House of Lords
Monday, 24 November 2014.
Prayers—read by the Lord Bishop of Birmingham.
Introduction: Baroness Helic
Arminka Helic, having been created Baroness Helic, of Millbank in the City of Westminster, was introduced and made the solemn affirmation, supported by Lord Howell of Guildford and Baroness Hodgson of Abinger, and signed an undertaking to abide by the Code of Conduct.
To ask Her Majesty’s Government what action they are taking in response to the European Court of Justice verdict on 16 October and its conclusions in respect of restrictive measures currently in place since the Liberation Tigers of Tamil Eelam was proscribed by the European Union in 2006 and by the United Kingdom in 2000.
My Lords, we are studying the implications of the ECJ judgment and considering appropriate next steps. The UK is committed to maintaining an EU listing. The court’s decision was based on fundamental procedural grounds, but the court rejected the LTTE’s argument that it could not be listed as a terrorist organisation because of its involvement in an internal armed conflict. The UK condemns the Tamil Tigers as a brutal terror organisation, and it remains proscribed under UK law.
My Lords, is my noble friend aware that his Answer will be greeted with a great sigh of relief by nearly all the Sri Lankans who live in the United Kingdom and, indeed, virtually all the citizens of Sri Lanka? However, is he also aware that this coming Thursday there is to be a rally at ExCel to celebrate the life of the leader of the Tamil Tigers, Mr Prabhakaran, and the other Tamil Tigers, and to raise money for Eelam? Will my noble friend bring this to the attention of the Commissioner of the Metropolitan Police? It seems to me that this is covered by the proscription. Frankly, if the terrorism Acts mean anything, this particular rally should be stopped.
My Lords, I would be surprised if the Commissioner of the Metropolitan Police is not already aware of it. The United Kingdom Government are actively concerned to promote reconciliation and reconstruction within Sri Lanka among all of its different communities.
My Lords, President Rajapaksa has called an early presidential election for 8 January next year. Last week there were defections by senior Ministers from the Government, including Mr Sirisena, who will be the principal opposition candidate. Given the history of such elections in the past and that reports this weekend suggest that Mr Sirisena’s first broadcast has been blocked and his bodyguards removed, what do Her Majesty’s Government believe are the prospects for a free, fair and inclusive election?
My Lords, can the Minister say what progress is being made with the United Nations Human Rights Council inquiry into the behaviour of all parties, including the Tamil Tigers, and if the Government of Sri Lanka are giving any signs of co-operation with that at all?
My Lords, will the Government condemn the refusal of the Sri Lankan authorities to grant visas to the OHCHR team which was to investigate the atrocities committed in the final stages of the civil war by both the Government and the LTTE? Will the comprehensive report of that team, headed by Martti Ahtisaari, nevertheless be published in accordance with the mandate of the team at the 28th session of the Human Rights Council in March 2015?
My Lords, the UK was a sponsor of the resolution of the UN Human Rights Council. We are actively concerned in this issue. We are not at all happy about the refusal of the Sri Lankan authorities to co-operate with the attempts to have an external inquiry, because of our concerns that the internal inquiry’s recommendations have not yet been implemented.
My Lords, can the noble Lord tell the House what action the British Government will take to ensure that the Sri Lankan Government co-operate more fully with the UN report that the noble Lord, Lord Hannay, just mentioned in his question?
The information requested is not currently available. The department published its strategy for releasing official statistics on universal credit in September 2013; officials are currently quality-assuring data for universal credit. It is not yet possible to give a date for when these statistics will become available.
I thank the Minister for his reply as far as it goes, but I am surprised that the department does not have better systems for identifying these statistics. We know that its approach to the introduction of universal credit, which is meant to be a flagship policy, is painstakingly slow. We also know that the Secretary of State has declared that it is unlikely that the target date of 2017 will now be met. The Minister is aware that universal credit can bring great hardship to vulnerable clients, which is why alternative payment arrangements have been put in place. Is the Minister able, at least, to say anything about the extent to which direct payments to landlords now operate in respect of people on the housing element of universal credit, and the extent to which those individuals can be identified early, before they build up debt arrears?
We have put out some statistics on the level of housing arrears, which show that, right at the start, 16% of people were in arrears. That compares with 7% for JSA equivalents. In the second wave of research, that 16% figure had come down to 12%. We have put in a lot of measures to ensure that we get that figure right down and give people the support that they need to manage their finances.
My Lords, universal credit is paid monthly and usually includes rent, which is quite a substantial slab of money. Can my noble friend tell us what progress he has made with the banks and credit unions to ensure that transactional bank accounts are available to people, so that they may take advantage of direct debits and standing orders?
We have a very active programme working with the banks to ensure that they provide services for the clients who are on universal credit. An exercise is currently going through to expand the ability of credit unions to provide these kinds of facilities by giving them a common banking platform.
My Lords, I declare an interest as chair of a housing association. More than half of tenants affected by the bedroom tax are in arrears. We now learn that the Government propose to claw back those arrears by deducting a further 20% from those tenants’ benefits. For couples, this means a full £20 to £40 deduction a week from their benefit for living in homes that we allocated to them and from which they cannot move. The Government have created the debt and now seek to solve it by sending those tenants even deeper into debt. It is shocking, and many will never recover. Do the Government not understand that we are wrecking people’s lives?
We conducted a painstaking process of testing how people respond to paying their housing rent directly. We found that there was a three-month adjustment process until people got familiar with it. We are now ensuring that we have the right systems to help people make that adjustment into the monthly payment situation.
In the last strategic outline business case the costs of the programme to 2023-24 were £1.8 billion. That is down from the £2.4 billion figure that we had in 2011. Under that case, we anticipate that the bulk of the exercise to transfer people on to universal credit will be completed by 2019.
My Lords, recent research by the Joseph Rowntree Foundation, and the Social Mobility and Child Poverty Commission’s recent State of the Nation report, underline the extent to which high housing costs drive poverty among working people, their children and young people. What are the Government doing about these high housing costs?
The poverty figures show that we are making really good progress in tackling poverty, with 600,000 fewer people in poverty through this Government. We are ensuring that housing costs are covered within universal credit and that people can take control of their lives in that way.
My Lords, the House will be aware that the Chancellor has announced that the working allowances for universal credit will be frozen until April 2018. There is a real danger, if there is no lift in those allowances—at least in line with inflation—that that will significantly reduce the real net incomes of low earners. Could the Minister tell your Lordships’ House what assessment Her Majesty’s Government have made of the impact of these measures on the level of poverty among those who are already in work, especially for those families who are earning too little to benefit from further rises in the personal tax allowances?
My Lords, I would like to return to the question of arrears raised by my noble friend Lady Hollis. Not only are people paid universal credit once a month in arrears but that is compounded by the debts they are getting into by having to pay back some of their council tax and crucially by the bedroom tax. Has the Minister read the report of the fact that Iain Duncan Smith went to court to defend his department’s right to levy the bedroom tax on a council home whose spare room was in fact a panic room which a charity had paid to secure to protect a woman who had suffered rape, assault, stalking and death threats from her violent ex-partner? As the newspapers reported clearly, she could lose £11.65 a week or move to a home with no secure space. How can the Minister justify this?
We have some financial incentives within universal credit to encourage people to go into work compared with the legacy system. The best and most recent data we have show that over a six-month period, 69% of people would have had some work in universal credit compared with 65% in the comparable JSA cohort.
My Lords, can my noble friend help me? Why does he think that the official Opposition are ignoring the considerable funds—the hundreds of millions of pounds—that have been made available to local authorities to deal with difficult bedroom tax cases? What possible motive can they have?
It is very important that local areas look after the more vulnerable people, and one of the most important elements that we are introducing alongside universal credit and supplementing it is universal support delivered locally. That produces a partnership where we can get all the resources that people need to become independent and take responsibility for their own lives and get them into a place where that can be done. We have 11 formal trials of universal support going on now.
Children and the Police
My Lords, as the report states, young people may come into contact with the police for a variety of reasons and it is crucial that, when they do, the police treat them in a way that is appropriate to their age and status as children. We agree. The police have a statutory duty to safeguard and promote the welfare of children, and take this duty very seriously.
I thank the Minister for that response. I also thank the Minister for Crime Prevention, Lynne Featherstone, for her swift response in writing to the report. Does the Minister agree that one of the key issues in supporting children and young people is collaboration between agencies at a local and national level—agencies such as children’s services, social services, education and health, as well as the police? What are the Government doing to encourage that collaboration and the sharing of good practice between such agencies?
Let me also say at this point that the Government welcome the report, which was a thorough piece of work and contained a number of good, strong recommendations. We look forward to discussing that further with the officers when officials meet them on Monday. On the specific point, we are looking at ways in which information sharing can improve. There is now a centre of excellence in information sharing, and multiagency working hubs aimed particularly at safeguarding children. It is very much for those two bodies to take on the recommendations so clearly highlighted in the noble Baroness’s report.
My Lords, I declare an interest as the secretary to the All-Party Parliamentary Group for Children. I am delighted that the Government have listened so carefully to the work that we brought forward, particularly in ensuring that 18 year-olds will no longer be detained in police cells. However, the Minister knows that youngsters as young as 15 have been detained. How many children remain in police cells overnight, what ages are they, when will this practice cease, and when will local authorities have the resources to place those children appropriately?
It is certainly the case that those under the age of 16 should not be in police accommodation overnight but put into the care of the local authority, with an appropriate adult to look after their interests. We also welcome the change made in the Crime and Courts Bill, which applies to 17 year-olds. On specific numbers, I will get those to the noble Baroness.
My Lords, will the Government revise the national crime recording standards —as recommended by the inquiry, in which I declare I took part—so that looked-after children are dealt with in exactly the same way as others when there are trivial events that would not involve the police if they took place in a school or anywhere other than a children’s home?
My noble friend is absolutely right, and I read that section of the report with great interest because it made a sound recommendation, which is that we should avoid looked-after children in care coming into contact with, and getting engaged in, the criminal justice system at too early an age. The police need to look at the range of options that are open to them in dealing with young offenders from such backgrounds—as they are available when dealing with other offenders in the wider community.
My Lords, does the Minister accept the conclusion of the report that it is important that there are better relationships between children and the police, and the importance within that of safer school partnerships? If that is the case, does he understand that these are at risk because of the reductions in police budgets all over the country?
We understand that police budgets are under pressure, and there is a reason why we have had to take that action. However, the number of police on the front line is increasing as a proportion. Safer school partnerships are an excellent idea but it is for governors and heads to make the decision to employ them. I should also add that there are encouraging statistics on the growth in the numbers of police cadets—up 24% in the first six months of this year. We anticipate that they will increase further. That level of engagement through police cadets in schools could be very powerful indeed.
My Lords, I declare my interest as chairman of the Youth Justice Board. Following up the point made by my noble friend Lady Walmsley about looked-after children, both the Youth Justice Board and the police warmly welcomed the recommendations in this report, but it seems that the blockage is at the Home Office, with an overcommitment to statistics. Could the Minister use his influence with the Home Office so that the talks that he will have with the authors of the report can unblock the system and allow the police, the Youth Justice Board and secure children’s homes to approach this matter in a sensible way?
I will, and I pay tribute to the work that my noble friend does as chairman of the Youth Justice Board. It is an important partner in making sure that we move forward on this. I was not aware that there is a particular issue relating to statistics; this report very much feeds into the wider work that the Home Secretary is doing in reforming the way our police work, particularly in regard to their sensitivity toward children, who are more often the victims of crime by other children than the perpetrators.
My Lords, noble Lords will understand how important it is that young people and children have respect for the police. As my noble friend Lord Harris of Haringey said, young people are less frequently coming into contact with the police as we see cuts, fewer police officers at schools and fewer PCSOs. They do not come into contact with the police so much because police officers are not known in their local communities. It is also equally important that police have respect for young people. On the back of the report of the all-party group, what advice will be given to the College of Policing to ensure that respect for young people is an important training aspect there?
The College of Policing has a very important role to play here, because it can change the codes—which it is doing—on issues such as stop and search, and it can change the culture within the police, particularly in relation to underreported crimes such as rape and domestic violence. I therefore think that this is very much going with the grain of what the College of Policing, which was set up by this Government, is doing to enhance and improve standards in service throughout the police.
Commonwealth: Young Entrepreneurs
Baroness Benjamin (LD): My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in so doing, I declare an interest as a vice-president of the Royal Commonwealth Society.
My Lords, at the UK-Caribbean Ministerial Forum in June, both sides committed to bringing together young leaders in business, entrepreneurship, civil society and academia. In 2014, our support for the Caribbean has included progressing scholarship programmes between higher education institutions and the UK, and enhancing regional competitiveness and enterprise innovation. In the wider Commonwealth, the range of UK programmes includes supporting a social entrepreneurship programme for young women in India.
I thank my noble friend for that encouraging Answer. As part of her Diamond Jubilee, Her Majesty created the Queen’s Young Leaders Award. Part of that programme is to discover, develop and nurture young entrepreneurs across the Commonwealth, which is wonderful. However, more opportunities are needed for young entrepreneurs, especially in the Caribbean. What are the Government doing to encourage links between business schools here in Britain and those in the Caribbean? How much priority does DfID give to encouraging entrepreneurship in the Caribbean?
My Lords, it is not just a question of DfID programmes: there are also UKTI programmes and British Council programmes. The British Council is concerned particularly with a creative young entrepreneurs’ programme, which covers the Caribbean as well as some other areas. It is clearly the sort of area where services and new industries can develop.
My Lords, last week I spoke at the opening event of Global Entrepreneurship Week here in London. I was delighted that a report released at the event showed that London is one of the top two cities for entrepreneurship in Europe. Is the Minister aware of the Sirius programme backed by UK Trade and Investment, which attracts young entrepreneurs from around the world and which I was involved in launching? Will the Government assure us that they are promoting this Sirius programme throughout the Commonwealth, along with countries such as India?
My Lords, is the Minister aware that this is Dominican Republic week in the United Kingdom and that various events are being organised by the embassy and by industries with an interest in the Dominican Republic? Will he encourage Commonwealth Caribbean countries to do similar by having a Trinidad week, a Barbados week and a Jamaica week in the United Kingdom? Maybe I should declare an interest as president of the Caribbean Council.
My Lords, the noble Lord may be surprised to know that I was not aware that this is Dominican Republic week. However, I am conscious that there are a range of Caribbean-related festivals not just in London but across Britain. Indeed, on one occasion I presented the prizes at the Miss Grenada Commonwealth competition in Huddersfield at what should have been about 10 o’clock at night but turned out to be one o’clock in the morning.
My Lords, I have to declare an interest as president of the Royal Commonwealth Society. Does my noble friend agree that what these young entrepreneurs really need is access to funds to get their businesses started? If, as in many other parts of the world, the banks will not play and are not really being as helpful as they should be, should we not also encourage the development of all kinds of alternative finance built on peer-to-peer lending and so on, as well as many other opportunities, which are enabling small businesses all over the developing world and certainly in the Caribbean to have proper access to funds for the first time?
My Lords, of course we should be doing that. Part of the problem in the Caribbean is that, apart from Jamaica and Trinidad and Tobago, we are talking about very small islands with very small economies, and getting major enterprises going in such areas is often a little more difficult than it is in larger countries.
My Lords, given that the Caribbean area is not, to put it mildly, a priority for DfID aid, should Her Majesty’s Government be doing more to assist some of the smaller islands there, some of which not only suffer from deep poverty but need support in order to succeed in establishing successful trading and business concerns?
My Lords, my brief says that the Caribbean is very much one of DfID’s priorities. We are of course conscious of the difficulties that some of the smaller Caribbean economies have. I am told that, apart from Guyana, none of the Caribbean economies is at present demonstrating very strong economic growth.
My Lords, will my noble friend also have a word with the Secretary-General of the Commonwealth Secretariat to ensure that it promotes such activities so that other Commonwealth nations can benefit? Not only could they learn from us but we could learn quite a lot from some of the Commonwealth countries.
My Lords, I declare an interest as a trustee of the Queen Elizabeth Diamond Jubilee Trust and as a person who was born in Dominica, one of the tiniest islands within the Caribbean. Mention has already been made of the Queen’s Diamond Jubilee scholarships which are going to be given to the 53 countries. Can the noble Lord tell us what assistance the Government intend to give to make sure that Caribbean members get a proper opportunity to demonstrate their skill, their talent and their ingenuity?
My Lords, that is a very good and complex question, and I think it is better that I write to the noble and learned Baroness with a full indication of where we are. I am very conscious of her background in Dominica and indeed, with my World War I hat on, of the contribution that her family and many others in the Caribbean made to the British war effort in the Great War.
Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 2014
Social Security Class 3A Contributions (Units of Additional Pension) Regulations 2014
Motions to Approve
Representation of the People (Scotland) (Amendment No. 2) Regulations 2014
Electoral Registration Pilot Scheme Order 2014
Representation of the People (England and Wales) (Amendment No. 2) Regulations 2014
Motions to Approve
Business Improvement Districts (Property Owners) (England) Regulations 2014
Motion to Approve
Clause 13: Proposal for referendum by Assembly
1: Clause 13, page 18, line 35, at end insert—
“(1A) A resolution moved under subsection (1)(a) must state whether the voting age at the proposed referendum is to be 16 or 18.”
My Lords, during the passage of the Wales Bill through this House, many noble Lords pointed to the numbers of young people who registered to vote in the recent referendum in Scotland as a great example of how young people want to get involved in the political process. Noble Lords also expressed the opinion that it would therefore be unfair for young people in Wales to be treated differently from their counterparts in Scotland in the referendum on income tax powers for which this Bill provides. I therefore committed on Report to bring forward amendments at Third Reading to allow the Assembly to decide whether 16 and 17 year-olds should be able to vote in an income tax referendum.
These government amendments provide that when a resolution to hold a referendum on income tax powers is moved in the Assembly, the Assembly must state, as part of that resolution, whether the voting age is to be 16 or 18 for that referendum. Let me be clear: we are not devolving the competence over the franchise in Wales to the Assembly. The franchise will remain solely within the power of Parliament. What we are doing is allowing the Assembly to make a decision in relation to an income tax referendum provided for under this Bill.
The amendments set out that if the Assembly resolves that the voting age in the referendum is to be 16, the resulting order to be laid by the Secretary of State must also provide for the creation and maintenance of a register of young voters. Many 17 year-olds will already be on the register of local government electors as attainers; that is, those who would reach the age of 18 before the creation of the next register, each 1 December. They would not be moved onto this new register of young voters but would still be able to vote in the referendum. This is because eligibility is based on being on either the register of young voters or the register of local government electors. In short, if, come the day of the referendum, the only thing that would stop you from voting in an Assembly election on that day is that you are 16 or 17, you would be eligible to vote in the referendum.
Of course, the voting age at an income tax referendum would be a matter for the Assembly to decide on when it triggers the referendum. At the moment, the Welsh Government have yet even to commit to holding such a referendum. I again urge Welsh Ministers to do so at the earliest opportunity. I have made no secret of the fact that I personally believe that lowering the voting age might help to reinvigorate our democracy. Many of those who spoke in the Assembly debate on this issue on 24 September also support reducing the voting age and would hope that, if and when the time finally comes to hold a trigger vote, Assembly Members will look at how much the debate on the Scottish referendum was invigorated by the number of 16 and 17 year-olds who became involved and would vote therefore accordingly. I therefore ask noble Lords to support these amendments. I beg to move.
My Lords, I am delighted to speak in support of Amendments 1 and 2, which I and my colleagues have signed. I want to pay tribute to my noble friend the Minister and her officials for the patience, persistence and professional care with which they have managed to perfect these proposals after so much discussion and improvement in meetings since I first raised the issue at an early stage of our consideration of the Bill. I am confident that we are now well on our way towards this timely reform. I cannot believe that anyone in the other place, or indeed anywhere else, will stand in its way. It would surely be a brave reactionary—even a foolhardy one—who would now claim that Welsh young people are less mature, well informed and well intentioned than their Scottish counterparts.
I have heard mutters that this is the thin end of the wedge. That is not so. The wedge was firmly implanted by the record number of 16 and 17 year-olds who not only registered to vote in their thousands, but then on 18 September ignored the blandishments of the separatists and voted to stay in the United Kingdom. We should recall that all UK parties endorsed the Edinburgh agreement which introduced this simple reform. I observed during the Report stage of this Bill:
“It would surely be constitutionally improper, in what has now been reinforced as a United Kingdom, to differentiate between the basic civic rights and duties of citizens here, simply on their area of residence. If, as I believe, the franchise is the foundation stone of our representative democracy, discrimination on that basis must surely be totally unacceptable”.—[Official Report, 11/11/14; col. 158.]
As my noble friend said, it will now be for the Welsh Assembly to complete the process. I am sure that this will prove uncontroversial since a substantial majority of Assembly Members have already declared their support. In the debate of 24 September, to which my noble friend referred, the Conservative spokesperson, Andrew Davies AM, said that:
“My group has a free vote on this particular issue, because there is no party line on whether there should be votes for 16 and 17-year-olds”.
Julie Morgan AM from the Labour Party said that it was encouraging and quite inspiring to see 16 and 17 year-olds involved in the Scottish referendum. The debate was led by my Liberal Democrat colleagues in the Assembly, who committed themselves there and subsequently, but perhaps even more significant was that the Minister, Jane Hutt AM, said that,
“we support the lowering of the voting age to 16”.
The outcome of that debate, held just two months ago and just after the Scottish vote, was 41 to 11 in favour of this reform. It is now surely unthinkable that any future referendum with equally long-term implications for the country and its citizens could be permitted to lapse back into the pre-2014 limited franchise. Whether that is on UK membership of the EU or any similar major decision, these young people have now earned the right to have their say.
This is a triumph for those who have worked so hard for so long to achieve this reform. The recent Youth Select Committee deserves special mention for its authoritative report, published just a few days ago, which carefully weighs the arguments. But the final and conclusive credit must go to the 110,000 young people in Scotland who showed by their actions that they were ready to take on this responsibility as fully adult citizens of the United Kingdom. I am delighted to support my noble friend.
My Lords, I am delighted to support the amendment as far as it goes. Of course we had amendments on Report that went a little further and would have dealt with voting for young people aged 16 and 17 in other referenda and in elections within Wales itself. I realise that as far as the Bill is concerned, the peg for this change is the fact that income tax is included in it. My colleague and noble friend Lord Elis-Thomas and I would like to have seen a more general approach by giving powers to the Assembly in the generality in order to address issues such as this. The fact that it does not go as far as we would have liked does not mean that we do not support it in going this far.
I was very conscious of the tone set by the Secretary of State, Stephen Crabb, as background to today’s debate. Only last Monday, addressing the Institute of Welsh Affairs, he said:
“We now have a unique opportunity to reshape the future of our Union. The appetite for change is there. People want a stronger voice over their own affairs. It is unmistakable in Scotland … And palpable in Wales. And it is a sentiment that cannot, and will not, be ignored. And I am determined that Wales should not play second fiddle in the current debate on devolution”.
That is very interesting, in the context of the amendments before us today, but it begs the question of how much further—and when—the rest of that commitment is going to be borne out.
We are very much aware that we expect to have the report of the Smith commission on Scotland tomorrow and, no doubt, this will have a relevance to these things. In relation to this amendment, however, can I take it that the Government would be minded to enable the Assembly to use similar powers in any further referendum which was only in a Welsh context? Does the fact that the provision goes only as far as income tax indicate—or not—that the Government do not foresee any further referendum in Wales in the context of further devolution and that that will be undertaken as quickly as possible, without being held up by the need for a referendum?
My Lords, I think I avoided being placed among the die-hards by the noble Lord, Lord Tyler, when I spoke on the subject on Report, because I said that I was still open-minded and prepared to be persuaded about the desirability of moving the voting age to 16. However, I did express anxiety about the idea that we should do this step by step, nation by nation, area by area. I would have preferred to see us having all-party discussions and taking a decision on the issue so that it applied to all votes, whether national ones or partial votes of this kind. I regret that we are moving in this ad hoc way because it is not the best way of undertaking constitutional reform. However, my noble friend has put forward these amendments and I am not going to oppose them. My successor as Member of Parliament for Pembrokeshire, or Pembroke South—my former constituency has been split in two and I always forget what it is called now—is Secretary of State. He has made firm commitments and I am delighted that he has taken such a strong position on these matters.
I will raise only two questions today. I am not going to challenge the decisions that have been taken, even if I would have preferred that we had got there by a somewhat different route. Many noble Lords will have received a note from the Electoral Commission which raises two issues. It points out that there are time constraints for introducing any change:
“In order to give Electoral Registration Officers (EROs) sufficient time to identify and encourage eligible 16- and 17-year olds to register to vote ahead of any future referendum in Wales, any primary legislation would need to be in place and amended regulations would need to be clear early in the calendar year before the referendum is expected to take place (e.g. by early 2015 if a referendum were planned to take place in 2016)”.
Later, it draws attention to the resource implications by stating:
“EROs would require additional resources to identify and encourage eligible 16- and 17-year olds in Wales to register to vote, including raising awareness of how to register to vote for this new group of eligible electors. The Commission may also seek further resources as part of our public awareness activity before any referendum”.
All I am asking is that, in the context of these amendments, we should be given the Government’s thinking about these issues and their reaction to the recommendations and report of the Electoral Commission. It seems to me that before we approve the way forward, we should know exactly what the position is going to be on the matter of resources and timing.
My Lords, in the debate a couple of weeks ago I indicated my worries and concerns. I do not want to detain your Lordships for long but I will make just a few brief points.
First, I was one of those who voiced considerable concern when the Prime Minister—wrongly, in my view—conceded votes at 16 in the Scottish referendum. The subject of the franchise is of enormous importance and it should have been addressed in a proper debate, both in your Lordships’ House and particularly in another place, and Parliament should have come, on a free vote, to a collective view as to whether it was indeed wise to reduce the age from 18 to 16.
When I intervened on the Labour Party spokesman two weeks ago and asked whether it was the intention of the Labour Party to make 16 the age at which you could drink alcohol and drive a motorcar, I was told that that certainly had not been gone into by the Labour Party—and the noble Baroness, Lady Gale, who was speaking on that occasion, certainly seemed to indicate that she would not favour such changes.
We have to look—and should have looked—at what the age of majority should properly be. That was why I opposed what my right honourable friend the Prime Minister conceded over the Scottish referendum. I accept the logic of what my noble friend Lord Tyler said—having granted it in Scotland perhaps you should grant it in Wales—but if we grant it in Wales it is almost inconceivable that we will not move to the profound and important decision of the franchise coming down to 16 all over and for all elections. Some of your Lordships will welcome that. I respect that view but I profoundly disagree with it. We are walking into this ad hoc, as my noble friend Lord Crickhowell indicated, without having given mature and sensible consideration to all the implications of what the age of majority should properly be.
I am not going to seek to divide the House this afternoon. In the circumstances, that would be ill advised, if not preposterous. I am not going to do it, any more than my noble friend Lord Crickhowell is going to do it. But he has indicated that he is not totally happy. I will go further and say that I am very unhappy about the way in which this has been done. This is not the way to change a constitution. There will be a debate at some stage about the franchise age throughout the United Kingdom for elections. It will not be before the general election next year, where it will remain at 18.
I will just say to your Lordships that although the pass has probably been sold—and, to mix my metaphors, the bandwagon is probably unstoppable—we have not done this in a mature, considered way and we should have done.
My Lords, I add my voice to that of my noble friend Lord Tyler in congratulating my noble friend the Minister on the progress that has been made as the Wales Bill has made its way through your Lordships’ House. There is great satisfaction among her colleagues on these Benches that so many principles that the Liberal Democrats—and, of course, the Welsh Liberal Democrats—have believed in and promoted for so many years are coming to fruition in the Bill.
I also thank and pay tribute to my noble friend Lord Tyler—a fellow Celt from Kernow, or Cornwall—whose diligence and persistence in Committee and on Report have resulted in these amendments today. These Liberal Democrat amendments will see Liberal Democrat policy on votes for 16 and 17 year-olds, if they are agreed by your Lordships’ House, coming to fruition in Wales.
I must admit that these amendments, allowing the Assembly to extend the franchise to 16 and 17 year-olds in a referendum in Wales, have the 16 year-old that still exists somewhere inside me, smiling with quiet satisfaction and with perhaps a little jealousy because I am one of those people who believed that I should have had the right to vote at 16. My first foray into politics was as a 16 year-old within a couple of weeks of my 17th birthday, when I was agent to a candidate in my school’s mock election at the time of the 1964 general election. Noble Lords will recall that it was not until 1969 that the suffrage was extended to 18 year-olds and I am sure the same concerns voiced in the Chamber today were voiced at that time. However, had anyone told us in 1964 that in the future young people would not have to wait until they were 21 years-old to vote, but would be trusted to do so in a referendum in Wales from the age of 16, there would have been joyful celebrations. Perhaps, as there is now, there would be a sense of pride that Wales was following Scotland in forging the way to extend full voting rights to 16 year-olds sometime in the future.
My political inspiration came, in part, from an inspirational history teacher who opened our eyes to the world. Since those days, unfortunately, teachers in schools have become far more wary of political education and the danger of being accused of political indoctrination. However, I see these amendments as presenting opportunities for the Welsh Government to introduce an element of political education for those under 16 in the future. They already have, in the Welsh baccalaureate, a module produced by Aberystwyth University entitled “Wales, Europe and the World”, which presents students with an unbiased overview of political systems and political parties throughout the world and allows students the opportunity to debate issues as they arise. A simplified version of this would be ideal as a short module for those under 16.
However, as I said, that is for the future. In the meantime—and in conclusion—I am very pleased to support the amendment and to put on record my grateful thanks to the Minister for being able to accept and promote issues that have had support from noble Lords on all sides of the House and my hearty congratulations on the masterful way in which she has steered the Bill through your Lordships’ House. I, along with colleagues from across the House I am sure, wish her continued success as she seeks to build on the consensus she has already begun in preparation for the next stages of devolution to Wales.
My Lords, in joining this debate, I congratulate the Minister on how she has handled us and steered us through the discussions. I would like to bring in two slightly different matters. First, in speaking of devolution to Wales, I understand that last week transport became the responsibility of the Welsh Assembly Government. How do we somehow get this movement between Wales and England as the line goes from Newport up to Chester? Who is going to be responsible as we go from England to Wales, Wales to England? That needs to be cleared up. Also, in her statement following last week’s debate, the Minister said that she had promises from the 22 electoral registration officers that each one of them had plans to increase the registration in their areas. It would help us tremendously if somehow or another she could make us aware of what each of these 22 various electoral registration officers intended doing.
Finally—I shall not be long—the anxiety in Wales and other places is that young people, as well as others, are becoming divorced from politics. They leave it to other people. Turnout is down. People do not feel that they have any influence over their lives through the ballot box. The eagerness to get people registered is not just so that they will vote and be on the electoral register but that they will be part of political life and involved in the lives of their communities. The Scottish referendum has been mentioned. There, young people did register and vote. They were an essential part of the debate in Scotland.
More strongly still, I remember 27 April 1994, when the South African franchise was opened and Nelson Mandela’s struggle had been won, how enthusiastic people were about the policies of the parties and how they queued for hours—some of them, for days—to register their vote. We need to do something that will enhance registration. Imagine that we have the European in or out referendum and that less than 50% of young people are registered to vote and that fewer than that actually cast a vote—the whole thing would be a shambles. The same applies to older people. We need the majority view on such an issue to be represented.
On the way here today, I was reading a book by David Tecwyn Evans recalling his memories of his life in Llandecwyn in Merionethshire at the end of the previous century and the beginning of last century. Here, he speaks of the elections of 1886, where the children of the school, although their parents were probably not entitled to vote, knew the name of every MP in Wales. They knew the issues—tithes, education, disestablishment—and they were interested. It is our job now not just to get people to register to vote but to enable them, through the education system and in other ways, to understand and to feel: it is not only a matter for the head but a matter for the heart. The facts are important, but being part of the argument is also important.
I thank the Minister for the work that she has done. I hope that she will be able to answer my two queries and that, somehow, we as representatives at various levels can enthuse people so that young people feel “rydym yn perthyn”, we belong.
My Lords, perhaps I may ask the Minister a severely practical question or two. What was the turnout among the 16 to 18 year-olds in the Scottish election? Was it indeed much below that of the 18 to 24 year-olds? My noble friend Lord Rowlands asked her how many 16 year-olds there are in Wales. How many 18 to 24 year-olds are there in Wales, so that we can make a comparison? I cannot sit down without saying a sentence about the speech that we have just listened to. Even in my headiest moments as a convinced Welshman, I have never quite seen England’s relationship with Wales as that of the Nationalist Party to the rest of South Africa.
My Lords, I intervene very briefly and with a note of apology. I was ill, which no doubt saved your Lordships a lot of time in Committee and on Report, so this is just a last-gasp intervention to say that I support the amendment, which seems highly desirable and long overdue, and I congratulate the Government.
I want to make one point in relation to my very good friend, the noble Lord, Lord Cormack, who has raised the important question of whether this is the way to change the constitution. The truth is that we have no way of changing the constitution; it is a matter of an extremely haphazard nature. The last time that we changed the constitution was with the Act of Settlement in 1701, which took a synoptic view, but which is a little early for even this noble House to consider. There is no way of changing the constitution rationally, and there should be. I have always supported a codified, written constitution, and I profoundly hope that when the House of Commons Political and Constitutional Reform Committee reports, it will accept that, partly because I am one of the authors of the report that it is considering, so naturally I support that proposal.
There have been so many illogicalities in considering Welsh devolution such as—I understand that this was discussed when I was not here—why the Welsh Assembly should not have reserved powers, why the Welsh Assembly should be the victim of an asymmetrical form of devolution and why the Welsh Assembly did not have financial powers in the first place. No clear logical view was entertained for any of those questions, and we therefore proceed empirically and haphazardly. In this case, we are considering simply whether it makes sense, not whether it is in what you might call an agreed constitutional tradition or follows a convention. Clearly, it does make sense; it is not possible to have young people aged between 16 and 18 in Scotland able to vote but not in Wales—there is no rationality in that. Why should Wales yet again be the victim of constitutional illogicality in a country that prides itself on its constitutional illogicality, showing that its constitution is not therefore unwritten?
That is the settled view of the National Assembly, and it is clearly beneficial in itself, as many noble Lords have said. Young people are able to make a strong contribution, as indeed, as the noble Lord said, they did in 1886. Lloyd George, whom he knows about, is an example of a young Welsh schoolboy who took a very active part long before he was able to vote or enter the House of Commons. So on the merits of the case, on the merits of the value of an input from a thriving and important part of the Welsh electorate, and because there is otherwise no logical or constitutional rubric why we should exclude Wales from this change, I certainly support the amendment.
My Lords, I rise on account of two matters about which I have strong feelings. One is the Act of Settlement of 1701. Although my respect for the noble Lord, Lord Morgan, of Aberdyfi, whom I may call my noble friend, is total and absolute, I still have doubts about whether that Act is indeed one that Parliament does not have in its sovereignty the right to repeal. The Act of course settled the succession of the Crown; it said that the succession should devolve upon the Electress Sophia and the heirs of her body, and of course the relevant heir of her body was George Lewis, the Elector of Hanover, George I. It seems to me that Parliament, being sovereign, could repeal the Act of Settlement any day, but that is by the by—I have said my piece.
The second matter is that I support the amendment, which seems to be based on very sound principles. One we have already have adumbrated, and that is the fact that it is a matter for the Welsh Assembly, which is the parliament for the land and nation of Wales, to decide on the right to vote and what age should dominate in such a situation. That is a healthy principle, and one that has been steadfastly upheld by my friends the noble Lords, Lord Elis-Thomas and Lord Wigley, as Members of the Assembly and indeed as Members of this House. When the voting age was reduced from 21 to 18 and jurors were entitled to sit at the age of 18, there were siren voices of caution. Looking fairly and objectively at the evidence, it seems that there was no justification for panic at all. It has worked well in the courts and in relation to Parliament.
The main point is one that has not been made: it is that age is relative to the situation you are dealing with. The age of 18 was decided, if I remember rightly, just before the 1970 election; in other words, 44 years ago. Could one not reasonably argue that a young person of 16 now is probably as mature mentally and physically as such a person 44 years ago? Society is changing rapidly all the time. Standards of health, learning and understanding are improving, and on that basis there is ample justification for this amendment.
My Lords, following the decision to reduce the voting age in the referendum in Scotland, young people distinguished themselves during the campaign with their level of participation, and I will be very interested to hear the Minister’s response to the noble Lords, Lord Richard and Lord Rowlands, on the statistics. However, I share a lot of the views of the noble Lords, Lord Crickhowell and Lord Cormack, on the manner in which this issue is being dealt with. It is piecemeal and haphazard. There has been no systematic debate. Of course, the noble Lord, Lord Elystan-Morgan, made a point about the reduction from 21 to 18, and there will always be an argument. We all accept that. Why not 15? We can make any argument we want with justification of one degree or another. That is not quite the point that the noble Lord, Lord Cormack, was trying to make. The point was that it came out of left field from negotiations between Mr Salmond and the Prime Minister and is being reflected in the Bill. Of course, it would be a very brave person who came to the Dispatch Box and defended not putting it into the Bill in view of what happened just a few weeks ago in Scotland. What possible justification would there be? However, I ask the Minister to reflect and to pass back to her colleagues the fact that there is no process here. It is just random, along with a long series of other constitutional aberrations.
I participated in a process that was anything but haphazard. It took two years to work out our settlement in Northern Ireland, which then came to Parliament to be debated and enacted. There was a process. As I understand it, the noble Lord’s party believes in a constitutional convention or a commission of some description, whatever we call it. We should not be precious about it. Those are all perfectly meritorious ideas. My point is that the change introduced by the Bill, which follows the process that happened in the Scottish referendum, inevitably has implications for the electorate more widely. We have a position whereby 18 year-olds will be voting next May and 16 years-olds will not, yet the decision that many 16 and 17 year-olds in Scotland took two months ago was very important. People could say it was of greater importance than a general election.
The point I am trying to make, which I ask the Minister to pass back to her right honourable friend, is on the concern that this is one further example of a haphazard attempt to change our constitution without any structured debate or rational process. I look forward to hearing her response to the noble Lord, Lord Richard, and the statistics. However, I will make another, tangential point, which applies whatever referendum takes place, whether on tax or anything else.
When the noble Lord, Lord Roberts of Llandudno, asked about transport and the roads, to some extent he hit the nail on the head. Scotland is, of course, an independent country which has shared its sovereignty with the rest of the United Kingdom; Northern Ireland is separated by sea from the rest of the United Kingdom, while Wales is not. You go from one side of the street to the other, from somebody’s back gate, and you are in Wales. Clearly, that means that unique issues need to be discussed when devolved powers are exercised. Again, there is no structure for that; there is no process or long-term debate, and we are basically making changes on the hoof. This process issue is a mistake.
My Lords, we welcome the Government’s amendment, which would give powers to the Welsh Assembly to decide on whether 16 and 17 year-olds will be able to vote in the referendum on income tax. However, can the Minister say whether this is a government amendment, even though three Liberal Democrat Back-Benchers have put their names to it? There is cross-party support for this amendment, and I am sure that the Minister could have asked Peers from other parties to put their names to it as well. However, we welcome it.
To give the responsibility to this age group is a good step forward, which will eventually lead to all 16 and 17 year-olds having the vote in all elections in the United Kingdom. There is no longer any good reason for a delay. Labour will make a manifesto commitment at the general election to allow 16 and 17 year-olds to have the right to vote in all elections. Although some Peers have expressed their views that this is piecemeal, haphazard and so on, this is another step on the journey we are making with devolution. This is how it has been done since 1999—it has been a step-by-step approach—and when the Bill becomes an Act it will give more powers to the Welsh Assembly. However, we appreciate that this is not the Bill that will give universal franchise to 16 and 17 year-olds; that will be a United Kingdom decision, taken by the Westminster Government.
I was pleased that the Minister was able to refer in the amendment to the need to include,
“provision for the preparation and maintenance of a register of young voters”.
We understand that the responsibility for compiling the electoral register rests with local councils and is a devolved matter. The registration of young voters must be a priority and needs active and constant engagement. The noble Lord, Lord Roberts, in his enthusiasm, expressed his wishes; I understand that, and we support what he was saying. We therefore hope that when decisions are made on a referendum, the Welsh Government will give every encouragement to EROs in Wales to ensure that they prioritise the registration of young people through at least one visit to every school and college in Wales in enough time to ensure that all young people are fully aware of their right to vote in the referendum. We believe that to be of great importance. I am sure that the Minister will do all she can in her discussions with the Welsh Government to ensure that that happens. We thank the Minister very much for her commitment in bringing these amendments forward today.
As this is our final opportunity to discuss the Bill, I would like to thank the Minister for her co-operation on it. We knew when we started on the Bill back in July that the Scottish referendum could impact on the nature and tone of the debate, and that has indeed been the case. The very fact that we have so many people in here today talking about the Bill tells us something. The scope of the devolution debate across the whole of the UK has changed since September. It feels as if this Bill is slightly out of date even before the ink has dried. It is, however, another welcome step in the process of devolution for Wales. It is clear that it is not only the Scottish referendum that has changed the tone of this debate during its passage, but the appointment of a new and more conciliatory Secretary of State. We very much welcome the shift in tone since his appointment.
I take this opportunity to thank colleagues on all sides of the House, especially people on the Labour Benches, for their co-operation and support on the Bill. In particular, I thank my noble friend Lady Gale, of Blaenrhondda, for her sterling work and active support on the Front Bench. I also thank officials in the Wales Office and Catherine in the Labour office for their work. In particular, I applaud the co-operation afforded by the Government Front Bench, led by two extremely distinguished experts on the issue of devolution in Wales. In particular, we are extremely pleased that we have managed to find a resolution to the issue regarding the reserved model power of government, and we look forward to seeing the fruits of the department’s work on 1 March. Thank you for also agreeing to the issue of votes at 16 in the referendum on tax powers.
The devolution debate is far from over. The Labour Party is in favour of a constitutional convention to iron out some of the anomalies across the UK that many noble Lords have talked about today. If, and when, we form the next Government in 2015, the Labour Party has also committed itself to presenting a new Wales Bill, pushing the boundaries of the devolution settlement further. This obviously needs to take into account the changes across the UK. We know that the coalition Government have agreed to present a cross-party approach in March to further devolution for Wales. We would like a cast-iron assurance that both the Conservative Party and the Liberal Democrat party will, if they are through some terrible tragedy elected to run the country again after the next election, match Labour’s commitment and bring forward a new Wales Bill in the next Parliament.
My Lords, I thank all noble Lords who have spoken in this debate, and indeed throughout the numerous debates we have had on the Bill. My noble friend Lord Tyler started his response on this amendment by pointing out that all parties endorsed the agreement that led to votes at 16 in Scotland. I make it clear that I strongly appreciate the work that my noble friend has done over a very long period to raise awareness of, and develop a campaign generally on, votes at 16.
The noble Lord, Lord Wigley, made the point that he would have preferred there to be wider powers for votes at 16, but he will understand that this question is best considered as part of the devolution of further powers to the Assembly, which is something which is being considered at this time, with a view to agreement and announcements by St David’s Day. He also asked about the precedent for future referenda. These amendments deal with the referenda provided for in the Bill. There are no further referenda planned in Wales. I point out to the noble Lord that the Welsh Government have not yet committed to this referendum. My view is that we should get this one out of the way first before thinking of further referenda.
My noble friend Lord Crickhowell referred to the ad hoc approach on this. I believe that our general approach to the devolution of further powers for the Assembly overcomes this problem. The noble Lords, Lord Cormack and Lord Empey, also referred to the way in which the decisions were being made on votes at 16. There has been a response to the success of the votes at 16 in Scotland. There will be a full analysis of the impact of that in due course, but the success in Scotland has certainly sparked debate. Given the points that the noble Lord, Lord Morgan, made about the way in which we make constitutional decisions in this country, it is important that there is considerable public debate on this. One could say that that debate has started in Wales, in general terms, with the debate that was held in the Assembly in which an overwhelming majority of Assembly Members supported votes at 16.
The important thing is that the Wales Office and my right honourable friend the Secretary of State for Wales are leading on the four-party discussions, in which the options for the future of devolution in Wales are being considered—the reserved powers model and the scope of any additional powers. That will include, for example, the devolution of powers over election arrangements. I believe that we are embarking on a period of considerable reflection and debate on the nature of our democracy in the UK as a whole, but we have already taken steps to ensure that that debate takes place in Wales. In line with the commitment made by my right honourable friend the Prime Minister on 19 September, we have made sure that Wales is at the heart of the debate on devolution.
My noble friend Lord Crickhowell asked two questions. One was related to the Electoral Commission’s concern about time constraints. I point out to him that the detail in the amendment ensures that time would be available in practice to assemble the electoral register required. The details in the amendment are based on a franchise Act of the Scottish Parliament. The Bill, as amended, will allow for 180 days for the Secretary of State to lay the order, plus the time that it would take to pass through both Houses of Parliament and the Assembly. There would be a pre-election period as well. If one takes all those periods of time together, they come to approximately seven months, which is the time that the Electoral Commission recommends for new legislation of this type. We believe that there is sufficient time to amass the register as required. My noble friend also asked about resources for awareness raising and so on. I assure him that we are well aware of the resource implications of this.
On that point, clearly local authorities are subject to considerable constraints. To be “well aware” of the resource implications begs many questions, such as: what are the resource implications? What discussions have there been already with the relevant authorities and are the Government satisfied that this can be done without taking on any extra staff?
I did not say to the noble Lord that this would be possible without taking on additional staff. It is important that the views of the Electoral Commission have been communicated to noble Lords because it is obviously involved in the discussions. The Assembly has made its views very clear on this and there are resource implications from its perspective as well because, as several noble Lords have made clear today, it is important to bear in mind that there has to be a period of awareness raising and education as well as the sheer issue of assembling a register.
The Minister is absolutely right. The National Assembly has resources in the Assembly Commission to promote its own activity, promote democracy generally and promote a particular referendum as we did prior to the previous referendum, which ensured that we have now proper law-making powers. I am certain that the present Assembly Commission will take the same positive view. Indeed, at an event that was part organised by the Assembly Commission last week, a vote was taken on this matter by young people. The young people were in a majority—a small majority—for generally reducing the voting age to 16.
The noble Lord brings information from the front line, if I can put it that way, in far more detail than I could have provided to your Lordships. The noble Lords, Lord Rowlands and Lord Richard, asked detailed questions about the numbers of young people who voted in Scotland and the turnout. The turnout of 16 and 17 year-olds was remarkably high. It is my recollection that it was slightly lower than among the older sections of the population but it was remarkably high. I refer noble Lords to the fact that the Electoral Commission is, at this moment, undertaking a detailed study of the impact of the votes of 16 and 17 year-olds in Scotland. That report will be published in the relatively near future and I would recommend it as very important reading for those of us who are interested in these issues.
I will have to write to the noble Lord on that issue because if I were to venture a figure, I fear I might mislead him, and it is important that I am completely accurate on that.
My noble friend Lord Roberts asked about the further devolution of the rail franchise announced last week. His question pointed to the difference between Wales and Scotland in the nature of their borders. He referred to the fact that the rail line between north Wales and south Wales goes across the border from Wales to England and back again. I will write to him with the details of last week’s agreement. I can assure him that the issue has been taken fully into account in the discussions between the two Governments. I will ask the Electoral Commission to write to the noble Lord with the details of the 22 electoral returning officers in Wales.
The noble Lord, Lord Elystan-Morgan, considered the issue of the maturity of young people now compared with 40 years ago. It is important to bear in mind that young people consider rather more strongly that they should have a say in the way their lives are run than was the case a long time ago. My noble friend Lord Cormack talked about the variable age of majority. I would say to him that there has always been a variable age of majority in this country. One could argue that some ages of majority are not entirely consistent with some others. It has always been the case that one could, for instance, join the Army younger than when you could get married without your parents’ consent. There are therefore different approaches to different aspects of life. Perhaps that is something else on which we need to have a consistent and long-term debate, but that has been the state throughout the whole of my life and, I dare say, we will not resolve that debate in the near future.
The noble Baroness, Lady Gale, referred to the signatures on the amendment. I tabled the amendment and three noble Lords exercised their right to add their names, as is the custom in this House. They had signed the original amendment. I would have strongly welcomed the noble Baroness adding her own name because one of the things signifying the tone of debate on the Bill has been cross-party consensus.
I was trying to point out to the Minister that there is cross-party support for the amendment, which could have been reflected in the signatures if I had been allowed. I am not sure whether I would have been allowed as it is a government amendment. However, I think the Minister will accept that there is cross-party support for the amendment.
I wholeheartedly recognise that there is cross-party support but repeat that this is a government amendment to which three people added their names. It would have been in the hands of the noble Baroness to add her name if she had wanted to.
Finally, I thank the noble Baroness, Lady Morgan, for the way in which she has expressed her appreciation for our efforts here today. She made the point that the Bill is already rather out of date. I would say to the noble Baroness that the fact that we are already planning, working on and discussing a future Bill indicates that this is a developing process.
Before I sit down, I should like to thank all those who have participated in our debates on the Bill. It has been a personal pleasure for me to steer a Bill through your Lordships’ House to devolve new powers to the Welsh Assembly and Welsh Ministers. “Historic” is a word that is sometimes overused in political debate, but I believe we can justly claim that the devolution of fiscal powers to the Welsh Assembly for the first time is an historic step forward. Although some noble Lords have expressed frustration at the pace of devolution, if we look back, we can see that Welsh devolution has come a long way in 15 years. Our debates have reflected the gathering momentum for further change. The Government are committed to ensuring that Wales remains at the heart of the development of devolution. My right honourable friend the Secretary of State and I are committed to publishing a framework for a reserved powers model of devolution by St David’s Day with—and I emphasise this—cross-party support.
I am pleased that the Government have been able to listen and respond to the views of noble Lords on two key issues during the Bill’s passage: first, on the lock-step mechanism for income tax and, secondly, on the referendum voting age, which we have just been discussing. I believe it is a better Bill as a result. At its heart, this is a Bill about accountability. It will provide the Welsh Government with the tools to help to build a stronger economy and a fairer society in Wales. For the first time, the Welsh Government will have the power to raise some of their own revenue, making them accountable to the people of Wales not just for spending, but for raising money as well.
I look forward to seeing how the Welsh Government capitalise on the opportunities we are giving them and once again urge them to call an income tax referendum as soon as possible. I thank my noble friends Lord Newby and Lord Bourne for their support and assistance with the Bill. The expertise of my noble friend Lord Bourne has been extremely useful in view of the fact that we have discussed the Silk commission on so many occasions. He was, of course, a member of that commission.
This is a short Bill but it has benefited from the expertise of officials from a number of departments: the Wales Office, the Cabinet Office, Her Majesty’s Treasury, HMRC and the DWP. It has been a pleasure to work with them on the Bill. They have been assiduous and endlessly prepared to give their time to assist me and support the many meetings I have held with noble Lords, both as individuals and in groups. I thank them for their assistance. I also thank the many noble Lords who have spoken in our debates. They have displayed a wealth of experience and understanding of devolution. I appreciate the willingness of so many noble Lords to give their time to attend a number of additional informal meetings that I arranged. I commend the amendments to the House.
Amendment 1 agreed.
Schedule 1: Referendum about commencement of income tax provisions
Amendments 2 and 3
2: Schedule 1, page 33, leave out lines 5 to 10 and insert—
“1 (1) Where a referendum held by virtue of section 12(1) follows on from a youth franchise resolution, a person is entitled to vote in the referendum if, on the date of the poll at the referendum, the person—
(a) is aged 16 or over,(b) either—(i) is registered in the register of local government electors at an address within an Assembly constituency, or(ii) is registered in the register of young voters at such an address in accordance with provision made under paragraph 1A,(c) is not subject to any legal incapacity to vote (age apart) within the meaning of section 2(1)(b) of the Representation of the People Act 1983, and(d) is a Commonwealth citizen, a citizen of the Republic of Ireland or a relevant citizen of the Union (within the meaning given by section 202(1) of that Act).(2) Where a referendum held by virtue of section 12(1) does not follow on from a youth franchise resolution, a person is entitled to vote in the referendum if the person would be entitled to vote in a general election of Assembly members if one were held on the date of the poll at the referendum.
(3) For the purposes of this paragraph and paragraph 1A, a referendum held by virtue of section 12(1) “follows on from a youth franchise resolution” if—
(a) a resolution is passed by the Assembly under section 13(1) which states that the voting age at the proposed referendum is to be 16,(b) the First Minister complies with section 13(2) in relation to the resolution, and(c) as a result, a draft of the statutory instrument containing the Order under section 12(1) which causes the referendum to be held is laid in accordance with section 13(3)(a).(4) An Order under section 12(1) may include provision for disregarding alterations made in a register of electors or voters after a date specified in the Order and sub-paragraphs (1) and (2) are to be read subject to any such provision.
1A (1) Where an Order under section 12(1) causes a referendum to be held which follows on from a youth franchise resolution, the Order must make provision about the registration of young voters.
(2) That provision must include—
(a) provision for the preparation and maintenance of a register of young voters;(b) provision prohibiting the publication or other disclosure of that register, or any entry in it, except as provided by such an Order.(3) Provision made by virtue of sub-paragraph (1) may, in particular—
(a) apply or incorporate, with or without modifications, any enactment relating to referendums or elections;(b) make other modifications of any enactment relating to referendums or elections.(4) An Order under section 12(1) must make such supplementary, incidental or consequential provision (if any) as appears to Her Majesty to be appropriate for the purposes of, in consequence of, or for giving full effect to—
(a) any provision made by virtue of sub-paragraph (1), or(b) the entitlement of 16 and 17 year olds under paragraph 1(1) to vote in the referendum.(5) Provision made by virtue of sub-paragraph (4) may, in particular—
(a) make modifications of any enactment;(b) make transitory, transitional or saving provision. (6) For the purposes of sub-paragraph (3)(a), “enactment” includes the Scottish Independence Referendum (Franchise) Act 2013 (asp. 13).
(7) For the purposes of this paragraph, “young voter” means a person who—
(a) will be aged 16 or 17 on the date of the poll at the referendum, and(b) is not registered in the register of local government electors at an address within an Assembly constituency.”
3: Schedule 1, page 36, line 17, at end insert—
““Assembly constituency” has the same meaning as in GOWA 2006;”
Amendments 2 and 3 agreed.
My Lords, perhaps I may say how much I appreciated the tenor of the Minister’s remarks a few moments ago. It has indeed been rather revolutionary in the history of the land and nation of Wales that there should have been so much compromise, understanding and unity in relation to very many matters. We as a people in Wales have a reputation of fissiparous disaffection of a general nature, and nobody could gainsay that, but it may well be that with this Bill—in both Houses but particularly in this House and particularly due to the attitude of the Minister—we have shown a different approach. It is a small but impactive Bill and I believe it to be of very great historical significance in so far as the constitutional situation of Wales as a land and nation is concerned.
I want to raise one matter, and that is the question of the relationship of the Bill to the undertaking given by the Prime Minister on 19 September—that cold morning which followed the heavy events in Scotland the day before. He said that,
“there are proposals to give the Welsh Government and Assembly more powers. And I want Wales to be at the heart of the debate on how to make our United Kingdom work for all our nations”.
Those were his exact words and they could mean a very great deal or nothing at all. If by “powers” one means the powers contained in this Bill, for which I wish Godspeed, then those words are utterly meaningless because they were spoken in the heady atmosphere of massive undertakings given to Scotland and weighty undertakings given to Northern Ireland. However, if in fact they referred to nothing more than this Bill, then they meant that no additional powers in relation to Wales were contemplated than existed at that moment—in other words, there was no addition to the status quo. In my view, that would be a very unsatisfactory situation. At best, it would be misleading. It would mean that there was a negligent misrepresentation, to use a technical legal term, on the part of the Government. At worst, it would mean something much more serious than that.
For a number of reasons, I do not for a moment impugn the Prime Minister of any lack of integrity in this matter. First, this was an ex cathedra statement—not something that had been cobbled together in the wee small hours of the morning of 19 September but probably something that had been prepared a long time before when it was anticipated in the months preceding the referendum that the result might be much more clear cut than it was. Secondly, the second part of the statement reads:
“And I want Wales to be at the heart of the debate on how to make our United Kingdom work for all our nations”.
If no further devolution of a substantial nature were contemplated in relation to Wales, how could that possibly have any relevance whatever? It seems therefore that, with one additional factor, the Government must be contemplating powers well beyond those that we are considering in the context of this Bill. If a Cabinet committee is set up to consider the situation in relation to Scotland, Northern Ireland and Wales, and to report in January 2015 on the whole question of constitutional development, if there was to be no constitutional development in Wales, what would be the point of including Wales in such an arrangement?
Therefore, I ask the Minister—I am confident that she will give a general reply, although one would not expect a detailed reply—to say whether the power that the Prime Minister was talking about on 19 September goes over and beyond the powers in this Bill. Furthermore, specifically with regard to the undertaking that she has given, which the House greatly welcomes, in relation to an 11 December report on reserved powers, will that report be implemented if it is in favour of reserved powers? The second part of the Silk report was accepted on the very day of publication by the Deputy Prime Minister. He did not accept it on behalf of the Government but on behalf of his party. Does that mean that the coalition Government will espouse that statement and undertaking given by the Deputy Prime Minister?
Finally, on a matter raised in our excellent debate earlier this month on membership of the Assembly in Cardiff, will there be a movement deliberately to increase the number of Members to make it a body that can be a credible legislature, which it can never be unless and until there is an addition to the 60 Members because there is no critical mass of Members available to scrutinise this issue? These matters are of the utmost importance and to which the people of Wales are entitled to have answers.
My Lords, it is not my intention to detain the House, despite this interruption, for more than a few minutes. I welcome very much the significant powers granted to Wales in this Bill, which has been so ably steered by the Minister. Perhaps of greater importance will be the conclusions of the consultations which will be produced, I hope, by 1 March. They will be groundbreaking. I also welcome very much the role being played the Secretary of State who is carrying out what I hope is the mandate given to him following the reshuffle by the Prime Minister in the words of my noble friend Lord Elystan-Morgan.
Following 7 May, my hope is that a Labour Government will bring forward proposals. By our votes in Committee, the Labour Front Bench underlined its commitment, as did my noble friends Lady Morgan of Ely and Lady Gale at Second Reading. They have provided the basis for a manifesto commitment. In the 1970s, when I set up the role of the Attorney-General to police the Assembly if it exceeded its powers, I never expected or contemplated one of my successors being so trigger happy and repeatedly trying to overturn the Assembly, and getting, for his pains, black eyes on two occasions. A simpler, cleaner, reserved powers model would be much better.
I close on the need for a high-power constitutional convention. In 1969, the setting up of the Kilbrandon royal commission by a Labour Government was the vital catalyst for the path that we have been treading over the years. I shall never forget the noble Lord, Lord Elystan-Morgan, coming up from the beach at Newquay in Cornwall one lunchtime and brandishing his idea for a royal commission as a way forward. It seems from the papers I have seen at Kew that other work along the same lines was also being done by Ministers. The announcement at the next Labour Party conference of a royal commission was the culmination of that work.
Today, something more profound and influential than even a royal commission is needed to map out the role for Scotland, Wales, Northern Ireland and England as partners in the future of the United Kingdom. I hope that there will be courage on the part of all the parties to work out a broad-based convention so that we can come to the end of piecemeal reform.
My Lords, I have no wish to detain the House but I want to place on the record on behalf of my noble friend Lord Wigley and myself, both of us former Members of the National Assembly. In fact, I am still a Member—so far—dependent on the will of the electorate, as were the Minister and her colleague on the Front Bench. I thank the Government for their very positive response on all these matters. I should like to refer in particular to one great joy as regards this Bill, which is the passing of a phrase with which I have always had constitutional difficulty: the Welsh Assembly Government.
First of all we were the Welsh Assembly. That meant all of us—the whole family of legislators, officials and Ministers, or rather secretaries in those days. Then we went through a transitional period as the Welsh Assembly Government. Now, thank goodness, we are the Welsh Government for Plaid Cymru and the National Assembly for Wales, and long may we remain so.
My Lords, I have been talking about devolution and independence with the noble Lord, Lord Elystan-Morgan, since around 1962 when we were both solicitors in Wrexham. Indeed, I even voted for him in 1964 when he was a Plaid Cymru candidate. The noble Lord, Lord Elis-Thomas, will be interested to know that. Thereafter we developed our ideas on devolution and it was those ideas, which we produced in 1967 in a Bill in the House of Commons and here that was taken up and considered by the Kilbrandon commission, to which I gave evidence. I say all this because of the history that everyone has been giving.
This Bill is just a step; it is not the end. I notice today that the Glasgow Herald says that the intention of the Smith commission is to introduce votes at 16 for the next Scottish Parliament elections. If that happens in Scotland, I am sure it is going to happen in Wales. Similarly, it has been said that Scotland may very well be looking for an airport tax. If that happens in Scotland, to the delight of the noble Lord, Lord Rowe-Beddoe, it will necessarily come to Wales as well. There are further steps to be taken before we have the complete and satisfactory home rule that the noble Lord and I dreamed of over 50 years ago.
My Lords, I shall respond briefly to the salient points that have been made in this, our last debate. The noble Lord, Lord Elystan-Morgan, referred to the words of the Prime Minister. Perhaps I may point out to him the solid steps that have been taken since 19 September. The Cabinet Committee has been established under the chairmanship of William Hague. The Secretary of State is of course a member of that committee and, indeed, I attend as well when Wales is being discussed. I would also point to the establishment of cross-party discussions here in Westminster. My right honourable friend the Secretary of State will also be in discussions with the leaders of the Assembly groups. We have made the announcement which has been referred to on numerous occasions in our debates of the date of 1 March, St David’s Day, by when we expect to have resolved the issues to a sufficient extent to be able to produce a reserved powers framework for future legislation in respect of Wales. That will deal with the proposals for additional powers in Silk 2, in so far as there is cross-party agreement relating to the size of the Assembly. Silk 2 was accepted by the Deputy Prime Minister in his role of leader of his party. The long-standing devolution credentials of the noble and learned Lord, Lord Morris, are well known and respected by this House. The recent Supreme Court judgment has made it imperative that the issue of the reserved powers model is dealt with.
The noble Baroness touched on Silk 2 and the fact that, in Wales, we had a remarkable cross-party agreement in the Silk commission to deliver it. A lot of parties compromised to reach that agreement. Can we be assured that there will not now be further compromise? The compromise has already taken place, the Government have a unanimous report and Wales expects it to be enacted.
It does not, of course, lie in my hands whether there is compromise. It is an issue for the four parties within Wales. I strongly agree with the noble Baroness, Lady Morgan, who has made clear that the devolution debate has changed. It has gathered force and moved on since Silk 2 was published. I join the noble Lord, Lord Elis-Thomas, in being delighted at the end of the concept of WAG. I always regarded this as an unfortunate acronym of the Welsh Assembly Government. My noble friend Lord Thomas made the very important point that the Bill is just a step. I say to noble Lords who make me feel like a newcomer that I have only been campaigning for devolution in Wales since 1979.
Bill passed and returned to the Commons with amendments.
Consumer Rights Bill
Report (2nd Day)
Schedule 2: Consumer contract terms which may be regarded as unfair
29: Schedule 2, page 58, line 2, at end insert—
“20A (1) A term which has the object or effect of permitting a trader engaged in the provision of fixed broadband internet access or mobile internet services to block, restrict or otherwise hinder the access of a consumer to any lawful electronic communications network or electronic communications service on the basis of an unreasonable or unusual definition of “internet access”, “data”, “webaccess” or similar word or phrase.
(2) Nothing in this prohibition shall affect filters for the purpose of child protection.
(3) “Electronic communications network” or “electronic communications service” shall have the same meaning as provided in section 32 of the Communications Act 2003.”
My Lords, Amendment 29 was moved, as Amendment 56B, in Grand Committee by the noble Baroness, Lady Thornton, and supported by the noble Lord, Lord Best, and my noble friend Lord Stoneham. It is an important amendment and, although I was not able to be in Grand Committee, in view of ministerial replies and subsequent statements by Ofcom, the Internet Telephony Services Providers’ Association and I thought that it deserved a better answer.
The amendment is designed to prevent ISPs blocking or discouraging use of services within the legal internet that compete with their own. It would prevent mis-selling of internet services and strengthen the power of the open internet code. At the core of the problem is consumers’ understanding of the services they should rightly receive within their internet contract. Customers assume that they can use all internet services, when in actual fact there are either specific terms and conditions preventing use of services like VoIP or extra charges are incurred to do so.
At present, internet service providers have no obligation to allow their customers to access the entire legal internet, despite selling internet access to their consumers. Some mobile operators have used this to block, degrade, impede or surcharge certain services simply because they compete with their own. It is very much in the interests of consumers and the economy that internet users have open access to all the legal parts of the internet, on the basis of fairness for consumers and to facilitate innovation in online services.
Although it disapproves of this anti-competitive behaviour, Ofcom has repeatedly stated that it does not have sufficient powers to prevent the blocking or surcharging of internet services. The amendment would resolve this problem by creating consequences for ISPs that claim to offer internet access but then restrict what the internet means through terms and conditions. The amendment dovetails with the industry’s open internet code of practice to ensure that the UK maintains an open internet for both consumers and industry, but the code is effective only if Ofcom is able to intervene if it is breached. Nothing in the amendment restricts the ability of ISPs to block access to illegal material or implement content blocking at the request of the customer.
The Government have put forward a number of arguments against the amendment, saying that the UK communications market is extremely competitive and consumers can switch if they are not happy. However, Ofcom’s own research in September 2013 clearly outlined that consumers were not aware of traffic management practices undertaken by ISPs and whether these would affect specific services that they use via their internet service.
The Government also say that the necessary steps are in place for the creation of both the transparency code of practice and the open internet code of conduct, which the vast majority of industry has signed up to. The open internet code is a good code but on its own does not have enough teeth.
The Government say that powers already exist within the Bill. The DCMS seems to believe that the Bill has the powers to resolve the issues of concern. But on 4 November, Ofcom’s CEO Ed Richards gave evidence to the Commons Culture, Media and Sport Committee. In response to a question from Philip Davies MP, he stated that Ofcom did not believe that it had “definitive powers” to prevent blocking. He went on to say that he thought it would be “better” if Ofcom did have such powers. These views are consistent with the views expressed by Ofcom to ITSPA over the past three years. Whether or not Ofcom is right is by the way. If it is not confident that it has the powers, it will not act.
Ed Richards reiterated the view that Ofcom does not currently have clear powers to prevent anti-competitive blocking behaviour on 18 November in a further evidence session to the House of Lords Communications Committee, of which I am a member. I said:
“There has been a debate about blocking by mobile operators of VoIP services and so on. Do you think you should have the ability to be clearer in your requirements, effectively, in legislation?”.
Mr Richards replied:
“My preference and the preference that I have articulated on Ofcom’s behalf before is that it would help us if we were crystal clear that should we think it was necessary we could stop the blocking of access to legal sites”.
He went on to say:
“There are different circumstances that one would want to make sure you had assessed and thought carefully about first before invoking it, but a backstop power to make sure that you could stop genuinely bad behaviour that was misleading the public about what they were buying feels to me like the sort of power the regulator should have”.
Is the Minister going to say that the CEO of Ofcom is wrong and that it should be denied these powers?
It is very disappointing that despite my noble friend Lady Jolly’s offer in Grand Committee to convene a meeting before Report, the meeting on this amendment with the Minister Ed Vaizey will not take place until Thursday 27 November. Even though that discussion has not yet taken place, I hope that the Government will consider their position, especially in the light of the strong statements by the CEO of Ofcom on at least two occasions. I beg to move.
My Lords, like the noble Lord, Lord Clement-Jones, we support an open internet, and it is in that spirit that we have signed up to the amendment. There is a case here for the Government to decide where they think the legislation currently lies, and if it is not clear that Ofcom has the powers that the noble Lord spelt out in some detail, it is important that this is resolved.
I think that it would surprise many people to learn that internet service providers have no obligation to allow their customers to access all the legal internet, despite selling “internet access” to all their customers. If DCMS believes that both existing legislation and new additions within the Bill resolve the issue of mis-selling, it is important that the Government agree with us that clarity should be made beyond peradventure. We need to know whether Ofcom is right that it does not have the powers, in which case the amendment will resolve that. If DCMS and Ofcom agree that the necessary powers do exist, DCMS should say so publicly and make it clear beyond any doubt that Ofcom has the necessary powers to act on any relevant open internet infringements. I look forward to hearing what the Minister has to say.
My Lords, the debate on this important issue in Committee was a very good one, as my noble friend said. The discussion focused more on the protections for net neutrality than on the specifics of this amendment. I sympathised with the points made and committed to a meeting to discuss them. I thought it important that the relevant interested parties were present, especially Ed Vaizey, the Minister for Culture and the Digital Economy. His diary proved to be completely immovable. The meeting is now in the diary for this Thursday and I am looking forward to it.
It is clear from the discussions so far that this is a really complex area, and one which is causing a great deal of debate both in Europe and across the Atlantic. We believe that we are global leaders in delivering open internet services. In the UK, a competitive market, effective self-regulation and consumer expectation have delivered a much more open internet than perhaps elsewhere.
As noble Lords may be aware, industry has developed two self-regulatory codes of practice—both now with full sign-up from major ISPs, with Vodafone, EE and Virgin Media signing up to the open internet code in recent weeks. This is the code that governs their behaviour and ensures that they do not block services that compete with their own. Mobile operators that restricted some services such as Skype no longer offer new packages that do so. Ofcom, the regulator, has been in dialogue with the provider whose behaviour this clause attempts to address and there is a commitment to review the wording in its terms and conditions to ensure that these are not misinterpreted in any way.
Critics of this self-regulatory regime will say that there is no penalty for falling foul of the open internet code and that ISPs can change their mind about being signatories at any time. While this is true, it is also the case for many other areas that are self-regulated, for example in online advertising, where great strides have been made to ensure a transparent sector. However, it is also true that in the two and a half years since the open internet code was agreed, no breaches have been reported. If there is a significant change in the number of signatories or we see common breaches reported, the Government will look at this again. Consumer expectations are such that we do not envisage this happening again.
In answer to my noble friend’s comments, we have discussed these issues with Ofcom. We agree with Ofcom that there may be some room for interpretation regarding its powers in this area. However, we do not believe that the amendment would deliver the intended restrictions on internet access providers. Furthermore, Ofcom’s analysis of the market for internet access services suggests that there is not an urgent need for intervention. The market is continuing to move towards the comprehensive provision of neutral open internet access services, and there is no evidence of present consumer harm. Therefore, for the time being, and because of the recent developments in this area, we see no evidence of the need for legislation.
However, by way of reassurance, as noble Lords will know, Clause 64(2) in Part 2 of the Bill means that providers will be unable to hide definitions of the service provided—such as broadband access—in the small print, and will have to give them due prominence. The Bill also retains the protections currently in force through the Unfair Terms in Consumer Contract Regulations 1999, which give regulators the powers to tackle such abusive behaviours, if proven. We are also taking a power in the Bill to allow us, after parliamentary scrutiny, to update the grey list. This means that were consumer or trader behaviour to change, or evidence of particular consumer detriment to emerge, we could add terms to the grey list to accommodate that. That could apply in this case should changes by providers not take place or we see a shift in provider behaviour across the board that is not currently evidenced. That means that ISPs will not be able to hide any clauses and that there is a route for action for regulators, should this prove still to be an issue. I believe that that is a more appropriate way to deal with this than legislating at this point, especially given that this is being addressed by the regulator.
We should also be aware of the ongoing process in Europe regarding net neutrality as part of the telecoms single market package. The Government have always championed the self-regulatory approach, but we recognise that not all markets are the same as the UK’s and that there is growing demand for further protections for net neutrality from other member states. It is clear from the European Council that there is the will to include text on net neutrality. We will continue to engage proactively with the European Council on that, and believe that an appropriate solution can be found. The latest text from the Italian presidency shows movement towards a more principles-based and outcome-focused approach, which we believe would be more appropriate.
To conclude, while I am sympathetic to the intentions of the amendment, the Bill is not the right place to do this. Telecoms regulation needs to be handled through telecoms legislation. We do not believe that the amendment will change the regulator’s power in this area; nor do we believe it be necessary at this time, given the market developments. We will continue to engage with the EU in a constructive manner.
I commend my noble friend’s persistence on the issue. The Government are unable to accept his amendment, but I hope that I have offered sufficient assurance to persuade him to withdraw it.
My Lords, I thank my noble friend for that reasonably comprehensive response. Although I do not agree with large parts of it, it was comprehensive. It is interesting that the Minister, along with others, seems to have confused the issue of the open internet with net neutrality. They are rather different issues. It will be useful to have that discussion on Thursday. This is not a net neutrality amendment. It is about the enforcement of the open internet principles. I shall not take up the House’s time by explaining the difference, but it is considerable. The Minister’s meeting with me and the industry on Thursday will be helpful.
The Minister’s reply was a mixture of, “The problem has gone away”, “Voluntary agreements will do the business” and “We don’t need the back-up”, but the bottom line, which I find quite baffling, is, “We don’t agree with Ofcom”. The CEO—albeit the outgoing CEO, who may be more frank than an incoming one —was very clear about the powers that Ofcom did and did not have and what he thought was appropriate.
I do not know what discussions there have been between DCMS and Ofcom, but a dialogue of the deaf seems to be going on. I understand what my noble friend said about this not being an urgent need, but I do not believe that the CEO of Ofcom would have gone on the record twice—first on 4 November with the CMS Select Committee and then a fortnight later with the Communications Committee of the House of Lords—unless he thought that this was a live topic.
I note the slightly comforting words of my noble friend that under Clause 64 no small print will henceforth be allowed and that there will be no hiding place. I cannot remember the exact words that she used, but they were ringing phrases. I hope that they will have some substance. There is scepticism whether they will bite in the way my noble friend outlined. We shall see.
As the discussion with the Minister has not yet taken place, I reserve the right to bring this matter back at Third Reading if absolutely necessary but, in the mean time, I beg leave to withdraw the amendment.
Amendment 29 withdrawn.
30: After Clause 77, insert the following new Clause—
(1) This section applies to the regulators which are involved in protecting consumers (“consumer regulators”).
(2) It shall be the duty of the consumer regulators to uphold the rights of consumers under this Act.
(3) In exercising their functions, consumer regulators shall have regard to the desirability of—
(a) upholding accurate, plain and intelligible information for consumers about goods and services;(b) promoting—(i) fair and reasonable practices in the selling of goods and services;(ii) fair and reasonable pricing of goods and services;(iii) the inclusion of comprehensive information on goods and services in contract;(iv) quick and fair means for consumers to make complaints and have disputes resolved.(4) Consumer regulators shall have a duty to consider whether a proportion of any fines levied for breaches of rights under this Act shall be used to compensate consumers.”
My Lords, I beg to move Amendment 30. I think it would be helpful if I read it out at this early stage. The proposed new clause states that the section involved applies specifically,
“to the regulators which are involved in protecting consumers”—
that is, “consumer regulators”. The proposed new clause continues:
“(2) It shall be the duty of the consumer regulators to uphold the rights of consumers under this Act.
(3) In exercising their functions, consumer regulators shall have regard to the desirability of—
(a) upholding accurate, plain and intelligible information for consumers about goods and services;
(i) fair and reasonable practices in the selling of goods and services;
(ii) fair and reasonable pricing of goods and services;
(iii) the inclusion of comprehensive information on goods and services in contract;
(iv) quick and fair means for consumers to make complaints and have disputes resolved.
(4) Consumer regulators shall have a duty to consider whether a proportion of any fines levied for breaches of rights under this Act shall be used to compensate consumers”,
who may have suffered loss or inconvenience as a result of that.
The amendment proposed previously by the noble Lord, Lord Clement-Jones, shows that it is time that this matter was reviewed. This is an important Consumer Rights Bill which in many other ways will be of great benefit to consumers. It would be a great pity for it to go ahead without recognising and dealing with the anomaly which exists.
Under the Bill, the regulators are not required to exercise certain functions that one would expect them to exercise. I make it clear at the outset that I am not complaining about, or accusing, the current regulators. I am saying that their attention has never been drawn to this particular role. It is a new role as far as they are concerned. I am very grateful to the National Consumer Federation which has helped me to draft this amendment and, by the way, gets no money from anyone. The federation covers all the other consumer organisations and has gathered all the necessary information in giving this amendment its warm support.
I shall deal as quickly as possible with my reminiscences but I remember that, when we first privatised a public industry—the electricity industry—we received a report from the Monopolies and Mergers Commission saying that the electricity boards did not satisfy consumer needs, their prices were too high and their labour forces were not treated correctly. At last the moment had come to do something to benefit everyone—consumers, employees and the general public. I well remember that not long after the Bill became law, I needed some electrical work done in my home. Along came a nice man from the new electricity company and I said to him, “I hope you are feeling much happier these days in your place of employment”. He replied, “I am not worried at all. I have bought shares”. So I have a very big kite to fly in that respect.
It is obvious that many practices today that regulators come across, such as the ones highlighted in previous amendments, are new. The marketplace, as it were, has changed completely as far as they are concerned and the Bill is the place to stress that there is a very important consumer role. That is why the end of the amendment, which is one of the most important parts, says that consumer regulators shall have a duty to consider whether, if consumers have been harmed or in some way not been given a fair deal, any fines levied should be used to compensate consumers. To my great delight, one regulator did that recently when a big fine was imposed and now £3 million of the fine is to be repaid to those consumers who had suffered either financial loss or other types of problems.
It seems to me that they do not need the Government or the law in order to do that—they could do it themselves—but it will help to have it firmly in print that they may. I do not know what negotiations they went into with the Treasury but they must have been very interesting indeed. People often say to one, “Oh, these regulators, what do they do with all the millions?”. Noble Lords probably know already that the money goes straight to the Treasury, and the Treasury is not by any means an easy nut to crack. They did very well indeed to get that amount repaid to those consumers who had suffered. I want that also to be part of the law and I want it to be a consumer right. That is not a great deal to ask for. It is long overdue. I commend the amendment to the House.
My Lords, I support Amendment 30, which has been moved by the noble Baroness, Lady Oppenheim-Barnes, which would ensure that regulators did what they are meant to do, which is to protect consumers and promote their interests.
I shall speak also to Amendment 50C, which is in my name and that of my noble friend Lord Stevenson of Balmacara. Our amendment would require statutory regulators to develop proper user or consumer representation on their boards, as well as reviewing annually the consumer experience of their industry, including whether consumers were sufficiently well represented and listened to so that their rights under this and other legislation were protected and, indeed, promoted. It would enable regulators to consider whether a levy might be needed to ensure that the consumer voice was clearly articulated.
Regulators exist in exactly those industries where the consumer cannot get a fair deal on their own behalf, either because of effective monopolies of the sort that we have just heard about or because the nature of the service is so complicated, long-term or specialist, such as in financial services or the law, that clients are in no position to evaluate it or to shop around. Despite this, not all regulators put the consumer, in whose interest they are meant to be working, first—sometimes because of industry capture, sometimes because they work at such a helicopter level that they fail to see the real consumer impact, and sometimes, as the noble Baroness has just said, because something new comes along and they are not feeling it from the grass roots up. Usually, however, it is because they do not embed the end-user’s views in their decision-making. They decide policy without researching the consumer’s experience or the consumer’s views, and they sometimes do not seem to understand the ordinary person who pays the bills. Our amendment would embed the consumer voice in the regulators’ governance, where it should have been from the start.
However, the noble Baroness, Lady Oppenheim-Barnes, has a rather craftier alternative, which is to place a duty on the relevant regulators to uphold the rights of consumers and to raise the possibility, as she has just said, of the fines levied by a regulator being used to compensate consumers for breaches of their rights. Given the £1.1 billion fine levied by the FCA last week, that part of her amendment has a particular attraction.
Without these amendments, the Bill will lack a certain crack of the whip in the hands of regulators. I therefore hope they get support.
My Lords, I start by applauding the contribution made by my noble friend Lady Oppenheim-Barnes in promoting consumer rights. She has outlined her concerns and given her views on what the regulators can do to help consumers, reading from her amendment. Given how much impact her work has had, her input will be invaluable in ensuring that we have a better understanding of what needs to be done when we start the implementation phase of this important Bill.
It is, of course, important that consumer rights in regulated sectors, just as in the rest of the economy, are protected and promoted; that consumers are given sufficient information to make informed decisions; that they are aware of how to make complaints and seek resolution to disputes; and that they have suitable representation to secure the best possible outcomes. The noble Baroness raised some important issues with this amendment and in our meeting.
However, I am concerned that this amendment would, first, complicate an already complex legislative and governance framework, through which regulators operate, with a number of new rules and requirements. Rather than helping consumers, it could muddy the waters further and lead to complex, unclear decision-making by regulators.
Secondly, it could perversely duplicate the extremely good work already being done across the consumer landscape. There are already various bodies and organisations fulfilling the objectives of this amendment, which I will explain in more depth shortly. In view of the comments made by the noble Baroness, Lady Hayter, I should add that similar concerns relate to Amendment 50C, although that comes from a slightly different angle and would provide, in some circumstances, for a levy.
We must not overlook the good work that economic regulators have done. As noble Lords may know, economic regulators have a statutory duty to take consumer interests into account. The nature of independent regulation means that consumers are at the heart of what they do, and I am confident that this remains the case. If anything, the tone of what I have heard suggests that regulators have not been vocal enough about how much their work helps consumers, so let me highlight a few examples. Average monthly household spend on telecoms services fell by 2.9% in 2013. In addition to this, satisfaction ratings across key telecoms markets are close to or over 90%. The majority of consumers remain satisfied with their service overall. Complaints about fixed-line and mobile mis-selling have decreased. In fixed-line, they decreased from 1,200 per month in April 2005 to just over 400 in 2013, and mobile mis-selling has also reduced very significantly. There is now more choice than ever for consumers, with at least 13 major suppliers of bundled residential services, 114 fixed-line operators and four mobile operators.
Ofcom is pushing to make it easier for consumers to switch providers, which is critical for a well functioning telecoms market. Water leaks are down by 40% since the 1990s, so there is a heritage of affordable water bills, with high-quality drinking water and cleaner rivers. Domestic energy bills, while having increased, are still favourable compared to Europe.
The process for speeding up switching energy suppliers is taking place, and we aim to reach the point where people can change over in just 24 hours. Even now, more than 2 million customers switched electricity supplier between October and March, with nearly a third picking smaller suppliers. Ofgem has also investigated and fined energy companies over marketing activities such as doorstep selling, which have a detrimental effect on some consumers.
The warm home discount took up to £135 off electricity bills for 2 million households last winter. There are record levels of passenger satisfaction in our railways, despite the record post-war number of journeys made, and Network Rail is on course to deliver its current programme of investment. Regulators have contributed to all those good outcomes for consumers and are continuing to work in the interests of consumers. Without them and their work, consumers would be much worse off than they are today.
The examples given also show how the regulators can adapt to change—a concern emphasised by my noble friend Lady Oppenheim-Barnes. She mentioned a huge £3 million fine being paid to consumers, and of course the FCA example quoted by the noble Baroness is another good example of regulators adapting to change.
I also reiterate the good work done by consumer bodies. Bodies such as the Consumer Council for Water, the Communications Consumer Panel and Citizens Advice were either established through legislation or are registered as charities. Statutory regulators such as the Civil Aviation Authority have also created independent, internal consumer panels to challenge and advise on policy from a consumer interest perspective. All those bodies play a huge role in helping consumers, meeting the very objectives behind these amendments—in particular around providing intelligible information and having consumer representation on regulators’ governing bodies to get a better deal for the consumer.
There are examples where consumer bodies have had real bite. The Consumer Council for Water negotiated with 11 water companies in response to rising profits for them and rising bills for consumers. Thanks to those discussions, the water companies have agreed to return £1 billion of that financial gain to consumers. Another result of CCW pressure is the fact that all but two water companies submitted plans in December 2013 pledging to keep prices at or below inflation until 2020. The number of complaints to water companies has reduced for the fifth successive year, and the CCW played a crucial role there.
As I have said on many occasions, Consumer Futures, now part of Citizens Advice, has done a huge amount on behalf of consumers to secure the best deals for them in industries such as energy and post, and to help with redress. For example, the strength of its advocacy and evidence led to Ofcom reversing its original decision and secured a price cap for second-class mail, providing real security for those who rely on sending letters and who are financially disadvantaged. It also constantly keeps energy companies on their toes. It helped secure £55 million of repayments by npower due to unfair billing charges; npower has said that it is investing £20 million to resolve those issues fully.
Let us not forget the superb work of Citizens Advice, because its job is to provide consumers with intelligible information across a wide range of sectors. Its success has been outstanding, and it works across all the utility sectors that these amendments are designed to address. It has helped millions through its website and over the phone; 86% of consumers reported a positive impact of advice on their lives, and 84% said that their understanding of their rights had increased.
The regulators and the consumer bodies uphold the rights of consumers, providing sufficient representation to them and promoting fair and reasonable practices. As such, I do not think these amendments would, in practice, achieve anything that is not already being done. They are more likely to bring harm than benefit. Regulators already operate within a complex legislative and governance framework. One of the key things that the Government can do to help is to make sure that the duties we ask the regulators to perform have real clarity and focus. The more duties we place on them, or the more we prescribe, the harder we make life for the regulators. This, sadly, has practical consequences that are bad for consumers.
Regulators may take longer to make their decisions with the sorts of changes under discussion. They might face a greater risk of legal challenge on the grounds that they have allegedly not taken account of all elements of their duties, even when they have acted in the right way. This is to the detriment of everyone, including consumers, and benefits only the lawyers. The cost of regulation itself would increase. Investors would look at regulated markets and factor in the greater risk to them of protracted regulation, which means higher costs. These higher costs find their way to the consumer’s bill.
In summary, I have enormous sympathy with the good intention behind these amendments. However, I strongly feel that there is a lot of good work already happening—it has obviously taken time—to promote consumer rights and representation in our regulated sectors. The consequences of adding these duties to an already complex legislative framework for regulators are likely to be worse outcomes for consumers and business at a time when there is a drive to cut the costs of regulation and increase efficiency, which passes through to the consumer.
Again, I salute the wonderful work being done by both noble Baronesses, and would be happy to meet them to discuss these issues in more detail as we get closer to the implementation phase. In the mean time, noble Lords can feel assured that much is already being done across the board to help consumers. I would ask the noble Baroness to withdraw her amendment.
I thank my noble friend for that very detailed reply. I wish I felt comforted, because I know she has spent a lot of time on and paid a great deal of attention to the issue. She said that these amendments might muddy the water. The problem is that the water is already muddy and the purpose of the amendment is to make it absolutely clear what the duties of regulators are in relation to consumers, along with all their other important interests. The effect of any practices that are being carried out by these industries which regulators have not seen, or have not thought that it was within their remit to deal with, is what this amendment clarifies.
Also, the Minister has rightly mentioned that most of these industries now have consumer representatives, or little personal consumer bodies. I would ask her only to try to get hold of one of them on an expensive 0845 number. They may work very hard but they do not have any powers of their own. I do not want that to be the way things happen—I prefer my amendment to that prospect. I do not want regulators to be hampered in the other important work which she has illustrated that they do. The great fines are not feathering their own nests; the regulators are doing what they consider to be their duty. I just want them to be given a new duty, and this amendment defines and clarifies it. I would like to consider this between now and Third Reading. There is a lot still to be done. However, for the moment, I beg leave to withdraw my amendment.
Amendment 30 withdrawn.
Schedule 5: Investigatory powers etc.
31: Schedule 5, page 81, line 14, leave out sub-paragraphs (3) to (11)
My Lords, Amendment 31 stands in my name and those of the noble Lord, Lord Best, and my noble friend Lord Stevenson of Balmacara.
Rather strangely, as the Bill stands, trading standards officers—who work on behalf of consumers to track down rogue traders, dangerous goods, scams and rip-off merchants—would lose their existing powers to inspect premises, unless they give two working days’ notice of such visits in writing. Because of the outcry over this nonsense when the Bill was in the Commons, the Government have already had to amend it so that officers can still enter without forewarning, either where there is suspicion of malpractice or where evidence might be destroyed. But that is always the case with evidence: it goes walkies when the police or trading standards are anywhere near.
Despite the slight amendment made in the Commons, the requirement for 48 hours’ written notice would still tie the hands of trading standards officers. This new requirement was written into the Bill, despite the fact that there were no calls at all for this change from business, and no evidence that officers misuse their current powers. While it is true that some companies quite liked it once it was suggested, none had demanded it. Meanwhile, enforcement agencies and consumer groups naturally want it removed. If the Government really want to help small businesses ensure that the right people and the right paperwork are ready for a visit, fixing it up by phone to suit the company would be much better than sending two days’ fixed notice by post, with no negotiation over the date. The Bill also does not deal with the difficulty of giving notice to mobile traders.
Even if we win a vote on this amendment, which would remove the need to have 48 hours’ written notice before trading standards could inspect, it does not mean that trading standards officers cannot give notice before they inspect. In fact, they would do so in very many cases. It is good practice to do so, but it would also save trading standards officers’ time: they would not have to go back a second time if the paperwork was not there. However, it makes no sense to give notice to people who are potentially breaking the law of when the enforcers will turn up to check on them. That would hamper the enforcers’ ability to tackle rogue traders, since unannounced visits can act as a deterrent, as well as a source of evidence.
Of course, these very same officers do not have to give notice for food safety: they can have unannounced visits. Ofsted can also make unannounced visits. Just last week we saw the impact of a surprise inspection of Colchester hospital by the Care Quality Commission, which led to major steps to safeguard patients. That might not have happened had the hospital management been given two days’ warning. Why must trading standards replace today’s on-the-spot checks with two days’ written warning? How difficult would it be for the very same officer to have different powers for entering the same premises, depending on which breach they are investigating?
The Government have said that a trading standards officer can always enter premises as a member of the public and see what an ordinary shopper can. However, retailers do not put their untaxed or counterfeit cigarettes on top of the counter or out on the shelves. Unsurprisingly, they are hidden below the counter, where an officer would not be able to look. It is not just consumers and trading standards officers who want the 48-hour requirement removed: small firms also dislike competitors undercutting them by underhand means. Indeed, the Tobacco Retailers’ Alliance—I do not often speak on behalf of anyone to do with tobacco, but it is right on this—has written, saying that it is,
“disappointed … that… the Bill … gives a retailer suspected of selling smuggled tobacco 48 hours’ … warning of having their premises inspected”.
It says that that seems,
“madness ... As legitimate retailers, we do not require any notice of an inspection. You can come in whenever you like”.
It says that the provision plays into the hand of retailers who break the law, allowing them to carry on selling smuggled tobacco after inspections. It urges the Government to remove this provision from the Bill and let inspections be carried out without warning so that they are an effective deterrent to those who sell smuggled tobacco.
He is not in his place, but the noble Lord, Lord Blencathra, wrote back to the retailers concurring with their view. He said there is no justification for giving 48 hours’ notice of an inspection of a tobacconist’s shop. It is not as though it is an intrusion into your personal home. Writing in the Grocer, the chairman of a large cash and carry store noted that independent retailers say that,
“test purchasing is less effective if there has to be 48 hours notice of a visit”.
As serious is the fact that there will be fewer inspections because trading standards officers are bound to become risk-averse where they have to articulate and document the evidence of their suspicion or malpractice, or the likelihood of loss of evidence, particularly in cases where, despite the reassurance the Minister gave us, evidence tends to come anonymously from other retailers. We know that a challenge in court that inspectors visited without reasonable evidence or gave proper notice in writing could cost their local authority heavy legal fees should they get tripped up by some clever lawyers, even if the inspection then found a breach of consumer law.
We are talking about the sale of dangerous goods, such as flammable mattresses, ineffective carbon monoxide detectors, dangerous toys, dodgy electrics, fake bags and jewellery and rip-off household goods. Trading standards officers stand in our shoes as consumers protecting us against these.
Amendment 31 would remove the Bill’s requirement for trading standards to have to give 48 hours’ written notice. As Giles Roca, director-general of the TRA, asked,
“why change a system that works perfectly well?”.
The Government were unable to answer that in Committee. Instead, they have come up with further amendments today which rather demonstrate that they accepted our arguments in Committee but dare not quite say so. Therefore, they have invented a new term: “a routine inspection”. The Trading Standards Institute, which carries out a lot of the work for the Government, does not recognise that term and does not know what it is. The Trading Standards Institute says it is very happy to give notice of routine visits to advise traders but that is not an inspection visit and it does not know what a routine inspection visit is. In fact, because of the cuts to the number of trading standards officers—I think there are 50% fewer than there were—and the move to an intelligence-led approach, only the older ones can even remember routine visits taking place.
Inspection visits are to find evidence. This will be curtailed if two days’ warning of the inspectors’ arrival has to be given. Why are the Government asking trading standards officers, who act on behalf of consumers, to work with one hand tied behind their backs? I beg to move.
My Lords, I support the amendment that has just been spoken to. I declare in interest in that I am a vice-president of the Trading Standards Institute and I have been the president so I have a long understanding of the work of trading standards people up and down the country. They have been extremely useful in every development of consumer rights and consumer law over the many years since they were called weights and measures inspectors under the old rules of 1880. Now that they are trading standards inspectors and the Trading Standards Institute is a very respectable body, they have as a prime function the enforcement of consumer law. That is so now, although the substance of the law has been altered and is being altered further by this Bill.
One of the principal jobs of enforcement officers is, of course, to see whether a prosecution is justified. No self-respecting prosecutor thinks that any minor infringement of the law is deserving of prosecution and the trading standards officers in each county are well aware of that. They take a great deal of care in developing their thoughts that on a particular occasion the goods are dangerous, or the various things that my noble friend Lady Hayter referred to have occurred. To my mind, there is no doubt whatever that it is a far greater deterrent to malpractice if no notice has to be given of an inspection. I was delighted, as I am sure many of us here were, whether interested in this subject or not, with the announcement of the work done by Ofsted in deciding that there are some occasions when schools need to be looked at without notice so that they can be taken off their guard and it is more difficult to show that they are all to the good.
Trading standards inspectors have tasks other than prosecution. I was thinking of this when the noble Baroness, Lady Oppenheim-Barnes, was talking about the previous amendment. They do a great deal of advisory work and advise not just consumers but businesses. That is at least equally important because they are advising businesses on how to comply with the law, how to better comply with it and how to make sure that they do not suffer from prosecution in the future. In their advisory capacity, inspectors make sure that the right relationship is obtained with the trader concerned and notice may be given that they wish to come and talk about a particular problem and they hope their advice will be looked at and taken. There is a world of difference between advising and prosecuting. We can all see that and surely there is no doubt that it is far better for the prosecution element of the work of trading standards that visits do not require notice on every occasion.
My Lords, I am delighted to follow the noble Lord, Lord Borrie. I, too, am a vice-president of the Trading Standards Institute. I moved this amendment in Committee because it seemed extraordinary when I first read it that trading standards officers would need to give 48 hours before turning up to find out some wrongdoing on a site, in a shop or whatever. However, the Bill already says that if,
“the officer reasonably considers that to give notice … would defeat the purpose of the entry”,
then the 48 hours’ notice would not have to be given. Nor would notice have to be given if the officer,
“reasonably suspects that there is an imminent risk to public health or safety”.
In Committee we received reassurances from the Minister, who explained that even if there was just a suspicion that there might be something going on, it would be quite in order not to give notice because that would totally undermine the purpose of looking in on the premises. That just leaves the 48 hours’ notice for “a routine visit”, which is how this is expressed in the amendments to follow in the name of the Minister. For a routine visit, 48 hours’ notice would be given but I understand that if trading standards officers are to make a routine visit—probably, as the noble Lord, Lord Borrie, said, to give advice, or to explain that the law has changed and there is something new that the business ought to know about—it will not be a matter of just giving notice. It is a negotiated thing. They will send an e-mail and receive a reply. What is the point of turning up 48 hours later if nobody is there or if the boss is not there and you need to see the boss? If it is something completely routine, this is how people behave just out of politeness, if for no other reason. They will make an appointment and go round and visit. The danger is that this will get blurred, the proper use of the unannounced visit will be inhibited and we will not see justice done when it should have been done. It seems much better if we simply omit this reference to 48 hours’ notice. It was probably a bad idea in the first place. There is a certain amount of retreat from it now—very sensibly by the Minister—but why not just knock it out? It does not seem to serve any purpose.
My Lords, the Government certainly share the objective of an effective enforcement regime to protect consumers from rogues and traders from unfair competition. In this Bill we are, of course, consolidating and modernising the investigatory powers of consumer law enforcers, bringing together the powers from different Acts, and ensuring for the first time that enforcers can tackle rogue traders who operate across local authority boundaries. We have also introduced strong safeguards as to how these powers are exercised because the powers are necessarily intrusive. They allow officers to enter premises, seize goods and break open containers, for example.
Under the Bill, therefore, consumer law enforcers will now have to give notice to traders if they want to make a routine inspection. We introduced this change, following discussion in Committee, because we think it is a basic principle of civil liberties that a business should suffer the disruption of an unannounced visit only when there is some good reason, such as suspicion that a business may have broken the law. However, we recognise that trading standards has real concerns about the requirement to give notice. I want to set out the approach that we have taken in more detail before talking about my amendments.
Businesses, including small businesses, are very supportive of strong powers to investigate rogue businesses, as has been said, because they harm consumers and are unfair to them. However, businesses have told us that unannounced routine inspections by enforcers are disruptive, costly and needlessly so. For example, an officer visiting a shop may demand a lot of attention from staff at busy periods or want information that the junior staff available cannot provide. The Federation of Small Businesses told us that the safeguard of two days’ written notice of routine inspections, which can of course be sent by e-mail, will allow businesses to ensure that the appropriate staff and paperwork are available. This means that neither the trader’s nor enforcer’s time is wasted. For example, if an officer visits a retail store to check centrally set price promotions, store colleagues may be unable to change promotions or answer questions on price establishment periods. Hence, matters that could otherwise have been cleared up quite quickly can result in primary authority referrals or a formal investigation.
Clearly, the Government are aware that much of the vital work of enforcement officers is directed at illegal trading. We very much value the excellent work of enforcers such as trading standards to protect consumers and legitimate businesses from rogue traders—including, I should add, the advisory work that the noble Lord, Lord Borrie, mentioned, which I agree is extremely valuable. Officers clearly should not have to give notice of an inspection where illegal trading is suspected. That is why clear exemptions are set out in the Bill, which I need to go into to try to ensure that the House understands how reasonable our proposals are. As has been said, notice need not be given, for example, if there is an imminent risk to public safety. The noble Lord, Lord Best, explained that clearly.
The exemption would apply: where an enforcer reasonably suspects a breach—for example, where enforcers find evidence of illicit tobacco, such as stubs and papers, in the streets near suspected outlets; where giving notice would defeat the purpose of the entry, a good example of that being where counterfeit alcohol is being sold in local shops and the enforcer believes that the traders in question are likely to conceal the illegal products if notice is given; and where it is not reasonably practicable in all the circumstances to give notice—for example, because the officer reasonably suspects that there is an imminent risk to public health or safety, as the noble Lord, Lord Best, mentioned. There are three or four other exemptions but, taken together, these exemptions ensure that consumer protection is properly maintained because if there is evidence of a serious or immediate breach, enforcers can intervene. The Bill supports an intelligence-led approach to enforcement which is an effective use of enforcement resources.
The noble Baroness, Lady Hayter, said that test purchases were less effective if notice had not been given. However, notice need not be given for a test purchase or to observe the carrying out of business.
Finally, it is worth noting that the police, for example, have no general powers of entry to commercial premises and can enter the premises only with reasonable suspicion or a warrant. Even with the notice requirement, enforcers such as trading standards will still have substantially more powers to enter premises than the police, who also deal with serious crimes. Since the noble Lord, Lord Borrie, mentioned it, I should say that for practical purposes, Ofsted normally gives up to two working days’ notice to further education colleges, and schools are given notice by midday on the working day before the inspection. However, there are unannounced inspections in cases of serious concern, as the noble Lord rightly mentioned.
In Committee, noble Lords were concerned that it was unclear when notice needed to be given. We listened carefully to the concerns raised and we have therefore tabled Amendments 32 to 39, which aim to put it beyond doubt that notice need be given only for routine inspections. Routine inspections under the Bill are any inspections that do not fall within the exemptions. They are typically made where trading standards considers that a business presents a risk, simply due to the nature of the sector in which it operates. Examples include visits to DIY stores and other retail outlets considered routine because there is no reason to doubt that the business is operating properly without any significant breaches of legislation, unless of course the exemptions applied. Such stores sell many different products and, as society changes more and more, services from dry cleaning to kitchen-fitting services. These need to be the subject of inspection from time to time. Notice ensures that the business is properly prepared so that the officer can check that the supporting systems are in good order.
Before my noble friend leaves that point, I wish—possibly—to help her. Is she aware that EU authorities have to give only 24 hours’ notice when coming to inspect a British company and, within that period, that the Secretary of State responsible has to provide supporting police for the inspection?
I am grateful to my noble friend for that factoid, of which I was not aware. Of course, our proposed regime provides for routine inspections and then, where there is a potential problem, for immediate inspections when they would be more appropriate. That difference is entirely justified, for the reasons that I have explained. Having worked in business, I know that when you have routine inspections you want to make sure that the people who understand all the rules and how the systems work—and have all the necessary paperwork—are available, because otherwise you often end up with a second visit. That is what we are trying to avoid, because that costs both parties.
We have clarified where notice needs to be given by adding to the Bill reference to what a routine inspection is. To offer further reassurance—
We felt that it helped to clarify that there was not a gap. In Committee, we went through a number of examples about which individual noble Lords were very concerned. Having checked through the examples, we are able to show to people’s satisfaction that the thing would be clear. Doing it this way in the Bill achieves that effect. However, I want to add a further reassurance. I am today committing the Government to reviewing the practical effect of the notice requirement within two years of commencement of this part of the Bill. I have listened to what has been said and we have made changes to try to clarify this. We want to have a good enforcement regime—
I thank the Minister and do not wish to detain the House, but does she not agree that a clear lack of definition within the Bill of “routine inspection” boosts the confidence of potential rogue traders, who will take that to court on a technicality?
I thank the noble Baroness for her intervention. We believe that the amendment put forward clearly defines the term “routine inspection” for the purpose of this power of entry. We clearly set out the exemptions in the Bill and I commend both our proposed amendments to try to clarify the circumstances, and the review within two years that I have offered, in response to the concerns that have been expressed about exactly how this will work. The powers and safeguards strike the right balance. It is an important area; the notice provision is strongly supported, particularly by the small business sector—not so much by big business—which we all care about because of the huge contribution that it makes to our economy. I ask the noble Baroness to withdraw her amendment.
I think the House knows that at the moment, no notice is needed in writing 48 hours before. The Government clearly made the wrong call, so they changed it a bit in the Commons by adding, “Well, unless the evidence is going to be lost”. They have now made more changes to say, “Well, routine inspections will be all right”; and now at the very last moment, we hear, “Well, there is going to be a review in two years’ time”. It sounds to me as if the Government know that this is wrong. The noble Lord, Lord Best, had it right: the Government should knock it out. They should not have put it there and it is not a way forward. There is no evidence that trading standards has misused its current powers; it will give notice because it is easier for it to do so. Ofsted does not have to define in law why it has made an emergency inspection without notice. The problem is the uncertainty: that if people are going to have to show that they had reasonable evidence or that they have fulfilled one of these requirements, there will be uncertainty, lack of clarity and fewer visits. I doubt that that is what the Government really want. I beg to test the opinion of the House.
Amendments 32 to 40
32: Schedule 5, page 81, line 14, at beginning insert “In the case of a routine inspection,”
33: Schedule 5, page 81, line 14, leave out “that sub-paragraph” and insert “sub-paragraph (1)”
34: Schedule 5, page 81, line 24, at end insert—
“(5A) In this paragraph “routine inspection” means an exercise of the power in sub-paragraph (1) other than where—”
35: Schedule 5, page 81, line 25, leave out “of entry is to be” and insert “is”
36: Schedule 5, page 81, line 26, leave out “and the officer” and insert “who”
37: Schedule 5, page 81, line 29, leave out “this paragraph” and insert “sub-paragraph (3)”
38: Schedule 5, page 81, line 31, leave out “this paragraph” and insert “that sub-paragraph”
39: Schedule 5, page 81, line 38, leave out “a notice is not given, and the officer” and insert “an officer of an enforcer enters premises under sub-paragraph (1) otherwise in the course of a routine inspection, and”
40: Schedule 5, page 81, line 43, leave out from beginning to “finds” and insert “If an officer of an enforcer enters premises under sub-paragraph (1) and”
Amendments 32 to 40 agreed.
40A: After Clause 78, insert the following new Clause—
“Product description and advertisement
(1) Subject to subsection (2), where any specification, description or advertisement of goods, services or land or property offered for sale, hire or lease, or any instructions or maintenance manual relating to such goods or services includes one or more units of measurement, those units shall be—
(a) those set out in Schedule 1 of the Units of Measurement Regulations 1986 (S.I. 1986/1082) (as amended); or(b) any multiples or submultiples of those units as set out in Schedule 2 of those Regulations.(2) Subsection (1) shall not apply to products listed in Schedule (Product description and advertisement).
(3) Subject to subsection (4), supplementary indications may be used in addition to the units authorised in subsection (1).
(4) Where supplementary indications are used—
(a) in the case of a conflict between an indication of quantity expressed in an authorised unit and a supplementary indication, the authorised unit shall prevail; and(b) the authorised unit shall appear first, and any characters employed in the marking of quantity in relation to a supplementary indication shall be no larger and no more prominent than those employed in the marking of quantity expressed in the authorised unit.(5) In this section—
(a) an “authorised unit” means a unit of measurement specified in Schedule 1 of the Units of Measurement Regulations 1986 (as amended) or any multiples or submultiples of those units as set out in Schedule 2 of those Regulations,(b) a “supplementary indication” means one or more indications of quantity expressed in a unit of measurement, other than an authorised unit, which is used in conjunction with an indication of quantity expressed in an authorised unit,(c) “unit of measurement” does not include arbitrary sizes such as sizes of shoes or clothing, paper and stationery or eggs,(d) a “year” is not to be treated as a unit of measurement.”
My Lords, I start with an apology to the noble Lord, Lord Harris of Haringey. In Committee I said that I would certainly look at the idea of somewhat broadening the scope of what we were considering. However, I received the official reply very late, and I have also suffered, as I hope will not be too much in evidence as I move the amendment, from a chest infection, which means that I dissolve into coughing fits from time to time. Therefore, I was unable to pursue the matter further and I apologise to the noble Lord.
I moved this amendment in Committee because the present law—at least, as widely understood—causes confusion. In descriptions or advertisements, there is no need as in other transactions to quote metric as the primary measurement. I shall give two examples. Some estate agents describe properties in square feet, others in square metres. As carpets are normally sold in square metres, it is hard for a would-be customer to know whether a carpet will fit into a room in a flat or house which they want to buy if it is advertised in square feet. The other example that I gave in Committee was that a retailer may offer in his showroom two comparable fridges—one whose capacity is described in litres and the other in cubic feet.
It appeared that the present Government’s view is that descriptions and advertisements are covered by the Weights and Measures Act, but David Willetts, the previous Minister concerned, held the view that they were not. Trading standards officers responsible for enforcement of the law believe that the law does not apply. They have given me examples of where they understand certain terminology to be legal and where similar terminology is illegal. One described the law on this subject as “a ass”.
This morning I met the Minister. It was a heart-warming occasion. My noble friend the Minister and her officials were the soul of reason and agreed to advise the professions and trading standards officers that the law did require the primary description to be metric, with every right to quote imperial measures as well. Therefore, the position should now be clarified and I am most grateful to all of them.
I have one reservation, which I hope will give rise to some discussion before I announce what I will do with my amendments. I was told that the Government have no intention to make any further moves towards metrication. They are happy to let two separate systems—conflicting systems, in some ways—coexist, whatever the confusion and cost that may cause for ever and ever.
I mentioned in Committee that in 1970, as Financial Secretary when Roy Jenkins was Chancellor, I helped to prepare the change to decimalisation, which was subsequently carried out by the Heath Government in 1971. We sounded out no focus groups and commissioned no opinion polls. We thought that opinion might well be rather against the move and many people forecast chaos. However, the decimalisation board made the most careful preparations and explained everything very clearly. There was no chaos and everything went smoothly, and who now doubts in retrospect—except, no doubt, some irrational UKIPers—that the change made life simpler for consumers?
The then Prime Minister had set up the Metrication Board to do for metrication what was so successfully done for decimalisation, but Mrs Thatcher abolished the board. It nevertheless continued to be government policy in principle to move towards metrication, but slowly and very cautiously, at a snail’s pace. Even that has now been abandoned. Everyone else—except, as far as I know, Britain and the United States—has gone metric, including, for example, the Commonwealth.
The United States and Britain have paid for that. If you run two systems side by side, there will be mistakes, some of which will be very costly. There was the orbiter disaster in the United States. In Canada, the so-called Gimli Glider ran out of fuel because of the same mistake and nearly killed hundreds of people. In Britain, only in the past few weeks, we have heard about the difficulties of Network Rail. A BBC reporter was told about maintenance crews across Britain who record what they do in different ways. He said:
“Network Rail told me that in some parts of the country they use miles, in other parts they use kilometres, so when two teams record the fact that they’ve fixed ‘three units’ of line, some mean three miles, others mean three kilometres. I don’t need to spell out what a mess that makes”.
In Committee, I said I hoped that in my urging further steps towards metrification after Magna Carta we might record some progress. Magna Carta decided that there should be one measurement for weights throughout the country. I also said that I hoped that the Committee would not feel I was showing an excessive sense of urgency in asking for further progress when it had been a mere 800 years since the concept was first advanced.
As well as the cost to employers such as Network Rail and the possibility of serious disasters, YouGov recently polled a number of consumers and asked them if they understood the present system. It asked for quick answers to how many yards there are to a mile and how many metres to a kilometre. Most people found it difficult to answer those questions. It was easier for them to answer that there are 1,000 metres to a kilometre than to get the 1,760 yards right. These surveys did not show that there was any easy familiarity with either system. Of course, it would be much simpler for consumers if there was one system, and the metric system should be the only choice.
We have not exactly speeded up since Magna Carta. In fact, we have moved backwards. Clearly, Magna Carta’s commitment to one measurement was far too radical for the present Government. We have gone backwards instead of forward. I hope that there will be some protests at this progress at a snail’s pace and at what I would call the cowardice of the Government in going back on the Magna Carta decision. It should be tackled for the benefit of the consumer. For the fear of whom have the Government run away? Possibly, it is UKIP because it does not like that kind of thing as it is too common in Brussels.
My Lords, in Suffolk it took us a very long time to get used to getting rid of the word “coomb”, which used to be how we would weigh corn. The problem was that other counties had a different coomb so it was quite difficult to compare one with another. Gradually, we came to terms with the idea that you might have tonnes—which we have now more or less accepted. However, this House should be very careful about this amendment because we are less well qualified to talk about this matter than most. Young people do not have a problem: they have only one system of measurement. My young are in their 20s and 30s. If I say, “Oh, it’s about 22 yards away”, they have no idea what I am talking about. One reason why the Daily Telegraph has been losing readers is that it still uses only imperial measures, which limits one’s audience to a particular age. Given its views, that is probably quite suitable for that newspaper.
There is a simple way around this, and I want to ask the Minister to help me. It is perfectly reasonable for an aged gentleman doing his shopping to be able to ask for a pound of apples. I can see that if you have never asked for half a kilo, it is somewhat difficult. Equally, it is perfectly reasonable for shops at a local level to make that kind of arrangement. But we have had from my noble friend Lord Taverne an example of something quite different, and that is the railway industry. If that industry cannot use one system, and if we cannot organise people to use one system for measurements, what then? Of course we could go back to using imperial measurements, but it is more difficult to add up, multiply and divide using that system. I remember that there are 1,760 yards in a mile, but most people who are aged under 40 do not.
This seems to me to be one of the most footling battles I have ever heard of. It really is not sensible to say that our sovereignty is being impinged by a system that is easier for us all and which means that we can communicate with people. We would still have to talk to them even if we were not in the European Union—it would be very silly indeed to suggest that—so would it not be a good idea to use the same language? The people who want to carry on with imperial measures grow fewer and fewer as the days go by.
I would like us to take one tiny step—I hope that the Minister will be able to say something by way of encouragement—which is that in all areas that are not about the immediate local connection between a shopkeeper and a shopper, only one measurement shall be used. That should not be too difficult to achieve. The shoppers and shopkeepers will change as they die off. Indeed, I notice that in my local village shop there are people who ask for their goods in either one measurement or the other. That will change and it can happen as slowly as we want, but surely any normal business-to-business activity—all of us now know what the term B2B means—ought always to be carried out using metric measurements.
I end by saying that I am experienced in this because a friend of mine was the chairman of the Anti-Metrication Board, an organisation set up by those who felt that something deeply awful was happening to Britain. I know that my noble friend takes that view on most things. The board had a mystical view about the fact that you could not measure ley lines using the metric system. There are few in this House who wish to measure ley lines. I am happy if the Government decide that in future ley lines may be measured only using the imperial system, but could they please ensure that all normal, reasonable activities other than the very smallest ones can be done using one of the most remarkable inventions of all? It took the great step from Roman numerals to Arabic numerals one stage further and gave us a system that even I can use simply and surely. Please let us not go on fighting a battle against Napoleon.
My Lords, I start by thanking my noble friend Lord Taverne for his well considered speech and the thorough explanation of his amendments. UK weights and measures legislation works by focusing regulation on measurements and equipment that are in “use for trade”. This ensures that the primary focus is on those transactions where consumers need to know the quantity they are purchasing, how it compares to alternatives, and that they can rely on the quantity being accurate. The fundamental principle behind weights and measures policy is that every measurement used for the purpose of “use for trade” should be subject to the minimum level of regulation to ensure that businesses and consumers are protected against short measure and can have confidence in measurements.
Any transactions being made by reference to quantity or any statement of quantity made or implied in relation to a transaction is caught by the term “use for trade”. It applies widely and is intended to apply not just to the transaction itself but to any use,
“in connection with or with a view to”,
a use for trade—perhaps that is B2B. That would already cover most advertisements or product descriptions for goods. However, there are some cases, of which my noble friend highlighted several examples, where a product is not being sold on the basis of quantity and so the unit itself is not being used “in use for trade”. In these cases the usage would fall within the more general rules on what constitutes a legal unit as set out in the Units of Measurement Regulations.
This additional legislation, outside the Weights and Measures Act, makes it clear that metric units are the legal unit for any purposes beyond “use for trade”. Therefore, the use of a non-metric unit in the examples given by my noble friend are already not legal uses under the existing legislation. The Government are not aware of any significant demand from business or consumers to extend the scope of offences under the Weights and Measures Act to cover uses of units of measurement beyond “use for trade” or to extend what is caught by “use for trade”.
However, this morning I was glad to meet my noble friend and officials in order to talk through the issue. He raised an important point about how product descriptions and advertisements are being used in the marketplace, and the potential impact on consumer protection. We have tried to clarify the issue. The Government will commit to taking this forward with the relevant industry bodies to remind them of the current legal position and the importance of providing clarity for consumers. I hope that in due course we will not have a mixture of square metres and square feet when describing rooms so that we can purchase carpets more easily. As my noble friend stated, the Government do not believe that it is in the national interest for further metrication to take place against the wishes of the UK public. I fear that my noble friend’s bid for total metrification will have to wait a while—but I sincerely hope not 800 years.
While my noble friend has clearly targeted his amendments at units of measurement, I would be concerned at the risk of unintended consequences from making any extension to the scope of weights and measures law and the risk of causing confusion by duplicating existing legislation. The UK is already a metric nation, along with most of the rest of the world, as my noble friend said. The majority of UK businesses and the public sector switched to metric units almost 20 years ago. The vast majority of trade is now undertaken using metric units, and metric has been taught as the primary unit of measurement in UK schools ever since 1974. Over time, public support for metric units is increasing, and as we have heard, especially among young people. Businesses that are not providing metric units risk losing business as more and more people are using metric in everyday life. My noble friend Lord Deben asked why single units could not be required for other purposes. These uses are already regulated, and metric units are the legal measurements required under the Units of Measurement Regulations. However, imperial units can always be permitted as a supplementary indicator.
I hope that noble Lords are reassured that “use for trade” already applies widely and catches all transactions which are based on quantity. Even in those cases where “use for trade” does not apply, the legal units are already defined in law. Therefore, I ask my noble friend to withdraw the amendment.
My Lords, my Amendment 40B might possibly have unintended consequences and I was not going to move it. If the Government do in fact live up to their promise and ensure that the professions and those responsible for enforcement tell people exactly what the law is, which is that it requires that metric units should take priority even in advertisements and descriptions, that will meet my objections. I am very happy to withdraw the amendment.
Amendment 40A withdrawn.
Amendment 40B not moved.
41: After Clause 79, insert the following new Clause—
“Contravention of code regulating premium rate services
(1) In section 120(3) of the Communications Act 2003 (conditions under section 120 must require compliance with directions given in accordance with an approved code or with an order under section 122) before paragraph (a) insert—
“(za) the provisions of an approved code;”.(2) In section 121(5) of that Act (provision about enforcement that may be made by approved code) after paragraph (a) insert—
“(aa) provision that applies where there is or has been more than one contravention of the code or directions given in accordance with it by a person and which enables—according to whether the person imposing the penalty determines that a single penalty or separate penalties are appropriate and proportionate to those contraventions;”.(i) a single penalty (which does not exceed that maximum penalty) to be imposed on the person in respect of all of those contraventions, or(ii) separate penalties (each of which does not exceed that maximum penalty) to be imposed on the person in respect of each of those contraventions,according to whether the person imposing the penalty determines that a single penalty or separate penalties are appropriate and proportionate to those contraventions;”.(3) Section 123 of that Act (enforcement by OFCOM of conditions under section 120) is amended as follows.
(4) After subsection (1) insert—
“(1A) Subsection (1B) applies where a notification under section 94 as applied by this section relates to more than one contravention of—
(a) a code approved under section 121,(b) directions given in accordance with such a code, or (c) an order under section 122.(1B) Section 96(3) as applied by this section enables OFCOM to impose—
(a) a single penalty in respect of all of those contraventions, or(b) separate penalties in respect of each of those contraventions,according to whether OFCOM determine that a single penalty or separate penalties are appropriate and proportionate to those contraventions.”(5) In subsection (2) (maximum amount of penalty) for “the penalty” substitute “each penalty”.”
My Lords, when you donate to a charity using a five or six digit short text code, or call directory enquiries for a number you need or have forgotten, you are more than likely to be using premium rate services. These are added-value services, products or content that consumers can purchase by charging the cost to their phone bill or mobile pre-pay account. While these services can, and do, offer enjoyment, convenience and speed of access to users, they also demonstrate certain characteristics which have the potential to give rise to harm, in the absence of effective regulation. For this reason, it is equally important that companies comply with the rules set out by the regulator’s code of practice, which serves to ensure consumers are treated fairly and not misled or taken advantage of.
PhonepayPlus regulates the market for premium rate services, and its code of practice, having been approved by Ofcom, sets out the regulatory framework for the industry, outlining the rules and required standards for every company involved in providing premium rate services to UK consumers. For example, a person or company providing premium rate services must be up front about the services they offer, and how much they cost, before users make any purchases. They must also treat consumers fairly and resolve complaints quickly.
Under the Communications Act 2003, PhonepayPlus can impose a penalty in respect of breaches of the code. The regulator has interpreted this to mean that it can impose £250,000 in respect of each provision of the code that is breached. The proposed amendment is intended to make it absolutely clear that where it is appropriate and proportionate, the maximum fine available to the regulator is indeed for each provision of the code that has been breached. Therefore, in the event of a company making two serious contraventions of the code, the regulator could impose a fine of up to £500,000, if that is deemed appropriate and proportionate.
This clarification will impact only on the premium rate service companies whose contravention of the rules is serious. It will not impact on the majority of businesses, which are compliant. The clarification is important to the regulator so that effective sanctions continue to be available for the most serious breaches of the code, which is there to ensure that consumers are not harmed by premium rate services and can use them safely and confidently. By clarifying the regulator’s fining powers, the amendment is an important tool in ensuring the continued existence of a sufficient deterrent to non-compliant behaviour by companies or people providing premium rate services. I beg to move.
Amendment 41 agreed.
Amendment 41A not moved.
41B: After Clause 80, insert the following new Clause—
“Nomination of judges to the Competition Appeal Tribunal
(1) The Enterprise Act 2002 is amended as follows.
(2) In section 12(2)(b) (competition appeal tribunal) after “the Lord Chancellor” insert “or nominated by the appropriate senior judge pursuant to paragraph 2(4) of Schedule 2”.
(3) After section 12(5) insert—
“(6) Appropriate senior judge has the same meaning as in paragraph 2(7) of Schedule 2.”.
(4) In Schedule 2 (the competition appeal tribunal) after paragraph 1(3) insert—
“(4) Upon the nomination of the appropriate senior judge, any judge of the High Court of England and Wales, the Court of Session or the High Court of Northern Ireland shall be a member of the panel of chairmen and shall hold and vacate office in accordance with the terms of their nomination.”.
(5) In paragraph 2(1) of that Schedule after “The members appointed” insert “by the Lord Chancellor”.
(6) In paragraph 2(2) after “A person” insert “appointed by the Lord Chancellor to the panel of chairmen”.
(7) In paragraph 2(3) after “and the chairmen” insert “appointed by the Lord Chancellor”.
(8) In paragraph 2(4) after “remove a person” insert “appointed by him”.
(9) In paragraph 2(6) after “remove a person” insert “appointed by him”.
(10) In paragraph 2(7)(a) after “the person to be” insert “nominated or”.
(11) In paragraph 2(7)(b) after “the person to be” insert “nominated or”.”
My Lords, the amendment raises a short but important point about the appointment of judges to sit on the Competition Appeal Tribunal. It has the support of the Lord Chief Justice of England and Wales, who brought the matter to my attention.
Clause 80 and Schedule 8 to the Bill make significant changes to the jurisdiction of the Competition Appeal Tribunal, which was established by the Enterprise Act 2002. At present, the tribunal hears appeals from the competition authorities and regulators. The effect of Schedule 8 will be to expand its jurisdiction so that it will become, in effect, a specialist court hearing private competition appeals from all parts of the United Kingdom. I understand that that part of the Government’s proposal has received widespread support. It cannot be disputed that, if it is to cope effectively with this increased case load, the tribunal will require to be staffed by a sufficient number of judges from all parts of the United Kingdom who are equipped to deal with it.
The position, at present, is rather unusual. The judges of the Chancery Division in England and Wales are, on and by virtue of their appointment, authorised to sit as chairmen of this tribunal. However, under the current legislation, their appointment terminates after eight years and is not renewable. This is found in paragraph 2 of Schedule 2 to the Enterprise Act. This is not the best use of that resource. The effect of the eight-year terminus is that their expertise is then lost, although they may continue to serve as judges in the Chancery Division for many years later.
The fact that the system of appointment that I have described applies only to the Chancery Division has another unfortunate consequence, which is that other sources of expertise among the judges are not being used. Practitioners with experience of competition law are appointed to the Queen’s Bench Division but are not automatically authorised to sit on the tribunal. The effect of this is that, to be able to sit as a chairman, they would need to apply to the Judicial Appointments Commission, enter and be successful in a competition. For obvious reasons, serving judges are not keen to undergo that process and I understand that, in practice, they do not do so. Moreover, no Scottish or Northern Irish judges can currently be appointed to the tribunal either, without successfully completing an equivalent recruitment process in their respective jurisdictions, which, for the same reasons, has no attraction for them either. The absence of judges from those jurisdictions is all the more unfortunate as, under the changes being introduced by the Bill, the tribunal, with its widened jurisdiction, can be expected to hear more cases from Scotland and Northern Ireland than it does at present. One has to bear in mind that there is a process of appeal. Appeals from tribunals sitting in Scotland and Northern Ireland will go to the Court of Session and the Court of Appeal respectively. The absence, on the tribunal, of judges from those jurisdictions is bound to be noticed and this could raise sensitive issues which are best avoided.
The problem that I have briefly outlined was recognised in the Government’s consultation paper Streamlining Regulatory and Competition Appeals. In paragraph 5.13, it is noted that,
“the practice of requiring judicial officeholders to undertake a second appointment … for an equivalent office acts as a bureaucratic barrier to enabling any of these judges to sit in the CAT”.
Legislation was therefore proposed that would enable the heads of the respective UK jurisdictions to select and appoint judges whom they regarded as appropriate to sit as chairmen. Those would be judges of all divisions in the High Court in England and Wales, irrespective of the division to which they were appointed, and judges sitting in the Court of Session in Scotland and in Northern Ireland. They would be able to continue sitting as chairman without any eight-year limitation, which is the position under the Act at present.
The amendment has been proposed because, as presently framed, the Bill does not give effect to the proposal outlined in that consultation paper. If the Bill remains as it is, the bureaucratic barrier will remain in place. That is a matter of great concern to the Lord Chief Justice as head of the judiciary in England and Wales. In his view, with his knowledge of the resources that would otherwise be available to him, it is depriving the tribunal of some of the ablest judges to serve that jurisdiction. It is to be expected that the same sentiments will be felt in Scotland. I know, from recent discussions with people there, that they have had to appoint a leading member of the Bar because no judge is prepared to undergo the process and sit on the tribunal.
I need not go through the provisions, which are set out quite clearly in Amendment 41B. The essence, the key provision, is in subsection (4), which provides:
“Upon the nomination of the appropriate senior judge”—
that is, the senior judge in each jurisdiction—
“any judge of the High Court of England and Wales, the Court of Session or the High Court of Northern Ireland shall be a member of the panel of chairmen and shall hold and vacate office in accordance with the terms of their nomination”.
Of course, that process relies on the judgment of the senior judges, but they know their judges very well and are well able to judge those who are appropriate to sit on the tribunal and can be relied on to make the appropriate choices.
Finally, I draw the Minister’s attention to a slip in the amendment. It is a very small misprint, in subsection (2). The reference there to paragraph 2(4) of Schedule 2 should be to paragraph 1(4) of that schedule. That is the paragraph that is set out in subsection (4), from which I have just been quoting.
For those short reasons, I beg to move.
My Lords, Amendment 41CA is in the same group as the amendment moved by my noble and learned friend Lord Hope of Craighead. It should be understood that I agree with everything that my noble and learned friend has said in support of his amendment. The amendment in my name is a much shorter form of that. It sets out an addition to Schedule 2 to the Enterprise Act 2002:
“A judge of the High Court of England and Wales, the Court of Session or the High Court of Northern Ireland shall be eligible for appointment as a chairman if nominated by the Lord Chief Justice of England and Wales, the Lord President of the Court of Session and the Lord Chief Justice of Northern Ireland respectively”—
who are all the senior judges in their respective jurisdictions.
I do not think that the House would be assisted by my going over the detail of the submission made by my noble and learned friend Lord Hope of Craighead. The main point that I wish to stress is that, when one looks at the consultation document, to which reference has been made, it would appear that the purposes that the Government have in mind for their intended legislation are precisely the purposes that would be served by Amendment 41B, if it were accepted, and likewise my own Amendment 41CA, if the same thing happened to it.
It is instructive to bear in mind, therefore, that in paragraphs 5.14 and 5.15 of the consultation document, the Government explicitly say that they are “minded to legislate”: first, to deal with the appointment problem encountered in Scotland; and, secondly, to deal with the fact that those who achieve appointment as chairmen of the Competition Appeal Tribunal can serve for only eight years.
In conclusion, if the Minister is of the view that the government policy has changed, it would be instructive to the judges, both north and south of the border, if that change in policy was made quite clear. If there is some concern about the precise drafting of either my amendment or that moved by my noble and learned friend, it could be easily corrected in time for Third Reading.
My Lords, I was not sufficiently fast on my feet, but when he comes to reply to this debate, perhaps the noble and learned Lord, Lord Hope of Craighead, could make it clear whether the delicate implication of his amendment is that the Competition Appeal Tribunal is judicially underpowered for its tasks at present or, in particular, in the future.
My Lords, I will reply to that very briefly. I thought that I made it clear that the amendment is really provoked by the expanding jurisdiction in Schedule 8. The present position copes satisfactorily—it is not the ideal situation—but the expanded jurisdiction will greatly increase the workload of the tribunal and its visibility, because it is going to deal with private litigation as well as the regulatory authorities. It is that particular feature that is concerning the Lord Chief Justice and, I dare say, his equivalents north of the border and in Northern Ireland. I do not want to criticise anybody on the tribunal at the present time; I am trying to look forward to the expanded jurisdiction and see that it is served as well as possible.
My Lords, I am grateful to the distinguished noble and learned Lords, Lord Hope of Craighead and Lord Mackay of Drumadoon, for joining our debate and for their amendments, which are intended to address an anomaly in the appointment of Competition Appeal Tribunal chairs. I recognise their concerns and agree that this difference has existed for far too long.
As noble Lords will know, the CAT has a UK-wide jurisdiction and, as a result of the Bill, we expect the CAT to become the venue of choice for competition cases. As the noble and learned Lord explained, it will be busier. The CAT hears appeals against decisions by the regulators and competition authorities in cases arising in England and Wales, Scotland and Northern Ireland. I agree with the noble and learned Lord that the current process for appointing CAT chairs effectively acts as a barrier to judges sitting in the Court of Session in Scotland or the Northern Ireland High Court.
The Judicial Appointments Commission was created in order to remove the scope for any perceived political interference. As part of its responsibilities, judges who are appointed to the Chancery Division of the High Court are also assessed for appointment as a chair of the CAT. However, the Scottish and Northern Irish equivalents of the Judicial Appointments Commission do not have a remit to make recommendations for appointments of CAT chairmen. This means that the only way judges in either the Court of Session or the Northern Ireland High Court can sit as chairmen in the CAT is to seek appointment via an application to the JAC.
I agree with the noble and learned Lords that this cannot be right, nor can it be what was intended when the Judicial Appointments Commission was created. It seems needlessly bureaucratic, as the noble and learned Lord, Lord Hope, said. This is an issue on which we share common ground and I would welcome the opportunity to discuss it in more detail with the noble and learned Lords to see what progress we can make at Third Reading, including, if appropriate, tidying up any slip. I hope that what I have said reassures the noble and learned Lords and I therefore ask the noble and learned Lord, Lord Hope, to withdraw his amendment.
My Lords, I am extremely grateful to the Minister for her encouraging and constructive reply. I am quite sure that in discussion we will be able to find some satisfactory solution. There are two solutions on the table and I think that, with the assistance of the Bill team, we can probably work out a satisfactory answer. I look forward very much to achieving that before Third Reading. For the time being, I beg leave to withdraw the amendment.
Amendment 41B withdrawn.
41C: After Clause 80, insert the following new Clause—
“Review of operation of Schedule 8
(1) The Secretary of State must, before the end of the period of five years beginning with the day on which this Act is passed, appoint a person to review generally the operation of Schedule 8 to this Act.
(2) The review must address, in particular, the following matters—
(a) the number and outcome of cases brought under the Schedule,(b) the amount paid as a result of these cases to consumers, professional advisers and third party funders, and(c) the extent to which consumers overall have benefitted from the operation of the Schedule.(3) After the person appointed under subsection (1) has completed his review, he must compile a report of his conclusions.
(4) The Secretary of State must lay before Parliament a copy of the report made under subsection (3).”
My Lords, Amendment 41C also seeks to insert a new clause after Clause 80, but does so with a rather different objective from that of the noble and learned Lords who have just spoken.
The proposed new clause is titled, “Review of operation of Schedule 8”, which is fairly self-explanatory. Before going any further, I must take this opportunity to thank my noble friend Lady Noakes for having moved amendments on my behalf to this part of the Bill. I tabled them some months ago for discussion in Committee but unfortunately malign fate intervened to ensure that I was abroad on the day that they came to be discussed.
Reading the record of the Committee’s deliberations, there were a number of questions still in my mind. As a result, I tabled the amendment we are debating tonight. I also thank my noble friend Lord Eccles for having joined me in taking up the cudgels. He has his own characteristically insightful amendments, which we will come to in a moment and to which I have put my name. Finally, I thank the Minister and her officials for the courtesy and kindness in meetings that they have afforded both my noble friend and me. With those thanks, to horse.
It is easy to characterise amendments to Clause 8 as anti-consumer. Indeed, reading the remarks of the noble Baroness, Lady Hayter, in Committee, I felt that that was somewhat her default option. However, for me and my noble friend Lord Eccles, the reason for tabling the amendments is not—I repeat, not—anti-consumer; rather they aim to improve the chances that consumers will receive the compensation justly due to them, and it will not flow in large measure to third-party funders, professional advisers and the like.
I was grateful to the Minister for the meeting at which my noble friend Lord Eccles and I explained this, and attempted to explain how the Competition Appeal Tribunal—the CAT—would, in our view, find itself in the front line of legal wrangling of a type and range which, by reason of its past experience, it was ill fitted to handle. I confess that I returned from that meeting with my noble friend somewhat depressed at the outcome. I returned to my office to reflect on what could be said that would cause my noble friend and the noble Baroness, Lady Hayter of Kentish Town, better to understand the potential ramifications of the Pandora’s box they are so casually preparing to open.
While awaiting inspiration to strike, I leafed through the Financial Times—and there it was, on page 8. It is a full page advertisement in very large type:
“We won over $28 billion in judgments and settlements in the past two years”.
“650+ lawyers worldwide—all devoted exclusively to litigation, arbitration and white collar matters. Get us on your side”.
Equally characteristically, in very small type down the bottom, which one does not read so easily:
“Attorney advertising. Prior results do not guarantee a similar outcome”.
That is the sort of 500-pound legal gorilla that the CAT is going to have to deal with. One does not win $28 billion-worth of damages by saying, “After you, please, Claude. After you, please, George”. Your weapon of choice will be the legal equivalent of a knee in the groin.
Lest any noble Lords think I struck lucky, I refer the House to an article the next day in the Times. These cases will undoubtedly require, find and use expert witnesses. The article states:
“A High Court judge last week called for a cap on legal fees … Mr Justice Mostyn said that the fees in a case in which lawyers and experts were paid a total of £920,000 during a dispute over assets worth £2.9 million was “madness”. A key factor was the use of experts: six reports by forensic accountants were filed, as well as a joint expert statement at a cost of £154,000. In eight months since April, a ‘staggering’—
that was the judge’s word—
“further £700,000 was spent”.
These are the sorts of things that lie ahead for the Competition Appeal Tribunal. That is my thinking in wishing to see the Government implement the amendments we are discussing, to ensure that the 500- pound legal gorillas do not run off with all the money.
Having said that, I accept that there has to be a little worm of doubt in my apple of certainty. Maybe my fears are wrong: just suppose, despite all my concerns, the new system works well and delivers the right outcomes for consumers. I am not able to foretell. Equally, I hope my noble friend on the Front Bench will accept that she, too, has to have a little worm of doubt in her apple of certainty. I hope the noble Baroness, Lady Hayter of Kentish Town, who I know to be an individual of discernment and sound judgment, can accept that she, too, cannot be certain. Only the passage of time, with its attendant experiences, can answer this question.
That is why I have tabled the amendment—so we can see what really happened in real life and not in our potentially fevered imaginations tonight. My amendment requires the Secretary of State, before the end of five years, to appoint a reviewer of the operations of Schedule 8. The reviewer can roam widely but he must answer three key questions. The first is a description of the cases brought under the schedule and the outcomes to them, so that we can form an overall strategic view of how the schedule has worked.
Secondly and most importantly, he has to split the proceeds paid between consumers, professional advisers and third-party funders. This will enable us to see the level of benefit to consumers. If, for example, consumers receive 90% of the total, it would be one thing. If, as I fear, they receive less than 50%, it will be another. Finally, a report on the general operation of the schedule, and how it benefits consumers, would open the way for some recalibration of legislation in the light of experience.
As this piece of legislation has such potentially huge implications as we move from an opt-in regime with, to date, only one body authorised to bring proceedings—Which?—to an opt-out regime where anybody is free to have a go, there is a need for a degree of formality. My amendment requires the Secretary of State to lay a report before Parliament, which will ensure the appropriate level of debate, scrutiny and follow-up.
To conclude, this is an amendment by which nobody loses. The only winners are truth and accuracy. I fear that my noble friend will be told to resist. There will be the usual guff about creating precedents. I argue that this change in our law is unprecedented and that the potential implications deserve a serious, formal, forensic follow-up and analysis. My noble friend will no doubt be told that her department will carry out a thorough review of the outcomes. Quite possibly. However, a review by an outsider, poking his or her nose disobligingly into various corners, is likely to be far more effective. We would also avoid the risk, if the results of the review are unwelcome and disobliging, that the press release, if any, may by some strange alchemy appear at 4.30 on a Friday afternoon.
I do not suggest that my amendment meets the exacting standards for parliamentary draftsmen. All I am asking my noble friend to do today is to accept that there has to be some uncertainty in all our arguments—mine and hers—and that she will, in consequence, take the amendment away for one final look before Third Reading. I conclude by saying to my noble friend, to paraphrase the famous phrase, that if she has nothing to hide, she has nothing to fear from my amendment. I beg to move.
My Lords, I put my name to the amendment and I will make a brief addition to what my noble friend said. This is a very significant change to the law. It is quite complicated, moving from the present arrangements of opt in to the double arrangement of opt in and opt out, going beyond, interestingly, what the European Union advises, and perhaps not concentrating enough on alternative dispute resolution techniques. Having said all the way through that the one thing we do not want is a US-style lawyers’ charter—we are all agreed on that—unfortunately the Bill is drawn so widely that we run a real risk that that is what we will get.
We need to remember that we are in the Anglo-Saxon camp and have a tendency to do things in a similar way to the way they are done in the United States—in the creative arts or wherever, and including, I fear, the law. We also need to remember that where such arrangements have been made in other jurisdictions, they have not been free of problems. Australia, which is often cited, has had considerable trouble about the authorisation of those who are to conduct the class actions or collective proceedings. It has been described as skirmishing. The way the Bill is drawn, we will have very similar problems with the question of who is to be authorised and who is not—because the person who is not may not be very happy.
New subsection (8)(b) states that a representative can be appointed,
“only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings”.
I will return to that on the next group, but it is very widely drawn. In support of my worry about the very wide drafting, there was a long and relatively confused debate in the other place in the Bill Committee. The answer, both there and here, seems to be, “Well, the Competition Appeal Tribunal will sort it all out”. I think that that puts too much of a burden on the tribunal and is unlikely to work well.
My Lords, I am delighted to see my noble friend Lord Hodgson back with us. We missed him on the day when the amendments were finally reached, but my noble friend Lady Noakes introduced his amendments with great clarity and verve. We had a good debate and we now have several different amendments, some of which we will be discussing in a minute. I am grateful for the efforts that my noble friends Lord Hodgson and Lord Eccles have made to explain their thinking to me in person. We have tried hard to meet their concerns. Having talked to my colleagues in the Government, I am now able to respond positively.
Although this amendment would require a review of the schedule, I believe that its driving force is to examine the effect of opt-out collective actions. I should say that the Government are happy with our proposals and believe that the existing opt-in regime is prohibitive, with only one collective case in 10 years involving 130 claimants. Therefore, the changes in the Bill are important. I do not share the pessimistic view about US-style claims, mainly because of the safeguards that we have written into the Bill, which we will no doubt come on to on the next amendment. However, I wanted to say that we have had a very good discussion, we have listened and we are happy to agree to a review after five years which covers the ground set out in the amendment. Following a further discussion that I had with my noble friend this morning, we will also commit to a ministerial Statement on the review here in Parliament. I am afraid that we cannot put the review in the Bill, as that would have ramifications for other possible reviews elsewhere in the Bill, but I can commit to a review, and I know that the Confederation of British Industry, which I met on Thursday because of its concerns about this part of the Bill, is content with that.
Of course, Schedule 8 does not just introduce an opt-out collective actions regime. It reforms the entire private actions regime for the benefit of both businesses and consumers. I think we are all agreed that consumers come first here. Therefore, the Government believe that it would be appropriate for the review of the impact of Schedule 8 to examine the whole range of reforms. The review would take into account both opt-in and opt-out collective actions, the fast track regime, the number of cases under the CMA redress power, collective settlement cases and, of course, the provisions outlined by my noble friend in his amendment. In those circumstances, I hope that my noble friend will feel able to withdraw his amendment.
My Lords, I am extremely grateful to my noble friend for her response. Of course I would like the provision in the Bill, because that gives it real permanence, but I spot two-thirds, three-quarters or, perhaps, only 5% of a loaf, and I will certainly grab it. In the circumstances, I beg leave to withdraw my amendment.
Amendment 41C withdrawn.
Amendment 41CA not moved.
Schedule 8: Private actions in competition law
41D: Schedule 8, page 113, line 3, at end insert—
“( ) when it considers that the proposed collective proceedings are justiciable and have merit, ( ) when it considers that early settlement will not be achieved either by alternative dispute resolution or any other means of resolving the dispute.”
The purpose of this group of amendments is to try to ensure that we begin as we mean to go on. It has been said right from the beginning that the focus of the regime is on the public, consumers, traders and small businesses that are given a bad time in the marketplace. I think we all agree that they are the people who should be enabled to settle their claims and not to make the fact that the claims can be settled into a charter for legal advisers, third-party funders and ad hoc organisations collected together. That has been the Government’s position right from the start.
Of course, the fact that we focus on the people who are in the best position to put the claim because they have suffered the damage does not mean that the legal profession will not be involved. No one would dream of accepting any form of settlement in this field without taking good legal advice. That would apply to defendants as well. Nevertheless, the endeavour should be, as my noble friend said, that the benefit does not go to what you might call the legal outriders: claims managers, hedge funds and so on.
The question I asked myself on this group of amendments was how to achieve more certainty that we will maintain the focus on consumers. That seems to me to be a matter of the balance between the statute and the tribunal rules. Those are the two places in which the rules of the game will be settled. To get the balance right, I think we must ensure that some things which are not at the moment mandatory under the Bill become things which must happen rather than things which may happen.
That is the reason for Amendments 41D and 41F. Three matters are added by those amendments to what will be subsection (5): two at the beginning and one at the end. The first to be added at the beginning is for the competition authority to make sure that,
“it considers that the proposed collective proceedings are justiciable and have merit”.
There is much evidence of vexatious claims being made in other jurisdictions. If those claims are speculative or even worse—I think there is evidence of this in some provinces in Canada whose systems have been cited—they become blackmail claims. The argument is put that it would be less expensive to settle and pay over some money than to fight through a collective action.
The second addition that Amendment 41D seeks to insert is that the tribunal may make a relevant order only,
“when it considers that early settlement will not be achieved either by alternative dispute resolution or any other means of resolving the dispute”.
There is, of course, a concentration on alternative dispute resolution, and that comes also from Europe. I think we would all want to feel that the tribunal had a statutory duty to find out not just whether or not such a system is available, which is the way the measure is drafted in its rules at present, but to satisfy itself that these matters had been considered and that if there was a faster and cheaper way of coming to a resolution which was in the interests of all the parties, it would be followed. As we know, sometimes irrationality creeps into disputes, when a rational approach tells you that it would be better to settle.
Thirdly, another of my proposed amendments seeks to deal with the fact that my noble friend on the Front Bench said in Grand Committee that the Government did not want to restrict the flexibility of the Competition Appeal Tribunal. I quite accept that. Therefore, I have included in Amendment 41F the catch-all provision:
“Nothing in subsection (5) prevents the Competition Appeal Tribunal from taking into account any other matter which it considers to be relevant”,
so that it is not constrained.
I have tabled two small amendments because I was concerned with the thought that the Bill as drafted seemed to imply that only one person would apply for authorisation. It seems to me likely that if there is a fairly big issue and the Bill is very open regarding who may apply for authorisation, two or three people may apply. Therefore, Amendments 41E and 41G seek to replace “the” with “a” at lines 4 and 14 of page 113. I am told that that drafting is defective but I would like to understand the Government’s position on this point. If more than one person seeks authorisation, how do the Government see that situation being dealt with? Presumably, some form of appeal procedure will need to be made available to those who are not chosen. I do not think the Bill covers that issue. I refer back to my short description of a Bill Committee debate in the other place where that point was raised. As far as I can see, it was never settled, and is not settled in the Bill as drafted.
Amendment 41H seeks to define and limit who can bring a claim. It seems to me that it has been Which?, and now we are going to an open field. Would it not be much more sensible to make a move which greatly expands the number of people who can make a claim and, of course, expands the type of claim they can make from that of opt in only to opt in and opt out, and not to have the possibility of a very wide range of people applying for authorisation? Indeed, if we are to keep the focus on the public, traders and businesses, we want to make sure that those affected are represented by people who collectively have their interests at heart and know a bit about the detail of the business that they are in as well. Therefore, Amendment 41H seeks to leave out “a person”, which is the general description at the moment, and insert,
“any appropriate consumer representative body or trade association”.
I am bound to say this seems to me to be completely in line with what the Government have said throughout.
At Second Reading, the Secretary of State said that this provision is not for lawyers but for the people who are directly affected. In responding to consultation, the Government said that lawyers, third-party funders and special purpose vehicles would be ruled out. However, the Explanatory Notes to the Bill contain the phrase that I have used. Therefore, in turning the proposition from the negative—that it is not to be this kind of person—to the positive—it is to be that kind of person— I believe that I am acting in accordance with the Government’s written and expressed policy in inviting the Government to do what they have already said they intend to do.
I turn to the amendments to new Section 47B(8)(b). It is important that I read into the record that new Section 47B(8)(b) says,
“only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings”.
That is a very subjective test. The phrase “just and reasonable” is more normally represented as “fair, just and reasonable”. The latter phrase is very frequently used in proceedings to judge the behaviour of people in the past. It comes into negligence actions very frequently and is used to judge the past. I have asked whether there are precedents for it being used to judge the future. At present, no precedent has been produced. I believe that it will not be at all easy for the Competition Appeal Tribunal to look at a prospective authorised person and say, “Oh goodness, yes, I can see as a matter of judgment that this person is going to be just and reasonable”. We have to remember that there is no previous track record because this is a new procedure including the opt out, which has not been the case previously. Therefore, Amendment 41J proposes to substitute for the relevant wording the phrase,
“the person has the experience and standing appropriate to the size, type and extent of the claims to be made”.
Amendment 41K seeks to,
“leave out ‘just and reasonable’ and insert ‘just, reasonable and in the primary interests of the class members’”.
In the first case, what we are looking at is references that the party can bring. What have they done in the past? Who are they? Do they have the knowledge and the skills which would make them good leaders of a collective action? In the second case, we are looking at their motivation. Do they really want to work in the interests of the class members or not?
I apologise for speaking at length. In summary, a scheme is involved in these eight amendments. They are designed to shift the balance to give more statutory backing to the operations of the Competition Appeal Tribunal as it writes its rules and to enable the regime to develop against the background of a scheme which has been decided by Parliament and not one which is left entirely to the tribunal. I beg to move.
My Lords, I declare my interest as a partner for the last 45 years in the global commercial law firm, DAC Beachcroft. I wish to speak particularly to Amendments 41H, 41J and 41K. In doing so, I support my noble friend in urging caution when examining Schedule 8 to the Bill.
This is a complex area of law and procedure and I would be the first to say that I do not understand it all, but I think that the overview is this. We are now dealing in this group of amendments with situations where, first, one or more businesses have been found to be in breach of competition law; secondly, numerous consumers have been affected as a result; thirdly, the individual amounts by which each consumer is affected are small; fourthly, a collective mechanism is therefore needed; but, fifthly, getting all affected consumers to opt in to join a legal case has not worked to date. Against that background, I can well understand why the Minister has promoted the concept of opt-out, whereby a representative person can take action on behalf of all those affected unless they positively object to being included and so choose to opt out.
My caution is this: that is a wholly new concept in the United Kingdom, so I argue that we must be cautious. We must balance the rights of the consumer with the rights of each individual business, particularly small and medium-sized enterprises, accepting of course that we are dealing with situations where business has been in breach of its market obligations. My noble friend has outlined proposals that examine carefully some areas of the detailed mechanics in this schedule and I support their overall approach, which seems to me to be one of proportionality. I recall, when I was speaking from the Benches opposite on the Compensation Bill, that I urged similar caution when we were looking at the regulation of claims management companies in 2005. I venture to say that if we had been a little more cautious, perhaps we would not have been quite so inundated with nuisance calls and texts about payment protection insurance, where a similar balance has had to be struck.
So how do we promote the interests of the consumer in a proportionate way? I agree that we need to achieve greater control over the identity of the representative person who decides to launch down this compensation trail on behalf of others. To me, the proposal that we limit this to trade bodies has considerable force but, if that is felt to be too limiting, we should lay a clear marker that the guiding principle to be applied in appointing a representative person is that it is in the interest of the consumers, the so-called class members, to do so. I support Amendments 41H and 41K in particular but also applaud the thinking behind the amendments generally.
My Lords, I thank my noble friend Lord Eccles for his perceptive analysis, and for the discussions that we have had where we have found much common ground. I am also most grateful to my noble friend Lord Hunt of Wirral for intervening to urge caution from an admirably common-sense point of view.
I shall address each of the amendments in turn, particularly their possibly perverse effects. Amendment 41D would require us to place in the Bill scrutiny of the strength of a claim and the consideration of alternative dispute resolution. I agree that weak claims should not be brought and that parties should attempt to reach a settlement. Rule 7 of the draft Competition Appeal Tribunal rules provides for this, requiring the CAT to consider the strength of the claims and the availability of alternative dispute resolution.
It is appropriate for these requirements to be in the CAT rules so that they can be more easily modified and strengthened if need be. This ensures an effective regime that promotes the interests of consumers. Although the CAT rules have been made available in the House Library, they will be the subject of formal consultation in the new year, well ahead of commencement. I undertake that the points on both the scrutiny of the strength of the claim and the availability of alternative dispute resolution will be included in the consultation document. To clarify, the CAT rules are made via secondary legislation. They are the responsibility of BIS Ministers and produced by the Government. This means they are binding on the CAT, cannot be ignored and cannot be changed by the CAT. They are the right place for most of the concerns that we have outlined today.
The micro-amendments, Amendments 41E and 41G, would limit a collective action to one representative. I understand why my noble friend would like to prevent multiple representatives bringing claims, as that could lead to businesses facing uncertainty and larger claims for damages. However, these mini-amendments would also have unintended consequences, as he hinted, because they would prevent hybrid claims. These are claims where more than one group of claimants—for example, consumers and small businesses—join together to bring a case. For instance, in a claim for damages following a cartel in rail fares, both consumers and SMEs may wish to make a claim. During the private actions consultation in 2012, however, business groups said that the one thing they wanted was finality and closure. They want to be able to pay out one set of damages and know that it is binding on those within that action.
To prevent a business having to respond to multiple representatives, there is discretion for one representative to be the lead representative. I am happy to discuss this further with my noble friend Lord Eccles in the context of the consultation if that would be helpful. Ruling out hybrid cases, as these mini-amendments would, means that businesses might face an opt-out collective action as well as multiple follow-on actions. There would be an incentive for claimants to race each other to court to commence a claim before anyone else, even if that claim was then dropped. This type of behaviour could lead to just the kind of litigation and cost that we all want to avoid.
Amendment 41F would provide the CAT with discretion to take into account any other matters that it considered relevant when authorising the representative. The Bill already provides the CAT with a great deal of discretion, and the CAT rules will include other factors that the CAT must take into account. This is likely to include any other factors that the CAT considers relevant.
Amendment 41H would exclude SMEs from bringing forward collective actions that would reduce their access to redress. We have deliberately avoided a prescriptive list of eligible bodies and instead afforded the CAT discretion, in accordance with the CAT rules, to determine whether a body is suitable. The CAT is a specialist competition court with a strong track record in dealing with consumer detriment. The Government believe that the CAT is best placed to scrutinise every body that seeks to act as a representative.
The CAT includes High Court judges—and may include some more if we make progress on the other amendment—who are experienced in making decisions based on broad criteria. It is appropriate that they use their experience to scrutinise each case on its merits. However, we would welcome contributions to our consultation on the collective action provisions of the CAT rules to help to ensure that only suitable bodies may bring collective actions.
Amendment 41J would require that the CAT may authorise a person to act as a representative only if they had appropriate experience and standing. The Government believe that this could be problematic. Given the lack of collective action cases brought forward in the past 10 years, it would be extremely difficult for the CAT to find a representative who would satisfy these claims. It is the Government’s intention to ensure that only appropriate representatives can bring forward cases, with discretion given to the CAT to achieve just that. Again, I will undertake to ensure that this concern is covered in the consultation.
Amendment 41K would require that the CAT believes the representative will act in the best interests of the class members. I agree with the sentiment of the amendment. Indeed, the rationale behind wanting only consumer organisations and trade bodies to bring collective actions is that they will represent the claimants’ best interests. To this end, we have introduced a similar test in the CAT rules. I am reluctant to place such a requirement in the Bill as it may deter those cases that have a mixture of consumers and SMEs. This is because the CAT might be forced to decide that a consumer organisation cannot represent a business or that a trade body cannot represent consumers. In turn, this would lead to business having to respond to multiple representatives, and possibly claims, which, as we have already, said we are keen to avoid.
I have discussed these amendments with noble Lords and set out some further considerations this evening. I hope that I have provided some useful reassurances about the consultation process. I hope that my noble friend will withdraw his amendment.
My Lords, I am very grateful to the Minister for having met some of the underlying issues in her answer. Possibly the most immediate is that I wanted to change the word “the” into the word “a” twice. My noble friend’s answer showed just how complex that was. She went into a great list of things that could happen if you did not have “the” and suddenly found you had only “a”. I fully accept that. This is a very complex situation. My worry is that I do not believe that it has been carefully thought through.
Now we are dependent on the consultation. The questions that arise are: who will design the consultation? What questions will be asked? What are the answers? What is the Government’s response to those answers? That is a great worry, particularly on the SME point, and here I thank my noble friend Lord Hunt for his professional contribution.
I worked in industry for a great deal of my career, and for quite a lot of the time I was involved with small and medium-sized enterprises. I cannot imagine any of those that I was involved with thinking of going into a collective action unless they were represented by their trade association or some body that would manage to get itself organised in such a way that it could be defined as a trade association, which is not a very difficult thing to do. The idea that bodies representing consumers and trade associations are not wide enough but all that needs adding are small and medium-sized enterprises does not seem to run.
I will think very carefully about what was said about this amendment and what was said in reply and see whether there is a case for bring the matter back at Third Reading, obviously on a somewhat different basis. In the mean time, I look forward to the assurance that there will be meetings with people who know about these matters before the consultation goes out.
It is quite surprising that the legal profession, apart from my noble friend Lord Hunt, has been absent from these discussions. The legal profession is very keen to participate in your Lordships’ discussions. This is a major change in the law. We had very helpful assistance from the noble and learned Lord, Lord Hope, but no other. That is quite surprising.
I retain the apprehension that this is a minefield and that we may get blown up. I beg leave to withdraw the amendment.
Amendment 41D withdrawn.
Amendments 41E to 41K not moved.
41L: Schedule 8, page 114, line 25, leave out “Subject to subsection 6,”
My Lords, I shall speak also to Amendments 41M and 41N. We are still concerned with the implications of Schedule 8, and here we get to the vulgar question of the distribution of the money. This group of amendments is designed to ensure that professional advisers benefit financially only commensurately with the take-up by consumers.
As presently drafted, proposed new Section 47C(5) requires that,
“any damages not claimed by”—
“within a specified period must be paid to the charity … prescribed by … the Lord Chancellor”.
So far, so good, but subsection (5) is subject to subsection (6), which allows the tribunal to order that these unclaimed damages,
“be paid to the representative in respect of all or part of the costs … incurred”,
which will presumably include legal and other fees. This surely cannot be right or just. Let us take the case of an opt-out class that assumes that 100,000 consumers were affected. Let us assume that only 20,000 consumers claimed. Under the Bill as drafted, the professional advisers could be paid 100% of their fees, even though only 20% of the affected consumers received any compensation. Amendment 41L would remove the let-out available to the CAT in subsection (5) and Amendment 41M would require that costs be paid out only in strict ratio to the payments to consumers.
My amendment has another useful by-product. Under opt-out class actions, no one can tell precisely how many consumers have been affected because they do not have to reveal themselves. Presumably the representative of a class and the CAT will agree an estimate of the likely number. In the Bill, however, there is no incentive—perhaps even the reverse—for the representative to seek out and provide compensation to those consumers affected. It must surely be important for the representative to have to make a genuine effort to find the disgruntled consumers, and Amendment 41M would give a direct incentive so to do. If we do not do this, we risk replicating what have become known in the US as “coupon settlements”, under which advisers take 100% of their fees and offer affected consumers the sum awarded, say $20, in the form of a reduction on their next purchase in the store affected. Many consumers do not claim; even fewer who have claimed ever use the coupon.
Amendment 41N would merely replicate the provision in respect of new Section 49A where a collective proceedings order has been made. This seems equally important because, as I understand it, this involves a case where parties have agreed a settlement without going through the difficulties, expense and time involved in proceedings and then go to the CAT for approval of the deal they have struck. There must be a real danger that in the course of negotiating the settlement the professional advisers will suggest that a useful part of the settlement could be that their fees are paid in full. A defendant may then be inclined to accept that requirement in an attempt to ensure a speedy settlement.
This group of amendments, like the others which we have been discussing tonight, are designed to put consumers and not professional advisers at the centre of our deliberations. They give the tribunal some additional statutory protection against the pressures that will, I fear, be brought to bear on them. I beg to move.
My Lords, I strongly support my noble friend for all the reasons I outlined a little earlier. His Amendments 41L to 41N seek to promote the interests of the consumers above those of others and should therefore be warmly welcomed. If the representative person and the lawyers and funders working with them are incentivised to find enough of the consumers to make the compensation process worth while, that must be the right way forward. Surely the worst thing we could do is create a system that is intended to provide greater benefit to consumers and succeeds in taking money from the guilty parties, but then fails to pass it on to the consumers themselves. The case is so strongly made, and I support it wholeheartedly.
My Lords, Amendments 41L, 41M and 41N place certain restrictions on the amount of legal costs that can be awarded to a representative. The Government agree with my noble friend Lord Hodgson: they do not want lawyers gaining excessive financial benefit from this regime. Any damages should be awarded to the claimants. We agree with the overall objective of getting the cash to consumers. For that reason, the Government have placed in the Bill measures to restrict the costs lawyers can claim.
The first key safeguard is that the CAT must certify that a representative is suitable to bring a collective action. The draft secondary legislation requires the CAT to consider whether the representative has a material interest that conflicts with the interest of class members. That means a law firm will not automatically be able to bring a claim. Secondly, the Bill prohibits the CAT from awarding treble damages, which limits the scope of unclaimed damages. Thirdly, the Bill contains restrictions on the financing of claims because it prohibits damage-based agreements, which means that lawyers cannot take away some of the damages from claimants. The Bill also does not provide for a claimant to be able to recover any uplift in legal costs from a conditional fee agreement—so-called no-win no-fee agreements.
A conditional fee agreement provides for a success fee for lawyers who win a case. Unlike standard legal fees, which can be recovered from the losing party, a conditional fee agreement has to be paid by the party being represented. In a collective action case, that may be the consumer organisation or the trade body. Therefore, it is in their interest to avoid conditional fee agreements or, where they enter into them, to negotiate the success fee so that it is as low as possible.
It is imperative that damages are paid to claimants. Therefore, if a representative wishes to use any unclaimed damages to cover their legal costs, two stages are set out in the Bill. This comes to the heart of the points that my noble friend Lord Hodgson raised. First, legal costs may be recovered from unclaimed damages only after claimants have had an opportunity to come forward and claim their damages. That means that if all claimants come forward and claim their redress, there will be no unclaimed damages to apply for to pay legal costs.
Secondly, any award of unclaimed damages has to be approved by the CAT. Additionally, the draft CAT rules, which noble Lords will recall is secondary legislation on which we will consult, require the CAT to consider the ability of the representative to cover legal costs if ordered to do so and will require an estimation of the legal costs. Any further restrictions may discourage representatives from taking on these cases completely, as they will have very limited means of recovering their costs, which may mean that the consumer receives little or no redress.
I hope that my noble friend is reassured by the discussion we have had on these three amendments that we are aware of the concerns around introducing an opt-out regime; that we have addressed the concerns that have been expressed through safeguards; and that we stand ready to undertake a strong consultation on some of the details we have debated. I hope that he feels able to withdraw his amendment.
My Lords, there is no half a loaf on this lot, that is for sure. This is not even a small slice. I listened carefully to what my noble friend had to say. She repeated some parts of the Bill, which my noble friend Lord Eccles had already said we are not entirely happy with, to be quite candid. She also said quite a lot quite quickly. I would not like to pretend I could take in the full implications, so I will read that very carefully.
One of the issues she did not address was: what incentive will we have under the new regime for the representatives to find the people and pay them? If they can possibly be paid their fees without finding the consumers, why will they bother? I honestly do not think that we have had a satisfactory answer to that point. We need to find a way to deal with the people who are putting those accused to a great deal of time, trouble and expense, and then do not take the trouble to make sure that they are paying out to the affected parties. We have a gap in the rules here and in the way we are approaching this. I hope that my noble friend will think carefully about that. I will certainly want to before we get to Third Reading next week or whenever. In the mean time, I beg leave to withdraw the amendment.
Amendment 41L withdrawn.
Amendments 41M and 41N not moved.
42: Schedule 8, page 120, line 38, at end insert—
“(3A) The CMA may approve a redress scheme under subsection (2)(b) subject to a condition or conditions requiring the provision of further information about the operation of the scheme (including about the amount or value of compensation to be offered under the scheme or how this will be determined).
(3B) If the CMA approves a redress scheme subject to such a condition, it may—
(a) approve the scheme subject to other conditions;(b) withdraw approval from the scheme if any conditions imposed under subsection (3A) or paragraph (a) are not met; (c) approve a redress scheme as a replacement for the original scheme (but may not approve that scheme subject to conditions).”
My Lords, with this amendment we turn our attention to Schedule 8 and focus on some other aspects of competition law.
Effective competition is good for the consumer, and this part of the Bill reforms the regime for private actions to give businesses and consumers redress where they have been harmed by anti-competitive practices. However, the current private actions regime is not delivering the redress to consumers or SMEs that we would like. Therefore, Schedule 8 reforms the existing regime. As part of those reforms, the Government recognise that business may want to offer redress voluntarily, so the Bill provides for the Competition and Markets Authority to approve redress schemes.
It is imperative that, for the business to make use of redress schemes, we strike the right balance in incentivising business and providing redress to consumers. This amendment allows for the CMA to approve an outline of a redress scheme when the CMA finds a breach of competition law. That removes the requirement for a business to submit a complete scheme at that time. That change is being made to prevent businesses being deterred from putting forward a scheme at an early stage. Businesses are concerned about disclosing information while still under investigation and the costs of setting up a scheme which may ultimately not be approved by the CMA.
If the CMA approves the outline redress scheme, it will be able to impose a deadline by which the business must have complied with conditions necessary to set up the full scheme. Once the full scheme has been created, the amendment allows the CMA to withdraw its approval of the scheme if it has not complied with the conditions. It also enables a revised scheme to be considered. I beg to move.
My Lords, we support the intention of this amendment. I know that it has been brought to the attention of BIS that Which?, certainly, is worried that the wording would not have the effect it wants. It looks as if the CMA will be bound into a pre-approved school and cannot object to it later because of the inability to revoke pre-approval once given. This is technical and not for tonight; if between now and Third Reading the Government’s lawyers concur with Which? that the wording is not quite right, perhaps we could bring it back and help it at that stage.
My Lords, I am grateful to the noble Baroness. I was aware that Which? had expressed some concerns during the course of today. The amendment actually flowed from the work of the private actions working group, which involved different stakeholders on this Bill. We have had discussions with Which? and we are happy with the form of the amendment. I can brief the noble Baroness separately if she wishes, but I do move the amendment.
Amendment 42 agreed.
43: Schedule 8, page 120, line 40, at end insert—
“(4A) But, where the CMA approves a redress scheme subject to a condition of the kind mentioned in subsection (3A), subsection (4) does not prevent further information provided in accordance with the condition from forming part of the terms of the scheme.”
Amendment 43 agreed.
44: Before Clause 81, insert the following new Clause—
“Insurance cover for money received or held by lettings agents in the course of business
(1) Subject to the provisions of this section, a person may not accept money from another person (“T”) in the course of lettings and property managing agency work unless there are in force authorised arrangements under which, in the event of his failing to account for such money to the person entitled to it, his liability will be made good by another.
(2) In this section T is any person who seeks residential accommodation which is to let or who has a tenancy of, or other right or permission to occupy, residential premises; and a “relevant payment” means any sum of money which is received from T in the circumstances described in subsection (1).
(3) In this section “lettings agency work” has the same meaning as in section 83 of the Enterprise and Regulatory Reform Act 2013 (redress schemes: lettings agency work) and a “lettings agent” is a person who engages in lettings agency work.
(4) In this section “property management work” has the same meaning as in section 84 of the Enterprise and Regulatory Reform Act 2013 and a “property managing agent” is a person who engages in property managing work.
(5) The Secretary of State may by regulations made by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament—
(a) specify any persons or classes of persons to whom subsection (1) does not apply;(b) specify arrangements which are authorised for the purposes of this section including arrangements to which an enforcement authority nominated for the purpose by the Secretary of State or any other person so nominated is a party;(c) specify the terms and conditions upon which any payment is to be made under such arrangements and any circumstances in which the right to any such payment may be excluded or modified;(d) provide that any limit on any such payment is to be not less than a specified amount; and(e) require a person providing authorised arrangements covering any person carrying on lettings agency work to issue a certificate in a form specified in the regulations certifying that arrangements complying with the regulations have been made with respect to that person.(6) Every guarantee entered into by a person (in this subsection referred to as “the insurer”) who provides authorised arrangements covering a lettings agent shall insure for the benefit of every person from whom the lettings agent has received a relevant payment as if—
(a) the guarantee were contained in a contract made by the insurer with every such person;(b) except in Scotland, that contract were under seal; and(c) where the guarantee is given by two or more insurers, they have bound themselves jointly and severally.”
Amendment 44 stands in the name of my noble friend Lord Stevenson and myself and is about client money protection. It would require every letting agent to have the money they hold either belonging to the tenant, because it is being paid by way of advanced rent, or belonging to a landlord in that it concerns rents received but not yet handed on, to be protected, so that even if the letting agent were to disappear or go bankrupt, such money would be safe and available to the tenant or the landlord. This is something that is required of lawyers, of other professionals and of estate agents, who hold money belonging to others. It is what is needed for rents collected by letting agents on behalf of landlords. It is not their money, and it should be held separately in a protected client account.
It is no small issue. We know of at least 500 cases of letting agents taking money from tenants as a holding fee, but then not letting them move in and keeping the money. This autumn we saw an agent, Mr Glasson, jailed for 21 months because he unlawfully and dishonestly kept rents and deposits; Mr Jackson of Suffolk Lettings stole £70,000 from landlords; and another letting agent, Mr Farrer, stole £17,000 in rents and deposits. This money was neither paid back to tenants nor passed on to landlords. Shirley Player was jailed for stealing £400,000 in this way.
This is money that is not going into the housing market. It is depriving landlords of their income, and tenants of their security. Amendment 44 is supported by landlords as much as it is by tenants. It is backed by the National Landlords Association, the Royal Institute of Chartered Surveyors, the British Property Federation, the Association of Managing Agents, the Association of Letting Agents, the Property Ombudsman, Ombudsman Services, Crisis and Shelter. It was also recommended by the CLG Select Committee in the other place. As David Cox, who leads ARLA, said, client money protection,
“is fundamental for tenants and landlords to ensure they have peace of mind should an agent go bust or take off with their funds”.—[Official Report, 3/11/14; col. GC 594.]
Similarly, a director of Kinleigh Folkard and Hayward said that it should be compulsory for all agents to subscribe to a client money protection scheme. Again, Savills urged the Government to make it compulsory for letting agents to have client money protection. It said that millions of pounds of consumers’ money is being paid to letting agents, despite the fact that,
“anyone can open a letting agency unregulated and with no checks on their bona fides”. —[Official Report, 3/11/14; col. GC 594.]
We are talking about vast amounts of money. It is estimated that perhaps £2.7 billion is held at any one time—in other words, rents collected but not yet paid on to a landlord. We want every letting agent to maintain a segregated client bank account for such client money, with written confirmation from the bank that all money in that account is the client’s, and—importantly—that the bank is not entitled to combine that account with any other account, nor exercise any right to offset money in the client account, because any sum has been owed to the bank by the agent.
There is also client money protection insurance. That would ensure that when an agent fails to manage a client account properly, the landlord can claim against the scheme, because the largest losses are where a letting agent goes into liquidation and the client account has been emptied by the agent. Ombudsmen cannot help in those circumstances; it is simply no good making an award against a bankrupt agency. We know, for example, that when the London Housing Solutions agency went into administration, 100 landlords were left without the rents that had already been paid over by their tenants, but which never reached them. Amendment 44 would require letting agents to have appropriate client money protection to safeguard both landlords and tenants.
I think that the Government were convinced by our argument, and by the representations of RICS, landlords and everyone else in Committee. However, instead of saying, “Yes, this is the right thing to do”, and making letting agents the same as estate agents—which, as it happens, hold very little money—the Government have said, “Well, let’s get letting agents to say whether they have client money protection”. That is in Amendments 44A, 44B and 44C, that the Government have tabled. But that is an absolute damp squib. Any letting agent that already has client money protection already tells you that. They do not need this Bill to make it known; they boast about it. The problem is not the people who have got client money protection, it is the letting agents who have not got it.
The Government amendments would, I am afraid, add nothing, and they would not help tenants at all, because tenants cannot shop around to find a different letting agent. The landlord does at least have some choice, so at the point they choose the letting agent, they can see whether they have client money protection; but they cannot keep on checking on it after that. The tenant has absolutely no ability to shop around. They have to pay the rent to the letting agent selected by the landlord, with absolutely no guarantee that the rent will actually reach the landlord.
The Minister has said in Committee that the client money protection that we have been urging could,
“make it difficult to encourage landlords to invest in properties”.—[Official Report, 3/11/14; col. GC 600.]
But it would have completely the opposite effect. It is the security given to landlords by client money protection that will encourage them to invest, knowing that all rents that are being made over to the letting agent by tenants are safe and sound.
This amendment is wanted by tenants, by landlords, and by reliable agents. I beg to move.