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Defence Reform Bill

Volume 752: debated on Wednesday 5 February 2014

Committee (2nd Day)

Relevant documents: 17th and 21st Reports from the Delegated Powers Committee.

My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Bells are rung and resume after 10 minutes.

Clause 5: Jurisdiction of Ministry of Defence Police

Amendment 10

Moved by

10: Clause 5, page 5, line 3, at end insert “, unmanned aerial systems, distributed common ground systems, ground control and other stations used to support the operation of unmanned aerial systems”

My Lords, in moving Amendment 10, I will speak at the same time to Amendment 11. I have tabled a series of amendments to the Bill, which I have formed into two groups: this one and a second group comprising Amendments 14, 15 and 16, which we shall come to later on. The purpose of both groups is to shed light on an issue that is causing rising public concern: the increasing use of what have been variously called “drones”, “unmanned aerial systems”, and “remotely piloted aircraft systems”. I would argue that the fact that there is no agreed terminology to describe these devices is an indication of the very rapid rate of change and development taking place and, perhaps, of the extent to which the appropriate level of democratic oversight, control and challenge is lagging behind.

It was interesting to note the amount of public and press interest—including international press interest—when I tabled these rather modest amendments to be debated in the Moses Room, which shows that this is a very live issue for many of our fellow citizens. At this stage, these are all probing amendments, but there are serious issues of public policy at stake about which I hope my noble friend will be able to reassure all Members of the Committee. I am grateful to my noble friend Lady Miller of Chilthorne Domer, the noble Baroness, Lady Stern, and the noble Lord, Lord Dubs, who put their names to these amendments. I look forward to hearing their particular concerns and contributions later in the debate.

As I said, there are two groups of amendments, but they focus on one issue. I will give some general background which will set both groups in context and enable me to be a great deal briefer when we come to the second group. Finally, before doing so, I need to declare for the record my interests in this and allied fields. I am a member of the APPG on Drones, I am treasurer of the All-Party Group on Extraordinary Rendition and I am a trustee of Fair Trials International. With that—to horse.

Public concern about drones takes, I think, two forms. The first lies in what one might describe as the here and now. The public are concerned about the collateral damage arising from what appears to be an increasingly prevalent—some would say indiscriminate—use of drones. To illustrate, I can do no better than to quote from a letter sent to all Members of your Lordships’ House by Reprieve. It describes a trip to Congress in the United States by Rafiq ur Rehman, a schoolteacher from Pakistan, who was accompanied by his children Zubair, 13, and Nabila, nine. The family were there to talk about 67 year-old Mammana Bibi—Rafiq’s mother, the children’s grandmother and the local community’s midwife. She was killed by a CIA drone strike in October 2012 while picking okra in a field near her home. Zubair and Nabila were also injured when the missile hit and had to be treated in hospital for shrapnel wounds. Speaking to members of Congress on Capitol Hill, Rafiq described his mother as follows:

“She was the string that held our family together. Since her death, the string has been broken and life has not been the same … My family no longer gathers together like it did when my mother was alive … they are afraid to visit because the drone might then kill them, too”.

I leave it to wiser heads than mine as to whether this is a good way to win over uncommitted hearts and minds.

Drones do not act in a vacuum—they act on information supplied to them. The public are anxious to know who is supplying this information and how it is being supplied. The legal context may be simply stated—and, in saying that, I am benefiting from advice given by Jemima Stratford QC. Individuals in a war are entitled to kill each other. That is the doctrine of combatant immunity. In addition, both the law in this country and international law recognise the status of some individuals as lawful combatants engaged in international armed conflict. However, killing an individual outside that framework is, to put it starkly, murder. Assisting in the killing of an individual outside that framework is assisting in an act of murder. The recent killings by drone strikes in Yemen and Pakistan, neither of which is at war with the United Kingdom or the United States, have increased public concern.

That is the here and now. However, public concern is beginning to take on another form. What does the future hold? This year we are commemorating the outbreak of the First World War, 100 years ago in the autumn of 1914. When the young men rushed enthusiastically to the recruiting offices that autumn, they had no real understanding of the killing power of the modern machine gun. If they had, there were fears that their enthusiasm might have been somewhat tempered. We, however, know about the capabilities of the machine gun and the capabilities and consequences of the atom bomb. Moreover, with the technical developments in television, by the 1970s war was being brought into our front room.

Some of you may recall an American singer-songwriter and satirist called Tom Lehrer who was also a professor of mathematics at Harvard University. He said that for the next war, the songs must be written in advance. His contribution went like this, although I shall not sing it:

“So long, Mom, I'm off to drop the bomb

So don't wait up for me

But while you swelter down there in your shelter

You can see me on your TV

While we’re attacking frontally

Watch Brinkley and Huntley

Describing contrapuntally

The cities we have lost

No need for you to miss a minute

Of the agonising Holocaust”.

Humorous though the song was, that trend has been accentuated by the development of the mobile phone—and especially of the mobile phone with inbuilt camera. As a consequence, for quite understandable operational reasons, the Armed Forces have put restrictions on mobile phones on the battlefield.

Here lies the first critical point. The camera and the mobile phone are, in their own way, rather effective peacekeeping devices. The Holocaust occurred off-camera. Today, however, if a soldier fires a shot and it’s on the “BBC News” that night, our political process—albeit slowly, imperfectly and often in the wrong way—begins to engage. Had there been pictures and tweets about the carnage in the autumn of 1914, how long would the war have lasted?

Here lies the second critical point. That door to the free flow of information—arguably so important to the preservation of peace—is slowly swinging shut. A drone is entirely anonymous. It needs no boots on the ground. Yet the damage it does is no less devastating than that done by the man with a machine gun. These amendments therefore are designed to shed some light on these slightly murky points. As the Prime Minister said, sunlight is the best disinfectant.

After those background comments, I turn to this first group, concerned with jurisdiction and seeking to make amendments to Clause 5, entitled “Jurisdiction of Ministry of Defence Police”. The Ministry of Defence Police Act was passed in 1987. That may seem fairly ancient—it is some 25 years old. However, it is a mere stripling in comparison to the Visiting Forces Act that we shall come to in a minute, which was passed more than half a century ago in 1952, or the status of forces agreement passed a year earlier.

Amendment 10 extends the jurisdiction of the Ministry of Defence Police by inserting after the word “hovercraft” additional words about,

“unmanned aerial systems, distributed common ground systems, ground control and other stations”,

as on the Marshalled List. The purpose of the amendment is simple. It is to ensure that drones cannot be included as a type of aircraft, and to recognise that they have an entirely separate legal distinction and terminology. The amendment selects the phrase “unmanned aerial systems” as a preferred descriptor. While I have no biblical adherence to this phrase, there is the challenge that there is no current legal definition of “aircraft” in the existing Air Navigation Order 1970; it contains only a classification.

Whatever descriptor is used, it is nevertheless important that it makes clear that a drone is not an aircraft—a word which, to the public mind at least, implies an aerial vehicle with at least one person inside it. The effect of this amendment would be that the MoD Police jurisdiction unquestionably extended to drones and the like, so they would not in future fall through the gaps in legislation to some netherworld, out of sight and mind. Amendment 11 runs in parallel and extends the power of the MoD Police to contractors operating under the provisions of the Bill—as we discussed in Committee on Monday.

To conclude, whatever one’s views of the morality or efficacy of drones, we need to ensure that the details of their operations are properly recorded and that the MoD Police are unquestionably able to investigate and follow up issues that arise. In an editorial in the Financial Times on Monday—the first day of Committee —about Edward Snowden and GCHQ, a parallel but not identical case, the editor wrote that,

“it is essential the public know that British law is up-to-date and that the checks surrounding GCHQ are proportionate and fit for the complexity of the digital age”.

These amendments seek to achieve the same in respect of the Ministry of Defence: that the law is up to date and the checks proportionate. I beg to move.

My Lords, I am very grateful to the noble Lord, Lord Hodgson, for that excellent and wide-ranging exposition. I begin by declaring an interest; I am one of the vice-chairs of the All-Party Parliamentary Group on Drones, established just over a year ago in October 2012 and very active ever since. The core purpose of the group is to examine the uses of drones—which the group decided to call “unmanned aerial vehicles”—by Governments for domestic and international military and civilian purposes. Among the objectives of the group are to examine the legal and ethical frameworks that govern the use of drones, raise awareness of the human rights issues in the use of drones and look for increased accountability and transparency in the use of drones by the United Kingdom domestically and internationally. It is in that context that, as a member of the all-party group, I put my name to these amendments.

I stress absolutely that the all-party group is not opposed to drones per se—far from it. Drones technology has many uses. I heard recently from my noble friend Lord Sandwich that drones are a godsend to archaeologists in Afghanistan because they can locate what is under the ground and pinpoint where archaeologists should dig to find more antiquities. That is a benign and helpful application of the technology. My noble friend Lord Ramsbotham—General Ramsbotham—has educated me about the indispensable role of drones on the battlefield. The APPG is concerned not with opposing drones but with transparency: ensuring that Parliament is well informed and that information about the development and use of drones is put in the public domain so that we may debate the many issues that arise.

Today, we are concerned with military use. As noble Lords will know, a large and wide-ranging law framework governs military activities and weaponry internationally and domestically. However, as the noble Lord, Lord Hodgson, said, as yet no legal definition exists of drones or unmanned aerial systems, and it is difficult to see how there can be governance of drones before they are defined. Currently they are treated by the MoD as aircraft and their special nature is ignored. This amendment gives us an opportunity to consider the terminology and make it clear that it is completely inadequate to lump drones in with aircraft.

Apparently, Her Majesty’s Revenue and Customs still uses the Air Navigation Order 1954 as a guide to defining aircraft. The order defines aircraft to include,

“balloons … kites, gliders, airships and flying machines”,

which means,

“aircraft heavier than air and having means of mechanical propulsion”.

One current air navigation order contains only a classification of aircraft, not a definition, to which various types of aeroplanes are added: land planes, seaplanes, amphibians, self-launching motor gliders, rotorcraft and helicopters. These definitions are not in any way helpful in dealing with drones. Drones are different; they are different now and they will be even more different in the future.

The Ministry of Defence Joint Doctrine Note 2/11, The UK Approach to Unmanned Aircraft Systems, states:

“There is a general expectation across defence, academia and industry that unmanned aircraft will become more prevalent, eventually taking over most or all of the tasks currently undertaken by manned systems. This view is strongly reflected in current government policy”.

The doctrine also notes:

“As unmanned aircraft become more capable and automated, complex issues emerge”.

Indeed, there is already a need to be aware of and to discuss the implications of drones making their decisions without human agency. The doctrine note also tells us that there can be an autonomous system that is,

“capable of understanding higher level intent and direction. From this understanding and its perception of its environment, such a system is able to take appropriate action to bring about a desired state. It is capable of deciding a course of action, from a number of alternatives, without depending on human oversight and control, although these may still be present”.

This amendment is a small beginning. If we want to agree on the terminology—which will certainly not be easy—the view of the APPG is that “unmanned aerial system” is a preferable term to “remotely piloted aircraft system” because that definition fails to take into account the fact that these devices might not be remotely piloted, and that they might not be piloted at all. This amendment could mark the start of a process of building up the corpus of law and regulation, governance and supervision that we are going to need in future. I look forward to the Minister’s response.

My Lords, I shall speak briefly to these amendments, to which I have added my name, because I want to spend more time on Amendments 14 to 16. What the two groups of amendments have in common is the need for accountability so that military activity or surveillance conducted from UK soil follows a legislative framework and a line of accountability through our Secretaries of State and parliamentary scrutiny committees. Such accountability is entirely lacking at the moment. I am glad that the noble Baroness, Lady Stern, set out so clearly the issues involved in this group of amendments, which I hope will allow me to spend a little more time on surveillance issues and the RIPA legislation lacuna that I want to talk about later.

My Lords, I want briefly to add my support for these amendments and to make one point. When the visiting forces legislation and other legislation governing the use by the United States of airbases in Britain was enacted, the technology was at a very simple stage. We did not have sophisticated techniques such as drones; we did not have any of these things. The legislation was designed for a different age when things were very simple. Because they have changed so much there is a need to look again at the way in which these bases operate. That is my simple proposition.

I understand that, when questioned on this point, the Minister said:

“There is no requirement for an additional agreement regarding the use of RAF Croughton by the United States visiting forces … The Department has no plans to review this arrangement nor review the activities undertaken by the US at the base”.

The US has been a great ally of ours. We were delighted when its forces came here and we welcomed them. Their airbases in Britain helped defend us in the war and we must not forget that, but things have moved on. The problem is that activities that were fully understandable to us, and we were happy about, when these bases were first established may now be considered in a different light. We are at least entitled to have a better understanding of what goes on there and to be assured that the uses to which the bases are put are compatible with our system, our laws and our approach to using some of these very dangerous weapons.

We need to look again at this issue. I am not saying that we should close down American bases. I share the view of the noble Baroness, Lady Stern, on drones: they have their good points and they have their bad points. However, we need to be careful before we allow even the friendliest of our allies to use bases for purposes about which we do not know enough and certainly have unease.

My Lords, I shall speak briefly to this group of amendments but my remarks apply also to a later group. Comments made on this issue will, inevitably, cross from one group to the other.

Many of us have benefited from the advice which the All-Party Parliamentary Group on Drones received from Jemima Stratford QC and Mr Tim Johnston of Brick Court Chambers, which is obviously of great value. However, before we look at this issue again on Report, noble Lords may find it valuable to read the very important interim report that Ben Emmerson QC delivered to the General Assembly on 18 September 2013, which not only considers the way in which remotely controlled aircraft have been used by both this country and the United States in various parts of the world but makes a detailed inquiry into the complications and difficulties of international humanitarian law. He has not come to a conclusion on these matters but his report is of considerable value in explaining the complexities and ambiguities. Members of this House would benefit from reading that report as well as Jemima Stratford’s opinion.

My Lords, I speak in support of these amendments. The point that has already been made cannot be stressed too strongly—namely, that rules, regulations and definitions that have been adequate to date need to be reviewed in view of the immense and unforeseen scale of development in modern warfare. It would be irresponsible to assume that the current rules and definitions, which were drawn up in the past, respond adequately to the new realities.

I have absolutely no doubt that the service in which I was privileged to serve, the RAF, is fully committed at the most senior levels to implementing not just what the law says but the spirit of the law. I am sure that that is the case. If it is the case, I cannot see how reviewing the sufficiency and adequacy of existing legislation can do anything but strengthen its position. It is good that these points have been brought forward.

It is very difficult to share my next point with the Committee, as it is not clear whether the issue should be raised now or on later amendments. Reference has been made to the overlap in this regard. I am deeply concerned about whether we as legislators are taking the psychological implications of the new developments seriously enough. I am sure some of those involved in the operations are taking them very seriously. If I put it crudely, it is not out of any hostility to the people concerned; it is just to try to bring home the starkness of the reality with which we are dealing.

I was talking the other day with a good friend whose son has just got a very good engineering degree. What does he want to do with his engineering degree? His ambition is to work in computer games and eventually perhaps have his own firm, I think. There has been terrific change in the nature of this kind of activity and what it can involve. I hope I will not be accused of being irresponsibly sensational, because it does not seem to me that it is irresponsibly sensational at all. It is taking into account the realities of life. When did we begin to drift into a situation where the mental and psychological processes about playing very advanced computer games and the processes of sitting in the Nevada desert, or wherever it is, operating a machine became blurred? How do we continue to take, as we have always tried to take, the responsibility of recognising that war is a last resort and a very grave step to take? How do we now undertake warfare in the context of all sorts of humanitarian obligations and the rest? The Geneva conventions are just one example. I think that for all these reasons there has been a certain degree of complacency among legislators about what is happening and its significance, and I am sure that it is time that this was reviewed. I cannot stress strongly enough my appreciation of those who have brought this amendment forward.

My Lords, I thank my noble friend Lord Hodgson for bringing this amendment forward because it is clear in my mind that your Lordships’ House needs to have a debate on this subject, not just in the APPG but elsewhere. What I am not so happy with is the amendment to Clause 5. The real problem seems to be that we do not debate defence Bills very often in your Lordships’ House and there are very few places one can table an amendment such as this and the other amendment in this group. I therefore appreciate why it is here. However, the noble Baroness, Lady Stern, said drones are treated as aircraft. Clause 5, which relates to the jurisdiction of the Ministry of Defence Police, refers to aircraft and hovercraft, so if a drone is an aircraft, it is in. At the moment, it is not, so perhaps we need some clarification on that, because definitions are important.

A good point was made about unmanned aerial systems, because it is almost giving them a respectable name. The public know the name “drones”, and we now seem to have tried to find a longer, more convoluted phrase. I think a spade should be called a spade. If it is a drone, it is drone. I wonder whether there is a problem.

The real problem as far as the public and the noble Lord, Lord Judd, are concerned is the collateral damage when drones are used. Oversight is essential, but the worry in international legislation at the moment is that if someone in Texas, or maybe Nevada, is operating them, will they be harassed if an error happens? I suppose errors should not happen. President Obama announced changes in the drone programme in May 2013, which has been welcome because it has reduced the number of deaths caused by drone strikes.

The other point that has not yet been made is about the other uses of drones, because this is a defence Bill. However, Amazon has been considering using drones to deliver parcels. It is at an experimental phase but I imagine that it will continue. The real point is that I am greatly worried about drones used as armed weapons. The fact that there is no pilot in the plane makes it more dangerous in many ways. I am not so worried—in fact, it can be safer to the Armed Forces and civilians—if drones are used to gather information on battlefields or the like. I welcome this discussion, although I do not think that the amendment has a place in the Bill. However, there is an argument for having a debate and a Bill on this and other matters separately to this Bill, which is mainly about procurement and the reserves.

My Lords, I welcome the opportunity to register a few points regarding some of the things that have been said in this Committee.

As currently used by UK Armed Forces, “drones” are not drones but unmanned aerial systems. They are not in any way autonomous. I should point out that I have no objection whatever to a further exploration of the use of these systems, their implications and the regulatory framework around them. That would be welcome, provided we do it with a clear eye, although I do not see the necessity for these amendments.

However, if we are to have this kind of debate, we need to be clear on a few things. The first is that we should differentiate between systems and outcomes. The legal framework for the use of armed force within the UK is essentially about the outcomes that people are allowed to inflict on others, not the systems that they use for those outcomes. If you think in terms of the unmanned aerial systems that we currently use, there is little, if any, difference between someone piloting the system from within a cabin on an airbase somewhere—looking into a screen in that cabin, making the decision about whether to engage a target and then firing a weapon—and someone doing exactly the same thing from the cockpit of an aircraft at 20,000 feet or 30,000 feet. In fact, the only real difference is that the person on the ground is likely to make better decisions because he is looking at a bigger screen, with greater definition, he will be able to see more detail of the target area, and he will be in a better position to avoid collateral damage.

My second point is that today and in the future, before any clearance is given for a target to be engaged by the UK Armed Forces, two questions inevitably have to be answered. The first is: is it legal? That, as we have all heard, can be a difficult issue, particularly in the area of international law, and it is sometimes clear that we would reach different conclusions on that matter from those of some of our allies. That remains an issue. The second question is: is it wise? Does it actually further your strategic objectives or does it hinder them? As we have heard in this Room, and I agree, these systems have in some circumstances been used unwisely in terms of furthering one’s strategic objectives. However, we should be clear in distinguishing between the two. In attacks on targets by US systems that are operating from—or with the support of—the UK, the situation is clear. Such attacks require clearance from the UK as well as from the United States targeting authorities. Having been in this position, I can assure your Lordships that that happens every time, even when it means waking up the Attorney-General, night after night, at 4 am, as certainly happened in my experience.

The other point on which it is important to be clear is that unmanned systems are not—and certainly will not be in future—constrained merely to the air. They will operate on the surface of the land and sea, and under the sea. If we are to undertake any kind of debate and exploration of these issues, let it be about the widest possible use of these systems and not just focus on unmanned aerial systems—or “drones”, as they are incorrectly called.

Finally, if we are to have this debate, the most important element is that of autonomy—already exposed to some degree in the debate today. As far as I am concerned, all the while that someone in the loop makes a decision about the legality and military utility of the target being attacked, the current framework is secure and will save us. When you introduce degrees of autonomy into the system—decision-making within the system itself as opposed to leaving it with a human in the loop—of course you introduce a degree of risk into the whole process. That is not something that happens at the moment, but it could happen in future and it is where the focus of our attention should lie.

I welcome the debate. I have no concerns about the ways in which these systems are used by the UK at the moment but it is something we should certainly look at for the future. However, I do not see the necessity for these amendments in this particular Bill.

Perhaps I might just ask the noble and gallant Lord one question. In the report by Ben Emmerson that I quoted there is a reference to the way the United Kingdom considers targeting intelligence. It says:

“The United Kingdom has informed the Special Rapporteur that during its operations in Afghanistan targeting intelligence is ‘thoroughly scrubbed’ to ensure accuracy before authorization to proceed is given”.

Could the noble and gallant Lord explain to those of us who are not so well informed how one “scrubs” intelligence?

First, one has to decide upon the reliability of the intelligence, because intelligence is not knowledge—there is no certainty about it. What degree of assuredness can we attach to the intelligence? What sort of cross-referencing is there? Then, everything else about the target—its structure, the things around it, the possibilities of collateral damage and all the issues properly raised under the law of armed conflict; that is, the military utility of attacking the target versus the possible risks of doing so—is gone into at great length. Certainly as far as the United Kingdom—and, in my experience, the United States—is concerned, it is done with a lawyer looking over one’s shoulder the whole time. When I was responsible for these sorts of targeting decisions in the five months after 9/11 when I was at United States Central Command, my lawyer and I were essentially joined at the hip. It had to be so and I welcomed it.

My Lords, I identify with the comments of my noble and gallant friend. He made many of the points I would otherwise have made. I share his scepticism here. I understand the purpose behind these amendments but I have some concern about seeing them included in a Bill such as this at the present time. On the other hand, I very much welcome the debate on the wider subject.

I just amplify one of the points made by my noble and gallant friend. In the popular mind, so-called “drones”, or “unmanned aerial systems” or “unmanned aerial vehicles”—the name professionally and technically which we have used for many years—are large and operate over great distances. However, within the same overall category come small battlefield UAVs. Some are small enough to be able to look over a hill into a valley beyond and report back to a ground tactical commander. There are reconnaissance and weapons-deploying issues here, and issues of large and small size. Because of that complexity, the issue definitely merits further investigation and debate, with the formation of a wide-ranging piece of legislation dealing with definitions and bringing the whole into a proper regulatory format. For that reason alone, while I recognise the intent behind the amendments, this should be taken forward in a somewhat different way.

My Lords, I will be very brief indeed. Obviously, views have been expressed about keeping the law and its enforcement up to date with developments in the nature and conduct of warfare. Also, at the back of what has been said there is a desire to know what is going on in our name and what the outcomes have been in relation to the use of some of the unmanned systems to which reference has been made. Certainly I await with interest the Minister’s response.

There seems to have been a general acceptance that this is an issue which should be debated and discussed, although obviously doubts have been raised as to whether, as far as the amendment is concerned, how relevant it is to this Bill. The only comment I would make before concluding and leaving it to the Minister to give the Government’s response is that, of course, as far as concerns the provision of any additional information that there may be, or any developments in the law, whatever is done must be consistent with the national interest and national security.

My Lords, I am grateful to my noble friends Lord Hodgson and Lady Miller, the noble Baroness, Lady Stern, and the noble Lord, Lord Dubs, for tabling the two amendments in this group. It has enabled us to have a useful and interesting debate about a number of important issues. The Defence Reform Bill deals with the future arrangements for defence procurement and the Reserve Forces, and I think it is fair to say that the debate on these amendments has drifted some way from those issues—a point made by my noble friend. In responding to them, I will try to address the specific effect of the amendments on Part 1 of the Bill, but I shall also set out more widely our position on some of the other issues that have been raised.

Before turning to the detail of the amendments, it might be helpful if I set out the UK Government’s policy on unmanned aircraft systems. I think it is important to use the correct terminology when discussing unmanned aircraft systems, or UASs. The term “drone” is often used, but the word evokes thoughts and images of computer-controlled machines free from human oversight, which is simply not the case. The term “unmanned air vehicle” had previously been used extensively in the UK, but it is no longer aligned with NATO or international thinking, and in the interests of interoperability we have now moved away from using it. Often, the actual level of human involvement is unclear when discussing unmanned aircraft systems and hence it is entirely appropriate that the term “remotely piloted aircraft system”, or RPAS, is also used as it emphasises the reality that a trained professional pilot is in control of the system. UAS and RPAS are the generic terms that define the totality of the components of an unmanned or remotely piloted aircraft together with the other necessary components, including all equipment networks and, most important, personnel.

The UK operates a range of these human-controlled systems principally for surveillance and reconnaissance purposes. There is often a misconception that remotely piloted aircraft systems are autonomous. Again, we have to be careful with the terminology as the word “autonomous” can mean different things to different people and organisations. The Government consider an autonomous system as being capable of understanding high-level intent, a system that is capable of deciding a course of action from a number of alternatives without depending on human oversight or control. Our current and future RPAS will not be autonomous. A military pilot will continue to remain in control of our armed systems, just as they are now. In fact, our current armed RPASs have greater human involvement than our other armed aircraft types. Our Reaper RPAS crews comprise highly-trained pilots, sensor operators and analysts who all make decisions in real time.

The UK currently deploys unmanned aircraft systems in support of operations in Afghanistan and of Royal Navy ships. These systems are predominantly used for intelligence, surveillance and reconnaissance tasks, providing vital intelligence in support of our troops on the ground and our sailors at sea. They provide persistent video imagery for the development of situational awareness in order to conduct planning and to protect our forces. While the sensors are broadly similar to those onboard conventionally manned aircraft, unmanned or remotely piloted aircraft systems have the ability to loiter for longer, building an intelligence picture that significantly enhances the situational awareness of our commanders.

The British Army currently operates four unarmed unmanned aircraft systems. Hermes 450 is the largest system, followed by the hand-launched Desert Hawk III and then the Tarantula Hawk, which operates solely as part of an improvised explosive device route-clearing capability. Finally, it operates the Black Hornet, which is a palm-launched nano-system used directly by infantry units.

The Hermes 450, which has flown around 85,000 hours for intelligence, surveillance and reconnaissance purposes, will be replaced by the more modern Watchkeeper, which is due to come into service this year. This system will provide operational commanders with a day/night, all-weather capability to detect and track targets of interest without the need to deploy troops into potentially dangerous areas.

This brings me on to our larger system, the Reaper RPAS which is operated by the RAF. Reaper is the UK’s only armed remotely piloted aircraft system which, again, is predominantly used for surveillance tasks. It has also been armed with precision-guided weapons since 2008, providing an offensive capability if needed by our ground commanders.

As I mentioned previously, a UK Reaper does not have the capability to fire weapons autonomously and can fire its weapons only when commanded to do so by the very highly trained and qualified flight crew. When tasked to attack a target, qualified Reaper pilots can select from two types of precision-guided weapons, the weapon with the smallest warhead appropriate to the target being selected. To reassure my noble friend Lord Palmer, every effort is made to avoid civilian casualties, aborting attacks when necessary, as is the case with manned aircraft pilots. I thought the noble and gallant Lord, Lord Stirrup, set that out very clearly.

The UK policy relating to use of and targeting by remotely piloted aircraft systems is exactly the same as that for manned aircraft. It is entirely compliant with international humanitarian law and the law of armed conflict. The rules of engagement used by Reaper pilots are no different from those used by manned aircraft pilots. Targets are always positively identified as legitimate military objectives following the principles of distinction, humanity, proportionality and military necessity. The noble and gallant Lord mentioned the role of lawyers in this.

In more than 55,000 hours of Reaper operations, there has been only one known incident that resulted in the deaths of civilians. On 25 March 2011, an attack on two pick-up trucks resulted in the destruction of a significant quantity of explosives and the death of two insurgents but, sadly, four Afghanistan civilians were also killed. In line with current ISAF procedures, an ISAF investigation was conducted to establish whether any lessons could be learnt or if any errors in operational procedures could be identified. In that case, the report concluded that the actions of the Reaper crew had been in accordance with extant procedures and rules of engagement.

In considering maritime UASs, the ScanEagle surveillance system is operated by the Royal Navy and is expected to become fully operational in the coming weeks. The system is launched from a pneumatic catapult, from either a Royal Navy or Royal Fleet Auxiliary vessel, and is fitted with a high-resolution camera which can see in the dark and poor visibility. It has a wingspan of just over three metres and can stay airborne for up to 10 hours, providing real-time intelligence which is invaluable in protecting our troops. Once again I would like to point out that ScanEagle is not armed and has no offensive capability.

In the years to come, technological advances and improving capability are likely to increase the level of automation in some systems, making the remote pilot or operator’s job easier, just as in other non-military equipment. However, I stress that the Government have no intention to develop systems that operate without human intervention in the weapon command and control chain. I am not going to comment on the operations of our allies, and it is long-standing government policy, for reasons of operational security, that the Government do not comment on their intelligence-sharing arrangements with coalition partners. I would also like to emphasise the point that the UK complies fully with its obligations under international law, as set out in Article 36 of additional protocol 1 to the Geneva Conventions, to review all new weapons, and means and methods of warfare.

Finally, I am aware that the noble Lords who tabled this amendment have some concerns regarding the activity that takes place at visiting forces’ bases in the UK. I would like to take this opportunity to point out that the US Air Force does not operate remotely piloted aircraft systems from the United Kingdom, and neither does the UK provide remotely piloted aircraft systems support to bases of the United States’ visiting forces.

I welcome this opportunity to once again put on the record the Government’s clear views of the benefits of unmanned aerial systems and remotely piloted aircraft systems, which provide vital intelligence to our forces on the ground, while minimising the risk to civilians as well as our own service personnel and other coalition forces. I can see their importance only increasing and find it difficult to imagine a future campaign in which such technology will not have a role to play.

I turn now to the detail of the amendments. They would amend the definition of the places at which the Ministry of Defence Police have jurisdiction under Clause 5(1). That clause would amend the Ministry of Defence Police Act 1987 to make it clear that the MDP has jurisdiction over any land, vehicles, vessels, aircraft and hovercraft that are in the possession of, under the control of, or used for the purposes of, a contractor and used for the purposes of providing defence procurement services to the Ministry of Defence under Clause 1. The purpose of this provision is to ensure that the MDP have jurisdiction over any property or vehicles owned or used by the GOCO for providing defence procurement services.

The amendment seeks to add unmanned aerial systems, distributed common ground systems, ground control and other stations used to support the operation of unmanned aerial systems to the things that the MDP will have jurisdiction over, where these are in the possession etc of the GOCO. The amendment is unnecessary because where the GOCO controls or uses ground control stations, they would already fall within MDP jurisdiction under Clause 5(1) because they are covered by “land”. In any event, the MDP already have jurisdiction under the 1987 Act over any land that is owned or under the control of the Ministry of Defence. Unmanned aerial systems are already covered by the words “vehicles” and “aircraft”. Therefore, again the MDP would have jurisdiction over any UAVs in the possession of or used by the GOCO by virtue of Clause 5(1) of the Bill, and over any UAVs that are in the possession of or used by the Ministry of Defence under the existing Ministry of Defence Police Act 1987. Therefore, these amendments are unnecessary because the items would be under the jurisdiction of the MDP in the case of the GOCO by virtue of Clause 5(1) or, so far as concerns the Ministry of Defence, under the 1987 Act.

The second amendment amends Clause 5(1)(a) by adding at the end,

“or any person who provides defence procurement services to a contractor”.

A contractor under Part 1 of the Bill is someone who provides defence procurement services to the Ministry of Defence under the arrangements set out in Clause 1—in effect, the GOCO. I assume that the intention behind this amendment is to bring subcontractors who might have a contract with the GOCO, rather than the Ministry of Defence, within the jurisdiction of the MDP, which already has jurisdiction over any contractors who provide defence procurement services to the Ministry of Defence. We believe that extending MDP jurisdiction to subcontractors of the GOCO would be a step too far and unnecessary.

My noble friend Lord Roper mentioned the report of Mr Ben Emmerson QC, which stated:

“If used in strict compliance with the principles of international humanitarian law, remotely piloted aircraft are capable of reducing the risk of civilian casualties in armed conflict by significantly improving the situational awareness of military commanders”.

In the light of what the noble Lord, Lord Judd, said, the MoD takes the psychological and physical health of our personnel seriously. Robust trauma-risk management strategies are in place and Royal Air Force medical services have not detected any adverse trends.

In summary, the current wording in Clause 5 of the Defence Reform Bill fully provides the Ministry of Defence Police with the jurisdiction they need to carry out their duties in relation to any future GOCO and the changes proposed are unnecessary. On that basis, I ask the noble Lord to withdraw the amendment.

As usual, the Minister has been extremely helpful and courteous, but I hope that he will say a word more about a couple of points. First, he stressed the present policy of the UK Government on autonomous weapons. If that is the case, is there not a strong case for establishing this principle somewhere in legislation, if not in this Bill? When war takes place the situation evolves, the pressures are great, and one wants to be certain that established principles continue to be observed. Secondly, will he assure us that when he talks about US forces and what they do and do not do—those forces that operate from our territory—in future any foreign services using our territory must give a firm undertaking, with which we must be satisfied, that they will abide by the same principles that the Government have in place at the moment?

My Lords, we will cover the noble Lord’s second point when we discuss later amendments and I think that I can give him an assurance on that when we discuss the later amendments. As regards his first point, this Bill is not an appropriate vehicle for the issue. He raises a very important point, but there is no need for additional laws. The existing ones are sufficient.

My Lords, I thank my noble friend for his characteristically thorough reply to the points made and I thank my co-signatories for their support. I emphasise to my noble friend that I do not think any of the signatories are against drones. We understand that they are valuable and we do not wish to expose the lives of soldiers, sailors and airmen to unnecessary risk. However, we want to know what is going on. Of course we understand that every effort is made to avoid casualties. This is not a trigger-happy amendment; it is about information, control and transparency. I was glad to hear that my noble friend’s legal advice is that the term “vehicles and aircraft” covers every aspect of drones and there is therefore no gap in this regard. It is important to have that on the record for the future.

I am grateful to my noble friend Lord Roper for drawing attention to some of the complexities of this issue and to the noble Lord, Lord Judd, for his important comments about dispassion. Some element of personal responsibility may become deadened by distance from the point at which the operation is taking place. The noble Lord, Lord Palmer of Childs Hill, very rightly said that this was not the appropriate place for the amendment. He is right, but when the bus comes along you get on board because who knows when the next bus will come along. As he rightly said, there are very few defence Bills and it is important for us to have a chance to debate things that have emerged since the previous occasion.

When two noble and gallant Lords get up and give some returning fire, one has to listen with great care. The noble and gallant Lord, Lord Stirrup, talked about the difference between systems and outcomes. We are concerned about outcomes because those are what UK forces are concerned with. Our concern about systems is around what we supply to other people, who may be doing things with them that are important. There are two distinct aspects that we are concerned about. My noble friend is entirely right to draw the distinction between “wise” and “unwise”, and we want to make sure that where things are unwise, we get to hear about it and that somebody follows it up so that any lack of wisdom is minimised. It probably cannot be eliminated, but it should be minimised. I hope it is right that the Attorney-General is woken up every few hours to give decisions on that, but that slightly stretched the possibility for me. However, I defer to him. The noble Lord, Lord Dannatt, was very helpful when he said that there is a need for regulation to bring clarity to this area.

I accept for the time being that we need to read carefully what the Minister has said and I accept that this is possibly not the ideal place to have these amendments. I am grateful to all noble Lords who have made this debate very worthwhile on all sides of the argument, and with that I beg leave to withdraw the amendment.

Amendment 10 withdrawn.

Amendment 11 not moved.

Clause 5 agreed.

Clause 6 agreed.

Amendment 12

Moved by

12: After Clause 6, insert the following new Clause—

“Immunity for contractor

(1) The Secretary of State may by Order made under section 2 of the Crown Proceedings (Armed Forces) Act 1987 revive section 10 of the Crown Proceedings Act 1947 for the purposes of providing immunity for a contractor.

(2) Before making an order in accordance with the provisions of this section, the Secretary of State shall publish and lay before Parliament a report on the impact of making such an order on—

(a) the procurement of defence equipment and modifications and training facilities including material for urgent operational requirements; and(b) the possibility of risk to the contractor of challenge, whether under the Human Rights Act 1998 or under any other statutory provision, arising from such procurement, whether at the time of the procurement or at any future date.”

The House has debated the issue of Crown and combat immunity a number of times in the past eight months. The Minister has shared with the House concerns that the MoD and the Government have about problems raised by legal challenges of decisions made in the heat of battle or of decisions made in the past about equipment, training or preparations for operations in which, regrettably, individuals have been killed or seriously injured. In the debate on 7 November last, the Minister said that,

“the Ministry of Defence has been grappling with rapidly increasing numbers of legal claims arising from operations, together with escalating costs, largely as a result of these legal developments and the increasing willingness of individuals to litigate”.—[Official Report, 7/11/13; col. 413.]

He rightly stressed that no intention to reinstate any form of Crown or combat immunity should affect any cases already started, and nothing that I say or propose is directed at affecting such claims.

My particular reason for raising the issue of contractor immunity is straightforward. The experience of the past few years, particularly but not solely in the shadow of the Iraq and Afghan operations, is that courts and coroners have taken to raising issues about the suitability or modification states of equipment. I said at Second Reading:

“My fear is that this legal probing, basking in the certainty of 20:20 hindsight, will extend to questioning why original designs or modifications which subsequently proved unable to match the opposition’s capability were allowed to persist or be deployed or, alternatively, why additional steps had not been approved though the technical capability existed. Such concerns should be borne in mind in any changes to responsibility for defence procurement. Indeed, they should add further stimulus to taking positive action to reinstate immunities in a field of activity where acceptance of risk to life has to be the norm if our forces are not to be gravely neutered by legal hindsight”.—[Official Report, 10/12/13; col. 757.]

My amendment is designed to probe the case of contractor immunity and how and to what extent it might be applied. It proposes one particular approach but I do not suggest that it is the only or necessarily the most appropriate one. The Committee will have noted that Clause 3 would appear to provide a company that is or has been a contractor with unlimited MoD cover for any financial claim that is brought in a court in the UK against the company. However, this immunity is circumscribed by requirements in subsections (6) and (8) of this clause. Bearing in mind the frequency of claims and findings involving defence contractors, it seems that this sweeping, broad-brush approach should be further considered in the light of current experience. Would it not give rise to a good deal of cross-claims—no doubt of value to the lawyers involved—between the MoD and the delinquent company, possibly at considerable additional expense to the taxpayer and the Defence vote?

My probing amendment considers an issue of immunity away from the immediate battlefield—the clear domain of combat immunity—in an area of defence activity, notably procurement, that has led or might lead to legal claims by those injured while on duty or by the families of deceased service personnel. The Minister will recall in the case of the loss of RAF Nimrod XV230 in Afghanistan in 2006 that the review found that a number of individuals, including those in service, civilians and contractors, had been so seriously at fault as to bear responsibility for the technical failure that caused the loss of the aircraft and all those on board. Other more recent examples of aircraft accidents will be known to the Minister and other noble Lords, where the absence or incorrect fitting of specific equipment contributed to disaster. The coroner’s findings in the tragic death of a Red Arrow pilot, reported in the past week, is one of these.

With Crown immunity available to the MoD, as it was through much of my service career, service personnel or their families were entitled to compensation judged by the criteria that unless the MoD could prove that the injury or death was not due to service, the set rate of compensation would be awarded. This approach to proof was overturned by the Armed Forces and Reserve Forces (Compensation Scheme) Order 2005. Now it must first be established that the injured or deceased were on duty at the relevant time before they are considered for any award or compensation.

This is a fundamental change in the burden of proof, in a climate where awards in civilian life appear to far outstrip those available to the Armed Forces. The Committee may recall the case of the typist with repetitive strain syndrome being awarded a couple of hundred thousand pounds in compensation. This has led to a growing number of claims being faced by the MoD in the recent past. Of course comparisons with civil awards can be misleading because in addition to a capital sum, guaranteed income payments, tax-free for life, may be awarded to those service men or women who are most seriously injured. Even allowing for that and for less extreme levels of civilian awards and for the recent increases in compensation for the most seriously injured service personnel, it is still the case that without court actions, service awards do not come close to matching those awarded to civilians. Excessive reliance is placed on the additional support of service charities. It is no wonder, therefore, that there has been an increase in claims against the Ministry of Defence. These might have been even greater if I, with the help of Lord Morris of Manchester, had not tabled and moved an annulment Motion to the Transfer of Tribunal Functions Order 2008, which persuaded the then Government to retain rather than abolish the dedicated tribunal that adjudicates on pension and compensation disputes for Armed Forces personnel.

For these reasons, I urge the MoD to be sure to put in place more representative entitlements if they go down the route I am proposing of providing immunity for the contractor in a GOCO set-up. At the heart of this is the fact that the training and operations of the Armed Forces cannot be totally risk free. Immunity coupled with more representative compensation where death or serious injury occurs is a better compromise. But because Crown immunity is now so circumscribed by statute in the Crown Proceedings Acts mentioned in the amendment, I have proposed a possible way forward if the concept of some specific contract immunity were to be favoured. Perhaps there is a better alternative, and I look forward to the Minister’s response. I hope that he will at least be able to reassure the Committee that the Government mind is not closed to the reintroduction of immunities at some future date in a manner that caters for both peacetime and conflict operations. The Armed Services Act renewal in 2016 would seem to be the right vehicle for making such a move. I look to the Minister for some reassurance on that since it could prove to be a more comprehensive approach than the one in this probing amendment. I beg to move.

My Lords, I thank the noble and gallant Lord, Lord Craig, for his amendment. It enables the Committee to consider this important issue, which he also raised at Second Reading. Although the amendment appears to be addressed at giving the GOCO contractor immunity from liability for mistakes, I believe that the real intent behind it is to debate the important issue of combat immunity so far as it concerns our own service personnel. The noble and gallant Lord is absolutely right to identify the matter as one with profound implications for the conduct of military affairs in the future.

With that in mind, let me start by saying something about the recent Supreme Court case known as Smith (No 2). The outcome of the Supreme Court case in the conjoined cases of Smith and others v MoD, Ellis v MoD, and Allbutt and others v MoD has created a new situation of which the implications are not yet clear. These are all tragic cases of deaths on the field of combat in Iraq. The Government have every sympathy with the claimants but are obliged to defend these claims on important grounds of legal principle. Briefly, the argument of the claimants is that while these tragic incidents did indeed take place in the course of combat, combat immunity should not apply because the incidents can be traced back to previous decisions about the provision of equipment and training to the soldiers which could, they argue, have protected them more effectively.

The Government are concerned that this argument could be applied to virtually any claim to which the principle of combat immunity has hitherto been understood to apply and if accepted could have the effect of opening up the conduct of combat to the scrutiny of the courts after the event. This in turn could have seriously debilitating effects on the decision-making of commanders on the ground which could in the long run seriously impair this country’s military effectiveness. They therefore sought to have the claims dismissed by the courts on the grounds that combat immunity applied. As the Committee is aware, the Supreme Court declined to do so. This leaves the claims to be decided by the lower courts after a full trial in each case. Ministers and the military chain of command have been clear that commanders and other military personnel, at whatever level, who make reasonable decisions in good faith in the course of operations will receive the full backing of the services and the Government. It is important to be clear that there has been no decision by the courts that would suggest that they would impose liability in such circumstances.

The Government’s initial response to the judgment will therefore be to defend vigorously these and similar cases which turn on the issue of combat immunity. For that reason, although we are considering the option of legislating for a statutory definition of combat immunity, and we have not ruled out any legislative possibilities, we think that it would be premature to bring forward any such proposals at this stage. Our position is underpinned by our commitment to compensate soldiers and their families for all injuries and deaths suffered in the course of employment, including on active operations, on a no-fault basis through the statutory Armed Forces Compensation Scheme. We firmly believe that this approach is preferable in principle to the stress and uncertainty involved in litigation.

Finally, coming back to the text of the amendment, which seeks to give immunity to the GOCO, I should like to point out that Clause 3 already provides a degree of protection for the contractor from exposure to those risks that are unique to the role it will play in acting for the Ministry of Defence to deliver the defence procurement services contract. The contract will be structured so that current and future contracts for the delivery of defence equipment and support will flow around rather than through the GOCO. In other words, contracts that are currently placed between the Secretary of State and industry will continue to be placed in the same way. The contracts already in place will not be novated to the GOCO and future contracts will not be placed in the name of the GOCO. The GOCO will therefore be only a third party to the contracts.

As the Ministry of Defence remains the contracting party, albeit advised by the GOCO, liability should continue to lie with Ministry of Defence. The intent of the clause is to provide the GOCO with protection from those uncapped and uninsurable potential financial liabilities that arise uniquely as a consequence of its role. To give the Secretary of State the power to revive Section 10 of the Crown Proceedings Act 1947 in order to grant immunity to the contractor, as the amendment proposes, would not in fact achieve that effect, since the scope of the 1947 Act was limited to claims against the Crown. However, I hope I have shown that such a measure is not needed in any case because Clause 3 already ensures that the contractor would not be liable in those specific circumstances.

The noble and gallant Lord, Lord Craig, raised a point about the financial immunity of the contractor. In the context of the Bill, the contractor is the GOCO. The clause prevents the GOCO being financially liable and an additional party to contracts between the Secretary of State and industry because of its role as the Ministry of Defence’s agent. At the moment, claims would be against the Ministry of Defence only, and that should remain the case.

In conclusion, we have had a full and interesting debate on this issue. In the light of what the noble and gallant Lord said, I ask him to withdraw his amendment.

I thank the Minister for responding. I am sorry that there was less interest in this matter than I thought the Committee might have taken. Nevertheless, the points that the Minister made are extremely important and will, I am sure, be read by many. There is no doubt in my mind that leaving the situation as it is is asking for further trouble. I hope that that point is well and truly taken on board in the Ministry of Defence. At this stage, I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Clause 7 agreed.

Schedule 2: Restrictions on disclosure or use of information

Amendment 13

Moved by

13: Schedule 2, page 35, line 5, leave out paragraphs 1 to 5 and insert—

“Information to which Schedule applies1 (1) This Schedule applies to information if—

(a) it was obtained by the Secretary of State or the contractor under or by virtue of this Part or otherwise in connection with the carrying out of functions under or by virtue of this Part, or is derived to any extent from information that was so obtained, and(b) it relates to the affairs of an individual or to a particular business.(2) Information ceases to be information to which this Schedule applies—

(a) in the case of information relating to the affairs of an individual, when the individual dies, and(b) in the case of information relating to a particular business, on the earlier of—(i) the day on which the business ceases to be carried on, and(ii) the end of the period of 30 years beginning with the date on which the information was obtained by the Secretary of State or the contractor.Offence of disclosing information2 (1) A person commits an offence if—

(a) the person discloses information, or(b) information is disclosed or lost as a result of the person’s failure to prevent the disclosure or loss through measures taken under sub-paragraph (2), and(c) it is information to which this Schedule applies.(2) A person holding information to which this Schedule applies must take adequate technical and organisational measures against unauthorised or unlawful disclosure of, and against accidental loss of, the information.

(3) Sub-paragraph (1) is subject to paragraphs 4 to 6.

(4) A person who is guilty of an offence under sub-paragraph (1) is liable—

(a) on summary conviction, to imprisonment for not more than 12 months or to a fine not exceeding the statutory maximum (or both), or(b) on conviction on indictment, to imprisonment for not more than two years or to a fine (or both).(5) The reference in sub-paragraph (4)(a) to 12 months is to be read as a reference to 6 months—

(a) in its application to England and Wales in relation to an offence committed before the date on which section 154(1) of the Criminal Justice Act 2003 comes into force, and (b) in its application to Northern Ireland.(6) If section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force on or before the day on which this Act is passed—

(a) Section 85 of that Act (removal of limit on certain fines on conviction by magistrates’ court) applies in relation to an offence under sub-paragraph (1) on and after that day as if it were a relevant offence (as defined in section 85(3) of that Act), and (b) regulations described in section 85(11) of that Act may amend, repeal or otherwise modify sub-paragraph (43)(a).Disclosure with consent3 (1) Paragraph 2(1) does not apply to a disclosure made with the consent of—

(a) the individual, or(b) the person for the time being carrying on the business (or, where there are two or more such persons, all those persons).Disclosure of information already available to public4 Paragraph 2(1) does not apply to information that has been made available to the public by being lawfully disclosed in circumstances in which, or for a purpose for which, disclosure is not precluded by this Schedule.

Other permitted disclosures5 (1) Paragraph 2(1) does not apply where information is disclosed—

(a) for the purpose of facilitating the carrying out of functions of a Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975),(b) for the purpose of facilitating the carrying out by the SSRO of any of its functions,(c) for the purpose of enabling or assisting an authorised person to carry out any of its functions,(d) for the purpose of enabling or assisting a contractor to provide defence procurement services to the Secretary of State by virtue of arrangements mentioned in section 1,(e) to the person from whom the information was obtained or, where that person is associated with one or more other persons, to any such associated person,(f) by a person to whom the information is disclosed by virtue of paragraph (e),(g) under the Freedom of Information Act 2000 where there is a requirement to disclose notwithstanding available defences,(h) in connection with the investigation of a criminal offence or for the purposes of criminal proceedings,(i) for the purposes of civil proceedings,(j) in pursuance of an EU obligation, (k) for the purpose of facilitating the carrying out by the Comptroller and Auditor General of functions, or(l) in anonymised form.(2) In sub-paragraph (1)(d), “contractor” and “defence procurement services” have the same meanings as in Part 1.

(3) For the purposes of sub-paragraph (1)(l), information is disclosed in anonymised form if no individual or other person to whom the information relates can be identified from it.

(4) For the purposes of sub-paragraph (1), disclosures under paragraph 5(1)(a) to (d) and paragraph 5(1)(h) to (k) must be strictly necessary for the purpose, made in confidence and paragraph 2(1) applies to the recipient of that disclosure.

(5) Prior to making a disclosure under paragraph 5(1)(a) to (d) or paragraph 5(1)(h) to (k), the individual or business to which the information relates must be notified of the intended disclosure and must have the opportunity to challenge that disclosure.

Power to prohibit disclosure6 (1) The Secretary of State may by order—

(a) prohibit the disclosure of information to which this Schedule applies;(b) provide that a prohibition imposed by virtue of paragraph (a) is subject to exceptions corresponding to those set out in paragraphs 3 to 5 (other than paragraph 5(1)(g));(c) provide that a person who discloses information in contravention of such a prohibition commits an offence punishable— (i) on summary conviction, with imprisonment for not more than 12 months or with a fine not exceeding the statutory maximum (or both), or(ii) on conviction on indictment, with imprisonment for not more than two years or with a fine (or both).(2) The reference in sub-paragraph (1)(c)(i) to 12 months is to be read as a reference to six months—

(a) in its application to England and Wales in relation to an offence committed before the date on which section 154(1) of the Criminal Justice Act 2003 comes into force, and (b) in its application to Northern Ireland.(3) An order under sub-paragraph (1) may repeal paragraphs 2 to 5.

(4) If section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force on or before the day on which this Act is passed—

(a) section 85 of that Act (removal of limit on certain fines on conviction by magistrates’ court) applies in relation to the power under sub-paragraph (1)(c)(i) on or after that day as if it were a relevant power (as defined in section 85(3) of that Act), and(b) regulations described in section 85(11) of that Act may amend, repeal or otherwise modify sub-paragraph (1)(c)(i).(5) An order under sub-paragraph (1) is to be made by statutory instrument.

(6) A statutory instrument containing an order under sub-paragraph (1) may not be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.

Authority to inspect measures to protect information7 (1) A person holding information to which this Schedule applies must permit an industry body, acting on behalf of the owner of that information, within six months of the relevant date and subsequently every three years, on reasonable prior written notice and on reasonable confidentiality and other undertakings, to audit and inspect the person’s technical and organisational measures for protecting that information in compliance with this Schedule.

(2) A person holding information to which this Schedule applies must comply with all reasonable requests or directions by the industry body to enable the industry body to verify that the person is in compliance with their obligations under this Schedule.

(3) The industry body must provide a report of its findings on each inspection to the Secretary of State within three months of that inspection. The industry body may publish each report within six months of that inspection and must include with each report any response made by the Secretary of State to that report.”

Schedule 2 is referred to in Clause 7 which is very brief and simply states:

“Schedule 2 (restrictions on disclosure or use of information) has effect”.

It is in Part 1, which deals with defence procurement. Clause 38, in Part 2, which deals with single-source contracts, is similarly brief and simply says:

“Schedule 5 contains provision about disclosure of information obtained under this Part”.

In essence, the purpose of this amendment is to seek to replicate, in respect of disclosure of information, the criminal offence provision contained in Part 2 and Schedule 5 on single-source contracts in Part 1 and Schedule 2 in respect of defence procurement. In paragraphs 4 and 5 of Schedule 2, references are made to “unauthorised disclosure” and “unauthorised use” of information but there is no reference to any penalties or implications for disclosing or using protected information. However, in Schedule 5, which relates to wrong disclosure of information obtained under Part 2, on single-source contracts, there is a reference to penalties of imprisonment or a fine.

We do not understand why there is this distinction on unauthorised disclosure of information between Part 1 and Part 2. It is our view that failure to protect protected information from disclosure should be an offence with laid-down penalties. We appreciate the purpose of Schedule 2 in enabling a GOCO to be given confidential information provided by defence suppliers and held currently by DE&S in order to take over the management of existing MoD contracts should a GOCO come into operation.

The Government’s argument for not putting the penalties in Schedule 5 for misuse of confidential information into Schedule 2 appears to be that the Official Secrets Act, along with the GOCO contract itself and the constraints of Schedule 2, will give confidential information given to the GOCO the same protection from disclosure as it has in DE&S today. If there was a misuse of information, the owner of that information could bring an action directly against the GOCO as it can at present against the Ministry of Defence. However, that raises the obvious question of why similar arrangements are not proposed by the Government in Schedule 5 in relation to disclosures of information in respect of single-source contracts.

The information covered under Schedule 2 will include private and commercially sensitive information to which the Ministry of Defence has been given access, outside of a contractual obligation, in circumstances where the owner has a reasonable expectation that the MoD would hold it in confidence and not disclose it to a third party—which, under a GOCO, might be regarded by the owner of the information as including companies that either had been, or might be in the future, competitor organisations.

The Government say that it is not appropriate for a criminal offence to be created for the disclosure of information acquired in the normal course of defence procurement on individual projects and programmes, but that a criminal offence of the disclosure of confidential information provided to the Single Source Regulations Office is justified because the information is highly detailed supplier information and is forward-looking, covering future financial performance, anticipated business plans and planned subcontracting activity.

If that is the argument the Government are going to advance again today, I remain to be convinced by it. Sections of the defence industry have certainly expressed concerns about the prospect of disclosure of their confidential information that would be provided to a GOCO operator in respect of defence procurement contracts and believe that firm penalties are needed to deter such activity. The Government’s argument may be that the information that would have to be provided in respect of single-source contracts is likely to be more commercially sensitive, and thus potentially more damaging if disclosed, than the information provided under defence procurement contracts. However, surely that is something that should be reflected in the decision on whether to prosecute and through any decision of a court on the level of the penalty to be imposed rather than by, as the Government propose, having no provision for any criminal sanction at all in Schedule 2. I beg to move.

My Lords, Schedule 2 in its current form is necessary to allow a GOCO to have access to existing confidential information provided by defence suppliers that is held by DE&S so that the GOCO can take over management of existing MoD contracts. If the GOCO does not have access to that information, it will seriously curtail the contracts that GOCO will be able to manage. It will not be able to manage contracts that involve the need to access confidential information provided by a supplier. If the MoD provides confidential information from existing programmes to the GOCO without the protection conveyed by Schedule 2 in its current form, the supplier of the confidential information may claim that the MoD has no legal right to do so. The MoD could seek to negotiate amendments to contracts or obtain licences to supply the necessary information to the GOCO; however, the volume of information concerned, the amount of time and resources required to undertake the negotiations, the costs in licence fees that may be incurred and the possibility of the owner refusing mean that this is not a practical proposition.

Schedule 2 as currently drafted provides protection for owners of confidential information because there are only limited circumstances—essentially where necessary or expedient for defence procurement—when the MoD can share the information with the GOCO. Schedule 2 also provides that the GOCO is then subject to the same confidentiality obligations as the MoD. For example, some of the information the GOCO has will be classified as “UK eyes only”, the classification applied to certain information that cannot be shared with non-UK nationals due to national security issues. The GOCO would not be able to share this information with any employee or parent company that does not meet the nationality requirements.

If the GOCO misuses the confidential information, the owner can bring an action directly against the GOCO in the same manner as it could have done if the MoD had misused the information. This is in addition to confidentiality obligations that the MoD will place on the GOCO through the management services contract. The GOCO will be contractually required to maintain the confidentiality of supplier information and not to disclose it to third parties without the permission of the MoD. The GOCO’s parent companies will be third parties, so the GOCO will not be able to disclose the information to them without the MoD’s permission. The Official Secrets Act will also apply to the GOCO and its staff. The information will therefore receive essentially the same protection from disclosure as it does in DE&S today.

The proposed amendment to Schedule 2 involves deleting the existing schedule in its entirety and replacing it by what is largely a replication of paragraph 2 of Schedule 5, which creates an offence of disclosure of confidential information provided to the Single Source Regulations Office. The creation of such an offence is reasonable in the context where the information is highly detailed supplier information that will be received under the single-source pricing regulations and which suppliers are required to provide by statute. However, the situation is very different from the GOCO situation, and it is not appropriate for a criminal offence to be created for the disclosure of information acquired in the normal course of defence procurement on individual projects and programmes, where any confidentiality is capable of being protected by the GOCO contract coupled with the Schedule 2 constraints. We do not want to create new offences unless it is absolutely necessary to do so. The single-source provisions cover a supplier’s future financial performance, anticipated business plans and planned subcontracting activity. It is highly unusual for the MoD to receive access to information covered by Schedule 5. The offence and tariff proposed is consistent with that applied to other price-regulated industries such as water, utilities, telecommunications and railways. It is not appropriate to day-to-day defence procurement business, which is best conducted as a commercial relationship between the MoD and suppliers.

The new statutory framework outlined in Part 2 has been designed to help ensure that we get value for money on an average £6 billion a year of single-source procurement. Our single-source suppliers can price in the knowledge that they will not be undercut by a competitor—a highly unusual position, and one that is not conducive to getting good value for money. We need to address this, and to do so we need information about a supplier’s actual costs.

Information alone is not enough. We need enough detail to be able to use this information to negotiate with suppliers on price, comparing their forecast costs with our experience from other projects. We need to be able to track and manage our many hundreds of large single-source contracts, so the information must come in a standard format. We need enough detail to uncover where suppliers have charged us costs that are clearly unreasonable—sadly, not a rare occurrence, as recent press articles have made only too clear.

To get value for money, we require a quantity and detail of information that is much greater than would be necessary in a typical competitive or private sector environment. Our single-source suppliers recognise this, even if they may not particularly welcome it. In return, we recognise that we have a responsibility to our suppliers to treat their information with the care it deserves. Much of it will be commercially sensitive, and some of it market-sensitive, and it could do significant commercial damage if it were to get into the hands of their competitors or market analysts. This is a responsibility that we take very seriously, as the new criminal offence in Schedule 5 makes clear.

In making the new criminal offence, we considered its scope very carefully. The new offence carries with it significant procedural consequences. New processes will have to be put in place to ensure that Crown employees do not inadvertently create a situation where they are suspected of a criminal offence. We need to ensure that the additional overheads and processes involved would not overly constrain the operation of government; for example, we have allowed the information to be shared across the Crown domain if this is needed.

The amendment would place additional burdens and responsibilities on the MoD, the GOCO and the SSRO in handling industry information; for example, by extending the scope of the criminal offence to Part 1 and through the unusual suggestion of allowing industry audit rights over how the Government handle this information. We are resisting this amendment as we believe it does not strike the right balance between protecting sensitive industry information and enabling the Government to fulfil their functions efficiently. I hope that I have addressed the points that the noble Lord made.

The arguments that the Minister has advanced in respect of this amendment are the ones that I indicated—fairly accurately—he would advance. I said earlier that I was unconvinced by them, and that remains my position.

Disclosure of information will be a serious matter under Schedule 2, as well as under Schedule 5. Frankly, if wrongful disclosure of information is going to become an issue under Schedule 2, it will begin to strike at the heart of confidence in the arrangements that the Government wish to proceed with in relation to the GOCO. Sections of the defence industry have certainly expressed their concerns about the prospect of disclosure of their confidential information that would be provided under the GOCO arrangements. Unlike the Government, they believe that firm penalties are needed to deter such activity.

I really do not think I have had an explanation of why the arrangements will be satisfactory and deter people from disclosing arrangements under Schedule 2 without any penalties, but those similar arrangements would apparently not be effective if they were included under Schedule 5 in relation to single-source contracts. The main difference to which the Minister has drawn attention is the view that the kind of information that might be wrongly disclosed in relation to single-source contracts would be far more damaging than the kind of information that might be disclosed in relation to defence procurement contracts under Schedule 2. Many in the defence industry think that the kind of information that could be disclosed under Schedule 2 could be extremely damaging to them and do not share the view that only information disclosed under Schedule 5 in relation to single-source contracts could have that effect.

I said in my contribution that I have not had a specific response to that issue. I said that if the Government’s argument was that the information that would have to be provided in relation to single-source contracts was likely to be more commercially sensitive and thus potentially more damaging if disclosed than information provided under defence procurement contracts, then surely that should be dealt with in the decision on whether or not to prosecute—and if there was a prosecution, reflected in the sentence that the court imposed—rather than taking the Government’s view that we will not put any criminal sanction into Schedule 2.

The Minister said that the Government do not think it is appropriate to have a criminal sanction for disclosure of information under Schedule 2. I appreciate that the Minister feels that the Government have given a convincing explanation for that. However, I do not. The Minister indicated what is at the heart of the Government’s decision when he said, “We, as a Government, do not want to keep creating more criminal offences”. That has been the main factor in making this decision. There is an overall reluctance to create more criminal offences, rather than saying that wrongful disclosure of information is a serious matter even under Schedule 2 and that there should be provision for a criminal sanction in Schedule 2 as well as in Schedule 5.

There is obviously a disagreement and difference of view between the Government and the Opposition. I shall withdraw the amendment but we may wish to pursue the matter at a later stage.

Amendment 13 withdrawn.

Schedule 2 agreed.

Clause 8 agreed.

Amendment 14

Moved by

14: After Clause 8, insert the following new Clause—

“Reporting obligationsReporting obligation on contractors

In providing any defence procurement services, the contractor shall—(a) report annually to the Secretary of State or at any more frequent intervals as the Secretary of State may specify on—procured under the arrangements set out in section 1; and(i) the technical characteristics;(ii) capabilities; and(iii) use of equipment and services,procured under the arrangements set out in section 1; and(b) ensure that any person who provides provision of goods or services to a contractor or to the Secretary of State for the purposes of DE&S pursuant to the arrangements set out in section 1 provides the contractor with all information necessary to carry out the contractor’s reporting obligation under paragraph (a).”

My Lords, I shall speak also to Amendments 15 and 16. The background to this group is the same as that for the first group, Amendments 10 and 11, and I shall not weary the Committee by repeating it. Amendments 10 and 11 were concerned primarily with jurisdiction—who is entitled to inquire; the second group is concerned with scrutiny—what is done with the information so gathered. This scrutiny will be achieved by inserting new clauses into the Bill.

Amendment 14 obliges contractors to inform the Secretary of State for Defence what procured goods and services are capable of and how they are being used. The amendment has been drafted to ensure that the reporting obligation will automatically broaden to cover any new technological developments in the future. We have heard from noble and gallant Lords about the various kinds of drones—surveillance drones, attack drones and drones that will fight other drones that are now being developed. It is important that the reportage also includes them.

Amendment 15 seeks to improve scrutiny. It does so in two ways: first, it inserts a new section into the Visiting Forces Act 1952 to create a mechanism for scrutinising overseas forces operating in the UK or within UK-operated facilities. The amendment includes a requirement for the RAF commander responsible for liaison with visiting forces to report at least annually to the Secretary of State and a list of factors which are to be reported upon.

It is worth while just to reflect on the position of the luckless RAF commander responsible for liaison. For a sterling officer to be the nut in the crackers—one side of the crackers being GCHQ and the UK Government, and the other being the US Government, the CIA and the National Security Agency—is an unenviable position to be in, and not a career-enhancing one if you are going to rock the boat and possibly say things that will be unpopular. Therefore, his position is very difficult, but that is by the by. However, we were tempted to buttress his position by defining the makeup of the scrutiny group to include, as it says, a member holding high judicial office—such as a judge—and a person who is capable of understanding the technology being used. The amendment defines the right of access to premises, to receive documents or to interview personnel in pursuance of the committee’s duties.

The second method by which this amendment improves scrutiny is by imposing a duty on the Interception of Communications Commissioner to report at least annually on any activity subject to the Regulation of Investigatory Powers Act 2000—RIPA. My noble friend Lady Miller has put down and had answers to a number of parliamentary questions on this particular topic, so I will leave the field clear for her to have a clean sweep in a minute or two.

Finally, Amendment 16 concerns the use to which these reports should be put. A copy of them should be laid—no doubt with redactions—before Parliament, a copy of reports, hopefully without redactions, should be laid before the Intelligence and Security Committee, and there would be a government response to any concerns raised in those reports.

Taken as a whole, these amendments are not designed to reveal details injurious to our national security or that of our allies. I recognise the delicate balance that needs to be struck in that regard. However, they are designed to ensure that at least the Secretary of State for Defence knows what is taking place in the far-flung corners of his empire. From press conferences, it is far from clear about whether he is currently being so informed. As a consequence of these amendments, the Secretary of State will be able to judge whether actions are taking place either as a result of the use of UK facilities or as the result of the transmission of information through UK facilities that are not in accordance with UK law.

In her advice, which I have already referred to, Jemima Stratford QC points out that the USA has placed much reliance on the doctrine of what is called “anticipatory self-defence”. Except in the rarest of cases, it will be extraordinarily difficult to see how an individual being hit with a drone strike can be said to present an imminent threat to US interests, but never mind. More importantly, the UK Government have rejected that formulation of the doctrine of anticipatory self-defence. In his written report to Prime Minister Tony Blair when evaluating the lawfulness of the invasion of Iraq, the then Attorney-General wrote:

“I am aware that the USA has been arguing for recognition of a broad doctrine of a right to use force to pre-empt danger in the future. If this means more than a right to respond proportionately to an imminent attack (and I understand that the doctrine is intended to carry that connotation) this is not a doctrine which, in my opinion, exists or is recognised in international law”.

To conclude, as warfare once again begins to be waged in secret, the citizens of a democracy are entitled to know that the actions being taken in their name are lawful. Confidence in our parliamentary system demands no less. I beg to move.

I apologise to the Minister, but I am afraid that there is a lot more to say on these amendments before he comes to reply.

I want to address two issues in these amendments in particular. First, the technology has advanced much faster than the legislation designed to regulate its application. In this case, I am not talking about drones but about interception capabilities. Secondly, a lot of the technology appears to be applied by American forces who operate from UK soil but for whom the force of UK law does not seem to apply. For both those reasons, I suggest that the legislative framework is in urgent need of amendment.

I do not know whether successive Governments were in denial, ignorant of or acquiescing to everything that went on. I shall take Menwith Hill, Yorkshire, as an example because it is the base that has caused the most disquiet. In 1988, Duncan Campbell raised this issue in the New Statesman. That was followed, some years later, by a Channel 4 “Dispatches” programme, and a BBC programme in November 1999, which followed some revelations that came from Australia. They detailed the worry that an immense surveillance capability was being developed at Menwith Hill without the knowledge or agreement of Parliament.

In Parliament, questions were asked. As long ago as 1994, Bob Cryer MP, introduced a debate and raised a number of issues. I will return to that. In 1997, parliamentarians were increasingly concerned. My honourable friend Norman Baker, now in the Home Office, asked the Secretary of State for Defence, John Reid, now the noble Lord, Lord Reid,

“what safeguards are in place to prevent American personnel based in the United Kingdom under the Visiting Forces Act 1952 committing offences under the Interception of Communications Act 1985; and what mechanisms are in place to detect any such offences”.

In effect, the answer from Dr Reid was that the Government were quite content with the situation and there was no problem at all. He actually said:

“We are content that the US authorities adhere scrupulously to these agreements”.—[Official Report, Commons, 14/7/97; col. 59W.]

Why was Dr Reid so sure? Why were he and, indeed, his successors, so content? We mere Back-Benchers can never know the details, and we would not expect to.

The said Mr Norman Baker is now a Minister at the Home Office. Has the noble Baroness any indication that he has perhaps pursued these matters and some of the other eccentric matters that he was interested in before he became one of Her Majesty’s Ministers?

I do not know why the noble Lord finds it an eccentric matter, but I have not discussed this with Mr Baker before speaking today or, indeed, at any time. I am simply quoting the Hansard entry from those years as an example of one of the parliamentarians. I could give many others, but I do not want to take the time of the Committee. They are certainly not eccentric.

I should clarify for the noble Baroness that I was referring to Mr Baker’s other eccentric issues. This one might not be classified as that at the moment.

I do not think we are discussing the other issues at this moment, so I shall return to the matter of the debate. The fact is that Parliament has time and again raised this issue. Indeed the Defence Select Committee in another place also raised it. In October 2004, a number of changes of use at Menwith Hill were put through as Written Statements prompting the Defence Select Committee to tell the then Secretary of State, Geoff Hoon, that:

“Despite the Secretary of State’s unequivocal statement that he wanted the decision to be informed by public and parliamentary discussion, he has acted in a way that has effectively curtailed such discussions”.

It went on to recommend full parliamentary debate of the proposals. There were none. In January 2008, my noble friend Lord Wallace of Saltaire spoke about how much Menwith Hill remains subject to British control and said that he was,

“extremely unhappy about the extent to which it remains effectively under British sovereignty”.—[Official Report, 10/1/09; col. 987.]

There is a long history of Parliament being left in ignorance on this issue. I do not know the reason for that. Was it because Secretaries of State did not know what was going on there or chose not to let Parliament know? However, the fact remains that the legislative framework applies to UK operators and all communications between the UK and abroad. We now have the Regulation of Investigatory Powers Act, which was brought in to cover some of these advances in technology. It will not come as a surprise to Members of the Committee that, under the framework, authority and warrants must be given if anything is to be done that would interfere effectively with the private lives of UK citizens. We need to know that what happens on UK soil, whether it is done on American bases or by people in the UK, is covered in the same way. That is the point of these amendments. In Amendment 15, we would give responsibility to an individual to ensure a reporting mechanism. My noble friend Lord Hodgson already referred to what an unenviable position that might be.

We have a heavy responsibility here to make sure that the very unsatisfactory state that has continued for decades comes to an end. In last week’s State of the Union address, President Obama promised to work with the US Congress to reform surveillance programmes. All we suggest in these amendments is that we in the UK Parliament play our part in making surveillance accountable. I fully accept the need for a security programme but of course I am equally concerned about where the lines are drawn and whether GCHQ overstepped its remit. At least I am assured that GCHQ has a line of accountability to the Government and our Ministers, and appears before committees of Parliament. In the case of the visiting forces, that is something we can remedy by amending the Bill as we suggest. I strongly feel that that needs to happen.

To conclude, when in 1994 Bob Cryer brought up the worry about these developments at Menwith Hill, the then Minister, Mr Hanley, said that,

“what he peddles is ill-informed, second-hand fantasy based on prejudice against our allies which in itself is not in the national interest. His colourful language may well make good sound bites, but it is pathetic in its paranoia”.—[Official Report, Commons, 25/3/94; col. 616.]

Since then, Mr Cryer’s worries have proved to be absolutely sound. It is our duty today to put in place very belatedly these amendments that would ensure full accountability.

My Lords, it is a privilege to follow the noble Baroness, Lady Miller, who has been so determined in pursuing this over a long period. I shall try to be brief. I will begin by bringing to the attention of the Committee a very short passage from the Ministry of Defence Joint Doctrine Note. It quotes General Robert E Lee:

“It is well that war is so terrible—otherwise we would grow too fond of it”.

That seems a very well chosen quotation in light of the development of war that is remote, unpiloted and rather like a video game.

These amendments take us into the area of ensuring lawfulness through requiring reporting on the activities of contractors and visiting forces. We aim by raising this matter to ensure that there is a debate on the existing scrutiny arrangements and the need to update them in the light of the widespread use of unmanned aircraft systems and future developments. I am grateful to the Minister for cleaning up my language; I will now say at all times “unmanned aircraft systems”, and I can see he is happy with me because he is smiling. It is not to suggest for one moment that what our Armed Forces are doing is unlawful. I am sure that it is not, and I am sure that the noble and gallant Lord, Lord Stirrup, was right about having his lawyer with him all the time. I do not doubt any of that for a moment.

The doctrine note that I have just mentioned deals with matters of lawfulness, ethics and humanitarian law in chapter 5. The note begins by saying:

“Signatories to the Geneva treaties are required to review all new weapons, methods and means of warfare to determine their compliance with applicable law”.

I am sure that the Ministry of Defence has done this in respect of unmanned aircraft systems, and I would be grateful to have from the Minister an indication of how and when that was done and where Members of Parliament have access to reading about such a review.

The note also says:

“There are elements of the LOAC”—

the law on armed conflict—

“that have specific consequences for unmanned aircraft, as compliance will become increasingly challenging as systems become more automated”.

I was very interested and glad to hear the Minister say that we are not going to become more automated and use unmanned systems without human agency. I am sure that many noble Lords here today will be glad to see that on the record.

I take this opportunity to congratulate the Minister and his department on the doctrine note, which is admirable in its clarity, its adherence to international law and the thoughtful way in which it raises the implications of these technologies for war in future and the impact on our humanity and value systems. I assume that the document has been shared with our American partners.

In June 2013, I asked the Government a Written Question on,

“what assurances they have received from the United States that it will not conduct activities from United States bases in the United Kingdom that violate international law”.

In reply, the Minister said:

“The use of bases in the UK by the United States visiting force remains subject to long-established agreements and procedures which ensure that the UK Government are fully satisfied as to the propriety of any US activity undertaken”.—[Official Report, 12/6/13; col. WA245.]

Will the Minister indicate what the long-established agreements are—I imagine that they are in the public domain and we know what they are—and the procedures? Can he tell the Committee whether he is satisfied that these “long-established agreements and procedures” are up to date and capable of dealing with the developments that we are discussing today?

The noble Baroness, Lady Miller, set out very cogently the concerns about why we need such arrangements—the forms of monitoring and oversight such as those proposed in the amendments. Bodies to ensure that the law is being followed are a normal part of our public administration. The IPCC scrutinises the police and Her Majesty’s Chief Inspector of Prisons inspects the prisons, just as the Care Quality Commission inspects hospitals, and so on. The area of defence weaponry and its uses is also subject to law—domestic, international and humanitarian. Machinery to ensure that the law is adhered to can bring great benefits in informing the public, counteracting ill informed speculation and strengthening the hand of all those in the system who want to operate within the law but may find themselves in a culture where there is no pressure to do so because there is no scrutiny and no chance of a comeback. I hope that this debate marks the beginning of a wider discussion of these important questions.

My Lords, I apologise for omitting to thank my noble friend Lord Hodgson for these interesting amendments and my noble friend Lady Miller, and the noble Baroness, Lady Stern, for their contributions. I turn to a point made by my noble friend Lord Hodgson in moving the amendment when he quoted from the useful and interesting opinion received from Jemima Stratford. As I mentioned, there is an ambiguity in the approach to international law in the United States and in this country which raises some of the problems that we are having to consider today, in particular the problems that would arise—I realise that the Minister is unable to discuss the transfer of intelligence between allies—if intelligence were able to be used for targeting purposes.

I am extremely grateful for having had the chance to read the interesting interim report of Ben Emmerson QC. The problem is that the United States considers itself to be involved in a non-international armed conflict with al-Qaeda and its associated forces that are transnational in character. That is not merely its view; it is the position endorsed by the United States Supreme Court in the judgment of Hamdan v Rumsfeld. There is a problem in it having that position which, as we heard from the noble and gallant Lord, Lord Stirrup, is not the position in this country. There is a difference in the interpretation of the law. Indeed, the final report of Mr Emmerson will, I hope, help us to clarify it, but that is the problem that faces us at this stage.

We also have to realise that the United States can pray in its own defence some of the UN Security Council resolutions that were passed in 2001 following 9/11. If we look at UN Security Council Resolution 1368 of 2001, or UN Security Council Resolution 1373, we see that they almost gave the United States authority to deal with al-Qaeda wherever it was met. As I say, there is a difference in the interpretation of international law and an ambiguity that leads to some of the problems that we are discussing today. Mr Emmerson provides an interesting discussion of these matters in his report to the UN, and I hope that if we return to them on Report, it will be possible for other noble Lords to have read it.

The noble Lord, Lord Roper, has raised a crucial issue. I am sure he would agree that, having stated that there is a difference in interpretation, we then have to act in the context of what is our interpretation. The danger is that we condone from premises and territory which is ours activity that may be acceptable within the United States interpretation but which is not acceptable within our interpretation. Of course, this can realm into very controversial issues, such as where does extrajudicial killing begin and end? There is the issue of rendition, as we have seen in the past, and so on. That is why it is so crucial to remember that the Minister in his very helpful response to our previous debate gave a specific assurance that he would be able to say things at this stage of our proceedings that would completely reassure us. The point is that our territory and our premises can be used only in terms of our understanding of the legal position and our interpretation of what it is all about.

I should like to make one other point. It is not just a matter of legality. I care desperately about that because I always come back to the point that, in the end, what the hell are we defending if we are not defending the principles of the rule of law and so on? We make an absolute nonsense of our commitments if we rationalise our way out of that.

I am always very worried—and this applies in British domestic legislation too—about where the dividing line between what is effective action against terrorism and extremism and all these cruel and unacceptable happenings becomes counterproductive because it begins to lend ground to those who are trying to recruit for the cause of extremism. One of the arguments that they love to use is, “look at the hypocrisy of these people”. It is, therefore, crucial to be able to demonstrate all the time that we are operating, not only in detail but in spirit, according to the principles we say we are upholding.

I am grateful to the noble Lord for that intervention. He is, of course, a very old friend. However, I feel that the Minister and the noble Lord, Lord Dannatt, in their interventions in the earlier debate, made it absolutely clear that there was no question of any American remotely piloted aircraft being controlled from United Kingdom territory. I think that was the assurance that the noble Lord, Lord Judd, was seeking.

On the other point, there is a perfectly good and important debate as to what is wise and what is unwise. I agree that there is a question of potential counterproductivity and that is why there is a dilemma in considering how these things should be used—whether there is going to be a net benefit, or a net disbenefit. That is a matter which has to be assessed on each occasion.

The noble Lord, Lord Judd, has raised a point and I think that my noble friend has answered half of it. He has answered the point about action coming from here. What we need to find out is whether information is being passed on which others take action. If we are doing that, we are assisting an illegal act. We need to be clear about that. It is not just doing things, it is sending information that other people act on.

I should like to support that response to the noble Lord, Lord Roper. I hesitate to use the word to such a long-standing personal friend and in the context of my respect for him, but I think it is a bit naïve to argue that, simply because we have these undertakings on automated aircraft and automated weapons, that is the end of the story. An awful lot of other things could be happening on our territory and on our premises which could be assisting with, for example, the extrajudicial killing, if we see it that way.

The noble Lord is obviously right about that. I was really treating the somewhat narrower point on the earlier amendment which we had been considering rather than the wider range of activities which could take place and which was very much discussed when we were looking at the question of extraordinary rendition.

I only replied en passant to the second point which my noble friend Lord Hodgson made. I mentioned that, although we have had a very clear assurance about nothing being done from the United Kingdom, unfortunately, the Minister was unable to cover the second issue which he raised.

I apologise to the Minister but, as the noble Lord, Lord Rosser, does not appear to be going to give an opinion, I would like to ask him a question. His Government were farsighted enough to bring in the Regulation of Investigatory Powers Act—and obviously they were concerned that the legislative framework kept up with technology. Does he support, in principle, the idea behind our Amendment 15 that its reach should be extended to cover visiting forces? In his opinion, is that something that we should aim to do?

It was not my intention to intervene in this debate since it seemed to be going on to rather wider issues than strictly covered in the amendment. For that reason, I am not going to go through the specific wording of the amendment and respond to the particular points in it as to where we stand because clearly the issues being raised in this debate go way beyond the amendment and, in my opinion, way beyond the provisions of this Bill.

My Lords, these amendments have enabled us to have a debate about a number of issues. The Defence Reform Bill deals with the future arrangements for defence procurement and the Reserve Forces. As with Amendments 10 and 11, which we debated earlier, the issues in this group of amendments go some way from the issues covered by the Bill. Therefore, I will address the impact of the amendments on the Bill, and I shall also try to deal with some of the other issues that have been raised.

First, I turn to Amendment 14 which would require the contractor—the GOCO—to report annually, or more frequently if specified, to the Secretary of State on the technical characteristics, capabilities and use of the equipment and services procured under the provisions of Part 1 and to ensure that anyone who provides defence procurement services to either the GOCO or the MoD provides all the information necessary to enable such a report to be made. Currently, DE&S does not report to the Secretary of State on the details of all equipment and services procured. Procurements are classified on the basis of value, and approvals take place at the appropriate level, with approvals for very high value, novel or contentious procurements elevated to the Defence Council. Where appropriate, DE&S seeks legal assessments of equipment and services procured. An established project management and acceptance process exists for equipment and services with the customer.

It is envisaged that this process would continue to exist under the GOCO arrangements. These arrangements will be agreed in the defence procurement services contract in place between the contractor and the MoD. It is currently not practical or necessary for DE&S to report to the Secretary of State on the details of all equipment and services procured and likewise it will not be practical or necessary for the GOCO to report these details to the Secretary of State.

I turn now to Amendments 15 and 16. The proposed addition to the Visiting Forces Act runs contrary to the purpose of the Act and would impose an onerous and unnecessary obligation on the Secretary of State for Defence. The UK welcomes foreign military personnel from a large number of countries. Their position in the UK is covered by the Visiting Forces Act and the NATO Status of Forces Agreement. Some are here as exchange officers, others for major exercises and some for training and education. This financial year some 3,000 foreign military personnel will have trained in the UK. For example, 65 foreign students are at the Royal College of Defence Studies here in London. Some 80 foreign officer cadets are at the Royal Military Academy Sandhurst and eight foreign officers attend the Royal Navy’s principal warfare officer course at Fareham. These military personnel are so enmeshed into the activities of the UK Armed Forces that a separate reporting mechanism concerning procurement, command and control, and premises and property, is not needed. The amendment is broad since it concerns,

“all premises and property used by visiting forces for defence purposes”.

The Visiting Forces Act and the NATO Status of Forces Agreement do not place foreign forces beyond the reach of UK law. The Act and agreement permit foreign laws and military discipline to apply to foreign military personnel in the UK, but these do not displace UK law. There is nothing unusual or sinister about this, and we require similar provisions for our forces when they are overseas. For these reasons, the Government oppose this element of the amendment. It might be helpful in this context if I clarify that RAF bases are made available to the United States visiting forces under the terms of the NATO Status of Forces Agreement and that USVF personnel in the UK are subject to the provisions of the Visiting Forces Act. I assure my noble friend that the RAF commander takes his responsibilities very seriously, and he receives very substantial training before he takes them on; I have been assured on that point.

With specific regard to oversight of the intelligence activities undertaken at RAF Menwith Hill, this is already provided by the parliamentary Intelligence and Security Committee. The committee does not comment on the details of its work programme, although it does publish information and, when appropriate, occasionally comments in its annual report on visits it has undertaken. I am able to inform noble Lords that the committee has made such occasional visits to the joint UK-US facility at RAF Menwith Hill.

RAF Menwith Hill operates as a field element of the US Department of Defense, whose activities, along with those of other US elements, are adequately governed by the Visiting Forces Act. While it would be not be appropriate to provide specific details about operations carried out at the base, the mission at RAF Menwith Hill is conducted in accordance with UK law and with the knowledge and consent of the UK Government. The MoD owns and manages the site, and a number of British staff from the MoD and GCHQ work at the base. The RAF commander acts as the senior MoD representative, is a member of the senior leadership team and has full and unrestricted access to all areas of the base. Oversight and accountability of RAF Menwith Hill must continue to remain the responsibility of the Intelligence and Security Committee, and the formation of a separate scrutiny group is not required.

As I have said, under the Visiting Forces Act visiting forces are subject to UK law. This means that if they ever wanted to undertake interception activities that engage the Regulation of Investigatory Powers Act—RIPA—a proper authorisation must be obtained. All such authorisations are already overseen by the Interception of Communications Commissioner, and he reports annually to Parliament and the Prime Minister on the exercise of those powers. I should add that, as proposed, the amendment would also have the effect of broadening the Interception Commissioner’s remit to cover the exercise of other powers, such as covert surveillance, under RIPA. Those powers are, of course, subject to separate oversight arrangements, not least through the independent Chief Surveillance Commissioner.

The oversight mechanisms are already in place, and cover any person subject to UK law performing such activities in the UK. So I can assure noble Lords that if what they allege to be occurring were actually happening, there would be oversight by Her Majesty’s Government and by the independent commissioner, but I do not propose to comment on whether this is happening, nor on the details of any intelligence operations, actual or putative. This part of the amendment is unnecessary and would not add any powers that do not already exist.

My noble friend Lady Miller was concerned about GCHQ accountability. We all know that there is intelligence co-operation between the UK and US Governments and that this is a key component of our relationship with the US, but I will not be drawn into commenting on the specifics of that co-operation.

I thank the noble Baroness, Lady Stern, for her compliment on our document. She raised the point about lawyers, and I shall be happy to have a word with her after the sitting about my personal experiences during the Libyan crisis; I think that that will be of some reassurance. To explain the role of lawyers, there are military lawyers advising commanders at tactical and operational level; in addition, civilian lawyers advise at operational level and also, crucially, at strategic level. That means that lawyers are involved at all stages in operations and, in particular, that civilian lawyers advise and approve the rules of engagement and targeting directives which set the framework for the use of force in operations. I hope that that is of some comfort to her.

The noble Baroness also asked whether UK doctrine is shared with US forces. The answer is yes, I can conform that UK doctrine is shared with key allies, including NATO, the US and France. We scrutinise each other’s doctrines to ensure that we align how we fight, think and are accountable under international law so far as possible. Where there are some differences, we are clear what they are and put national caveats on our involvement.

My noble friend Lord Roper raised a point about the difference of interpretation of the UN Security Council’s resolutions. Where there is a difference of interpretation, we always act on the basis of our UK interpretation. It is not unusual in coalition operations for states to have different views, and we are used to respecting differences and putting in place necessary caveats. My noble friend also mentioned Mr Emmerson QC’s report. I will look at the possibility of circulating this to Members of the Committee before Report.

In conclusion, Amendment 14 is clearly within the scope of the Bill, but I am afraid that I cannot agree to it for the reasons I have set out. Amendments 15 and 16 deal with issues that are outside the purposes of the Bill. I therefore ask noble Lords not to move them.

My Lords, it is important to have on the record that these amendments are not meant to undermine collaboration with our allies, wherever they may be. We understand that the security of this country depends on working with people and other nations and making sure that we in turn help them maintain their security. It is important that that should be on the record.

What I was concerned about was this: the noble Baroness, Lady Stern, referred to the creation of a culture, and the question is whether we have the right culture around how this issue should be approached. I do not want to stretch the analogy too far, but the problems that happened in the City of London were about culture. People said, “So long as it is not breaking the law, we can do more or less what we like”. What the noble Baroness is putting her finger acutely on is whether we have people who follow the spirit as well as the letter of the law, or whether we are, as the noble Lord, Lord Judd, said, in danger of being seen as hypocritical.

The Minister said, strangely, that systems for supervision and scrutiny exist, but he was not prepared to confirm that they are being used because he could not say that. That is exactly the culture question. The systems are there, but are we using them properly? In that sense, unlike his response to the first group of amendments, this was a rather less than satisfactory response. We have not addressed the question of anticipatory self-defence and whether we are providing means of collaboration with our allies, whoever they may be and who believe that anticipatory self-defence is okay, in things that would be unlawful under UK law. We have had a good first canter around the field. My noble friend Lady Miller has got her teeth into the ankle of an issue and is not letting go. In the mean time, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

Amendments 15 and 16 not moved.

Clause 9: Transfer of employees: application of TUPE regulations

Debate on whether Clause 9 should stand part of the Bill.

My Lords, Clauses 9 and 10 relate to the transfer of employees, and the transfer of property rights and liabilities in the light of the provisions in Clause 1 in respect of defence procurement arrangements. The decision has now been made by this Government that they will not proceed with the GOCO option but will move to a changed DE&S organisation from April.

Can I ask how the Government envisaged a transfer of staff to a GOCO taking place, had they decided to continue to proceed down that road? When the Bill was being discussed in the other place, the government Minister concerned said that the Government were,

“considering a phased transfer by domain, with the initial domain—maritime—transferring two years before the competition for the remaining domains becomes effective. It is likely that the successful contractor for the initial domain will also be in the competition for the other domains and in a strong position to win them, but it is important that we maintain competitive tension to ensure that the contractor puts in a competitive and compelling bid for the other domains. Therefore, we do not intend to give exclusivity rights over those domains to the successful contractor for the initial domain, which opens up the prospect of having different contractors”.—[Official Report, Commons, 10/10/13; col. 252.]

However, a few minutes after that, in the same debate, the same government Minister said that he had had,

“some advice saying that, as drafted, the contract will be for all four domains”—

including the joint domain—

“and that, in respect of competition for the four domains, including the joint domain, after the initial phase is over the subsequent phases will transfer automatically, in the event that the performance of the contractor has been up to speed”.

Having repeated the advice that he had just been given, the government Minister in the other place said:

“Whether that survives negotiation remains to be seen. Maintaining an element of competition before agreeing the transfer of subsequent domains is quite important. We will be negotiating that as we proceed down the track”.—[Official Report, Commons, 10/10/13; col. 253.]

One is left with the impression that the government Minister in the other place was not wildly enthusiastic about the advice that he had received and had just repeated it.

I appreciate that this is somewhat academic, as this Government are not proceeding now with the GOCO, but whether there might have been more than one contractor, and the timescale for the transfer of domains, is an issue of interest for DE&S staff. It would be helpful if the Minister could indicate which of the two versions of the competition transfer arrangements for the GOCO set out by the government Minister in the other place, to which I have just referred, actually represented the Government’s intentions.

The Government are now moving to a new DE&S organisation from this April and are seeking the agreement of the Treasury and the Cabinet Office to provide the new DE&S organisation with greater freedoms and flexibilities to recruit, reward, retain and release staff; freedoms and flexibilities that are considered necessary for the effective and efficient conduct of the business. The Government have said that DE&S requires,

“a high proportion of Project Management, Commercial and Financial expertise as well as engineering and other technical specialities”.

They added:

“These specialist skills have a much higher market value than can be recognised within the civil service pay framework, and it is becoming increasingly difficult to recruit, develop, and retain those with the particular skills needed at all levels of the business”.

There are currently hundreds of posts unfilled within the DE&S organisation. Without the achievement of the proposed greater freedoms and flexibilities, the Government’s view is that the loss of skills and capability in DE&S will continue, reducing the ability of the Ministry of Defence to deliver equipment to the front line.

I appreciate that it is extremely unlikely that the Minister will be able to say any more today about the progress of the discussions with the Treasury and the Cabinet Office than he said two days ago. However, as it will affect the employees of the new DE&S organisation in April, can the Minister say something about the hoped-for timescale of the Ministry of Defence getting the new DE&S organisation fully up and running? Roughly how many of the current vacant posts in the DE&S organisation will be filled, assuming agreement is reached on the new freedoms and flexibilities, and over what timescale will they be filled? Are the current discussions with the Treasury and Cabinet Office about the principle of going outside the Civil Service pay scale, or about the extent to which it will be acceptable to go outside the Civil Service pay scale in the revamped DE&S organisation from April—or are the discussions about both issues?

The Government have said that they are looking for an injection of a significant element of private sector support in the changed DE&S organisation from April. What form will that private sector support take, in what areas of activity and at what cost? Is it a case of the private sector taking over and running some functions, of the private sector acting as consultants, or of people from the private sector coming into posts in the DE&S organisation and becoming employees of the organisation on permanent contracts? Or is it intended that it will be a combination of all three? How long is it expected to take to bring in the private sector support envisaged, and how long is it expected to be before the DE&S organisation from this April will be running and operating as fully envisaged by the Government, with its new freedoms and flexibilities, and injection of a significant element of private sector support?

One of the greater freedoms and flexibilities the Government referred to is in respect of release of staff. Put simply, is, in this context, the word “release” a euphemism for “sack, or otherwise remove from the organisation”? What are the greater freedoms and flexibilities the Government are seeking in respect of release of staff? One of the main concerns expressed in respect of staff about the Bill’s provisions to establish a GOCO related to the potential for a two-tier workforce. Is the position, however, that that could still be the case with the DE&S organisation as envisaged from this April? Will the flexibilities the Government seek simply be used to reward senior managers brought in from outside, and will the flexibilities be used in relation to appointment and promotion procedures to favour candidates from outside the organisation? Can the Minister give any helpful assurances on these points, not least over concerns expressed about the possibility of a two-tier workforce being created in the DE&S organisation?

We heard in our discussions on Monday that the existing staff were pretty good, with problems not being just about recruitment but also retention, which the Government of course seek to address. However, retention also needs to be addressed by developing personnel management and pay systems which give equal opportunity to access the development and rewards that are put in place in any future changes. Once again, can the Minister give an assurance that this will indeed be the case?

The Government have said that they are in discussion with the Treasury and Cabinet Office over new flexibilities. Are there in fact any concerns within the Ministry of Defence about the impact such freedoms and flexibilities might have? Is the Ministry of Defence concerned about where it might get its project managers, commercial officers and engineers from if the DE&S organisation from April has a market advantage in respect of the overall remuneration package, or is this point not of concern within the Ministry of Defence?

Finally, I have not touched on the issue of pensions for the staff but, as I understand it, the relatively recent changes to public service pensions are now in place for the Principal Civil Service Pension Scheme. That means that staff transferred to the private sector, or non-civil-service public bodies, can retain their membership of the Principal Civil Service Pension Scheme with the new employer, rather than having to move to a scheme providing an equivalent pension. Perhaps the Minister can confirm that that is indeed the case. Of course, such an arrangement does not mean that the new employer has to place new staff into the Principal Civil Service Pension Scheme or, indeed, to employ them on the same terms and conditions at all; hence the concerns that have been expressed, and to which I have already referred, about the prospect of a two-tier workforce. I appreciate that I have raised a number of questions, and I hope that the Minister will be able to respond to the points that I have raised, either now or later on.

My Lords, the provision in Clause 9 is necessary to ensure that any initial transfer of civil servants to the contractor will be under the Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE. These implement the EU-acquired rights directive 2001/23EC, which ensures that employees’ rights are safeguarded in the event of transfers of undertakings, businesses, or parts of undertakings or businesses.

The TUPE regulations protect employees if the business in which they are employed changes hands or if the services that they provide are to be provided by another organisation. Their effect is to transfer employees and any rights, powers, duties and liabilities associated with them from the old employer to the new employer. This includes any rights specified in their contract of employment, statutory rights, and the right to continuity of employment. It also includes employees’ rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays, and personal injury claims. Liabilities arising from such claims also transfer to the new employer. TUPE gives employees a legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact, although there are special provisions dealing with old-age pensions under occupational pension schemes.

Where the sole or principal reason for a dismissal is the transfer itself, it will automatically be deemed to be unfair. This is also the case where the sole or principal reason for the dismissal is a reason connected to the transfer, unless it is for an economical, technical or organisational reason—an ETO reason—requiring a change in the workforce, such as an organisational restructuring resulting in a reduced workforce requirement, or a business relocation. This ETO defence is narrow in scope, and it can be difficult for the new employer to demonstrate. Even if the employer can rely upon an ETO defence and the dismissal is not automatically unfair, it may still be unfair for other reasons, such as a failure to consult properly in a redundancy situation.

Similarly, the new employer cannot change the terms and conditions of employment of transferred employees if the sole or principal reason for the change is the transfer. This is also the case where the sole or principal reason is connected to the transfer, unless there is an ETO reason for the change, usually requiring a change in numbers of the workforce. This often makes it difficult, if not impossible, for new employers to harmonise terms and conditions of employment of staff immediately after a TUPE transfer.

There is a risk that the transfer could be regarded as being outwith the TUPE regulations and be classed as a public administrative transfer. Therefore, it is necessary to make clear provision through the Bill and give the employees certainty that their rights will be protected by the TUPE regulations. The TUPE regulations list explicitly situations to which the regulations do not apply, and a public administrative transfer is one such situation.

Clause 9 also ensures that if the contractor seeks to make redundancies or alter terms and conditions of service, the TUPE regulations will apply. Further, because the protection of employees’ pensions is limited under TUPE, the amendments to the Treasury’s fair deal policy as a result of the Public Service Pensions Act 2013 mean that the employees will also retain membership of their public sector pension scheme upon transfer, and the GOCO will enter into an employer admission agreement with the Ministry of Defence and the Cabinet Office, which will form a contractually binding agreement to continue to allow access to the public sector pension schemes for the transferred employees.

In summary, this clause is required to avoid any doubt that the TUPE regulations will apply to the transfer of Ministry of Defence civilian employees to a GOCO. It will not apply to service personnel, who will remain with their respective services, and will be placed in the contractor’s organisation as required to provide military expertise. They will remain Crown servants and will continue to be managed by their owning military service, and their terms and conditions of service will remain.

The contract between the Secretary of State and the contractor will set out a routine for managing the placement of service personnel in the contractor’s organisation, and will make provision to remove personnel at short notice from the contractor’s organisation if required for operational reasons. Service personnel placements in the contractor’s organisation will last for two to three years, in accordance with usual personnel appointing routines.

Clause 10 and its related schedule provide a number of necessary safeguards, including the power for the Secretary of State to create a transfer scheme which will enable the transfer of the business to another contractor or, in extremis, back to the Ministry of Defence. When a contract expires or is terminated, for whatever reason, it may be necessary for the Ministry of Defence to manage operations itself or to transfer the undertaking to a new company.

Under this power, it is intended that the Secretary of State would have the ability to direct the transfer of certain specified property, rights and/or liabilities such as real property, intellectual property, contracts and people, to either himself, a company, including a publicly owned company, or to a new contractor. This power would allow the Secretary of State to decide exactly what is to be transferred at the point that the transfer scheme is created. The power may be exercised in unforeseen circumstances and maximum flexibility is therefore required. The contractor will be conducting work which is critical to national security and it would not be appropriate to rely on contract provisions alone.

For example, in a situation where the entity becomes potentially insolvent and elements of the business are liable to fall into the control of an administrator, a statutory provision offers more certainty and control and therefore less risk, while contractual provisions are more easily amended or subject to dispute. Furthermore, third-party rights can usually only be transferred with the consent of the third party, whereas a transfer scheme can direct that such rights are transferred. The intention would be to use such a scheme in only a very limited number of scenarios, such as the early termination of a contract. The critical national importance of defence procurement makes it inappropriate to rely on contractual provisions alone. Moving assets by a transfer scheme will avoid the need for third-party consent and ensures the continued delivery of defence procurement services.

The noble Lord, Lord Rosser, asked whether Clauses 8, 9 and 10 on property rights apply to the new DE&S in April. The answer is no, because the new DE&S will remain part of the department, so there is no change of employer for the staff and no property is legally transferred. The noble Lord also asked about freedoms and flexibilities. The new organisation will have significant freedoms and flexibilities, agreed with the Treasury and the Cabinet Office, around how it recruits, awards, retains and manages staff along more commercial lines, to reflect its role of running some of the most complex procurement activity in the world. As part of the MoD, DE&S will remain a Crown body and its staff will continue to be civil servants. However, there will be a number of significant changes, including that governance will be through a non-executive chairman, a CEO and a Chief of Defence Materiel, supported by a board and other non-executive directors. DE&S will be accountable to Ministers through an owners’ council, with an agreed corporate plan and framework document to enshrine its freedom to operate.

Funding will be via MoD estimates, in due course through charging MoD customers for the work it does. DE&S will publish its own plans and produce annual reports and accounts, which will be consolidated within those of the MoD. DE&S will be accountable to Parliament through the CEO as an additional accounting officer. DE&S will have the freedom to pay, grade, promote and manage Civil Service staff. These changes will reinforce the customer-supplier relationship between the military command customers and DE&S and allow it to move earlier to a hard-charging regime.

The noble Lord asked if there was one competition for each phase. There will be a single competition for all four domains provided that the performance of the domains are satisfactory as they transfer. That is, before each subsequent domain transfers, an assessment is made of the GOCO-contracted performance, which is required to meet an agreed standard. The noble Lord asked about discussions on Civil Service pay freedoms. Discussion is ongoing on whether DE&S will be able to go outside the Civil Service pay framework. The noble Lord also asked about the retention of staff. The decision has not yet been made on the remuneration package for retained staff. Any decision will depend on the freedoms agreed with Her Majesty’s Treasury and the Cabinet Office. The noble Lord also asked about pensions. Civil servants transferred to the GOCO will retain their pension arrangements. He asked about a two-tier workforce. There will inevitably be staff on different terms and conditions but that will not necessarily create a two-tier workforce. Part of the purpose of the freedoms being sought is to recognise and incentivise performance through reward.

I said that I would return to Schedule 2. The noble Lord asked why, if there is a criminal penalty under Part 2 of the Bill, one should not apply to GOCOs under Part 1 as supplier contractors are very concerned that GOCOs may misuse the relevant information. Under single-source provisions, contractors are compelled to provide information. They have no choice in that. However, under Part 1 the information is voluntarily given to the MoD by the contractors as part and parcel of the particular procurement being negotiated. It should also be remembered that the Part 1 provisions for disclosure of information to the GOCO apply only to existing and legacy contracts at the date of vesting. After the date of vesting for all new contracts it will be up to the supplier contractor to negotiate for appropriate confidentiality clauses to be included in their contracts, just as for any other contract in any other area of business.

I thank the Minister once again for his detailed response. I would be grateful if he would read in Hansard the points I raised as I think there are one or two questions to which he did not respond. I should say straightaway that I did not expect him to be in a position to respond to them all immediately. He has certainly answered a number of the points, but I would be grateful if he would write to me on those to which he did not respond. I also appreciate his further response in relation to the earlier debate we had on Schedules 2 and 5. I will reflect on the additional information he has just given. I certainly do not intend to pursue the Question that Clause 9 should not stand part of the Bill and I thank the Minister once again for his response.

Clause 9 agreed.

Clause 10 agreed.

Schedule 3 agreed.

Amendment 17 not moved.

Clauses 11 and 12 agreed.

Committee adjourned at 6.33 pm.