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Lords Chamber

Volume 753: debated on Monday 24 March 2014

House of Lords

Monday, 24 March 2014.

Prayers—read by the Lord Bishop of Chester.

Flooding: Military Deployment


Asked by

To ask Her Majesty’s Government what assessment they have made of the military deployment during the recent floods.

My Lords, our people lent invaluable support to the relief efforts, with a peak of 5,000 personnel from all three services and the reserves. They were available to provide everything from sandbagging to aerial reconnaissance, as well as highly visible reassurance to the public. Now, in the recovery phase, we still have 223 people in the field. Once the operation is complete, we will make a detailed assessment of our contribution to civil resilience within the overall national response.

I thank my noble friend for his response. As we saw with the recent flooding and with the Olympic and Paralympic Games, when we deploy our military in the appropriate civil circumstances the results are always excellent. What further plans do the Government have to review the use of our military in other potential appropriate civil circumstances?

My Lords, I agree with my noble friend—the work of the Armed Forces is always excellent. The lessons learnt will provide a valuable opportunity to look at how the contribution of our Armed Forces to civil resilience can be enhanced and accelerated in future emergencies. We are working with the Treasury to consider whether there is potential for improvement to the funding processes. We routinely support civil authorities on a wide range of resilience activities, such as support in the event of industrial action by fuel tanker drivers and firefighters.

My Lords, on 12 February the Prime Minister told Parliament that money would be no object in the response to the floods and that local authorities had only to request military assistance, yet the flooding started in late December in the West Country. Why did it take not far short of two months to make that statement on money being no object, and why was it so long before the military was called in? Why was no action taken by the Government in the first week of flooding to consider and determine the potential role that the military could play? Was it because the Government were not prepared to find the funding to enable cash-strapped local authorities to call in the military until weeks later, or was it because the Government just did not get round to doing it?

My Lords, the department received its first request for assistance on 29 January and had deployed the requested support by the following morning. As the weather continued to deteriorate, defence became increasingly involved in providing support to local authorities.

Can the Minister confirm that the contribution made by reservists to flood relief was in this case substantial?

Yes, I can assure my noble friend that that is the case. The average number of reservists employed in mid-February, at the peak of the crisis, was around 80 per day. In most cases reservists were employed on man training days—the payment method used for routine reservist activity—although there were a small number of formal mobilisations, namely of signallers and engineers. I managed to visit some of the reservists who helped with the flood work, both infantry and engineers, who told me that they were very well received by the public for the work that they did.

My Lords, would the Minister like to say a little more about the issue of funding? We are aware that when the military is called out in support of the civil power, if it is to reduce the threat to life there is no charge, but very quickly the charging becomes extremely high. That could well have been the reason why local authorities were concerned about calling the military out. That would seem to be counterproductive when trained bodies of people are available to help in civil situations. Can the Minister say what the Government are thinking of doing about that?

My Lords, the noble Lord asks a good question. Certainly the perceived risk of a substantial full-costs bill at the end of an operation can be a concern to local authorities. We would like to do more to support the civil authorities, but we must ensure that the defence budget is not disadvantaged, nor indeed gains any inappropriate benefit, from so doing. The Secretary of State is currently in discussions with the Treasury, exploring the possibility of a full marginal costing recovery scheme, which would make the costing situation much clearer to all parties in advance.

My Lords, does the Minister agree that numbers themselves have a real strength? In our push to try to reduce the number of people in the military to get maximum efficiency, we are losing that. France in its White Paper, for example, saw the use of the military in various départements as a very important part of the whole structure. Have we really looked at this in detail? I believe that we have reduced numbers to a level at which they cannot assist the civil power where they should be able to do so, because they are formed bodies which are very often self-supporting.

My Lords, as I said in my initial Answer, we are looking at this whole process to see how to improve it in future. This is one area that we will certainly look at closely.

Can my noble friend confirm that the deployment to which the Question and his Answer relate had no effect on routine operations?

My Lords, the personnel allocated to assist with flooding were selected in such a way that their participation would have no impact on military units’ preparedness for future operations. That includes contingency operations should assistance be requested in the event of future flooding or other severe weather.

My Lords, as the flood water recedes and people begin to reoccupy their homes, can the Minister say whether he anticipates that the armed services will be needed for a similar role next winter?

My Lords, I cannot say that I am very good at forecasting the weather, but if the Armed Forces are called on I am sure that they will do as good a job as they did this year.

My Lords, military assistance to the emergency services in the Environment Agency was very welcome. I well recall an even more acute situation in the foot and mouth disease outbreak. However, had that outbreak occurred a few months later, the military would all have been in Iraq. It is, therefore, important to recognise that military priorities change and we need to invest in the emergency services. I have just been given information that there is to be a huge cut in West Sussex Fire and Rescue Service of about £2.5 million this year and another £1.5 million next year. We depend utterly on those emergency services; help from the Army is good, but we need to continue to fund them.

My Lords, the noble Lord makes a very good point, but the Armed Forces are always ready to do what they can to help the civil authorities.



Asked by

To ask Her Majesty’s Government what is their assessment of the current situation in Burma with particular reference to the Rohingya, Shan and Kachin peoples.

My Lords, we welcome that the Burmese Government and ethnic armed conflict groups will establish a joint committee to draft a nationwide ceasefire text, but remain concerned by low-level fighting in Kachin state and Shan state. We are troubled by UN reports that at least 40 Rohingya people were killed in Rakhine state in January and by constraints imposed on Médecins sans Frontières. We have pressed for improved security and accountability, co-ordination of humanitarian assistance and a solution on Rohingya citizenship.

My Lords, I thank the noble Baroness for her Answer, including her expression of concern for the suffering of the Rohingya people. Is she aware that I visited Shan state recently and Kachin state last year, and that in both states, despite ceasefires, the Burmese army continues to carry out military offensives and atrocities, including the killing, rape and torture of civilians, while the Burmese Government continue their expropriation of land, theft of natural resources and displacement of hundreds of thousands of civilians? Will Her Majesty’s Government not consider more robust responses? Many Burmese people and advocacy organisations such as Burma Campaign UK, in its recent report, Downplaying Human Rights Abuses in Burma, are concerned that the British Government are making trade and investment such a priority that the Burmese Government can continue to kill and exploit their own people with impunity.

My Lords, as ever, the noble Baroness comes to these questions with probably the most up-to-date information available. She is absolutely right that, despite ceasefires having been signed, there is still concern about real human rights abuses happening in Shan, about fighting in Kachin and, of course, about the appalling situation in Rakhine. We take these matters very seriously. They have been raised in the most robust way at the highest level, by the Prime Minister, when President Thein Sein visited the United Kingdom, and most recently by me about a week ago, when Ministers from the national planning committee were here, as well as representatives of the chamber of commerce and the director-general responsible for all investment coming into Burma. I did not hold back in any way in making very clear to them our view that responsible business can happen in Burma only against a backdrop of human rights being observed.

My Lords, have we asked the Burmese Government directly why they are not providing adequate protection and relief for the 140,000 Rohingya displaced victims of ethnic cleansing in Rakhine state but are instead expelling humanitarian organisations such as MSF, which provided health services to these victims of the Government’s failure to protect them? Secondly, why does the FCO’s quarterly report on Burma as a country of concern play down or omit these and other human rights violations, such as the tolerance of hate speech?

I assure my noble friend that the discussions in relation to Médecins sans Frontières are ongoing. We have huge concerns about it being probably one of a handful of NGOs that are providing health support in Rakhine. Those discussions are ongoing and I will certainly report to the House once we have made some progress. The quarterly report stated:

“More needs to be done to tackle hate speech, which continues to inspire violence and intolerance across Burma; we continue to lobby the Burmese government to tackle these underlying issues”.

We continue to raise these matters. As to humanitarian access, my noble friend will be aware that there are certain parts of the country which, unfortunately, due to fighting, we cannot access, but we continue to press the Burmese Government to allow us access in those areas where there is no fighting.

My Lords, how does the Minister respond to the report of the outgoing UN special rapporteur for human rights in Burma last week, in which he concluded that human rights violations against the Rohingya people could amount to crimes against humanity that should be the subject of an independent international inquiry? Will Her Majesty’s Government support these well founded recommendations?

We support a lot of the work that is being done by the special rapporteur. In that report, which he presented to the Human Rights Council, he felt that technical assistance was required from the international community for any investigation to be transparent, credible and acceptable. I know that the noble Baroness does a large amount of work in this area and continues to campaign. Of course, we will continue to press the Human Rights Council for a strong resolution on human rights against Burma.

My Lords, the noble Baroness will be aware that the forthcoming census in Burma is largely funded by the United Kingdom. Has she seen the calls by a number of non-governmental organisations that it should be postponed, not least because in Rakhine state, and other states where there are large ethnic minorities, it could certainly be a flashpoint for further confrontation. Will she at the very least ensure that, should the census be conducted, it will not be used to further distort the ethnic tensions in Myanmar?

The noble Lord is right. We have provided about £10 million to ensure that the census is conducted in a technically sound way. We have also helped with the mapping exercise. We have concerns about the census, which is due on 28 March. This Friday will be census night and there will then be a period of 10 days when enumeration will take place. We have concerns because of the 135 officially recognised ethnicities—Rohingya, for example is not included—but we take some comfort from the fact that we have gained agreement from the Burmese Government for independent observers to be mobilised during this process. We hope that the option to self-identify will be used by the Rohingya community to be properly enumerated.

My Lords, the noble Baroness has said that these issues are raised with the Burmese authorities vigorously and frequently and I know that to be the case. I am sure that these efforts are appreciated. To ensure that these issues do not drop between any cracks or rely on a single sentence to capture them, should we not adopt in the quarterly report a traffic light system under which countries that persistently abuse human rights are shown to all of those who read our reports around the world as red, those which are making progress as amber and others as green? As we take comfort in some progress, I sometimes feel that we have lost them on our radar.

As the Minister with responsibility for human rights, I constantly keep under review how the quarterly and annual reports on human rights are presented, how we can present them better and how we can better judge countries that are making progress. I am starting to see the first drafts of the human rights reports which will be published later this year. They will include a great deal of detail on Burma, both as a country of concern and in relation to specific human rights abuses.

Israel and Palestine


Asked by

To ask Her Majesty’s Government what representations they have made to the government of Israel about the actions of the Israeli Defence Force towards civilians in the Occupied Territories.

My Lords, we have serious concerns in regard to IDF actions in the Occupied Palestinian Territories, including the killing and injuring of civilians, policing of non-violent demonstrations and treatment of child detainees. We have repeatedly raised cases with the Israeli authorities, including the Ministry of Strategic Affairs, COGAT, and the National Security Council.

I thank the Minister for that reply. Is she aware that since last July, 44 civilian Palestinians have been killed and many hundreds have been seriously injured? Among them, for example, 12 year-old Attah al Sabbah, now a paraplegic, was shot while collecting his school satchel; and two young footballers, Adam and Johar Halabiyeh, from Abu Dis near Jerusalem, were shot in the legs before being beaten up, one having his knee joint shattered. They were returning from football training. Will the Minister ensure that, as well as the usual ineffectual representations that our Government make to the Israeli Government, they will also ask FIFA to impose penalties on countries which allow young footballers to be treated in this way? Will she also say why it is that we are prepared to impose sanctions on Russia for breaking international law but not upon Israel, which has been breaking international law for decades?

I thank my noble friend for that question. She comes to these matters with great expertise. She has asked a number of questions—not only Oral Questions but Written Questions—on a regular basis. I can assure her that we take these matters incredibly seriously. There has been a worrying increase in violence in the West Bank. In 2012, nine civilians were killed; in 2013, 27 civilians were killed; and the number of civilians who have been injured is also on the increase. Last week I raised these matters with our officials and only yesterday—Sunday— our ambassador spoke with the national security adviser and again put our concerns before him.

My Lords, it is true, is it not, that in recent weeks the international community has taken a dim view of the occupation of one country by a neighbouring country and that this has led, quite properly, to a flurry of international activity, reference and the activation of sanctions? Yet, given that this question quite rightly refers to occupied territories which have been occupied now for more than 40 years, am I right in thinking that that there is no sense whatever of the same level of urgency and commitment being given to liberating these occupied territories as there is when similar events occur in other parts of the world?

It is important that I try to focus on this Question. I understand why people try to read across to other matters, but successive government policies on the Occupied Palestinian Territories have been clear. Successive government policies about the two-state solution based on the 1967 borders, with agreed land swaps and a settlement for refugees in Jerusalem as a shared capital, have been the same. There is a Kerry framework agreement on which we hope progress will be made and we hope that that will be done by around the end of April. We are supporting and continue to support that, and we hope that it will yield some positive results.

My Lords, will the Government continue to raise the use of excessive force, the lack of proportionality and the almost complete impunity of the IDF when operating in occupied zones rather more strongly and effectively than has been the case in the past? There is the particular case of Raed Zeiter, a Palestinian civilian and a Jordanian magistrate, who was killed by the Allenby Bridge. Will the Government insist on a full and independent inquiry into his death?

The views of this House are very clear, and I will certainly make sure that the strength of feeling on this matter is fed back. Officials from our embassy in Tel Aviv have raised with the IDF the issues of the Palestinian-Jordanian judge Raed Zeiter, who was tragically shot. I understand that there has been some progress, and that Prime Minister Netanyahu has issued a public apology and announced a joint Israeli-Jordanian investigation into the incident. Anger about it has been widespread and that has been communicated to the Israeli authorities.

My Lords, bearing in mind the incidents that have been referred to, does my noble friend the Minister agree that the particular importance of the two-state solution should be stressed and that the consequences of not achieving an agreement should be warned against? Whatever the incidents, the only way forward is an agreement on peace and I hope that the Government will support that.

My Lords, the bad behaviour of soldiers from any country is inexcusable, but is the noble Baroness aware of the many efforts made by Israel to support the Palestinians on the other side? These efforts relate to the economy, where the GDP in the West Bank is rising by about 7% a year, to the number of Arabs in East Jerusalem and Jerusalem, which is increasing at a greater rate than that of the Jewish population, and to the large numbers of Palestinians who are being treated in Israeli hospitals across the country, as well, incidentally, as those wounded from Syria. Should the UK not be concentrating on pressure on Mr Abbas to continue negotiations so that we can get to a two-state solution that the vast majority of the population in Israel supports?

The Government have always been quick to recognise the progress that has been made on positive action by the Israeli Government. However, that does not take away from the real and serious concerns that we have in relation to child detainees, for example, that I know the noble and learned Baroness, Lady Scotland, was trying to get in on. We have concerns about IDF actions and continue to raise them at the highest level.

Does my noble friend agree that Israel is a great country with a great people, but unfortunately with a very narrow-minded and reactionary Government? Will our Government specifically seek out meetings with the Israeli human rights group B’Tselem, which has recently made strong representations to the Israeli Government about these unacceptable Palestinian casualties?

I am not familiar with that particular human rights group but I will certainly ensure that officials are aware of the work that it is doing.

Alexander Litvinenko


Asked by

To ask Her Majesty’s Government whether they intend to reconsider their decision not to hold a public inquiry into the murder of Alexander Litvinenko, following the judgment by the Court of Appeal on 11 February.

My Lords, the Home Secretary has decided not to seek permission to appeal the judgment and will give fresh consideration to the exercise of her discretion to establish an inquiry. The Government continue to co-operate fully with the inquest into Mr Litvinenko’s death.

I thank the noble Lord for his somewhat implausible Answer. The fact is that three eminent judges have concluded that the coroner was absolutely right, that the Government’s case was unconvincing and that a special inquiry was needed. As we have heard, the Government have not appealed against that. Why do the Government concede that a special inquiry might be adopted, not now but in the distant future? Is that sensible?

My Lords, the noble Lord is being rather uncharacteristically churlish about the Answer I gave. These are complex and sensitive issues, as I hope noble Lords will appreciate, and it is right that the Home Secretary gives proper consideration to whether or not to hold an inquiry. That is her right and we should support her in that.

My Lords, does the Minister recollect that on 11 February this year Lord Justice Richards, in giving the judgment of a unanimous and strong Court of Appeal, examined in detail each and every one of the six reasons given in the decision letter by the Home Secretary and rejected each and every one of them absolutely? He crystallised the situation with this sentence:

“If she is to maintain her refusal she will need better reasons than those given in the decision letter, so as to provide a rational basis for her decision”.

Does the Minister accept that failure to allow this matter to be properly examined under the Inquiries Act 2005 would not only be a denial of the justice that the assassinated Litvinenko deserves but a breach of the commitment that the United Kingdom has shown so honourably over the years to the rule of law?

My Lords, the Government have sought justice in this case ever since Mr Litvinenko died in 2006. That remains the position. This crime took place in this country and involved a British citizen. We want to see those whose arrests were sought by the Crown Prosecution Service—Andrey Lugovoy and Dmitry Kovtun—brought to and put on trial in the UK. Meanwhile, the noble Lord has emphasised why it is important that the Home Secretary gives proper consideration to the need for an inquiry.

My Lords, the judgment of this very powerful three-judge court emphasised that the case for setting up an immediate statutory inquiry, as requested by the coroner, Sir Robert Owen, is plainly a strong one. As has just been said, the judges rejected all the reasons given by the Home Secretary for not doing so, and then said that there needed to be,

“fresh consideration to the exercise of her discretion”.

That was said in a judgment on 11 February. In the intervening weeks, has the Home Secretary given fresh consideration and can the Minister now tell the House what her reasons are for accepting or rejecting the idea of an inquiry?

The noble Lord is quite right. The judgment was a firm one. None the less, the decision to order an inquiry requires proper consideration. There is no deadline for this consideration but, clearly, the Home Secretary will seek to come to a conclusion as soon as possible. Meanwhile, the arrest of those whom we wish to see tried for this offence remains our priority.

My Lords, does the Minister agree that there was in the past at least a scintilla of plausibility in the argument that, on prudential grounds, it was not worth provoking the Russian Federation because we needed to work with it in other areas, such as Syria and Iran, but that after Russia’s blatant invasion of Crimea, all that has gone and justice should now be done?

Yes, but, as I have pointed out, justice requires that those whom we wish to see put on trial in this country for this crime are brought to justice, and that requires the Russians to honour their agreement to extradite according to our request. I could not agree more with the noble Lord that our relationship with Russia has deteriorated as a result of the recent attempted annexation of Crimea. We are clearly not happy with that situation either, so it is yet another breakdown in our relationship with Russia.

My Lords, instead of passing sanctions of doubtful usefulness on various Russian citizens, would it now not be better to honour the promise given personally by the Foreign Secretary to Mrs Litvinenko, and to honour the Written Answer to me of 8 July last from the Minister, and respect the basic principles of British justice with a fully open inquest or inquiry? I have not understood whether the Government are committed to that or not.

My Lords, I think that I have made the position quite clear. The Home Secretary is considering, in the light of circumstances, whether an inquiry is the proper course of action. Meanwhile, as noble Lords will know, the G7—not the G8—is meeting in The Hague today to consider developments as a result of Russian aggression in the Black Sea area.

Defence Reform Bill

Report (First Day)

Amendment 1

Moved by

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

“Procurement of communications systems or servicesAdditional arrangements relating to procurement of communications systems or services

(1) To the extent that communications systems or services are procured for defence or related purposes under this Part (whether by the Secretary of State, Scottish Ministers or officers of other states resident in the United Kingdom) and those systems or services are used or proposed to be used for the purpose of interception of communications or processing of intercepted communications, it shall be the duty of the Interception Commissioner to report on the use or proposed use of those services or systems for any activity which may be subject to the provisions of the Regulation of Investigatory Powers Act 2000.

(2) In section 57 of the Regulation of Investigatory Powers Act 2000 (interception of communications commissioner), at the end of subsection (2) insert “; and

(e) the transmission of data through the jurisdiction and processing of data by means of any communication systems or services procured under Part 1 of the Defence Reform Act 2014 in the United Kingdom for defence (whether or not of the United Kingdom) or related purposes which has been obtained by interception, whether by—(i) the Secretary of State or Scottish Ministers; or(ii) officers of other states acting within the jurisdiction.””

My Lords, I will take just a moment to remind Members of the problem that I am trying to address with this amendment—that is, that the ability to intercept communications has leapt ahead of the regulations governing them. However, that is a very broad area and I think it is generally accepted that the Regulation of Investigatory Powers Act needs a thorough overhaul. This amendment addresses just the update to governance that is needed in the area of defence procurement—the subject of this part of the Bill.

The capacity and scale of interceptions from the RAF bases used by our allies, the Americans, under the Visiting Forces Act means that Parliament must put something in place to be confident of a statutory basis for these interceptions. However, I emphasise that in no way should the amendment be seen as undermining of our relationship with our NATO allies or of the intelligence agencies—quite the reverse. It seeks to increase confidence among UK citizens that we are in compliance with international law and have a national legislative framework that respects citizens’ right to privacy while keeping abreast of threats and technological developments.

I raised this issue in Committee and, in tabling this more focused amendment, I have taken account of the Minister’s comments at that stage. Since Committee, both the Deputy Prime Minister and the shadow Home Secretary have made speeches highlighting the need to act quickly and decisively with regard to governance of the intelligence agencies and interception.

I welcome particularly my right honourable friend Nick Clegg’s announcement that the Royal United Services Institute—RUSI—has agreed to establish an expert panel to review the use of internet data for surveillance purposes. That panel will consist of a group of experts drawn from the worlds of intelligence, technology, civil liberties and the law, and it will be chaired by Professor Michael Clarke, the director-general of RUSI. The panel will look at the principles that ought to govern our use of surveillance, examine current practice and make recommendations for reform and, where necessary, new legislation. I am sure that the review will spend some time looking at the whole legislative framework.

This amendment does no more than try to plug a gap in the mean time in respect of how data are obtained from UK citizens and how they may be shared, stored and used. The DPM went to the heart of the matter in his speech to RUSI when he said:

“it is in all our interests to ensure that we can enforce the law in the online world in the same way we enforce the law in the offline world, targeting terrorist and criminal networks and preventing attacks from taking place, precisely to safeguard the free and open society that we want”.

Yet would our laws even apply as things stand? The facts about what is intercepted and stored by, for example, the NSA as opposed to GCHQ, are a matter of conjecture to most of us, certainly to me. No doubt many interceptions are joint operations, but just how do Ministers know which are which and what is going on? It is so that Ministers are precisely aware of what is being planned that I propose in this amendment a reporting obligation relating to the procurement of communications systems or services in the area of defence.

The amendment seeks to extend the existing reporting obligations of the Interception of Communications Commissioner to report on the use of all communications systems and services procured for defence purposes. This expressly includes systems used on US bases by officers of states who are in the United Kingdom. The proposal involves extending the remit of the ICC, as I have suggested in subsection (2) in the amendment. In doing this, I sought to take into account the Minister’s careful response to the more extensive series of amendments tabled by the noble Lords, Lord Hodgson and Lord Dubs, the noble Baroness, Lady Stern, and me in Committee. In particular, I accept the argument of my noble friend Lord Astor that an entirely new scrutiny group might not be necessary, with the caveat that we must therefore build on existing mechanisms to fill the gaps in regulation and monitoring of all communications systems in the UK. This modest amendment seeks to address those different points on which my noble friend Lord Astor, through absolutely no fault of his own, given existing regulation and the remit of the Bill, was unable to reassure us.

We were informed by the Minister when this issue was last debated in Committee that,

“under the Visiting Forces Act visiting forces are subject to UK law”.

In response to an earlier version of this amendment, which also sought to provide oversight by the Interception of Communications Commissioner of the activities undertaken at US bases on UK soil, my noble friend Lord Astor added that, if the visiting forces,

“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”.—[Official Report, 5/2/14; col. GC 118.]

This reply puzzled me somewhat; perhaps I misunderstood it. I thought that US bodies or officers were not actually listed as those authorised under RIPA to apply for interception activity. With this in mind, I would be very grateful if my noble friend Lord Astor could explain whether and how such authorisations have been made. In addition, the reported scale of the interceptions would make the granting of such a volume of authorisations almost impossible.

The amendment would plug a gap in the oversight of these activities at such bases by providing an active duty of review to be undertaken by the ICC and his five trained specialist inspectors, who assist him in carrying out his duties. The amendment would therefore broaden the ICC’s remit, because currently, as I read it, the ICC does not have in his remit oversight of activity at US bases and looks only at,

“designated public authorities based in the UK”,

and specifically does,

“not oversee the intelligence or security services”.

By giving the ICC, who is a highly trusted commissioner who already oversees very sensitive material, responsibility for reviewing intercept data transmitted through or processed in the UK, the amendment would help us to scratch the surface of the activities being undertaken at US bases in the UK.

Whether or not the Government feel that this is the right amendment for the regulation of the interception activity, the need for action in this area is now urgent. I am sure my noble friend the Minister is aware of answers in the other place to questions asked about RAF Croughton, which the US military describes as the headquarters for the provision of,

“world-class … communications and global strike operations”.

RAF Croughton has been reported as being linked to both covert drone strikes in Yemen and the widespread programme of NSA/GCHQ surveillance that is the subject of so much controversy in the United States and which President Obama has undertaken to take action on and, as he says, to rein in. I am not sure that the Government’s position in maintaining in their Answer that,

“There is no requirement for an additional agreement regarding the use of RAF Croughton by the United States Visiting Forces”,—[Official Report, Commons, 10/12/13; col. 196W.]

stands up. The Government have also said:

“The Ministry of Defence remains satisfied with the arrangement that is currently in place regarding the use of RAF Croughton by the US”—

I might mention also Menwith Hill—and that,

“The Department has no plans to review this arrangement nor review the activities undertaken by the US at the base”.—[Official Report, Commons, 26/11/13; col. 213W.]

In reply to my Written Question of 3 December 2013, my noble friend the Minister said:

“The requirement to monitor the compliance of US personnel at RAF Menwith Hill with the Regulation of Investigatory Powers Act 2000 is not contained within the terms of the NATO Status of Forces Agreement of 1951”.—[Official Report, 3/12/13; col. WA 41.]

Therefore, I submit that interception activity is not covered by SOFA, nor does the MoD have plans for a memorandum of understanding, which might go some way towards filling that gap.

Some of you will have read the advice of Jemima Stratford QC, which was written for members of the APPG on Drones. The advice, which I am happy to provide to any noble Lords who would like a hard copy, supports my amendment. It concludes, as do I, that,

“pending review of the existing legislative framework, such amendments might go some way to ensuring that Ministers are informed about data passing through the UK. This, in turn, would help the government monitor compliance with UK law and make informed decisions about whether there is a need for an MoU or other multilateral agreement between NATO partners”.

I beg to move.

As the noble Baroness, Lady Miller of Chilthorne Domer, said, she also raised the issue of interception capabilities in Committee when she referred to concerns over the relevance of existing legislation in the light of rapid advancements in technology, the level of application of that technology by in particular American forces operating from UK soil and the extent to which UK law did or did not apply to them.

The amendment moved by the noble Baroness does of course refer to,

“officers of other states resident in the United Kingdom”,

and officers of other states acting within the jurisdiction.

I presume, therefore, that the amendment is nation-neutral and is intended to refer equally to other countries, although I am not sure that it is intended to cover any such activities being undertaken by, for example, embassy officials of such other countries.

As far as the United Kingdom is concerned, the Interception Commissioner, as I understand it, already monitors intercepted data, including of the Ministry of Defence, so I assume that is not the real issue since that individual reports annually to Parliament and to the Prime Minister. The Government have stated that if visiting forces want to undertake interception activities covered by the Regulation of Investigatory Powers Act a proper authorisation must be obtained, that such authorisations are overseen by the Interception of Communications Commissioner, and that covert surveillance powers are subject to separate oversight arrangements through the Chief Surveillance Commissioner.

In relation to foreign military personnel, the extent to which they are exempt from local jurisdiction is regulated through status of forces agreements negotiated between the sending and the host nation, which allow a sending state’s military forces to operate within, and at the consent of, the host state.

In 1951 NATO agreed a status of forces agreement covering hosting arrangements between the alliance’s member states, and thus from our perspective applies equally to visiting forces in the UK and to British forces based in NATO countries. The 1952 Visiting Forces Act incorporated the NATO status of forces agreement into UK law. The Act and the agreement provide for foreign laws and military discipline to apply to foreign military personnel in the UK, but such personnel are still subject to UK law, and this arrangement applies equally to our forces when they are overseas. The Armed Forces Act 1996 extended the Visiting Forces Act to third countries by Order in Council.

The Government have said that the US visiting forces are thus subject to both US and UK law. At present I believe that around 9,500 US military personnel and supporting civilian staff are permanently based at various locations throughout the United Kingdom. Most UK military bases involved are used by the United States Air Force, but RAF Menwith Hill is used by the US National Security Agency. The United States visiting force is responsible for internal security at the bases that have been made available to them. The parliamentary Intelligence and Security Committee has oversight of the intelligence activities undertaken by RAF Menwith Hill, and the Government have stated that the mission at RAF Menwith Hill is conducted in accordance with UK law and with the knowledge and consent of the UK Government. The United States visiting force also declares its inventory of weapons in the UK annually to the MoD, which ensures that all weapons are appropriately licensed and stored, and the storage of US munitions on bases in the UK is governed by a 1997 agreement between the UK and the US.

I listened to the concerns raised by the noble Baroness, Lady Miller of Chilthorne Domer, just as I listened to the Minister’s response in Committee, when he gave the Government’s assurance that oversight mechanisms were in place and covered any person subject to UK law performing such activities in the UK. Clearly the Government have a responsibility to make sure that appropriate arrangements are in place to ensure that we know what is going on in our own country in the field of military and security activity, including interception of communications and surveillance, and that what is happening conforms to UK law. That means that the Government have to satisfy themselves that both oversight mechanisms and the law continue to keep pace with increasingly sophisticated technological developments. I hope that in responding the Minister will be able to assure us that that is, and indeed will continue to be, the case, not only because a Government must know what is going on within their own borders in these vital areas, but to address some of the questions and concerns raised by the noble Baroness, Lady Miller, in moving her amendment today.

My Lords, I thank the noble Baroness, Lady Miller, for raising and giving an airing to this subject. I can only hope that this will not be the end of the discussion of this important matter. The point was made as to whether this amendment was within the remit of the Bill. I like to think that this is going to be not one that we will necessarily vote on today, but one that we will come back to in greater detail bearing in mind the reply from my noble friend the Minister.

The noble Lord, Lord Rosser, went into great detail, and I certainly do not intend to repeat his comments, but I share many of his concerns about the assurances that he seeks. Do my noble friend the Minister and the Ministry of Defence believe that, with our reduced Army, Navy and Air Force, we are more vulnerable without such interception? No one likes the breaking of privacy and no one likes secrecy, but with our Army being reduced by 20,000, our Navy by 5,000 and our RAF by 5,000 personnel, and with the increase in the Reserve Forces, which we will deal with later in the Bill, rising very slowly to reach the 30,000 level, how important is that interception, and how important is it that it is reported and transparent, as my noble friend Lady Miller asked?

That is brought very much to the forefront of our minds with the problems in Ukraine. What help or hindrance does such interception cause in the present climate of hostilities? Overall, how should such transparency be effected on forces such as those of the United States operating on UK soil?

My Lords, Amendment 1 deals with the issue of interception of communications and follows on from the amendment on the issue that we considered in Grand Committee.

As I am sure that my noble friend appreciates, the issues that she has raised this afternoon, although important and interesting, are not entirely related to the Defence Reform Bill. In fact, the Interception of Communication Commissioner’s Office—the role and powers of which are covered by the amendment—is the responsibility of the Home Office, rather than the Ministry of Defence. I hope that she will therefore understand if I do not respond to all the points that she raised. In particular, as the Prime Minister recently made clear in the House of Commons, intelligence-sharing between the UK and its allies will not be discussed in public. I will, however, try to cover those aspects of the amendment that deal with defence matters and to touch upon the wider points where I am able to do so.

I can give my noble friend and other noble Lords an unequivocal assurance that the Government are fully aware of the activities at US bases in this country and that interception activity in this country is subject to the full rigour of oversight provided under RIPA. We all know that there is intelligence co-operation between the UK and US Government and that that is a key component of our relationship with them. I will not be drawn into commenting on the specifics of that co-operation, but I can confirm that operations at the base that my noble friend mentioned are carried out in accordance with United Kingdom law.

The amendment is in two parts. The first would require the Interception Commissioner to report on the use or proposed use, subject to the Regulation of Investigatory Powers Act 2000, of services or systems procured for defence purposes. However, the Interception of Communications Commissioner is already required by Section 57 of RIPA 2000 to keep under review the issue of RIPA 2000 interception warrants. Therefore, the additional legal effect of this part of the amendment would be to impose a requirement on the commissioner potentially to be involved twice for the same interception. He would be required to comment once in reviewing the use and proposed use of equipment to intercept communications, and then again when reviewing the actual issue of any subsequent interception warrant. Therefore, this part of the amendment is unnecessary; it provides no additional scrutiny, and could, in some circumstances, introduce uncertainty and lack of clarity. This would be an unhelpful extension of the commissioner’s remit, which, as it stands, is clear and distinct.

The second part of the amendment would amend Section 57 of RIPA 2000, so that the commissioner would be required to keep under review the transmission of data through the jurisdiction and processing of data by means of any communication obtained for defence or related purposes, by systems procured under what—I hope—will become Part 1 of the Defence Reform Act 2014. The commissioner is already required, by Section 57 of RIPA 2000, to keep under review the issue of RIPA 2000 interception warrants. It is an offence to intentionally, and without lawful authority, such as that of a warrant, intercept—at any place in the UK—any communication in the course of its transmission. This amendment would require the commissioner to keep under review a new category of non-interception activity—transmitting and processing intercept data—in respect of data that have been intercepted.

This broadening of the commissioner’s remit is undesirable for two reasons. First, the inclusion of transmission and processing material would not provide any additional scrutiny of activity. By definition, any material that is transmitted or processed must first have been intercepted, and is, therefore, already subject to the commissioner’s oversight. Any material that is processed or transmitted would either have been legally obtained under a warrant that would have been issued under the existing RIPA powers, or unlawfully obtained, in any situation where it had not been collected in accordance with a warrant or some other lawful authority. If it has been obtained lawfully, this amendment would provide no additional safeguards. If obtained unlawfully, normal criminal proceedings would apply, with no requirement for further involvement by the commissioner.

The second reason why the Government cannot accept this part of the amendment is similar to the basis on which we opposed the amendment’s first part: that it would introduce a lack of clarity into the commissioner’s role. The commissioner’s office is not currently staffed, trained, organised or equipped to monitor transmission and processing as well as the legality of the production of warrants for interception. I need to be clear that I am not arguing simply that the commissioner has not got enough money. It is a matter not of resources but of clarity of purpose. Transmission and processing are areas of activity that are very distinct from interception in the way they are carried out and scrutinised legally. Effective oversight of transmission and processing is an activity which is primarily technical, rather than legal. It is one for which the office of the commissioner would not be equipped, given its current role—which is to ensure that activities are carried out in accordance with the law.

These proposed new areas of oversight are so distinct from interception that to introduce a requirement to monitor these activities, as well as interception itself, would introduce the risk of the commissioner’s oversight losing focus, and could therefore, perversely, impair the commissioner’s ability to perform its primary role.

In conclusion, I appreciate the efforts the noble Baroness has made to tie the amendment as closely as possible to the Bill, by adjusting the wording from that which she used in Grand Committee. We have had a debate this afternoon but I hope she will understand that I cannot accept the amendment, for the reasons I have outlined. I therefore ask my noble friend to withdraw it.

My Lords, first, I thank the noble Lord, Lord Rosser, for his thoughtful, thought-provoking and informative reply, from which I hope to have gained a lot more food for thought. Between us, we have managed to move the debate on this afternoon. I very much thank him for taking the time and effort to analyse the issues that we are looking it. I also thank my noble friend Lord Palmer of Childs Hill for his support because this matter really goes to the heart of that balance of which I spoke, between security and privacy.

I also warmly thank my noble friend the Minister. I realise that his reply labours under the difficulty of the amount that he is not able to say. He has given, as far as he is able to, some of the assurances that I was seeking. The difficulty is that there is so much that we cannot possibly know that it is very hard to imagine that we will ever be able to legislate adequately for the technological advances that have been made. That is the challenge before us because at some stage we are going to have to update RIPA, and even where it crosses into areas of defence it will have to be within a legislative framework.

The Minister made one particularly useful and interesting comment that I picked up on. That is the fact that some of this falls under the jurisdiction of the Home Office and some under the jurisdiction of the Ministry of Defence. Again, when we come to legislate that is a real issue because its effect is to leave a bit of a hole in the middle down which things can disappear. Also, had we had something about procurement and expanding defence capability back in about 1990, then what was going on and being built at Menwith Hill might have created a bit more of a stir about what was being procured there and for what purposes. There was some debate that it was for missile defence; I am sure that some of it is but some of it is for other purposes. The Intelligence and Security Committee may be aware of those purposes but of course many of them are poachers turned gamekeepers, which poses another challenge.

In concluding, I pay tribute to the Campaign for the Accountability of American Bases, which is based up near Menwith Hill. This is about accountability. It is not asking American bases to go home but saying that they should be accountable to the UK. Without that campaign, some of these issues would be much harder to keep our eye on from Westminster. However, I thank noble Lords for giving us the time during this important Bill and, in the mean time, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 14: Regulations relating to qualifying defence contracts

Amendment 2

Moved by

2: Clause 14, page 9, line 30, after “state” insert “for Business, Innovation and Skills”

My Lords, we now come on to Part 2 of the Bill. I would like to acquaint the House with my interests in this from my history. In 2008, I was working for Defence Equipment and Support, and I therefore tend to come at the problems being tackled in Part 2 from perhaps a wider direction than is typical.

At this point, I also thank the Government, particularly the Parliamentary Under-Secretary of State, Philip Dunne MP, the noble Baroness, Lady Jolly, and their civil servants and advisers, for the enormous amount of time that they have given to Peers in general and ourselves in particular in scrutinising Part 2. We therefore have only three groups and five amendments, because we have done all the probing—“What do these little clauses mean?”, et cetera—in those detailed meetings. The way that the Government handled that is highly commendable.

Before we move on to the amendments, it would be useful to pause and look at the problem that we are trying to fix. The Ministry of Defence procures between £6 billion and £8 billion-worth of equipment each year through contracts which are sourced by a single-source supplier. Why does it do this? It does it for the harsh practical reason that, in order to secure sovereignty, it has to cede monopoly. Why does it have to do this? It has to do this because defence technology cannot be this much-dreamed-about, off-the-shelf idea; you need your technology to be at the leading edge, and frequently the only people you can buy leading-edge technology from are your own suppliers. You use your own suppliers to assure security of supply.

The problem with these large contracts is that any vestige of competition recedes as the contract proceeds. The world changes and the Ministry of Defence is left with the harsh choice either to cancel or to pay more. These contracts are also very big. Taxpayers, not unreasonably, often feel that they have got a bad deal. This is compounded by the fact that contracts are frequently obscure and opaque—they are certainly not transparent. I would, en passant, like to commend the Government for the provisions in Part 2 that relate to the reporting regime, which we completely support and believe is an important step forward.

As I say, the people who tend to get blamed for this are the Ministry of Defence, civil servants and serving personnel who work in DE&S. We have to see the size of the problem of managing contracts of enormous size, difficulty and complexity over many years. The Government’s reaction to this was to ask the noble Lord, Lord Currie of Marylebone, to produce a report—which I have read and commend—and to invite a team of civil servants and at least one adviser to produce legislation to address the issue. That legislation is Part 2 of the Bill.

What Part 2 is trying to do is neatly summed up in the provisions referring to the Single Source Regulations Office: the aim is to ensure,

“that good value for money is obtained in government expenditure”,


“that persons … who are parties to qualifying defence contracts are paid a fair and reasonable price”.

That is the objective, and the Opposition commend the Government’s efforts in this area. We support the generality. Part 2 is a good attempt but not good enough. That is why we have three groups of amendments on Part 2, which will focus on: the independence of the Single Source Regulations Office; the misuse of target cost incentive fees; and the focus on allowable costs.

Amendment 2 relates to the independence of the Single Source Regulations Office, or at least our solution to what we think is not its independence but its apparent independence. It is important to understand how Part 2 works. My interpretation of the way Part 2 works—probably the Government will put me right in a minute or two—is that it puts a straitjacket or constraint or series of rules on how government can behave in these contracts and hence prevent itself by law from being bullied by big suppliers. It is quite a complicated thing to do. You would think, “Well, why don’t you just tell them not to be bullied?”. Of course, in the heat of the moment, when an urgent requirement is coming through, when you have got to do the deal, when it is a matter of national security, it is very difficult to resist the bullying of a big and powerful supplier. The essence of Part 2, as I read it, is to create this framework or the straitjacket that officials will have to work within when they complete these qualifying contracts.

Right at the centre of Part 2 is the Single Source Regulations Office, the SSRO, which has an immensely important role. The two aspects that I would pick out are its responsibility for analysing the data—overlooking the contracts and creating some of the parameters within which they are created—and making rulings. This analysis and these rulings are very significant for the financial impact on the contractor and, conversely, the other side of the coin, on the taxpayer. The SSRO stands between the MoD and the contractor, and its very essence is that not only is it independent but it must be seen to be independent. It is the Opposition’s contention that it is not independent enough and certainly not seen to be independent enough.

I will constrain myself to proving my points, because we had a very good debate about this in Committee. I commend to anyone who wants to see the sources of the comments that I am going to make—and I do not think that the Government will challenge any of them—the Hansard of the Grand Committee of 25 February. The essence of the issue is that the Secretary of State appoints the non-executive chairman through a process that involves: asking a panel to seek to recruit capable people; from those capable people, the panel determines those who are sufficiently good to do the job; a list of names is then given to the Secretary of State, and he then chooses the chairman. The appointment is within his discretion, once the individuals have passed the appropriate fitness test. He also appoints the other non-executive members of the board; he decides on the reappointment or not of the chairman and the non-executive members; he decides their pay; he approves executive appointments; and he determines the SSRO’s budget. While technically he does not control the pay of its staff, one of the two very useful letters from the noble Baroness, Lady Jolly, on 4 March 2014, says:

“The Bill does not impose any legal constraints on pay for the SSRO employees but, as with all non-departmental public bodies, the Government would expect the SSRO to comply with the relevant Cabinet Office guidelines”.

I ask noble Lords to imagine a situation where they are standing between two very powerful bodies, the industry and the Government. The difference between these two parties is that the individual responsible for the department spending between £6 billion and £8 billion, on which your rulings will have significant impact, appoints you, pays you and decides your budget, whether you are reappointed, who your people are, how big your budget is and, effectively, influences how much you pay people. In my view, this is not sufficiently independent.

We had some debates on this topic in Grand Committee. I commend the noble Baroness, Lady Jolly, on making the unambiguous statement:

“The creation of an independent body is absolutely central to the success and longevity of the framework”.

I could not agree with her more. She made a series of statements to try to make me feel good about it. There was a lovely little paragraph at the end:

“There will be a framework agreement established between the MoD and the SSRO that sets its budget, in accordance with HMT’s guidelines in Managing Public Money and performance targets”.—[Official Report, 25/2/14; cols. GC 330-31.]

What those performance targets are going to look like I do not know. One has a slight, itsy-bitsy worry that the Treasury might have as a performance target, “Try minimising the cost to the Treasury”, which of course would not make it very independent.

An area where I probed a little in Committee was whether the Ministry of Defence was going to put in place any mechanisms to try to put some space between the SSRO and the Ministry of Defence. I do not work in the City, but I will risk the term “Chinese wall” type things. You need to have control of the communications. I posed the question: what would be the characteristics of the communication between the Secretary of State, his staff and the chair of the SSRO, the chief executive officer and the staff of the SSRO? The noble Baroness, Lady Jolly, did not produce a response at the time but went away and carefully thought about it and produced a response in her letter of 4 March 2014. In the letter addressed to me, she said:

“Specifically, you asked if the Secretary of State or MOD staff would be able to communicate with the Chair of the SSRO, or his/her staff. I can confirm that we do not envisage any bar on communication between the Department and the SSRO, indeed, we would see regular exchanges as a positive and constructive development … I suspect that it would be a relatively infrequent event for the Secretary of State to write directly to the SSRO … but I do not accept that such correspondence would be harmful or an indication of the Secretary of State seeking to influence the SSRO unduly”.

The SSRO, we are told, is a small organisation—I got the impression that it would be something like 30 to 50 people. What are they going to talk about, with regard to an organisation of 30 to 50 people, other than the rulings and analysis that the SRRO generates? If your boss talks to you about the rulings you produce, how can that not be a situation in which you do not feel influence?

As if to really cheer me up, the noble Baroness, Lady Jolly goes on—she writes a lovely letter, I must say—to state:

“I suspect”—

not “guarantee”; not “assure”—

“that the Chair will be energetic in defending both the reality and the perception of independence on behalf of the new body in order to underpin its credibility”.

Given the power of the SSRO, I contend that, sat in the MoD with the Secretary of State having this range of powers, it is not sufficiently independent.

We looked at some of the other solutions in government, and there are a variety of solutions, although I did not research them in any great depth. I believe that the Comptroller and Auditor-General of the National Audit Office is appointed for only one term of 10 years, so he is not very susceptible to influence. I think the Governor of the Bank of England was going to be something like eight years, but the new governor said that he wanted only four, or something like that. Nevertheless, there is a mechanism in that Act to give the individual a sense of security. The OBR, I believe, has some mechanism related to the Select Committee. We looked at this range of options but ultimately felt that we should go for a simple option that had already been considered by the noble Lord, Lord Currie, and, as far as I can see, was rejected only because the department in question said that it did not want to do it: putting this organisation in another part of government. Therefore, our recommendation is that the SSRO be placed in the Department for Business, Innovation and Skills.

We have done this because BIS is a big department with experience of regulation. It presently has the Competition and Markets Authority in it—the Office of Fair Trading is morphing into that together with the Competition Commission and the Competition Service. It has this type of experience of balancing regulation. It has some involvement with defence through UKTI. It has tribunal experience. It actually has 49 agencies and public bodies, including the Central Arbitration Committee, the Competition Appeal Tribunal, the Copyright Tribunal et cetera. It has adjudication experience. It is responsible for the Groceries Code Adjudicator. We thought it was a simple solution to recommend that the SSRO be placed in the Department for Business, Innovation and Skills.

The other amendment in this group is Amendment 3, which speaks to Clause 14(7). Here, we just want to put into law the very straightforward assurance that the noble Baroness, Lady Jolly, gave in Grand Committee:

“To summarise, we expect the Secretary of State to use his exemption power only in exceptional cases”.—[Official Report, 25/2/14; col. GC 340.]

I lighted upon Clause 14(7) because it is one of those very typical subsections that government puts in legislation, which, roughly speaking, say, “Notwithstanding the above, the Secretary of State can exempt everything”. We have had an assurance that the exemptions will be exceptional; we would like to put that in the Bill, and we commend that to the House.

We have also had some discussions about exemptions, which were put on the record in Grand Committee. However, a specific set of exemptions was sought by industry, to which the noble Baroness, Lady Jolly, responded in her letter of 19 March. Those exemptions relate to that exemption being used in the case of—for want of a better term—call-off contracts: things which have a determined external price. That seems to be a perfectly good exemption. Perhaps the Minister could say a little more to reinforce that it will be used in that entirely practical area, which is an area where industry would value a little additional exemption. I beg to move.

My Lords, I welcomed the letter from the Minister. It gave a lot of confidence, which is needed not only by Members of your Lordships’ House but by contractors, who I am sure were worried about changes in circumstance and the new organisations that they would have to deal with.

These sections of the Bill talk about how both the Government and the contractor cannot be bullied; the question is whether they have the correct balance. The balance is pretty good. I have great confidence in my right honourable friend the Secretary of State for Business, Innovation and Skills, who I am sure would deal with this admirably within his department. However, these contracts are very MoD-based, and there ought to be the ability within the MoD to deal with this probably in a better manner than the Department for Business, Innovation and Skills.

Who should deal with defence: the MoD or Business, Innovation and Skills? I would like the Minister to take back to his department the question of whether there should be more co-operation between Business, Innovation and Skills and the MoD. There are skills in that department which the MoD would do well to emulate, such as regarding how contracts under EU regulations are dealt with. BIS deals with that better than does the MoD.

As regards inserting an organisation other than the MoD in the management appointment of SSRO, I understand the fears. There is a fear when the organisation that is appointing you is the one you are criticising—that point was well made. However, someone has to be in that role, and there is no better organisation for it than the Ministry of Defence.

My Lords, as the noble Lord, Lord Tunnicliffe, explained, the intent behind the proposed amendment is to increase the independence of the SSRO by giving BIS responsibility for the regulations relating to qualifying defence contracts. As we have made clear on countless occasions during the progress of the Bill, and indeed in positive meetings with noble Lords—we have met quite frequently to discuss this, so I am glad the noble Lord found that helpful—the Government are fully committed to the independence of the SSRO in order to achieve value for money for the taxpayer. The SSRO will succeed only if it is, and is seen to be, fair to both parties. If it is too biased towards the MoD we risk driving the best suppliers out of the market. It is precisely the need for an independent moderating authority that led the MoD to propose the creation of the SSRO in the first place.

In Committee the noble Lord, Lord Tunnicliffe, pointed out that the SSRO chair and other non-executive directors are appointed and potentially reappointed by the Secretary of State. The Secretary of State sets the budget for the SSRO and can abolish it if he, or she in the future, so wishes. The noble Lord considers that that gives the Secretary of State considerable leverage. It would perhaps help if I were to explain in detail the context of our approach to the SSRO. In framing the legislation, we wanted to give the SSRO as much freedom as possible, including the ability to recruit its own staff. We did not want the SSRO to be a servant or agent of the Crown. These requirements have led to it being designated a non-departmental public body—NDPB.

Considerable public attention has been paid to NDPBs over the past few years, and substantial guidance has been developed. This includes the requirement that they must be allocated to a department, and the Secretary of State of that department must appoint the chair and the non-executives of that body. This department must also pay for the NDPB, which is why the MoD must set the budget for the SSRO. As to the ability to abolish the SSRO, this has been included in Clause 40 which relates to the termination of the whole of Part 2. This power will be used only if there is a desire to repeal the entire framework and revert to a non-statutory approach. In either case, the SSRO will no longer have a role, so the power will exert no leverage over the SSRO.

I turn now to what we have done to ensure the independence of the SSRO. The independence of the chair and other board members is essential, so I hope that noble Lords will forgive me if I describe the recruitment process in detail. To ensure that this appointment will result in a suitably independent and unbiased person, we are running the process in full accordance with the guidelines of the Office of the Commissioner of Public Appointments—OCPA. The recruitment panel for the chair is headed by a public appointments assessor, who has been chosen for us by OCPA. Also on the recruitment panel is an independent person suggested by OCPA and approved by the public appointments assessor. There are two others on the panel—one MoD official, and a representative from industry, Mr Paul Everitt, the CEO of ADS, one of the industry trade bodies for the defence sector—so only one of the four members of the interview panel will be from the Government.

A similar recruitment panel, with the addition of the chair, will be used to select the other non-executive directors. There are additional requirements for suitable candidates. They must not have come recently from the MoD or a defence supplier. Together they must represent a balance of private and public sector experience. They must have between them a variety of relevant experience: for example, legal or regulatory expertise, and experience of acquisition within the price sector. This is a rigorous appointment process, and I am confident that the result will be an independent SSRO board.

Having a suitably independent and strong chair will safeguard the independence of the framework, and we have tried our best to achieve this. This is further backed up by guaranteed freedoms. The SSRO is largely free to determine its own procedures, including making committees. The exceptions to this are where procedures are laid out in the Bill, and the requirement to run a full public consultation in support of the quinquennial review, which will be included in the framework document between the MoD and the SSRO.

In addition, the SSRO, like all public bodies, will be subject to external scrutiny by organisations such as the Competition and Markets Authority and the National Audit Office. Moreover, the SSRO chair can be brought before a parliamentary committee at any time. All these points highlight the considerable efforts we have made to ensure that the SSRO will be independent and subject to appropriate public and parliamentary scrutiny. The fact that the Secretary of State appoints the chair and that he can dissolve it are not what will determine the independence and impartiality of the SSRO. While we fully share with the noble Lord his aspiration of protecting the independence of the SSRO and the framework, we do not believe that this amendment is a necessary or effective means of achieving it.

In terms of practicalities, the Ministry of Defence will be the sole government user of the single-source procurement framework. It already has the technical expertise, the understanding and the necessary contacts with the defence industry to understand how the framework will operate in the real world. While the Department for Business, Innovation and Skills would undoubtedly be able to develop the required level of knowledge and expertise, it would take considerable time, effort and cost to create and would, in effect, duplicate the existing capability of the Ministry of Defence.

Moreover, it is normally the case that a single government department acts as the sponsor for a regulatory authority. This amendment would have the effect of splitting this between BIS, which would be responsible for the regulations relating to qualifying defence contracts, and the Ministry of Defence, which would be responsible for all other aspects, including the application of civil penalties. This would create an unhelpful degree of confusion and inconsistency, especially with regard to relations between the Government and the SSRO.

By creating the SSRO, we will increase the number of parties involved in single-source procurement from two—the MoD and the supplier—to three. Adding BIS as a fourth party would add confusion. For example, a supplier might lobby BIS for a change rather than the SSRO, and BIS might seek the MoD’s opinion on a matter rather than trust the SSRO’s recommendations. It is true that BIS has a similar role with regard to other regulators, such as Ofcom, but in such cases BIS is acting as a moderating body between the privatised suppliers and the public. In the case of the SSRO, however, the proposed amendment would place BIS in the position of setting statutory pricing and procurement rules of which the MoD is the sole user. BIS would thereby become the moderating body between private industry and another government department. This would create a potentially unhelpful relationship.

I will make a final point on premises and the issue of independence. I reaffirm what I said in Committee, which was that the SSRO, although it will be on government estate, will not be co-located within the Ministry of Defence. In developing this piece of legislation, the MoD has consulted extensively with industry over a prolonged period. There has been no suggestion from industry that it would see any advantage in having BIS own these regulations. Indeed, the Minister for Defence Equipment, Support and Technology, Mr Philip Dunne, recently met with Mr Paul Everitt of ADS, who said that industry no longer had any concerns over the independence of the SSRO.

The noble Lord, Lord Tunnicliffe, asked about a couple of points, including performance targets. Targets are there to ensure the efficient operation of the framework and the organisation. They are likely to relate to how quickly the SSRO responds to opinions or determinations made by the MoD or the supplier. He requested clarification on communications between the Secretary of State and the SSRO. If they are not on ruling, what sort of communications will they be? The SSRO will be responsible for keeping the framework under review and this will require communication with the Secretary of State or his officials to discuss any matters relating to the performance of the framework of the SSRO. The SSRO will have similar communications with industry.

On Amendment 3, as I stated, the purpose behind Part 2 is to ensure that in exchange for providing suppliers with a fair and reasonable price, the MoD will receive value for money for the goods and services it obtains through single-source procurement. Here we are in complete agreement. This works in two ways. First, it does this by establishing pricing rules that must be followed by the MoD and suppliers and by giving the SSRO the power to adjust the contract price if these rules are not complied with. This places a direct obligation on suppliers to use only appropriate and reasonable pricing assumptions.

Secondly, the Bill imposes transparency requirements which will allow the MoD to monitor suppliers’ costs: for example, ensuring that cost increases are highlighted in good time. These transparency provisions will allow the department, over time, to generate pricing benchmarks for goods and services. In turn, this will help the MoD to negotiate with industry over prices and to press for tough but reasonable efficiency targets. As it is in the interests of the MoD that these two features are applied as widely as possible, we fully expect that the Secretary of State for Defence will use the powers of exemption set out in Clause 14(7) only on an infrequent basis.

In Committee, I provided examples of where we envisage that the use of exemptions might be justified. However, I will summarise them again for the benefit of the House. The first circumstance is where there is no market failure. The framework addresses the situation where a contract price is not subject to the competitive pressures of the market. If those pressures are evident in the contract price, the framework is not required. An example is the purchase of additional items that are already available in the civil market, such as computers.

The second circumstance is one of national security. The Bill provides for some categories of contracts to be automatically excluded from the framework. One of the categories identified in the draft regulations is when the contract is for the purpose of intelligence activities. These exclusions apply only if the whole contract is covered by one or other of the excluded categories. So in the case where a significant part, but not all, of the contract is for intelligence activities, the contract would not be automatically excluded from the framework. As transparency is a significant part of the framework this is unlikely to be appropriate, so the whole contract may require exemption by the Secretary of State.

The third circumstance concerns our relations with other nations. Some of the standard reports would give us sight of a supplier’s plans for the key industrial sites sustained by MoD’s single-source procurement, which could result in a supplier having to reveal the forecast throughput assumptions of facilities that are used predominantly by a foreign Government, thereby exposing that country’s defence planning assumptions. This is likely to be treated with considerable reluctance by the foreign Government and therefore may require use of the exemption.

These are strong, valid reasons for the Secretary of State requiring this exemption power. However, not all the potential cases might be classed as being exceptional, as set out in the proposed amendment. Let us take, for example, the case where the market failures addressed by the framework are not present. It might be useful if I quoted the hypothetical but plausible example of where the department wishes to buy additional desktop computers. In the interests of operating only a single type, an open competition might be undesirable. However, in this example we do not need the full protections Part 2 offers to confirm that the price being offered to the department is fair and reasonable; we can simply compare it with the market price. This may be an unusual case as it requires a contract to be single-sourced yet fully priced using market prices. There would be a valid case for using the exemption powers, but it would be hard to argue that this constitutes exceptional circumstances.

We do not wish the Secretary of State to be constrained by how the new regime is applied in this way, but given that it is in the department’s interests that as much single-source procurement activity as possible is covered by the framework, the fewer exemptions there are, the greater the benefits there will be to the MoD.

I hope that this explains our position and therefore I urge the noble Lord to withdraw his amendment.

My Lords, I thank all Peers who took part in this debate, and in particular the Minister for her various assurances. I have faith that the people currently in the Ministry of Defence will undoubtedly use the right mechanisms to select the chairman of the SSRO and the individuals who are its non-executive directors. The pressure, which I am sure the present Administration would not bring to bear on the SSRO, will nevertheless come from all the subtleties. I speak as somebody who has chaired a nationalised industry, and who has been the chief executive of one and therefore on its board. The most subtle pressure comes from something that is entirely within the discretion of the appropriate Secretary of State. The Commissioner for Public Appointments, whom the Minister quoted, stated in a recent press release:

“The Public Appointments Commissioner plays no part in a decision not to re-appoint someone at the end of their term of office. That is a matter for Government”.

As we have seen recently in the case of Ofsted, the Government exercised that privilege without recourse to any mechanisms or checks. Everybody will try to do the right thing in these circumstances, but at the end of the day “not being reappointed” is a code for being fired, and being fired can engage the mind rather firmly. I believe that we should do more to distance the SSRO from the Ministry of Defence; the solution that we have chosen is the best one, and because it is important that the Government understand the wisdom of our words, I beg leave to test the opinion of the House.

Amendment 3 not moved.

Housing: Inherited Social Housing Tenancies


My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Minister of State for Employment, Esther McVey, in the House of Commons earlier today. The Statement is as follows.

“Mr Speaker, the Urgent Question called by the honourable Member for Rhondda is not a new one but part of the 1996 provisions which impacted on the spare room subsidy legislation in 2012 and one that we have debated in the House before.

Upon investigation early this year, it would appear that some claimants may have been unintentionally protected from the effects of the removal of the spare room subsidy, including those who have been in receipt of continuous housing benefit since 1 January 1996 and have lived in the same property since that date, unless the move was due to a natural disaster, fire, flood and so on. A grace period of four weeks—or 52 weeks if the claimant or their partner is a welfare-to-work beneficiary—applies. For example, housing benefit would be classed as continuous if the break is less than four weeks, or 52 weeks for welfare-to-work recipients. Where a claimant dies, the partner or an adult child can inherit the protection, but it must be in respect of the same dwelling and they must qualify for housing benefit.

The issue about inheritance of housing benefit has always been part of our understanding about what the loophole meant. This was also part of the guidance issued to local authorities some weeks ago. The loophole derives from a very narrow but complex set of regulations dating back to 1 January 1996, when local reference rent rules were introduced.

In January 1996, transitional protection was offered to existing claimants, which could, and still can, be inherited if the claimant dies; for example, by a partner, or, where there is no partner, by adult children, and the protection only applied in respect of the same dwelling. Therefore, partners or adult children must continue to live in that property and only if they qualified for housing benefit. This protection ends if housing benefit ceased or they moved address.

With hindsight, the protection offered by the regulations could have been time-limited, but it was not; it has lain dormant for 17 years. The effect is that it has now unintentionally been applied to a group of people who were not financially affected by the local reference rent rules. In fact, in the previous debate, my honourable friend for Hitchin and Harpenden, who was Secretary of State at the time, said clearly that this exemption was never intended to be the case. This matter was fully debated and voted upon on 26 February 2014 to approve amendment regulations to close the loophole. Clearly, the House has already spoken on this issue.

As guidance was sent out a few weeks ago, I would suggest that this is not the appropriate time or place to discuss any questions local authorities may have, and that there are clear channels for them to do so. However, our experience with local authorities at the moment is that they know what they need to do, and are just getting on with it”.

My Lords, I thank the Minister for that Answer—I think. Obviously, this House has not discussed the regulations concerned, although a regret Motion is coming up. I want to ask the Minister two questions, the first on numbers. He has told the House previously that the number of people affected by this loophole in the bedroom tax is small—the DWP says 3,000 to 5,000—but figures obtained under FOI by Labour show that, with more than a third of councils still to reply, already well over 23,000 people are likely to be affected. The new guidance, to which I think the Minister referred, may increase the number still further. Can he therefore tell the House precisely how many people will be affected by the loophole?

Secondly, I want to put to the noble Lord the following statement:

“I worry about what Labour chooses to call the bedroom tax, because so often what is a spare room is in fact a vital part of looking after an elderly person. It enables their relatives to come, it enables carers to be there … I think we introduced that rather without thinking it through very well, and I think that’s costing us”.

It is costing all of us, in discretionary housing payments, in rent arrears and in human misery. Surely the Minister agrees.

My Lords, as I have said in this House previously, the numbers involved with this particular loophole are small. This particular inheritance issue does not change our estimates. A figure of around 5,000 has been attributed to the DWP in defining “small”.

On the FOI figures, it is worth making the point that local authorities are now getting to grips with the actual numbers. The Birmingham figures were quoted quite extensively. It was reported that Birmingham alone had 2,100 cases, the significance being that they make up a large proportion of the figure that we have been looking at. More recently, Birmingham put out a clarification, saying:

“We haven’t finished identifying them at Birmingham so can’t give you an exact number, but the number of possible cases has dropped substantially below the 2100 that was reported in the papers.”

So we can see that some of the FOI responses to which the noble Baroness referred—if that was an example—may be clarified.

We have a process for supporting local authorities and people to make the adjustments through discretionary housing payments, which we have increased in recent years from £20 million to £180 million in the current year—indeed, the signs are that that figure will be underspent. The number of people being affected is coming down reasonably rapidly; it is now below half a million.

Can my noble friend tell the House roughly how many people in this country are living in overcrowded conditions or are on housing waiting lists? Can he also put on the record the number of new social houses being built by this Government and compare that with the number built by the previous Government, because, clearly, housebuilding and social housebuilding are crucial?

My noble friend draws the comparison between the amount of capacity that we have in this country and the demand for it. The number of people on the waiting list is 1.8 million, with the figure for overcrowding running at 250,000 on some estimates and 400,000 on others.

When this Government took office, we were left with the lowest level of peacetime housebuilding that this country had seen since the 1920s. Since then we have delivered nearly 400,000 new homes and put in very substantial investment. There is £11.5 billion public investment to boost housing supply over the four years of the spending review, and this is meant to lever in more private investment. The volume of housebuilding is now picking up. The starts in the quarter to December were up 20% compared with the same period last year.

My Lords, every stat I have heard from the Government is either misleading or wrong. The bedroom tax will not help the waiting list because they too want smaller accommodation. It will not much help overcrowding as most families who are overcrowded do not live in the places where there are underoccupied houses. It will not make government savings. As we see, the GHP figures keep going up but the savings stay the same—false. Had the Government followed their own precedent of 1996 of transitional protection for the private rented sector, or had they followed what we did in 2008 by protecting existing tenants in the private rented sector, we would not have the calamity, misery and distress facing so many vulnerable and disabled people in this country. It is shameful.

My Lords, the figures show that there is a reasonable balance around the county; there is not one place with overcrowding and another with waiting lists. We are staying with the estimate of roughly £500 million a year in savings. On transitional protection, we have given even more notice on the changes coming through than we gave on the LHA changes at the emergency Budget of 2010.

My Lords, will the Minister tell us when the review on the bedroom tax will be published? In the mean time, will he undertake to meet many of the people who have been personally affected by this tax, and whose lives have been turned upside down as a result?

We are conducting a review on the spare room subsidy; those figures will be published in the final review next year, and we have an interim publication later this year. I meet a lot of people all the time on this issue—in particular, I am seeing a large number of local authorities and holding discussions with them.

The Minister says that he is seeing a large number of local authorities. Is he actually meeting people who have been affected by this tax? If he has, where has he met them—in what part of the country, in what boroughs? Perhaps he might tell us when. Also, he refers to 400,000 houses built since the last election in 2010—he mentioned 400,000 in his brief, which he read to the House. How many of those were started under the previous Labour Government? It was the Minister who was playing politics with the stats.

I do not have to hand the number of starts. All I can say is that the number of completions in that last year—the handover year—was the lowest level of building in peacetime since the 1920s, which is a pretty shameful performance from a Government who saw a very long boom. I would like to be able to answer the question, but if I am not allowed to I will not.

There are communities where, unfortunately, the housing estates are known as hard-to-let properties. If the noble Lord, through legislation, is forcing families out of those houses, it is not necessarily the case that those who are on the waiting list will take up those houses. There is a danger that the people who are fighting hard to keep up the morale of the community in hard-to-let housing areas will see empty property vandalised, will despair and will leave the housing estate where they have worked so hard to keep up appearances.

Local authorities clearly have a duty here and interest in their local areas to manage them. We are making sure that they have those resources in discretionary housing payments. Indeed, I have been very keen to spend the extra £20 million of funding on discretionary housing payments. It is a balance of maintaining the housing stock and the people in it with the right people in it. There are always isolated cases where the management of particular estates is tough; those are issues for the local areas.

Railways: High Speed 2


My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Secretary of State for Transport in another place. The Statement is as follows:

“Mr Speaker, the past few days have brought important proposals to make the most of High Speed 2. They will help us to build the line better, bring benefits to the north sooner and support job creation and economic growth. I want to update the House at the first opportunity, and I am sorry that, for unavoidable reasons, I was not able to do that last week.

The proposals are welcome, because HS2 is a vital project. It can do for future generations what Victorian railways did for previous generations and the motorways for ours. That is why it has the strong support of the Government, and it is why cities in the Midlands and the north are calling for its benefits to be spread as widely as possible.

We must heed that call, but for this to happen we also need to get the basics right: stick to cost, plan well, listen, respect the environment, build what really works and what we really need for the future and, of course, make sure that people get the benefits as quickly as possible.

I know, too, that HS2 is just part—but a vital part—of our long-term economic plan, one that will see better infrastructure for all parts of the country. It is a clear and ambitious plan, a plan that is already paying dividends—shown by last week’s welcome decision by Hitachi, the company that invented the bullet train, to move its global rail headquarters to Britain. That is the sort of opportunity presented by HS2.

First, let me respond to the report by Sir David Higgins. He began work as chairman of HS2 in January. The first task that I set was to look at how to maximise the benefits of HS2 and manage the costs. Last year, Parliament backed the principle of a high-speed rail link to the north with 350 votes in favour and only 34 against. Now it is up to us to make it happen. Given his great track record, there is no one better suited to the job than Sir David.

I turn to his proposals. First, on costs, Sir David has reviewed the cost estimates for constructing phase 1 and confirmed that they are realistic. The budget set by the Government in 2013 stands. As experience shows, in Britain we can build great projects on time and on budget, such as High Speed 1 and Crossrail. However, at this early stage, before Parliament has considered the hybrid Bill, we must include a proper contingency. Of course, for popularity’s sake, one option would be to slash the contingency and claim it as a saving. Sir David says that would be the wrong thing to do. I agree, but, as he also says, with growing certainty comes growing confidence. There will be the stage when we can bring the contingency down.

Let me turn to his second proposal. I have heard many honourable Members ask why we cannot build in the north sooner. I agree: we can. His report suggests opening the line to a new hub station in Crewe six years earlier than planned. Direct trains will of course be able to run off HS2 lines to serve places such as Stoke, Liverpool, Manchester, north Wales—and Scotland—faster too. A line to Crewe sooner would mean shorter journeys than with just the current phase 1: quicker to Manchester, quicker to Liverpool, quicker to Scotland.

This is a welcome proposal and I am commissioning HS2 Ltd to undertake work to allow it to be considered in detail. However, this must be seen as an acceleration of phase 2, not an alternative. Sir David said that we must make the most of this investment so that as many towns and cities as possible benefit. I agree, and we will make sure that happens.

With the third proposal—for the southern end of the line—our priority must be to get the benefits to the Midlands and the north as soon as possible. In short, we must put our money and time where it can do most good. Sir David is clear that he does not think existing proposals for the HS2-HS1 link meet that test. The HS2-HS1 link proposed in the hybrid Bill has not secured a consensus. The link requires too many compromises in terms of impacts on freight, passengers and the community in Camden. I therefore intend to remove the link from the hybrid Bill and withdraw safeguarding as soon as possible. I will also commission a study into options for improving connections to the continent which could be built once the initial stages of HS2 are complete.

I also agree with the report that much more can be made of Euston station—not just to build something we can be proud of but to maximise the economic potential of the line and use a site which has been neglected, and to generate private sector investment which can reduce the overall burden on taxpayers. I will, therefore, ask HS2 Ltd and Network Rail to develop comprehensive proposals for the redevelopment of Euston. Our ambitions for Euston must not, however, conflict with our commitment to control costs. I want to see substantive private sector investment to ensure this.

Secondly, I turn to the report from the growth task force published last week. It is from an impressive panel, including business leaders such as Sir John Rose, Alison Nimmo and Ray O’Rourke, city leaders such as Julie Dore from Sheffield, and the general secretary of the TUC, Frances O’Grady. I thank everyone involved and in particular the Commercial Secretary for his committed leadership. Their message is clear: we need HS2 and we need to act now to squeeze the most from it in terms of jobs, skills and growth.

The task force’s recommendations are plain common sense: things that business, government and cities can do together, and must start doing now. In relation to skills, this means proper training to ensure that our young people get the best jobs on the project. In relation to planning, it is ensuring that the line brings new strength to our cities. On transport it is ensuring that we link the existing road and rail network properly to HS2, and plan investment in them together. Regeneration and economic growth are vital parts of HS2.

City leaders have already started to put plans in place, but government has a role to play as well. That is why I am asking HS2 Ltd, and London and Continental Railways—which developed the King’s Cross St Pancras site—to come forward with proposals for a regeneration company that will respond to the growth task force’s recommendations on regeneration. This matters because, as I have said before, HS2 is a project that will be built over many Parliaments—and no doubt Governments too—and it will serve people through many generations. It is not the only answer to our transport needs but it is a central part of the answer. That means designing it carefully and building it right: building something that works, that we can be proud of, and that benefits as many people and places as possible for the lowest cost. We are on schedule to open the line in 2026—which, by the way, is exactly the date the previous Government set in 2010—or ahead of that date in the case of the Crewe proposal.

The Government are keen to rise to the challenge. I hope that honourable Members on all sides of the House will do the same”.

My Lords, I thank the Minister for repeating the Statement. None of us underestimates its significance. We should begin by congratulating Sir David Higgins and the noble Lord, Lord Deighton, on their substantial and very thorough reports. Significantly increasing capacity south of Birmingham and improving connectivity north of Birmingham are vital and will transform our great cities. I am glad that the penny has at last dropped and that the emphasis is being put on the real role of HS2, which is significantly to increase capacity in our crowded stations and not to reduce journey times from Birmingham to London by 20 minutes for businessmen. It is not that that reduction is unwelcome but it is not as important as the other concepts.

We will of course continue to hold the Government to account for keeping costs down on the project. One of the issues which Sir David Higgins emphasised is that significant savings will be made if the Government set about reducing delays. Therefore, I ask the obvious questions. Where is the hybrid Bill? When will we be able to consider it? What steps is the Secretary of State taking to ensure that we consider the Bill at the earliest possible time? Delay costs money.

I am also glad that one significant objection, which was the concern of a very large number of people, has been allayed by agreeing to scrap the link between HS1 and HS2. That link was always fraught and it brought immense troubles to very large numbers of residents in the London Borough of Camden, while effecting the link on that route looked to be a matter which would be subject to great challenges during the passage of any hybrid Bill. Given the acute affordable housing crisis in Camden, a significant proportion of any new housing must be social housing. There will still be consequences for Camden from the fact that Euston is to be significantly enlarged, even though the link is not to be pursued. At Old Oak Common, where significant regeneration is planned, there is no decision yet from the Government about the relocation of the First Great Western and Heathrow Express train depots. That is of considerable significance to this project and we want to see a decision and proposals on that as soon as possible.

This means that the Government have to put themselves out and talk to the local authorities concerned, as indeed they need to talk constructively to the local authorities that govern our great cities in the Midlands and to the north of London, which will welcome the suggestion that Crewe should be developed several years ahead of what was forecast earlier. However, there are significant implications for our northern cities, which have every right to be prioritised for integration as much as elsewhere in the country. We want a coherent transport plan for the north, which of course has been historically underfunded. We are all too well aware that the Government committed the sin only a couple of years ago of transferring excellent rolling stock from the north to Thameslink. It is not surprising therefore that northern cities think that their needs take a lower priority than they ought.

We need a rebalancing of railway investment into the regions in order to close the economic divide. Even the Government, despite their commitment to government having little role to play in huge areas in the economy and everything being left to the market, recognise that we cannot afford such a significant and drastic difference between the growth of London and the growth prospects of our other major cities. We welcome the proposal on Crewe and the faster construction of phase 2 that is promised.

There is a great deal of consultation to be done. When will the Government announce their response to the phase 2 route consultation? Time means money with such a project in which so many resources are invested. I hope also that there will soon be an announcement of the site of the HS2 skills college. We have seen from the construction of Crossrail the stimulus that is given to high-level skills. We have also seen the difficulty of our own people being able to respond at the relevant level of skills in all aspects. It would be tragic if we did not ensure that the benefits of the construction of HS2 were directed towards the British people from the very construction of the lines.

We must also learn lessons from Crossrail on SME procurement. Contract numbers are high in volume, but the total value of the contracts is uncertain. We must ensure that the high speed pound reaches all parts of the United Kingdom. It is vital that we maximise the opportunity that this new north/south line can bring to the whole of our country. Of course we support the project, but we wait for the Government to rise to the challenge.

My Lords, there is clearly a great deal of consensus across the Benches in this House. I very much welcome that because, as the Secretary of State said in his Statement, this project will span many Parliaments and inevitably a number of Governments. Therefore, that consensus is absolutely vital.

I thank the noble Lord, Lord Davies, and I welcome the comments that he made. I did not identify many questions within his comments. I found one to which I think he wanted a response, which concerned when we would respond to the consultation on HS2. We expect that to be in the autumn. There have been a very substantial number of responses. We need to go through those in a great deal of detail and we need to pay a great deal of attention to them. That is a complex process.

I assure the noble Lord that we have long recognised the importance of the Midlands and the north. In this process I have been spending a great deal of time myself in the north. I welcomed the growth task force report in Manchester with the leaders of Manchester council, the former leader of Trafford, and a number of other representatives of local communities. I underscore that importance and look forward to further questions from other Members of this House.

My Lords, I congratulate Sir David Higgins and the noble Lord, Lord Deighton, on their two reports. I am very pleased that the Government have accepted them. They are a breath of fresh air. I look forward to continuing to work on the project.

I am particularly pleased that the HS1 link has been removed as it was not fit for purpose, but can the Minister encourage her ministerial colleagues not to be too negative about that? She may know that there is already a link with HS1—it was built with HS1—on to the North London Line and the west coast main line which could be used to run Eurostars north of London. It needs signalling—they have forgotten to do that—but that is a minor detail. The trains are operating in France but they could operate in Birmingham and Manchester very quickly and provide that link if there was a demand. I hope that she will take that back to stop any negativity coming from the northern part of the route and the claims that cancelling the HS1 link is a disaster. It is not.

I fully agree with the noble Lord’s comments about the HS1/HS2 link, and those were indeed the comments of Sir David Higgins. It is something that could technically have been done but, given the impact that it would have had not just on the community but on passengers and freight traffic, trains would have travelled at 20 miles per hour on that particular link and no more of them than three an hour, at that, so it was not fit for purpose.

However, I give assurances, as the Secretary of State has said, that there will be an important study to look at how to connect the north through to the continent as HS2 progresses. We recognise the importance of that; it is a significant and serious piece of work. Sir David Higgins has recently welcomed proposals from others who understand transport and community issues, and the department had done so previously. We will continue to appreciate the input that comes in, and that expertise.

My Lords, the spirit of the Statement is in for a penny, in for pound—a lot of pounds, of course—but if it is to be done, it should be done well and quicker. I particularly welcome the extension to Crewe, which is in my diocese, so much sooner; I am sure that the people of Crewe, that noble old railway city, will welcome that warmly.

I notice in the Statement, though, that direct trains will be able to run off HS2 to serve north Wales. I have always assumed that the trains on the high-speed rail link will be electric. Does this mean that the Government are announcing plans to electrify the railways beyond Crewe to Chester and into north Wales? If so, when is that going to happen?

My Lords, the line will be able to take classic-compatibles immediately, which will provide a great deal of the flexibility that is needed. Obviously there is a wide programme of electrification already under way. I can take a look again at the route that he has just suggested and come back to him with comments on it but, essentially, the way in which the line is being designed does not just mean that HS2 trains themselves will be able to run up and down it but ensures that it can be used by classic-compatibles that can go on to a wide range of other destinations.

My Lords, I wonder whether I can start with a question: can anything be done to expedite the tortuous Bill procedure in both Houses? This is a matter for the Government and the House authorities, but we really should not wait for years and years while the Bill waits at the convenience of the House—or, rather, the convenience of the nation.

We have already been told that the fares policy will encourage use rather than deter it. I agree that the HS1/HS2 link as tabled is not very satisfactory, but we need a modern transport link between Kings Cross, St Pancras and Euston. I regretted to see in the report the issue of one stop on the Underground. That would mean carting your cases, luggage and everything down to where it is very congested. The time has come to bite the bullet and make a proper link. If these stations were an airport, they would be one terminal; the distance is very short.

I am most interested in what has been said about the north. I think that the north has been done badly to by successive Governments. The most recent bad thing that was done was when the noble Lord, Lord Adonis, cancelled an order for 200 new diesel trains that would have improved the services there. The north must have decent rolling stock, not the cast-offs from other railways and certainly not antiquated stock. Every city in the north needs its local enterprise partnership to get down now to planning how they will link supporting services into the stations that are served.

Lastly, I challenge the Government on the consistent reports I have seen for years that there is no business case for investing in the north. I think that the reason is that, with the present trains and present service, it is difficult to see why people should use the railway. However, we are looking at a new era, and I am sure that there will be a business case for investing properly in the north.

We absolutely agree that we are looking at a new era. It is frankly inspiring to meet the city leaders, businesses and other stakeholders of the great cities of the north and the Midlands, who are coming together to create a sort of common strategy for maximising the benefits of HS2 by building interconnectivity between them. That is absolutely crucial. My noble friend may be hinting at a rolling stock issue in the north. That is an immediate problem that the department has said that it will find a way to resolve no matter what, but it has not yet found an absolute answer.

Parliamentary procedure is a matter for the two Houses. I am sure, though, that with the good will of Members of both Houses, we can encourage the process to move according to the speediest possible timetable. It is important that people who are petitioning are properly heard and listened to; I would not want to cut short the opportunity for that proper interface.

On fares policy, we have said that this will not be a premium service. There will be many ways to link Euston and St Pancras. They have to be looked at. Travelators have been mentioned; there is one stop on the Northern line.

Order, please. I think it is my noble friend Lord Jenkin, then it will be the noble Lord’s turn.

My Lords, I am grateful that the normal procedures of the House are being abided by. I strike a discordant note, as a supporter of this project, to say how disappointed I am—as I am sure many people in the Midlands and north will be—at the abandonment of the link between HS1 and HS2. Thirty years ago, during the passage of the Channel Tunnel Act, we were told that there would be through trains from Paris, Brussels and other continental cities to our great cities of the Midlands and the north. This was, at least, a chance for those through trains to run between those cities. How does the Minister suggest that a businessperson coming from the continent to the Midlands or the north gets between Euston and St Pancras? Do they take the Victoria or the Northern line? Or will they pull their luggage along Euston Road? Will the Minister accept from me that there will be a great deal of disquiet in many parts of the country about the abandonment of this link?

Many of the cities in the north and the Midlands accept that the link as it was designed did not fit the purpose that they saw for it. It simply was not adequate in the role that it played. We will be looking at many more trains going to many more destinations out of Kings Cross and St Pancras. There has to be a much better way to create a link between HS1 and HS2. That will be a major study. It is a piece of work and it needs to be of the standard that a high-speed intercontinental link deserves.

In the short term, we will need a way to get between Euston and St Pancras. As I say, that will be looked at. The distance, as other people have said, is very limited; I walked between the two in four minutes yesterday. However, it will be important to make sure that that is an efficient and effective link and not a matter of trundling down the street.

My Lords, on this question of the HS1/HS2 link, there could be an additional dimension. I have had discussions with Sir Howard Davies who, with his commission, is currently looking at whether a Thames estuary airport could be a realistic addition to the shortlist of options that will be given to the Government after the next election. If, indeed, it becomes a realistic option—which is not impossible at all—then the question of a link from the north will become absolutely vital. People must have a way of travelling down on the HS2 and going on the HS1, with a link to the airport at the Isle of Grain if that is the one which is approved. That would be almost more important than a direct rail link to the continent.

My Lords, none of us is attempting to second-guess what the conclusions of the Davies report will be, or the conclusions of the Government of the day that will make the final decision. At that time it will be appropriate to take a look and work out how links can be created if they will be relevant to whatever the major airport will be for the south-east, and to the high-speed line. However, to attempt to do so at this point would delay HS2, which we want to get into the ground by 2017 to deliver the benefits which we all discussed earlier. That is absolutely crucial.

My Lords, I was very glad that the Statement mentioned Scotland on a couple of occasions. However, in her replies to all the previous questions, the noble Baroness mentioned just the Midlands and the north—she is reverting back to that again. Will she confirm that the best part of the whole economic case is regarding journeys between London and Scotland, and that that also frees the existing lines to have more stops at intermediate stations in England? Will she therefore initiate discussions with the Scottish Government as quickly as possible to ensure that work is under way to determine the route to Scotland, to start to think about the funding and to start working on dates for construction? Unless she and the Government do that, we will not think that they are being serious about Scotland.

I am delighted to say that the department is somewhat ahead of the game. I have already commissioned a report and consultants have been retained; we expect a preliminary response on how to take the benefits of high-speed rail to Scotland. We will get our interim response in July, and that will be a very important document in being able to identify the future. Of course, HS2—even the “Y” that is currently planned—will help to bring journey times to Glasgow and Edinburgh down to less than three hours.

My Lords, I welcome this report; I am in favour of HS2. However, I am rather more in favour of the “plus”. In this report, one word which bellows out is “connectivity”. In the foreword it says that there is,

“poor connectivity in the North”.

It wants us to be,

“more ambitious … about producing a coherent transport plan for the North”.

On page 9, the report states:

“In contrast, connectivity in the North is poor”.

I agree.

I do not want to detract from what has been said about getting to Crewe earlier, and the connectivity in the north-west. However, I want to speak about the other leg, from Birmingham up into Yorkshire, and the possibilities beyond that. The original proposals in January 2013 propose a terminal station in Leeds—what I describe as a “hammerhead terminus”—where the only connectivity is a long walk. That might suit Leeds but it is useless for connectivity for anywhere else, such as Huddersfield, Halifax, Bradford, Keighley, Skipton, Ilkley, going back round to Wakefield, or further connectivity to York, the north-east and Scotland.

Does the Minister agree that connectivity will be achieved if, in Leeds, we get a new station parallel to the Leeds City station of today, not a station that is a hammerhead terminus, which would mean that people would have to leg it such a long way, and the detraction that that would bring?

Yes; I can reassure my noble friend that we are looking very closely at all the proposals that have come in through the consultation, and more generally we are going back to look at all the detailed elements of the second phase of HS2. The issues he raised have been raised with the department and will be looked at, as will other proposals. As I said, we will come back with our conclusions in the autumn.

My Lords, I declare an interest in HS2. Unfortunately, it is likely to be a post-mortem interest because by the time it reaches Newcastle I will have long since been dead and buried. The urgent need is for investment now, or as soon as possible, in the north-east in the intra-regional rail infrastructure and indeed, that which will extend across the Pennines to the north-west. It is a very poor route and service at the moment. Can the Minister give any assurance that investment will take place sooner rather than later in those regards, irrespective of what happens in the timing of the HS2 project as such? After all, the north-east has a mere fraction of the per capita expenditure on transport infrastructure, particularly of the south-east, but also in relation to many other regions in the country.

The noble Lord will be aware that spending on transport in the next Parliament is to be £73 billion, of which only £17 billion will be on HS2. There will be a very substantial spend on other transport services, including upgrading and improvement of rail, electrification, and so on. I could go on with a very long list. I can assure the noble Lord that that is not being ignored. There are also great opportunities with the local growth fund, which is a £2 billion-a-year fund for stakeholders to bring forward plans that they see linking into and maximising the benefits to HS2, so that they can go ahead in preparation for the arrival of HS2. I expect many of the cities and communities in the Midlands and the north to be doing exactly that.

Does my noble friend share my enhanced confidence in recent developments from the fact that the growth task force is chaired by our noble friend the Commercial Secretary, following his remarkable achievements on the infrastructure of the London Olympics, in particular?

The noble Lord, Lord Deighton, has brought so much to this issue, not just his experience. The House will be aware that some years ago transport was looked at primarily in silos. It was about how to get people or freight from one place to another. It is now seen as inherently part of an economic development strategy. Local connectivity and integration with the rest of the network now have an importance that perhaps they once did not have. The noble Lord, Lord Deighton, has been very instrumental, with others, in making sure that we have those thoughts right at the forefront of the HS2 scheme.

My Lords, I greatly appreciate the Statement today, but when we talk about the great cities of the north, are we including cities such as Preston or Carlisle, which almost certainly will end up with an inferior rail service to the capital in London unless we get the connectivity right, as the noble Lord, Lord Shutt, has wisely drawn our attention to? There is no sign of that at the moment. For example, in a Parliamentary Question in the past few months, I was told that there was not even a business case made for high-speed trains from Wigan, which was to be the terminal to Glasgow. I find that incredible. I am also told that the high-speed trains will not run on the high-speed line, so the tilting trains will be providing an inferior service down the conventional west coast line.

I am not sure that I fully understood the noble Lord’s last point. There will be the fast, specially designed HS2 trains, but the line can also take the classic-compatibles—diesel or otherwise—that can go off to a whole variety of other connections on the west coast main line and other routes. This frees up the west coast main line, the east coast main line and the Midland main line to take a whole complexity of other services. That issue has been raised by others on the Floor today. The expectation of an enhanced service from a much greater number of cities than those absolutely directly connected to HS2 is entirely viable. We just have to make sure that it is deeply embedded in our planning.

My Lords, I warmly welcome the Statement, representing as it does an increased and restated commitment to this project from the Government, added to by my noble friend Lord Davies, who spoke for the Opposition. It is extremely important that it is restated in that way, and it is encouraging to see what questions have been asked as well. However, I share some of the concerns raised by my noble friend Lord Snape. I certainly do not wish to delay anything—the quicker the better, in terms of preparing the scheme and getting it going. However, with regard to the statement:

“I will also commission a study into options for ways to improve connections to the continent which could be built once the initial stages of HS2 are complete”,

I would like it to be spelt out in a little more detail what this commission is going to do and within what timescale, and I would like just a clue as to what the other conceivable options would be if there were not to be a direct link between HS1 and HS2, because that must be a concern for those of us in the Midlands and the north.

The decision to not develop the proposed HS1-HS2 link is very recent. A lot of work and thought needs to go into framing the study. As soon as we are able to do that, I will be glad to share it with the House.

Defence Reform Bill

Report (1st Day) (Continued)

Clause 16: Pricing of contracts: supplementary

Amendment 4

Moved by

4: Clause 16, leave out Clause 16

My Lords, I am pleased to see the noble Baroness, Lady Jolly, in her seat. I would feel inhibited in quoting extensively from her letters, as I intend to do, in her absence. As I mentioned earlier, my vision of Part 2 is essentially that it delivers value by forcing the Government into the constraints that the legislation will spell out once it becomes law. Broadly speaking, what it will do, I hope, is to force agreements into a shape whereby a price is set in one form or another and the excesses or losses that actually occur in practice are handled by Clause 21 entitled “Final price adjustment”. The concept seems to be very sound. You have to go into the regulations to understand it but, broadly speaking, if the actual outturn cost goes up, then pound for pound the contractor makes a loss until the cost becomes excessive, and then, by a formula, the loss starts to be shared with the MoD, eventually on a 50:50 basis. Similarly, if the actual cost goes down because of the efficiency of the contractor, initially all that efficiency and improvement falls to the contractor. Only when the profits start to become excessive is there any clawback to the MoD. It looks to be a good idea that contracts can be forced into that by law. We will wait to see whether that comes off but it is a good aspiration, which we support.

As I mentioned earlier, the Government facilitated extensive discussions on the contract. Of course, when everyone sees a formula, one at least takes some interest in how one would get round it, because that is what people will try to do. As an example, I examined the Statement on carriers made by the Secretary of State for Defence on 6 November in the House of Commons, in column 251 of Hansard. He criticised extensively the previous deal, which was for the carrier but then went on to be a deal which I will call a critical industrial capacity deal. In other words, it was a deal, quite complicated in nature, that essentially paid BAE Systems to do nothing if it had nothing to do in order to retain the essential workforce, facilities and so on. It is a very uncomfortable deal but nevertheless you can see the wisdom of it. Our Government made such deals, this Government have made a similar deal, and despite all the wonderful planning in the world I suspect that future Governments may have to make a similar deal. We agreed with BAE on 6 November.

Perhaps I may comment on a sentence or two of the statement. Crucially, under the new agreement, any variation above or below that price—£6.2 billion in the paragraph—will be shared on a 50:50 basis between government and industry. That looks like a good target-cost incentive fee, which is the second big way in which the Bill envisages that business will be done. In other words, if the outturn cost is £100 million higher, then government stump up £50 million and BAE loses £50 million profit. If it is lower, the extra profit or surplus is shared 50:50 with BAE. So far so good. However, the next few words are,

“until all the contractor’s profit is lost”. [Official Report, Commons, 6/11/13; col. 251.]

So suddenly the sharing is 0:100. This means that 100% of the excess cost once the contactor’s profit is lost is paid for by government. This does not seem to fit with any of the models in the Bill.

I raised this issue in Committee and the noble Baroness, Lady Jolly, was kind enough to write to me. In her letter she said, “You speculated that although this agreement”—the agreement to which I have just spoken—“deals with an area concerned with single source procurement, deals of this type could not be covered by the new framework and therefore would be exempted under Clause 14(7)”. That is the clause we were talking about earlier which states that the Secretary of State could exclude contracts but, the Government have assured us, only under exceptional circumstances. The letter continues, “Obviously, in this particular case the new framework has not yet commenced and the provisions are not retrospective”. So the new framework will not cover this agreement. It goes on, “Moreover, although this is a very complex agreement covering a range of issues such as redundancies and policies, were a similar agreement to be reached in the future then there is no reason why such an agreement should not be covered by Part 2 of the Bill. There is no expectation that it will be exempted under Clause 14(7). The principles underlying Part 2 would be as relevant in the application of such an agreement as any other single source contract between MoD and industry”. That is great. That is good. In future we are going to work within the limitations of the new framework.

At a subsequent meeting I said that that was a great assurance but how do we accommodate the point where the deal just concluded goes into a sharing of 100% of the losses being picked up by government and 0% of the losses above that point being the responsibility of BAE Systems? The Government drew breath and said that they would write again. When they wrote again the letter stated, “As I explained to you in my last letter, our initial assumption is that in future any single source contract negotiations will be on the basis that the resulting contract will be a qualifying defence contract as defined in Part 2 of the Bill. It is also our assumption that the Secretary of State will only be required to use his exemption powers on very rare occasions. We do accept that there may be situations, such as where there is a very large element of risk involved in a major project, where it makes sense for the MoD to accept the potential liability for a larger proportion of the costs. In this case, however, there will no requirement to invoke the Secretary of State’s exemption powers. Clause 16”—which is the subject of this debate—“provides the department with the flexibility to make target-cost incentive fee arrangements with industry, allowing us to specify arrangements where we share a greater proportion of potential gains and losses than is the case under the final price adjustment”, which I have previously described.

I do not know about your Lordships, but “target-cost incentive” means that there is an incentive. Every pound that you lose, being wholly paid for by the Government, does not seem to be an incentive at all. This seems to be a complete misuse of Clause 16, which was designed to keep an incentive on the contractor throughout the contract to the very end. I cannot claim that use of this clause in this way is contrary to the wording, but I do claim that it is contrary to the clause’s intention, which was to create a framework for a target-cost incentive fee arrangement—in other words a proper incentive running all the time.

I believe that the use of this clause to legitimise a large and complex deal, whereby all losses are picked by government, is an improper argument. We support the generality of this Bill, but I would like to hear what the Government will do about the use of this clause, which will allow a coach and horses to be driven through this otherwise well crafted part of the Bill; we believe that that is wrong. We would like to hear what the Government are going to do about it and that is why we have put forward this amendment that the clause be deleted. I beg to move.

My Lords, this amendment seeks to remove Clause 16 of the Bill.

The clause is essential to ensure the consistent and widespread application of the new framework to all types of contracts used by the Government in single-source procurement. The purpose of Clause 16 is to allow for qualifying defence contracts that use a target price rather than a fixed price. These target-price contracts include sharing arrangements in the event of cost overruns or underruns. The benefits of any cost reductions are shared by the MoD and the supplier, as are the risks of costs being greater than anticipated. They are usually referred to as target-price incentive fee contracts, as the noble Lord has said. This kind of contracting approach is a model often used in high- value single-source MoD procurements where there is insufficient pricing certainty to make a firm or fixed-price contract a sensible option. In the past they have accounted for approximately 40% of our single-source contracts by value.

The Typhoon-availability contract, which provides support to the RAF’s Typhoon fleet, is one such contract. We want to retain the ability to use these target-cost contracts. We also do not want these contracts to be excluded from all the protections offered to both parties by Part 2. Clause 16 ensures that such target-cost incentive fee contracts, or indeed any other pain/gain share models based on a target price, can benefit from all the protections of the new regime.

Target-cost contracts are typically used when it is not reasonable for either party to take the risk of a firm price at the outset of the contract. This risk may be so great that in order to accept it a supplier would have to price in a very large contingency. This does not represent value for money. In this case, the price at the outset is deemed to be a target price. The final price is determined by comparing actual incurred allowable costs with those used to set the target price. Contractually agreed terms specify the share each party takes, whether 50:50 or some other split. Clause 16 ensures that the allowable costs included in the target price, and the allowable costs later agreed as the actual costs, must conform to all the pricing rules within the Bill. It is possible that there might be a disagreement at the end of a contract over what the actual costs were. In this case Clause 16 allows one or both of the contracting parties to ask the independent SSRO to make an expert determination. This helps ensure that disagreements are not overly prolonged.

Clause 16 also specifies that Clause 21—“Final price adjustment”—does not apply to target-cost incentive fee contracts. This requires a little explanation. The purpose of Clause 21 is to deal with any excessive profits or losses that might apply to firm- and fixed-price contracts. Most of our single-source contracts—approximately 60% by value—are such firm- or fixed-price contracts. A fixed price is typically used for contracts that are not risky enough to justify the use of a target-cost approach. They provide suppliers with the strongest incentive to become more efficient, as any cost reduction will improve their bottom line. This, in turn, will create better value for money for the taxpayer in lower follow-on prices.

However, when profits become excessively high, we do not want to have to wait until we engage in a follow-on contract. Indeed, it is possible that there will not be any follow-on contract at all. That is why we want to ensure that we get a share of these profits even if we have agreed a fixed price. Equally, we do not want to force a supplier to be subject to potentially crippling losses simply because they agreed to a fixed-price contract. For cutting-edge defence equipment, a contract that did not appear risky at first may turn out to be just that, which is why Clause 21 also provides a minimum protection for suppliers in the event of excessive losses. Because Clauses 16 and 21 both include profit-sharing arrangements, they cannot run simultaneously. That is why Clause 21 is excluded from target-price contracts.

Turning back to the amendment, we would like to maintain both options: the option to agree a fixed- or firm-price contract, with suitable protections for excessive profits and losses, as set out in Clause 21; and the option to agree target-price contracts if the contract is clearly high-risk and a fixed-price contract would not give us value for money. Clause 16 is what allows us to do this. The clauses have clearly distinct purposes and will be used in different cases.

Target-price contracts typically account for more than £2 billion worth of contracts per annum. This clause is therefore essential to the overall functioning of the new framework and must remain within the Bill if the substantial financial benefits expected under Part 2 are to be realised. I hope that this explains our position, and I therefore urge the noble Lord to withdraw his amendment.

I thank the noble Baroness for that explanation. But, as she knows, I do not need that explanation because I agree with everything she said. What I am challenging is the use of Clause 16 to explain an agreement where the share is 100% of the losses to the Government and 0% to the contractor. That seems incompatible with the spirit of Clause 16. I do not want Clause 16 to be removed and the noble Baroness knows that I will withdraw my amendment, but I would like at least some assurance that such a deal will not be done in the future. It makes a mockery of the target-price sharing if the so-called share is 0% versus 100%.

I thank the noble Lord for his patience. I would rather not give him inaccurate information. How an agreement works out is very much due to commercial judgment, assured for value for money by the Ministry of Defence or HMT—the Treasury. That is the answer that I have. It is determined as a result of judgment, assured for value for money by the MoD or HMT.

My Lords, there is much agreement between the Opposition and the Government. On this area, I am afraid there is not. Considering the interest that has been shown in this debate by the rest of the House, and my lack of success on a previous occasion, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Clause 20: Allowable costs

Amendment 5

Moved by

5: Clause 20, page 14, line 14, leave out subsection (1) and insert—

“(1) The Secretary of State shall set out in regulations the overarching principles governing the treatment of allowable costs under qualifying defence contracts, and such other measures as may be necessary.

(1A) Having regard to the principles set by the Secretary of State under subsection (1), the SSRO shall issue guidance about determining whether costs are allowable costs under qualifying defence contracts.”

My Lords, Amendments 5 and 6 seek to bring out the relative weight given by the Bill to the contract profit rate and allowable costs. The contract profit rate is the subject of Clauses 17, 18 and 19; allowable costs are the subject of Clause 20. The split between profit and allowable costs is typically that more than 90% of the final price will be allowable costs and less than 10% will be profits.

Clause 17(1) states:

“Single source contract regulations must make provision for determining the contract profit rate for a qualifying defence contract”.

Since it is a regulation, it will be made by statutory instrument, with all the parliamentary attention that that will enjoy. Clause 20, which is about much, much more money—nine or 10 times as much money—simply says that the SSRO,

“must issue guidance about determining whether costs are allowable costs under qualifying defence contracts”.

The essence of our concern is that the real potential for profit and loss in a defence contract comes from how the allowable costs are set. They are the much bigger proportion, and once the deal is set—unless it is a profit-sharing contract such as we have just discussed, and even there, the allowable costs are set—every pound by which the contractor is able to produce the goods cheaper than the allowable cost converts to profit on their account. It may not be under the profit part of the pricing deal, but it drops to profit. One has to realise that a substantial amount of the allowable costs—sometimes more than half—are allocated overheads. If you are the finance director of this large conglomerate, you are probably more concerned about making sure that you can—I was about to use a very unparliamentary word—get as much of your overheads into the allowable cost as possible. If one were negotiating this deal, one would not worry about the profit; everybody knows that it is going to be about 10%, as it is laid out by statute and all that sort of thing. The concentration would be to get as much into the allowable costs as possible, both in terms of the original price setting and in terms of taking advantage of some of the price adjustment mechanisms.

It is therefore our contention—and Amendments 5 and 6 give effect to this contention—that the allowable costs rules should be set out in regulations and that there should be a framework of regulations setting out the criteria for allowable costs, recognising that the actual detail of allowable costs will be extensive and that those criteria should go on, as Amendment 6 proposes, to be the subject of guidance from the SSRO. It is a very simple idea, but, we think, a very important one: to give the debate on the most important part of the price a higher profile in the public domain, and to try to persuade the Government that they should be as accountable—indeed, more accountable—for the criteria setting allowable costs as they are for those setting profit.

The Government will no doubt come back and point to Clause 20(2), which sets out criteria. I was somewhat scathing about the criteria in Committee, so I shall try to be less so now. The three criteria are that the cost should be,

“appropriate … attributable to the contract, and … reasonable in the circumstances”.

Working backwards through them, my general understanding of administrative law is that things have to be reasonable in the circumstances. I would not quibble at throwing “reasonable” into the Bill, but it is not a particularly heavy or precise definition.

The next criterion is “attributable to the contract”. It does not seem to me a very exciting idea that the cost should be attributable to the contract; I think that the average lay person would expect allowable costs to be attributable to the contract. Nevertheless, that is what is set down.

The only criterion that seems to have any substance is that the cost should be appropriate. I have a very low opinion of the word “appropriate”. I used to stand on the opposite side of this Chamber and read the stuff that the officials produced for me. Whenever I saw “appropriate”, I knew it meant that they could not find a better argument—I fear that that is what “appropriate” means.

The overarching framework of allowable costs should be set out in regulations so that they can come before Parliament and be widely developed. The SSRO’s guidance should be developed from those fundamentals and should be in the public domain. I beg to move.

My Lords, I will consider Amendments 5 and 6 together. They concern the statutory guidance that the SSRO must issue for determining whether costs are allowable costs under qualifying defence contracts. The allowable costs make up the bulk of the price, and we agree with the noble Lord, Lord Tunnicliffe, that it is important that there should be clear and comprehensive rules that help ensure value for money.

Amendment 5 would introduce an additional step requiring the Secretary of State to set out in the single-source contract regulations principles governing the treatment of allowable costs. The SSRO would be required to have regard to those principles in the regulations when issuing its statutory guidance. Amendment 6 would require the parties to a qualifying contract—that is, the MoD and the supplier—to have regard to those principles as well as to the SSRO’s guidance.

It is in the interests of both the MoD and our suppliers that the rules determining allowable costs should be clear. These costs will typically account for around 90% of the value of a qualifying contract. The SSRO’s guidance must be sufficiently detailed to ensure that inappropriate costs are excluded and to avoid unnecessary ambiguity. The guidance must be enforceable. The Bill provides a strong enforcement mechanism underpinning the SSRO’s statutory guidance on allowable costs. This ensures that its guidance will be adhered to unless there is good reason not to do so, and it is achieved through several provisions.

Clause 20 provides three high-level principles that are binding on the parties to the contract. The noble Lord listed them. Costs must be reasonable in the circumstances, appropriate in nature and attributable to the contract. However, the noble Lord must know that, in the past, costs have not always been attributable to contracts. That has been unavoidable, but it has always been found to be the case after the event. Clause 20 also requires the SSRO to issue statutory guidance.

The guidance issued by the SSRO will have effect in several ways. First, both parties to a qualifying defence contract must have regard to the guidance when agreeing the price. Secondly, the Secretary of State can require a supplier to demonstrate how they have followed the statutory guidance at any time. Thirdly, the SSRO may make a binding determination on the extent to which a cost is or is not allowable.

If either party feels that the guidance was not followed, they can appeal to the SSRO, which can change the price. Any deviation from the SSRO’s guidance carries with it a significant risk. Following an appeal, the SSRO has the power to adjust the price back to what it would have been had the guidance been properly applied—and it is likely to do so unless there were good reasons not to follow its guidance, supported by a robust audit trail. Therefore, although it is called guidance, it is enforceable guidance.

Turning to the content of the guidance, we are confident that the statutory guidance will be substantial. We have agreed with industry that we will jointly recommend to the SSRO that its initial guidance should be heavily based on the existing government accounting conventions. These make up a substantial part of the current “Yellow Book”. For example, there is substantial and detailed guidance on the treatment of costs such as research and development, rationalisation and redundancy, and other such cost categories. These conventions can be imported into the initial statutory guidance, and will be expanded on to include areas not yet covered. Producing this guidance will be one of the first duties of the SSRO, which it will do in consultation with the MoD and industry. MoD officials are already working on the material we intend to provide to the SSRO in support of its consultation, and we know that industry is doing likewise.

The statutory guidance will also continue to evolve as new circumstances are considered. This will happen through the SSRO’s ongoing reviews and consultations on the framework, where the MoD and industry will suggest amendments. The SSRO will also make amendments following opinions or determinations that it is asked to make in relation to allowable costs. For example, if there is any ambiguity in the case of a particular contract, one or other party is likely to raise this with the SSRO for an opinion. After the SSRO has considered the matter, it will be likely to amend the guidance at the next appropriate point so that all parties have the clarity they need. Therefore, the existing provisions of the Bill contain everything required for substantial guidance backed by a strong enforcement mechanism.

In issuing its guidance, the SSRO is acting in its role as an independent expert charged with regulating the framework. The SSRO’s aim is to ensure value for money for the taxpayer and a fair and reasonable price for suppliers. This aim is provided for in the Bill under Clause 13. We do not consider that there is any need to limit the SSRO’s power in relation to providing detailed guidance consistent with that aim. In the event that the MoD objects to the SSRO’s guidance, it can make that case to the SSRO. However, we consider that a strong and independent SSRO will provide the best outcome for the new framework, and it should be fully empowered to fulfil its aim, as with other regulators, without unnecessary constraints.

There may also be an unintended consequence to these amendments. One of the parties to qualifying contracts—the Secretary of State—would be allowed to limit the power of the SSRO to independently set guidance on the allowable costs of those contracts. This may be perceived as introducing a partisan element to the regime, which we do not want.

There is one final point I wish to make. These amendments would lead to there being three tiers to the rules that determine allowable costs: primary legislation, regulations, and statutory guidance. This would add an additional level of complexity to the framework. MoD commercial officers and their industrial counterparts would have to follow and have regard to all three. There are cases where it may be appropriate to have three levels of rules, but clearly it should be avoided unless absolutely necessary. In this case we do not consider it necessary. We have taken the simpler approach of having three high-level principles in primary legislation, supported by substantial detailed guidance issued by the independent SSRO.

In summary, we want a framework that provides clear guidance on allowable costs, supported by a strong enforcement process, and for the SSRO to be able to act as a strong and independent regulator. The Bill as drafted does this, and we do not consider that these amendments are required. They will unnecessarily constrain the power of the SSRO and may introduce uncertainty for contractors. I hope this explains our position. I urge the noble Lord to withdraw his Amendment 5.

My Lords, I am still not convinced by the argument. The essence of my argument is that there should be symmetry of regard for profit and allowable cost. The allowable costs are so intrinsic to how much defence equipment costs the taxpayer, and so much a part of contracts which, over the years, have received massive—perhaps unfair—public criticism. This part of the Bill—which, as I have already said, is a good try and something that we support—will have the biggest impact on cost and profit, and we are not exposing it to the public scrutiny that having the criteria and framework in regulation would allow and, indeed, insist on.

I am incredibly impressed by my arguments but equally seized of the fact that I would not win a vote, so, with enormous reluctance, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6 not moved.

Consideration on Report adjourned.

South Sudan

Question for Short Debate

Asked by

To ask Her Majesty’s Government what is their assessment of the progress of peace talks between opposing armed groups in South Sudan and the influence exerted by Sudan on those developments.

My Lords, in view of the absence of my noble friend Lady Warsi, it may be for the convenience of the House to adjourn briefly. I beg to move that the House do adjourn during pleasure for five minutes.

Sitting suspended.

My Lords, it appears that four of the 11 speakers are not in the Chamber at the moment. We could either adjourn for a further five minutes or we could start and allow them to speak.

My Lords, I wonder if it would not be more flexible to start and to allow speakers to speak when they arrive.

I do not know what the protocol is—I look to the clerk for advice on what the procedure would be. I am quite happy for speakers to speak as and when they—

In those circumstances, my Lords, shall we just adjourn for five minutes to see who else turns up, possibly until a quarter past?

Sitting suspended.

My Lords, I apologise for our timing being so far out. There are some noble Lords who have not been able to come here. If they come within the next two or three minutes, we will allow them to speak. They may well be expecting to start much later. In these circumstances, we will not enforce the six-minute rule quite as sharply as is our wont, but we might enforce the seven-minute rule quite sharply.

My Lords, I presume that the extension of time also applies to the opening speech.

While diplomats attempt to find a lasting solution to the long-standing rivalry that sparked widespread conflict in December, millions of South Sudanese are suffering an acute humanitarian crisis. Fighting spread rapidly from the capital to volatile locations in Jonglei, Unity and Upper Nile states, fuelling local political battles and inflaming old civil war grievances.

More than 1,000 people were killed during the five weeks of violence before President Salva Kiir and the former vice-president Riek Machar signed a ceasefire agreement. Terrible human rights atrocities have been documented throughout the crisis. Taban Deng Gai, the rebel chief negotiator at the peace talks in Addis, confirmed that innocent people lost their lives in Malakal, Bentu and Bor, the state capitals of Upper Nile, Unity, and Jonglei states. Human Rights Watch concluded that armed forces from both sides have looted extensively, destroying civilian property and desperately needed aid facilities. They have targeted civilians and carried out ethnically based extra-judicial killings.

A substantial solution to the crisis will come only through an inclusive political process that engages South Sudanese communities and deals with the underlying causes of unrest. A political agreement between leaders that does not address people’s grievances, nor clearly invite citizens across the country to play their part in finding long-term solutions, may be a first step. It will, however, prove a poor foundation in the search for sustainable peace.

On 30 December, the Peace and Security Council of the African Union called for the establishment of a commission of inquiry to investigate abuses perpetrated during the conflict to ensure accountability, reconciliation and healing among all South Sudanese communities.

A five-member commission of inquiry was appointed on 7 March 2014, to be headed by former President of Nigeria, Olusegun Obasanjo. The mandate of the commission is to,

“investigate the human rights violations and other abuses committed during the armed conflict in South Sudan”.

I ask my noble friend what actions the Government are taking to ensure that the commission is adequately supported and that it focuses on all its objectives— including modalities for reconciliation—as well as identifying perpetrators of human rights abuses. How are our Government working with the Security Council to press all the warring parties to allow unrestricted humanitarian access across the country, and to stress the need for UNMISS to fulfil its mandate to protect civilians more effectively?

On 30 March, east African heads of state met in Addis Ababa in the latest push for peace. Leaders from the Intergovernmental Authority on Development, IGAD, were called together, even as fierce fighting took place around Malakal. They authorised the prompt deployment of a regional protection and deterrent force that would operate as part of the IGAD monitoring and verification mechanism established to support the 23 January ceasefire. Riek Machar, the leader of the SPLA in opposition, immediately rejected the proposal, saying that UNMISS already had a clear mandate in the country.

The current crisis has its roots in wide-ranging failures of governance, security provision, reform, justice and reconciliation in Sudan. If the country is to move forward, there needs to be a process that is ready and willing to embrace these issues and address these drivers of the crisis. This will involve a change in political participation, not just a power-sharing deal. The peace talks must lead to a fundamental change in the way in which politics is done in Sudan, not just a political power-sharing deal between two leaders, which would be a return to the status quo. The peace process needs to deal with the roles of current leaders in any future Government, including what the appropriate role is for Salva Kiir.

South Sudanese civil society organisations are calling for robust justice mechanisms as well as reconciliation to be built into final agreements. These will need to deal with historic grievances that are not dealt with by the comprehensive peace agreement, as well as those from the newest outbreak of conflict. What are our Government doing as a matter of urgency to ensure that civil society plays an effective role in the negotiations and in the monitoring and verification mechanisms? What political and material support are we providing to help them to fulfil that role? Do our Government agree that the IGAD and international funds must quickly take steps to expand participation in the mediation process and engage representatives from South Sudanese communities, the diaspora and religious communities to ensure that the process is seen, heard and active across the states of South Sudan?

The Security Council received an advance copy of the Secretary-General’s report on South Sudan on 6 March, which it is understood was discussed on 18 March. The report apparently contains a reprioritisation of the core functions of the mission—protecting civilians, rather than capacity-building. In December, the Security Council voted to increase the mission’s military component by 5,500 to 12,500. However, UNMISS is unable to have a broader impact on the crisis and is increasingly seen as partisan by both sides of the conflict. On 13 March in Western Bahr el Ghazal, an area that has largely escaped conflict, youths demonstrated against the force, citing it as working with the rebels.

That same week, the Government of South Sudan openly accused UNMISS, or agents working with it, of channelling weapons to Riek Machar after they found mislabelled weapons in UNMISS-marked trucks travelling to Unity State. There is a strong perception that agents of armed groups have infiltrated protection areas within UNMISS bases and are monitoring who is inside. These perceptions increase fear, anxiety and tension within camps. UNMISS and UN police should expand their patrolling efforts and engage with communities to better control their perimeters and reassure populations.

Do our Government agree that the UNMISS mandate should be refocused on the protection of civilians and away from giving capacity-building support to either party? It is understood that finding additional troops for UNMISS is proving difficult. What are our Government doing to help to ensure that the reinforcements agreed in December arrive in good time?

On 14 February the UN Security Council welcomed the positive bilateral relations between Sudan and South Sudan. President Bashir visited Juba on 6 January and sent an envoy to the South Sudan peace talks. Sudan’s position is critical to the course of the ongoing conflict in South Sudan. The split in South Sudan mirrors the division seen in the second civil war, when Riek Machar and a number of other groups split from John Garang and ultimately received support from Khartoum. The split differs in a number of ways from that of 1991. For example, the Bul Nuer of Mayom County, who comprised the core of the SSDF forces of Paulino Matip and remained allied with Khartoum until 2006, fought with Salva Kiir this time. The core of the rebellion was also from Bor, John Garang’s home territory.

Ugandan forces have been reported to have been fighting alongside the Government of South Sudan in the recent conflict. There is some argument that worse scenarios might have developed if they had not been present. The consensus at the Addis talks and among the international community, however, is that the involvement of the Ugandan army is counterproductive because it has undermined the ability of IGAD, in which Uganda is a main actor, to act as a mediator between the parties.

The 27 September 2012 agreements on outstanding issues between Sudan and South Sudan still lack implementation, and the situation in Abyei has deteriorated terribly. Sudan’s internal conflicts have also escalated, and the international community should make every effort to avoid its piecemeal approach of the past, of following the crisis and taking its eye off the bigger picture. I ask my noble friend what reports our Government have received, if any, of any international actor providing political or material support to the SPLA in opposition. What are our Government doing to ensure that the Government of Sudan withdraw their oil police from Diffra, and that the SPLA and South Sudan police forces withdraw from Abyei, in line with the United Nations Security Council statement of 14 February?

What representations are the Government of the UK making to Sudan about accessing the 25,000 or so refugees who fled to that country from South Sudan in the recent fighting? Finally, I ask my noble friend to confirm, given the complexity of these issues and what I am sure will be the large number of questions put by noble Lords, that she will write to me to answer the questions more fully than is possible in the time available.

My Lords, I warmly congratulate the noble Lord, Lord Chidgey, on securing this very timely debate and on his comprehensive introduction of it. As I have recently returned from a visit to South Sudan with the Humanitarian Aid Relief Trust, I will highlight three aspects of our visit: the continuing problems and suffering resulting from the failure to secure agreement on Abyei; the escalating humanitarian crisis in Bahr el Ghazal and Warrap state; and the prerequisites for an effective peace process.

Our visit began in Agok, near to Abyei, where we met senior representatives of the Ngok Dinka community. Their situation remains cause for deep concern. Abyei town is still devastated; the continuing refusal of the Khartoum Government to remove their military forces maintains a reign of terror, so civilians cannot return to their homes; the murder with impunity last year of the paramount chief has left deep scars; and the failure of the international community to fulfil obligations for a referendum created such frustration that the local community organised their own, with an overwhelming mandate for joining South Sudan. Sadly, recent weeks have seen an increase in violent attacks, with many more civilian casualties reported. There is also a justifiable fear that the conflict which has erupted in South Sudan will deflect the attention of the international community from the urgent requirement to address the continuing needs and suffering of the people of Abyei.

We then visited Man-Angui camp, where nearly 5,000 internally displaced people are living in horrendous conditions. Warrap state and Bahr el Ghazal have been inundated with thousands of civilians fleeing from the conflict in Abyei, from Khartoum’s continuing genocidal bombardment in the Nuba mountains and in Blue Nile, and, most recently, from the tragic eruption of conflict in South Sudan. Many are without any humanitarian aid, living in flimsy cardboard shelters which will disintegrate with the imminent heavy rains; some have no shelter at all. There is such a shortage of food that people are forced to eat leaves with no nutritional value. For many, there is no health care, so pregnant women are giving birth with no midwives or access to clinical intervention if needed. The current crisis in these parts of South Sudan is becoming another catastrophe. The rains will bring even more disease, worsened sanitation, famine and severe challenges for access for humanitarian assistance as more than half the country becomes impassable. What support is being given by DfID to address this critical situation in this part of South Sudan?

The urgent need for a genuine peace process is intensified by Khartoum’s continuing genocidal policies in Darfur as well as Blue Nile and South Kordofan, where it has ruthlessly tripled aerial bombardment while the international community’s attention has been focused on the conflict in South Sudan. February saw the highest number of civilians killed or injured in South Kordofan since the current conflict began in 2011, with the number of fatalities more than double those recorded in January. The Sudanese Air Force is now employing even more sophisticated weaponry against civilians, including upgraded aircraft.

The Famine Early Warning Systems Network argues that food insecurity in South Kordofan will reach emergency levels by April. In Blue Nile state there is even less humanitarian assistance. When we visited there last year, many hundreds of people had already died of hunger. What are the British Government doing to try to help humanitarian assistance reach these civilians before hunger and disease claim many more hundreds of lives in South Kordofan and Blue Nile?

The proposed peace process needs to meet the complex realities on the ground, as the noble Lord, Lord Chidgey, emphasised so well. As the conflict erupted, myriad locally focused groups in north-eastern South Sudan—only some of them Nuer—took up arms against President Salva Kiir in order to protest localised grievances. While those groups have grievances against the president, only a small minority support Riek Machar. However, in mid-March 2014, when IGAD announced the formation of the Protection Deterrent Force—PDF—for South Sudan, Riek Machar announced that “his forces” would not co-operate with the PDF.

Therefore, for a genuine conflict resolution process to be effective, the complex reality must be recognised and addressed. First, the diverse grievances of the myriad grassroots groups must be studied, understood and resolved. That process should be conducted separately with each group, with cessation of violence as a precondition for such discussions. There is no other way to stop the fratricidal violence that currently plagues so much of South Sudan.

The second phase can come only when violence has subsided, making it possible to engage in meaningful discussions with all the key political forces in South Sudan—not just President Kiir and Riek Machar—about governance reforms and the political future of the nation. President Kiir has outlined an excellent eight-point road map for a return to peace and moving the country forward, which needs to be considered by the international community, although there is no comparable proposition from Riek Machar or any other opposition groups.

Having just returned from a heartbreaking visit where we witnessed first-hand the massive scale of suffering, I urge Her Majesty’s Government to fulfil their continuing responsibility, as a member of the troika, to support a realistic, just peace process, essential for urgent action to alleviate the current catastrophes; to prevent escalation of yet more conflict; and to ensure that the Government in Khartoum do not take advantage of the conflict in South Sudan to escalate their ruthless assaults on their own people. The United Kingdom has a responsibility to bring some hope to people in both nations, Sudan and South Sudan, who have suffered too much for far too long. I sincerely hope that the Minister will provide that hope this evening.

My Lords, I am grateful to my noble friend Lord Chidgey for initiating this short but important debate. I was born and brought up in Africa and still have many connections throughout the continent, so I feel particular resonance with this debate. I have visited Juba, as my family undertook business in that part of the world. I also declare that I am the chairman and a funder of a charity which has undertaken humanitarian work in Sudan.

There was a long struggle for independence for South Sudan, with decades of conflict, but since it was granted independence in July 2011 its problems have not been erased. In Sudan, there has been a history of problems relating to cultural differences, poverty, tribal intolerance, violence and ethnic religious prejudice. After South Sudan gained its independence, differences arose within the ruling Sudan People’s Liberation Movement. It started as a political dispute between President Salva Kiir and his former deputy Riek Machar, but has escalated into a full-scale conflict, with some of the fighting along ethnic lines. The President has accused Mr Machar of launching a coup, which Mr Machar denies strongly. Following the ceasefire of 23 January there was hope that a long-term peaceful solution could be found. However, the brutality witnessed less than a month later in the city of Malakal shattered all our hopes and disturbed even the most seasoned of aid workers on the ground.

Two months on and I am now very disappointed that the second round of peace talks has been delayed. The two sides are unable to even agree on who is to attend such talks. This is extremely frustrating and illustrates the scale of the challenge ahead. The international community must be swift and assertive in condemning any obstruction to progress on negotiations. I support the threat of sanctions by the European Union and the United States in the event that progress is not forthcoming. Most importantly, it is the humanitarian situation and human rights violations that are threatening innocent people’s livelihoods. I commend the work of the United Nations and the World Food Programme to assist with this, but it is not and cannot be enough.

The UN mission in South Sudan has been clear to both sides that its premises and facilities must not be violated. I welcome the temporary strategic shift towards the protection of civilians and the facilitation of humanitarian assistance. I also welcome the establishment of a commission of inquiry so that human rights abuses are properly investigated and perpetrators held accountable. Any eventual solution must be thorough and comprehensive enough to prevent such a catastrophe from recurring. I believe that the participation of all sides and relevant parties is crucial if this is to be achieved. The decisions of the Intergovernmental Authority on Development must be respected in its role as mediator in the region.

It is also paramount that we see the withdrawal of all allied forces and armed groups, as originally drafted in the cessation of hostilities agreement. The people of South Sudan are enduring suffering every day. Twenty thousand people have died and nearly a million people have been displaced in the space of just three months. There are now also warnings of a potential famine if farmers do not feel safe enough to return to their homes and plant their fields. It is depressing that the world’s youngest country has descended into such chaos. The people of South Sudan had already encountered far too much suffering prior to independence. Ultimately, these divisions must be healed and governance must be strengthened for the sake of the South Sudanese people.

This will happen only through mutual compliance with the cessation of hostilities and mature political dialogue. During the January ceasefire, our Foreign Secretary was clear that the UK was ready to lend its full support to efforts for a process of national reconciliation. I hope that we will do so and respect this commitment, and I would be grateful for clarification on this point from my noble friend the Minister. I am, however, encouraged by our Government’s commitment to working closely with the Republic of South Sudan towards international peace and stability. I ask my noble friend to update the House on the representations that the UK has received from the African Union on the assistance the UK can provide.

I also call on the Government to further press South Sudan to implement the agreements from September 2012 to resolve outstanding areas of disagreement with Sudan and uphold the ceasefire. We need to continue to work towards resolving the political, tribal and humanitarian problems to achieve peace and prosperity not only in South Sudan but in Africa as a whole. I look forward to the Minister’s remarks at the close of the debate.

My Lords, I begin by apologising to the noble Lord, Lord Chidgey, for arriving late in his introductory speech. I should normally be struck off the list, but business is very hard to predict in the House of Lords. I thank the Whips on the Front Bench for resurrecting me.

All of us who follow South Sudan regularly have been dismayed and disturbed by the events in December, having had high expectations of Africa’s youngest country. What concerns me most is that so much killing will discourage even those who supported and nurtured this country long before its independence. I am sure that noble Lords will have read, as I have, other harrowing accounts about Malakal and Bor and especially the work of the International Committee of the Red Cross and of Médecins sans Frontières, which we must highly commend for their swift action. Through the aid agencies and the churches, we somehow have to rebuild the trust that we know exists among the people of South Sudan. We have to remind ourselves of the many bonds between the different races and that this is primarily a political conflict, in my view, based on and exploiting ethnic divisions. In short, it is a failure of leadership where it was most needed.

One of the most critical problems is the loss of confidence in UNMISS and the possibility that the UN itself will have to rethink its mandate in terms of nation building rather than state building. What is our Government’s analysis of this? Does the Minister agree that there has been perhaps too much emphasis on influencing—at times even controlling—organs of central government? One can imagine the enthusiasm of supporting states at a time of independence. Does she agree that there has therefore been too little emphasis on devolving power and ensuring that capacity building in the regions and people’s participation in local communities are equally important?

The showdown between Salva Kiir and the UN may now have passed, judging by more soothing comments I read recently from the GOSS. It would be very serious if this row halted the basic humanitarian work of the UN and the related agencies, on top of the considerable present challenges of feeding and sheltering tens of thousands in the midst of civil war and the continuing arrivals of refugees from almost every direction. The fighting has continued in Upper Nile, Unity and Jonglei in spite of efforts at diplomacy and peacekeeping.

I have no doubt that the UK has played a useful and important role in the troika during the IGAD talks in Ethiopia, but if the principals are not willing to settle their differences—which have a long history going back before the CPA—what hope is there for diplomats? I trust that we are not going to reduce the staff any further in the Sudan unit, for instance, or in South Sudan itself at a time when, at the onset of the rains, we are going to see a much bigger humanitarian disaster unless aid agencies can pre-position their supplies in time. I understand that, so far, owing to official obstruction as well as road conditions, the World Food Programme has been able to reach only 765,000 people—about three-quarters of a million—out of the 2.5 million affected by the conflict, and that is only in the south, although it has now begun airdrops in the three conflict states. UNHCR and UNOCHA estimate an even higher figure at risk of food insecurity, and there has been concern about the high level of malnutrition seen among young refugees arriving in Ethiopia from the north-east.

As we heard from the noble Lord, Lord Chidgey, the situation in Abyei remains precarious. We heard from the noble Baroness, Lady Cox, that across the border in South Kordofan the Nuba people are still the victims of bombardment by the Sudanese armed forces. There is no doubt that Khartoum has taken advantage of the situation in the south to exploit its own position.

What about Riek Machar, the maverick opposition figure who has a long track record in Sudan? I notice that the IGAD statement loosely condemned tribalism and ideological bankruptcy. I am not sure which one of those applies to whom, and I do not know whether the member states of IGAD have any idea how to deal with Riek Machar. There are suspicions that he may return to his old alliance with the north. He has long had ties with the UK, and the FCO needs to make more effort to bring him back to the negotiating table. Perhaps the Minister will update us also on the position of his colleagues, who are in detention and the subject of diplomacy.

Finally, there has to be national reconciliation. There are currently three different official bodies concerned with justice and reconciliation and, although they put out a joint statement in January, there is concern that they are not yet active. The churches, on the other hand, led by Archbishop Deng, are an essential part of this process. They are already active and I understand that their initial focus will be on the displaced from Bor, Malakal and Nimule, who have suffered most in the recent conflict.

My Lords, I, too, am grateful to the noble Lord, Lord Chidgey, for initiating this debate. I claim no special expertise on this subject but, like other noble Lords, I am extremely keen to hear the Government’s assessment of how the peace process is proceeding.

It is indeed tragic that so soon after South Sudan came into existence as an independent country in 2011 such a vicious civil war should have broken out. I do not think that the world as a whole has yet woken up to the scale of the disaster, with more than 10,000 dead, according to the latest Economist report, and close to 1 million internally displaced people, according to the report of the United Nations Secretary General on 6 March. As we have already heard, major towns such as Bor, Malakal and Bentui have been totally destroyed.

Sadly again, as we know, it looks as though the conflict has taken on a horribly strong ethnic dimension, with Dinka and Nuer pitted against one another, and, even more tragically, that atrocities have been committed on both sides. However, it is important to note that the Government were formed from and still contain people from both ethnic backgrounds—and, furthermore, that they remain the elected Government.

The parish in which I reside and help when not working elsewhere has close links with South Sudan and, through this, I have information from a source who is not only very well placed but, in my view, is utterly to be trusted. He is quite convinced that the vice-president, Riek Machar, tried to depose the president in a coup and that he and his associates were certainly guilty of embezzlement. As we know, Riek Machar denies this and says that the spark for the conflict was fighting in the presidential guard. Nevertheless, we know that he broke away from the SPLM in 1991, signing a peace deal with Khartoum in 1997 and accepting arms from the north.

Furthermore, it is absolutely undeniable that he is now leading an armed conflict against the Government. If this reading of events is true—as I say, I know and trust the source, who is a good position to know what is happening—the wording of the Motion does not quite reflect the situation when it refers simply to “opposing armed groups”, as though there was an equality of blame. There are indeed some other breakaway armed groups and both the Government and Riek Machar’s forces are to blame for the atrocities, for local troops on both sides have got out of control.

However, the conflict is at heart one between a constitutional Government and a faction that has tried to overthrow them by force. In these circumstances it is difficult to see how the President could agree immediately to a power-sharing agreement, which he has been asked to do, without at least some adequate international backing to ensure that what has happened in recent months does not happen again, if and when first a ceasefire and then an agreement have been reached. Nevertheless, the UN Secretary-General was surely right when he said:

“While the declared intention by Mr Machar to remove an elected government by force is unacceptable, both sides now bear full responsibility for bringing the senseless fighting … to an immediate end”.

It will be very interesting to learn the Government’s assessment of Sudan’s role in all this. We cannot help wondering whether Sudan is once again trying to influence the course of events in the south, not least with a view to the oil fields, a significant portion of which are occupied by rebel forces. However, against this there is the fact that according to the latest Security Council report from the UN, President Omar al-Bashir and President Salva Kiir of South Sudan have met, and President al-Bashir has agreed to support a cessation of hostilities, and to participate in a monitoring and verification team.

We cannot underestimate the sheer difficulties that this country now faces. As we know, it is very poor. The Government are limited in the resources that they have to bring to bear. There are high expectations among the different tribal groups, and there is a long history of conflict that is still simmering and erupting. The number of troops on the ground is limited, considering the country’s vast size. Despite these difficulties, clearly every effort must be made, first, to bring about an immediate ceasefire, because nothing can happen until there is one. Secondly, as the noble Baroness, Lady Cox, emphasised so forcefully from her long and passionate engagement with the country, there must be an immediate stepping-up of humanitarian aid. There must be a serious examination of the kind of political system that might work there—without forgetting the fact, as I have emphasised, that there is a constitutionally elected Government in place and there is surely some duty to try to support them.

My Lords, I echo the warmest congratulations that have been expressed on my noble friend Lord Chidgey’s masterly analysis of the appalling consequences of the civil war and the useful proposals that he has made for the solution of the conflict.

After what was originally a political dispute between President Salva Kiir and former Vice-President Riek Machar, the tensions escalated until they became acute. It was the President who fired Machar, accusing him of trying to oust him in an attempted coup. If the allegations that have been referred to by the noble and right reverend Lord, Lord Harries, are correct, I really wonder whether Machar has any future role to play in the politics of South Sudan, or whether the international community should say that he is no longer a fit person to engage in a dialogue with the Government.

After the power struggle escalated into violence, there were, first, clashes between units of the SPLA in Juba loyal to the two leaders respectively, and then almost immediately ethnic cleansing against the Nuer in the capital, resulting in tens of thousands abandoning their homes and possessions, and taking refuge in the UN camp next to the airport. This conflict spread with extraordinary speed to other parts of the country, as my noble friend said, particularly to the three capitals: Bentiu, the capital of Unity state; Malakal, capital of Upper Nile, which is the largest oil-producing region, recaptured as I understand from the rebels three days ago; and Bor, capital of Jonglei. The fighting has continued in spite of the ceasefire agreement between the warring ethnic factions. As has been said, the UN estimates that over a million people have been displaced, a quarter of a million of them across the borders, 90,000 to Uganda alone, with 500 people a day still crossing that border.

My noble friend mentioned the IGAD meeting 10 days ago in Addis, which authorised the prompt deployment of a regional “protection and deterrent force” in support of the ceasefire. As to Machar’s prompt rejection of that proposal and his idea that UNMISS should have sole responsibility in those areas, I ask my noble friend the Minister: what discussions have there been between IGAD and the UN with a view to dovetailing their mandates and even assigning specific tasks to IGAD?

The criticism of UNMISS that we have heard about may well be partly justified, particularly the episode when it was found that weapons were being shipped in a truck that was otherwise engaged in humanitarian assistance. UNMISS has explained this by saying that those arms were destined for Ghanaian peacekeepers, and apologised for departing from its usual practice of shipping weapons to the peacekeepers by air. Nevertheless, a nasty smell remains over that allegation, which needs to be cleared up.

UNMISS has not done anything substantial to prevent the carnage and destruction so far, even though its mandate includes the deterrence of violence and the protection of civilians. However, should the revision of its mandate called for by my noble friend explicitly authorise the use of armed force in support of those objectives? I ask my noble friend the Minister: will Ugandan troops remain in South Sudan as part of the IGAD force? My noble friend is surely right to say that Uganda has played an important role in preventing even greater loss of life, which would have happened without its troops. It would seem perverse if IGAD did not build on its knowledge and experience of the situation on the ground, but I understand that it is not on the list of potential contributors to the IGAD force.

The UN says that 3.7 million people are at risk of food insecurity, and the situation could become even worse if the conflict continues. Aid agencies have so far reached only about a quarter of these people, and I wonder if my noble friend has any information about the further plans of the eight humanitarian agencies whose emergency directors just concluded a three-day visit to the country to enhance the response that they are already making.

Do we know the timetable for the deployment of IGAD forces, and will they give priority to Unity, Upper Nile and Jonglei, where not only was the fighting worst but 90% of the food-insecure are concentrated and all the WFP food stocks, offices, computers, vehicles and other assets were looted or destroyed? In Upper Nile’s two WFP warehouses alone, 1,700 tonnes of food were stolen, which would have been enough to feed 102,000 people for a month. What guarantees have been given by the rebels that when these assets are replaced, as they have to be, the same will not happen again?

With the rainy season about to start, any planting will cease, turning the country’s acute food crisis into a long-term problem, as the FAO has said. On top of its lack of capacity and resources to deal with the humanitarian needs of its own population, South Sudan has to look after some 200,000 refugees from Sudan and to cope with the continued aerial bombardment of civilians in the border area by the Sudanese air force, which was mentioned by the noble Baroness, Lady Cox, and the noble Earl, Lord Sandwich. I hope that my noble friend the Minister will at least be able to say that the UK has responded to this dreadful crisis with our accustomed generosity.

My Lords, the whole House is indebted to the noble Lord, Lord Chidgey, for tabling this Question for Short Debate. I am sure that we all thank him for the eloquent way in which he set the scene for this debate.

Following the fighting that broke out in Juba last December, we have seen the violence spread like a plague to Jonglei, Unity and Upper Nile states, where fresh clashes only last week have rendered those areas inaccessible to humanitarian agencies. As we have heard, unverified reports suggest more than 10,000 fatalities. The key message of our debate to all sides should surely be that there should be an immediate cessation of hostilities with no delay.

Both President Kiir and his former deputy, Riek Machar, must understand that anything which further exacerbates the existing ethnic tensions, particularly between the Dinka and Nuer, risks the very future of South Sudan and plays into the hands of those who wanted the world’s newest state to fail from the very outset. They should also take careful note of the statement of the special envoys of the European Union, the United States and Norway in which the troika warned them that, if they fail to engage constructively with the IGAD-led talks, “they will face consequences” and that:

“The people of South Sudan expect renewal, they expect their voices to be heard in forging a more sustainable peace. Business as usual is not a viable way forward”.

The suffering of the people of South Sudan is being further compounded by the collateral effects on humanitarian relief and those who work so selflessly to provide it. Since January there have been three fatalities among aid workers, more than 100 were prevented from relocating from Yirol in Lakes state to Juba for safety, and more than 75 humanitarian vehicles have been commandeered or stolen. It is impossible to feel anything but deep admiration for those aid workers still in the field, risking their lives to bring relief and help to the destitute. Surely there is more that we could do to give them practical help and support.

With 3.7 million people now experiencing acute food insecurity and 7 million facing some degree of food insecurity, according to figures provided by the food security and livelihoods cluster, does the Minister agree that if, as the noble Lord, Lord Avebury, has just mentioned, pastoralists and farmers prove unable to move with their livestock or to plant their seeds at the outset of this rainy season, it is becoming increasingly possible that this crisis of food insecurity will freefall into outright famine? I hope that the Minister will update us on the Government’s own assessment. Perhaps she can also tell us whether, with the reallocation of funds from development projects in other parts of the country to emergency food relief, she would concur that this poses a threat to the country’s long-term recovery. Is it the case that the crisis response plan for humanitarian activities until June 2014 is around only 23% funded, with a shortfall of £592 million? How can that gap be filled?

Over these weeks we have seen former allies become enemies, old grievances reignited, and tribalism and factions threatening the cohesion of South Sudan. The failure to address many of these underlying issues and challenges—many of which were well known but ignored in the framing of the 2005 comprehensive peace agreement—has played its part in the genesis of this new eruption of violence. Any political agreement crafted between power brokers and warlords that does not address grievances and fails to reach out to affected communities will be a poor basis on which to build a peace. There needs to be a fundamental shift in the way that politics is practised in South Sudan. It cannot be based on deals between a couple of competing leaders. Sudan’s churches have always had a historic and important role as peacemakers, and groups such as Citizens for Peace and Justice—a coalition of 30 civil society organisations—should be given direct and independent participation at the IGAD negotiating table. They at least, in contrast to some of the political leaders, have had an enduring interest in the humanitarian needs of the people.

As is always the case when violence replaces negotiated political solutions, powerless, vulnerable people, especially women and children, are caught in the cross-fire and are the ones who suffer the most. From December to mid-January, almost 500,000 people were displaced. It is predicted that total displacement may reach more than 900,000 and that 40% of those will be children. The impact is also spreading to neighbouring countries. As we have heard, there are now around 222,000 refugees. As of 12 March, 70,000 South Sudanese had crossed into Ethiopia seeking asylum, with the number expected to reach more than 150,000 by the end of this year. Perhaps the Minister can update us on the Government’s own assessment of the numbers and of those who have been responsible for these events. Is there not an argument for the United Kingdom to have in place a full-time special envoy to Sudan?

We have seen attacks on civilians by government forces, attacks on civilians by opposition forces, ethnic targeting by government forces, and widespread destruction and looting. Perhaps the noble Baroness can tell us what is being done to hold those responsible to account and particularly to tackle the recruitment and arming of children and young people into their militias. Can she also tell us whether she thinks that the commission of inquiry, which has been referred to, is sufficiently well resourced? Will it have unimpeded access to the affected areas? As well as bringing perpetrators to justice, does it have within its terms of reference the creation of mechanisms for settling grievances which might pre-empt future eruptions of violence, while fostering a climate in which reconciliation might occur? Reconciliation is not a soft issue—an add-on which might be nice to have—but a hard-edged security requirement.

Will the Minister say what child protection specialists are in the field and whether we have formally requested the UN Special Representative of the Secretary-General for Children and Armed Conflict to travel to South Sudan and report to the Security Council, so that due weight can be attached to addressing the appalling plight of the children whose lives have been shattered by these events? Perhaps I may also ask whether the British Government will be bankrolling the elections next year. How can we possibly imagine that an accurate census can be taken when 1 million people are displaced? What genuine choices will be able to be made?

As I conclude, I should be grateful if the Government would tell us what intelligence they have on the role and influence of South Sudan’s neighbours in the conflict. The harsh reality is that events in South Sudan have enabled Khartoum to continue its systematic war of attrition against the people of South Kordofan and Blue Nile. The reality is that events in South Sudan have taken the spotlight off the 18 states affected by armed conflict in the north—not least in Darfur, where violence continues unabated and largely unreported.

My Lords, the noble Lord, Lord Chidgey, has done a great service in helping us once again to focus attention on South Sudan. I greatly admire the consistent work done by so many noble Lords—above all, my noble friend Lady Cox—who take an interest in Sudan and in South Sudan.

I first went to Juba in 1950, 64 years ago. I was only 14 and I had the privilege of travelling around Equatoria province with my father, who was then an administrator in the south, visiting schools, seeing what life was like and visiting the missions. Later, in the early 1970s, when I became a Member of Parliament, I flew south to Juba from Khartoum with the then Foreign Minister of Sudan to visit the south at a time when President Nimeiry had made a major gesture to the south. He went south and spent Christmas with the Christians. Here was a Muslim President going south to spend Christmas with the Christians. Alas, that gesture and spirit did not last.

I want to make just a few reflections. First, it is right that Britain, having had responsibility for Sudan for 60 years, should, as part of the troika and as part of the international effort, carry on its interest and concern for that country. Indeed, it is a British interest that we should do so; it is a British interest to see stability in east Africa and in South Sudan.

Since independence—we have heard much today about this—there has been at least 30 years of fighting: horrific bloodshed and the longest civil war that Africa has seen. We have heard the figures. Two million were dead and 4 million internally displaced before independence was ever reached. We have heard the figures today on what has happened in the past three months. Earlier, in the 1980s and 1990s, there was serious disagreement within the southern SPLA. There was rivalry for power among the different politicians, creating what today could be described only as a Dante’s Inferno. We have to ask ourselves: what can we, the international community—the east African nations, above all—and the African Union, supported by the international community, do that will help these wretched, poor people?

First, there is the question of survival. We must have, before anything else can happen, a ceasefire, the right amount of humanitarian aid and stability. Then, to my mind, follows reconciliation; the lessons can be learnt from South Africa and other countries. There is an investigation going on led by IGAD, but it is important that civil society, local communities, women and, above all, the church—which is widely respected in the south—should take the major lead in reconciliation. I was very impressed by the visit made to South Sudan by the most reverend Primate the Archbishop of Canterbury in early February, when he talked about the need to plant “a tree of reconciliation”, not trees of bitterness. He said:

“Politics is lived by habit; violent conflict has become the habit of politicians. It’s time to set a new habit”.

The church can play a major role in helping with reconciliation, led by people such as Archbishop Deng Bul and others.

I strongly endorse the comments made by my noble friend Lady Cox, but I think that we should see the area as a whole—not just the states of Jonglei, Upper Nile and Unity but South Kordofan, Abyei and Blue Nile. Then we have to consider security, where we and others have skills to help. There is a dire need to create cohesion among the security forces in South Sudan and to be quite clear as to what the role of UNMISS is, as well as that of the neighbouring states in their military co-operation. Beyond that, there need then to be plans for the longer-term development of South Sudan.

I want to stress two final points, which have been made during this debate. First, only after stability has been created can we begin to recreate the framework for democratic participation, both at a local and a national level, to suit South Sudan’s own traditions, culture and history. I should like to know what the Minister’s view on this is, because you cannot achieve proper democracy of the kind that will suit Sudan without establishing the right values—those of freedom of expression, the rule of law, an independent judiciary, systems of accountability, tolerance and mutual respect. That takes a long time—we all know that.

Secondly, to achieve all these things, somebody has to hold the ring to avoid this unending cycle of violence. My own view is that it would be best to explore the idea of a trusteeship, created by the African Union and IGAD and supported by the UN and the troika. An interim Government could be established, participated in by all willing politicians and, above all, President Kiir, supported by leaders of civic society and the church—women, too, who have a vital role to play—and advised by many international experts.

I do not believe that any of this can be achieved without the basic security and stability of that country. The international community, because it is contributing money, resources, expertise and advice, is entitled to have a strong say in how that stable framework can be devised. For the sake of these wonderful people, the long suffering people of South Sudan, let us help them to have a future.

My Lords, I join those who have thanked the noble Lord, Lord Chidgey, for introducing this debate at a critical time for the future of South Sudan. There is clearly huge frustration at the lack of sustainable progress in the peace talks between the opposing groups in South Sudan. It is also extremely alarming to see human rights violations, particularly those recently in Bor, continuing to be committed on both sides, targeting innocent civilians along ethnic lines and resulting in the massive humanitarian crisis that so many of your Lordships have spoken about this evening.

At a time when so much has been achieved economically and politically in sub-Saharan Africa, it is a tragic state of affairs that the world’s youngest nation, which had such high expectations on achieving independence in 2011, has failed to end the current crisis.

I entirely agree with the recent statement by the head of the United Nations peacekeeping operations in the region, who said:

“The security and humanitarian situation in South Sudan will continue to deteriorate until the parties fully engage in the political talks, respect the cessation of hostilities and allow freedom of movement for the United Nations and its partners”.

Despite the rhetoric of President Salva Kiir and Riek Machar, I question the commitment of both sides to ending this conflict. With the diplomatic initiatives in Ethiopia stalling, there is clearly growing support by several western backers to impose targeted sanctions in an attempt to break the deadlock.

The tragedy for South Sudan is that with its vast oil reserves and untapped additional natural resources, the country has huge potential to attract foreign direct investment. However, with the continued political uncertainty this investment is unlikely to be forthcoming. In the recently published Global Peace Index, South Sudan ranked 143rd out of the 162 countries analysed, making it one of the most risky countries for foreign direct investment. There is growing concern that the unrest within South Sudan could spill over its borders and destabilise the volatile region.

My noble friend Lady Cox’s account of continued genocide attacks in Sudan is extremely concerning. However, while Sudan could have taken advantage of the disarray in South Sudan to strengthen its hand on outstanding disputes between the two countries, President Omar al-Bashir so far appears to have supported IGAD in its efforts to mediate a sustainable settlement. Both the Sudanese and South Sudanese Governments have requested the international community to assist in the debt relief of both countries. This should be another lever by the international community to incentivise a sustainable resolution to the challenges facing the region.

In conclusion, can the Minister outline what is being done to assist with humanitarian relief, particularly more air drops, to those regions with poor infrastructure? I would also like to hear what can be done to include civil society in the protracted negotiations. I entirely agree with my noble friend Lord Luce when he calls for women to have a more vital role in the future of the region.

This is a time for urgent compromise, strong leadership and an inclusive Government if there is any chance of a sustainable future for this fledgling nation.

My Lords, I thank the noble Lord, Lord Chidgey, for his introduction and for securing this debate. South Sudan is in a terrible mess. After gaining independence from Sudan, as the noble Lord, Lord St John, suggested, there were great hopes for South Sudan, the newest nation on earth. The overwhelming support of the South Sudanese for independence has not, however, resolved the problems that have plagued the country. Fighting between government troops and rebel factions has erupted, killing thousands and forcing more than 800,000 to leave their homes. After more than three months of negotiation, the only achievement of the peace process has been a ceasefire that has been repeatedly violated since January.

Last week, the United States special envoy to South Sudan, Donald Booth, issued a warning on behalf of Britain and other international diplomats when he said that,

“there will be consequences for those who obstruct progress”.

However, last Friday we heard that the second round of South Sudan peace talks had been delayed over the issue of who could participate. South Sudan’s Government have made it clear that they do not want to take part in the peace process if a group of former high-ranking political leaders whom they oppose join in the talks as a third party. I hear what noble Lords have said in terms of the undesirability and unsavoury characteristics of some of these people, but one cannot start to negotiate until all the relevant parties are round the table. That is unacceptable behaviour.

Therefore, following the warning prior to the meeting, what are the consequences now? If the international community fails to follow through, we will lose credibility. Will there be, as was threatened by the European Union representative, targeted restrictive measures against individuals who are obstructing the political process? At some point, all groups will need to get back round the table to deal with key issues.

Other noble Lords, including the noble Lord, Lord Sheikh, and the noble Baroness, Lady Cox, have focused on the severe humanitarian crisis in the country. When you read the horrific statistics, you imagine what it must be like, but I cannot imagine some of the suffering that the noble Baroness, Lady Cox, has witnessed over the years.

Efforts will also be need to be made to address two crucial issues. Oil is both a blessing and a curse for the country. Despite the significant resources in oil wealth, there is a desperate scarcity of infrastructure, and instability is holding back the opportunity to exploit oil. Oil production has fallen drastically. Sudan is now dependent on South Sudan for oil, but Sudan has the refineries and the pipeline to the Red Sea. Significant progress will need to be made on the issue of oil between Sudan and South Sudan before peace can be made permanent.

Border disputes in Sudan continue to strain ties. The main row is over the border region of Abyei, where a referendum for residents to decide whether to join South Sudan or Sudan has been delayed over voter eligibility. The conflict is rooted in a dispute over land between farmers of the pro-South Sudan Ngok Dinka people and the cattle-herding Misseriya Arab tribesmen.

Another border conflict zone to which other noble Lords referred is the Nuba mountain region of South Sudan’s Kordofan state, where violence continues between the largely Christian, pro-SPLA Nuba people and the northern government forces. Again, those issues need to be resolved before there is a lasting peace.

There has been a regional escalation to the situation. Uganda, Sudan’s main regional foe, is openly supporting the South Sudan Government in protecting the oil state of Unity. That has created the real fear that Sudan will go on the offensive, with its calls for Uganda to withdraw being ignored and its oil supply being threatened. Ethiopia has largely tried to arbitrate in the conflict. However, reports of Eritrea—Ethiopia’s old rival—becoming involved by funnelling weapons from Sudan to the South Sudanese rebels significantly increase the chances of it becoming involved. There is a real fear that all the old regional scores will be settled in South Sudan. As one Western diplomat observed: “You’ve got Uganda fighting Sudan inside South Sudan, with Eritrea fighting Ethiopia inside South Sudan and a complete law and order vacuum”.

A sustainable solution must include a resolute determination to address the people’s grievances, and the wider community must be involved in the negotiations. I was delighted to see that the Japanese Government have contributed $1 million to ensure that civilian members will be involved in the monitoring and verification mechanisms. It is worth taking note of the point made by the noble Earl, Lord Sandwich, about the need for devolution within the country. There also needs to be an opportunity within the commission of inquiry to enable reconciliation, as suggested by the noble Lord, Lord Chidgey, in addition to identification of the perpetrators of human rights abuses. Can the Minister explain whether and how the Government intend to pursue that with the commission of inquiry?

My Lords, like other noble Lords, I am grateful to my noble friend Lord Chidgey for tabling today’s debate, and to noble Lords for allowing me to adjourn the House for a short period to allow as many speakers as possible to take part. I thank all noble Lords who have taken part for their contributions. I also take this opportunity to commend the continued work of the All-Party Group on Sudan and South Sudan, of which I know that my noble friend is a member, as are other noble Lords here tonight. Their work ensures that parliamentarians of all parties are kept informed as the tragedy in the region continues to unfold and helps to raise awareness of the dire humanitarian situation facing millions.

This House’s continuing interest in both countries is evident from the past six months, in which we have had two debates, three Oral Questions and over 50 Written Parliamentary Questions. Since I updated your Lordships on 7 January, the picture has got no better. Huge efforts by IGAD, the African Union and the UK and its partners were put into getting the two sides to sign a cessation of hostilities agreement, which happened on 23 January. Not only have both sides blatantly disregarded it but they are showing no sense of urgency in political talks. The Government, in particular, have resorted to unacceptable rhetoric against UNMISS.

Through our Ministers and our special envoy we continue to work closely with the IGAD countries, the troika and the EU to try to move entrenched mindsets. We are providing both financial support and technical expertise to the IGAD process. In the Security Council we are making it clear that UNMISS should prioritise the protection of civilians, the facilitation of humanitarian assistance and the investigation of human rights.

The African Union has now established its commission of inquiry into alleged human rights violations. We fully support that commission and look forward to its findings. In the mean time, a report from UNMISS has made clear the depth and scale of human rights atrocities by both sides. These include extrajudicial killings, targeting of civilians, torture, recruitment of children and sexual violence.

My noble friend Lord Chidgey spoke about the commission of inquiry. We recognise the capacity limitations that the African Union faces and are encouraging it to liaise closely with the Office of the High Commissioner for Human Rights and UNMISS, and we welcome the efforts UNMISS, Human Rights Watch and others have already made to report these atrocities.

The noble Baroness, Lady Cox, and other noble Lords referred to the dire humanitarian situation. It is getting worse. More than 900,000 people have been forced from their homes. Around 75,000 are still sheltering in UN compounds in appalling conditions. The UN has declared a level 3 emergency—the highest level of humanitarian crisis. In response to my noble friend Lord Avebury and the noble Lord, Lord Alton, I can confirm that there is a very real risk of famine. We have responded by committing an extra £39.5 million for emergency assistance. This is helping to provide food, shelter, water, sanitation and tents, which afford some privacy to women, girls and young children. We are pressing all sides to ensure that unhindered access is given to humanitarian agencies.

We are, however, reviewing with the UN humanitarian country team and other donors how best to reach displaced populations that are on the move because of the security situation. This was a priority issue for the UN emergency directors’ visit to South Sudan last week, and we expect to announce a further package of support very soon. The UK is currently the second largest contributor, after the US, to the crisis response plan. We are lobbying other donors to contribute more, most recently through the working party on humanitarian aid and food aid in Brussels.

The South Sudanese population deserve better than this from their leaders. Beyond an immediate cessation of hostilities, they need to see a truly inclusive settlement which brings in not only politicians but—as the noble Lord, Lord Luce, said—a full cross-section of civil society, including church groups, women’s representatives and minority groups. Those politicians currently standing trial in Juba must receive a fair and transparent trial. There needs to be a comprehensive national reconciliation process which properly addresses the deep-rooted political and social grievances that existed even before the current conflict. There must be a full inquiry into alleged human rights violations, and proper accountability for those found guilty. Access must be granted for humanitarian agencies needing to deliver and pre-position urgent aid before the rains. Humanitarian assets should be protected, and staff safety guaranteed.

My noble friend Lord Avebury asked about the other challenges to aid, and about what guarantees rebels have given in relation to aid. We have a real problem in relation to looting, commandeering and destruction of humanitarian assets. This is constraining the response and risks fuelling the conflict. The UK and our humanitarian partners are taking measures to reduce the risk of looting of humanitarian supplies during the conflict. We have called on all parties to respect the independence, impartiality and neutrality of humanitarian personnel.

My noble friend Lord Chidgey drew attention in the Question to the role of Sudan, and he expanded on that in his speech. We should recognise the fact that the Government in Khartoum, in their role as a member of IGAD, have chosen to put their full support behind the peace process and are resisting any temptation to intervene militarily. We acknowledge that Sudan has played a constructive role in that capacity. The two Governments have remained on good terms, with President Bashir’s visit to Juba in January being followed by a number of mutual exchanges, including most recently a visit by the South Sudanese Defence Minister to Khartoum last week. Our envoy Tim Morris was in Khartoum last week and held constructive talks with senior government Ministers. The Minister for Africa, Mark Simmonds, also discussed the situation in South Sudan during his visit to Khartoum in mid-January.

As the noble and right reverend Lord, Lord Harries of Pentregarth, said, it is important that all regional leaders play a constructive role in the ongoing discussions and negotiations. However, we should also highlight our deep concern at the turn of events within Sudan in recent weeks, in which the upsurge of violence in Darfur has led to the displacement of about 120,000 people. The Minister for Africa issued a Statement condemning this on 6 March.

The noble Baroness, Lady Morgan, also referred to other regional players such as Uganda. The presence of Ugandan troops in South Sudan is at the invitation of President Kiir. However, we have been clear to all South Sudan’s neighbours that their actions should not contribute in any way to escalating the violence. We welcome Uganda’s stated intention to withdraw its troops once a regional force has been established and we have been in regular contact with the Ugandan Government about this.

My noble friend Lord Chidgey spoke about Abyei and the withdrawal of police forces. We have repeatedly made it clear to both Governments through the UN Security Council and through our embassies that they should comply fully with the Abyei interim agreement of May 2011 and with UN Resolution 2046, including by withdrawing all their forces from Abyei. We have been clear that lack of progress in implementing agreements will only invite further unilateral action, increase tensions and raise the risk of conflict. The noble Baroness, Lady Cox, also asked about our support for Abyei. We are very supportive of the role which the United Nations Interim Security Force for Abyei is playing in trying to keep the peace. Beyond UNISFA, all our support for the people of Abyei goes through UN agencies. I can certainly write to the noble Baroness with a full breakdown of that support.

The noble Lord, Lord St John of Bletso, asked about debt relief. We are committed in principle to seeing debt relief for all heavily indebted poor countries, including Sudan, where we are confident that it will lead to poverty reduction. We continue to make it clear to the Government of Sudan that they will need to meet the requirements of the internationally agreed HIPC initiative before the UK will provide debt relief as part of a multilateral Paris Club agreement. The Minister for Africa, Mark Simmonds, made this position clear to the Sudanese Government when he visited Khartoum in mid-January of this year. The noble Lord also referred to UN targeted sanctions. We have made it clear, as have the EU and the US, that we stand ready to consider targeted measures against individuals obstructing the political process in support of the African Union and the IGAD effort.

My noble friend Lord Chidgey referred to peace talks and civil society, as did the noble Lord, Lord Luce. We welcome the civil society forum, which was held in Addis last week, and its subsequent declaration as an important step towards ensuring that civil society views are heard and properly engaged. My noble friend also asked about the UNMISS mandate, which we believe must reflect the changed environment in South Sudan so that it can focus on protecting civilians, enabling humanitarian assistance and investigating human rights abuses and violations. We are encouraging the UN Security Council to bring forward the renewal of the UNMISS mandate so that it is better able to respond to these priorities. In the medium term this is bound to entail less of a role on state-building, which I think was also referred to during the debate.

The noble Earl, Lord Sandwich, referred to the staffing in the Sudan unit. We have no plans to reduce staffing in that unit. I think that the noble Lord, Lord Alton, also asked about this. We have a UK envoy, Tim Morris, who was appointed in January especially to cover the South Sudan talks. He has been travelling extensively in the region in support of those talks; in fact, I think that he may be there today. A new special representative for Sudan and South Sudan will take a post in the summer.

My noble friend Lord Sheikh asked about what representations the UK had received from the African Union and what support it would like the UK to supply. We have not received a direct request for assistance, for example with the commission of inquiry, but we are encouraging it to work closely with the UN and would be happy to consider any request. We are providing financial and technical support to IGAD—I think around $1million—which is mediating the wider talks.

The noble and right reverend Lord, Lord Harries of Pentregarth, spoke about the attempted coup, as he described it. There are conflicting accounts of the precise circumstances that led to the conflict. We have not seen any evidence of a coup attempt, but we are urging leaders on all sides to restrain their followers and to work actively to prevent the situation deepening divisions along ethnic lines. While there have been deeply disturbing occurrences of ethnically targeted killings, it is clear that the crisis began initially as a political one.

My noble friend Lord Avebury asked about discussions between the UN and IGAD, and the role specifically of the Ugandan forces. Our envoy Tim Morris is, as I said earlier, in Addis Ababa today. He is discussing with IGAD, the troika and the EU envoys, the nature of any popular deterrent force. We believe it is essential that any such force comes under the UNMISS hat, albeit drawing on regional forces. It will be for IGAD countries to agree on whether that should include Ugandan forces.

The noble Lord, Lord Alton, spoke about child soldiers. We are concerned about the number of child soldiers that have been recruited. It is vital that the commission of inquiry looks into this thoroughly during its investigations.

The noble Lord, Lord Luce, spoke about civil society, but I think I have already addressed that earlier.

In conclusion, bringing lasting peace and development to South Sudan is a huge and complex challenge which will require time, patience and unceasing attention from the regional and international community. For the good of the South Sudanese people, who have suffered for far too long, the UK will remain centrally involved for as long as is necessary. I know from the interest in your Lordships’ House that we will continue to keep this matter on an important and priority agenda.

House adjourned at 7.36 pm.