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Lords Chamber

Volume 739: debated on Thursday 19 July 2012

House of Lords

Thursday, 19 July 2012.

Prayers—read by the Lord Bishop of Newcastle.

Democratic Republic of Congo

Question

Asked by

To ask Her Majesty’s Government what assessment they have made of reports that mutineers in the eastern part of the Democratic Republic of Congo have received assistance from foreign military officials.

My Lords, we have studied the United Nations Group of Experts report and believe it to be credible. We call on the countries named in the report to seek a sustainable resolution to the conflict, and one that breaks the cycle of violence.

I am grateful to my noble friend for that Answer, but is he aware that Presidents Kabila and Kagame have agreed that the 11-nation International Conference on the Great Lakes Region should work with the AU and the UN to establish a neutral force along the Rwanda-Congo border? Has President Kagame discussed with our Prime Minister which countries are offering to commit troops while Rwanda withdraws its support from the M23 rebels? Secondly, the Tutsi leader, Senator Mwangachuchu, claims that the M23 rebellion resulted from the ICC judgment against Thomas Lubanga and the indictment of Bosco Ntaganda for recruiting child soldiers and other crimes. Has the Prime Minister offered UK assistance, or has any other agency offered assistance in the pursuit and capture of Bosco Ntaganda?

In answer to my noble friend’s questions, yes I am aware of the Great Lakes conference agreement by Presidents Kabila and Kagame and others that they should consider the idea of a border force, but it is still only at the thinking stage. Did my right honourable friend the Prime Minister discuss this with President Kagame when he saw him a few weeks ago? The answer is no, because the propositions of the Great Lakes group had not come forward at that point. The Prime Minister expressed extreme concern at the Group of Experts report that Rwanda might be involved in backing the M23, but other developments have taken place since.

Has the ICC judgment against Thomas Lubanga created an atmosphere in which the M23 rebellion and breakaway from the Congolese army has taken place? I have to say that it may have played a part, but it is very hard to say. It may have been one of the reasons why Bosco Ntaganda and others retreated from their previous co-operation with the Congo army and have set up a mutineers’ group again. Have we offered, and has my right honourable friend offered, UK assistance in the pursuit and capture of Bosco, who is of course indicted by the ICC? No, because it is the responsibility of the DRC itself to co-operate fully with the ICC, and that is what we constantly urge.

Given the importance of the African Union and South Africa and their good offices to the future of the DRC, would the Minister welcome the accession of the former Foreign Minister of South Africa, Mrs Dlamini-Zuma, to the leadership of the African Union? Her good offices are going to be absolutely crucial at this time if we are to bring peace and security to that area.

The noble Lord is absolutely right, and I certainly welcome that accession. The African Union is playing an increasingly positive part in facing up to the regional issues in the centre of Africa and at the centre of its concerns. We certainly welcome that. Obviously the African Union has played a key part in the International Conference on the Great Lakes, which was in the margins of the meeting of the African Union in Addis Ababa the other day. It is a very good prospect that South Africa is playing a leading part, as the noble Lord describes.

My Lords, was the Minister’s reply to the noble Lord, Lord Chidgey, an acceptance that Rwanda has been aiding and abetting not only M23 but the other six rebel groups that have led to 1.4 million people being displaced in the Kivu in eastern Congo? That being the case, why are we not using the £344 million of aid which we have provided to Rwanda as leverage to persuade Rwanda not to aid and abet these insurgent groups, and to do rather more to bring to justice people such as Bosco Ntaganda, who has been responsible for the recruitment of child soldiers, which has led to the deaths of countless numbers of people—a haemorrhaging loss of life that dwarfs even the terrible and tragic events in Syria by comparison?

In answer to the noble Lord, Lord Alton, no one questions the atrocities and misery of these various armies. I have counted five different armies and groups involved in killing and fighting each other in the region, and there is an extreme danger of this spreading and creating mayhem more widely on both humanitarian and security grounds. That is certainly the case.

As to our leverage, our aid programme is not quite as large as the sum mentioned by the noble Lord. I have a figure of £198 million a year to the DRC, and £83 million a year to Rwanda. Certainly our judgment is that, through that aid, we have the authority and the leverage to influence the situation. I spoke to the Foreign Minister of Rwanda, Louise Mushikiwabo, about three weeks ago, as did my right honourable friend the Secretary of State for Development and my honourable friend Mr Bellingham. We all impressed on her and her colleagues the necessity of facing up to the reality, and of Rwanda’s activity, as reported in the Group of Experts, to cease and to make way for a proper solution to the conflict. We are using our leverage and influence in a very nasty situation, but the way we do it obviously varies from country to country.

My Lords, I am very grateful for the opportunity to ask a question in this particular context, because I think the plight of the Congo is well known to everyone in this House. The issue of regional co-operation has already been flagged indirectly in what has been said. One of the questions I would like to ask is to do with what Her Majesty’s Government are doing to foster a broader regional strategic engagement involving more than simply the Governments of Rwanda and Congo. As part of that regional question, I am very concerned about a cross-border issue in the region: the plight of the indigenous peoples and indigenous minorities such as the Batwa. Twelve months ago I met the Batwa community in Congo and was dismayed to find what little attention some local authorities, especially by the United Nations, give to their plight. Are the Government aware of this?

I am very grateful to the most reverend Primate for his question about the regional aspects, which are vital. May I answer him in this way? First, my honourable friend Mr Bellingham, the Parliamentary Under-Secretary concerned with African matters, was at the African Union conference last week and talked to regional leaders in detail all the time. Secondly, we have been promoting the idea of regional dialogue between the countries concerned. Thirdly, we are the third largest humanitarian donor trying to grapple with the situation. Fourthly, there is the matter, which my noble friend raised, of the Great Lakes group and its movement towards the idea of detailed regional co-operation and the involvement of all the key players in the region in solving this problem themselves. The regional aspect is very important, and I fully agree with the most reverend Primate that this is what we should concentrate on.

As to the cross-border issue, which was his other question—

Noble Lords: Oh!

I have been asked many questions, which produces many answers. The cross-border issue is very serious and we are looking at it very closely.

My Lords, I have visited the Great Lakes region on 10 occasions over a decade and I have never ceased to be amazed by the resilience and dignity of the local populations and the barbarity and scale of the atrocities visited on them, such as a nine month-old baby who was raped with a military-issue rifle and who then sustained terrible gunshot wounds. Does the Minister agree that we need to hold Rwanda to account, and that we should also hold the Congolese army to account? Could he press for more military tribunals so that we can play our role in ensuring that innocent victims such as that nine month-old baby girl get the justice they deserve?

Yes. Obviously we encourage the bringing to account of the very evil people who are committing these atrocities; there is no question at all about that. Bosco Ntaganda has been indicted by the ICC, and Rwanda has its own tribunal and court for assessing the horrors of the past. In all other aspects of bringing those involved to account, we will certainly press as hard as we can in the ways I have described in detail to your Lordships over the past five minutes.

NHS: Health Workers

Question

Asked by

To ask Her Majesty’s Government what steps they are taking to promote changing the roles and skills mix of health workers in the National Health Service to improve access and quality, and reduce costs.

My Lords, local healthcare providers must be free to manage the composition and skills mix for their workforce so as to best meet the demands of the communities they serve. We are working together with the professions and partners on key initiatives that will help healthcare providers make more informed decisions on the shape of their workforce to achieve better outcomes in both patient care and value for money.

I thank the Minister for that reply. As he knows, changing job roles in the health service can be done well to great benefit or it can be done badly and be detrimental to services. Given that a recent report from the All-Party Parliamentary Group on Global Health has provided the evidence for what works, can I ask him, first, how will the Government make sure that Health Education England and other national bodies give this a much higher priority and provide the support that local organisations need to make this happen? Secondly, to avoid the problems of failure, how will the Government ensure that the Care Quality Commission and other national bodies provide the leadership needed to make sure that failures do not happen?

My Lords, the noble Lord’s Question addresses the central issue facing the NHS, which is how to deliver the best outcomes for patients and do so in the most cost-effective way. He is right to single out the role of Health Education England because I believe that, in conjunction with local providers who will be feeding in their view of what the workforce priorities are in their local areas, together with the Centre for Workforce Intelligence, which has a horizon-scanning capability, we can at last crack a nut that has been so difficult to crack in the past, that of good workforce planning in the NHS to make the workforce as productive and effective as we can. He is also right to single out the CQC because in areas such as staff ratios, the commission has a role in making sure that providers have thought about the right way to deliver care in individual settings.

My Lords, in order to produce a skilled workforce with wide diversity in the health service, one of the real needs is that of attracting more young people into this very large workforce. At the present time, as I think the noble Earl may be aware, there is massive resistance to having young people on work experience in the health service. All sorts of barriers are put up—risk of infection, lack of privacy and so on—most of which are absolute nonsense. Could the Minister do more to encourage the university trusts in particular to ensure that more young people can gain work experience in our hospitals?

My Lords, the noble Lord has made an extremely creative and important point, and I will gladly take it back to the workforce colleagues in the department.

My Lords, I cannot give my noble friend the precise figures for matrons, but what I can tell her is that in all NHS trusts there is now an emphasis on nurse leadership, however defined, so that at ward level and indeed at board level the input from nurses is heard and taken into account. That is important if we are to achieve what I think everyone wants, which is to drive the quality of care at the bedside.

My Lords, as Ministers review the skills needs of the health service, will they take into account the significant contribution that can be made in healthcare settings to recovery and well-being by the arts—music, poetry and reading aloud, for example? Will they signal to healthcare professionals and commissioning bodies that it is legitimate to invest certain resources in the arts and, of course, design in order to promote good health?

One of the features of the reforms that we have enacted is the ability for allied health professionals, including those mentioned by the noble Lord, to have a say in the planning of services at a local level—health and well-being boards. The value of those activities, rightly emphasised by the noble Lord, will I hope in time be more greatly appreciated as the outcomes framework takes effect, and the patient experience of care becomes more prominent in the way that we assess services.

My Lords, how will clinical leadership be developed to secure the appropriate culture and values essential for delivery of safe, effective and dignified care for all NHS patients?

There is a clear role here for the professional bodies. Training should be done in the right disciplines and numbers and in the right way. I am sure I do not need to tell the noble Lord that in virtually all the medical royal colleges and through the Royal College of Nursing, there is an increasing emphasis on leadership backed by resources from the Department of Health. We are seeing a drive forward for innovation and the breaking down of professional barriers, which is another aspect of this issue.

My Lords, we now accept nurse prescribing as perfectly normal and sensible, and these changes were implemented when the NHS was the major provider of health services. Therefore, what challenges or opportunities does the Minister think that the new diverse health economy will pose to task shifting?

My noble friend poses an extremely complex question. She is right that regulatory improvements such as nurse prescribing are making a difference and we are looking to see what other professions can also share in that sort of freedom. As the NHS gets more plural, we are able to drive the consistency and quality of practice through the NHS standard contract, through regulation, as the noble Lord, Lord Crisp, emphasised, and also through the clinical leadership referred to by the noble Lord, Lord Kakkar. That applies not only in NHS settings, but in private and independent settings as well.

Credit Unions

Question

Asked by

To ask Her Majesty’s Government what are the next actions they plan to take in support of the continuing development of credit unions.

My Lords, credit unions provide people on low income with access to financial services and loans. More can be done to support credit unions to modernise, serve more people and become self-sustainable. Therefore, on 27 June, I announced that we are going to provide £38 million to fund a new credit union expansion project and that the Government will be consulting on credit union interest rates, as recommended in the credit union feasibility study published on 10 May.

My Lords, in the UK today, 1.4 million people have no bank account and 7 million people use high-cost credit, whether it is payday loans, home credit or pawnbrokers. My frustration is that development is still very slow and more could be done to develop the sector. Will the Minister agree to look at what contribution the high street banks could make towards developing the sector? In particular, could they be persuaded to second staff to work in the sector to aid its development? I believe that our banks should make a contribution to the sector to provide financial products at an affordable cost that they themselves will not provide.

My Lords, we have a procurement function going on with the credit unions, which will start shortly, in terms of how they can modernise and improve. It may well be that there are contributions that are not financial but intellectual that the credit unions can add. We are currently having a series of working parties with the retail banks as we develop the requirements for universal credit and financial inclusion.

My Lords, I greatly welcome my noble friend’s commitment, but can we accelerate things? In this age of rapacious loan sharks, credit unions could be of real help to many people who are struggling on very low fixed incomes. Could we please have a little more expedition?

My Lords, the whole point of this exercise is to expedite the growth of the movement. There are currently 1 million members of credit unions. The target that we have set is to double that within five to seven years and to make credit unions self-sustaining, which they currently are not.

My Lords, I am very glad that the Minister has given us that target of 2 million people but, in the light of the figures given by my noble friend Lord Kennedy, if 7 million people are using high-cost credit at the moment, with the extortionate interest rates of doorstep lending, is 2 million too unambitious a target? Should the Government not be shooting for a far higher figure?

My Lords, we have to build an industry that is self-sustaining. That is the vital priority. It is no good piling money into an industry that cannot effectively absorb it. It is vital that we get this right, and this expansion project is the right way to go.

My Lords, my noble friend’s announcement of the extra support for credit unions is immensely welcome, particularly because after April 2013 the discretionary social fund will no longer be available to give community care grants or crisis loans. Will some of the £38 million that he has announced, which is extremely welcome, be used to advertise the existence of the social enterprises that usually constitute credit unions? One of the biggest problems is that people do not know about them. If Jobcentre Plus and prime contractors to the work programme were made to advertise the availability of these services, it would help them enormously to make progress in future.

My Lords, that is something that we need to look at closely. One of the things that we are doing in the housing demonstration projects is tying the credit unions into the direct payment structure, and that has been very helpful. As we build out that system, the role of credit unions can be used and advertised in that way. As for the £38 million, that is for the credit unions themselves to decide how to use, and we will be taking bids and working out that process over the next half year or so to find out how that money can be used most effectively.

My Lords, welcome as the consultation is, it should include something about children getting involved. In St Albans District Credit Union, in which I declare an interest, there is a nice scheme going on where youngsters come in on a Monday, give their money and get that put in their book. Establishing the pattern of saving, which is one of the key principles of credit unions, could be an advantage if people were exposed to it nice and early. Will the Minister discuss with his friends in the Department for Education the possibility of getting into schools and working with credit unions in that way?

My Lords, something over 10% of members of credit unions are youngsters—over 100,000. That is useful and valuable for youngsters. However, I emphasise that what we are looking at now is trying to build an industry that can sustain itself. That must take priority, and that is what the money is for.

My Lords, while I, too, welcome the Government’s support for the growth of credit unions, and recognise that some changes in the regulations are going to come in this September, what will the consequences be for the very smallest credit unions that are still serving some of the poorest and most vulnerable people in our society?

My Lords, what we are looking for in the bids is substantial change. Smaller credit unions can take part in those bids in combination with groups of credit unions. In fact, we are expecting consortia to form to use this money most effectively.

Police: Working Conditions

Question

Asked by

To ask Her Majesty’s Government what representations they have received about the case for flexibility in police working conditions and practices.

My Lords, police working conditions and practices are discussed regularly by the police negotiating machinery, where the Home Office is represented, as well as in ministerial meetings with representatives of police staff and associations.

Has the Minister seen the recent findings released by the independent commission headed by the noble Lord, Lord Stevens? The findings show an alarming level of morale among police officers, with four out of 10 women police officers who responded saying that they had thought of quitting the force. Indeed, over three-quarters of the respondents said that they were pessimistic about the future of the service. Although the report focused specifically on women police officers, there is evidence to show that male officers are similarly affected by these issues, as indeed are police couples trying to combine their police duties with family responsibilities. Does the serious nature of these findings not demand an urgent and early response from the Government, so that these issues can be addressed and the situation can begin to improve, rather than deteriorate, as many police officers fear it will?

My Lords, I have seen the report, which was commissioned by the Labour party and conducted by the noble Lord, Lord Stevens. I have to say that the statistics come from an online survey and so were somewhat self-selecting: we believe that those responding were more likely to be those who were disgruntled with their job. As regards the position of women in the police service, the noble Baroness ought to recognise that the retention rate for female police officers is something of the order of 95%, which is considerably higher than the retention rate for men in the police force. I would have thought that that indicates that women police officers are satisfied with their terms and conditions and that there are suitable policies for flexibility in all of the police forces in the country.

My Lords, I declare an interest as a member of the independent police commission. I am sure that, when it comes out, the report will make very interesting reading. Women police officers have particular issues that they feel are not being addressed or considered seriously. Can my noble friend tell me how many forces have applied flexible working conditions and arrangements for women police officers? If he cannot tell me today, I will be happy to accept a written response.

I can give my noble friend an assurance that all 43 police forces have policies relating to flexibility in working. I repeat the statistic I gave earlier, that the retention rate for women in the police service is over 95%. That seems to indicate that there is considerable satisfaction with the terms and conditions that are on offer.

My Lords, if the Minister and the Government are under the impression that there is high morale in the police service at the moment, they are very seriously misjudging the truth of the facts on the ground. Police men and women fear for their terms and conditions and their pension entitlements. They feel that, on the one hand, the Government are forever praising our police service—in my view, quite rightly—for the tremendous way in which it fills the gaps, most recently in relation to the Olympics, but, on the other hand, seem to be pursuing a policy of at least threatening to downgrade the terms and conditions of police men and women. Are the Government not showing two faces on this?

My Lords, I echo the noble Lord’s praise for the police service, and thoroughly endorse it. However, I should also say that it is quite right that we look at police pay and conditions, which have not been properly examined for 30 years. That was the point behind the Winsor report. We believe that that report will provide a good basis for discussion and consultation. This area has not been looked at for 30 years, and we think that it is right to look at it again now.

My Lords, in the light of the security debacle mentioned by my noble friend Lord Grocott, does the Minister agree that when it comes to service, duty and commitment, public is quite often far preferable to private?

My Lords, that is another question. I praise the police force for all that it does. The noble Lord is a fine exemplar of the police service and we are proud to see him serving in this House as well. However, there are some areas where it is often better to use the private sector, and that is why we make use of it for such things as the security around sporting events. I do not think that the noble Lord would think that that would be a good use of police time or manpower.

My Lords, would my noble friend’s department be happy to give evidence to the Stevens commission on the recruitment and retention of women police officers?

If I heard my noble friend correctly, he asked whether we would be happy to give evidence. Of course we would.

Could the Minister make it absolutely clear—I am sorry; the noble Lord, Lord Elton, reminds me to keep my hands behind my back—that, where we have the Army, G4S and the police working together during the Olympic and Paralympic Games, it will be the police chief who has ultimate responsibility for issuing orders and dealing with disorder, and not G4S or the Army?

My Lords, as I made clear the other day, security is ultimately a matter for my right honourable friend the Secretary of State. However, in the event of there being a major incident, it will obviously be the police who will take charge of operational matters at that stage.

My Lords, the Government’s approach to millionaires, which is a tax cut of 5p in the pound, is in stark contrast to their approach to the working conditions of our police, on whom we all depend and whose morale is at a low ebb, despite what the Minister said. Do the Government still intend to introduce the controversial Winsor recommendations on regional pay and cut starting salaries for the police? Will the Minister give an undertaking that, for the rest of this Parliament, the Government will not preside over compulsory redundancies among front-line police officers?

I am not sure what the point behind the noble Lord’s first remark was, but I remind him that millionaires are probably paying higher rates of tax than at any point in the past 13 years—during a large number of which the party opposite was in government. On the second part of the noble Lord’s question, it would have helped if he had listened to my earlier answers, when I made it quite clear that the Winsor report was a very good basis for discussion. That is what we intend to do, because these matters have not been looked at for 30 years.

Late Night Levy (Application and Administration) Regulations 2012

Motion to Refer to Grand Committee

Moved by

My Lords, I had understood from press reports and a Written Ministerial Statement last night that, in light of a Supreme Court judgment yesterday, immigration orders or regulations would be laid today. Can the Minister enlighten us as to what form those may take and when noble Lords are likely to have sight of them?

My Lords, I issued a Written Ministerial Statement last night in response to that judgment from the Supreme Court. I can give an assurance to the noble Baroness that we will be laying orders later today and that they will be available in the Printed Paper Office.

Motion agreed.

Business

While the Leader of the House is here, I feel that I should bring to the attention of the House a very serious matter that has arisen. At Question Time yesterday, I asked a question of the Treasury. The noble Lord, Lord De Mauley, who is normally very honourable, told me that he could not reply to my question and would do so in writing. We did not know at the time that a Written Ministerial Statement was being made by the noble Lord, Lord Sassoon. The Leader of the Opposition asked a few days ago that, while this House is sitting as part of this Parliament, any major Statement—this was a serious Statement on infrastructure and loan guarantee schemes—be taken here. It was taken as a Written Ministerial Statement while I was asking an oral question. It really is quite outrageous and I hope that the Leader of the House will be able to assure us that it will not happen again.

My Lords, the noble Lord, Lord Barnett, has been a Member of this House for a very long time indeed. The noble Lord knows that it does not have points of order and that if he needs to raise a question, it has to be on a relevant Motion. It is a gross discourtesy to the Lord Speaker for the noble Lord not to have put down a PNQ if he felt it was appropriate. It is also a discourtesy to the House for him to break the rules in this way. If the noble Lord does not know what the rules are, then I urge him to take advice from the Clerk of the Parliaments, who no doubt will provide an induction course for him.

My Lords, I have indeed been a Member of this House for nearly 30 years and have never, I hope, done anything discourteous in any way. I was putting an oral question on the specific issue and at the same time a Minister was putting down a Written Ministerial Statement. This was on something rather important, to say the least, because the Prime Minister—and even his deputy was with him—was making this major statement about loan guarantees. The Leader of the Opposition asked specifically that those kinds of statements should be made here; she never said written ones. What is wrong with my asking now that it should not happen again?

My Lords, what is wrong is that the noble Lord is breaking the rules of the House by not raising it at a relevant time on a Motion that is on the Order Paper.

Wales: Devolution

Motion to Take Note

Moved by

That this House takes note of the progress being made by the Commission on Devolution in Wales chaired by Paul Silk.

My Lords, first, I declare an interest as I am in receipt of a pension from the National Assembly for Wales. I am also a member of the advisory board of the Wales Governance Centre, to which I will refer later.

Since I entered this House 18 months ago, noble Lords have devoted many hours to Scottish constitutional issues. In putting down this Motion for debate today, I am hoping to start to redress the balance and shine a little light on Welsh constitutional issues. We recently had an excellent debate on the Government’s Green Paper on electoral systems, which demonstrated that we have plenty to say. In the 1990s, as a Liberal Democrat, I was a supporter and campaigner for a full Parliament for Wales, rather than the little fledgling we were given in 1999. However, I am a pragmatist and long ago accepted that the Assembly we were given, fashioned like a county council as a corporate body, was the best that the then Secretary of State for Wales could persuade his party to accept. In my view, something is better than nothing.

We then set about building the Assembly into a proper legislature. First, the Liberal Democrat-Labour partnership Government established the Richard commission, which produced a radical and far-sighted set of recommendations, which I regret were not pursued by the then Secretary of State. Instead of a giant leap forward, we were consigned to a series of short hops. One such short hop, in 2006, saw the second Government of Wales Act, which introduced primary legislative powers—but only so long as MPs gave their permission on a one-by-one basis. Hence, the infamous legislative competence order was born and with it a great deal of resentment between the two institutions. It complicated an already very complex system.

It is worth noting that there is a fundamental difference in how the original Government of Wales Act and the Scotland Act were written. The Scotland Act gave power to the Scottish Parliament over wide areas of public policy, with specific and narrow exceptions. By contrast, in Wales, the Assembly was given much more narrow and specific powers, which were added to in a haphazard and lopsided way as and when the Assembly asked for them, an issue I will return to later. The second stage envisaged in the Government of Wales Act 2006—full legislative powers—was pressed for throughout the third Assembly. However, there was little progress prior to the coalition coming to power in 2010.

The history I have outlined so far will tell you that the people of Wales have got used to looking over their shoulder with envy at the powers enjoyed by the Scottish Parliament. Just as resentment was building, rescue arrived in the perhaps unlikely form of the coalition. A number of key developments followed pretty quickly after the coalition came to power. There are four pieces on the chess board at the moment and, just as in the game of chess, the movement of one piece has a knock-on effect on all the others.

A referendum was held on legislative powers, which was won resoundingly. Intergovernment talks have started on the Barnett formula, which has been a growing source of acrimony for the past 12 years. Recently the Secretary of State issued a Green Paper on electoral arrangements for Wales which proposes some significant and, to me, very welcome changes. The Silk commission set up in October 2011 is a long-burning fuse looking at two key aspects. Part one deals with financial accountability. The Assembly has always lacked some credibility because, uniquely in the UK, it has no responsibility for raising the money it spends. Even a parish council has more financial credibility than the Assembly. The Welsh Assembly is probably the only body in the world able to pass laws and spend money while having no power or responsibility over tax. Indeed, only last week the Wales Governance Centre, the Institute for Welsh Affairs and Tomorrow’s Wales came together to produce a joint submission to the Silk commission in which they emphasise this anomaly. They labelled it,

“an aberration from international and British norms”,

and expressed the view that such powers were needed in order to increase the accountability of Welsh government.

The commission, chaired by Paul Silk, formerly a clerk to the National Assembly and, indeed, formerly a clerk to Parliament, in the other place, is modelled on Scotland’s Calman commission, but, significantly, it has even greater credibility because unlike Calman, all four main political parties are represented on it. So far it has taken evidence on financial accountability and we expect its report on this aspect early next year. It has had more than 40 submissions, the majority in favour of some element of fiscal powers for the Assembly. Of course, the big question is exactly which taxes should the Assembly be allowed to levy. In a country with such a long border with England there are practical problems to be addressed in order to ensure that devolution of tax-varying powers does not lead to increased tax avoidance.

The foundations for the commission’s discussions were laid by the Holtham commission, which was established by the Welsh Government in 2007. That looked at the Barnett formula as well as tax-raising powers. In contrast, the Silk commission is looking only at taxation, discussions on the Barnett formula being held between Governments. While that is understandable, as the Barnett formula does not affect only Wales, it makes the situation more complex and I believe that it will be essential to reform the Barnett formula before we can have satisfactory devolution of any significant tax-varying powers. Discussions between the two Governments seem to be progressing and I wonder whether my noble friend the Minister, when he replies to this debate, can give us an update on progress. I am particularly interested in the concept of the introduction of a Barnett floor, which would ensure that when public expenditure begins to rise again, Wales will not be subject to the Barnett squeeze suffered from so badly so far.

I believe that it is more or less inevitable that the final recommendations of the commission will include some which are dependent on Barnett reform for their implementation. Indeed, a large number of the responses to its consultation concentrate on this issue. It is a happy coincidence that this week has seen the publication of the ICM poll commissioned by the Silk commission which gave a strong, if a bit confused, endorsement for proposals for the Assembly to be granted tax-varying powers. Some 64% favoured powers to set income tax and 80% agreed with borrowing powers. My view is that borrowing powers are a vital first stage that can be implemented quickly and easily. The Northern Ireland Executive has used its borrowing powers for infrastructure and public service investment. There has been significant development in the borrowing powers of the Scottish Parliament. Wales needs this freedom as well if there are ever to be major infrastructure projects, such as the badly needed improvements to the M4. I accept that the Treasury has to place limits on such borrowing, but if Wales were to be given similar powers—similar limits to those applied in Scotland and Northern Ireland—we would be looking at something in the order of a cumulative limit to borrowing over a period of 10 years of just over £1 billion. I am pretty certain that the Treasury can cope with that.

It is of course easy to agree in principle that some taxation powers should be devolved, but the difficult decision comes in agreeing exactly which taxes and to what extent. The two most commonly cited proposals are for part of income tax and for corporation tax to be devolved. Corporation tax has the advantage of ensuring that the Welsh Government would benefit from higher tax revenues as a reward for pursuing successful economic policies. More prosperous businesses mean more tax revenue. The Welsh economy desperately needs stimulation. I am a strong devolutionist, but I fully recognise that the Welsh economy has suffered badly in the years since devolution. It would be useful for the Welsh Government to be able to attract new business with the incentive, for example, of a slightly lower rate of corporation tax.

The Silk commission is looking at the devolution of some powers over income tax, following the Scottish model and as recommended by the Holtham commission, which said that half of income tax should be allocated to Wales but with the ability to vary it by 3p from the English rate. But without a fairer funding formula, this could lead to a further drop in income, which would be simply unacceptable. Therefore, in my view, the devolution of a proportion of income must be predicated on a reform of Barnett running alongside it.

If not income tax, what other taxes could successfully be devolved? Maybe stamp duty, to help lower the cost of homes in Wales. As waste management and recycling are both largely devolved, both the landfill tax and aggregates levy, if devolved to Wales, would enable the Welsh Government to take a more strategic approach to environmental issues. There should be a greater freedom to reform the local government rating system, domestic and non-domestic. The complexity of Welsh devolution is such that both business support and local government are devolved, but the Assembly does not have the powers to change the rating system beyond some control over the multiplier.

Another possible candidate is the devolution of our passenger duty. There is really no reason why the Assembly should not be allowed to create a new tax—maybe a green tax—to stimulate environmental efficiency. Clearly, this is a complex area and there must be detailed analysis by tax experts before decisions are made. It is clear to me, however, that control over some tax levers would encourage the Welsh Government to be more strategic in their thinking, and to concentrate on the economic growth that Wales so badly needs. It would increase democratic accountability.

Finally, and briefly, I will anticipate the second stage of the Silk commission and look at the issue of powers more generally. I have just cited an example of complex powers over local government finance. There are many more such anomalies, where a gap in powers makes it difficult for the Welsh Government to wield the powers they do have as effectively as they should. Basically, the Government of Wales Act is chaotic and becomes more so by the year as additional powers are tacked on like sticking plaster. In my view, the Act needs to be entirely rewritten on the Scottish model, which I referred to earlier in my speech.

There is, in addition, a pretty long list of additional powers that the Assembly could justifiably claim should be devolved to Wales. Powers to deal with energy consents for projects over 50 megawatts would be particularly welcomed in a country which is home to so many large wind farms. Policing is a strong contender, because the police nowadays work so closely with local authorities, and local government is devolved. The gradual development of a body of Welsh law makes it logical that there should be a separate Welsh jurisdiction. We are already, de facto, half way there, and that is important to recognise. Some aspects of broadcasting, such as S4C, could sensibly be overseen by the Assembly and there is a host of more minor powers that would tidy up the settlement, such as reforming the electoral arrangements for local government.

I am very pleased indeed to see the list of distinguished speakers planning to take part here today. I have already referred to the noble Lord, Lord Richard, and his report. I am pleased to see him in the Chamber. I look forward to hearing all your Lordships’ views. I regard this as our opportunity to make our voice heard in this consultation and I ask the Minister when he speaks to suggest how we can most effectively put the points made in this debate on record for consideration by the Silk commission.

My Lords, I congratulate my noble friend on securing this debate, which enables us, as she suggested, to have an input into the Silk commission’s deliberations.

My comments today will be very preliminary and tentative, because I hope that we shall have a further chance to debate the Silk report when it is published and before the Government make up their mind on the proposals. However, even as things stand, it is not difficult to make an informed guess about the recommendations of the first part of the Silk commission’s inquiry on taxation and accountability in Wales; and, indeed, perhaps about the eventual outcome after public reaction to its proposals and the Government’s consideration of it all. I say this with some confidence, because we know what happened to Scotland after the Calman inquiry and the subsequent Bill that came before this House. Unlike Scotland, Wales does not have a Parliament of its own, but it has a National Assembly and Government, and we can reasonably assume that developments in Wales will very likely follow a similar pathway to the one in Scotland.

The commission may well recommend that the revenue produced by certain UK taxes in Wales should be assigned to the Welsh Assembly Government and a corresponding deduction made from the block grant. I see no insuperable difficulty with this, although there may be some argument about the level of the taxes concerned and the power to change them. I first encountered this idea of assigning the product of taxation in a report produced by my noble friend Lord Steel of Aikwood when he presided over the Scottish Parliament, which takes us back a bit.

I also remember the conclusion of that report: namely, that even if the Scottish product of all the UK taxes he listed in his report—and it was a page full of transfers—was transferred to Scottish coffers, Scotland would still need a subsidy from the UK Treasury to maintain the level of spending that it was accustomed to. That is likely to be the position in Wales as well. To my mind, the real problems arise over powers to vary rates of tax of one sort or another and if power is given to raise new taxes unique to Wales, as allowed in the recently passed Scotland Act, although it is a power not yet used in Scotland.

With regard to the power to vary taxes, we have seen the argument arise over the desire to vary corporation tax in different parts of the UK, particularly in the face of the low rate of 12.5% in the Republic of Ireland. The rate is regarded as an all-important factor in attracting inward investors, and of course we all want inward investors in all parts of the UK. The UK Government’s view is that it would not be right to allow one UK country or region a more favourable rate of corporation tax than another. I do not see them changing their mind on this.

I am more perturbed by the possibility of new or increased rates of taxes being imposed on businesses and individuals in Wales. We have a Labour Government in Wales, with more of the flavour of old Labour than the new. They are convinced of the supreme importance of the state and of the primacy of its needs and requirements. Their views are not mine. Suffice it to say: by their deeds shall ye know them. As the noble Baroness has just said, their record in developing the Welsh economy over the past 13 years is not one to be proud of. They have seen Wales fall as a favoured destination for inward investment from being second only to Scotland to being the lowest bar one among the UK regions. That, I dare say, was due to the abolition of the Welsh Development Agency. Let us face it, Wales is one of the poorest regions in the European Union and one of the least able to bear additional taxation. Extra taxes would drive out businesses and individuals—of that we can be certain. If the Government were to lower taxes to incentivise people it would be a different matter, but that is most unlikely.

If the National Assembly and its Government do not have taxation powers, how can they be held accountable to the electorate? Arguably, that could be achieved through the National Audit Office, the Public Accounts Committee and all the other parliamentary mechanisms here, but I do not think that they have ever been applied. That is a dilemma that is being left to the Silk commission, and I do not envy its task of deciding how that accountability can be created. Even within a democracy, there must be safeguards against the deleterious, deeply damaging and mistaken use of powers. The trouble is that it often takes time for the abuse and hurt to be felt and realised by the electorate.

This possibly explains the somewhat conflicting views expressed to the ICM poll, which was commissioned by the Silk commission and published this week. We are told that 64% of those questioned thought that income tax levels should be determined in Wales. However, as the Guardian put it on Monday,

“other answers muddied the waters”.

It went on:

“Asked which level of government should have the most influence over taxes that Welsh people pay, the results seem to contradict the bottom-line conclusion, with … 53% saying it should be Westminster. The Welsh government was … second with 35%”.

There we have it.

I agree in principle that borrowing powers, which are already available to the Scottish Parliament and the Northern Ireland Assembly, should be granted to the Welsh National Assembly and its Government but under strict Treasury control, bearing in mind the UK deficit that the coalition Government inherited and which has got us into so much trouble. The ultimate safeguard—we must never allow this to go—must be the overriding power of this Parliament. I sincerely hope that it will be preserved for use in extreme circumstances if things go very badly wrong in Wales.

There are many other issues to consider: the transfer of business-rate setting to the Assembly, which has similarities to the transfer of corporation tax in that it can advantage or disadvantage an area, depending on the rate imposed. However, the key question is whether the product of any tax transfers is additional to the block grant or a substitute for some part of it. I suspect that most transfers will be substitutes.

There is also the issue raised by the Welsh Government in their evidence to the commission in the event of a transfer of power to vary income tax. They suggest that there should be a referendum. Incidentally, it is not a power that the Welsh Government have actually asked for. Much to my surprise, I see that the Welsh Conservatives, in their evidence, which is reproduced on page 7 of the excellent Library note, say that,

“consideration should be given to the devolution of some aspects of income tax, because this could make the … Assembly more accountable to the people it represents … There is considerable merit in exploring this policy”.

Wonders never cease.

My Lords, I congratulate the noble Baroness, Lady Randerson, on choosing this debate. For me, the real problem is channelling more resources to Wales, and the issues of accountability and the irresponsibility which comes from spending without actually raising the taxes are secondary. The issue of more resources for Wales is important and bristles with problems, so I am sad to see the lack of interest in Wales in the Silk commission. For example, the first public event in Wales, in Swansea in March, was attended by but 11 people.

I am not surprised at the findings of the ICM poll, published this month, in which those polled agreed that, in principle, greater tax powers should be given to Wales. Sadly—or perhaps surprisingly—the most enthusiasm for the transfer of tax powers came from those who do not pay taxes. More than 76% of the unemployed thought that there should be a transfer of tax powers, and Paul Silk himself commented that it is clear from the poll that there is a limited understanding of taxation issues among the public as a whole. This begs the question: how much weight we should then attach to the findings of that poll? The most important finding is on page 13. It states that,

“the public subscribe to the view that in an age of austerity, public spending in Wales must not exceed revenue raised in Wales ... the Welsh public would prefer fiscal transfers from the rest of the UK than higher taxes in Wales”.

Surprise, surprise. This sounds very sensible indeed.

I should like to raise one or two preliminary considerations, if I may. In a unitary system of government, and a small country, the problems of differential taxation are great, and the situation would be made easier in a federal system. There is, for example, the frequently raised problem of air passenger duty. How would it help Cardiff Airport if this were transferred? It would be taken into consideration in the block grant. If the air passenger duty were higher in Wales than England, Wales would lose business. If it were lower, let us imagine the cries from Bristol because of the incentive for people to go to Cardiff. Surely the problem is poor access to Cardiff Airport. Therefore, I welcome the proposed new railway station there, which was announced this week.

Our concern should really be justice within the UK; hence the debate on the Barnett formula. There is an overwhelming case for the distribution of resources to be based on need but, realistically, that will not happen before the Scottish referendum. What do we know about need within the UK? Fascinating figures on regional unemployment were published by the European Union on 4 July. There were two important conclusions. The first was that some regions in England are worse off than Wales; and Scotland is better placed than Wales. So we should beware of interregional conflict. In 2011, for example, the unemployment rate in Wales was 8.6%; in Scotland, it was 7.9%; in the West Midlands, it was 9%; in Yorkshire and Humberside, it was 9.4%; and in the north-east, it was 10.8%.

The second conclusion from these regional statistics relate to the divisions within Wales and, indeed, the widening gap. For example, in west Wales and the valleys the unemployment rate in 2010 was 9.2%, but in 2011 it was 9.9%. In east Wales, however, the figure decreased from 7.8% to 6.5%. Surely this widening gap should be addressed. It should be a major concern of the Welsh Assembly Government and of this House. In passing, I should say that I welcome this week’s announcement of the extension of the electrification of rail as far as Swansea and the valleys. Without that, the regional gap would be further widened.

That obviously leads to a debate about the definition of devolution. Although that debate is not for today, one still might ask why devolution should stop at the National Assembly level. Proper devolution should be extended to the lowest practical tier of government—in other words, subsidiarity. Currently, our local authorities are weakened. I therefore welcome the debate about city regions promoted by the task force report published on 11 July.

On taxation generally, I am not surprised that the Welsh Affairs Committee in the other place, in its January report, reached no conclusions. We should recognise the danger of Wales losing out in interregional competition and falling into the trap of seeking differences for their own sake, such as the variation of income tax or the so-called nudge taxes, such as the 5p we pay in Welsh supermarkets for plastic bags. But the more successful these nudge taxes are in altering behaviour, the less revenue is raised. Thus it is done for social and not revenue reasons.

If we follow the Holtham recommendations, and the Welsh Assembly Government were to introduce new taxes on goods or activities that are currently not taxed at the UK level, it could be a serious disincentive to inward investment at a time of increased competition. Obviously, much of the debate centres on devolving borrowing powers, which I am certainly not against in principle. The trouble with borrowing, however, is that it has to be repaid. One sees the problem, for example, with the PFI scheme and the property bubbles in Ireland and Spain. Clear limits have to be set by the UK Treasury, as the noble Baroness readily acknowledges, otherwise the problem can get out of control, as happened in Spain with the degree of devolution of borrowing powers to the autonomia and the difficulty of the Spanish federal Government in dealing with their fiscal crisis.

Where is the domestic revenue stream in Wales to repay? How can we provide flexibility in the context of block grant variations? To what extent will the problem be met at the UK level by the new government guarantee scheme announced this week to underwrite private sector investment? Perhaps the Minister could say how relevant this scheme is to Wales, and what effect it might have on the current debate.

The starting point of the debate is surely that in Wales we are relatively poor, in the UK context. There is a shortfall between the UK taxes raised in Wales and the UK public spending in Wales of around £15 billion, roughly equal to the total Welsh Government expenditure. Taxes raised in Wales would be raised from a weaker tax base, as Wales generates 70% of the UK average GVA. Therefore, a penny on income tax raises 30% less in Wales, and Wales would lose if, for instance, 10% of income tax were raised here.

If some of the tax raised were taken off the block grant, there would be a worse outcome for us than under the Barnett formula. The devolved borrowing powers could therefore be a distraction from the primary question of how much capital investment we need. What is our fair share of UK capital investment, and where is the continuous income stream to pay for the borrowing? Perhaps we could use the Severn Bridge tolls? In passing, I must say that the Severn Bridge toll is a major tax on Wales, and a major disincentive for inward investment. Perhaps the best way of helping Wales at the moment—certainly south Wales—would be to abolish the toll, or at least make it cover maintenance costs only.

I agree with Geraint Davies, my own MP for Swansea West, in his submission to Silk, that there may be a case for tinkering at the edges, or for experiments such as our plastic bag tax, but that to concentrate on these may well divert attention from the main issue; that is, that our interests are best served not by flirting with ingenious new tax devices, but by claiming more and ensuring that Wales obtains a fair share of the national cake based on our needs, which certainly does not happen currently under the Barnett formula.

My Lords, I congratulate my noble friend on initiating this discussion. I hope that the House will forgive the intrusion of someone from the north, rather than the west, of the United Kingdom. I promise that I shall be brief.

I can see that the problem of asymmetric devolution has not made life easier for Wales. It is my hope that the work of the Silk commission will feed the discussion as to what tax arrangements are most suitable for the whole of the United Kingdom. We do not live in a homogeneous, single, unitary state. There are substantial variations in need, which have been alluded to by the noble Lord, Lord Anderson, and others who have spoken in the debate. However, it seems to me that our approach, nationally—by that I mean as part of the United Kingdom—is somewhat too fractured. It would be appropriate to pull together the thinking of Holtham, Calman, Silk, and all the other inquiries that are going on into these matters, with a view to taking the step that has been alluded to as the desirable end point by my noble friend of some form of federation for the country. I say “some form” because it is quite clear that the United States form has built imbalance into the prosperity of the different states. However, that need not be the case, as is made abundantly clear by the experience of the Federal German Republic.

Looking at what is happening in Scotland is not necessarily the right way to approach what is to be done in Wales, because the Scottish situation is far from stable. The degree of satisfaction that may arise from the Scotland Act is yet to be determined. It is certainly my view that equitability as between the different nations and regions of this country should be a prime concern and one should not simply address the local difficulties as though they were unique.

It is time to ask some questions of the Government regarding the Silk inquiry, and my noble friend Lady Randerson has done just that. In particular, I should like my noble and learned friend Lord Wallace to indicate when he replies to the debate what the state of the discussion is between the two Governments as regards borrowing. Is it confined to borrowing from the Treasury or does it also encompass the possibility of private borrowing for public intentions? The urgency of that issue seems to have been recognised by virtually all those who have given evidence to the Silk inquiry and it seems that that could be done without seriously upsetting the British economy.

What has been interesting is the extent to which there is an express desire within Wales for greater control over taxation, although I noticed what the noble Lord, Lord Anderson, had to say about the down side. However, that could be rectified by making sure that the distribution of public—United Kingdom—funds takes more account of need than is the case with the Barnett formula. I hope that the Government will give some indication as to how they would wish to progress. The postponement of decisions on Barnett is definitely damaging to the coherence of our United Kingdom.

If economic success leads to an increase in the Welsh budget, it should not follow that there should be an immediate reduction in central government funding. These matters fluctuate in the short term and it is important that the infrastructure of the economy should be underpinned and that problems such as the greater rurality of Wales are taken into account and a more equitable solution is produced.

I urge the Government to take note of the inquiry in another place, chaired by Mr Graham Allen, into the possibility of a convention on a constitution for the whole United Kingdom. There is much merit in that. Evidence from the Silk inquiry and of those who have been giving such careful consideration to these matters as they affect Wales should be fed into such a convention. However, it should not be expected to deliberate and come up with immediate results but rather, in the manner of the Scottish convention, take its time to come up with a solution that will satisfy the different parts of the United Kingdom, I know that that goes beyond the ambit of this debate.

I am grateful to the noble Lord for giving way. He makes an important point. Can he clarify his thinking about this constitutional convention? Should it be literally along the lines of the Scottish constitutional convention or should it have a more demographically representative element and therefore be much more akin to a deliberative assembly, the conclusions of which would not be binding? Which sort of model does he think would be preferable in this case?

I would hope that we can learn from the experience of the Scottish convention: that it should not be confined to certain political parties; that it should be representative of varying and discrete interests; and that it should be deliberative. The serious groundwork being done by Silk—and earlier by Holtham, Calman, and so forth—should be borne in mind and taken into account. This should not be led by politicians who have come to it with a defined end point; but rather, it should emerge as something like a national consensus following a national debate.

My Lords, I welcome today’s debate and thank the noble Baroness, Lady Randerson, for facilitating it. However, I have no doubt that we will return to this subject when the Silk commission produces its report, which is expected in November. In addressing these matters today, I am conscious that Mr Ron Davies once famously stated that devolution is a process and not an event. Where are we in that ongoing process? We can now fairly assert that the National Assembly for Wales is here to stay. Fewer than 20% of respondents, in a whole series of polls, say that they would prefer to revert to the bad old days best typified when we had Mr John Redwood as a governor-general.

The two-to-one majority vote last year for primary law-making powers has given the Assembly the law-making tools in those areas devolved to it. The model, however, as the noble Baroness said, is nothing like as transparent as in Scotland, where all functions not reserved to Westminster come under the Scottish Parliament. Wales should operate on a similar basis. At some stage we are going to have to come back to that. There is also a case, as the noble Baroness asserted, for other portfolios to be devolved, most notably those of police and prisons. There is wide support for this within those services, and also for devolution of broadcasting, major energy projects and the courts.

How far should the process go? My party, Plaid Cymru, believes that ultimately Wales should have its own independent voice within the European Union, and for the present political union of these islands to be replaced with a new relationship. It should be more like a social union, with a more confederal link between Wales, Scotland and England. I expressed my own emphasis in my maiden speech in this Chamber. I want to see Wales as a nation taking all the decisions that can meaningfully be taken on an all-Wales level, and to have an effective voice in other decisions that have to be taken on a wider scale. There are models of government short of independence that may warrant consideration. These include federal, quasi-federal and confederal structures. As was noted by the noble Lord, Lord Maclennan, a moment ago, I believe that when we debate the future of this Chamber, it would be a missed opportunity not to consider the possibility of it becoming a federal Chamber, particularly if devolution for Wales, Scotland and Northern Ireland moves towards the devolution-max model that apparently is very widely supported in Scotland.

With regard to the appropriate fiscal powers, these will depend on the level of devolution that obtains. As the process moves forward, so too must the financial powers that correspond to the constitutional powers. So, at this point in time, I suppose that we can do two things. First, we can lay down the principles that should apply, and secondly, we can lay out the fiscal powers that are appropriate to our current position on the devolution pathway.

Plaid Cymru, in its evidence to the Silk commission part 1 study, highlighted four core principles:

“Fiscal devolution is part of an evolving process by which Wales will become more economically and democratically self-sufficient;

“The Welsh Government currently has accountability over its expenditure without responsibility for its income. There are no direct linkages between taxes paid in Wales and decisions taken by the Welsh Government; decisions taken do not impact its revenue. By creating linkages, the people of Wales would be empowered over decisions that affect their wellbeing;

“The economy of Wales is underperforming. We want to see a more prosperous and more equal society. Fiscal powers provide levers towards achieving these goals; and

“The workings of government should be transparent, but current fiscal arrangements are opaque. Fiscal devolution would create greater clarity in terms of responsibility. This would enable more effective scrutiny”.

I would add that I find it astounding that our National Assembly should have less tax-varying power than does my own local Llanwnda Community Council. I do not understand why Westminster did not insist at the very outset of devolution that tax-varying powers should be part of the settlement.

All but two of the countries within the OECD that have devolved legislatures require those regional bodies to raise at least 20% of their budget from their own taxes, which in Wales would be equivalent to some £3 billion a year. One cannot begin to address the question of what tax-varying powers should be devolved without at least reviewing the inadequacy of the Barnett formula in its application to Wales. The Holtham commission showed that Wales was being underfunded by up to £400 million a year if the settlement was supposed to allow the Assembly to maintain public services at a level comparable with England. Updating the Holtham figures to the 2010-11 situation shows a widening gap, with a shortfall of up to £540 million. The Secretary of State for Wales, Mrs Gillan, said in the Assembly on 23 May that:

“The Barnett formula is coming to the end of its life and needs to be looked at”.

Silk is not directed to review Barnett, but I cannot see how it can reach conclusions without knowing the Government’s intentions with regard to replacing Barnett, hopefully with a needs-based formula.

Putting in a Barnett floor, as some have advocated, to limit the effects of the Barnett squeeze, is nothing like enough. To a large extent it is like closing the door after the horse has bolted. At a time of expenditure cuts it achieves next to nothing, and unless there is some backdating mechanism to take account of what has happened since 1999, which would generate the sum of £8 billion—the amount we have lost out on because of the Barnett squeeze over the period—the problems facing us now will not be answered. We need to replace Barnett with a needs-based formula, and we need to do it immediately. If the Government wait until after the Silk commission reports in November before indicating their intentions concerning Barnett, they will totally undermine the Silk commission and leave Wales suspended in mid-air with no inkling of where we are going. The problem is that the finance needs of Wales are distorted by viewing the Barnett settlement through the Scottish prism, but that is what happens all the time.

What are the taxes which, within our current limited autonomy, might be raised by the Assembly? If we are to aim at, say, 20% of the Welsh budget being funded by taxes raised in Wales—some £3 billion a year—that can come from one of only three major sources of taxation: from income tax, of which some £5 billion is raised annually in Wales; from VAT, which generates £3.5 billion a year; and from national insurance contributions, which raise a similar sum. Ignoring council tax and non-domestic rates, all other central taxes raised in Wales amount to some £4.5 billion. The EU rules make it difficult to devolve VAT in a meaningful way, and national insurance is directly associated with non-devolved responsibilities around social security, so my party’s evidence to the Silk commission advocated that 50% of the income tax take in Wales should come to the Assembly. In this we prefer the Holtham model to the Calman lock-step model, which makes it difficult to do more than maintain the status quo.

My party also favours devolving other smaller taxes such as stamp duty, aggregate levies, landfill taxes and airport passenger duty. I personally believe that we should look at alcohol and tobacco duties, and at oil duty. The argument that is always put forward is that of cross-border distortion, but I think that it can be overstated. There is considerable variation in taxes between the regions of other countries. One thinks of the huge difference in taxes between Zurich and Zug in Switzerland, with just a lake between the two that people can cross. In the United States, the greatest level of tax discrepancy is between two adjacent states, New Hampshire and Vermont, with no insurmountable problems. My party also believes that income arising from the Crown estates in Wales should also come to the Assembly, although that is not a massive sum, and we believe that we should have the same powers as Scotland to introduce new taxes. With regard to corporation tax, we would like the £800 million to come to the Assembly, but we accept that because of European rules, there are restrictions on our scope to make this a meaningful devolved tax. Personally, I believe that the tool we should be using should be that of providing greater investment allowances to trigger economic growth. At the moment they are available in the enterprise zone in Deeside. They should be more widely available in order to ensure that there is an incentive for those investing in Wales.

Finally, with regard to borrowing powers, there is an overwhelming case for the Assembly to have these powers. Local authorities have them, the Northern Ireland Executive have them and, under the forthcoming Scotland Act, Scotland will have them. Why on earth does Wales not have them? My belief is that we need much more than the £1 billion referred to by the noble Baroness; it would be nearer £4 billion or £5 billion. This should be brought forward immediately, and it could be done through the use of the Welsh Development Agency Act which allows such powers. It is not being used now because the Treasury insists that it should be offset against the departmental expenditure limit figure for Wales.

What is the attitude of the people of Wales towards such a change? As we have heard, 64% believe that income tax should be determined in Wales, two-thirds believe that the Welsh Government should have the right to change the level of tobacco and alcohol taxes in their budget, and when it comes to allowing borrowing, a staggering 80% support it. What are we waiting for? Can we be assured that, when Silk reports in November, the UK Government will immediately press ahead with its recommendations? That will create better and more transparent government, which is a big demand. Democratic answerability needs it and the Welsh public want it, so let us get on with it.

My Lords, I welcomed the establishment of the Silk commission, but the terms of reference given to it by the Secretary of State are in some respects ill judged. The commission is tasked to consider issues of accountability but not of fairness. The block grant and the Barnett formula, along with the system and structure of democratic representation in Wales, are off limits. The commission is required to consider fiscal matters before it considers constitutional matters when the nature of political and legislative devolution should, I think, determine the appropriate fiscal devolution.

The Barnett formula provides nearly 50% of public expenditure resources in Wales. It is comprehensively discredited. This was stressed in the Welsh Government’s response to the Silk commission consultation, and a while ago a Select Committee of your Lordships’ House provided a comprehensive and devastating analysis of the inadequacies of the Barnett formula. The funding provided by the Treasury to Wales is computed on the basis of changes to spending in England in policy areas that are devolved to Wales and the extent to which they are devolved to Wales, and on the size of the population relative to that of England. So resources provided to Wales follow political decisions and events that occur in England. Notoriously, the Barnett formula is not a needs-based formula, in contrast to the principles on which resources are allocated to local government, social security spending and health spending. The Barnett formula is bizarre and unjust, and it makes a mockery of the principle of devolution. The effect of per capita funding under the formula has been what the noble Baroness referred to as the Barnett squeeze. Wales receives less than if it were an English region. GDP per capita in Wales in 2007 was 77% of the UK average, but Wales received only 8% above the UK average. Holtham, which examined these matters pretty definitively, found that Wales had relative need of 115 per capita on a scale in which England was 100. Wales is poorer on all the significant indices: unemployment, child poverty, social security claims, disability, housing, education, health and mortality.

Poor people in Wales, including unemployed under-25 year-olds in the Alway and Ringland estates in Newport, whom the Prime Minister thinks ought, in due course, to cease to have housing benefit, are subsiding Scots living in wealthy suburbs. Holtham told us that Wales, which has less than 6% of the population of England, is short-changed by a figure in the order of £300 million. I cannot overstate the importance of this issue to Wales. There is no statutory basis for the Barnett formula, which is opaque in its process and has no independent audit—it is a disgrace.

The Government have hitherto set their face against change to the Barnett formula. Why? For reasons of political cowardice? The Conservative Party had nothing to lose in 2010, when it was set on finding every means possible to reduce the deficit, by tackling the problem of the overpayment of some £4 billion to £5 billion to Scotland under the Barnett formula, but mysteriously it did not do so. Was it because Liberal Democrats representing Scottish constituencies held it to ransom or is it simply a product of intellectual indolence in the Treasury?

I agree with almost everything the noble Lord says, but in fairness he ought to deal with the point that the Select Committee report was to the previous Labour Government, who were equally unwilling to address this issue.

The noble Lord has, as so often, a telling point. I do not disagree with him at all. I am pleased that discussions are now taking place between the Government of the United Kingdom and the Government of Wales. I hope that they will be fruitful, because for Wales reform of the Barnett formula is more important and urgent than any fiscal devolution. At a very minimum, as the noble Baroness said, there should be a floor in the block grant so that it does not fall below the level that would be provided under the English needs formulae. Of course, we need a properly developed needs-based formula for the block grant.

The coalition is obsessed with cutting public expenditure, deflating an already depressed economy. These issues are hugely important for Wales.

It is right in principle that if legislative powers are devolved, then tax-raising powers ought also to be devolved, including a power to vary levels of taxation. This satisfies the principle of accountability and will make for more responsibility and better value for money. It is appropriate that a Government elected by the people of Wales should have discretion to use resources as they judge appropriate for the benefit of the people of Wales. As the noble Lord, Lord Forsyth, suggested too, these considerations ought to have been brought to bear at the very outset of the process of devolution.

What, however, would happen in practice if tax-raising powers were devolved? Wales needs more public expenditure or, at any rate, a less drastic reduction in public expenditure. It needs that if it is ultimately to be able to reduce the disproportionate size of the public sector in Wales. It needs to be able to invest in education and infrastructure and in a strategy to support the development of new leading private enterprise sectors in Wales. What Wales does not need is more and extra taxes laid upon people and businesses. I do not think anybody in Wales ought to nurse the illusion that the block grant would rise to compensate for tax cuts that might be introduced under fiscal devolution in Wales.

So, which taxes ought to be considered? Income tax is perhaps the prime candidate, but the power to raise or lower income tax by 3p in the pound would be a poisoned chalice. The Government of Wales have not sought that power. No doubt they would not refuse it if it were thrust upon them, but would they use it? I think it no more likely that the Government of Wales would than the Government of Scotland.

Then there is corporation tax, but there are problems defining Welsh companies. Holtham found that the only realistic way in which one might be able to devolve powers in relation to corporation tax in Wales was by reference to the number of people employed by Welsh businesses, but we do not want to create an incentive for Welsh employers to reduce the number of people that they employ. There is a broader principle. Competition between the territories of the United Kingdom to offer a lower rate of corporation tax might well not be in the interests of the United Kingdom as a whole.

I will not run over the whole litany of alternative taxes that noble Lords have already mentioned, but if there is to be fiscal devolution then choices have to be made from among the options of business rates, council tax on second homes, stamp duty land tax, capital gains tax on land and property, landfill, aggregates levy, air passenger duty, and so forth. If we examine the scope to use such devolved powers, we again run up against the problem that tax increases would be damaging to business and prosperity in Wales. The Welsh Local Government Association is right to insist that there needs to be a rigorous examination of the merits of devolving any one of these.

Borrowing powers seems a much simpler issue, whether for capital or to offset the volatility of revenue that would be consequent on Wales setting its own tax levels, but this is also excluded from the terms of reference of Silk. It was not, however, excluded from Silk’s consultation, nor from the responses. It is more attractive, but would Welsh Government bonds be underwritten by the Government of the United Kingdom? Is it realistic to suppose that there can be Keynesianism in one small country called Wales? How can fiscal devolution be a reality within a meaningful macroeconomic strategy for the United Kingdom?

The terms of reference of the Silk commission are very restricted on constitutional matters. I simply say that the constitutional matter that is most pressing and important for the people of Wales is the representation of the people of Wales in the Parliament of the United Kingdom. The coalition has legislated to reduce the number of Westminster constituencies for Wales by 25%. The voice and the votes of the people of Wales are to be very substantially reduced, as is the quality of the representation of the people of Wales because of the absurd exigencies of the redrawing of the boundaries. Therefore, I hope that Welsh Liberal Democrat MPs will not hesitate to vote down the proposals to reduce the number of constituencies.

I hope also that people in Wales will consider the issue of an elected second Chamber because if there are to be Senators for one vast Welsh constituency, wandering round undermining the work of Assembly Members and Welsh Members of Parliament without any accountability, and they are to be Members of a second Chamber that is going to be much more assertive in fiscal matters, then they will find that this reform is travelling in the very opposite direction of the devolution that they want.

The proper considerations are how to improve the accountability of the Welsh Government; how to provide funding commensurate with the responsibilities that are devolved, having first defined those; how to ensure a fairness of distribution of money across the United Kingdom; and how to strengthen, not weaken, the coherence of representative government across the United Kingdom. Is there any resting point for devolution? These are issues for everyone, not just for the people of Wales.

My Lords, I thank my noble friend Lady Randerson for introducing this debate. Secondly, how refreshing to hear from the Labour Benches a call from the noble Lord, Lord Howarth, to change the Barnett formula. The Labour Government were there for 13 years, and they did nothing at all about this revision, so I hope that his voice will carry in the chambers of the Labour party.

I also suggest that in Wales it is not revolution; it is evolution. We tackle things thoroughly. We might not always be as incautious as others want us to be. Some 120 years ago Cymru Rydd, Wales of Tomorrow, had people such as Lloyd George and Tom Ellis at the helm. They dreamt their dream, and that dream was home rule for Wales. That did not come immediately, and even today it has not come to the extent that some of them would have liked. I know that the noble Lord, Lord Wigley, and my noble friend Lord Thomas were there on the night when the referendum result came in from Carmarthen in 1997. There I was in the BBC studio in Bangor and we were losing, until all of a sudden the voice from Carmarthen said that we were to have our Assembly. The dream of those people 120 years previously had been realised.

There has been gradual development over the years. The distinguished Huw T Edwards, the first chairman of the Council for Wales and Monmouthshire, who was originally from Penmaenmawr but latterly of Flintshire, contributed so much. What a debt we owe to the first Secretary of State for Wales, Jim Griffiths. Things have happened gradually, but they have been made to happen by people who knew where they were going. There were times when the waters were rather still, but then we had Welsh disestablishment.

Over the years we have had legislation dealing with courts, development, language, education and broadcasting—all of these came in time. We owe those who fought for them—and I am sorry that I was not always on their side—a great deal for their efforts over a century to ensure that Wales remains an independent country with its own culture and its own contribution to make. I would love to mention them all. I heard a sermon on Sunday that spoke of “a mighty cloud of witnesses”. In the history of Wales we have had just such a mighty cloud, and some of them are in this Chamber today. We owe them and others a tremendous debt.

We must always search for the best and the most acceptable way forward. As I said, I well remember the first referendum, held on 1 March 1979. Four voted against for every one who voted for. Even though we had headquarters ready in Cardiff, we did not need to occupy them until the results came in 1997. I pay tribute to the Labour Government at that time who, early on in their programme, kept their promise of a referendum on devolution in Wales. A few months ago we had another referendum that approved full Assembly powers for the 20 devolved areas appertaining to the Welsh Government, and so the evolution continues. The Silk commission, deciding on future responsibility, is the next step forward—indeed, not just a step but a milestone on the road. The full answer will not come at once, but we will move ahead if we have tolerance and retain our dreams and aspirations.

I shall mention three areas that will have to be kept in our sights as we move forward, because they have financial as well as cultural implications. Last year there was an agreement between the BBC, S4C and the DCMS about the funding for television broadcasting in Wales. The time might come when the Welsh Assembly says, “We ourselves want to be responsible for broadcasting in Wales”. We have to keep the door open so that no financial agreements can strangle any move on the part of the Assembly Government to move in that direction.

The second area is water. I am sorry that my great friend Richard Livsey, Lord Livsey of Talgarth, is not with us. He dreamt a dream about water supplies in Wales. I remember debates in 2006 in the Welsh Government about how we wanted more authority over water in Wales. We have plenty of water in Wales at present but England does not need it today, although it might tomorrow. We have to decide who is going to regulate, distribute and charge for water in Wales. No new agreement must restrict the ability to discuss with our neighbours on every side of the border what we are going to do and how we are going to act in any situation.

The Silk commission notes cross-border agreements, which is the third area. This might be essential for us, especially in north and mid-Wales. Over the years I have dealt a lot with hospitals and medical centres on both sides of the border. We appreciate Alder Hey Hospital in Liverpool, which treats children’s ailments; the Walton Centre, again in Liverpool, which deals with neurological complaints; the Christie Hospital in Manchester; and the orthopaedic hospital in Oswestry—and all of them are on the other side of the border. There are financial implications, and nothing that we do must hinder the co-operation that has been a lifesaver for so many decades. There is much more to be said.

Governments change. People even change their minds. They think in different ways. We mature in different ways. We must always be ready to follow our dreams and think what the sensible way is to move ahead at that particular time. I thank my noble friend Lady Randerson for introducing this debate. I hope—indeed, I am sure—that it will not be the last that we hear of the Silk report in this Chamber.

My Lords, I start with an apology. I am desperately anxious to catch an early train that will get me back to mid-Wales by this evening. I have asked the noble Baroness, Lady Randerson, for her permission and she has graciously granted it. I hope that the House will accept my apology. I, too, warmly congratulate the noble Baroness on having secured this debate.

It is essential not only that there should be a commission of this nature looking at the situation as it now exists and reporting in two parts—the second part, if I remember rightly, by the middle of 2013—but that the monitoring process should be a permanent process and not a temporary act. Devolution, after all, in my submission, is a progressive process and endeavour, and one should never regard it as something that is limited to a single act or collection of acts and frozen in time. I hope, therefore, that thought will be given to having some sort of monitoring body of this nature that will continue to monitor and survey the situation from time to time.

I take the point that has been raised by the noble Lord, Lord Howarth, and the noble Baroness, Lady Randerson, about the sequence of the two parts of the report. Logically, it would have been much better the other way around: first, ascertain what powers the Welsh Assembly should have and, secondly, decide exactly how they should be paid for and who should be accountable in that regard. However, that is not the end of the world. I make the point, though, that whatever the report might say about powers, it will be wholly essential to look at the situation post-October 2014 when the Scots, in their referendum, will come to a decision about independence and possibly one or two other matters. Whatever the Scottish nation decides or does not decide will certainly having a knock-on effect and a substantial impact on Wales.

I turn to the question of powers. The first matter I will mention is of a cosmetic nature, which is that the Assembly should be referred to as a parliament, and should no longer be called “the Assembly”, because, with the referendum in March last year, the last vestiges of that sort of subsidiary body disappeared. We have a full, legislative, home rule parliament. Remembering Gertrude Stein’s line that,

“a rose is a rose is a rose”,

we should say that a parliament is a parliament is a parliament. It would be nonsense to call it anything else.

On the question of the totality of powers that have been devolved to Wales, as more than one contributor to this debate commented, the situation is completely impossible for those who practise the great vocation of the law. In Scotland or Northern Ireland, there is a complete block transfer of each subject heading, subject to some very specific and easily ascertainable exceptions. In the case of Wales, I do not know what the exact figure is, but I would guess that, by now, there are more than 700 different pieces of legislation that have to be traced, all of them like needles in haystacks. Although of course I accept that tracing them is a monumental task—I am sure that the Minister, who will be replying to this debate, will accept that—it is one that has to be tackled some day, by way of consolidation. In carrying it out one will discover various odd bits and pieces that one has assumed have been devolved but in fact have not been. It will at one and the same time be a very important and significant tidying-up exercise.

I turn for a moment to the question of finances. I believe that it is not merely one question, but, essentially, two. The first is, what powers should a Welsh parliament have over finances? The second, and perhaps even more important, question is, should it use all or any of them? It is my respectful submission that there is no earthly reason why those powers should not belong to the Welsh parliament immediately. When the debates about the establishment of the Assembly took place at the end of the 1990s, a great deal of evidence was tendered on the fiscal powers granted to some regional parliaments, and how, in western Europe, it was almost inevitably the rule that they were never used. Dozens of bodies, in fact, have those powers, but for one reason or another have decided not to use them. I am not an economist but I am a Cardiganshire man, and in Cardiganshire we are very careful about any decisions that concern money. I can well imagine that there are various pros and cons: there are possibilities and pitfalls. All I would wish would be that those powers should be in the hands of a Welsh parliament, and that we, the Welsh people, should determine whether we want to use all or any of them.

With regard to the Barnett formula, it is central to the whole situation. Whether the actual loss would be £300 million or £550 million, as the noble Lord, Lord Wigley, has calculated—and I have every reason to believe that his calculation is a valid and proper one—there is no doubt but that a vast treasure of finances has been lost to Wales over the years. If there is an adjustment that would on the face of it justify a docking of the block grant to make up for it, I would argue very strongly that one should, at the same time, take into account what one would call the proper, restituted claim of Wales in this regard. Those who belong to the great vocation of the law will know that in civil law the adage is restitutio in integrum—restitution in full. That would mean that the money that Wales has had squeezed out of it in the past 13 or 14 years should be taken fully into account.

I turn now to opinion polls. We have had scripture quoted by the noble Lords, Lord Roberts of Conwy and Lord Roberts of Llandudno. I will add the advice from the psalmist:

“Put not your trust in princes”.

I am talking about the princes of the 21st century, the pollsters, who tell us exactly what we think, or should think or wish, in relation to everything on earth. Polls can change. There has been reference to the ill fated vote of 1979. I had the responsibility of being the president of the campaign for a yes vote. I remember that, some nine months before the vote itself, the two voices were almost equal. Then, of course, as far as the yes campaign was concerned, it went steadily downhill.

I very much welcome the Silk commission. It could be a path to a more wholesome and more complete Wales. Let us hope that it will not be a silk road—that institution of massive length in ages past.

My Lords, I had the privilege of serving on an earlier commission, the one chaired by the noble Lord, Lord Richard. The report that we produced paved the way, first of all, for the transfer of legislative competence and, secondly, for the full legislative powers that were then endorsed in a referendum. I am afraid that I disagree with the noble Baroness, Lady Randerson, on her strictures about the gradual processes by which we have pursued devolution. One significant and fundamental benefit has arisen from the way in which we have processed devolution, which is that we have begun to build consensus. The noble Lord, Lord Roberts of Llandudno, reminded us of just how fragile the referendum vote was. We were bitterly divided in Wales on the issue of devolution. The gradual nature of the approach that has been taken has therefore been very important in the process of building consensus. There is, now, a growing consensus around the devolution settlement.

I am also therefore grateful for the thoughtful way in which we are approaching the issue of fiscal devolution. Although I understand the point made by noble Lords that we should first of all decide on powers and then look at fiscal devolution, we have reached a rather constitutionally illogical position. We remember the great cry of the American colonies:

“No taxation without representation”.

We have representation without taxation. There are very few legislative bodies in the world that have full legislative power but do not have any form of tax powers. There is a compelling constitutional logic in place that some kind of tax power should accompany legislative power.

The questions that arise the moment that we say that are: what and how? The Holtham report, which is very useful, is based on some interesting principles and made some observations that we would be foolish to ignore. The first, which I will quote directly from paragraph 2.9 of the report, is that,

“tax devolution that leads to tax competition may undermine a tax base and lead to too-low levels of tax for the union as a whole”.

I cannot believe that any one of us wishes to produce an arrangement that would lead to that kind of consequence. The second issue—I was particularly struck by those passages in the Holtham report that deal with the relationship between the English and Welsh economies—is that the economy of Wales is highly integrated with that of England. I was startled by the figures that the report produced: 48% of the population of Wales lives within 25 miles of the border with England, while 90% of our population lives within 50 miles of that border. There is a corresponding, very large, population on the other side of the border—something like 30%. That is in very stark contrast to the situation around the border between England and Scotland. Our border overlap is some 30%; the English-Scottish overlap is 5%. When one says that one does not want asymmetry but conformity or some sort of symmetry, one has to recognise the very different arrangements and situations that apply. Clearly, if one embarked on some tax variations, that border issue would become extremely important. We have therefore to be very careful in the way in which we handle that situation.

Nevertheless, Holtham concluded that,

“small differences in basic rates of income tax (up to around three pence) … could be sustained … without being likely to induce significant migration or changes to labour supply”.

I have, however, a different niggling question about income tax-varying powers. It is not about migration; it is about the impact on communities where incomes are below the national average, which was certainly the case with those that I represented. What would be the effect not only on families but on communities’ purchasing power if you added 3p to the existing basic rate of income tax? The noble Lord, Lord Wigley, mentioned the experiences with regional taxation in the United States. I have read quite a bit about those and know that some of them are very regressive. You have to be very careful, because regional taxes can be regressive. We must be extremely vigilant in this respect.

Before I buy either the Holtham line or the 3p line, I want a meaningful impact assessment to be made. What would be the impact of such a change on the internal purchasing power of, for example, the Merthyr and Rhymney communities of adding 2p or 3p to the basic rate? I could not say yes to the granting of such powers unless I knew what impact I was making.

We all know of Chancellors who have brought in Budgets that have had unintended fiscal consequences. I was a passionate fan of the 10p band, which benefited the constituents whom I represented. I therefore regretted it bitterly when the previous Administration abolished that band. It has left us going from 0% to 20%. If we were to add another 3% to that, one would be left to ask where marginal tax rate issues kick in. We saw a Budget in March that had unintended consequences. The Chancellor completely miscalculated the impact of abolishing, on grounds of simplification, age-related allowances. We should not embark on this kind of change without a full impact assessment. If I were to make any recommendation to the Silk commission, it would be to let us have such an impact assessment so that we can make a judgment on what taxes it would be meaningful, reasonable and sustainable to devolve.

However, as many other noble Lords have said, the fundamental issue is not tax but the Barnett formula. Politicians can vie over this—it has been said that the previous Administration ducked the issue and it will be interesting to see whether this Administration do so, too—but it is not the politicians who drew it to our attention but a very powerful recommendation of the Holtham report. Holtham argued:

“Even if our proposals for tax devolution were implemented in full, the block grant would still account for around 85 per cent of the total resources … Ensuring that Barnett is replaced by a system that sets the block grant by reference to Welsh relative needs therefore should be a priority for Wales”.

I think that most of us would endorse that conclusion, and we sincerely hope that the noble and learned Lord, Lord Wallace, whom I have known for many years and who is not a man to duck an issue, will not duck this one, too.

My Lords, in the last Welsh Assembly election in 2011, Peter Hain, the shadow Secretary for Wales, introduced the Welsh Labour Party manifesto with a call to the voters to vote for Carwyn Jones and Welsh Labour, which was fair enough, but then added:

“'But it is also an opportunity to send a message to the Tory-led Government in Whitehall: that Wales is being treated unfairly and their deep and savage cuts are hurting but not working”.

On 17 April this year, in the build-up to the local elections in Wales, for which the Welsh Government are responsible, Carwyn Jones told a public meeting in Newport:

“Vote Labour on the 3rd of May to tell Cameron and Clegg that their brutal cuts have been rejected in Wales”.

Peter Hain at the same meeting urged voters to make 3 May,

“a referendum on this unfair and disastrous budget”.

He was not of course referring to the budget of the Labour Assembly Government, a budget that was passed only with the assistance of Liberal Democrat Assembly Members. He was fairly and squarely passing the buck for the underperformance of the Welsh economy, referred to by the noble Lord, Lord Roberts of Conwy, and the noble Lord, Lord Wigley.

Labour has indeed adopted my very useful family motto, “Ar Bwy Mae’r Bai?”—“Who can we blame?” Blaming Westminster for all the ills and inequalities in Wales is only too easy. It illustrates that the Welsh Government in Cardiff escape accountability for their spending decisions. They do not want the Welsh voter to ask the questions that almost every elected body in the world has to face: “How have you spent my money? What have you done to my taxes?” Those are the questions that I would ask of the Gresford Community Council about its precept, which forms part of my council tax.

Those of us who have campaigned for devolution for all our political lives hoped to see a Welsh Government who had fiscal responsibility for both the raising and the spending of people’s money within the policy areas devolved to them—I fought on that basis in 1964, which seems rather a long time ago. That has not happened; we got the Barnett formula. As the noble Lord, Lord Rowlands, has just admitted, Labour ducked its reform.

The fundamental weakness of the Silk commission is that the Secretary of State announced when setting it up:

“The Commission will not consider … the Holtham Commission’s proposals for funding reform in Wales, including Welsh Ministers’ existing borrowing powers”.—[Official Report, Commons, 11/10/11; col. 28WS.]

Those powers were to be dealt with in a different way. I fail to see how the Silk commission can fulfil its remit to,

“examine issues of fiscal devolution and accountability in Wales and … focus on building consensus”—[Official Report, Commons, 19/7/11; col. 115WS.]

without an examination of the present system and the Holtham proposals for reforming it. How can it be possible to build a consensus in which powers to raise funds by taxation of the people or of businesses in Wales are introduced to increase accountability without reform of the Barnett formula?

Everybody agrees that Barnett is inequitable, even the noble Lord, Lord Barnett. There is consensus, from the Richard commission, to which I gave evidence in 2004, to the Steel commission and the Calman commission in Scotland. The House of Lords commission on the Barnett formula of the noble Lord, Lord Richard, of which the noble Lord was a member, said that Barnett was “arbitrary and unfair” and the Holtham commission of 2010 said that it lacked any objective justification. Holtham’s conclusion was that the Barnett “squeeze”,

“has caused the funding of devolved activities in Wales to fall below what Wales would receive were its budget determined by the various formulae that the UK Government uses to allocate resources to comparable functions in England”.

It is a formula based on crude population percentages and it takes no account of need. Noble Lords have already referred to the figures. On the basis of need, Wales should get 117% of English per capita spending and currently gets only 112%—a deficit of £400 million. Scotland should get 105%, but gets 120%. Perhaps the reason that Barnett remains is that Scotland drags its feet—like the Cardis, Scots know the value of money, and they are getting an extra £4 billion out of it. That £4 billion might fire the English to vote for Scottish independence, if they ever had a chance to do so.

A needs formula for Wales would take into account the higher levels of deprivation, the lower levels of economic prosperity, a much higher degree of rurality and the quality of public health. In addition, Barnett does not fulfil the requirements for accountability. There is no link at all between the spending decisions made by the devolved Government and the revenue that is raised and handed over to them by the United Kingdom Government. How then do you build accountability into the system, which is the declared purpose of the Silk commission?

Holtham pointed out that there are only three areas of tax that raise significant revenue: VAT, national insurance and income tax. VAT is ruled out because Europe does not permit varying rates of VAT within the borders of a member country. Gresford roads would also be choked by smugglers heading across the border to Chester, some eight miles away, as they used to be choked by people struggling over the border for a drink in the dim and distant days when our part of Wales was dry. I can tell the noble Lord, Lord Rowlands, that I know all about border issues. Increases in national insurance would impact on jobs and, in any event, as it is linked to welfare, it is not a devolved matter. The Welsh Government should be funded primarily by income tax and corporation tax. There are difficulties, of course, but they have to be worked out. The revenues from those taxes would increase as the Welsh Government succeeded in boosting jobs and industry. As my noble friend Lady Randerson—who must be congratulated on introducing this debate—said, it would be the reward for the Government pursuing successful job creation and business-friendly policies. If the Assembly Government failed and the revenues decreased, the answer would lie in the ballot box. It does not currently. As the Labour Government said, “Send a message to Westminster”.

Another safeguard would be continued equalisation funding. I agree with Holtham that United Kingdom income tax should be reduced in Wales by 50% and the Assembly given the responsibility of voting annually to raise the remaining taxes, with the safeguard that the Assembly should set a rate of 3p either side of the UK rate, a matter to which other noble Lords have referred. The excellent submission to Silk by the Changing Union project, funded by the Joseph Rowntree Charitable Trust, pointed out that the Holtham commission estimated that in 2007-08 total identifiable expenditure in Wales was about £25 billion, exceeding Welsh tax receipts by £6 billion. It said:

“This represented a fiscal deficit of 10% of Welsh GDP, although he”—

Holtham—

“suggests this gap would have more than been made up with a possible revenue equalisation grant of £27.5 billion from the Treasury based on 5% of UK population share”.

Other devolved Administrations have borrowing powers. In Wales, speedy investment in much-needed infrastructure and capital projects will stimulate the economy in both the short and long term. The Welsh Government cannot fund a long-term programme of investment out of their general expenditure. Borrowing powers are essential.

In the 1960s, I was greatly influenced by the late Professor Ted Nevin, then of Swansea University, who attacked the policy of bribing companies to come to Wales with cash subsidies. His view was that you invest such funds as you have available in creating the infrastructure of communications—road, rail, air and telecommunications—designating enterprise zones and customs-free zones, and investing in training a skilled workforce. Business must want to come to Wales for the business-friendly environment that a Welsh Government should create. That is what we hope for. That was the policy of the Welsh Liberal Party back in the 1970 general election—I know, because I wrote it—and it remains the policy of the Welsh Liberal Democrats. The Welsh Government need the funds for these long-term aims to be realised. I fervently hope that the Silk commission produces the right decisions.

My Lords, I also thank the noble Baroness, Lady Randerson, for securing this debate—a debate on a highly pertinent and relevant matter.

The Silk commission appears to be on track to complete and publish part 1 of its work in the autumn of this year. I tend to agree with the noble Lord, Lord Elystan-Morgan, that parts 1 and 2 are the wrong way round, but so be it. If the commission does reach the conclusion of part 1 by the autumn, it will then have to be prepared to offer recommendations on a package of powers to improve the financial accountability of the Welsh Assembly. I can well imagine that whatever those recommendations are, they will receive considerable support. However, part 2 of the commission’s work, reviewing the powers of the Assembly, is likely to be much more contentious, and the linkage between part 1 and part 2 is inseparable. Businesses of all sizes and shapes can be severely hampered by uncertainty, which is disliked, and any question of tax-varying powers is also disturbing. The Holtham commission, which has already been quoted today, recommended measures in regard to income, property, land and minor taxes, but it also proposed exploratory discussions with the United Kingdom Government in regard to corporation tax.

I shall briefly highlight two or three submissions to the Silk commission which are at variance with the poll—which has been quoted on all sides of your Lordships’ House this morning—showing that 64% are in favour of tax-raising powers. I say that these submissions are at variance, but they represent quite a body of opinion. The Institute of Directors in Wales, for example, said in its written evidence that its members feared that,

“business could be seen as an easy source of cash for social or environmental policy areas that the WG has traditionally favoured”.

CBI Wales said that,

“the retention of the unitary tax system for corporation tax”,

is necessary to retain “the status quo”. The National Farmers Union Cymru said that its members had,

“a wide range of views”—

as can be expected—

“on what, if any, fiscal powers the NAfW should have”.

The NFU also said that it felt that the Barnett formula did,

“not serve Wales … well”.

Noble Lords have talked about the Barnett formula and I am going to say a little more about it. If we do not address the Barnett formula, we will simply be playing round with the deck chairs. If we do not know the baseline, what is the point of talking about anything else? We have no national accounts, and the tax take in Wales is not published at the moment. That has got to be done. If we do not have a satisfactory baseline, we will only be playing about with those deck chairs, as long as they exist.

The Barnett formula is the elephant in your Lordships’ Chamber, in the Welsh Assembly Government, in Wales and in Scotland. All your Lordships would agree that Wales has suffered, as was amply illustrated by your Lordships’ Select Committee in its report published in July 2009, which has been referred to. I was privileged to serve on that committee, which the noble Lord, Lord Richard, so ably chaired. Its first witness when we were taking evidence was none other than the noble Lord, Lord Barnett. I will quote from the noble Lord’s opening statement:

“The system I decided to use at that time to change was that any increase or decrease in the overall budget for public expenditure for the whole of the UK should be divided amongst the regions on a population basis which was roughly 85 per cent England, 10 per cent Scotland and 5 per cent Wales. Northern Ireland was taken as the same at 5 per cent but of course in Northern Ireland's case they got a lot more than that for a variety of reasons which will be fairly obvious”.

A few minutes later he said:

“I thought it might last a year or two before a government would decide to change it. It never occurred to me for one moment that it would last this long”.

It is now 35 years later and it has lasted this long. It is a totally inadequate way in which to block-fund the constituent nations of this Union. If we do not, as I said earlier, address the inequalities quickly and expeditiously, I cannot see how any meaningful changes can be agreed and implemented to a baseline which is demonstrably not fit for purpose.

It is my belief that both the previous Government and the current Government recognise—of course they do—the grave seriousness of the problem, but there seems to be no political will to address and resolve it. There are reasons why the previous Government backed away and reasons why the current Government back away. I am sure they do not have very much thought to agree with what may happen in Scotland in 2014, with the referendum. However, they are just putting off the inevitable. It has to be done.

All my life, throughout my education, I had impressed upon me—and I firmly believe and have upheld it—the great virtues of an unwritten constitution. I have in these past few years come to realise that the virtues seem to be rather less than the obvious problems and faults that now emerge in the continuous way in which the constitution is added to, bolted on to and changed in this piecemeal way. It has been mentioned already, but these continuing piecemeal changes are such that we are in urgent need of a national United Kingdom convention to consider the governance of England, Scotland, Wales and Northern Ireland in the 21st century and where we have got to. Asymmetric devolution: so crazy when you think about it. Then we have the problems of the north-east of England, which I was well aware of when I was on the Barnett Formula Select Committee. The rest of England increasingly feels that it is somehow missing out. It is not quite sure what it is missing out on, but it is missing out. Federalism, in some shape or form, is becoming increasingly attractive to me. It could address what I believe are the well-founded concerns of the inhabitants of this United Kingdom.

My Lords, I thank the noble Baroness, Lady Randerson, for bringing this debate before us today. It gives us the opportunity to debate the important topic of the Silk commission’s remit while we await the report on part 1, which I understand will be published in late autumn. I thank all noble Lords for their contributions. It has been a typical Welsh debate, but I welcome the contribution of the noble Lord, Lord Maclennan, who is a non-Welsh Peer but all the more welcome. I thank him for his contribution.

Many contributors have said that we are on a journey of devolution—it is an evolution, not a big bang. We have had to take this step by step and, as my noble friend Lord Rowlands said, it is about building consensus on the way. I was there on the night we awaited the Carmarthen result, holding our breath. We certainly got that result and it was, for most of us, a great cause for celebration. Today’s debate gives me the opportunity of laying out Labour’s comments on the progress that has been made by the Silk commission, as well as our priorities regarding the two parts of the commission’s remit: on the devolution of fiscal powers, which would improve financial accountability and the powers of the National Assembly for Wales; and to recommend modifications to improve current arrangements.

The commission is due to report on part 1 in the autumn and, so far, it seems that the commission has been very well received across Wales. Individuals and organisations across the country have engaged constructively via written or oral evidence, or through attending one of the commission’s meetings—although, as my noble friend Lord Anderson said, they have not all been very well attended. On part 1 of the commission’s remit, we are clear that the Welsh Government should have borrowing powers so that they are able to invest in infrastructure. This is especially important given the 41% real-term cuts that the coalition Government in Westminster have inflicted on the Welsh Government in Cardiff Bay.

Many noble Lords have talked about the poll conducted by ICM recently, in which eight out of 10 people supported the idea of granting the Welsh Government borrowing powers. I think that all noble Lords have said that that is where we should be going. The poll suggests that this proposal is likely to have the wide support in Wales that, as I am sure all noble Lords will agree, is essential for any change. The Welsh Government are the only elected institution in the UK, at any level, that do not have borrowing powers. As other noble Lords have said, even community councils in Wales have that power.

One striking result of the poll was the level of support for giving the Welsh Government the power to borrow, especially for capital projects such as schools, roads and hospitals. It seems that the Welsh people are happy with the nudge taxes we have been talking about, such as the carrier bag levy, which has proved such a success and has altered people’s behaviour, with an up to 90% fall in the usage of carrier bags. This was not a tax—the Welsh Assembly does not benefit financially from it, as the money goes to charity—but we have benefitted environmentally.

In a statement on 17 July, in reference to the opinion poll, Paul Silk, the chair of the commission, said:

“A majority of people believed that if the Welsh Government is given responsibility for taxation and spending it would be more accountable, the economy in Wales would be stronger, and public service would improve”.

It was also clear that people wanted to be consulted on the devolution of taxes such as income tax through a referendum. I think we would all agree that in those circumstances a referendum would be essential—many noble Lords have spoken about the difficulties of having an income tax in Wales.

In a Statement to the Welsh Assembly in June, the First Minister, Carwyn Jones, set out the Welsh Government’s position on financial reform and called for a comprehensive reform of Wales’s financial powers. He said that landfill tax, stamp duty, the aggregates levy and air passenger duty could be devolved to Wales as part of a new package of fiscal measures, but that the priority remains the reform of the Barnett formula, and that the Welsh Government should have the same borrowing powers as the other devolved nations. As the First Minister said in an earlier statement:

“We can’t go ahead with fiscal devolution without the funding being addressed otherwise we risk locking ourselves into the current Barnett formula which is to our detriment”.

This is the key question that needs to be addressed. In the mean time, we support the immediate introduction of a Barnett floor, as the Holtham commission recommended, while we await a long-term solution. This would stop any further escalation of Wales’s underfunding problem in future years. I understand that there are ongoing intergovernmental talks with the Chief Secretary to the Treasury, Danny Alexander, and the Welsh Finance Minister, Jane Hutt, with the aim of finding a fair funding settlement for Wales which includes discussion on the Barnett floor. Can the Minister say how these talks are progressing?

On the devolution of tax-varying powers, we believe that there may be some value in devolving some of the taxes under consideration. As I said earlier, the First Minister gave us the examples of air passenger duty, stamp duty, landfill tax and the aggregates levy.

As for phase 2 of the commission, it is regrettable that one of the key issues that the Silk commission might have considered—the electoral arrangements for the Welsh Assembly—was considered not by the commission but rather in the Green Paper on electoral reform which the Secretary of State for Wales published recently and was debated in Grand Committee on June 18. In fact, the issue that we are debating today is notable for being the one constitutional issue where the Government have adopted a broadly consensual approach. On other constitutional matters there has not been such a consensus—such as the review of parliamentary boundaries which, if the proposals go ahead, will see a 25% reduction in Welsh representation, 10 fewer MPs, a weakening of the Welsh voice in the other place and, of course, the proposed changes on how the Welsh people elect their Assembly Members. Far greater dialogue should have been taking place with the Welsh Government and the Secretary of State on this matter, rather than the “top down” approach.

Its seems that the coalition Government are far more interested in these constitutional matters than they are in addressing the real issues facing families in Wales, such as the high cost of living, an economy in recession and high unemployment. So while we note the good progress that the commission is making and that its voice is important, it is not our top priority. Jobs and growth are our priority. Today’s unemployment figures for Wales stand at 9%, and an increase of 2,000 more people without jobs means more heartache for Welsh families. Commenting on these figures, the Secretary of State for Wales said that she was “disappointed but not surprised”, and urged firms to seize the opportunity offered by rail electrification. While we welcome these announcements, it will take time for jobs to materialise. In the mean time, what seems to concern the Secretary of State is the consultation on the electoral arrangements for the Welsh Assembly, and the Commission on Devolution in Wales, neither of which will provide jobs for Welsh people now.

The Secretary of State for Wales met with the Silk commission this week to receive a report on what progress is being made. Can the Minister tell your Lordships’ House the results of that meeting? I hope that there will be an opportunity to have a fuller debate when the commission completes its work. We can then see what the recommendations are, what the Government’s response will be and, more importantly, what the Welsh Assembly and Welsh Government’s views are. I suggest to the Minister that if we do have a debate on the recommendations—as we have had a two and a half hour debate today, and I think that we could have gone on longer, perhaps a lot longer—perhaps we could have a five-hour debate next time so that we can explore everything and have the time to put our views on what we think of it. In the mean time, I look forward to the Minister’s response to our debate today.

My Lords, I start by joining others who have contributed to the debate in congratulating my noble friend Lady Randerson on securing it. It has been a welcome debate with welcome contributions from all sides of the House. I certainly know from recent debates in the Moses Room that there has been an appetite among a number of noble Lords who have contributed today for a debate on a Welsh issue in your Lordships’ Chamber. I therefore welcome this particular debate, which is very timely. I also welcome the constructive tone of my noble friend Lady Randerson, who herself had distinguished service in the Welsh Assembly, and in the contributions from noble Lords in all parties and the Cross Benches.

The Commission on Devolution in Wales, commonly known as the Silk commission, was set up by my right honourable friend the Secretary of State for Wales in October 2011 to review the present financial and constitutional arrangements in Wales. The commission has met nine times to date, most recently last week in Cardiff.

The noble Lord, Lord Howarth, queried the commission’s terms of reference. It is fair to point out that the Government sought to work collaboratively—indeed, succeeded in doing so—with the party leaders in the Assembly to establish the commission. It is supported by all four parties in the commission. The terms of reference were agreed by all four party leaders in the Assembly. They are similar in many respects to many of those of the Calman commission on devolution, on which I was privileged to serve during the previous Parliament. However, the Silk commission has a considerable benefit over the Calman commission as it has buy-in from all parties in the Assembly. Rather regrettably, the Calman commission did not have buy-in from the SNP Government in Scotland when it deliberated.

As has been indicated, the first part of the commission’s remit concerns improving the financial accountability of the National Assembly. The commission is looking at the case for devolving tax-raising powers to the Assembly and the Welsh Ministers. While Members of the Assembly are accountable to the electorate via the ballot box every four years, the Welsh Government and the Assembly as a whole are not accountable to Welsh electors for the money that they spend. They simply spend what they are given. This point was very graphically made by a number of contributors to the debate, not least my noble friend Lord Thomas of Gresford and the noble Lord, Lord Rowlands, who talked about representation without taxation.

The public, it is fair to say, have placed their trust in the devolved institutions in Wales in the 13 years since they were established. During that time, the Assembly has been seen to mature, culminating in the overwhelming yes vote in the referendum on further law-making powers in March 2011. However, as my noble friend Lord Roberts of Llandudno graphically reminded us, the original vote in 1997 was on a knife edge. I remember watching it on television in the small hours of the morning. The point made by the noble Lord, Lord Rowlands, is important: over time a consensus has emerged. That is probably reflected in the fact that all four parties were able to agree on the terms of reference and the setting up of the Silk commission.

However, the financial accountability of the devolved institutions in Wales has not changed. That cannot be right. My noble friend Lord Roberts of Conwy drew attention to the fact that existing bodies such as the National Audit Office and the committees of Parliament already exist. Obviously there is a role for them, and perhaps it is a role that has not been developed as much as it could be in achieving greater accountability for the way in which money is spent. With power comes responsibility. With the powers that the Assembly has acquired, Welsh Ministers should be responsible not just for spending the money but for raising some of the money needed to pay for the decisions which they make.

A number of comments have been made about the survey carried out by ICM on behalf of the commission and published earlier this week. It appears that the Welsh public agree with the need for greater accountability. I share my noble friend Lord Roberts of Conwy’s view that it is not always clear precisely what was said, given that a number of the findings do not seem to quite add up. Nevertheless, there was quite a clear finding that 66% of those surveyed were positive about the Welsh Government having the right to change the level of taxation in Wales, and 56% believed that doing so would make the Welsh Government more accountable.

The commission itself has a wealth of experience, being chaired by Paul Silk, a former clerk in both the Assembly and this Parliament, and comprises nominees from each of the four political parties in the Assembly: Sue Essex, the Welsh Labour nominee; Nick Bourne, the Welsh Conservative nominee; Rob Humphreys, the Liberal Democrat nominee; and Dr Eurfyl ap Gwilym, the Plaid Cymru nominee. In addition, there are two independent members, who are equally experienced: Dyfrig John CBE, chairman of the Principality Building Society; and Professor Noel Lloyd CBE, former vice-chancellor and principal of Aberystwyth University.

As we have debated, the commission has been looking at the possible tax and borrowing powers that could be devolved to the Assembly and the Welsh Government. These include powers in relation to landfill tax, air passenger duty and stamp duty, but they are in no way limited to those taxes. The commission’s terms of reference require it to make recommendations that are likely to have a wide degree of public support. In announcing the commission, my right honourable friend the Secretary of State for Wales acknowledged that it would have to consult widely to secure that support, not just in Wales but throughout the United Kingdom.

The commission’s call for written evidence closed in February this year and there has been a series of public meetings throughout Wales, starting in March in Swansea, ending in Flint in May and including every local authority in Wales in between. The commission has received written and oral evidence from a number of cross-border bodies—some referred to by the noble Lord, Lord Rowe-Beddoe—such as the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses. It has also held drop-in sessions to allow representations from Members of your Lordships’ House and of the House of Commons.

Further afield, the commissioners have met legislators and interest groups in Scotland and Northern Ireland to discuss the implications of ongoing developments in these countries on the commission’s work. These included, in Scotland, Sir Kenneth Calman, Scottish Government officials, members of the Scottish Parliament’s Finance Committee; and in Northern Ireland, the First Minister and Deputy First Minister and the Committee for Finance and Personnel.

I have no doubt that, in addressing its work, the commission will take into account some of the very important considerations that have been raised during our debate: issues such as tax competition and—as mentioned by my noble friend Lady Randerson and graphically illustrated with figures by the noble Lord, Lord Rowlands—the practical problem of the percentage of the population living very close to the Welsh-English border. This is much greater than the equivalent on the Scottish-English border, which itself brings its own implications and considerations when looking at tax. Indeed, the noble Lord, Lord Rowlands, mentioned the impact of using a tax-varying power of 3p in the pound on the purchasing power of poorer communities. That is the sort of consideration that one would expect that the commission might take into account.

As I said, the commission is expected to report on part 1 in late autumn this year, and the Government will consider its recommendations very carefully. The noble Baroness, Lady Gale, asked for a further debate. As she knows, that is not in the gift of Ministers, but no doubt the usual channels will look at this. My own view, and clearly that of the opposition Front Bench, and I am sure others in the Chamber too, is that it would be useful. Once we have some concrete proposals, having a debate would be a useful part of considering them.

My noble friend Lord Roberts of Conwy asked about a referendum. We think that this is probably jumping the gun at the moment, given that we do not actually know what the proposals might be. However, it is obviously an issue that would have to be considered in view of any decisions which the Government came to on the commission’s findings. Certainly at the moment, we believe it is premature.

After publication of part 1, the commission will begin work on part 2, which will look at the powers of the Assembly and modifications that may be needed to the boundary between what is devolved and what is non-devolved. The aim here is to simplify the settlement where possible and to make it work better. Again, the commission will need to consult widely and make recommendations only where they are likely to have a wide degree of public support. As we know, the Assembly has powers in 20 devolved areas, and it is for the commission to decide where there is a requirement to tidy up the boundary of the settlement. Any further changes to the settlement must be right for Wales and for the United Kingdom as a whole. In the course of this debate, we have heard references to water, prisons, police, local government finance and broadcasting. I do not think that there will be a shortage of matters for the commission to consider, but it would certainly be inappropriate to comment on these at this stage.

My noble friend Lady Randerson also talked about the structures of the different devolution Acts. There was a difference between the Scotland Act and the original Wales Act, subsequently the Government of Wales Act; and a different settlement again in the Northern Ireland Act. I did not wholly agree with the noble Lord, Lord Elystan-Morgan, when he said that the reservations in the Scotland Act were all relatively simple. Part of my job is to look at these regularly, and sometimes it can be quite difficult to interpret them. Indeed, a case has recently been referred to the Supreme Court on the extent of some of the reserved functions, so it is not straightforward.

The Minister will have noticed that several noble Lords raised the issue of borrowing powers. He is coming to that in a moment, I gather. When he does, will he address the question of the Welsh Assembly’s existing powers to borrow via the Welsh Development Agency Act? The problem is that the full sum is placed against the DEL allocation by the Treasury. If that could be lifted, it would enable that power to be used as it is now available in Scotland.

Almost on cue, I was about to turn to a number of the specific points that noble Lords raised in the course of this debate. What was described by at least one noble Lord as the elephant in the room is the Barnett formula. This, of course, is not part of the remit of the Silk commission, nor of the Calman commission.

I know it will disappoint noble Lords, but the Government made it very clear in the coalition agreement that the priority is to stabilise the public finances and that no replacement to the Barnett formula will be considered until the nation’s finances are back on track. However, I could not fail to hear the comments of everyone who contributed to the debate, I think without exception. Someone pointed out, although admittedly not in the context of what appears in the coalition agreement, that the Secretary of State for Wales had said that the Barnett formula was coming to the end of its life. However, I reiterate that the Government’s position is that the priority must be the stabilisation of the public finances.

The Minister has said that the Barnett formula will be reconsidered only when the economy is back on track. Recently, the Prime Minister said that austerity will last until 2020. Does that mean there will be no substantial revision of the manifest injustices resulting from the formula until that time?

My Lords, I have described what was said in the coalition agreement for this Parliament. I do not think that anyone would be wise enough to predict the policy of any Administration, of whatever hue, in a subsequent Parliament. My noble friends Lord Forsyth and Lord Roberts of Llandudno were right to point out that the previous Administration did not address this either. Indeed, in their response to your Lordships’ Select Committee report, they stated that the Barnett formula:

“has a number of strengths”.

There is unanimity throughout this House that Barnett has to be changed. Will the Minister explain the logic of the coalition agreement? What on earth has dealing with Barnett got to do with dealing with the deficit? Surely the Government are capable of doing more than one thing at the same time. I cannot see the linkage between addressing the Barnett formula and dealing with the deficit. The Barnett formula, if it is changed, is simply about the distribution of existing resources. It does not affect the deficit in any way. When the coalition agreement was drafted, what on earth was in the minds of the four people who did it?

My Lords, I am not a mind reader. It does not necessarily follow that it is a zero-sum game, as my noble friend would consider. I have heard people make this case before and no one has suggested that it should be a “beggar my neighbour” approach, which could actually lead to an increase in expenditure.

In a debate on a commission that does not have the Barnett formula in its remit, the Government’s position is not going to change. I have indicated the Government’s position, but there are intergovernmental talks, which have been referred to, and the Government indicated that they would engage in them. I was asked a number of other questions, initially raised by my noble friend Lady Randerson. The talks between the United Kingdom Government and the Welsh Government are looking at all aspects of the Holtham reports, including the extent of convergence between the trends of devolved funding and equivalent funding for England, and how need might be best measured. The commission is not considering, as I made clear, the fundamental overhaul of the Barnett formula. However, as I indicated, it is looking at these issues, such as convergence—although at the present time it is divergence rather than convergence—and how the need might best be measured.

My noble friends Lord Maclennan and Lady Randerson asked about borrowing and the state of discussions, as did the noble Baroness, Lady Gale. The Silk commission is looking at the case for borrowing powers for Welsh Ministers as part of its consideration in part 1. The bilateral talks between the United Kingdom and Welsh Governments are looking at how the latter might best use their existing powers—I hope that this refers to the point raised by the noble Lord, Lord Wigley—which were inherited by Welsh Ministers on the abolition of the Welsh Development Agency. They are, admittedly, relatively limited, but this is part of the ongoing discussion between the two Governments. Indeed, my right honourable friends the Chief Secretary to the Treasury and the Secretary of State for Wales have each met Jane Hutt, the Welsh Finance Minister, in the past fortnight, so these talks are very much alive and active.

The noble Lord, Lord Anderson, asked how the recent initiative to encourage the banks to lend more, announced by the Government this week, would impact on Wales. The funding for lending scheme is designed to boost lending in the real economy, making mortgages and loans cheaper and more easily available to families and businesses right across the United Kingdom. Wales will be as entitled to apply and take advantage of that as any other part of the country. The scheme opens on 1 August for 18 months.

Another important point, which was raised by noble friend Lord Maclennan and then spoken to by the noble Lord, Lord Rowe-Beddoe, is that there have been a number of different commissions. They asked whether there was a possibility of taking a more strategic look. Very recently, the Prime Minister indicated that there will be a need for an open, involved and comprehensive conversation about what kind of union we want to see, and—almost 15 years after the process of devolution started in the United Kingdom—that we should consider the best way of having such a conversation. However, the Prime Minister made it clear that that should await the outcome of the Scottish referendum, which is likely to be in 2013-14. That view was reflected in at least one speech in your Lordships’ House today. We will certainly be arguing for the integrity of the United Kingdom and for Scotland to remain part of it. That is the first and foremost objective and focus of not just the Government but the Labour Party in Scotland and across the United Kingdom. The point is one that I suspect will feature in more of our debates in the weeks and months to come.

In conclusion, I indicate that in introducing the debate my noble friend asked how we might take forward the comments made in it. I certainly undertake to write to Paul Silk, drawing the commission’s attention to the fact that the debate has taken place and to the comments that have been made. It is also pertinent to say that not only to the commission but within government. Points have been made in this debate on which I am sure some of my colleagues in government will wish to reflect.

My Lords, I thank all those who have contributed to the debate. Every noble Lord who has done so has made a very valuable contribution. In particular, I thank the Minister for his informative reply.

A wide variety of opinions have been expressed but I think there is consensus that the time is now right for the Welsh Assembly to have tax-varying powers. In some of our eyes, that time is well overdue. However, I detect that some people are coming to this for the first time. The debate has revealed the complexity of the issues. However, there is certainly agreement across the board that the Assembly needs borrowing powers. Some very interesting ideas have been put forward on the convention—for example, on the future of the UK constitution. The idea that there should be a permanent monitoring commission is very interesting.

Of course, you can never get a largely Welsh group of people together without their discussing the Barnett formula. After today’s debate, the Minister is well aware of the strength of feeling on this. I shall make just one quick point of clarification: when I referred to the Barnett floor, I was referring to it as a way in which we could quickly make some progress on this issue. Something to which no noble Lord has referred today is how long it will take once the decision is made to reform the formula. It will take years, rather than months, to develop a new needs-based formula, and in Wales we need that action quickly.

Once again, I thank every noble Lord for their contribution.

Motion agreed.

UK Border Agency

Motion to Take Note

Moved by

My Lords, it is not before time that your Lordships examined UKBA, a service whose own officials said yesterday is “falling apart at the seams”. There are more than 150,000 people, including 3,900 criminals, who have been refused an extension of stay but whose whereabouts are unknown. Nor is there a strategic plan to manage these cases. The location and removal of absconders is considered a low priority for UKBA and the effectiveness of the intelligence used to support arrest visits is not measured to ensure an efficient use of resources.

The Commons Home Affairs Committee recommended that bonuses amounting to £3.5 million should be withheld from senior UKBA staff but it seems that the banks are not the only enterprises where failure is rewarded. The Prime Minister told the Liaison Committee that he believed in,

“a small bonus … that you only get if you meet some stretching targets”,

so why are UKBA staff still getting bonuses?

The failure over the missing persons is not an isolated case. Major organisational changes at Heathrow, including the introduction of team-based working, a new shift-working system and the amalgamation of immigration and customs roles, were not effectively planned and were introduced at Heathrow’s busiest time of the year. In spite of deploying extra staff to reduce the scandalous queues at Heathrow, the delays were even worse in June, only a few weeks ahead of the Olympic Games. UKBA is bringing in volunteers who will receive three days’ training instead of the six weeks plus four weeks of mentoring that UKBA staff have to undergo before they are let loose on passengers at our ports of entry. The independent monitoring board was scathing about the short-term holding facilities for children at Heathrow, which it described as “disgraceful” and “deplorable”.

Then there was the fiasco of the so-called legacy cases, which were laid aside for a variety of reasons until they reached an estimated total of 450,000, which UKBA promised had to clear by July 2011. It failed in spite of repeated assurances given by Ministers, and there are still 80,000 cases today. Mr Whiteman, the new head of UKBA following the abrupt departure of his predecessor, has said that all these cases will be resolved by the end of the year. But how can anyone have confidence in this new promise when they consider the broken undertakings of the past?

Where cases in the new archive have been processed since July 2011, nine out of 10 have been granted three years’ discretionary leave, so that they have to reapply at the end of that period and yet again after another three years. Is this an efficient way of using UKBA’s diminished resources? Staff numbers are being slashed by 22% in the five years from 2010 to 2015, which means the loss of 5,300 jobs. Asylum Casework is already understaffed, so inevitably less time will be available for individual decisions and more applicants will be wrongly refused.

The wrong way to reduce the workload is to take away the right of appeal against refusal of family visit applications. The success rate of appeals in these cases rose from 19% in 2004 to 45% in 2010 so, in future, half of all applicants who are wrongly rejected will have to reapply, at a cost of £78 for a single visit, to get the decision reversed. By the time the second application is granted, the occasion for the visit, be it a wedding or an anniversary, will be long past and there will be a stain on the person’s record, which is bound to affect any of their future applications. It is contrary to natural justice to refuse an application on the grounds that information has not been supplied, the requirement for which could not have been known at the time the application was made, as the agency is doing. It is up to the UKBA to explain clearly and unambiguously what information the applicant has to supply.

The tribunal statistics for the year to March 2012 give a stark picture of the unreliability of UKBA decisions on immigration and asylum applications overall. Fewer than half the appeals made were dismissed and my noble kinsman may be able to confirm that the 36% of appeals allowed was an all-time record. These figures show that the criteria being applied are too harsh. In addition to the incalculable personal consequences of faulty decision-making, there is also an avoidable burden on the tribunals. The Government told the Home Affairs Select Committee that they are committed to driving up their appeal win rate by improving the quality of decision-making and by withdrawing cases that are no longer sustainable. Should not the UKBA have a definite target for reducing decisions overturned by the First-tier Tribunal, and would my noble kinsman care to give an estimate of the savings if it could be reduced to, say, 20%?

In a high proportion of the cases where people lose an appeal for leave to enter or remain, the decision is taken to deport them. As an official told the chief inspector, the UKBA is operating as though,

“a decision to deport equals a decision to detain”,

despite the presumption of liberty in policy. A study by Matrix Evidence for the NGO Detention Action shows that the UKBA is wasting £377 million over a five-year period on the detention of migrants who are ultimately released. That rises to £390 million if the persons who cannot be deported are given the right to work. No account is taken of the cost of treatment for the mental and physical ill health of long-term detainees, or of their loss of productivity.

About 27,000 migrants enter detention per year and nearly 11% of them are detained for more than three months. Of these longer-term detainees, nearly 40% are ultimately released on bail or temporary admission. The right way to deal with this unacceptable situation would be to detain only migrants who can be deported within a lawful or reasonable period. This applies, for example, to prisoners who are detained at the end of their sentences, even when it is known that their country of origin will not accept them back. Where the decision to detain is based on the risk to the public, the agency should provide the evidence that the migrant would reoffend. Perhaps my noble kinsman could say whether this recommended practice has been adopted.

Some people are being deported with inadequate documentation and are being returned here by their countries of origin. As the Minister will be aware, there are serious allegations of ill treatment during deportation, though G4S was replaced as the contractor following the death of Jimmy Mubenga on a flight to Angola. Its successor, Reliance, admits that its staff are loutish and aggressive and lack respect for minorities and women. On asylum, the Minister for Immigration has received two reports from the UNHCR about errors in the detained fast track, a matter also raised by the chief inspector, who points out that one in three of those initially routed through the DFT is subsequently released.

The treatment of women in the asylum system is raised by Women for Refugee Women and in a recent report for Asylum Aid on gender-related claims in the EU member states, including the UK. Asylum Aid says that although we are often in advance of other EU countries, the UKBA rarely refers to the UNHCR gender guidelines, and practice by the courts is variable. The Minister points to the revised instructions on managing gender-based asylum claims and to a thematic review of relevant cases, but he does not mention the UNHCR guidelines. That review uncovered faults in the decision-making process, such as a lack of investigation in cases involving domestic violence and whether an applicant’s gender would affect her ability to seek state protection. According to Asylum Aid, our own guidelines are not well implemented and they do not include important procedural aspects that are found in the UNHCR gender guidelines.

Women for Refugee Women says that under the LASPO Bill the withdrawal of legal aid in non-asylum cases will undermine the availability of vital legal representation in complicated and often ill-understood asylum cases and it asks whether the UKBA will monitor the impact of LASPO to see whether its apprehension is justified. Its also says that two-thirds of the women who participated in its research become destitute during the asylum process, having to rely on charities for food. This needs to be pursued within the NGO. Our legislation requires that the special needs of asylum seekers and their family members who are vulnerable persons must be taken into account when providing or considering support, but there is no obligation to carry out or arrange for the individual evaluation of a person’s situation to determine whether she has special needs. This is a gap that needs to be filled.

Turning to LGBTI asylum seekers, the UKBA conducted a quality audit to assess the impact of the training. There seems to have been a definite improvement, with a higher proportion of these claims being accepted, but the audit uncovered some concerns. I would be grateful if my noble kinsman could say why the audit has not been published nearly a year after it was produced.

Finally, I would like to mention torture victims, who are routinely being held in immigration detention centres in breach of the Immigration Rules. This is according to a Medical Justice report, The Second Torture, which details 50 such cases. Fourteen of them have now been granted leave to remain in the UK, but only one of the 50 was released from detention pending determination of the asylum claim, as the rules provide. Two of the 50 were forcibly returned to their countries of origin and endured torture for a second time. Both managed to flee again, claimed asylum for a second time, and were detained again in the UK. One of them now has leave to remain on the basis of the risk he faces in his country of origin. All but two of those 50 in the sample have now been released, underlining the failure to house them in the community when they first made credible allegations of their torture. That would have cost £5,000 instead of the £23,000 bill for keeping them in custody for 226 days. That was the average length of time for which the 50 were detained.

The effects of wrongful detention on these torture victims were catastrophic, including attempted suicide, self-harm and hunger strikes. Five of them have now launched individual judicial review proceedings, claiming damages for false imprisonment based on the UKBA’s breaches of Rule 35. The UKBA’s response to this report is to say that it is anecdotal and based on a small number of cases. Obviously a small charity does not have the resources to carry out an investigation of every one of the thousands of asylum seekers detained every year to see whether each one has made a torture claim and been ignored. What is needed is an independent review by the chief inspector with help from independent medical experts on torture. Rule 35 is not working and has not worked ever since it was first introduced. In the face of such an abysmal record of failure extending over many years, this survey by Medical Justice is a wake-up call.

Sacking nearly a quarter of the staff, taking away migrants’ appeal rights, refusing applications without just cause, detaining people who are never going to be deported and ignoring torture claims are not the route to sorting out the enormous problems that beset the agency. The cuts should be stopped before things get even worse and the Home Office should address the many recommendations made by the UNHCR, the chief inspector, the Select Committee on Home Affairs and the many expert NGOs whose wisdom is freely available. I beg to move.

My Lords, I am most grateful to my noble friend Lord Avebury for putting the spotlight on the work of the UK Border Agency. He has given us a very thorough tour d’horizon of the many areas that have been complained about. It is also interesting to note from the business plan just produced by the agency that it recognises that,

“its management structures need to adapt”,

and that,

“the Board is taking a fundamental look at the way they work”.

I am not sure what it means in the business plan when it says that,

“increasingly we will look for opportunities to use commercial providers, overseas counterparts, voluntary organisations and community involvement to supplement the services we provide directly”.

I am not at all happy to read that the “hubs and spokes” system that operates in regions overseas will reduce 70 hubs to around 25. It seems to me that that is a recipe for disaster and will exaggerate the problems that have already arisen as a result of that system being put in place. Perhaps my noble friend the Minister can shed some light on those two general points in particular.

My interest in the work of the agency is in relation to short-term visa requirements and student visas in particular. I refer back to my short debate in January of last year when I raised a number of concerns, complaints and horror stories. I also refer to the debate introduced by the noble Earl, Lord Clancarty, in March of last year. I will not go over that ground.

It is still disturbing to read in the May edition of the Diplomat that obtaining a British visa is now so time-consuming, costly and fraught with bureaucratic obstacles that potential investors are discouraged from doing business in Britain. Student visas, however, continue to give me the most concern. The British Council has researched this and lobbied hard for flexibility but so far with little success. Apparently, only last year 50 British Council scholarship students were turned down as a result of the system.

As a particular example, I should like to cite Mexico, which is the second largest economy in the Americas after Brazil. During his recent visit to the G20, in one of his meetings with the Mexican authorities the Prime Minister stated that he saw education as the main tool to increase co-operation with Mexico. He also undertook to remove unnecessary obstacles. A new Administration is about to take over in Mexico, so it is a good moment to review the situation. Currently, 3,000 students in the United Kingdom are financed by the Mexican Government or their own families. They pay the full overseas student fees and most are doing graduate and postgraduate studies. Mexico’s National Council for Science and Technology, which is roughly the equivalent of our British Council, sends students to the United Kingdom and the United States to look particularly at scientific and technical areas. It has been a very successful story because, happily, the United Kingdom’s academic institutions compare very favourably with those of the United States.

There is no pattern of students overstaying. They all return to Mexico where they are needed as high-flyers to manage Mexico’s vibrant economy and to be the leaders of the future. Earlier this year, on an Inter-Parliamentary Union visit to Mexico, we met a group of Mexican alumni from the LSE. On another occasion, we met students who had studied at other universities throughout the United Kingdom. We were very impressed at their enthusiasm for the courses that they had undertaken and for their wish to continue to have links with the United Kingdom in whatever work they do.

Yet Mexico does not have most-trusted-country status, as do Argentina and Chile in terms of Latin America. I understand that the system of being a most trusted country in some ways eases the formalities. I do not understand why something cannot be done about this as regards Mexico. After all, we have only about 100 students from Argentina. The scale is very different. What about the future as regards Brazil? We have just signed up to a science-without-borders programme, which will bring 12,000 students from Brazil to British universities over the next few years. If, after going through the whole process of applying and being accepted by our institutions, students are faced with this all-too-rigorous visa application process and the costs involved, it can be very off-putting and certainly can seem most unwelcoming. When will a thorough review of this important aspect of the agency’s work take place?

This Government have been brave in reconsidering and reversing some of the previous Government’s policies and decisions, such as the closure of embassies in central and South America. I am delighted about the reopening of embassies in El Salvador and Paraguay. But this is true also in other parts of the world. Will the Government therefore not also consider reversing the decision to use the UK Border Agency to handle visa applications in regional centres and revert to the former practice whereby visa applications were handled with discretion and sensitivity in British embassies? I look forward to my noble friend’s reply.

My Lords, I too thank most warmly the noble Lord, Lord Avebury, for having made this debate possible. There are few people in Parliament in either House who have a more intimate knowledge of the subject and who have more consistently throughout their distinguished political career contributed to the quality of debate and the quality of information available to us all. The noble Lord deserves warm appreciation from us all.

We now are faced with acute pressure. I wish that more time was spent on examining and analysing pressures that are likely to develop and perhaps make a grave situation now seem quite mild compared with what faces us in the future. I think about the implications of climate change and the movement of people. I think about the issues of conflict, not altogether separate from the issues of climate change and what will result from it. We need far more of this analysis so that we can be prepared and not always just reacting to situations.

I always say that the first reality of life is that we are born into a totally interdependent global community. We may like it or we may not but that is the fact. Unless we face up to that, and realise that as politicians the way in which future history will judge us is how far we make a success of that membership of an interdependent global community, we are failing the nation. It is a huge challenge, which always should be before us.

We also must face up to the consequences of the way in which we manage our economic affairs. There is great emphasis on market ideology and, therefore, on the free movement of capital and goods. But we are not able—I am not suggesting that it is possible—to have free movement of people. This of course is a great flaw in the whole market theory but it also leads to great pressures. As long as there is that contradiction, there will be pressure for migration and considerable illegal migration. Obviously, people will follow resources and where they go, and economic activity where it grows.

Of course, we have to think of the management of the situation in an international context. I wish that we would not drag our feet on European institutions. I cannot begin to understand how we are going to look to the successful management of this issue without co-operating as closely as possible with our fellow members of the European Union and in ensuring that the quality of the work they are undertaking in this respect is of the highest order. There is a big challenge there as well.

The UK Border Agency is in the front line of all this. As politicians, we need to ask ourselves very often what kind of context we set for those in the front line handling this difficult issue. Do we set a context of understanding, of wisdom, of concern, and of the need at all times to preserve a commitment to justice? Or do we allow ourselves to be tempted into a seaside auction about the unacceptability of people flooding in from abroad? I am not saying that there are not great needs arising from people flooding in from abroad; there obviously are. But we need to examine the political context we provide, in which the UKBA is expected to undertake its task.

I want to underline the fact that we are dealing with people who, frequently, are in the midst of the most acute trauma. They are in mental and physical anguish. Think of children, who have been through terrible conflict, and have seen killing and maiming in their lives. Think of vulnerable adults, sometimes, travelling the world, who may have in their pocket a letter explaining that they are vulnerable but who, faced with the awe of the border authorities when they meet them, may forget even to produce the letter. There is a need to have imagination and sensitivity in all we are doing.

There is the issue of people who have suffered from torture. I have known at first hand too many cases of people who, years after the torture, are still trying to adjust to a normal life and overcome what they have been through, but are harassed—as they see it and feel it—by the way that we administer our immigration policy in an absence of imagination and sensitivity.

I do not understand the new legislation on families. We hear from the Government on every possible occasion about the importance of family, yet for some people for whom family will be absolutely indispensable in terms of their stability and ability to contribute to society, we introduce these arbitrary rules. There needs to be much more imagination about who is a suitable person to bring in as a relative, and who is not. There also needs to be much more clarity in the regulations about what is acceptable and what is not.

I particularly support the noble Baroness, Lady Hooper, in what she said about universities. Universities are going through a nightmare at the moment. There have been no less than 14 major changes in policy towards them in the past three years. We are part of an indivisible international community, and we should ensure that our communities of scholars in universities are international. It is not just a matter of making money from people coming in from outside but of enabling our own students to come to terms with the world in which they live. The quality of their higher education depends upon the presence of an international community. You cannot have world-class universities which are not international communities. There is an absurdity in putting up special barriers.

I am also worried that it is beginning to change the culture in universities. Good universities have operated as communities of mature, responsible, self-motivated people. Now we have to police attendance at lectures, whereas in a good university, as we all know, a highly motivated student may well say, “That is the lecture I’m going to, and that is the lecture I’m not going to”. There is a sort of police system that the universities are being expected to apply, in being able to account for the overseas students in their midst. This is quite contrary to the whole concept of liberal education, and is very worrying. It is also extremely expensive. When we are talking about the shortage of funds for higher education, it is disgraceful that this extra burden has been placed upon the universities.

I conclude by making this point: it is not a matter of fixing this, or fixing that. I am very glad indeed that the UK Border Agency has recognised in its business plan the issues that exist and is determined to do something about them. We should all fall in behind that and enable it to do it. However, it is a question of the culture. We read of the awful things that go wrong—we know that they go wrong too often. We have seen the letters that, with a bit of imagination, could have been written in a more sensitive, firm, clear way, but have come out in the most officious, authoritarian language, to people who are in the midst of uncertainty and trauma. There is a huge cultural challenge here.

In encouraging the UK border authority to move forward with its business plan as stated, I hope that we will stress that leadership is needed to ensure that we have a positive culture behind the organisation which is in the front line of our relationship with the world as a whole. We should be judged by this, as a member of the international community. Are we a good, decent place, or a hostile, negative place? We need to ask ourselves basic questions of that kind.

My Lords, I thank my noble friend Lord Avebury for securing this debate. He is probably the best qualified person to speak on border controls. His tireless campaigning on behalf of refugees and asylum seekers is legendary. A lot of people across the world are alive today because of his work on the rights and liberties of the individual.

Headlines in this week’s papers are unlikely to build confidence in the way UKBA conducts its business. Performance has slumped after it lost 1,000 more workers than planned. The report from the National Audit Office is devastating. It talks of loss of focus and poor performance, and of a tendency towards optimism bias in planning, delivery and reporting that has contributed to the current problems.

This is nothing new. Successive Governments must accept blame for this chaos. We have only to cast our minds back to 1997 when the incoming Labour Government found piles of unattended and lost files at Lunar House. The orderly queue of applicants awaiting immigration decisions grew to the extent that the process became unmanageable. All this happened because the number of immigration staff was reduced by 1,000 at that time. The impression given was that asylum seekers were flooding the country, and that tough new measures were required to control the flow of economic migrants, students and others who were seeking admission to the United Kingdom.

I have said before that all political parties subscribe to a fair immigration policy and fair procedures. This has never been in dispute. The policy is to admit those who are eligible and to exclude or—subject to the appropriate humanitarian principles—remove those who are not. But in any administrative system, questions arise about priorities. The administration of the immigration system is no exception.

The problem the UKBA faces is very simple. The need to exclude those who are ineligible means that checks have to be made to determine who is eligible and who is not. The greater the emphasis on excluding those who are ineligible, the more intensive the checks have to be. The more intensive the checks are, and the more complicated they are to administer, the more delay and expense accrue to those who are eligible.

Again, if the objective of excluding those who are ineligible is taken to extremes, in matters that are often not susceptible to documentary proof the risk of excluding those who are eligible to enter but lack the resources to prove it becomes serious. When we add to this the insatiable appetite by politicians to play the numbers game, is it any wonder that a culture develops over time where administrators are expected to deliver results which often lack fairness and justice in the process? The heavy emphasis on excluding those who are ineligible rather than giving prompt and sympathetic attention to the rights of the eligible has led to practices that have an adverse effect on people from the New Commonwealth, and also on refugees and asylum seekers. Often the numbers seeking admission are exaggerated to an extent that asylum seekers bear the brunt of public disgust.

We do not condone illegal immigration. Nor do we condone the entry of those who do not qualify to be here. I suspect that genuine refugees seeking admission under the UN convention are few, and the sooner reliable statistics are produced, the better it will be for building a cohesive society here. We need our Governments to proclaim at the highest level the contribution migrants make to the British economy. We need a shift in priorities towards greater emphasis on the rights of those eligible to enter the United Kingdom. This has been the principle on which Britain’s points-based migration system was introduced. The aim was to remove the subjective decision of immigration staff and to establish objective criteria so as to avoid any misunderstanding about how controls are applied. However, if the final objective is to cut down on numbers, we are back to the starting point of differential treatment offered to different countries, which is more likely to affect applicants from third-world countries.

The argument that often surfaces is about perceived economic and social costs and benefits. We tend to forget that, given that EU immigration is protected by the freedom of movement rules, successive Governments have focused efforts on more tightly controlling non-EU migration. The positive contribution that we forget is that those who benefit from education here also take back with them the soft diplomacy of democratic values which in our case is the envy of the world. No amount of overseas aid could compensate for this very important contribution towards democracy in many parts of the world.

Another matter that I need to stress relates to headlines in the press this week, such as, “Immigrants drive biggest population rise in 200 years”. The figures published by the Office for National Statistics indicated that the population of England and Wales had surged by 3.7 million in the past decade, and about 2.1 million of that was the result of the number of immigrants outweighing the number of those leaving the country. The growth in population obviously presents social challenges, but the calls for an arbitrary population limit such as 70 million are sinister and, frankly, more in keeping with a totalitarian dictatorship than Britain in the 21st century.

If the issue is immigration, the pace of change needs to be managed, but migrants bring major benefits to the country. According to the Office for Budget Responsibility last week, while zero net migration would keep population down below 70 million, it would also lead to the national debt rising to 120% of GDP by the middle of the century. This would mean that the scale of cuts and taxes increases to be borne by the UK population over the next 50 years would be tripled if we are to bring debt back under control at 40% of GDP. The economic impact of cutting migration in this way would turn the UK into a country such as Greece for most of the 21st century. We have to promote a simple message. Let us stop playing the numbers game. Let us think about what makes Britain great. It is our people, irrespective of their origin, who will produce the wealth that will sustain the country’s health, welfare, social services and pensions for years to come.

Some years ago, I was involved in looking at immigration control procedures. What became clear was that there is an appetite by the Home Office to ask questions about the purpose of a visit to the UK, but overall it puts very little faith in the answers provided by applicants. That culture seems to continue even now. I will give noble Lords an example. I was involved with the then chief constable of Sussex, Paul Whitehouse, in raising funds for the Starehe project in Kenya. We raised more than £1 million in this country. The girls’ centre opened in 2005 and provides the only free education in that country, drawing poor girls from the worst slums in and around Nairobi. The original pioneer class of 72 has swelled to 400 in just seven years. The success has been remarkable. The centre has a small farm that grows food and rears livestock. There are also beehives and a small fish farm.

Most importantly, the hub of the matter is that International Produce Limited, the UK’s largest importer of fresh produce, which is owned by ASDA-Wal-Mart, has generously offered an internship for two students from the girls’ centre to come to the UK. They applied, but their applications were rejected. They applied again to come for a shorter period, but again they were rejected. I ask a simple question: what does it say about us that when it comes to raising people out of the poverty syndrome and giving them experience with a company based in this country that is prepared to help them, we turn them down and simply do not believe them? The reasons provided for the rejection of the applications was that the entry-clearance immigration officer was not satisfied that the girls were genuinely seeking entry as business visitors for the limited period, as they had stated.

I come back to the point I made earlier. It is simply this: in order to improve in particular the quality of asylum decision-making, the Home Office should show leadership on the importance of breaking down the culture of disbelief that is particularly obvious the treatment of women. There are many who live among us in the UK who exist in a legal limbo and with the fear of forced removal. Many have fled persecution that we would struggle to imagine. Let us give a lead so that every woman who comes to this country fleeing persecution gets a fair hearing and a chance to build a new life.

I look forward to the day when I can travel through immigration controls here with the Home Office Minister, my noble friend Lord Henley, and not have to wait and provide an explanation of why I am entering the country while he walks on through.

My Lords, like other noble Lords, I thank the noble Lord, Lord Avebury, and congratulate him on obtaining this important and timely debate. In doing so, I salute his tireless and determined championing of the causes of those who seek sanctuary in this country following torture or ill treatment in their own country.

I want to concentrate on one aspect of the UKBA’s performance with which I am currently engaged: the enforced removal of those for whom entry has been denied. I declare three interests that will colour my contribution. First, as Chief Inspector of Prisons, I was given the responsibility of inspecting immigration detention centres. To my surprise—but not entirely surprising, given the number of Prison Service officers in the then Immigration and Nationality Directorate—I found that immigration detention rules were not based on UN and European Union detention rules but on UK prison rules, which are wholly inappropriate because immigration detainees and asylum seekers have not been convicted of crimes. My inspectors and I spent 18 months working with the IND, amending the rules to make them fit for purpose. My main concern was the lack of a coherent strategy, or any leadership or direction, in the immigration and asylum process.

My second interest was as an independent asylum commissioner, a commission that reported in 2009. As I had done with detention rules, we deliberately gave the UKBA the opportunity to comment on our findings before we published our recommendations. In commending the then Border and Immigration Agency for making strenuous efforts to deal with asylum claims more efficiently, we found what the noble Lord, Lord Dholakia, has just described—the culture of disbelief that persisted among decision-makers. The adversarial nature of the asylum process and the lack of access to legal advice for applicants led to perverse and unjust decisions. My belief in the culture of disbelief was proved by the then Minister, Mr Byrne, the very afternoon that we published the report. He was asked on “World at One” about the remarks that I had made on the “Today” programme. He said, “I have not read the report but I disagree with every word of it”.

The year before, on behalf of Birnberg and Medical Justice, I had written the foreword to a report called Outsourcing Abuse, in which I said that if even one of the 48 detailed cases from a list of nearly 300 alleged assaults by security guards employed by private security companies on contract to the Home Office is substantiated,

“that amounts to something of a preventable national disgrace”.

In 2010, my noble friend Lady O’Loan in her report on the dossier on behalf of the Home Secretary found that although there had been no pattern of systematic abuse by escort officers, it clearly happened, and that there was no management or training of guards. She recommended a review of the training provided for the use of force, involving annual retraining to ensure that in any case in which force is used, officers are trained to consider constantly the legality, necessity and proportionality of that use of force.

This is where my third interest is: as chairman of an independent inquiry into forced removals on behalf of Citizens UK, the largest alliance of civil society organisations in the country, which works on many issues, not just immigration. I want to concentrate particularly on the case of Mr Jimmy Mubenga, who died on 12 October 2010 from cardio-respiratory collapse after being restrained by three G4S detainee custody officers in an aircraft at Heathrow while being removed to Angola.

Two days ago, Mr Gaon Hart of the Crown Prosecution Service concluded that there was,

“insufficient evidence to bring any charges for Mr Mubenga's death … Although counsel advised that there was a breach of duty in the way Mr Mubenga was held”.

However, it was not enough to tell a jury what may have caused a person’s death, and there was,

“insufficient evidence that the restraining methods used … were, in themselves, illegal”.

He added that,

“experts suggested there were shortcomings in the training given to the security guards”,

and that the training on positional asphyxia—where the position of an individual affects their ability to breathe adequately, causing death due to lack of oxygen—and the warning signs for identifying it, were both flawed.

Moreover, although G4S had followed training recommended by the UKBA and the National Offender Management Service, which had been found to be safe and fit for purpose after official review—an official review that incidentally was carried out by the National Offender Management Service on its own techniques—was criticised by experts, as was the lack of specific training for the use of restraint in aircraft. I understand that the CPS is writing to the UKBA, to NOMS and to G4S expressing these concerns; and I ask the Minister whether copies of these letters can be put in the Library.

I have to say that in the face of all the evidence that we have gathered during our inquiry, quite apart from all the other evidence that was available, I find that CPS decision, at kindest, perverse. Passengers reported hearing Mr Mubenga cry out that he could not breathe and that the guards were killing him. There had been Home Office warnings to G4S in 2006 about the dangers of using positional asphyxia. There had been stringent criticisms by the coroner in the case of Gareth Myatt, a 15 year-old who died in Rainsbrook Secure Training Centre following the use of similar procedures for restraint by G4S guards. He, too, had called out that he could not breathe before he died. As an inquest is the only public forum in which this death can now be scrutinised, I ask the Minister to confirm that this will be conducted as soon as possible by an experienced coroner, and that public funding will be made available to ensure full support for Mr Mubenga’s family.

The Home Affairs Select Committee in another place has also investigated rules governing enforced removals, although in nothing like the same depth as my inquiry. The Government’s response has not been as full as I would hope. It confirms that all guards must be certified by the Home Secretary, which includes certification that they have received training in restraint techniques approved by the National Offender Management Service. I believe that that is perverse.

Unfortunately, time does not allow me to cover all the points that I shall present to the Home Affairs Select Committee in the report in November because I want it to follow them up, but they include the recommendation that the regulation of all detainee escort officers by the security industry authority is in line with an amendment to the Private Security Industry Act 2001, which currently excludes them. This must include not just initial licensing but annual top-up training, connected to annual training on a physical intervention skill model. Frankly the current training of security guards is not effective. If the UKBA had bothered to look beyond the inappropriate NOMS techniques, it would have found that special mental hospitals have for years rejected them in favour of those that are non-pain compliant, except in extreme circumstances when removing a weapon. Unfortunately the three special hospitals have used slightly different techniques that have never been codified, and I have written to the noble Earl, Lord Howe, about this.

I asked the UKBA to attend our evidence session, and we heard from the restraint trainer at Ashworth Hospital, who told us that not only had he done what he had done with non-pain techniques, but that the Liverpool police had asked him to devise techniques for getting people on and off crowded Mersey ferries, and that he could do the same for aircraft. Last week, the Minister of Justice announced the introduction of new minimising and managing physical restraint, formerly known as control-restraint techniques, for use in juvenile custody, recommended by a restraint advisory board set up for the purpose. This has now been reconstituted as the Independent Restraint Advisory Panel.

I asked the Minister whether the panel could be charged with similarly examining restraint techniques for the UKBA, independent of NOMS. We found that the measurement of successful returns passed to Ministers is not a qualitative process but merely counts the number of reports received from contractors. The only training received by the eight monitors who report on a contractor’s performance and the conduct of individuals was to watch a session of contractor-run training. Far from recruiting and training staff when contracts change, old ones—no doubt bringing old habits with them—are merely TUPE-ed from one contract to another. The Immigration Service Commissioner is prevented from regulating unscrupulous alleged legal advisers who exploit immigrants, and so on.

We have found good things, such as the Independent Family Returns Panel, whose procedures we have recommended to the UKBA for single returnees as well, not least because the in-depth examination of the appropriateness of return might avoid scandals, such as reported by Freedom from Torture and others, of previously tortured people who, their case being disbelieved by the UKBA, were returned, tortured again, and escaped to seek asylum once more.

My successor as Chief Inspector of Prisons, Anne Owers, coined the phrase “the virtual prison” to describe what Ministers were told by officials as opposed to what she saw on the ground. I fear that one of the most besetting sins of the UKBA, and indeed of the Home Office over the years, has been its continued refusal to listen to facts from outsiders. I just hope that Ministers will discard the former practice and listen, because it really does matter. The image of this country is presented by the UKBA, and currently too much of what we represent is being let down by procedures that, with good leadership, good management and good training, could be avoided.

My Lords, I am very grateful to the noble Lord, Lord Avebury, for securing this debate today. I would like to pick up on some of his points about the UKBA’s faulty decision-making and then go on to highlight a number of areas of concern about the role and performance of UKBA.

On 19 June, the right reverend Prelate the Bishop of St Edmundsbury and Ipswich raised in a supplementary question a concern from the churches about African Christians responding to invitations to enter this country on short visits. It seems that a new economic test was being applied to them. Able well-qualified African clergy were being invited to conferences in this country, or to visit dioceses for short periods endorsed by bishops, and were being turned down simply because their personal income was low. We all know that African clergy do not get paid very much, they are not often paid regularly, and they may not have bank accounts. In his response that day, the Minister said that he could not believe that someone who was being endorsed by a bishop could be turned away. He said:

“Certainly, we would not want that to be the case”.—[Official Report, 19/6/12; col. 1658.]

I am grateful to him for arranging a meeting of officials from the border agency with some of my colleagues from the Church of England.

I am not here to make special pleading on behalf of the church or to argue for any kind of special treatment at all, but that case illustrates some of the failings in the system and in the role and performance of the UKBA. When the right reverend Prelate sent the details of the case to the Minister, the response seemed to show a change in tenor. We were told that the applicants’ intentions and their personal circumstances, including their financial circumstances, are paramount. While the UKBA’s visa sections are able to take into account the support for an applicant’s case, they are unable to accept assurances or guarantees made by the sponsor on the applicant’s behalf. That is because such assurances and guarantees are legal unenforceable, yet the UKBA has insisted in the past that, while the economic circumstances of the individual are considered, they should not be the only deciding factor.

We appear to be in a situation where the decision-making process is at best a muddle. A report published in December last year by the independent chief inspector on entry clearance decision-making touched on that very issue. He commented that in 16% of all sampled cases there was evidence of an application being refused for failing to provide information which had not been set out in the published guidance in the first place as being required. Some applicants were refused entry as a result of failing to demonstrate a subsisting relationship with a UK sponsor despite that being neither a requirement under the rules for general visitors nor cited in the visitor guidance provided by the agency. Applicants have not always been informed of the requirement before they apply, and at the time of the publication of the report, they were not given an opportunity to provide the extra evidence once they were informed.

We appear to be in a double bind. On the one hand, people are refused entry despite having ample evidence of a strong relationship with a UK sponsor, and yet the Minister says that the UKBA cannot accept assurances or guarantees made by the sponsor on the applicant’s behalf. On the other hand, in cases cited by the chief inspector, people have been refused entry because they did not have evidence of such a relationship. As I say, this is a process and a system which is at best muddled and confused, and at worst misleading. Either it is the case that the UKBA is not applying the rules sensibly or that the rules themselves are unable to cope with the actual situations of a number of those applying for short-term entry into the UK for valid reasons, such as to further mutually enriching relationships between dioceses here and overseas.

I understand that a number of UKBA border posts have been amalgamated into larger regional centres with fewer face-to-face interviews and more reliance on documentation. Yet if the rules on which forms of documentation are acceptable are as unclear as they appear to be, then the situation does not inspire confidence in the UKBA’s ability to make accurate judgments.

Nor do such cases appear to be the only areas of concern in relation to the performance of the UKBA. In his report last December, the chief inspector found evidence of poor decision-making, with errors being found in over a third of the cases sampled, alongside a failure to consider relevant positive evidence, misinterpretation of supporting evidence, misleading information about an applicant’s right to appeal, concerns about internal reviews and insufficient retention of supporting documentation by the UKBA. In a later report, the inspector spoke of poor communication, poor managerial oversight and lack of clarity about roles and responsibilities, together with poor communication between the agency, Ministers, managers and operational staff.

There are other areas of concern as well, the first of which is the practice of dawn raids. We believed that dawn raids made by the staff of the UKBA were a thing of the past, but last week another case of a dawn raid being undertaken by UKBA officers was reported. A family of four, including children aged 10 and two, together with their mother who was 31 weeks pregnant, were forcibly removed from their home. The result was that the pregnant mother was hospitalised while the husband and children were removed to the Cedars detention centre in Sussex. That is not an isolated case. In April, another family was subjected to a dawn raid, resulting in another pregnant mother being restrained by four officials and the family’s removal to a detention centre. Other examples can be given. A representative of the Scottish Refugee Council expressed grave concern about these matters:

“After the UK Government promised to end child detention in 2010, the Home Office undertook to improve the way in which children and families were treated in the asylum process. The new Family Returns Processes (FRP) that they have put in place was intended to treat families with children more humanely if their case had been refused. We have grave concerns about how this process is being rolled out in practice”.

It is absolutely vital that UKBA staff working on the ground treat families with respect and care at all stages, particularly at the end of the process when families may be at their most vulnerable. Indeed, that April dawn raid took place within days of the director of asylum at the UKBA telling a conference in the same city that the agency was “more compassionate” with a process that was fair.

A second further area of concern is the administration of the legacy programme for those whose asylum cases have taken several years to be heard. In my own city of Newcastle I know that asylum seekers in that scheme were told by letter that they would hear the outcome of their cases by the summer of 2011, and they are still waiting. A number of those people have been threatened with deportation despite their cases remaining unresolved. In the few cases where solicitors have been able to follow them through and press for a resolution, some were granted leave to remain on the basis that it would be for a period of only three years, while those whose cases were dealt with before the summer of 2011 were in nearly every instance given indefinite leave to remain.

There are other areas of concern, including the disparity between the published timescales for interviews and decisions, and what is actually happening. People are being detained for far longer than the stated timescale —for 13 days as opposed to the three to four-day period the UKBA aims to meet. The detained fast track system also appears to have insufficient safeguards to prevent people being incorrectly allocated to it. I look forward to hearing how the eight recommendations of the chief inspector are being implemented.

I could say more about the evidence that there is still child detention and about the real concerns of our universities, but in conclusion I acknowledge that this is a difficult and even fraught area for officials on the front line, as it were, and I acknowledge that some things are better than they once were. But when we add up the catalogue of errors, misjudgments, muddle and confusion, we are left with a system and an agency that is problematic. I long to see real evidence of the more compassionate and fair agency that the director claimed was the case a couple of months ago. It certainly does not look like it at present.

My Lords, I thank my noble friend Lord Avebury for giving us the chance to talk about the border agency. I pay tribute to the things he said about asylum and to what the noble Lord, Lord Judd, said about immigration policy and the philosophy that should underline it. However, I do not intend to deal with those subjects at all. I wish to put my contribution on the UK Border Agency in a wider political context. There was a time when there were two criteria that decided which political party won an election in Britain: political ideology and competence. The divisions caused by political ideology have virtually vanished, along with the philosophical struggle between socialism and capitalism. However, competence remains a deciding factor. In that, the opinion polls tell us that at the moment the Government are not doing well enough to stay in power, let alone win an election.

There can be few areas where the failure of competence has been greater than in the management of the UK Border Agency. There has been inadequate progress over the 26 months that the coalition has had responsibility for the conduct of our affairs. We now have a state of crisis, which needs emergency action to put it right. The United States took emergency action after 9/11. I had the opportunity to observe the homeland security force that protects America’s borders—and the US has a far greater problem with its long southern border. I also know Hong Kong rather well. It is another place that can teach us lessons in the efficiency of protecting borders.

I say at once that guarding our borders is part of the defence of the realm and therefore of the highest priority, especially for a Conservative-led Government. I will make some specific proposals to remedy the defects and will illustrate the defects by referring to two highly critical reports on the border agency. The first is the report of 7 February 2012 by John Vine, the independent chief inspector of the border agency. The second is the 26 June 2012 response of the Government to the 17 January 2012 report of the House of Commons Home Affairs Committee. I shall refer also to some Written Answers that I have received on the matter over recent years.

The first question must be: why did it take 14 months for the Government to set Mr Vine to work? We all knew well before the election that the thing was a shambles. It was, after all, in May 2006 that the then Home Secretary, the noble Lord, Lord Reid, denounced the Home Office immigration department as “not fit for purpose”. What was the reaction of the Civil Service? The head of that department was promoted to head the whole of the Ministry of Defence, which he later left with an even more tattered reputation. Mr Vine concluded that the border agency had,

“poor communication, poor management oversight and a lack of clarity about roles and responsibilities”.

You cannot get more damning than that.

A point highlighted by the Commons committee was the failure to use available modern technology to protect our borders. I will give only two examples. Mr Vine pointed out that there had been no attempt to incorporate the verification of fingerprint systems—on which considerable public money has been spent—to identify any passengers trying to enter the UK using a false identity. The Commons committee complained that the iris recognition system, on which £9 million had been spent, had provided only 12 iris gates. I should emphasise that in the US iris recognition and other advanced biometric systems are widely and efficiently used.

The response of the Government to the report was breathtaking. They merely said that the iris gate was now “planned for closure” because,

“the system is close to the end of its useful life”.

My God! In fact, the failure of the UK iris system was largely due to the ill disciplined, heavily unionised border force being reluctant to use it. Meanwhile, the new facial recognition system also seems to be failing.

I was impressed with the new chief executive of the border agency, Mr Rob Whiteman, with whom I had a long chat. However, he has a huge challenge. The problem with the staff of the border agency is not just that they are of indifferent calibre; they have been shown to be seriously and systemically corrupt. As the Minister knows, because he gave me the Written Answers, some 30 Home Office staff members have received heavy prison sentences for misconduct in public office. The great majority were from the border agency. It was a disgrace.

There needs to be a much tougher recruitment policy, focused primarily on employing those most suited to the crucial role of protecting our borders. I have looked at the application forms for jobs in the agency. They seem more concerned with social engineering, for example ensuring that staff reflect diversity of sexual orientation, than with ensuring that those recruited have the necessary integrity, motivation and discipline. I believe that border force staff, who are not of the integrity that we should demand, should remain state employees. In my view there must be no question of hiving off this crucial role to the private sector; we have already seen enough disasters on that side.

I am prepared to believe for the moment that the Government were right to split the border force from the rest of the border agency, but it is a pity that command should have been given as a temporary appointment to a retired chief constable who is due to leave the job in September. The border force should be reformed as a highly trained, tightly disciplined uniformed force that is not allowed to take industrial action. It should have a clear command and control hierarchy, as do the military and the police. Its staff should be closely vetted and in general should have only British nationality. It should be under the close control of Ministers who represent the elected democratic Government.

At the moment I feel that far too much is left to the control and guidance of Home Office officials. The commander of the border force should have the same link with Ministers that service chiefs have with Ministers in the Ministry of Defence. At this time, when Britain’s Armed Forces are being reduced, it should be possible to recruit some first-class officers who are experts in administration, logistics, planning and management to fill some of these key roles. Whenever there is criticism, Ministers claim—I hope that the Minister will not do so this time—“Oh, it takes time to get it right”. The Government have had over two years, and time is now running out.

I turn to the question of passports. For years I have urged that the Government should always know what other passports UK passport holders have. There should be a strict obligation to divulge full details to the British passport authorities, probably including a photocopy of any other passport held. One response that I had from the Government was, “Oh well, people wouldn’t necessarily disclose the fact that they had a second passport”. The answer to that is simple: anyone found deliberately to have concealed their non-British passport would be liable to have their British passport cancelled.

That leads to the question of e-Borders, on which some £400 million has already been spent. This, too, has been a shambles. I quote the Commons Home Affairs Committee again:

“As of July 2011, the e-Borders system was collecting details of about 55% of passengers and crew on airlines, with no coverage of ferries or trains. The original target to collect 95% of passenger and crew details by December 2010 was missed, as were all other previously timetabled deadlines”.

To this deplorable situation the Government’s response was:

“We believe that the technical ability to collect data from the rail and maritime sector can be delivered by December 2014 … Clearly our preference is to have 100% coverage of e-borders on all routes”.

However, the Government concluded:

“Some benefits of the system do need a higher level of coverage to be valid but not necessarily 100%”.

I hope that the Minister will tell us that the Government expect to get at least 95% coverage on all routes—and by when. If you do not know who left the country, you have not the slightest idea who should or should not be here. It is clear that so far the Government have got their priorities wrong. They need to get a grip on this crucial aspect of our national security.

My Lords, I shall begin by asking the Minister a direct question, which I shall come back to if he feels unable to answer it in his winding-up speech: will he ensure that United Kingdom Border Agency staff are asked to read this debate in Hansard? Whenever I come to take part in or listen to discussions on the House of Lords, not least on issues of civil liberties, I am always struck by the extraordinary level of commitment and expertise to be found here.

Of all those who have contributed, like the noble Lord, Lord Ramsbotham, my noble friend Lord Dholakia and others, among the prime movers in this whole area is my noble friend Lord Avebury. Without going on about him, I think that we all recognise that he is a great credit to this country and the kind of person who Parliament can be proud of because of the persistence and commitment that he shows unreservedly, and with great dedication, day after day.

I shall speak on several issues and be brief about all of them. One of those issues is the things that are patently and immediately wrong, and could be put right relatively easily without any great expenditure. Another is a good example of what could be done at no great expense at all. Then there is what I regard as the deep, almost impossible dichotomy in what we ask UKBA to do between, on the one hand, the commitment to human rights and human decency and, on the other, the overriding pressure on the agency to cut down the number of people coming to this country for whatever reason, however good, that is brought to bear on it by the media and to some extent by those of us who are politicians. In the end, we cannot blame UKBA for things that stem from political dogma and prejudice. We have to take considerable responsibility ourselves.

Let me first say that I strongly support what the noble Lord, Lord Marlesford, said about being very cautious indeed about outsourcing. We have all read the reports in the past day or two about the House of Commons Select Committee investigation of G4S. However, G4S is likely to be given yet further responsibilities in the next few weeks, not least because of the Olympics. At a certain point, when an organisation, be it public or private, clearly fails, there has to be a careful investigation of its contracts and a decision on whether to continue with those contracts. The chief executive of G4S, Mr Nick Buckles, has been described by the Select Committee as someone who has no idea of what is going on and has shown an extraordinary ability to deny that he knows anything about it, which, I note, has become a great characteristic among those who are being subjected to investigation in almost any area. I strongly suggest that one has to ask whether such an organisation should be responsible for such sensitive issues as the deportation, or, for that matter, the admission, of people from other countries, many of whom have very profound histories of suffering and torture.

The second issue I want to raise very quickly is the question of what are sometimes called legacy cases. The issue has been raised by the noble Lord, Lord Ramsbotham, and others, and also by my noble friend Lord Avebury. What are legacy cases? They are cases that have been pending for five years or very much more, in which people have been living in this country as residents, but under the weight of a sword of Damocles, as they may at any point no longer have leave to remain. I believe that the Home Office’s decision to move from indefinite leave to remain to what is now called, in the Home Office’s own phrase, discretionary leave is extremely foolish. Somebody who is given only discretionary leave, but who has lived in this country for five years or more already, will be uncertain about his future and that of his family. He can make no long-term investment in his existence in this country, whether that be a financial investment or a social and personal investment in his children and grandchildren. Discretionary leave is a very poor substitute for indefinite leave to remain. I strongly suggest that we need to look closely at whether an amnesty should be considered as a serious possibility for those who have lived in this country for five years or more with no criminal record of any kind. Amnesties have been granted with good results in a number of other countries.

A further short-term issue I would like to bring up is what is called the fast-track process. It is almost the exact opposite of what ought to happen. The whole asylum and refugee system cannot be built up soundly unless careful attention is given at the first stage. In this country, we have an endless process of appeals and legal interventions, demands, requests and so on, which means that people live here for years without having the right to stay but without any pressure to go. That is because our first-stage processes of admission and refusal are so inefficiently, and, often, so inadequately, advanced. We have to look again at fast-track procedures and ask that thorough early-stage procedures be substituted for them. Failing fast-track procedures, which open the door to appeal after appeal, are disastrous if we want an inexpensive and efficient way to deal with the process. We see that more and more at the present time.

The third issue I want to mention very quickly—and I have a close eye on the time—is that of the return of young people literally within a week or two of reaching the age of 18. Some of these young people, who had been protected by their minority status, are being sent back, right at the present time, to Iraq and Afghanistan. I beg noble Lords to give one moment’s consideration to this: imagine you are an unaccompanied 18 year-old, who may have no contacts whatever in the country to which you are being deported. What do you think you do? You turn to those who are willing to befriend you and, if they happen to be called al-Qaeda, well, bad luck; they are better than nothing at all. We are returning potential terrorists to countries which are insecure and fragile. I cannot think of anything very much more foolish to dream up in a bath on a dark night.

The fourth issue, in only five, was raised by my noble friend and put forward by Asylum Aid: a complete failure to recognise the special position of women in a world where, tragically, rape has become a weapon of war. I first encountered this when Dame Anne Warburton produced a brilliant report on the way in which rape was being used as a weapon of war in Bosnia. Far from disappearing, it has become ever more significant, yet when a woman comes to this country as an asylum seeker, claiming that she has been abused and raped, her case is very often dismissed. That is partly because there are no expert elements in the UKBA, such as there are—thank goodness—in the Metropolitan Police, to consider the special cases of rape and sexual abuse. She usually ends up as a prostitute on the streets of King’s Cross or Everton or somewhere else, because it is the only way in which she can raise the money to keep alive. That is a totally undesirable contribution to the criminal community in our own country.

Finally—before I give an example of something better that can happen—there are those who are left on their own with no means of keeping alive until their case has been heard. The instance of trying to take a very long time to decide an asylum case, with no decent and legal means of support being made available, is once again an invitation for people to be degraded and for others to exploit them and make money out of them.

As for a good example, I am very proud to express to this House an interest that I share with my noble friend Lord Dholakia: we are both patrons of a body called the Gatwick Detainees Welfare Group. The group has managed to recruit no fewer than 100 volunteers from among the citizens of the region around Crawley and Gatwick Airport. They are paid nothing; they spend their own money to be able to go and sit with detainees, befriend them, talk to them and give them a sense that, somewhere, there is a source of support, trust and help. There is a waiting list to join the volunteers, amazingly enough. Only a couple of weeks ago, 450 people turned up at a theatre in Crawley to listen to what the refugees had to say about what they had been through and about the songs and poems that had kept them going. This was a crowd of our fellow citizens, not specially selected but men and women who cared about the well-being of their fellow citizens. I suggest going down the path, at least to some extent, of providing confident, human help to one’s peers, rather than following endless, complicated, inexplicable and incomprehensible processes of immigration rules without recognising the human dimension. The latter makes everything more expensive, more complicated and sadder.

I strongly endorse what the noble Baroness, Lady Hooper, said by saying in one sentence that one of the greatest investments that this country can make is in those who carry back to their own countries democracy, education and a commitment to the rule of law. We will not get that by making it harder for overseas students to come here or by treating human beings as if they were so much fodder to become terrorists tomorrow.

My Lords, I, too, thank the noble Lord, Lord Avebury, who is one of this House’s treasures, for not only prompting a debate of exceptional power and authority but speaking so forcefully on so many of the shortcomings of the border agency. I want to focus on another.

At 6 pm on 14 January this year, I landed with my wife at terminal 4 of Heathrow after a very long flight from India. I was shocked as I came close to the border controls to see the longest queue that I have ever seen anywhere, probably 300 to 400 metres long. I am tempted to say it was longer, but that was my estimate at the time. As it was terminal 4, it contained predominantly people from the subcontinent, including a great number of families, many with young children, and 17 desks at border control were unmanned. I subsequently put down a Written Question asking the border agency to identify or estimate the average time in that queue. The agency came back with the suggestion that it was one hour and 40 minutes. I am sure that estimate was given in good faith but I am deeply sceptical of it. I myself, along with my wife, was in the UK nationals queue, which was very much shorter, but we still had to wait something like thirty or forty minutes before being let through. Even if it was only one hour and 40 minutes, that is far too long for people who have been on such a long flight and then find themselves on arrival in such horrible conditions.

I have travelled, and still travel, a great deal, either on business or for pleasure. I travel in the developed and developing world and have sometimes, as I am sure many of your Lordships have, faced queues in other countries, particularly in America. However, generally speaking, border controls the world over increasingly allow speedy and efficient entry. I have never seen, anywhere in the world, queues to rival those that are now commonplace at London Heathrow and which I saw that evening. This is profoundly unwelcoming and uncivilised. We all know and understand that it is damaging to the UK’s reputation and our national interest, not least because of its impact on potential investors in the UK economy, many of whom I regularly meet in my work and for whom London Heathrow is now a watchword for a torrid experience.

After I got through passport control on 14 January, I asked to see the officer in charge, who was not close to the desks but buried somewhere in the offices at the back. I questioned him about the reasons for this intolerable queue. He of course answered that he had insufficient resources to man the many empty desks and also told me that he thought the matter was only going to get a lot worse. Other noble Lords have mentioned the border agency’s own reports, from which we know that 5,200 staff are to be dropped in the next four years.

I recognise and support the Government’s drive to reduce public spending and the deficit. As somebody who has managed in the public sector, I do not for one moment underestimate the enormous complexity of the task that the border agency faces, which has been exceptionally clear throughout this debate. Implementing government policies in all the areas we have been discussing—security, immigration and asylum—is not trivial. These are very difficult and complex challenges. Many noble Lords, including the noble Baroness, Lady Hooper, and the noble Lords, Lord Judd and Lord Ramsbotham, gave us some very tough reminders of how important it is for the border agency to get so many things right to maintain our civilised standards with respect to the tortured and the brutally oppressed, to safeguard the vibrancy of our education system and to husband and develop the skills of the UK workforce.

I am also someone who has had to reduce costs at many points in his life, both in the public and private sectors, in a variety of organisations, and I am not one who assumes that increasing costs is necessarily the answer to all the challenges that we have heard about during this debate. However, in respect of Heathrow, is the Minister satisfied that the agency deploys its resources optimally? One obvious thing to note about international travel is that it is very data-rich. We know where the airplanes come from, how many people are in them and when they are going to land. It must be possible to give very precise estimates of the flow of passengers through an airline terminal. Is he satisfied that we have such accurate forecasts of passenger numbers? Is he satisfied that we can flex what capacity the agency has to varying demand? Are the working arrangements of the staff in the agency sufficiently flexible? Can they be shifted easily on the basis of need from location to location? Can they be rostered flexibly? Are there enough part-time staff to deal with the inevitable peaks?

If the agency is underresourced, and it may be, it must, like all organisations, cut costs in ways which create, not destroy, value and which are hard-headed about priorities—we have heard many of those in the course of this long debate. There can be no excuse at all for the UK having the longest airport queues in the world. It is a national shame.

My Lords, like other noble Lords I thank my noble friend Lord Avebury for securing this debate. Other noble Lords have paid various tributes to him; I simply draw the attention of your Lordships to the fact that Liberal International, the worldwide body of some 100 political parties, awarded him their highest prize, the Prize for Freedom. We all know why; it is because of his extraordinary lifetime of sterling service. When he raises this debate it is very much in the cause of freedom—our own and that of those who would come to visit us.

I shall touch on three areas in this brief speech. First, it seems to me that there is considerable conflict within government over the question of people coming to our country. Everyone from the Prime Minister and the Deputy Prime Minister down through ministerial departments, parliamentarians, NGOs, businesses and universities spends a great deal of time travelling the world telling people what a wonderful place this country is, how they ought to come and how beneficial it will be for all of us if they do—for conferences, to study, to do business or whatever. However, I frequently wonder whether we are being completely counterproductive, because when these people try to come to the country, they do not find the welcome that we describe; they find endless barriers, which they would never have found if they had not listened to us in the first place.

It becomes incredibly frustrating organising, for example, international political conferences. I find that even people at the level of Ministers and senior parliamentarians frequently cannot come to conferences in this country any more, because they cannot get visas and appropriate permissions; they have to travel to other countries in order to get them. Our universities have already been mentioned and it is also the case for business. Even businesspeople who live in this country but have passports from other countries frequently find it almost impossible to get in and out of the country without being obstructed in the endless queues so vividly described by the noble Lord, Lord Birt.

I ask myself why there is this inconsistency and incoherence within government about whether we want people to visit or whether we want to keep them out. We need to be clear about it. This country has never been able to survive and thrive by building a big wall around itself. It has always been an open country; that is why people want to come. In the past, other countries have built walls to keep their people in. We ought to be taking walls down to encourage the free movement of people and the rich diversity of the country.

If the first question is one of conflict within government about whether they want people to come, the second, frankly, is over the competence not only of the UK Border Agency but of the sponsoring department, the Home Office. I was astonished to find, when I asked the Bill team for the Crime and Courts Bill, which is to establish a border policing command, whether there had been any discussion between the Minister and the Minister of Justice in the Republic of Ireland—the only place with which we have a land border, where there is no requirement for any border checks and nor should there be—that there had been at that stage no consultation despite the fact that the Bill was coming to Parliament and we have institutions that bring these Ministers together on a regular basis, not just within Europe but directly. It seems to me that that is just one element of a raft of incompetences that have been revealed in the debate in your Lordships’ House today. It is not just that these things are difficult. It is that many of them simply are not being attended to. If we are going to have an e-passport system, the one country we simply have to get it sorted out with is the Republic of Ireland. If we do not, people will be able to come through into Northern Ireland and the rest of the United Kingdom, yet there seems to be no coherent arrangement with the Republic.

Many noble Lords have described other areas about which there is a lack of confidence, but the most serious issue seems to be the problem of the culture within the whole department—within the Home Office and within the UKBA. I remember, many years ago, organising for a senior member of what is now the Police Service of Northern Ireland—it was then still the RUC, but many changes had taken place—to come to an international conference to talk about policing. He started his address by saying, “It is terribly important to understand what the purpose of your job is. I am a police officer. Our job is to maintain the human rights of all our citizens”. The jaws of a number of politicians who were at the conference dropped. They had expected the police officer to be talking about maintaining the rule of law, catching criminals and ensuring that people were brought to court to receive their due rewards. He said, “No, it is about maintaining the human rights of everyone”. If we create a culture like that, we end up with a lot less criminal behaviour to deal with.

When I look through the business plan of the UKBA on its website, I find that it is all about “securing borders”, “reducing immigration” and tightening down on things. There is no kind of sense that it is, as the noble Lord, Lord Judd, said, the first welcoming face for the rest of the world. I think that the noble Lord described it as the front line, but it should not be a front line as though it were the Maginot line. It should be a welcoming agency that encourages people to come in and, of course, looks to those who might create trouble.

My experience is that it is ordinary, legitimate travellers that the UKBA strikes fear into—not organised crime, which knows how chaotic it is. Ordinary, decent people end up in difficulties. I know this from my own family. One of my daughters-in-law is Brazilian and another is German, and I know how difficult they have found it, moving backwards and forwards to and from this country, even after they were married. There has quite rightly been much talk, some of it extremely moving, about the incredibly vulnerable people who are frequently left in great difficulties and distress; that, of course, is true. What is even more troubling in some ways is that sometimes capable, qualified, professional young women—lawyers and so on—are left in tears. That shows us just how abusive the whole culture has been. I do not say this out of speculation. I spoke recently to one of the most senior people involved with the UK Border Agency and asked: “What is the problem?” He shook his head and said: “It’s the culture of the agency. The whole approach within it is abusive and it’s all about keeping people out”. In that case it needs to change.

The noble Lord, Lord Marlesford, made an interesting suggestion. He talked about the fact that we are cutting many of our services’ staff and that in many ways this is about defence of the realm. I know from my own experience that many officers in the forces are accustomed not just to using hard force but to winning hearts and minds. They are frequently much more capable of making a judgment about whether the person coming up to them is likely to plant a bomb or whether they are a legitimate traveller than are some of the people employed by the UK Border Agency.

We have a serious problem. People become like those with whom they live and work. The UK Border Agency has not just employed G4S; it has become like G4S and it has the same challenge. If G4S has been damaged—perhaps even irreparably—by its incompetence over the Olympics, it may well be that the UK Border Agency will become another G4S over the next few weeks unless there is some radical change, which frankly I do not expect without a massive change in the culture of the organisation.

My Lords, I want to raise a single point concerning early legal advice for asylum applicants. It is an important point and one which I have raised on a good many previous occasions when we have debated asylum and immigration Bills. I was therefore pleased when an experiment in legal advice was started in Solihull, which continued until 2008. Since then, it has been extended to the whole of the West Midlands region. I believe that this system now covers 17% of total asylum applications. The results have been fewer appeals against initial decisions and a reduction in the level of successful appeals. Public trust in the system has been increased in this single region. Absconding has also been reduced. It appears that the UKBA is starting to do some things right, whatever its failings may be on other fronts.

Will the Minister confirm that it is the Government’s intention to extend early legal advice to the whole country as soon as possible? Will they balance the extra costs against the rather considerable savings that are likely to accrue? Will the Minister assure the House that there will be full consultation about extension with all the agencies involved, so that all applicants may benefit? Extension should now be much easier than it would have been earlier because of the declining trend in total applications. I should also point out that legal advice does not usually require fully qualified lawyers. Advisers need a sound knowledge of the refugee convention, together with a grasp of our asylum statutes and relevant case law. I have given the noble Lord notice of this question and I therefore look forward to his reply.

My Lords, I would first like to add my thanks to the noble Lord, Lord Avebury, for securing this debate. In his highly impressive opening contribution, he referred to a wide range of issues of concern and I hope he will forgive me if I do not even try to make a similar comprehensive contribution.

From April 2008 to February 2012, UK immigration, asylum and border operations were managed by the UK Border Agency, which employs around 21,000 staff and accounts for around one-fifth of Home Office spending. At the beginning of March this year, the Home Secretary made a decision to separate the UK Border Force from the rest of the agency so that it could report directly to her. The agency will be an executive agency and the UK Border Force will be a directorate of the Home Office. The transition arrangements to establish two separate organisations will not be complete until this autumn, with the transition to being a directorate within the Home Office, which is being managed by a transition board, set to be completed by December of this year. There must be a question about whether this summer, of all summers, is the best time to have the border agency and the border force in the throes of transition arrangements. Perhaps the Minister will say why from March until the autumn of this year was deemed the most appropriate time to implement this separation project.

Since 2009, the agency has undertaken change with a view to delivering better services and reducing costs. Its workforce was reduced by more than 3,000 between 2008-09 and 2011-12. A new IT programme, known as Immigration Casework, is being implemented in conjunction with improvements in processes, with the objective of transforming immigration and asylum casework by 2015. However, the Government’s 2010 spending review imposed a duty on the UK Border Agency to reduce its budget by at least 15% between 2011 and 2015 and its workforce by approximately 5,000 staff, or some 22%, with the result that it has had to look for additional cost reductions beyond its transformation initiatives. The result has been changes and staff reductions being forced through at a faster rate than planned and at a faster rate than the organisation can apparently properly handle.

A recent report by the National Audit Office, to which the noble Lord, Lord Dholakia, referred, found that caseworking and UK Border Force changes have often been independent of head-count reduction plans. The National Audit Office reported that in 2011-12 the agency’s workforce was reduced by more than 1,000 more than planned, even though progress was slower than expected in the Immigration Casework programme and workforce modernisation at the border, and no agency-wide skills strategy was yet in place. The result of this disconnect, says the National Audit Office report, was, in some places, a dip in performance and the need to hire new staff or increase overtime. For example, performance in London and the south-east has come under pressure due to staff shortages. Two of the three regions visited by the National Audit Office team reported that they now needed to recruit caseworkers, having allowed too many to leave. Continuing, the National Audit Office report says that achieving significant change in any organisation requires strong leadership and good communication, which have not been evident enough to date. Apparently the most recent Civil Service people survey results show that only one-quarter of staff believe that the agency’s board has a clear vision for the future, and less than one in five consider that change is managed well.

The UK Border Force, which is in the process of being separated from the UK Border Agency, has to reduce its workforce by 10% over the 2011-15 spending review period—that is, by around 850 full-time equivalent staff. During 2011-12, staffing declined by around 350 full-time equivalents, which was much faster than planned. We have seen the effect of this pressure from the Government to make excessively quick and deep cuts in expenditure under the spending review in the length of queues and waiting times for many passengers arriving in this country, particularly at Heathrow. In that regard, the National Audit Office report has again drawn attention to a lack of transparency in how passenger clearance times are reported. That may not have mattered too much before the spending review staff cuts and lengthening queues but it certainly does when official figures—government figures—fly in the face of what everyone can see is happening.

The UK Border Force’s stated performance target is to clear 95% of passengers within published standards, which are within 25 minutes for European Economic Area nationals and within 45 minutes for non-European Economic Area nationals. According to UK Border Agency data, this target was achieved every month in 2011-12. However, in his recent report on Heathrow Terminal 3, the independent chief inspector highlighted shortcomings in both methodology and reporting. He found that measures were not taken frequently enough, and were reported in a way that made no distinction between the different experiences of EEA and non-EEA passengers, particularly during peak arrivals periods. The chief inspector reported that queue-measuring techniques did not provide an accurate reflection of performance.

The true figures show that in the last week of June of this year, waits in immigration queues for non-EEA passengers at Terminals 3, 4 and 5 at Heathrow exceeded the target time of 45 minutes on four, five and four days of the week respectively. For the month of June as a whole the figures for Terminals 3, 4 and 5 were 13, 21 and 18 days respectively when the targets were exceeded, with the longest wait being over two hours.

The Government’s Immigration Minister has previously given assurances that all immigration desks at Heathrow and other key ports and airports in the south-east will be fully staffed during peak periods over the summer. Unless one takes the view that June is not a summer month those assurances have not been delivered. The figures show that all desks were not being manned at peak times in June, hence the long queues and unacceptable waits. We have heard today from the noble Lord, Lord Birt, of his personal experience in queues at Heathrow and the non-manning of all desks. Long waits for passengers arriving in the UK give a poor first impression of our country and our level of efficiency. Along with additional staff temporarily drafted in, special arrangements have been made to avoid extended waits for Olympic Games personnel.

The question, though, is what happens after the Olympics. Will we be reverting back to waits of up to two hours in passport and immigration queues once the additional staff drafted in have gone and the special arrangements no longer apply? At the moment that looks like a distinct possibility, with the Home Secretary intending to cut staff levels by 5,000 at the UK Border Agency and UK Border Force by the end of this Parliament. This is despite the long queues at our major airports; despite an increase in the number of people absconding from Heathrow; despite the Government deporting some 1,000 fewer foreign prisoners last year than were deported in the last full year of the previous Government; and despite the considerable concerns that a number of noble Lords have raised in the debate today over different aspects of the role and performance of the agency and the impact—as my noble friend Lord Judd so eloquently articulated—that this has had on some of those who come into contact with the agency.

The Government need to get a grip on border control and security. It is not much good trying to encourage new businesses, investors and more visitors to come to Britain if their welcome on arrival is a wait of up to two hours in a queue at the airport, or before departure a less than helpful, fair or speedy process for dealing with their application to come here. If that continues some will simply be put off coming and the potential loss to our economy, image and reputation will be considerable. I hope that the Minister can assure us that we will not be reverting back to extended queues and long waits for non-EEA nationals at our airports, particularly at Heathrow, and at other points of entry after the Olympic Games and that the target times will be met.

Although policy decisions and procedures are at the heart of some of the concerns identified by noble Lords who have spoken today, it is clear that government decisions to reduce budgets and staff numbers at the UK Border Agency under the 2010 spending review much further and more quickly than planned, without regard to the consequences, have contributed significantly to a number of the problems that have been identified today. The Government’s responsibility is to see that the agency, including the border force, is properly staffed to do the job that it is meant to do on our behalf on immigration and asylum work, ensuring the effective, fair and efficient control and security of our borders. If you cut too fast and too deep, as the figures show that this Government have done at the border agency, they should not be surprised at the outcome and should not try to suggest that all responsibility for the problems that arise lies elsewhere.

My Lords, the first question I should like to answer was put to me by my noble friend Lady Williams of Crosby, who asked whether I would make sure that all UKBA staff read a copy of this debate. I do not think that I can ensure that that happens but I will certainly make sure that a copy goes from my office to Rob Whiteman, the head of UKBA. It will be up to him to decide on the most appropriate method by which he can disseminate the various words of wisdom that have appeared in this debate throughout the entire United Kingdom Border Agency.

Perhaps I may say to my noble kinsman Lord Avebury, who introduced this debate and asked a very large number of questions—they were coming out at the rate of four or five a minute at one stage and I am not sure that I got them all down or that I will be able to respond to all of them—that we accept that scrutiny of all government agencies is crucial to ensuring that they deliver the appropriate government policy and offer appropriate value for money. Reports on the work of the border agency have shown the Government that, as in all organisations, there is—how can I put it?—some room for improvement.

I stress that today’s debate is about the role and performance of the United Kingdom Border Agency. However, I will say a little about policy, which is a matter for the Government, because obviously it is important in this area. I think that it would be useful if I start by clarifying the roles of the United Kingdom Border Agency, which this debate is about, and the UK Border Force, which this debate is not about. In March 2012, the border force was split from the United Kingdom Border Agency. There are now two completely separate organisations which work together to provide border and migration control. The UK Border Agency is responsible for actions before people get to the border, and once they are beyond the border and in the UK. The UK Border Force is responsible for protecting the border itself through entry control and customs functions at the border.

Outside the United Kingdom, the UK Border Agency is responsible for the visa system and an intelligence network that checks people travelling to the UK before they arrive and ensures that those who have no right to enter the UK do not come here. In the UK, the UK Border Agency carries out immigration casework—for example, asylum applications, which we will come to in due course, and applications for people to settle in the UK—as well as ensuring those who have no right to be here leave, whether by helping them to return voluntarily or by enforcing their removal. Again, I will say a bit about that later.

I have to say that questions relating to the border force go somewhat wide of the scope of the debate. I appreciate that my noble kinsman, my noble friends Lord Marlesford and Lord Alderdice, the noble Lord, Lord Birt, and most recently, the noble Lord, Lord Rosser, all raised serious questions about the border force. But in light of the debate and the number of questions I will have to come to, those issues will have to wait for another day. I shall deal with just some of the concerns that have been raised by noble Lords in this debate before I say a word or two about policy and where we wish to be. I appreciate that a large range of questions were asked and I imagine that in the end, as always, I will deal with only a mere tithe of them in this wind-up. I hope that I can write to noble Lords about some of their other concerns in due course.

One of the first questions put to me by my noble kinsman Lord Avebury was about bonuses within UKBA and his regret that they were being paid when there were failures within UKBA. As he probably knows, only the top performers who have consistently worked to a very high standard are recognised through bonuses. We have significantly reduced the value and the number of payments made to senior managers. I think that only a quarter of all staff—the overwhelming majority of whom are front-line officers—were awarded an average of around £500 last year and, I should make clear, only after meeting very strict criteria.

My noble kinsman was worried about the number of appeals allowed, and suggested that 36% was an all-time record. In 2010-11 the Courts and Tribunals Service statistics recorded that some 36% of appeals were allowed, which was not an all-time record. Over the past two years, the figure for allowed appeals, based on the same statistic from HM Courts and Tribunals, has decreased both in percentage terms and volume. I think that in 2009-10 it was 41%, and 38% the year before. If I have got those figures wrong I will write to my noble friend. He seemed to say that it suggested that the decision-making criteria were too hard.

Appeals are allowed for a variety of reasons, including evidence being submitted at the hearing that was previously not seen in the decision-making process. He will know about that in relation to the changes we are making in the Crime and Courts Bill. Consequently the allowed appeal rate is not always indicative of whether the original decision was of poor quality or too harsh. Certainly the Border Agency works hard to analyse the reasons for allowed appeals, in order to identify trends and implement improvements.

My noble kinsman also asked about removal of overstayers, and whether that was a priority of the agency. As he knows well, enforcement is a vital part of the agency’s operations, and it relies on intelligence to identify and take action against those with no right to be here. The Government are certainly determined to crack down on any illegal immigrants who are here without any right to be, and anyone found living or working here is liable to be detained or removed. We believe that illegal immigration, as we have made clear on all occasions, puts undue pressure on public services, local communities and legitimate businesses. This summer we have launched a UK-wide operation to remove overstayers, and have already seen some 2,000 removals since the campaign started. In addition, local immigration teams across the country continue to deal with migration refusal cases. That brings me to the important question of how we deal with the removals, and whether we are doing them in the right manner.

The right reverend Prelate the Bishop of Newcastle talked about dawn raids on families, and whether they were appropriate. We would always like people who are here illegally—whether families or others—to leave voluntarily. It is only our last resort to use an enforced return. To reduce the risk of families who will not remove themselves voluntarily absconding, it is sometimes necessary to visit them early in the morning when they are most likely to be at home. However, I can assure the right reverend Prelate that that process is overseen by the Independent Family Returns Panel to ensure that the welfare of children is taken properly into account.

My noble kinsman Lord Avebury, the right reverend Prelate the Bishop of Newcastle and others talked about the legacy cases and the problem of clearing the archive. We are dealing with a controlled archive of legacy, asylum and migration cases. These are cases that have not been traced or concluded but continue to be reviewed and checked. We are confident that we will close the controlled archive by the end of December this year. By that point, having checked cases a number of times across multiple databases, including against financial records, the benefits system and HMRC’s systems, as well as our own, we should be satisfied that those individuals are no longer in the country.

The noble Lord, Lord Hylton, also asked about ELAP, the early legal advice project. As he will be well aware, we want to ensure the provision of high-quality advice, including legal advice to asylum seekers—whether it comes from lawyers or others. He will be aware that ELAP is a very important opportunity to improve our understanding of what works. The project has run since November 2010 and has been extended until March next year. By then we will be in receipt of a final report so that we can make informed decisions about the next steps, based on a fair and thorough evaluation of front-loading legal advice services. Given that the evaluation postdates the next round of legal aid contracts, any decision on a national rollout may not be possible straight away; it will take time to work out the detail of funding mechanisms. The United Kingdom Border Agency will work with partners and the Ministry of Justice to do so as quickly and practically as possible.

My noble friend Lady Hooper raised questions relating to Mexico and asked whether we were meeting criteria for how we should be performing on visas in that country. I can say that visa performance in Mexico is currently good. Short-term visas in Mexico are turned around in an average of 10 days, which certainly matches the figure for other countries. It is something of which the border agency can be proud.

My noble kinsman Lord Avebury and the noble Lord, Lord Ramsbotham, raised the case of Mr Jimmy Mubenga. The agency deeply regrets the death of Mr Mubenga. We will very carefully consider any issues that were raised by the CPS investigation and we will certainly decide whether any further action is appropriate once the Prisons and Probation Ombudsman’s investigation and the coroner’s inquest have been completed. The noble Lord, Lord Ramsbotham, also asked whether certain letters relating to this case could be put in the Library. May I look at that issue, write to the noble Lord in due course and see whether a response is appropriate?

However, that brings me to the question of restraint and the use of force raised by the noble Lord. In the majority of cases, we believe that the use of force and restraint when undertaking removals is unnecessary. Home Office-approved control and restraint techniques, including the handcuffing of detainees, are only ever used in the removal process where they are deemed necessary to ensure the safety and security of detainees, escorting and airline staff, and other passengers. If handcuffs, for example, are used, they are always removed at the earliest appropriate opportunity, when it is considered safe to do so and when there is no risk to others on board. I hope that the noble Lord will accept that assurance.

I wanted first to deal with some of the points that had been made. I now want to say a little about government policy itself. The border agency obviously deals with the operation of our systems but, in the end, as my noble friend pointed out, it is we, Parliament and the Government, who are responsible for policy, and we should not blame the border agency for policy. That is a matter for the Government and I am here to speak for them. The Government’s overall aim is to rectify an out-of-control immigration system by bringing down net migration while still attracting to the United Kingdom those who we believe are the brightest and the best.

We believe that a comprehensive set of policy reforms on work, students, settlement and family have set the way to achieve that end. It is now for the border agency, which is building on those policy changes through operational change, to deliver the reductions in long-term immigration that the Government expect, while at the same time not preventing valuable and genuine visitors coming to the United Kingdom. The agency has recently implemented measures to control family migration and made significant changes to the visa routes for students, workers and those who wish to settle in the United Kingdom. Across the board the agency has tightened up the requirements for those who wish to come here, by increasing language requirements, salary thresholds and skills levels.

I turn first to students. I listened to what my noble friends Lady Williams, Lord Alderdice and Lady Hooper, and the noble Lord, Lord Judd, said about students and universities. I have some sympathy with the points that all of them put, but the arguments put forward by the noble Lord, Lord Judd, seemed to go somewhat too far at times. What was the remark I put to my noble friend sitting next to me? I think it was, “What planet is he on?”. He seemed to have gone so far away from what we are doing, and what we are trying to do. All we have done is to try to reform the student visa route. The measures we are taking are to ensure that students can be reassured that they are attending genuine institutions that have been properly inspected. That is good for the country, the education sector and the students themselves. The measures include: a tightening of the regime for licensing colleges that sponsor foreign students; restrictions on the entitlement of students, including the right to work; and the closure of the post-study work route from April 2012.

No student who has an offer from a genuine, proper university, and who can speak English, is going to suffer in any way at all. When the noble Lord looks, if he will, at the numbers of those coming from abroad to attend British universities, he will find the figures more or less as they have always been; the students are still coming in. What we have seen is a decline in the number of those coming into very spurious and dubious colleges that were really there just as a way of getting round the immigration system, and served no other purpose whatever.

I would give way, but I have only got two more minutes—

I thank the Minister for replying so fully, but he asked me to look at the evidence of what was happening. Has he looked at the evidence of what has happened to the number of students coming from India? This is very grave in the context of our future relationship with India and the world.

My Lords, I accept there has been a decline in the number of students coming from India. Will the noble Lord also look at the increase in the number of students coming from other parts of south-east Asia? He will find that it easily compensates for the decline from India. We are not seeing a decline in the overall number of students coming to universities. What we are seeing is a decline in the numbers of those who were coming here allegedly to study but using that as a way of getting round the immigration system. I think that what we did was quite right. I am proud of it, and there has been no damage to United Kingdom universities as a result.

I see that I am running out of time, so I will make my last few points. We want to see the border agency continue to move forward and to maintain its performance in removing foreign national offenders, in preventing others from coming in who should not be coming in, and in continuing to deal with the archive of legacy asylum cases that I mentioned earlier. As a result of its work, the agency will be a more streamlined and efficient organisation in future. For that reason, I am grateful for this debate. It will be a more efficient organisation in delivering its core objectives of a selective immigration system while also providing value for money for the taxpayer. The work of the agency is crucial in controlling migration and protecting national security. In this climate of change, we rightly expect the agency to continue to deliver.

My Lords, I thank the Minister very warmly for his comprehensive winding-up and for his kind promise to write to those whose questions he could not deal with. I am also grateful for the assurance he gave to my noble friend Lady Williams that what has been said in this debate will be drawn to the attention of the head of the UKBA, and I am sure that it will not be difficult for the agency to find a means of disseminating the Hansard report of the debate to the whole staff. It is important that people in the UKBA should be aware of the widespread concerns that have been expressed.

If I may say so, I thought that my noble friend was a little complacent about some of the issues that were raised. There was the failure to listen to criticisms made by the chief inspector, which were dealt with by the right reverend Prelate and the noble Lord, Lord Marlesford, among others. We have heard repeatedly about the culture of disbelief that prevails in the UKBA. The noble Lord, Lord Judd, and my noble friends Lord Alderdice and Lord Dholakia raised that point. The dangers of outsourcing were particularly emphasised by the noble Lord, Lord Ramsbotham, and I agree with him entirely that the responsibility for escorting deportees needs to be thoroughly examined. Personally, I would take this function away from the sub-contractors who have dismally failed to look after the people in their charge and return it to the UKBA itself so that we can see exactly where the responsibility lies.

My noble friend Lady Williams mentioned discretionary leave to remain, which I do not think was dealt with in the noble Lord’s reply. I am open to correction, but I think that the legacy cases, which she did mention, are nearly all being dealt with by giving people three years’ discretionary leave, for which they have to reapply after three years, instead of giving them indefinite leave to remain. That surely cannot be right. The detained fast track system was raised by the right reverend Prelate and my noble friend Lady Williams, but we did not hear anything from the Minister on that matter. I raised the issue of the failure to have regard to the special needs of women. My noble friend Lady Williams also talked about this, and it has been comprehensively covered by Women for Refugee Women and Asylum Aid.

Finally, this country’s reputation and the effect on our future prosperity and well-being will likely be harmed if we do not attract the people we need in business, management and higher education because of the difficulties that are placed in their way. This was mentioned particularly by the noble Baroness, Lady Hooper, and my noble friend Lord Alderdice. I mention also, of course, the problems that have arisen at Heathrow, which were the subject of a powerful contribution from the noble Lord, Lord Birt. I hope that we shall hear from the Minister about these other matters. They are of equal importance to the ones that he dealt with in his winding-up speech. I hope that, as a result of the distribution of this debate to the UKBA, some attention will be paid to the forceful and legitimate criticisms that we have heard this afternoon.

Motion agreed.

EU Drugs Strategy: EUC Report

Motion to Take Note

Moved by

That this House takes note of the Report of the European Union Committee on The EU Drugs Strategy (26th Report, Session 2010–12, HL Paper 270).

My Lords, the European Union Committee report on the European Union drugs strategy for 2013 to 2020 was published on 16 March of this year, and I am glad now to have the opportunity to bring it to your Lordships’ House for debate in my capacity as chairman of the Home Affairs sub-committee that conducted the inquiry. I thank the noble Lord, Lord Henley, for the Government’s full and helpful response to the report. In his letter of 10 May, he described our report as “extremely timely”, and so it was.

On 8 June, just a month later, the Council agreed that the EU did indeed need a new drugs strategy for 2013-20, and that it should be adopted by the end of this year. That in itself was a welcome development. Vice-president Reding, the commissioner responsible for this area of policy, described the strategy in somewhat slighting terms as,

“a nice piece of literature”—

and “wishful thinking”. We took a different view: that a new strategy was needed to show the direction in which the member states wished to go. The Danish presidency clearly agreed with that. The first draft of the strategy has already been discussed in the Council’s working group, and I understand that it is to be published shortly. So we got our views in ahead of the game, which is what this House should aim to do whenever possible with its thematic reports.

Our report made a number of recommendations, and I have time to refer to only a few of them. The point that I wish to emphasis the most, and to which we returned more than once, is the need for an informed and objective public debate on the drugs policies of the different member states as an integral part of the negotiation and adoption of the new drugs strategy. We were struck during the course of our inquiry by the paucity and poverty of any such public debate anywhere in Europe. This should be remedied.

In the course of our inquiry, we learnt about the policies of a number of member states, from the Swedish zero-tolerance approach to the experience of Portugal, where the possession of drugs for personal use was decriminalised in 2001. Portuguese law also greatly improved the harm reduction measures available to drug users. We took evidence from Jose Socrates, the former Prime Minister of Portugal who introduced that policy, and from the director of the Portuguese Institute for Drugs and Drug Dependency.

What the committee did not do was consider whether to make any recommendations for a change in the law of this country towards the decriminalisation of possession and use. That would have been outside the terms of reference of our EU committee, and we took no position on it. What we did was to urge forcefully that the formulation of a new EU drugs strategy offered a golden opportunity to widen the public debate on these different policies, in the hope of achieving a better meeting of minds on the best way forward in the EU in general and in this country in particular.

We stressed that such a debate should be “informed”, “objective” and “dispassionate”—and we chose those words with some care. The press have an important role to play. However, I am afraid that some organs of the United Kingdom press are notoriously lacking in objectivity on this subject. The noble Baroness, Lady Meacher, in her evidence, singled out the Daily Mail. The noble Lord, Lord Mancroft, told us that it had behaved “grossly irresponsibly”. In the unlikely event that the Daily Mail reports this debate, I shall no doubt be accused of seeking to have drug trafficking legalised. I hope not. Even the Daily Mail should recognise that there is an argument to be made that imprisoning drug users is not necessarily best for them, best for society, or even the best use of our prisons. That argument has nothing whatever to do with the legalisation of drug trafficking.

As I say, I hope that publication of the new EU strategy will trigger such a debate. I am not, however, overconfident of that. The Council has already, without any public debate, agreed on 19 points that will shape the strategy. None of them deals with national drugs policies. Nor should they, because the Commission and Council agree that this should remain within the competence of the member states. However, EU drugs policy is an impressive instance of subsidiarity and action, and we found no one who advocated changing it. Somewhere in the document that the Council has shaped up so far, though, there could and should have been some recognition that member states can learn from one another in formulating their policies.

Perhaps the Minister could tell us whether he agrees, and if so what steps the Government can take to broaden the debate, both nationally and internationally. In that context, I welcome the initiative by the UK’s Drugs Policy Committee to hold a public debate on 19 November, entitled “New Generation, New Problems, New Drugs: Time for a New Approach”, at which the right honourable Oliver Letwin will make the keynote speech. I hope that that debate, including the Government’s contribution to it, will cover the international as well as the domestic aspects of the issue.

I turn to the question of new psychoactive substances, or NPS, as they are known. The Government’s action plan, published on 17 May, contained a commitment to ensuring that the new EU strategy includes activity to tackle the problem. To that extent we welcome it, but it does nothing to counter our criticism of the current EU legislation: that it is slow, cumbersome and ineffective. He pointed out that in the space of six years only two substances have been banned using the EU Council decision. It took the EU one and a half years to ban mephedrone. By that time, 15 member states including the UK had already banned it under their national laws. The Government have undertaken to promote robust co-ordinated action at EU level to tackle NPS. Does this include helping to design and implement a rapid and effective EU planning procedure?

The reduction of drug trafficking and the destruction of international criminal networks is, naturally, one of the objects of the current strategy and will undoubtedly be one of the objects of the next one. There is no doubt that the tracing and confiscation of the proceeds of crime is potentially one of the most powerful weapons in the armoury of states, although it has yet to fulfil that potential to the full. The role of Europol, which devotes something like one-third of its work to this field, is vital, and that is something that the Government will need to keep in mind as they conduct their audit of EU competencies and as they approach the Protocol 36 decision in 2014.

There are two additional steps that the Government could take on the confiscation of proceeds, and I hope that they will. The first relates to the draft directive on the confiscation of the proceeds of crime. In a report published in April the committee recommended that the Government should opt into the draft directive. I repeated that when the report was debated on 22 May, and the recommendation that we should opt in was endorsed without dissent by this House. The draft directive was debated in another place on 12 June, and in advance of that debate the Government announced that they would not be opting in at this stage. I believe that that was putting political expediency ahead of the national interest. The key issue here is not whether we in this country already have in place all the measures in the draft directive—we have. Rather, it is whether we can shape the directive so that we can recover the proceeds of criminals who hold them in other member states. I hope that the Minister can assure me that when the negotiations are concluded and the directive is ready for adoption, the Government will revisit that decision and do so in a positive spirit.

The second step that the Government can take is one that they and their predecessors should have taken long ago: to sign and ratify the Council of Europe convention on money-laundering, the Warsaw convention. The committee has raised this question time and again in this House in taking evidence from Ministers and officials and in correspondence with Ministers, and I make no apology for returning to it yet again. The previous Government undertook to ratify the convention early in 2010. For this Government, the noble Lord, Lord Henley, assured the committee that he was pretty sure that the United Kingdom was compliant with the convention, but that the Home Office did not currently have the resources to review that. I asked him when the Government would sign the convention, to which he replied,

“I would hope we would do so within the next year or so but I am not going to be any more precise than that”.

The response to our report was in fact even weaker. The Government are confident that the work required to enable them to reach a fully informed position in respect of signing and ratifying will “progress significantly this year”. What does that mean? Surely it would not take much more than a week—or, I would suggest, the amount of time that it has taken to write the brief for the Minister and all the officials who came to our committee—to check to see whether there are in fact provisions of the convention not already implemented in our law. If any such provisions are found, steps can then be taken to remedy the situation.

A failure to sign one of the major international instruments for combating serious organised crime, including drug trafficking, frankly does not give the impression of a Government who take the fight against crime all that seriously. In the light of the issues raised by HSBC’s failure to enforce its own money-laundering procedures, that hardly seems to be the message we should be conveying at this moment. Our failure so far to sign and notify the Warsaw convention weakens our hand in pressing other European countries, which may well be a good deal less compliant than we are in this matter, to do so.

The Council’s conclusions state that,

“in formulating the new strategy appropriate consideration should be given to recommendations put forward by high-level scientific societies”.

The committee, alas, cannot claim to fall within that description, but we did take a great deal of high-level evidence on which to base our conclusions and recommendations. We hope that the Government will not only respond positively to them, as they have begun to do, but will help to persuade other member states to do so too.

I would not wish to conclude my remarks without paying a tribute to the work of the European Monitoring Centre for Drugs and Drug Addiction, in Lisbon. EU agencies often come in for a good deal of flak, sometimes deservedly so. The EMCDDA seems to us to be performing a genuinely valuable function with modest resources. It is important that it be enabled to continue its excellent work.

Our report raised a number of serious questions. I have by no means referred to all of them. I hope the Minister will answer those questions, and I look forward to hearing his replies. I beg to move.

My Lords, I congratulate the noble Lord, Lord Hannay of Chiswick, and his colleagues on the Select Committee on what is a really thorough and incredibly useful piece of work—one which we have not had before the House for a very long time. It makes some extremely useful recommendations and comes to some very helpful guiding conclusions, and I am grateful for the opportunity to debate it today. I would add to that my congratulations to the noble Lord, Lord Hannay, on the way that he has introduced this debate. Were it not for the fact that my name is on the list and so I had better say something, I would not be speaking, as the noble Lord covered his report extremely well, and certainly covered all of the main points that need to be addressed. It is late on a Thursday afternoon and we have a long speakers list, so I shall try to keep my comments as short as possible.

It is very helpful that the report emphasised, at paragraph 26, that member states should continue to decide and enact health policies in respect to drugs. That is the position we have had for many years and have now, and it complements the position of the United Kingdom’s own national drugs policy, where the Government would like to see such decisions go further down, even to a local level. That co-ordinated approach is helpful.

The report’s conclusions in paragraph 27 are also extremely helpful. They concern the difficulty of amending a treaty signed by 180 countries, namely the United Nations conventions. This is important, because a lot of people and NGOs in this country and around Europe have been devoting quite a lot of time over the last four or five years on working to amend the conventions, or get them amended, on the basis that it is difficult to develop policies and strategies in this difficult and complex area while the conventions remain as they are. If we read the report before us today and its conclusions, we see that that is not so. By way of a very helpful example, the committee draws attention in paragraphs 30 to 34 to the different national policies in Sweden, the Netherlands, Portugal and the Czech Republic. They are well worth looking at, because they demonstrate the flexibility within the conventions which many countries have not taken advantage of. Nor, certainly, have we, and we might well think about doing so.

The report refers to the EU strategy’s two “broad brush” objectives—which have been the policies of most nations, too—of restricting supply and reducing demand. These are indeed very broad brush. Reducing demand is left to subsidiarity and the individual member states. Where the European Union has played a significant role is in attempting to restrict supply. There is great co-operation between member states’ police forces and different agencies. Of course, one could always say that it could be improved, but it is an area where the strategy has been successful. However, as the report says, it is rather broad brush, and it would probably be more helpful if that broad brush were to become a slightly narrower brush.

On reducing supply, I would make two points only. First, the report makes a number of points on trafficking. I noticed and read carefully the Home Office’s evidence about that. Apparently, it has had great success in managing to stop drugs coming into this country and other European countries, to the effect that, for example, the purity of cocaine has significantly reduced and the price has gone up. Of course, this is good news and the Home Office should be congratulated on it. However, I have heard such statements from the Home Office many times during the past 25 years. I am sure that what it says is correct, but I note that it has had absolutely no effect on the amount of drugs that can be got on the streets of Britain and of other cities in Europe nor on the ease with which one can do so. I wonder whether that is an effective use of resources. That, too, has never been looked at.

The report also makes an interesting point about displacement which has not been taken into account previously; namely, that if security forces, be they customs or police, adopt a strategy for getting rid of trafficking in one particular area, it has the undesirable effect of moving it somewhere else. Within Europe, that could mean moving it to a part of Europe that has not had a serious drug problem so far. There are two examples of exactly the same problem occurring outside Europe. Only this week, we have heard that Honduras has now taken over as the murder capital of the world. The work that the Mexican and United States Governments have done to reduce trafficking in Mexico has caused enormous problems in Honduras, which did not have any problems previously. The second example is the work being done by the Americans and the Royal Navy in the Caribbean to stop that being a drug route for South American cocaine. It has been very successful, but it has displaced the problem to west Africa, which now has an appalling drug problem which it did not have 10 or 15 years ago. We must be careful not to recreate those problems in Europe. It is helpful that the report draws attention to them.

My main point rather echoes that made by the noble Lord, Lord Hannay, and is about differences in national policies and what they mean. I draw attention to Sweden and the Netherlands, two countries which are often regarded as being at opposite ends of the spectrum when it comes to drug policies. I know both of them quite well and have spent quite a lot of time looking at policies in those countries during the past 20 years. They are very interesting and very different. Although Sweden is regarded as being hugely successful, it is the nature of the way that things happen there that a degree of its problems is not visible. I would not say that it has been swept under the carpet, which would be unkind and unfair, but it is like an iceberg—it is below the surface.

I do not necessarily think that the Swedish policy overall is quite as overwhelmingly successful as is presumed. My background is in drug treatment, and although a lot is talked about the success of the treatment system in Sweden, for a number of cultural and social reasons, that form of treatment, without going into the detail, would not be acceptable in this country. You could not do it. Equally, in the Netherlands, their approach to life, the way that they choose to live, and their morals and ethics, are very different from ours in Britain. Although what they have done is very interesting, and some people have asked why can we not do in London what they have done in Amsterdam, one of the things I have noticed is that you can learn from other countries—I wish we would learn more from them—but you cannot pick up another country’s policy and transpose it. We are not Los Angeles, Amsterdam or Stockholm, we are different. We can learn from them but we cannot do exactly as they do. That is an important thing to take on board.

Perhaps the most important part of this report for me was Chapter 5, which is devoted to Portugal. Everybody in the drugs field has something to say about Portugal—that it has either been a huge success or a great failure, depending on the position you started from. The interesting thing about this report is that it is so dispassionate and refuses to come to a conclusion, but recognises the importance of what has happened in Portugal, where there has been a reduction in the use of the criminal justice system, an increase in the treatment system and a resulting reduction in drug use. There has been a complete change in what has happened in that country. Could we do that here? I do not know. Nobody knows, because we have not done it. However, I fully support the noble Lord, Lord Hannay, when he referred to the fact that we have not had that debate. One of the reasons we have not had that debate is not only because of the irresponsibility of the press, which scares politicians off from doing it, but because important social debates of this sort need to be led by the political class, particularly by the Government of the day, and successive Governments for the last 20 years have declined to engage in this debate. They have not said whether it is right or wrong but have just refused to engage.

What this report says to us more than anything else is that there is a hugely important debate out there to be had. It could have an enormous effect, because the single biggest cost of the drug problem—an economic cost in these difficult economic times—is the criminal justice cost, which we are told by the Government is about £18 billion a year. If there is any possibility that we could save some of that money and save some of the people to whom that money is directed as individuals through healthcare—this Government are doing a great deal on healthcare and drugs—that is something we should be looking at. If there is one message that comes out of this excellent report for me, it is that we must have this debate and that it is worth while—but it must be led by the Government.

My Lords, I congratulate the noble Lord, Lord Hannay, on his introductory speech, and him and his colleagues on this very good and balanced report. In the UK, certainly in some sections of the media, we live in a sort of EU-bashing country, but there are so many areas where pan-European co-operation is valuable, or indeed essential, and the fight against drugs is one of these. I agree with the basic conclusions of the report: that the European drugs strategy has been an important beginning but needs to be tightened up and refocused. As the noble Lord said, the work of the European Monitoring Centre for Drugs and Drug Addiction is rightly praised in all quarters and should certainly be defended for the future.

This report comes at a time when something of a sea change in drugs policy seems to be happening around the world. The so-called war on drugs has been declared a failure, not only by the United Nations drugs agency but by the leaders of some of the main states originally propagating that war in Latin America and elsewhere.

The reasons are plain to see: a punitive approach to drug use often compounds problems of public health. In prison in many countries drug addiction is not treated, exchange of needles is not available and other treatments simply do not exist. Diseases such as HIV readily take hold. Many prisoners in different countries who were not drug users before become so in prison and, in fact, many overdose when they leave prison.

In the bulk of what I have to say I shall follow up what the noble Lord, Lord Mancroft, said and what the report says about Portugal, since there has been so much debate about that country’s policies among those who follow these issues, and rightly so. We now have a lot more evidence about the consequences of those policies than we had a few years ago. A good example is an in-depth study by a Polish author, Artur Domoslawski, called Drug Policy in Portugal. As the report says, Portugal is traditionally a quite conservative country, marked by the strong presence of the Catholic Church.

When drugs emerged as a serious problem in the 1970s and 1980s the country first adopted a classical repressive approach. The new strategy was implemented in laws passed in 2000 and 2001. These laws decriminalised drug use; drug trafficking remained a criminal offence. All this is well known. In place of criminal courts, dissuasion commissions were set up. These bodies seek to turn people away from drug use. They have the power to impose civil sanctions for those who refuse to attend: for example, they can take someone’s driving licence away and there are even worse civil penalties than that.

At the dissuasion commission a person’s history and his or her addiction issues are discussed and treatment options proposed. The aim, essentially, is to avoid stigma but at the same time to lock the person into a treatment pattern. It is rightly described by some of the contributors to this study not as a magical formula but as a specific framework on which work is ongoing. The Government in Portugal also established a large number of outreach programmes with the aim of limiting the spread of drug use in the first place. There are some 70 projects across the country, mostly carried out by NGOs funded by the state but operating locally. The evidence shows some clear positive outcomes, which were briefly mentioned by the noble Lord. For example, the percentage of drug users among those with HIV dropped from 52% in 2000 to 15% in 2010: a pretty large drop, but the numbers are not that great in the first place.

All this is interesting, but Portugal is a small country, its experiment with a public health approach to drug use is quite recent and we know that drug use is often cyclical, so all the data we have might in the here and now not be valid 10 or 15 years down the line. However, in another report from the Cato Institute, published in April, the conclusions I have just mentioned are quite forcefully backed up:

“Judging by every metric, decriminalization in Portugal has been a resounding success”.

Quite rightly, I suppose, the report does not ask the Government to comment on this, but I would be interested to see what the Minister makes of the massive interest which has attended the Portuguese experiment and whether he thinks that it is directly relevant to this country. The UK Drug Policy Commission says:

“The UK invests remarkably little in independent evaluation of the impact of drug policies”.

Speaking as a social scientist, it is crucial to make such investments. Again, I would be interested to hear what the Minister says on this point. The commission also says,

“the United Kingdom remains at the top of the European ladder for drug use and drug dependence”.

In the light of government policy, perhaps he would like to comment on that statement too.

My Lords, I welcome this opportunity to say a few words about the report on the EU drugs strategy by Sub-committee F and, in doing so, pay tribute to the effective and experienced leadership of our chairman, the noble Lord, Lord Hannay.

We need to be realistic about the competence of the European Union and the objective of its drugs policy. It is not clear from the Government’s response whether they agree that neither of the two main objectives of the 2005-12 strategy, the reduction of demand and supply, has been achieved. According to the independent evaluation by the RAND Corporation, although there have been reductions in demand for cannabis and recently a slight decrease in cocaine consumption, there is little evidence on whether these successes can be attributed to the strategy and its action plans. It goes on to say that if there are trends on the supply side, there is no evidence that they can be attributed to the strategy or its action plans. That does not mean that the 2005-12 strategy was not of some value, but that we need more focused objectives, as has been said already, than the 158 actions in the strategy’s so-called “wish list”. The Government say that while it is necessary to articulate broad ambitions and guiding principles, they should be,

“underpinned by specific, and where possible, measurable objectives”.

The preparation of the next drugs strategy, which has to be ready by the end of 2012, falls on to the agenda of the Cyprus presidency over the next six months. With all respect to Cyprus, the APPG for Drug Policy Reform suggests that the Justice Directorate, which has the responsibility for drug control policy at EU level, should be taking the lead. It would be useful to hear from my noble kinsman the Minister what mechanism there is for the presidency to seek its input, and indeed that of the largest member states where drugs are a huge problem, in formulating the draft.

On the Government’s refusal to sign and ratify the convention on money laundering for the second time of asking, does my noble kinsman have anything to say about the scandal of HSBC’s dealings with Mexican drug barons, revealed in a US Senate report published on Monday, which was referred to by the noble Lord, Lord Hannay? Here, as in the US, financial institutions and their employees face civil and criminal penalties for failing to properly file suspicious activity reports. What steps are being taken to ensure that the SARs regime is not being widely flouted by HSBC here as it obviously was over there? Does he think that this disgraceful conduct reveals a need for tightening EU legislation on money-laundering?

One important recommendation by the committee on which the Government agree, for instance, is that greater use should be made of Europol’s databases. The Government say that they are calling for more voluntary information sharing between member states, but this is an area in which there could be a specific objective, to increase the proportion of information routed through Europol’s liaison bureau which is cross-checked with their central databases. There is no reason why that should not become routine, with specific encouragement, such as the publication of the percentage that is so cross-checked, broken down by member state.

The Government agree that the EU could do far more to reduce the supply of drugs through encouraging producing countries to diversify their agricultural economies away from illegal drugs. The Government quote the success of the UK-led project in Helmand province, Afghanistan, for supplying wheat seed to 160,000 farmers, and they say they are working to make alternative livelihood programmes sustainable for the long term. How can this be done, can my noble kinsman explain, after the UK has withdrawn from Afghanistan? If my noble kinsman says the scheme does not require the British presence, why is it working only in Helmand? Why is this a specifically UK project, when we are talking about an added emphasis in EU development policies? Can my noble kinsman quote any large-scale agricultural diversification projects sponsored by the EU in Latin America, and is there scope for co-operation between the EU and the US in this area which is so clearly of mutual benefit?

As the noble Lord, Lord Hannay, has already said, one alarming development which has occurred during the present EU strategy is the appearance of an ever-increasing array of new psychoactive substances, the NPSs. The EMCDDA, whose work, as the noble Lord, Lord Hannay, said impressed the committee greatly during our visit to Lisbon, reports that in 2011, 49 NPSs were notified, compared with 41 in 2010 and a mere 24 in 2009. The European Commission says that it will propose stronger EU legislation on these products, which are freely sold on the internet and in clubs, taking into account scientific evidence on the risks that they pose. Mephedrone and BZP, for instance, are identified as potentially harmful, but how can we or the EU satisfactorily assess the effects of substances coming on to the market at such a rate, particularly when some of them may have cumulative or delayed-action consequences for the user? Would my noble friend say if we attended the EU-US meeting in June on new drugs, and what conclusions were reached there?

As an aside, what is the Government’s current thinking on the drug khat? A thoughtful article by Howard Swains in the Independent magazine suggests that banning khat would mean the imprisonment of more Somalis, damaging their job prospects and creating a recruiting ground for al-Shabaab. However, regulating supply and applying health and safety laws to the mafrish where khat is chewed would help both legitimate suppliers and consumers. Probably the UK is the largest market in Europe for this drug and we could pave the way for European regulation, perhaps also for other relatively less harmful drugs as well as khat. The Government responded to the committee's suggestion of exploring alternatives to banning new psychoactive substances—such as regulating them as we do alcohol and tobacco—by saying that they were going to publish an NPS action plan in May. Will the Minister say whether our proposal has been taken up and how the Government action plan dovetails with the Commission's report on the information exchange, risk assessment and control of NPSs, published on 11 July?

As has already been mentioned, the Committee recommended prioritising the evaluation of harm reduction strategies. The Government replied that there must be caution in the absence of more robust and comparable evidence. It would be a mistake to neglect the Portuguese and Czech experience and similarly other member states could benefit from the development of an evaluation framework setting out the evidence base and assessing the value for money of our own 2010 drugs strategy. It should be a matter for discussion whether this is best achieved by promoting a European area network on illicit drugs to improve co-operation in drugs research—as the Government suggest—or perhaps by extending the remit of the EMCDDA. The EMCDDA already reports on drugs research, as for example on the use of supervised injectable heroin treatment for a small group of heroin users formerly thought to be untreatable. One thing is certain and that is that the problem of dangerous drugs is international. The Committee and the Government are agreed on the value of a comprehensive EU drugs strategy and the framework it creates for practical co-operation between member states.

My Lords, I am very grateful to the noble Lord, Lord Hannay, for drawing our attention to the report of the European Union Committee on the EU drugs strategy and for introducing this debate with such vigour. I declare an interest as the chair of the National Treatment Agency for Substance Misuse—the NTA. It was set up as a special health authority in 2000 to improve the availability, capacity and the effectiveness of drug treatment in England and has had notable successes. Chief among them has been the doubling of the number of people in treatment since its inception and the dramatic reduction of waiting times. From April 2013, the National Treatment Agency’s key functions will be taken over by a new body with a wider remit, Public Health England. However, the NTA, with its limited remit of treatment issues, has provided support in developing a drugs strategy in England. Today I shall draw on some of our experiences.

The report before us recognises—indeed, emphasises —that drug policies and their remit should remain within the competencies of member states, which is surely right. As the noble Lord, Lord Hannay, said, and the noble Lord, Lord Mancroft, emphasised, we cannot simply transfer policies from one country to another. Countries are quite different in many respects. I hope that the report will not just be a nice piece of literature but will inspire debate. The EU strategy touches on aspects that are of importance to drugs strategies across the world. Many of these aspects are covered by drugs strategies for England, although some of the concerns are beyond the remit of my agency, the National Treatment Agency. As a government agency, the NTA is bound by government policy and, as such, has no separate view on some of the substantive issues raised by the EU Committee’s report such as decriminalisation and drug trafficking. I shall therefore limit my remarks today.

One important issue that was touched on by the noble Lord, Lord Avebury, is money. As the report points out, tackling drug use effectively saves large sums of money. We in England have done extensive research on the economic aspects of drug treatment and it is estimated that for every pound spent on drug treatment alone, approximately £9 is saved. Savings to the NHS and savings from tackling drug-induced crimes are enormous.

The scale and quality of drug treatment and recovery services in England, provided by not only the NHS but the voluntary sector, is admired by experts across the rest of the world. I shall draw on that expertise in sharing some observations today. I welcome the committee’s report and agree with much of it. However, I shall put two particular issues raised by the committee under the spotlight of further scrutiny: first, the adequacy of statistics and, secondly, the role of harm reduction in public health.

I start with statistics because the report calls for an improvement in the quality and comparability of national statistics. It suggests the UK may need to change the way in which it collects data so that EU-wide statistics are more consistent. It is difficult to disagree with this wider European aim but we should not infer from it that there is anything wrong with the accuracy or scope of our own national statistics. I declare another interest here: the NTA is responsible for running the National Drug Treatment Monitoring System, one of the most comprehensive data sets in the NHS. Its findings are independently evaluated and validated by the National Drug Evidence Centre at the University of Manchester and published as national statistics. A close study of the EU Committee report shows that it is not criticising our statistics on drug treatment at all. Where the committee finds fault is in the provision of figures on the prevalence of drug use, which is a completely different matter. I welcome the opportunity to make this distinction and clear up any confusion that there may be.

In this country, the British Crime Survey estimates drug use among the general population. It is notoriously difficult to measure drug use, not least because it is a covert, criminal activity. The British Crime Survey suggests that the trend in class A drug use is static, with about 3% of people admitting to using class A drugs in the past year, mainly powder cocaine.

To understand what is happening in more detail, the Home Office and the NTA have commissioned independent experts from the University of Glasgow to estimate the number of the most problematic drug users—heroin and crack addicts—who would benefit from specialist treatment. The ongoing research suggests there has been a significant fall in the number of people in England who are addicted to these problematic drugs, from a peak of 332,000 in the middle of the previous decade to 306,000 at the last count. This trend is echoed in the demand for treatment services, as measured by the National Drug Treatment Monitoring System. The number in treatment is falling, from a peak of 211,000 in 2008-09 to an anticipated 198,000 in 2011-12. In particular, we are seeing a steady reduction in the number of heroin users entering treatment for the first time. This has fallen from 48,000 in 2005-06 to a predicted—I emphasise that—estimate of 9,000 this year. At the same time, waiting times remain low. On average someone can access a treatment programme within five days of being referred. The proportion of clients waiting more than three weeks to start treatment is 2%: the lowest ever.

What all this means is that the drug treatment system in England continues to respond quickly to demand, but that the nature of this demand is changing. With fewer new clients coming into treatment, the challenge for the future is overcoming addiction among an increasing proportion of older, entrenched ex-users already in the system, who by definition are more complex to treat. Any drugs strategy in any country must take account of the realities of drug use at a particular time. While it may be difficult to compare statistics about drug use across Europe, we can be extremely confident that we know what is happening about drug treatment in England and we have a positive story to tell.

This brings me to the committee’s point about harm reduction and decriminalisation. The report says that members were impressed by the evidence from Portugal on the effectiveness of its public-health-oriented national strategy. They noted that harm reduction and public health policies were increasingly being adopted internationally, and suggested that EU member states should learn more from each other. As I said, the National Treatment Agency has no view on whether a policy of decriminalisation would be beneficial in this country. However, what is often forgotten in the debate on decriminalisation is that in England we already tackle drug dependency as a public health issue.

What has happened in Portugal as a consequence of changing the law on the possession and use of drugs is comparable with what already happens in England, within a different criminal jurisdiction that makes illegal the use of and trade in dangerous drugs. In both countries treatment has been expanded. Portugal changed the law in 2001 in order to expand treatment. In England, treatment was expanded in the same period within an existing legal framework. Unfortunately the benefits of our public health approach too often get lost in controversy over whether we have lost the so-called war on drugs, or whether we should legalise particular substances. The fact is that in England there has been a steady increase each year in the number of people overcoming addiction and embarking on the road to recovery. In 2010-11 the official statistics showed that 28,000 individuals successfully completed treatment, an 18% increase on the previous year. Information given to the NTA board indicates the equivalent figure for 2011-12 is anticipated to be almost 30,000, among them an increasing group of opiate users, who are the hardest to support.

I agree with the view of the committee that the EU drugs strategy should improve the collection of information so that member states can learn from each others’ experiences. I also agree that the new strategy should use the EU’s public health obligations to further the inclusion of harm-reduction measures in national policies. In England, we are already successfully demonstrating the benefits of a public health approach through our existing data. I welcome the opportunity to call attention to a track record in treatment and recovery that many other countries would envy, and I hope that the Minister agrees.

My Lords, I am grateful to the noble Lord, Lord Hannay, for introducing this debate. Reports from his sub-committee of the European Union Committee have demonstrated a move in a positive direction. The debate which the noble Lord, Lord Mancroft, has indicated is lacking in this country needs to be accelerated and made more audible. Illegal drug trafficking is the biggest trade in the world. The harm it does is scarcely measurable because the victims do not always come forward to indicate what has happened to them.

The report appears to make some very powerful points and, to some extent, I am a novice in this area. It is novel but highly welcome that the report, at paragraph 97, supports,

“the exploration of alternatives to … new psychoactive substances, such as placing them within regulated markets similar to those that already exist for alcohol and tobacco, which attempt to control use through education and treatment rather than criminalisation”.

The report is also helpful in displaying the evidence which was given by some of the most authoritative voices about this subject, such as that of the UN Office on Drugs and Crime in its 2010 report, From Coercion to Cohesion. Its executive director, Mr Costa, said:

“Moving from a sanction-oriented approach to a health-oriented one is consistent with the international drug control conventions”.

That seems to me to be a lesson that this country needs to learn.

I very much hope that this committee’s report will constitute a prelude to a discussion about the treatment of drug addicts in this country. Although we wholly understand the view of the noble Lord, Lord Hannay, and the committee that this was not part of their mandate to consider, none the less, when we get into discussion within the European Union about what the shape of that European policy should be, we will certainly be listened to if we are seen to be open to the arguments being deployed by those who are most knowledgeable and are sensitive to the possibilities of development of this policy in our own country.

It seems that the cost of drug addiction is not properly understood by the public in terms of the scale of its impact on our economy, although it is perhaps understood in terms of its impact on individuals. I found the economic analysis of costs and consequence of treatment of drug misuse from a National Treatment Outcome Research Study very telling. It reported that illegal drug taking requires a workforce of 5,000 customs officers and 18,000 police officers. More startling, it states that the victim costs of drug-related crime were £9.7 billion annually. That paper was produced by Messrs Godfrey, Stewart and Gossop.

I have also found extremely compelling the arguments deployed by a very personally involved practitioner of drug treatment, Mr Max Rendall. He wrote a book, published in the autumn of last year, entitled Legalize: The Only Way to Combat Drugs. The book is very well researched and forcefully makes the case for diminishing the attitude that drug abusers are criminals and strengthening the concept that they should be regarded rather as patients. That is also the message that comes out of the report of the sub-committee.

The presumption I make in intervening in this debate is that this is a subject for non-experts as well as experts, because the problem is of such a massive cost to our country that we have to get across the need to deal with it. I am happy that in the Government’s response to this paper the Minister included a reply that the Government wish to combine their legislative approach with drug demand reduction, supply restriction and recovery-focused treatment approaches, to address the complex issues that harmful drug use poses. It has to be recognised—and it was by the report—that there has been no appreciable decline in demand flowing from the EU drug strategy of the past seven years. We must address that deficiency. The Government can make a significant impact on public opinion in this country and should look again at the possibility of legalising the taking of drugs. That will enable regulation to be much more effective than it can be in the present situation.

My Lords, I congratulate the noble Lord, Lord Hannay, and his colleagues, both on the substance of their report, which is informed and realistic, and no less importantly, on its tone, which is reasonable and humane.

We should of course give praise where it is due to operational successes in dealing with drug traffickers, and acknowledge progress—for example the progress that the noble Baroness, Lady Massey, described—in treatment. However, we should also recognise that we are considering here an area of colossal policy failure since the orthodoxies of policy were established across the world in the UN’s Single Convention on Narcotic Drugs in 1961, and President Nixon’s declaration of a war on drugs in 1971.

Worldwide, there are 210 million users of narcotics, vast numbers of whom are criminalised. There are some 2.8 million drug users suffering from HIV and AIDS. The Count the Costs website counts the costs of drugs across the world in terms of health, crime, the economy, development, the environment, security and human rights. There is a useful paragraph in the Select Committee’s report alluding to the situation in Iran as reported by Amnesty International, where the human rights of drug users or suspected drug users have been violated in a programme of activity actually supported by European Union aid.

The United Nations calculated the cost of the global drugs problem in 2003 as $321.6 billion. SOCA in this country has estimated the social and economic cost in the UK to be £17.7 billion a year. The Government tell us that more than 50% of perpetrators of property crime are users of heroin and cocaine. Great swathes of Latin America have been devastated by crime, military repression, corruption and the atrocities of gang conflict—all associated with drugs. In Mexico, between 2006 and 2011, there were 47,000 deaths. As the noble Lord, Lord Mancroft, told us, the displacement as a result of reasonably successful interdiction of drug trafficking in some parts of the world has wrought havoc in Equatorial Guinea in west Africa.

The report tells us that,

“over the EU as a whole, and over the seven years of this Strategy, there has been no overall demand reduction”.

It goes on to say that,

“we have not seen evidence to suggest that there has been any measurable overall reduction in supply”.

The report last year of the Global Commission on Drugs Policy stated:

“Vast expenditures on criminalization and repressive measures directed at producers, traffickers and consumers of illegal drugs have clearly failed to effectively curtail supply or consumption”.

As the report notes, policies across the European Union are inconsistent. EU efforts to reduce demand and supply and to influence policy across the world are therefore ineffectual.

The All-Party Parliamentary Group on Drug Policy Reform, of which I am a member, held a conference last autumn. Our group is chaired by the noble Baroness, Lady Meacher, and I pay tribute to her for her remarkable work in this field. I know how very much she regrets that, because she is engaged in other public service duties this afternoon, she is unable to join your Lordships’ debate. Our conference was attended by eminent people from across the world, including members of the global commission, and politicians and officials from Latin America and Europe. Unfortunately, no Minister of the United Kingdom was able to attend. We agreed at that conference, just as the Select Committee has agreed, on the need for evidence-based, rational and proportionate policies to reduce harm and protect those who are susceptible to drugs.

Let me emphasise, in case there should be any misunderstanding, that I strongly believe that policy and enforcement should be implacable in relation to organised crime and systematic drug trafficking. We should give all the support we can to Europol, for instance, to enable it to perform as it needs to do on money laundering—the revelations about HSBC underscore the importance of that—and to seize the proceeds of drug trafficking and the drug themselves. Given that there is subsidiarity in this policy field in the European Union, let us at least learn from the diversity of policies among the member states. We need more research. The committee found that the work of the European Monitoring Centre for Drugs and Drug Addiction is a bright spot. It is important that in the next European Union drugs strategy there should be sufficient funding for the monitoring centre to enable it to develop its excellent work so that it can produce better data sets and more effective comparative data, which does not imply that we need to discard the longitudinal series of data that have been built up within the member states. The centre needs a capacity to evaluate and to make cost-benefit analysis, for example of the Portuguese experience, which should be done, of course, on a factual and dispassionate basis. I am glad that the Government agree that that would be useful.

The experience of the Czech Republic is an excellent example of evidence-based policy. In 1998, the Czech Republic decided to criminalise the possession of drugs for personal use. However, it wisely followed that enactment by a two-year cost-benefit analysis of the effect in practice—what we call in this House post-legislative scrutiny. They found that the availability of drugs had increased, that the use of drugs had increased, that the numbers of new users of drugs had increased, and that social costs had increased. Very rationally, in 2010, it decriminalised the possession of drugs for personal use. Some 35 countries have decriminalised, including Spain, and a number of states of the United States of America. Within the European Union, Germany, Estonia and Lithuania are tiptoeing in that direction. I would like to emphasise, just as the report does, that:

“Decriminalisation needs to be distinguished from legalisation, which is prohibited under the UN Conventions. Drugs are not legalised; instead, criminal penalties associated with the possession of small quantities of drugs for personal use, and the use of those drugs, are replaced by civil penalties such as requirements to attend treatment programmes”.

The experience of Portugal should be instructive to us, as the noble Lord, Lord Giddens, explained to us, and other noble Lords. It took the decision in 2001 to decriminalise drugs for personal use. Instead, there were to be civil penalties, and of course the work of the dissuasion committees; it made a commitment, on a large scale, to treatment and harm reduction. Mr Goulão, who gave evidence to the committee, and also gave evidence at our conference, said,

“a drug addict is mainly someone who needs health and social support rather than criminal conviction”.

Very importantly, the experience in Portugal has been that the commitment to treatment and harm reduction is cheaper. This matters at any time, but particularly in a period of austerity. The costs of treatment were,

“far outweighed by the savings to the criminal justice system”,

the courts, and prisons; by the reduction in the incidence in HIV and AIDS; and by having drug users engaged in society and the economy, instead of being marginalised.

In Switzerland—outside the European Union, of course—there has been a programme of injecting heroin users with diamorphine, leading to improvements in health, less drug usage and less crime; and those findings are endorsed by studies here by King’s College London of differential treatments for chaotic heroin users.

One of the difficulties in this country is that policy has gone to and fro, and sent out conflicting signals; for example, with the regrading of cannabis: first as a class B drug, then as a class C drug, and then again as a class B drug. I am encouraged by the evidence given by the Home Office to the committee that for every £1 we invest in drug treatment, at least £2.50 is saved in reductions in crime and other costs. My noble friend Lady Massey suggested that the savings were even larger; so the question is, are we investing enough? We are doing well, I understand, but could we do significantly better? We do need rational public debate. Policy-making is made very difficult by the attitude of certain elements of the media. The editor of the Daily Mail declined to meet the All-Party Group on Drug Policy Reform. It may make it easier to sell papers, but it is not constructive to demonise drug users. I very much endorse the finding of your Lordships’ committee that,

“the formulation and adoption of a new Drugs Strategy by the EU offers a golden opportunity to widen the public debate, to consider as dispassionately as possible the different policies and approaches, and thus to achieve a better consensus about the best way of proceeding”.

But will the British media allow us to develop the argument in this way?

The committee noted that tobacco kills 5 million people a year; alcohol 2.5 million people a year. These are huge problems, but nobody is suggesting that we should criminalise the consumption of tobacco or alcohol. They noted that drugs kill about 500,000 people a year. The consumption of drugs in this country is criminalised.

It seems to me that the benefits of decriminalising possession and using regulation would be to release users from the embrace of the criminals and cut the ground from under this vast and murderous criminal industry. It would make it much more possible to increase advice and help for users and get more of them into treatment. It would enable control of the composition and quality of the substances that are consumed, and there would be the benefit of tax revenue from that consumption. No society has ever been drug-free and the strategy should be one of damage limitation. So I am disappointed by the Government’s response to the sub-committee, which says that decriminalisation,

“fails to recognise the complexity of the problem”.

Continuing with criminalisation fails to recognise the failure hitherto, and no one who advocates decriminalisation disputes the complexity.

The issue of new psychoactive substances, “legal highs” as they are popularly known, is an immensely difficult, complex and important challenge. The New Psychoactive Substances Action Plan produced by the Government sketches elements of a sensible strategy and has good features such as temporary bans while not criminalising users and only banning where the harms are established. But this is a dangerous and massive challenge. The All-Party Parliamentary Group on Drug Policy Reform is holding an inquiry at the present time, and I hope that our conclusions will in due course be helpful.

I want to ask the Minister whether he considers that we might do better if the Department of Health in this country and the directorate of the European Commission that leads on health were to lead on drugs policy, because drugs are, after all, primarily a health issue. There are signs of movement in international thinking. The UK’s own drug strategy lays considerable emphasis on treatment and education. At the March meeting of the UN Commission on Narcotic Drugs there was an Australian resolution calling for the UN to consider a wide variety of evidence-based control measures to tackle the emergence of new psychoactive substances and increase the use of consumer protection. It was agreed that all options should be on the table for addressing new psychoactive substances. UNODC Executive Director Fedotov said:

“We must restore the balance … Prevention, treatment, rehabilitation, reintegration and health have to be recognized”.

Will the UK Government play a full and willing part in that movement of opinion and policy, and will the new European Union strategy similarly assist that process and that progress?

My Lords, I, too, congratulate the noble Lord, Lord Hannay, on this report, which, given the number of people who are involved in this debate, shows how vital this issue is. During my short time as a practising economist, one of the things I learnt about markets was that while states can regulate them, they certainly cannot abolish them; where there is demand, there is always supply. That applies to the area of drugs probably more than anywhere else. It is an irony that the UN Single Convention on Narcotic Drugs signed in 1961 and the subsequent war on drugs have been pushed particularly strongly by the United States, the country we see as the bastion of capitalism and markets, but there is an absolute contradiction here. The convention was implemented in 1964 and in theory there should be no global drugs market at all because the convention was signed by the vast majority of the members of the United Nations.

As the noble Lord, Lord Howarth, has said, the drugs market was worth $320 billion back in 2003, but perhaps what is more important—and I suspect that I am underestimating it—is that it represented 1% of GDP. In 2009 the market for cocaine was estimated to be worth around $85 billion, which can be compared with the income of Andean farmers at around $1 billion. There is a huge market in South America. Of that laundered money, which at today’s value is something in excess of half a trillion dollars, under 1% is actually seized during its transit by authorities, so 99% of it is recycled into organised crime. The report is very clear—and it has been mentioned by a number of other noble Lords—that, in terms of supply and demand, the existing EU strategy has had no noticeable effect whatever.

I was also interested in the statistics at the beginning of the report that suggest that almost one-quarter of EU citizens have admitted to using drugs, and one in 20 on an ongoing, annual basis. That suggests that whether we like it or not, drug taking—I suspect mainly so-called soft drugs—is a part of our culture and of life. However, simply because the law is transgressed, does not mean that we should endorse drug taking. I am sure many of us break the speeding limit, but that does not mean that we should not have speed limits as part of the rules of driving. However, there is an issue there about what we make legal and illegal.

One of the results of this policy, and the area that I will concentrate on, concerns consumer countries. We have black markets and we have health risks—because there is no quality control, taking drugs is more dangerous under a prohibition regime. There is no consumer advice. The activity produces criminals—in the United States it is estimated that one in four imprisonments is drugs-related and in the UK maybe up to 50% of crimes have some relation to drugs. We also have organised crime as part of our infrastructure. Perhaps more importantly, in producer countries we have already mentioned the 47,000 or 48,000 Mexicans who have been murdered during the presidency of President Calderón over the past six years, and 95% of all murders in Mexico are drugs related.

I very much welcome the comments of my noble friend Lord Mancroft about transit countries. Honduras has the highest murder rate in the world. I chair the all-party group of a country that is not well known—Guinea-Bissau, an ex-Portuguese colony in west Africa. It is a state that has failed in many ways and has become a main route for drugs from South America into Europe. As a result, that society has disintegrated even more; corruption is strong and the military within the country has become a state within a state and is largely financed through the drugs trade. In those countries, we have not only drug habits but much greater corruption.

One of the most important paragraphs in the report, paragraph 64, quotes Youngers and Rosin in 2005, who say that,

“international drug trafficking breeds criminality and exacerbates political violence, greatly increasing problems of citizen security and tearing at the social fabric of communities and neighbourhoods. It has corrupted and further weakened local governments, judiciaries and police forces … it can be extremely damaging to local environments”.

This issue of displacement—I welcome its emphasis in this report—shows the great difficulty of this policy. When we clamp down in one area, it destroys another without mending the societies where the problem has been solved from a consumer state’s point of view.

I would probably disagree with noble Lords so far—I disagree with the report in this regard—about one area, which comes back to practical economics. One cannot decriminalise the consumption of drugs and keep the criminalisation of the supply chain. What happens in that circumstance is that one sits slightly more smugly as a consumer in your population, but you still lay waste to the developing world and the transit countries through which those supply chains operate, because no difference is made to the way the system operates there.

That is why this issue is particularly difficult and there are no easy answers. There are huge political risks —the newspaper issue in the UK has been mentioned by the noble Lord many times—but the system has failed, and now we have an international network of organised crime.

I am impressed by what the noble Lord is saying, but could he help us by clarifying this issue? If he does not accept that you can decriminalise the taking of drugs while keeping the criminalisation of the trade in drugs, how does he compare that with the situation in which the illicit black market in tobacco is criminalised?

You will never completely take away criminalisation, but perhaps the least damaging solution—again, I am not pretending that there are any easy answers regarding the supply chain—is to have pharmaceutical companies becoming distributors of drugs like any other prescription drugs. Will you ever completely decriminalise something where there is high taxation or smuggling? The taxation-hedging that takes place is perhaps more the issue than the question of VAT on drugs like alcohol or tobacco, and is perhaps the area where you have to be more careful.

There is an international network of organised crime involving money-laundering; corruption; human misery, of course; and a very large black economy. More than that, though, we have reduced liquidity within that black market which allows arms trafficking, people trafficking and terrorism. You can regulate markets but you cannot abolish them. I agree very much with the report’s conclusions in general but I would very much like to see the EU lead this debate internationally into much more realistic waters for the future. I particularly agree with this part of the Government’s response, which reads:

“It is vital that this debate is focussed on clear evidence and analysis and we will continue to champion the use of evidence at local, national and international level”.

However, the track record of UK Governments on evidence-based drugs policy has been particularly bad.

My Lords, I join those who welcome the European Union Committee’s 26th report of Session 2010-12. It is an excellent document and I congratulate the noble Lord, Lord Hannay, and the members of the committee on its creation. I also congratulate the noble Baroness, Lady Meacher, and her team on the detailed response that they have produced and circulated to our meeting today on all aspects of the report. I am only sorry that she is unable to be with us today. She has, however, asked me to deliver her speech to the meeting today in her absence:

“I, Baroness Meacher, am profoundly sorry not to be able to be present today for this important debate on Lord Hannay’s valuable European Union Committee report on European drug strategy”.

The noble Lord, Lord Hannay, is to be applauded for the steering this inquiry through challenging territory and for ensuring that the report says so many useful things. I hope very much that the Minister will feel able to respond positively to the report, with some concrete proposals for action within the UK. It is helpful that the Hannay report proposes that most aspects of drug policy should remain within the competence of member states, rather than at this time attempting a pan-European reform strategy. European states like Portugal, Switzerland, the Czech Republic and Spain have shown the way to the rest of the world in developing and evaluating more health-orientated and cost-effective drug policies that seek to avoid criminalising problematic drug users. Individual member states could learn from those countries and take action. This would no doubt be more difficult at the EU level. Having said that, it would be most helpful if the EU would undertake a review of the best drug policies across Europe, with a view to drawing up a scientific document setting out the evidence of what works.

The All-Party Parliamentary Group on Drug Policy Reform agrees with the Hannay report that the EU’s early warning system on newly developed psychoactive substances within member states and beyond is of considerable importance. In our inquiry into possible regulatory controls over these substances, it has become apparent that speedy access to information about new substances is a vital prerequisite to taking any appropriate action. Our inquiry has highlighted the importance of information for potential users of the new psychoactive substances, and for their parents, teachers and other influential adults, in reducing use. We particularly welcome the support from the Hannay committee for,

“the exploration of alternatives to banning new psychoactive substances, such as placing them within regulated markets similar to those that already exist for alcohol and tobacco, which attempt to control use through education and treatment rather than criminalisation”.

Our report, in the autumn, will be considering very carefully the pros and cons of different regulatory systems, as well as their implications for use of these substances among young people. An important issue for all EU countries is whether banning the supply of specified new psychoactive substances should be linked to the banning of use, with all the negative consequences that that entails.

Again, the All-Party Parliamentary Group on Drug Policy Reform warmly welcomes the positive comments of the Hannay report on the Portuguese public-health orientated national drug strategy and the encouragement to member states to study each other’s policies and to be more willing to learn from one another. It also welcomes the committee’s support for prioritising the evaluation of drug strategies. At this time of austerity, it will be important to evaluate the costs and benefits of allocating resources to health-based policies rather than to criminal justice responses.

Will the Minister agree to an evaluation of the possible decriminalisation of drug use in the UK—which is of course quite different from legalisation—as a possible response to the growing evidence of the cost effectiveness of such policies? The noble Lord, Lord Hannay, rightly raises the issue of the location of responsibility for drug policy within Europe. The report goes further and says that the EU strategy,

“offers a golden opportunity to widen the public debate, to consider as dispassionately as possible the different policies and approaches”.

These are most valuable observations. The same issues apply to individual member states. Again, it would be most helpful if the UK Government would establish an independent review committee to consider the appropriateness of the Home Office as the lead department for drug policy in this country. There are alternative models within Europe and an evaluation of these would be helpful. Following the reasoning of the Hannay report, it would of course be wise to incorporate this matter within a wider review of the Misuse of Drugs Act. Again, I offer our congratulations to the noble Lord, Lord Hannay, and his committee.

My Lords, I speak as a member of Sub-Committee F of the European Union Committee chaired by the noble Lord, Lord Hannay. I would like to pay tribute to his leadership and chairmanship, which is always outstanding. Indeed, I think that the way in which the report has been welcomed, and the plaudits that it has received, indicate how much appreciation there is for what he has done.

I hope that those who are interested in this subject will not only read the report but will read the evidence that was submitted to the committee. A lot of work went into much of that evidence and it should not just be cast to one side. It contains some very interesting reflections of experience. I, for one—and it is not only in this sphere that I have noticed it—found an interesting difference of perspective between those dealing with the issue at a global policy level and those dealing with it at the front line of people affected by drugs. I think that your Lordships would find it refreshing to read the evidence given by the Reverend Eric Blakebrough, who is at the forefront of working with drug addicts. What he had to say was extremely illuminating.

As has come across in this debate, a review of global drug policy is clearly overdue. As some noble Lords have emphasised, the Global Commission on Drug Policies has said this, too. It is significant, and we would be remiss not to take it seriously, that states such as Guatemala, Colombia and Uruguay, which face many of the consequences of what we are debating, are calling for an urgent debate of this kind. If there is to be a debate, the European Union should certainly take a lead in it.

Our report is an absolute reflection of the consensus that was reached. I attach great significance to those sentences where we talk about the health dimension being at least as important as the enforcement dimension. I wish that the debate could move more into the role of health. Since our report was published, the European Monitoring Centre for Drugs and Drug Addiction has commended the Portuguese approach. The cost benefits of a health-focused, rather than a criminal justice-focused, approach are particularly relevant at a time of so much economic stringency and cuts in public funds, because we must be certain that the money being spent is not being wasted and is being used as cost-effectively as possible.

As my noble friend Lord Howarth was sharing his thoughts on decriminalisation, my thoughts immediately turned to the report. There in chapter 1—I hope that the House will forgive me if I quote from it—we deal with exactly that, stating:

“It is instructive to compare illegal narcotic drugs with two psychoactive drugs which are legal and openly commercially available: alcohol and tobacco. Worldwide, one person in three uses alcohol, one in four uses tobacco, whereas fewer than 5% of people declare themselves as using drugs at least once a year, and fewer than 1% use drugs on a continuing basis. Tobacco kills five million people a year, alcohol 2.5 million people a year, and drugs about 500,000 a year. These are figures that need to be borne in mind when considering why some potentially harmful addictive substances are licit and some illicit. Prescribed drugs, whether or not mixed with narcotic drugs, also lead to acute cases of addiction and withdrawal, but they too are outside the scope of our inquiry and are not examined in this report”.

Perhaps I may say on a purely personal note that, after undergoing an operation for which I had to take painkillers afterwards, I had a hell of a job coming off one of the painkillers that was prescribed. My GP told me, “You do realise you are taking an addictive drug and you are going to have a tough job throwing it”. The interfaces in this area are very important to face.

A further issue is how we toughen up our approach to money-laundering. We have to take very seriously what has become clear in a big case in the United States at the moment. One of the difficulties in facing up to this is that it is sometimes very difficult to establish where the dividing line is exactly, if there is such an absolute dividing line, between illegal and legal business activity. This greatly complicates the tasks of the enforcement agencies.

I referred to the urgent need for a review. It is fair to say that, after 50 years of the current enforcement-led international drugs control system, the so-called war on drugs is coming under unparalleled scrutiny. The goal was, of course, to create a drug-free world. Instead, despite more than $1 trillion, according to the UNODC, having been spent fighting the war, illegal drugs are used by an estimated 270 million people and organised crime profits from a trade with an estimated turnover of $330 billion a year—the world’s largest illegal commodity market. The UNODC has acknowledged that choosing an enforcement-based approach was having a range of negative unintended consequences, including the creation of a vast criminal market, displacement of the illegal drug trade to new areas, diversion of funding from health and the stigmatisation of users. The noble Lords, Lord Mancroft and Lord Teverson, dealt with that point. What concerned us in our deliberations in Sub-Committee F was not only this displacement and the drawing of third countries into the whole affair but the human rights dimensions. Sometimes, what was being done by the enforcement agencies and others in some of the third countries was totally unacceptable in terms of any basic commitment to human rights. We really do need to watch where our money is going and what is happening to it in terms of whether it is upholding human rights, whatever the cause may be. We cannot deal with one problem by transgressing very seriously in another area.

I shall conclude my brief intervention by saying that I have been impressed, in the context of the urgent need for a review, by a recent report produced by Count the Costs, which is a coalition of NGOs working in this area. It is a very interesting coalition that has produced an alternative report. The headings in that report include:

“Wasting billions and undermining economies … Undermining development and security, and fuelling conflict … Threatening public health, spreading disease and causing death … Undermining human rights … Promoting stigma and discrimination … Creating crime and enriching criminals … Causing deforestation and pollution”.

The report also examines other options for controlling drugs, including health-led approaches—hence the significance of Portugal—and legal state regulation and control. It ends with a call to UN member states to count the cost of the war on drugs and properly explore all the alternatives that might deliver better outcomes. In the report, we hear the voice of people very often giving their lives to work in the front line of the consequences of this very serious issue. In our deliberations, we should take seriously what they are saying.

My Lords, I recall in my early days in this House the noble Lord, Lord Judd, telling me that just because I was sitting on the Bench for the first of a trio of debates, I did not have to speak in all three of them. I admire his stamina.

This is indeed a useful and realistic piece of work—to repeat just two of the plaudits that have been given. EU or UK? As the chairman of the committee said, it is subsidiarity in action: it is not either/or. The two are complementary, just as it is not a matter of the Home Office or the Department of Health—though, of course, if one is in the lead it affects both perceptions and actions. This involves health, law enforcement, education and, if you are Dutch, tourism. When I looked for information about the new restriction on cannabis in Holland—the ban on foreigners visiting cannabis cafes—I did not expect to see quite so much about the tourist industry. It is too soon to see the impact on the use of other drugs there, including alcohol, but I hope that the UK is keeping an eye on that.

The Dutch have not criminalised—or, perhaps, recriminalised—cannabis, but I agree with the conclusion of the report that the debate would benefit from a clearer understanding of what it would mean if we decriminalised certain drugs. It seems to me that different people mean different things by this. I also agree with the report that member states should be more willing to learn from one another.

The combination of the EU and drugs seems a particularly easy target for the—how can I put it?—less thoughtful media. Some months ago I attended a seminar that attempted to promote a sensible, measured debate on drugs. The politicians there blamed the media. I have to say that the media blamed the politicians for not taking a proper lead. The drugs trade, as has been said, is an international business and business, as my noble friend said, adapts to markets. If we are to achieve more than just displacement, there must be a lot of co-ordination and co-operation. The report makes the point about the displacement effect and other possible unintended consequences when measures against drug trafficking are planned.

Like other noble Lords, I was pleased to see the importance the committee placed on human rights. When the EU provides assistance to other countries in anti-trafficking measures, it must make clear that resources must be used in a way compatible with human rights, and programmes must be monitored to ensure that they do not bring about human rights violations, in particular the application of the death penalty.

The issue of displacement—or, perhaps, replacement —is very much to the fore of the inquiry into new psychoactive substances by the All-Party Parliamentary Group on Drugs Policy Reform, which has already been mentioned. It is chaired by the noble Baroness, Lady Meacher, from whom, I have to say, I am learning an enormous amount. The ingenuity of manufacturers is staggering: for instance, using research undertaken years ago to make substances that were not then developed. In an age when science and manufacturing are so well developed there will always be another new substance available to take the place of the one made illegal. We talk about the rate at which new substances come on to the market; the issue seems to be more about replacement, as one is banned and another takes its place, than variety. Suppliers, of course, are responding to demand. With modern communications and information, it does not seem to take very much effort to access the new drug.

I hope that there will be an opportunity at some point to discuss new psychoactive substances when the group has finished its work. Like my noble friend Lord Maclennan of Rogart, I am a novice in this area, but the inquiry is making me think hard about the need to unpackage drugs: there are so many different substances within that heading. We need to understand markets and fashions: different legal highs, it seems, are the highs of choice in different parts of the country.

We need to understand the impact of a ban; it seems that the use of mephedrone may have increased since it was banned. We need to understand the harms of criminalising young people. We need to understand the psychology of recreational drug use; it seems that people grow out of it very largely as they grow into their mid-20s and their lives change. We need to put all this in the context of how society deals with alcohol and much more.

It is also making me think about what we mean by drugs education. Frankly—no pun is intended here; the point does not come from the Frank website, although I have looked at it—I wonder whether “education” is even the right term. It might say more about me than about its content, but it seems to have unhelpful tones of authoritarianism. What does it take to persuade a young person—because they all think that they are immortal—that it is dangerous to take a white powder or tablet the ingredients of which are unknown or unregulated?

I mentioned this work to a friend who told me that some years ago her daughter told her that she had taken an ecstasy tablet at a club. Her mother’s reaction was to say, “Whenever you come food shopping with me, you scrutinise every label for the e-numbers and other contents that you disapprove of. How could you possibly take a tablet when you have no idea what is in it?”. I believe that she has not taken any drugs since.

My Lords, I thank the noble Lord, Lord Hannay, for his instructive contribution and leadership. I welcome this report on the EU drugs strategy. It is a comprehensive effort and will afford us an opportunity for further debate on the points relevant to the UK. The report enhances our current knowledge and enlivens us to the common challenges we all face. Mostly, it reinforces the need for co-operation within and between countries in order for us to deal with matters of trafficking, supply and money-laundering as stated in Chapter 4, as well as sharing examples of good practice in Europe.

With your Lordships’ indulgence, I will concentrate on the situation closer to home in the UK, more specifically the experiences of those on the front line in Tower Hamlets. As the committee is aware, according to the NTA there about 306,000 heroin and crack users in England. We have high numbers who receive drugs treatment in the community or in prison, suggesting a considerable impact on addiction. Although the UK is leading internationally on drug treatment, findings indicate that drug-related deaths are higher in England than in most other European countries. I take this opportunity to pay tribute to the work of the NTA under the leadership of my noble friend Lady Massey, and bow to her and others’ experience, and that of those who have contributed to today’s debate.

Nationally, in the UK, a number of well respected voluntary organisations are providing a variety of programmes, although there is clearly a need for greater co-operation between voluntary and statutory agencies to minimise the risk of services and care provided being patchy or inconsistent. I declare an interest as I was privileged to have led the “Breaking the Cycle” three-year pilot project initiated by Addaction in partnership with the Zurich Community Trust. It provided 400 families with a holistic response where families from Derby, Tower Hamlets and Cumbria were supported. This service was based on the principle that most individuals want to change if support is available to them. It targeted the needs of the whole family, providing a range of motivational and individual interventions. These included counselling, family mediation and therapies, with regular monitoring and home visits, working in collaboration with partner agencies including schools and others. So successful was the outcome for significant numbers of the families, that this model has since been implemented across many parts of the UK by Addaction.

The work was begun in Tower Hamlets more than three decades ago by a handful of brave individuals when most of us felt that this was a taboo subject—while, in some quarters it remains prohibitive, as more families face the anguish, frustration, stigma, pain and isolation which characterises the experience of many families with a member using drugs. There is more open discourse as well as demand for services; that conversation is taking place largely due to organisations such as NAFAS, the Osmani Trust and the Jagonari Centre, which I believe receives funding from the MoJ.

The total number of people accessing structured drugs treatment in Tower Hamlets at the end of March 2012 was 1,853 and 545 were Bangladeshis. There are growing concerns among the community about the use of cannabis by the under 20s, as has already been alluded to; and a rise in alcohol and drugs use among girls, who are sometimes coerced into prostitution to support their habit. Organisations such as NAFAS, which has built up 20 years of expertise, say that there is a need for further research as well as specialist provision to work with families where stigma is still a deterring factor in seeking initial services. A website called londonstreetgangs describes Tower Hamlets as a “heroin capital”, though that is not my personal experience. A film made by Rageh Omar, of Al-Jazeera, refers to £300 million of deals being done in a few days. This was a staggering sum. The total funding for both drugs and alcohol treatment and drugs intervention projects in Tower Hamlets is a mere £8.7 million. It is a frightening reality and the value of the fight we have on our hands.

The cost of family grief, suffering and loss is beyond words. Every parent whom I have spoken to has shared their fear, hopelessness, helplessness, trauma as well as shame. While there are no apparent London-wide targets to tackle drugs dealing on our streets, Tower Hamlets Council has led a local campaign, responding to the community’s demands, called “Dealer a Day”. The programme successfully involved the community and last year secured 400 arrests for drugs supply offences. Despite the efforts made by these and other organisations, significant gaps remain in services, which need further consideration by your Lordships’ House. Frequently those seeking help have hidden their addiction from their families for years before seeking services, as is also known with survivors of domestic violence and child abuse. There is little or no sympathy for addicts seeking help, because drugs addiction is seen as a lifestyle choice.

There is clearly an enormous amount of progress and information available, but there is still a long way to go in creating awareness of addiction and identifying potential drugs use, particularly among family members. Many families that I have spoken to will testify that this is their initial barrier. Work by Addaction also suggests that addicts cannot just be treated medically, but require a holistic intervention involving a range of therapies, support, counselling, housing, and family involvement. Funding should and must be targeted to working with families of addicts to educate them, although I take the point of the noble Baroness, Lady Hamwee, about education. However, it gives families the necessary tools to cope. During the work with Addaction, it became evident that many involved in this field are the least skilled professionals. Therefore professional training needs to be strengthened to equip those who deal with the most vulnerable in our society. They also need to be enabled to work in a multifaceted and multidisciplinary way, which is now required by social workers and police officers when dealing with crimes of domestic violence and child protection cases.

The role of GPs is also critical. They are in an ideal position to promote and embrace a holistic approach, including controlling and limiting substitution drugs, to which many become further dependant, as has been alluded to by the noble Lord, Lord Judd, and others. There ought to be consistency in practices, so that someone living in Rochdale can access similar standards of care as those available to people living in Redbridge. I understand that this is not the case. For example, some authorities in the south-west operate a system of “dry house”, which promotes total abstinence and independent recovery. This support system means a higher rate of recovery. It seems logical that this should be considered by other local authorities, if necessary by pooling resources, yet this is not the case in many parts of London. Why the success rate of programmes such as Alcoholics Anonymous and SMART recovery is higher than that of standard treatments should also be looked into.

I could go on listing the countless great services that have done amazing work over a long period and others that sell families short and leave them crumbling. I speak from personal experience of watching a family member with a severe dependency on drugs. I witnessed drug-induced psychosis, the cycle of recovery and relapse, hospital admissions and that family member being systematically and repeatedly failed by institutions as their choice of drug was simply replaced by an ongoing high dosage of anti-psychotic and anti-depressant drugs. These surely create another, equally dangerous addiction, to which several noble Lords have alluded.

Drugs are the fifth column in many communities. At a time of austerity, this may be the last priority for funding. Given that resources are shrinking, we need a more co-ordinated response to the devastating impact on families and society in general. Currently, very few structured daycare programmes address challenging addictive behaviour. Some have referred to structured daycare programmes as being almost like babysitting. I apologise; I do not intend to offend any particular organisations or methods of work.

Appearing before a Select Committee in the other place recently, Russell Brand called for,

“an authoritative, truthful, honest debate and some funding for abstinence-based recovery”.

He claimed that this would help to,

“neutralise the toxic social threat”,

that addicts pose as criminals and to ensure that they are not simply put on methadone programmes for years at a time, which leaves them written off on the sidelines of society. The harm to individuals, families, communities and society at large is all-encompassing. The examination of drugs cannot be conducted dispassionately, as is suggested by the report. Collective responsibility to tackle this issue is a must so that generations of families are not destroyed in the process, leaving society to pick up the burden of our failures. Mitch Winehouse recently said that he needed help to speak about the death of his daughter. This is borne out by parents to whom I have spoken. I can say only that I am glad that he has done so and agree entirely with his assertion that a grass-roots response is required. Indeed, I would welcome it if parents, individuals and organisations made contact to share their experiences with us all.

Drugs have permeated our young and their social culture. The graveyards of our country claim many of the talented and those children whose names we will never come to know. Surely it is time that we looked at the suggestions detailed in the report, which refers to the Swedish experience in paragraph 30. Here, I note that I am perhaps alone in this; none the less, I shall pursue the point. The report says that Sweden has long been viewed as operating a relatively tough national drug policy. The approach is one of zero tolerance, in an effort to achieve the national aim of a drug-free society. While I acknowledge that there is no consensus on this, I ask the Minister how he views the suggestions of zero tolerance and abstinence-based programmes. Also, will he undertake further work to establish greater understanding of the plight and drug habits of girls and young women in inner-city areas?

My Lords, I also speak as a member of the sub-committee of the noble Lord, Lord Hannay. Can I start by thanking him for his chairmanship and for securing this very important and interesting debate?

Some 12 years ago I made a speech early in my membership of this House. It was on cannabis. I felt in a lonely position. I fear tonight that I might repeat the experience. My short speech will be informed by a 35-year career in policing, part of which was in the drugs squad of Durham Constabulary—which was then and I might add remains one of the finest police forces in the country.

Illegal drugs are a scourge in modern society. I think that we all agree on that. I have seen at first hand the misery, psychological damage and, yes, death, caused to young, old, rich and poor by improper drug use. Only last week we read in the press of two tragic but different cases. One was that of a psychologically damaged 26 year-old woman, Hannah Bonser, allegedly addicted to cannabis, who for no apparent reason attacked and stabbed Casey Kearney, a 13 year-old stranger. It was for no other reason, it appeared, than that she was being told in her head to do it. This case illustrates the damage that newer, more powerful cannabis can inflict on the mind and should be compulsory reading for those who would relax controls on this mind-altering substance. Bonser was convicted of murder and sentenced to life imprisonment.

The other case is totally different. It is of two people of mind-boggling wealth, Hans and Eva Rausing, living in a wealthy part of London in a £50 million house. They lived in squalor to indulge their addiction to hard drugs and it resulted in the death of Eva, who was only in her late 40s.

I mention these two cases to illustrate that the drug problem affects all classes, professions and ages. If allowed to flourish it can eat away at the very fabric of a normal, healthy society. As responsible parliamentarians in a nation state or in a European union of states, we have a duty to get right our strategy for dealing with the problem. We are here to discuss the strategy of the European Union, but that will naturally be informed by the individual experience of member countries.

In this short debate I would like to discuss two areas and base my comments on many years’ experience of dealing not just with drugs but criminal activity generally. The main thrust of illegal drug control should be the task of individual states, each with different problems and cultures. Subsidiarity in this area is the correct approach. How can the European Union assist? Clearly, the fight against drug trafficking goes wider than state boundaries. The various countries of the EU should work together, pooling resources and experience in the fight to prevent the movement of illegal drugs within and outside the Union.

One of the key weapons in the fight against drug trafficking is good intelligence. It is essential. Rather like prostitution and pornography, drug crime is often described as victimless. You rarely have a complainant reporting the matter. As the noble Lord, Lord Maclennan, mentioned, the victim does not always come forward. There are victims, of course: the child in the pornographic film, the trafficked girl now working as a prostitute, the drug addict and his family, and the society that has to fund his treatment. They are all victims. Good intelligence is critical.

The difficulty is getting police officers, police forces and countries to share that intelligence. Before computerised databases we kept information on cards. The problem was getting detectives to put the information on the cards. Officers had a tendency to keep the information to themselves. When they were on leave or away sick, that valuable information was lost. Now that we have computerisation there is no excuse for that.

We saw from the inquiry chaired by the noble Lord, Lord Bichard, into the Soham murders in Cambridgeshire, that one of the main problems for the police was a lack of sharing intelligence. For that reason, one of the most important recommendations in our report before noble Lords today is paragraph 72. It states:

“The Government should fully support the Director of Europol in seeking to improve the use of Europol's unique databases and other facilities, and should urge other governments to do the same”.

Trafficking of course is the supply side of the problem. What about reducing demand? The criminal law has a part to play, as has education. Treatment, of course, is also essential, but it is a little late to go down that road when we should be trying to stop it happening in the first place. In our inquiry, the evidence from the Home Office was interesting in that our UK policies seem to be working. We were told by the drugs director that,

“drug use is actually falling in a number of countries across Europe”,

and that England is,

“showing some of the biggest reductions of drug prevalence across the EU … the fall is almost entirely due to reduction in the use of cannabis”.

To some extent, that was borne out in the speech of the noble Baroness, Lady Massey, who mentioned the reduction in the number of people trying to get treatment for drug addiction.

It made me smile when I put to witnesses who had perhaps a more liberal view than I that we must be doing something right in Britain. I got the response that we should treat the data with caution. Yet these are the very data used by that same lobby when drug offences were increasing. Of course, it then criticised the use of criminal sanctions. It is a classic case of shooting the messenger and using statistics rather like a drunk uses a lamp-post—more for support than illumination.

In conclusion, we need to change the culture of society. It is not impossible; we have done it before. We did it with drink-driving. Those who were convicted were punished and ostracised, and we increased the detection methods with roadside breath testing. I am very pleased that we are going to do the same with drug- driving, which is the cause of a relatively unknown number of deaths in this country. We also did it with smoking. We made it illegal to smoke in pubs and restaurants, and, I am pleased to say, in your Lordships’ House.

Most people do not like to be seen infringing the law and, over time, the culture of society changes. Peer pressure starts to have an effect, and this is living proof that there is a place for criminal sanctions, which can change society for the better. The European Union can assist in that endeavour. I commend the report to the House.

My Lords, this is another admirable report from our European Union Select Committee. I would like to praise the noble Lord, Lord Hannay, for his very forceful introduction, with which I think from this side of the House we wholly agree. I also thank the Home Office for a very detailed response to the committee’s report. We do not always get that but this was an example of a department doing its job properly.

Most noble Lords in this debate have focused on drugs policy generally. We have had a lot of excellent expert contributions. As someone who is not an expert in this field, I have learnt an awful lot. This is the sort of debate that the House of Lords should have where, I hope, we can contribute to more intelligent public debate on these issues. In my brief remarks, I shall focus on the role of the European Union in drugs policy and the Government’s view of what that role should be. It strikes me that this is an entirely proper question to ask when, last week, the Secretary of State for Foreign Affairs, William Hague, launched a review of the balance of competences between Britain and the European Union.

I suppose that there is general agreement that one good thing about the EU is that it is a laboratory for policy experiment. While I agree with the noble Lord, Lord Mancroft, that there are major cultural differences between the member states, there are also a lot of socio-economic similarities. We are all post-industrial societies. Europe is quite unlike the United States, in that trends towards social liberalism, secularism and individualism are very much the social trend in Europe. Some of the problems that lead to drug use are very common across our societies, such as the polarisation of skills that lead to a lack of prospects for young people, which is where some of the most tragic instances of drug use arise.

There is a role for comparing national policies and practices as a contribution to evidence-based policy, but in order to do this properly the role of an agency, such as the highly praised EMCDDA, is very important. Therefore, the first question I ask the Minister is to seek an assurance that the Government will continue to support the work of this agency and that Britain backs its continued existence, and will support it in future budget negotiations.

More than that, there is an EU competence in this area. One would hope that the Government would endorse that. A lot of people think of Europe as simply a free trade area or a common market, but of course one of the features of a common market with its free movement is that a lot of things cross borders that we do not necessarily like. Drugs are the classic example. It is a very proper issue for a union that is about promoting free movement also to be about trying to deal with some of the adverse consequences of free movement, of which drugs, cross-border criminality and drug trafficking are good examples.

Most of the member states of the EU have accepted that logic. It is a logic that is not driven by some mystical dream of a federalist project, but by the facts of life, and the need for co-operation to tackle these problems. During my time as an adviser in Government, I always thought of the Home Office as one of the most sovereigntist of the Government departments in terms of clinging on to national sovereignty. It is interesting that its response to the report shows an acceptance of the need for an EU role which is welcome.

The justice and home affairs agenda has grown enormously. In 1992 it was simply a question of intergovernmental co-operation and a separate pillar. All member states agreed at the time of the Lisbon treaty that it should be properly brought into the community system of decision-making. Do the Government agree that there is a proper role for the EU in drugs policy? Will that be one of the outcomes of the review of its competences? When we are thinking about the balance of competences, it is not a question of whether they are for the nation state or for Europe. In most cases, as in this case, the primary responsibility will rest with the nation state, but there is a useful and important European Union supporting role. I should therefore like the Minister to confirm that he agrees that the European Union adds value in this area, and that this is not an area where the Government would seek to repatriate powers, if indeed they are seeking to repatriate powers at all. The question is not one of competence but of whether powers are exercised in conformity with the principles of subsidiarity and proportionality.

Will the Government, in response, endorse their support for institutions such as Europol? Will they agree that there is a possible role for minimum legislative standards? I see that the Home Office response offers a pragmatic judgment on that, which is that it depends on whether or not they work. Will the Government support that view? What is the Government’s position on measures to deal with the proceeds of drug trafficking and to deal more firmly with money laundering?

Today is possibly an important day in the history of Britain’s troubled relationships with the European Union because, when we woke up this morning to read our Daily Telegraph, we saw in that newspaper the important statement by the Prime Minister that he, “would never”—I repeat, “never”—

“campaign for an ‘out’ vote in a referendum”.

Do the Government agree that the EU’s role in helping to tackle cross-border crime and drug trafficking is one of those modern cases for the European Union in the 21st century that this Government wholly endorse?

My Lords, like all other speakers in this debate, I offer my congratulations to the noble Lord, Lord Hannay, on producing this report and on the work of all the members of the committee. If I may single out just one at this stage, it would be the noble Lord, Lord Mackenzie of Framwellgate, particularly for his remarks on the proper use of statistics, for which I was very grateful. If you accept the statistics when they go one way and then denigrate them when they are going the other, it is not a proper way to behave. My estimation of the noble Lord, which was always high, has gone considerably higher as a result of those remarks.

As always on occasions such as this, I ought to start with an apology. Yet again, as with earlier remarks I made in evidence to the noble Lord’s committee, I confess that we cannot answer what I will call the Warsaw Convention question. I still hope that we will be able to produce something within the next 12 months, but I have to repeat that it requires quite a lot of legal and policy analysis. We are confident that we are compliant with the convention. In fact, in some areas we go further. We will comply when we can, but more work needs to be done on that in due course.

I singled out the noble Lord, Lord Mackenzie of Framwellgate, but I should say that the speakers’ list has attracted a great many experts, and we are grateful for the fact that the noble Baroness, Lady Massey, with her experience as chairman of the NTA, could come forward. Other noble Lords who have taken part in all-party groups and served on committees have brought their thoughts to this debate.

Bearing in mind the hour and the fact that there is another debate to come, noble Lords would not want me to repeat the entire response of the Government to the report because, as they will know—I have a copy of the letter I sent to the noble Lord, Lord Hannay, with the Government’s response—it goes on for some pages. Some of the questions, particularly those put by the noble Lord, Lord Liddle, are answered in that response. They are there on the record and deal with the points he made.

I believe, as always, that the report was particularly timely because it has the potential to be influential in relation to the drafting of the new EU drugs strategy, which is taking place under the Cypriot presidency that ends in December this year. I welcome the contribution that it will make to those discussions, and I can give an assurance to my noble friend Lord Avebury that officials have already discussed the United Kingdom priorities for the strategy bilaterally, with the Cypriot national drugs coordinator, and jointly with other member states at the horizontal drugs group, and will continue to work with the Cypriots as the strategies are developed before its planned adoption in December. In addition, a number of our European partners have commented on the helpful way in which the report has helped set the scene for discussions on the new EU drugs strategy. I pay tribute to the foresight of the committee in undertaking this work, and for the clarity with which the report has been written.

As is obvious from the Government’s response, we agree in large measure with the committee’s analysis and findings. Looking forward, there are a number of key areas that we would like to see the new EU drugs strategy address. We are keen to ensure that the next iteration of the EU drugs strategy maintains its balanced approach, encompassing public health approaches and enforcement measures, working together to reduce demand and restrict supply. It is important that there is a clear and consistent approach to prevent drug use and minimise drug misuse, and that there is a strong focus on moving individuals with a dependency into sustainable recovery. It is important for the new strategy to highlight the importance of reducing health harms—as suggested by the noble Lord, Lord Giddens, I think—while supporting people to recover, such as preventing the transmission of blood-borne viruses and other infections, if the prospects for recovery by drug users are to be maximised.

The new strategy needs to describe how pan-European work will support and dovetail with activities which are best taken forward by member states, or their localities. Drugs policy—as I think everyone agrees—should, and does, remain mainly the competence of member states. National strategies should continue to have primacy on approaches to domestic drugs issues. The EU drugs strategy should seek to complement the delivery of national strategies, particularly through focusing on enhancing co-operation rather than on developing legislation. Similarly, it should produce a framework within which statutory agencies and civil society can work together.

Like the committee, the Government believe that the EU drugs strategy can add real value in tackling drug trafficking. We believe that in order to tackle the supply side effectively, we need to employ both traditional and innovative tools. By intelligence sharing—this brings us on to Europol; I refer the noble Lord, Lord Liddle, to our response—by raising policing and law-enforcement standards, and by promoting best practice among external partners, we will help to destroy the criminal networks that target Europe and its member states.

The strategy should also continue to build on lessons learnt to date across the EU from our joint approaches on the new psychoactive substances mentioned by a number of noble Lords. We should use the objectives and commitments in the UN resolution, led by the UK, with Australia and Japan, on promoting international co-operation in responding to the challenges posed by new psychoactive substances, as a useful starting point. I should say that we have made considerable progress in this country by speeding up the legislative machinery that allows us to deal with these so-called legal highs in that we can now refer them to the Advisory Council on the Misuse of Drugs for a rapid response. We can process them fairly quickly while the ACMD looks at them in greater detail. Only recently a new drug which I think I can only pronounce by its street name, which is MXE—I can never manage to pronounce its proper name—has been given a temporary ban while the ACMD takes a further look at it to see what its long-term damage could be. I appreciate that to some extent this change means that we are often like a dog chasing its tail and it might be that in the future some new legal mechanism or machinery has to be set up to make it easier to respond to new drugs or legal highs as they are developed.

I am very grateful to the noble Lord for allowing me to intervene. In the Government’s response to the committee’s report and in the report itself, a favourable view is taken of analogue legislation whereby the Government would take powers to ban new psychoactive substances that they consider to be analogous to substances that are already banned. Perhaps I may counsel some caution before the Government go down this road. The American experience seems to show that analogue legislation provides a field day for lawyers who spend a great deal of time and money arguing over whether the precise molecular composition of a new substance is analogous to the already banned substance, and of course it would be a wholesale extension of prohibition, with all the difficulties involved.

We will certainly look at the American experience. We are aware that there are a great many more lawyers in America than there are in this country, and that the Americans are keen on making use of lawyers. However, obviously we would want to learn from their experience. While I am on the subject of the ACMD, I should also say to my noble friend Lord Avebury, who asked about khat, that the advisory committee is currently reviewing the harms associated with it. We will not prejudge that advice, but we will look at it in due course.

I am most grateful to my noble friend. I also mentioned, in the context of the examination of khat, the possibility of applying regulation. The committee looked at regulation although it did not express a firm opinion on it. However, it is another way of tackling harmful drugs, and it may particularly apply to the use of khat. I would be grateful, given that the advisory committee is looking at khat, if it would also examine the possibility of using regulation to control it.

I think that that must be a matter for the advisory committee to decide. I want to make it clear that we will not prejudge its advice. We will look at it when it comes and then make an appropriate decision. I understand that that is likely to be later this year.

I want to try to make progress because the House wishes to get on to the next debate. One of our key priorities for the next iteration of the drug strategy is to ensure that we agree a principle of transparency that would allow greater oversight of the available EU funding streams and the actions they are driving. It is vital that we ensure that EU funding for counternarcotics and EU co-ordination in external third countries is effectively targeted and aligned with overall EU drug strategy priorities. We would like to see concrete actions intended to tackle drugs covering both action to enhance local capability against the drugs trade and alternative development.

The noble Lords, Lord Hannay and Lord Liddle, and others mentioned the European Monitoring Centre for Drugs and Drug Addiction in Lisbon, which is rather inelegantly known as the EMCDDA. I will refer to it as the European monitoring centre. I was asked what our view is of this body. I agree with everything that the noble Lord, Lord Hannay, said about its valuable work. We accept that it should continue and that we should make increased use of it where possible, and similarly of its early-warning system through the use of intelligence gathering and forensic analysis via Europol and Interpol. This will also help with our collective understanding of the current EU drugs market.

There were those who took the debate further and asked that we look at alternative approaches. The noble Lord, Lord Hannay, said that he was somewhat constrained because he was worried that the Daily Mail might be listening. I looked up at the Gallery and I do not think that anyone from that paper was there at that stage. We fully respect the fact that different ideas and policies will be put forward in the ongoing debate. We believe that policies should be discussed, challenged and reviewed. That is what we are doing in the United Kingdom through our annual review of the drugs strategy that we produced back in 2010, and the development of our evaluation framework. We continue to discuss efforts to tackle the drugs trade with our international partners.

Similarly, within this country, the noble Lord mentioned a conference that my right honourable friend Oliver Letwin will be addressing in November on these matters. My right honourable friend, as a Minister in the Cabinet Office, is also part of the inter-ministerial group on drugs that I chair on behalf of the Home Office. There were those who said that it should not be the Home Office that led on this subject and that this matter should be transferred to the Department of Health. However, we in government think it should cover all the Government but be led by the Home Office. The inter-ministerial group that I chair also has representatives from Health, Education, the Cabinet Office, Work and Pensions, the Ministry of Justice, Communities and Local Government and, last—one should never say least—Her Majesty’s Treasury. Meetings of the inter-ministerial group are roughly once a month and all those Ministers regularly attend. I think that it is a very fine example of the Government being non-siloised—if I can put it in those terms—and thinking across the board in these matters.

I will say a word or two about Portugal and decriminalisation. Again, we will continue to look at what happens in all countries and we are determined to study the effects of the work they have done in Portugal. There is an excellent policy review by the EMCDDA of what Portugal is doing, which I commend to noble Lords. We will look at what it does and make our decisions in due course. Lastly on the subject of decriminalisation, I do not think that this is the time or place to go on to that wider subject. However, the legal framework that we have in this country—the Misuse of Drugs Act 1971—allows the criminal justice system some flexibility to deal with the best way to reduce reoffending and gives both the police and the judiciary discretion to take into account all the circumstances of the offence, such as when it involves possession of a relatively small amount of some drug.

As noble Lords will be aware, government officials are closely involved in the development of the new EU drugs strategy. It is currently on course to be adopted at the Justice and Home Affairs Council in December. I can assure the noble Lord and his committee that officials from the Home Office will keep the committee informed of progress with the new document as appropriate.

My Lords, I thank the noble Lord for his response to the debate, which was helpful in many respects. I can assure him that I was not the slightest bit worried that the Daily Mail might be up in the Gallery; I was merely worried that its recording of anything I said might not be all that accurate. If that paper is not there, the problem will not arise.

The one point I still regret a bit is the Warsaw convention. At the risk of banging on about this, I point out that it is not that we believe that the British Government’s money-laundering arrangements are not consistent with the Warsaw convention—I accept what the noble Lord says, that they almost certainly are—it is the example that we set by not signing and ratifying an international convention that deals with a matter of great importance to us, and where we want to encourage others to see that we take it seriously and to take it equally seriously themselves. That is the basis on which I continue to urge him to find the one or two man hours necessary to achieve this, particularly in the light of the not very pleasant story about HSBC. I do not want to go into that as it is not proper to do so here, but one can see that we would not want the impression that we are a bit sloppy about these things to get around. I am sure that he does not want that, and neither do I.

I shall not reply to the debate. I thank all noble Lords who have participated; it has been extremely gratifying that so many people participated from outside the narrow limits of the EU Select Committee and the sub-committee that I chair. It was not, as these debates, alas, quite often are, simply the usual suspects, and for that I am extremely grateful. We had a debate that can best be summarised in the single word “thoughtful”, and that is as it should be. It was a thoughtful debate with a lot of different views being expressed, and I hope that it will help the Government among others in their formulation of policy.

I conclude with a point raised by the noble Baroness, Lady Massey, in her contribution; she has a lot of expertise and of course a specific role in this matter. I think that I understood her to say that she was not quite sure that there was that much difference between what we did here and what the Portuguese now did under their new policy. That struck a chord with me; I think that she is right. The big difference is that the Portuguese are proud of what they have done and go around telling everyone about it, while in this country, although we have a much more humane policy—the Minister referred to this—with much more emphasis on harm reduction than in the past, it still remains the policy that dare not speak its name. That is why the best contribution that the report produced by my committee could make would be if it started a wider thoughtful debate about these issues. I beg to move.

Motion agreed.

Arrangement of Business

Announcement

My Lords, the previous item of business took longer than was originally anticipated, and we have now reached our usual rising time for Thursday. The Question for Short Debate from the noble Lord, Lord Bach, is time-limited to one hour and a half, with Back-Bench contributions of seven minutes each. If Back-Bench Members were to restrict their contributions to four minutes, we would rise in one hour. There is of course no obligation to do so, though I remind noble Lords who decide to take seven minutes that when the clock hits seven, they have already had seven minutes.

British Council: Funding

Question for Short Debate

Tabled by

To ask Her Majesty’s Government what is their policy towards the future funding and future expansion of the British Council.

My Lords, it is an honour to be opening this debate today. I am delighted that, after not a little difficulty and with the gratefully received help of the government Chief Whip, we have managed to secure this debate before the long Recess. I only hope that all the other noble Lords who are to speak in this debate agree with that. I am delighted at the quality of the speakers who have been good enough to stay late on a Thursday evening to speak in this debate, particularly the Minister, to whom I am grateful for answering this Question.

I declare my interest as chairman of the All-Party Parliamentary Group on the British Council, a position that I am delighted to hold, not just because in my view the British Council is one of our country’s greatest institutions, a jewel in our crown, but also because many years ago I grew up as a British Council child. My father, having left the Army at the end of the war, joined up and had a distinguished and happy career with the council both at home and abroad, working with such council legends as Dame Nancy Parkinson and Sir Paul Sinker. Abroad he served in Madras, now Chennai, and Tehran, and at home in Glasgow, Oxford and, as a senior officer, in the famous Home Division. I was proud of him then, and I am proud of him now, in the same way as I am proud of the 7,000 people in 191 offices in 100 countries around the world who do such extraordinary things for our country, and who, in order to do that job, sometimes have to put themselves in physical danger. All noble Lords will remember the incident in Kabul last August, when lives were lost. Thankfully, no British Council lives were lost, but lives were lost, and these were people who had put themselves in harm’s way for our sake. Public service is not always properly respected in this country, particularly at the present time. I hope that this debate will reinforce this House’s high regard for those who serve in public service.

It is worth reminding ourselves of the mission set out in the British Council’s royal charter, first to,

“promote cultural relationships and the understanding of different cultures between people and peoples of the United Kingdom and other countries”;

secondly to,

“promote a wider knowledge of the United Kingdom”;

thirdly to,

“develop a wider knowledge of the English language”;

fourthly to,

“encourage cultural, scientific, technological and other educational cooperation between the United Kingdom and other countries”;

and fifthly to,

“otherwise promote the advancement of education”.

It is not as though life has ever been easy for the British Council. Anyone who has read about the long, drawn out beginning of the council itself, way back in 1934, will know that, if it had not been for the persistence and will power shown by some, particularly Sir Reginald Leeper and Lord Lloyd, the council might never have come into existence. The French and the Germans in particular had years of experience of cultural diplomacy, stretching back to the second half of the 19th century. Now, nearly 80 years after the British Council’s foundation, I believe that those great countries sometimes envy its success and influence in performing its soft power role of cultural diplomacy.

Having survived the enmity over many years of Lord Beaverbrook and other powerful forces, the constant internal departmental battles within Whitehall and innumerable reviews and reports, some of them recommending summary execution, the British Council has emerged alive and flourishing as it nears its 80th anniversary. Of course, other obstacles have emerged, some of them serious, but the British Council has learnt to adapt. It was born in an age of empire and has successfully moved into an age of proudly independent countries, many in the Commonwealth, many outside. For example, it has learnt to engage well with the development agenda, which it does to great effect. By way of brief example, the programme run for DfID to strengthen civil society in Burma—a crucial programme —was evaluated as “outstanding”, and the British Council has won a £12.8 million contract to deliver the second phase of that project.

However, the British Council remains true to its core purposes: the English language, education and the arts. The main obstacle, as I rather feebly described it, is the question of money, or rather, the lack of it. The 2010 spending review settlement—often described by that rather overused word, “challenging”—entailed a 26% real-terms reduction in the British Council’s grant in aid from £185 million to £154 million by 2014-15. As the Foreign Affairs Committee of another place has said, that has put the British Council’s budget under “great strain”, and,

“may well trigger some fundamental rethinking of the role and work of the Council”.

The settlement was indeed severe, and it is much to the credit of both the chief executive, Martin Davidson, and—if I may say so without unduly embarrassing him—the previous chairman of the British Council, my noble friend Lord Kinnock, that difficult economic times were anticipated, and a decision made to expand greatly the amount of what is described as earned income in relation to grant in aid.

This has been done successfully so that, by 2015, only one pound in five that the council receives will be from grant in aid. We should commend this achievement but, at the same time, it is vital to sound a warning voice. The British Council is a public body; it belongs to all of us; it represents our country very successfully around the world. In my view, therefore, the present chairman, Sir Vernon Ellis, is surely right when he says in his introduction to the annual report for 2011-12, published earlier this week, that,

“the grant element in our funding remains vital … Further cuts in our core grant would make it more difficult to align our priorities with the interests of the UK”.

Without that grant in aid, how will it be possible for the British Council to do its vital work in countries where there is very little or no earned income to be had?

I hope that the message will come loud and clear from this debate that enough is enough. All Governments —and this Government, I am afraid, in particular—are guilty of not always seeing the treasures before their very eyes. There is an official blindness to what is palpably obvious to everyone else. There are some services and institutions that make Britain a more civilised and more respected country. A failure to support those services and institutions sufficiently by government demeans us both in our own eyes and in those of the world beyond. This Government have had to face issues of this kind a number of times. On one, the forests of this country, they backed away; on another, to which I am almost embarrassed to draw reference, legal aid, they did not and they took it on. That is an excellent example of how short-sighted Governments can be. I urge the Minister and the Government not to make the same mistake that they made in abolishing legal aid for social welfare law, in a very different context.

The British Council is a great institution and, as I have said, a jewel in our crown. It is incumbent on any Government, and this one at the present time, to protect it, to cherish it and to ensure that it continues to serve our country well.

My Lords, I am most grateful to the noble Lord, Lord Bach, not only for introducing this debate so comprehensively but for his work as chair of the British Council All-Party Parliamentary Group, of which I am a vice-chair. The all-party group has an important task in bringing to the attention of Members of Parliament the role played by the British Council in extending its brand of soft diplomacy throughout the world. In the past year, we have heard from Martin Davidson, the chief executive, as well as from directors and regional directors in Afghanistan, the Middle East, Russia and sub-Saharan Africa, who brought fresh, informative and inspiring accounts of their activities in the field.

Apart from its job in educating Members of Parliament, the work of the British Council in the area of education exchanges at university and other levels, in the dissemination of British arts and culture and in the teaching of English is an invaluable asset to this country. It increases knowledge and know-how, and helps to develop trade and investment links and opportunities. Certainly, whenever I travel abroad with parliamentary delegations, it is good to know that we can visit not just the British embassy but the offices of the British Council to get its particular slant on the country that we are visiting.

The Cultural Olympiad and the World Shakespeare Festival are also vehicles for important British Council input. Most recently, the visit of Aung San Suu Kyi underlined the part that the British Council can play in a country such as Burma, which is emerging from the shadows. I fully support the noble Lord, Lord Bach, in what he said about future funding and, while recognising the need to find savings and efficiencies in all areas of government policy, I hope that the future activities and expansion of the British Council will not be unnecessarily curtailed.

In an earlier debate this afternoon on the role and performance of the UK Border Agency, I was able to refer to the British Council and its campaign to improve and make more flexible the visa application system for overseas students coming to this country. I cited Mexico as a prime example, since every year more than 3,000 students come to our prestigious UK universities. They are paid for by the Mexican Government and, in some cases, by their own families, who are then faced with all the hurdles and costs of the visa application procedure. It is not exactly a welcoming way for these young people to start the education experience, and they are likely to be the future movers and shakers in their own country once they have finished their studies here.

I take advantage of this debate to raise a pet theme of mine, about the welcome and hospitality that is extended to overseas students coming to this country, because the British Council has a special role in this respect. In the old days, the British Council had houses throughout the United Kingdom, usually in university cities, that provided centres for overseas students to gather and meet local British people interested in things international. I remember going along to some of these occasions as a child with my mother, brother and sister, and forming lasting friendships with students from all over the world. Nowadays, a lot of overseas students, particularly at postgraduate level, find themselves surrounded by other international students and with very little opportunity to meet British people, learn about the British way of life and practise their English with people who speak it as their mother tongue. I know about this from a young Swedish family friend, as well as from a young lawyer from Chile doing a postgraduate course at the LSE. Both are delighted by their courses and the international friends they have made, but they wish to meet more British people.

There are ways in which this issue could be tackled with the British Council in a co-ordinating and leading role. There are organisations, such as the English-Speaking Union and Rotary International to name but two, that have a network of branches and clubs throughout the country and already take an interest in educational exchanges and in giving hospitality and a welcome to overseas visitors. I believe that something useful and beneficial could be done with these organisations and, indeed, the universities themselves. The British Council could have the pivotal role of co-ordinating something, which hopefully would not tax future budgets too heavily. I look forward to my noble friend’s reply.

My Lords, I join the noble Baroness, Lady Hooper, in warmly thanking my noble friend Lord Bach for securing this timely but unfortunately short debate. I thank him too for his very kind remarks.

As a former chairman, I say with pride that the British Council has brilliantly undertaken its public diplomacy mission of international cultural and educational relations for 78 years. It continues to do so with unmatched innovation and skill in an age in which change in the world has greater breadth, depth, penetration and velocity than ever before. The chief executive, Martin Davidson, and the people who work for the council would never, of course, claim perfection. But I have to say that, if there was ever a league table of international public diplomacy institutions, the council would, as the late Mr Brian Clough might put it, be “among the top one”. The history proves that, but I have time only to refer to recent years.

By 2004, when I succeeded my noble friend Lady Kennedy in the chair, British Council turnover was £482 million, grant in aid was 36%, 4,800 overseas staff and 1,800 teachers were active in 110 countries, and the audience reach was 35 million people. In 2008, as my noble friend indicated, after several years in which the council had consistently met the Gershon efficiency target of 3% per annum, we designed and began to implement a strategic change programme for maintaining excellence in tumultuously changing global conditions. Our aim, among other things, was to double turnover, reduce grant in aid as a proportion of that rising income to 20%, significantly extend face-to-face contact with users of council provision and hugely expand audience reach, all, of course, without losing quality or compromising values. That “scale of ambition” programme is working. This year, turnover is £740 million, the world audience, through IT and the massive diversity of educational and cultural activities, is over 500 million people and about 12.5 million people have direct physical contact with the council. By 2015, the British Council will have a turnover of about £1 billion with commensurate increases in reach and contact.

The advance has been made possible by winning international competitive contracts, making partnerships with global giants such as HSBC, Microsoft and the Premier League, raising productivity through growth and often painful staff and cost reduction and reconfigurations, all increasing value for taxpayers’ money. It is all being achieved despite cuts in public provision, referred to already in this debate, of no less than 24% in the current spending round which mean that, in 2014-15, grant in aid will provide just 16% of income.

That could have been a £50 million hammer blow to the work of the council had it not been for the changes already under way. As it was, the council and its people did not engage in public protest; they simply got on with their task. I emphasise heavily to the Minister, however, that their creditable ability to sustain success in spite of sudden and profound losses does not signify an infinite capacity to withstand further grievous bodily harm. The grim reality is that any more cuts would be seriously disabling. Because such funding is spent in areas and on activities which have no foreseeable prospect of generating revenues, the vital breadth of the council would be severely curtailed. That would gravely injure the council’s ability to serve Britain by attracting positive perceptions and, crucially, earning trust. In a world in which communication has never been easier but understanding has never been more fragile, that would directly contradict our country’s strategic need to foster security and stability.

To underline that: a weakened British Council would not have been in Tunisia or Libya at the coming of the Arab spring or in Syria now. In Afghanistan, Iraq, Zimbabwe, South Sudan, Burma and many other places, the council would be confined, at best, to formalities of provision. The massive potential of growth in China, India and Brazil would be stunted.

The council has invested in what I call digital public diplomacy and that could continue in just about all conditions, but durable influence and opportunity often require presence. Building trust needs people-to-people contact. Since further shortage of non-earning resources would unavoidably mean contraction and withdrawal, the consequences would be deeply negative.

In recent years lessons have been arduously learnt about the necessity of developing convincing and effective public diplomacy—so-called soft power. In the wise words of a US general, international strategy which neglects that is,

“trying to put out a fire with a hammer”.

But soft power is not a soft option. It requires investment, long-term patience and consistency, candour and transparency in relationships. It must have esoteric and practical usefulness to those who are the objects of soft power. It must manifest mutuality in the development of understanding—the ability to be good listeners as well as trustworthy communicators.

The British Council, with its enlightened and emancipating values, its professionalism and its independence, has those qualities in abundance. They are now irreplaceable and literally priceless. If they were jeopardised or diminished by cuts, it would betray the national interest. That cannot be allowed.

My Lords, earlier today, like my noble friend Lady Hooper, I participated in the debate on the UK Border Agency secured by my noble friend Lord Avebury. Much of what I want to say is simply an extension of this subject, but within the context of the important work of the British Council.

I first thank the noble Lord, Lord Bach,