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Grand Committee

Volume 787: debated on Wednesday 29 November 2017

Grand Committee

Wednesday 29 November 2017

Scotland Act 1998 (Insolvency Functions) Order 2017

Considered in Grand Committee

Moved by

My Lords, this order is one of a number of measures which are intended to update and modernise corporate insolvency in Scotland with particular regard to insolvency rules for the winding up of companies. This follows the Insolvency (England and Wales) Rules 2016, which modernised the process relating to company insolvency in England and Wales.

The law on corporate insolvency in Scotland and the respective legislative competences of the UK and Scottish Parliaments and Governments is complex. That is particularly the case with regard to winding up. For example, in relation to business associations, the general legal effect of winding up is reserved but the process of winding up is excepted from this reservation. Consequently, in practice, it is not always clear whether a winding-up matter is covered by reserved or devolved legislation.

To address this, and in order to facilitate the efficient, effective and user-friendly modernisation of, in particular, company insolvency rules for Scotland, both the UK and Scottish Governments agreed that we should legislate to remove the need for a complicated exercise of assessing which rules relate to a reserved matter. Accordingly, both Governments agreed to the preparation of a combined order under Section 63 and Section 108 of the Scotland Act 1998.

Section 63 of the 1998 Act enables an order to provide for any functions that are exercisable by a Minister of the Crown in or as regards Scotland to be exercisable by the Scottish Ministers concurrently with the Minister of the Crown. Section 108 of the 1998 Act enables an order to provide for any functions that are exercisable by a member of the Scottish Government to be exercisable by a Minister of the Crown concurrently with a member of the Scottish Government.

The order will therefore allow for the mutual conferring of functions between Scottish Ministers and a Minister of the Crown, so that both have the power to bring forward as appropriate winding-up rules or regulations for companies, incorporated friendly societies, and limited liability partnerships in Scotland irrespective of whether these rules or regulations relate to reserved matters under Schedule 5 to the Scotland Act 1998, or matters that are not reserved.

This approach will enable each Administration to make provision on winding-up matters without any doubt being cast on the scope of the relevant enabling powers. It will also ensure that the rules on the winding up of companies in Scotland will be contained in one instrument rather than split between two.

I hope that your Lordships share our view that this is a sensible step which will modernise the approach to corporate insolvency in Scotland. Furthermore, it demonstrates the benefits of two Governments working together to make the devolution settlement work for people and industry in Scotland. I beg to move.

My Lords, I thank the Minister for his explanation of the order, the first of many instruments to be debated today. I put on record my pleasure at operating under the chairmanship of the noble Lord, Lord Rogan. It is the first time I have operated under his chairmanship, and I hope he is kind and pleasant with me.

As we have heard, the order relates to corporate insolvency rules in Scotland and the complexities that arise due to winding up being a mixed area of competence. The Minister will no doubt have in mind the fact that the future may hold many more discussions about mixed areas of competence as we move forward with our exit out of the European Union. Fortunately, today’s order is intended to make an existing process simpler and has received general support. I place on record our support for it.

As the Minister explained, the order would confer mutual functions on Scottish Ministers and a Minister of the Crown so that both have the power to bring forward winding-up rules and regulations for Scotland in relation to companies, incorporated friendly societies and limited liability partnerships. We accept the arguments that this will alleviate an otherwise complex assessment of which matters are reserved in this specific area and assist in the modernisation of these rules as regards Scotland by ensuring the provisions are held in one single order rather than split across multiple instruments. We are content to support the order.

As I understand it, the provisions are made with an assurance that a Minister of the Crown will be able to exercise these functions only with the agreement of a member of the Scottish Government. I may be a doubting Thomas, but I am sure that occasionally a dispute may arise in the future and a challenge to the agreement. Has a procedure been envisaged for what happens if a conflict arises and the relevant Ministers find themselves in disagreement over the use of these powers? I am sure that we are all alert to the dangers not of disagreements, but of complex arrangements being misused and misquoted in Scotland as a tactic against the Westminster Parliament. Will the Minister answer that point?

May I clarify that the intention is that either the Minister of the Crown or a Scottish Minister may act, but they have to agree with each other? If so, what will be the process by which they consult? There may be circumstances where the action has to be fairly urgent. Clearly, one does not want to use a consultation process which causes delay. Does one simply have to notify the other or do they have to give consent formally either way?

My Lords, I share the delight of my noble friend on the Front Bench that the noble Lord, Lord Rogan, is presiding over our proceedings today. The last time that I mentioned the Chair in a Grand Committee I was told that I was not supposed to do that, but I am delighted that I did. I agree completely with the question raised by my noble friend on the Front Bench and amplified by the Liberal Democrats.

I will make a few more points. First, I am increasingly worried about the number of important matters that are being dealt with through statutory instruments. This one is perhaps okay. In fact, I think it is, as my noble friend on the Front Bench said, and he is supporting it. I go along with that. However, I suspect that as we move into the new year, we will get hundreds if not thousands more statutory instruments, many in areas that might more properly be dealt with by primary legislation. It is very important that we on this side of the House—and indeed all sides—keep an eye on the Government to make sure that some important matters which should more properly be dealt with by primary legislation on the Floor of the House are not slipped through on statutory instruments, particularly in Grand Committee.

I welcome the Minister to the Front Bench—I should have done so right at the very start. I have not had the opportunity to appear opposite him before. I know of his work in the European Parliament, which he carried out with distinction. No doubt, like me, he would have preferred that European Parliament to go on and on into the foreseeable future, which it may well do, if my noble friends the Liberal Democrats have their way. I am right behind them on that.

However, I am worried about one aspect of this order in relation to limited liability partnerships. The Minister understandably mentioned nothing about the controversy of limited liability partnerships, particularly in relation to Scotland. He will know that there has been a lot of publicity and concern expressed about the way in which limited liability partnerships are being used for tax evasion, tax avoidance and money laundering. These limited liability partnerships can be set up quickly and cheaply. I think they cost £35. As a result, corporation tax and capital gains tax are being avoided by people who set up these limited liability partnerships. Very often, there is no need for the partnership to be in writing; it can just be a verbal agreement between people, which is very unsatisfactory. There has been great controversy, not just in Scotland but in other places too. A lot of controversy has arisen in Jersey in relation to them. More recently, the suggestion that people with self-employed status could be treated as employees by a limited liability partnership has caused some genuine concern.

I know that this is not directly covered by the winding-up procedures. However, as my noble friend rightly pinpointed, there could be a difference of opinion between Holyrood and Whitehall about whether a limited liability partnership should be wound up. It may be that Westminster, in its wisdom, will want such a partnership to be wound up because it had been involved in some kind of activities and it would be more appropriate for it to be wound up, but Holyrood might not. In that case, I endorse the questions asked by my noble friends in relation to this. I hope the Minister will amplify in his answer what might happen specifically in relation to limited liability partnerships.

I, too, congratulate the noble Lord, Lord Rogan, on being in the chair, and I also congratulate the Minister. I read his moving maiden speech and welcome him to the Front Bench.

I am worrying away at the same point that four other noble Lords have raised. It is the phrase,

“by the Scottish Ministers and a Minister of the Crown”.

It may be because of my former ACAS chair hat, but I look for trouble—for how to sort it out before it happens, and for codes of practice. My questions are about what might seem a narrow point, but it is an extremely important one. Would this relationship be mutual? Would they both have to agree? That question has already been asked. Does one have precedence over the other? I think that has already been asked. Is there an intention to think about something like a code of practice for any eventuality, such as when they do not agree? If they do not agree, how will the delays that take place affect not only the companies but the workers involved in the lack of future of those companies? It is extremely important that, in any inbuilt possible conflict, we should consider the people who are going to be at the bottom end of it and might be detrimentally affected.

My Lords, I thank noble Lords for those helpful questions. I, too, add my welcome to the noble Lord, Lord Rogan. We are the two new boys on the block and it is a pleasure to be under the noble Lord’s astute guidance. I also welcome the support from all sides for this approach. It has a number of important implications for how the two Governments work together, and I hope it will serve as a template for ongoing challenges in the near future, although one might argue that the waters will get choppier as we move forward.

The Minister of the Crown and the Scottish Government Ministers must reach agreement. Without agreement, there will be no progress. This therefore puts a great responsibility on both to recognise the point raised by the noble Baroness, Lady Donaghy, about what would happen if they do not do so. It places on their shoulders a very strong burden because they need to recognise that where there is no consent, there is no movement forward.

The noble Lord, Lord Bruce, asked whether it is just a question of notification. No, in actual fact, it is consent—both Ministers must consent to the process. It is not enough just to inform, which is why agreement must rest at the heart of it, which is important.

I thank the noble Lord, Lord Foulkes, for his kind words, which were very generous. He is right that there will almost certainly be many more SIs in the months to come. I cannot comment on that yet, but I do not doubt that he will keep an eye on the Government, and I think that that eye will be attached to very strong interventions whenever we stray from what he believes to be the correct approach. I am looking forward—I imagine—to those interventions in the months to come.

Tax evasion and limited liability partnerships are not covered within the wider ambit of the order, which is specifically about winding up. I too share the concerns that many of these areas can of course be done almost on a verbal basis and therefore move very swiftly, but in terms of the aspects of this particular issue, it is the winding up only. I hope it gives some confidence that in both instances it is about the consent of both parties, recognising each’s responsibility and duty in this regard, and moving forward on the basis of a consensus. I hope this will be a way of addressing that, but I recognise that that does not cover the wider issues raised, which are not within the scope of this particular approach.

The points of the noble Baroness, Lady Donaghy, were well made. I recognise that workers will suffer if the two Ministers in question cannot reach agreement. That is why I repeat that careful consideration must therefore be given to the implications of failure to reach that agreement. In most instances, I hope it will not be controversial, and there will be a strong recognition that these things must move forward swiftly. On that basis, I hope that I have the support of your Lordships this afternoon.

Motion agreed.

Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017.

My Lords, the draft order laid before the House is made under Section 104 of the Scotland Act 1998, which allows for necessary or expedient provision in consequence of an Act of the Scottish Parliament. The order is being made to ensure that the policy set out in the Criminal Justice (Scotland) Act 2016 can be fully implemented. It was passed by the Scottish Parliament on 8 December 2015.

The 2016 Act contains a number of provisions which have been developed from the recommendations of Lord Carloway’s review of the Scottish criminal law and practice, which reported in November 2011. This review followed a UK Supreme Court decision in the case of Cadder that gave suspects a right to legal advice before questioning by the police in Scotland. In this context, the review aimed to modernise and enhance the efficiency of the Scottish criminal justice system, and its recommendations have led to a number of the provisions in the 2016 Act.

These include reforms of arrest and custody laws designed to provide flexibility for police in conducting investigations while ensuring fairness for suspects. It will also build on 2010 reforms to allow suspects access to a lawyer whether or not they are to be interviewed by the police. In addition, the Act specifically states that the police have a duty not to deprive people of their liberty unnecessarily. As a consequence of some of the measures introduced by the Act, it is necessary either to amend the law elsewhere in the United Kingdom or to make provision in relation to Scotland where the reforms apply to reserved matters.

Making such amendments is not within the competence of the Scottish Parliament, so it is necessary for this order to be laid before the United Kingdom Parliament. It is made under Section 104 of the Scotland Act 1998, which allows the UK Government to make legislative changes which are necessary or expedient in consequence of an Act of the Scottish Parliament.

The order makes provision about arrests effected both in Scotland and outside Scotland in connection with crimes committed in Scotland and the investigation of Scots law crimes and extradition matters in Scotland. Provisions in Schedule 1 will ensure that cross-border enforcement and assistance continues to work effectively. Where a Scottish warrant is executed in England, Wales or Northern Ireland, provisions in the 2016 Act on arrest procedure and rights of suspects will apply.

Schedule 2 covers the effects of the 2016 Act on “reserved forces”, namely the Ministry of Defence Police, the British Transport Police and the Civil Nuclear Constabulary. Schedule 3 relates to the impact of the 2016 Act on immigration, HMRC officers, designated customs officers and the National Crime Agency. Schedule 4 covers the application of the 2016 Act on persons subject to service law. Schedule 5 makes provision regarding a person arrested in connection with extradition proceedings.

Reserved forces exercising the powers and privileges of a police constable in Scotland will also be bound by a stop-and-search code of practice issued under Section 73 of the 2016 Act. The order amends the 2016 Act to ensure that the UK Government and reserved bodies subject to the terms of the code are fully consulted when any amendments to the code are being considered. The order also refers to a code of practice that will apply to investigative bodies reporting criminal offences in Scotland to the Crown Office and Procurator Fiscal Service.

This is a particularly wide-ranging and complex order that has required close working between the UK and Scottish Governments, Ministers and officials. As such, it shows how Scotland’s two Governments can co-operate effectively to make the devolution settlement work. I beg to move.

My Lords, I again thank the Minister for his very full explanation of the order. As we have heard, it provides legislative changes in consequence of Parts 1 and 2 of the Criminal Justice (Scotland) Act 2016 as passed by the Scottish Parliament. Again, we are content to support the order.

As has been stated, the Act follows, some years later, a review of criminal law and practice in Scotland undertaken by Lord Carloway, and has been subject to detailed scrutiny by Members of the Scottish Parliament. Provisions include changes to police powers, rights of suspects while in police custody, criminal procedure and provisions regarding powers of stop and search. These are wholly within the devolved competence of the Scottish Parliament.

The order is made under Section 104 of the Scotland Act 1998 to make consequential legislative changes regarding arrests effected in Scotland and outside Scotland in connection with crimes committed in Scotland, police custody in Scotland, the investigation of Scottish law crimes and extradition matters in Scotland. I ask the Minister: where these provisions affect officers outside Police Scotland, including police officers across UK forces outside Scotland, immigration and customs officials, NCA officers, the Civil Nuclear Constabulary and other forces covered by the order, has any assessment been made of any additional training or resource needs that might arise from these provisions? If so, who would be responsible for funding any such additional needs identified? I look forward to the Minister’s reply.

My Lords, I also thank the Minister for his introduction and explanation. I will explore one or two aspects of this because, as he said himself, it is complex. It is a mixture of devolved and reserved matters.

I will first look at reserved matters relating to human rights, because we have clearly had some controversies in Scottish policing over the last few years. The Liberal Democrats oppose the creation of a Scottish national police force. We believe our criticisms and concerns have been somewhat borne out, certainly in the early part, by the way the national force conducted itself and the fact it appeared to be under somewhat more direct political control than many of us would regard as appropriate and would be the case for police forces in England.

In particular, we saw a massive increase in the use of stop and search by the police in Scotland. In 2013-14, there were 450,173 “consensual” searches. The meaning of “consent” is rather subjective in that context. There were 192,470 statutory searches. Not surprisingly, this created a great deal of public reaction. The Scottish Government responded to that; I give them credit for that, but they needed to because it was a very strong reaction. Consequently, the figures the following year, at least from 1 April to 30 September, saw consensual searches drop to 888 from 450,000 and the statutory searches from 192,470 to 20,665. Consensual searches are now banned altogether, so that is a step in the right direction. I want to check with the Minister, where part of the reaction was not just that public concern but human rights implications that would fall on the UK Government, does this combination of Acts by the Scottish Parliament and this statutory instrument maybe avoid the possibility of that particular question of human rights being addressed again?

The other area is the issue of cross-border policing generally. The Minister mentioned the MoD police, civil nuclear police and British Transport Police. The Scottish Government have taken over the responsibility of the British Transport Police north of the border. Many of us felt that that was a retrograde step too. I am a passionate home ruler, a passionate believer in devolution and supporter of the Scottish Parliament, but I believe that we should also recognise that, as long as we are part of the United Kingdom—which the people of Scotland want us to be—devolution should be to enhance and bring Government closer, but not to undermine the advantages of collective working across the United Kingdom. It seems to me that there will be circumstances where the transport police could be inhibited in their role in cross-border policing. Can the Minister give some clarification as to whether this instrument will affect that positively, negatively or not at all?

I do not have the capacity to go through the whole SI in detail, but there seem to be a number of issues that are really quite important, including to clarify how the devolved and reserved powers can work constructively together—which is why we are not opposing the instrument—but some clarification is nevertheless necessary of what that really means. There also needs to be an understanding, or perhaps appreciation, that the Scottish Government have learned a little bit about their excessive zeal in creating a national police force, which has led to quite considerable friction. I mention again the appearance of mounted police at highland league football matches and routinely arming police officers in rural villages. Things such as that are well within the devolved capacity of the Scottish Government but bring human rights issues into question, so they are not of some indifference to the United Kingdom Government, who have to answer if there are questions of human rights compromises by a devolved Government or Administration.

Having said that, and supporting the passage of the instrument, I would nevertheless appreciate it if the Minister could answer those questions.

My Lords, I want to raise two points. The first, briefly, is an important one on European arrest warrants and whether there is any implication when—if—we go out of the European Union. Will cross-border activity by police using European arrest warrants be affected?

I have a major objection, however, following up what my noble friend has said. I warn that I am going to cause real trouble on the next instrument. I am sorry that I have not alerted my noble friend and colleague on the Front Bench, but I am not going to support it. I will vote against it. I am not going to agree that it should go forward because of what we have just heard about the British Transport Police—and I feel even more strongly about it. It is a major mistake. We and the Government should recognise now that we have all made a major mistake in agreeing that the responsibility for the British Transport Police should be devolved to Holyrood.

I am in favour of devolution. I campaigned for it and, unlike my noble friend on the Front Bench, I have been a long-standing supporter of devolution. But the way in which it is being dealt with by the Government in relation to the British Transport Police is, quite frankly, dangerous, reckless and ought to be stopped. Ruth Davidson—who I understand is the most important Conservative in the whole United Kingdom—has been attacking this and has said that it should be stopped.

The British Transport Police is working perfectly now, dealing with policing on the railways north and south of the border. It is working very well and it should stay that way. The transport unions want it to stay that way. The chief constable of the British Transport Police wants it to stay that way. Yet the Scottish Government are going to incorporate the British Transport Police in Scotland into Police Scotland. Police Scotland is already a total debacle. The chief constable is on gardening leave. Officers have been suspended. The chairman of the Scottish Police Authority has had to resign. Fortunately, a good new chair is taking over, with effect from tomorrow. Nevertheless, in spite of Susan Deacon taking over, it is wrong for the British Transport Police to be incorporated into Police Scotland. It is wrong in terms of policing. It is wrong in every way.

The Government should think again. They should withdraw this statutory instrument and go back to the Scottish Government and say that they have come up against intractable objects—I do not mind being called an intractable object—and are having a change of mind in relation to devolving the British Transport Police. It is never too late to change your mind—I have done it before: I have made mistakes and admitted them, and changed my mind—if you think something is wrong and it is going to be positively harmful. It will be harmful to policing, north and south of the border. It is not just a Scottish issue because it will affect criminals in Scotland coming down to England and criminals in England coming up to Scotland on the railways, and the British Transport Police will not be able to deal with that.

I know that it is difficult for a junior Minister, particularly a new junior Minister, to go back and say to a Secretary of State—although I know David Mundell well and I know he will understand this—that he has had trouble dealing with this statutory instrument and the Government must think again. I hope that there will be some way to get the Scottish Government to think again. For far too long, we have just accepted that what they say is right because they are the Scottish Government. We have a very distinguished former Presiding Officer of the Scottish Parliament with us here today—no one has done a better job in the chair in the Scottish Parliament than my noble friend Lord Steel—but even he will admit that sometimes the Scottish Parliament, and particularly in this case the Scottish Government, get it wrong and it is now time to think again. If we do not do that, what is the point of coming here? What is the point of looking at these things? What is the point of having a legislature for the whole United Kingdom—which thankfully still has responsibility in Scotland—if we do not sometimes stand up and say, “Enough is enough”? I think we should do so on this issue.

My Lords, my point is much narrower. I would like clarification on Schedule 1. A constable of the Police Service of Scotland can arrest someone in England, Wales or Northern Ireland without a warrant in connection with a Scottish crime in certain circumstances. A constable of a police force in England, Wales or Northern Ireland can arrest a person in Scotland—it does not mention a warrant—in certain circumstances. Is there a difference? One says without a warrant; one does not mention it. What are the implications? What are the circumstances that are mentioned there? Later on it talks about deserters and refers to certain limited circumstances. I can understand that; obviously, that is a much more complicated issue. But it would be extremely useful to have some clarification about what that cross-border responsibility would be.

I was hoping that there would be another question to give me a minute or two longer. In the absence of that additional question, I will try to answer the questions that I can. First, I welcome the support from the noble Lord, Lord McAvoy, and other noble Lords and recognise the dissent from the noble Lord, Lord Foulkes. I will come back to that point.

In answer to the question from the noble Lord, Lord McAvoy, about the training and the costs of training, the reserved forces operating in Scotland have been trained through existing budgets. Police Scotland has assisted in this by carrying out training courses for those reserved bodies operating in Scotland. It has also continued supporting partner agencies to adjust to the Act. So there should be no additional costs. However, the noble Lord is quite right to raise the question. We need to make sure that we keep an eye on this. Offering training once and believing that that is all is not enough. We need to make sure this is ongoing training and that it is delivering. It is important that we make sure that we are auditing the outcome and output of the training.

In response to the noble Lord, Lord Bruce, who has asked some serious questions about human rights, noble Lords will recall that the Cadder case originated from a human rights issue. That was the reason why the Government were very keen to move forward.

On stop and search, noble Lords will be aware that this is an operational matter, which limits my ability to comment specifically. However, I note again that where there are issues such as this, they can and should be addressed directly through organisations in Scotland. I note that the noble Lord, Lord Foulkes, welcomed, Susan Deacon, the new chair of the oversight body. I believe that that appointment will be a useful addition to the overall oversight matter. These issues need to be addressed directly through that point. If violations of human rights occur, they can be raised and escalated through the different strata. In the first instance, it would be a matter for the Scottish Government to address.

I will come back in a moment to the more complicated question on the British Transport Police. However, in answer to the first question from the noble Lord, Lord Foulkes, the European arrest warrant is still a subject for negotiation, so we do not yet have clarity on exactly what that will mean. If noble Lords will forgive me, I will postpone answering that question until I have an answer to it. That is probably the sensible thing to do.

The noble Lord has made a passionate point about the British Transport Police. I think not a single person on these Benches does not share his concern about some of the issues which seem to be unfolding, not for the sake of better policing or for better serving the people, but rather for a narrower, more factional agenda. I think we all have a certain degree of unease about that particular aspect. The important thing for me to note at this point is that the Smith commission recommended by consensus that powers over this would be devolved back to the Scottish Parliament and to the Scottish Government. In this instance, the Scottish Government are operating within their competence to do so. I share some of the noble Lord’s unease and I am sure that this will not be the end of the matter.

On the Smith commission, with no disrespect to the noble Lord, Lord Smith, for whom I have great respect, or to the other members of the commission, it is possible they did not get everything right. They were rushed. They had to do things very quickly and were under a lot of pressure from the SNP in particular. At the end, John Swinney, having signed up and agreed to the Smith commission, said at the press conference that he did not accept the recommendations —an astonishing situation. If they can do that, we have the right to think again as well.

I may be wrong on procedure, but I think that if we do not agree this today, it goes to the House at a later date. That will give the Minister time to think and to consult. In that case, he might be able to consult not only David Mundell and Ruth Davidson but—can I go higher?—even Theresa May about this, because there is genuine concern. I have expressed it strongly, but it is expressed even more strongly by some leading Conservatives as well as other people in my own party. I hope we can have a pause in this statutory instrument. I do not think it would delay it unduly. It would give the Minister time to go back and say, “Look, I as a Minister faced this furore”. Although they have not got to their feet, all the people round the Committee Room were nodding when I was making this point. The Minister has made the point himself and substantially agreed with me. This would give the Minister time to go back and perhaps find a way to get the matter reconsidered.

I will, I hope, be guided on points of procedure regarding the noble Lord’s exact question. However, I know that whatever we agree here today, the order must then move to the Floor of the House, at which point there will, I imagine, be an opportunity for this point to be made in the Chamber and for a Division to be called on the point.

That might be the opportunity for that pause. I appreciate some of the points which the noble Lord is making, but he will need to find support in the House. I am not sure whether I can comment on that at the moment, but I recognise the passion with which he makes the point, which is that issues are now unfolding. I stress that this matter was devolved to the Scottish Parliament and the Scottish Government; I do not believe that we can now revisit it in the fashion which the noble Lord would like, if I am being frank. I hope that that gives some answer to that.

I have one more answer to give to the noble Baroness, Lady Donaghy. She will be pleased to know that I will write to her, because she asked quite a technical question which requires a technical response. If she will allow me, I will write to her in due course with that information, and will happily share that with everyone else in the Room.

Perhaps I can help the Minister. I believe that whatever happens today, provided that my noble friend indicates to the Government Whips that he intends to debate the order on the Floor of the House when it is called, they will seek to make time so that there can be a proper debate.

Helpfully, apparently that is a matter for the usual channels, and I am not one of them, so I hope that that will be resolved in due course and that the noble Lord, Lord Foulkes, will find his satisfaction through that.

I thank the Minister for giving way before he sits down. The Smith commission proposals were supported. There was a lively discussion and the situation of the British Transport Police was brought up, but it has been devolved. I wonder whether, not to alleviate the concerns of my noble friend Lord Foulkes but to address them, it would be procedurally possible for the Minister to undertake to raise this specific debate with his counterparts in the Scottish Parliament’s Government.

That is a very good point indeed. I believe that I will be able to raise this very point both behind the scenes and with my counterparts north of the border, and then it will be discussed more fully in due course.

I am grateful for the assurances of the Minister and, even more, of my noble friends, both of whom are part of the usual channels in one way or another. I feel no less strongly about it, but I understand the procedure that should be followed.

I am very happy for that. Again, I will do all I can to take this forward in the manner in which we have discussed over the past few moments.

Motion agreed.

Scotland Act 1998 (Specification of Devolved Tax) (Wild Fisheries) Order 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Scotland Act 1998 (Specification of Devolved Tax) (Wild Fisheries) Order 2017.

My Lords, the reason for making this order, laid before the House on 14 September 2017, is to grant the Scottish Government a limited and specific power to raise a levy on wild freshwater fisheries for the purposes of the management, conservation and sustainable development of those fisheries. The order relates to reforms being undertaken by Scottish Ministers to support the management and conservation of wild fisheries in Scotland.

The Scottish Government commissioned an independent review of wild fisheries in Scotland in 2014. One of its conclusions was that the Scottish Government should have the power to adopt appropriate management tools, including the flexibility to change the way in which income is raised for fisheries management, currently done through a fisheries assessment levy applied to salmon fisheries at a local level. Consequently, the order will give Scottish Ministers the power to make regulations imposing a levy on the owners, occupiers or users of wild fisheries, or owners or occupiers of the right to fish in wild fisheries.

The Scottish Government intend to use this power by introducing related provisions to their Wild Fisheries (Scotland) Bill that will provide Scottish Ministers with the power to set, collect and retain fishery assessment levies in circumstances where they do not approve the fishery management plan developed at a local level. The levies in question are considered by Her Majesty’s Treasury to be taxes and are, therefore, outside the legislative competence of the Scottish Parliament.

In order to introduce a Bill into the Scottish Parliament with provisions on tax, the Scottish Government require an amendment to be made to Part 4A of the Scotland Act 1998. An Order in Council, under Section 80B of the 1998 Act, is the mechanism through which Her Majesty may amend Part 4A so as to specify an additional devolved tax.

We have agreed to devolve this power on the basis that it will be applied only to a levy in respect of the conservation and management of freshwater fisheries. This will not have a significant impact on businesses in other parts of the UK, but we consider that this measure will support the UK Government’s ability to meet their international conservation commitments. I beg to move.

My Lords, again, I thank the Minister for his full explanation of the order. As we have heard, it would provide legislative competence for the Scottish Parliament to bring forward provisions on specific taxes relating to wild fisheries in Scotland.

The order will amend Part 4A of the Scotland Act 1998 to provide that taxes on specified persons to fund expenditure on the conservation of freshwater fish and their habitats, and the management or regulation of wild fisheries, are to be devolved taxes. The Scottish Government commissioned an independent review of wild fisheries in 2014 to consider how this magnificent Scottish resource can be protected and managed sustainably into the future.

The order will allow for an intended wild fisheries Bill to be brought before the Scottish Parliament to include powers for the Scottish Government to raise levies on the owners, occupiers or users of wild fisheries if they deem it necessary in the future. These provisions have been approved by HM Treasury, the Department for Environment, Food and Rural Affairs, and members of the cross-party Environment, Climate Change and Land Reform Committee in the Scottish Parliament. We are content to support the order so that these issues can be scrutinised fully in the Scottish Parliament.

I ask the Minister: what consultation are his Government undertaking with Scottish Ministers to ensure that the package of reforms undertaken on these natural resources in Scotland either do not materially affect or are beneficial to wider conservation and natural planning efforts across the whole of the UK? We hope that the Scottish Government will work with members of all parties in Scotland to ensure a sustainable future for these natural resources and for communities right across Scotland.

My Lords, I suppose I should begin, like everybody else, by sucking up to the Deputy Chairman and the Minister and saying how pleasant it is to be here with them. I do not remember this ever happening in this Room before, but the House of Lords exists to be pleasant and I am delighted to join in welcoming them here. In fact, a few moments ago the noble Lord, Lord Foulkes, made a quite gratuitous and kindly reference to me, no doubt anticipating that I might give him support if there were a vote. In fact, I would not have done, but nevertheless the atmosphere of pleasantry is something I am happy to continue.

I have a purely personal interest in this matter, in that I fish occasionally on the Tweed and more regularly on a loch in the Scottish Borders, which I will return to in a moment. I think the Minister will agree that this order is somewhat unusual in that it is predicated on a Scottish Parliament Bill that we have not yet seen. That makes it a little difficult to understand but none the less, in principle, we will support it. That is presumably why the Sewel convention does not apply in this case, because it is bestowing more powers on the Scottish Parliament under the Scotland Act. Like the noble Lord, Lord McAvoy, I would like to hear a little more about the consultation that the Minister has had with colleagues in the Scottish Government about how this is going to operate.

I have two questions about the order. The first relates to the amendment of Chapter 7 of the Scotland Act, on page 2 of the order. It states:

“This subsection applies to taxes on the … occupiers ... of the right to fish in wild fisheries”.

I operate a syndicate on a loch in the Scottish Borders. One of the members of the syndicate is the former sheriff, who will certainly be breathing down my neck if we do not get this right. Does that mean that when I pay, as I do, a handsome sum to His Grace the Duke of Buccleuch for the right to fish on his loch, that makes me an occupier of the right to fish in the waters? In other words, am I, in supporting this order, liable to find myself subject to taxation in future?

My second question is one that I anticipate my noble friend Lord Beith is about to ask. Fisheries in Scotland are governed under legislation that was passed way back in the 1950s. In the case of the Tweed, Scottish legislation covers the south bank; in other words, people operating in England are subject to Scots law in this peculiar circumstance. I wonder whether this order applies to them as well.

My Lords, my noble friend did not realise quite how far the provision he has just cited extends. Legislation, particularly the Scotland Act 1998 (River Tweed) Order 2006, embraces the whole of the Tweed district, which includes all the tributaries of the Tweed and tributaries of the rivers which are tributaries of the Tweed, whether they are in England or Scotland. Of course, many of them are in England, such as the Till, for example. The Tweed river system has always been managed as a single system, which makes a great deal of sense. It would be odd to do it otherwise.

However, there are some problems inherent in this, as there were in the 2006 order. The Minister said that the Bill will not affect other parts of the United Kingdom—I hope I am not quoting him wrongly. If that is the case, it will be an interesting reversion to the previous way of legislating in this area. My initial assumption was that this order might affect all the tributaries of the Tweed. The basic question is: can somebody have a fine or levy placed upon them by the Scottish Government when they are not only resident in England but the activity to which the levy relates is wholly in England? Can someone who is the owner or occupier of a fishing right on, say, the Till, be required to pay a levy by the Scottish Government?

There may be a perfectly good case for them being required to pay that levy, but if there is, that surely should be a decision on which the United Kingdom Parliament—the only Parliament which represents England—should continue to have a say in future. It seems constitutionally repugnant for the Scottish Parliament to be able to pass laws or impose levies in England, just as it would be repugnant now under devolution to do the reverse in this area. That is what I would like clarification on as I think something of a wrong turning was taken in the 2006 order, and I do not want to see it repeated in subsequent orders, such as the one we are considering today.

I thank the Minister for his cogent explanation. I declare an interest as the spouse of the part-owner of a west coast river.

There is great concern among those involved with district salmon fishery boards on the west coast of Scotland that this clarification of the law is intended to cover a deeper purpose. We currently pay what used to be called fishery rates, or sporting rates. That money is returned to us in the form of support for the district salmon fishery boards. In general terms this has been a very satisfactory arrangement and has allowed the employment of marine biologists to assist riparian management and so on. The concern is that this measure in effect allows the Government to separate the two strands and use that money as part of the general tax pool, and then return what they wish to the district salmon fishery boards, which will thereby over time suffer attrition that may well be a downward trend. Will the Minister therefore give an assurance that all money raised by this measure will be returned to the district salmon fishery boards or their equivalent?

I thought the last order was complicated. I will try to do justice to the questions. I welcome the support of the noble Lord, Lord McAvoy, and others. The noble Lord rightly asked what consultation has been undertaken. There has been significant collaboration between the UK and Scottish Governments over the impetus behind this approach. Noble Lords are right to note that there is no Bill as yet, but the argument underpinning this approach is that in due course there will be. This is in anticipation of that. We have international obligations on behalf of the salmon in a river, which the UK Government are taking very seriously. The recognition here is that the administration of that will rest with the Scottish Government in this instance. We will continue to ensure the outcome of that management is carefully considered so that we can move forward.

The noble Lord, Lord Steel, also asked about consultation. I hope my response answers his question. He asked whether he will be paying the tax, or whether the Duke of Buccleuch is the individual. Helpfully, I have the answer to that, I believe, on two pieces of paper. No, the Scottish Government do not intend to change the existing process to collect the salmon levy locally. The Scottish Government have ruled out the introduction of other taxes. However, these powers will future-proof wild fisheries management, ensuring that Scottish Ministers have the levers at their disposal should new evidence or circumstances merit the introduction of new taxes on the users, such as through a rod licence. The answer is no at the moment, but if a rod licence comes in it will be yes. I hope the noble Lord is okay so far.

The noble Lord, Lord Beith, asked quite a detailed and important question. I remember many years ago when I was a geography student that one of the big challenges was to try to determine exactly where tributaries were because it depends on the season, the rain and so on. Scottish legislation will be subject to the rules of legislative competence in Section 29(2)(a) of the Scotland Act, so English fisheries cannot be taxed. I think that answers his question quite clearly.

That is very helpful. I thank my team very much; that was exactly the answer I was looking for in that instance. Good.

The noble Earl, Lord Cork and Orrery, asked an important question as well. The answer to where the money will be spent is that the salmon levies will be utilised in the district in which they are raised. I hope that gives some comfort to him in that regard.

I think those are the answers to the questions noble Lords posed. I hope that that is satisfactory.

Motion agreed.

Drug Dealing Telecommunications Restriction Orders Regulations 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Drug Dealing Telecommunications Restriction Orders Regulations 2017.

My Lords, these regulations were laid before Parliament on 12 October. The drug dealing telecommunications restriction orders—DDTRO—respond to an operational requirement of the police and the National Crime Agency to support them in tackling the issue of “county lines” drug dealing and its related violence and criminal exploitation.

As noble Lords probably know, “county lines” is the police term for urban gangs supplying drugs to suburban areas and market and coastal towns, using dedicated anonymous mobile phone lines. We are particularly concerned about this form of drug dealing because of the high-harm nature of this activity. County lines gangs target and exploit children and vulnerable adults, who are then at high risk of extreme physical and sexual violence, gang recriminations and trafficking. In the National Crime Agency’s latest threat assessment of county lines, three-quarters of police forces in England and Wales reported exploitation of vulnerable people in relation to county lines, including children as young as 12.

The mobile phone line is central to county lines activity, with some prominent lines making in excess of £5,000 per day. However, the phone number has limited personal data associated with it and the handset is typically located well away from street-level drug-dealing activity. Such factors make it hard for the police to gain possession of the handset and to pursue criminal prosecutions against an individual for the activity on the line. Where it is possible to do so, and where there is sufficient evidence, the police will pursue prosecution. However, where prosecution is not possible, the police and the NCA have been clear that closing down the phone lines will seriously disrupt county lines drug dealing and the associated violence and exploitation.

With that background in mind, I turn to the details of the regulations before us. The DDTRO Regulations are made pursuant to Section 80A of the Serious Crime Act 2015, which sets out the power to make regulations which enable courts in England and Wales, Scotland and Northern Ireland to issue DDTROs. In essence, the regulations provide the civil courts with the power to make a drug dealing telecommunications restriction order, and set out the process and procedure for doing so.

The applicant for a DDTRO—that is, the police or the NCA—will have to satisfy a court that on the balance of probabilities the device has been used, is likely to have been used, or is likely to be used in connection with drug-dealing offences. The court will also have to have reasonable grounds to believe that the order would prevent or restrict the use of a communication device in connection with drug-dealing offences.

It is important that the initial DDTRO application hearing is conducted in private and without notice to ensure that the phone owner does not know that their line will be closed. If forewarned, the phone owner is likely to take action to negate the order by changing phone numbers in advance. The regulations also provide a number of safeguards to ensure swift resolution if a phone owner is impacted in error. This includes the ability for the applicant authority to disapply the order of its own volition, as well as the right of an affected person to appeal an order at a public hearing.

I hope noble Lords will approve these regulations. They will give the police a vital tool in their efforts to tackle county lines drug dealing and protect vulnerable individuals from being exploited by county lines gangs. I therefore commend these regulations to the Committee.

My Lords, I thank the Minister for her explanation. I have some specific questions about these orders and a general comment about the Government’s approach to illegal drugs and related issues. We support these measures but we have wider concerns.

As the Minister has explained, these regulations allow law enforcement agencies to make an application to a court to disconnect mobile communication devices, such as mobile phones, where there are reasonable grounds to believe that an order would prevent or restrict their use in connection with drug dealing. These orders can be made without notice to the people affected, in private and at the request of the applicant, without any details being disclosed to anyone. I can understand the need to protect covert human intelligence sources who may be involved in supplying information to the enforcement agencies and I also understand what the Minister has said—that if people were told in advance, it might enable them to change their telephone numbers in advance—but surely this is going to be only a marginal benefit, as it will soon become apparent to the drug dealer that their phone has been disconnected. Unless I do not understand the issue fully, it would not take very long not only for an alternative number to be secured but for the suppliers and clients to be notified of what the new number is. What is the real advantage of keeping the whole process secret—other than protecting sources—set against the benefits of having, as far as possible, an open justice system? Can the Minister explain how these measures present any more than a minor irritation to the drug dealers? In her explanation, she talked about these measures seriously disrupting drug dealers, but surely it would be very quick and easy to re-establish their lines of communication.

Moving on to wider issues, these measures are symptomatic of the Government’s approach to illegal drugs—tinkering around the edges in the vain hope of appearing to be doing something. But the inescapable fact is that there is an insatiable demand for illegal drugs, from young people who smoke small amounts of cannabis to the rich and famous who use cocaine. The fact that these drugs are illegal is no longer a consideration for millions of recreational drug users in the UK. As with most forms of prohibition—as we have learnt from history—stemming demand is clearly ineffective and, as a result, the law is being brought into disrepute. Addiction to illegal drugs, on the other hand, should be treated as a health issue and not a criminal justice issue. It is the sufferer’s addiction that is the issue and not the drugs that they are addicted to.

As with any insatiable demand, there will clearly be a supply. The only effective way to deal with illegal drug supply is to take out the whole distribution network from source to street. During the period of the “peace dividend”, between peace in Northern Ireland and the rise of Islamist terrorism and the far right, the police and the security services were able to mount a limited number of operations that did just that—take out importers, distributors and street dealers. The combination of the diversion of the security services back to their core function of anti-terrorism and the reduction in police resources means such operations are no longer possible.

There was a story in the Times this week on this very issue of county lines, which reported:

“Thousands of children and teenagers are being used by criminal gangs as drug runners ... The National Crime Agency ... believes that the ‘county lines’ drug trade, in which urban gangs move Class A drugs and cash between inner-city hubs and out-of-town locations, is out of control”.

I spoke a few weeks ago in Parliament to some young people whose lived experience is that drug dealing, with all its inherent risks and dangers, presents the best way to make money as far as they are concerned, whether to support a reasonable lifestyle or to put food on the table for their families. Prison was seen by them as a place where they can meet with their friends. As one young woman recently released from Holloway prison explained, it was somewhere where she had “the best time”, to quote her exactly. She added, admitting the irony, that when her local police station was the base for a safer neighbourhood team and she saw uniformed officers on a regular basis she felt safer, but not anymore.

In a society where discrimination against the young, and black and minority ethnic people, persists in the job market, where young people’s lives are blighted by criminal records acquired at a young age, and which, from young people’s perspective, gives them little or nothing and no hope of making a decent living by legitimate means in the future, they believe drug dealing to be a legitimate option. All this creates a parallel society where young people feel they have to arm themselves with knives and guns to make themselves feel safe, whether they are engaged in drug dealing or not, resulting in record numbers of young people dying on the streets from knife crime and of people dying on our streets from taking illegal drugs because there is no control of the strength or composition of the drugs they are taking. What is the Government’s response to this alarming picture? It is to cut off the phones of drug dealers, if and only if they find out what numbers the dealers are using—something that can be rectified by drug dealers within hours.

There is a crisis in this country enveloping increasing numbers of young people. Of course we should make life difficult for drug dealers and these measures may have a marginal impact, but a major rethink about the legalisation and regulation of drugs, the treatment of addiction, the incarceration and criminalisation of young people, providing opportunities for young people to earn decent money legitimately, and the decimation of community policing, is desperately needed.

My Lords, I thank the noble Baroness, Lady Williams of Trafford, for her explanation of the regulations before the Grand Committee. I am fully supportive of them as far as they go and I welcome the action being taken here, although more could be done.

I have spent a few Fridays and Saturdays with the Metropolitan Police over the last few months, looking at a variety of the operations it undertakes and how it has to work in some very challenging circumstances to keep us safe. This whole issue of drug gangs crossing county lines was the subject of a briefing I received recently. I remember visiting one particular unit that explained how a number of young people from their area had been apprehended in a coastal town with drugs and cash. They had gone from their London base and they were dealing stuff there. It is absolutely right that this exploits some very young, vulnerable people. It potentially drags young people into a life of crime. There are other risks for these young people of being groomed and sexually abused, and of being subject to other forms of violence. It is a very depressing thing to see.

I also went on a raid of a property being used as a drugs den. Across the table there were about a dozen mobile phones. If you are a drug dealer apparently you have loads of phones, which is why we have these orders. That highlighted to me the importance of these phones to the operations.

This is a serious issue and the orders have my support but my problem is that the phones can be bought with minimal information. You can just wander into a high street store or supermarket and do not need to provide anything and you can get a mobile phone and off you go. If you are a drug dealer I suppose you buy loads of these phones. I think you can also buy the mobile phone credit with minimal information. There are lots of circumstances where if you want to do things in this country you have to provide ID—to buy goods, to buy services, to get access to credit. This week I went to the post office because a parcel had arrived, we were not there and a little card was put through the door. To get the parcel, which was for my wife, I had to produce the card, our council tax bill and both our passports—just to get a parcel that was legitimately ours. But apparently someone can go to the high street and buy a mobile phone with no indication of who they are—and go off and set an operation up.

That is part of the problem. Why are we allowing people to walk into shops and buy phones with little or no verification of who they are? We all accept that a proportion of these phones that are bought without any information being given will be used for criminal activity. As the noble Lord, Lord Paddick, said, the orders will disrupt some activity for some period of time but I suggest that people will be off down to the same shop where they bought the previous phone to buy a new phone pretty sharpish, and they will be off again—with, I suspect, some amazing speed—to do their drug dealing with phones. This is a really serious problem and people have to be stopped. As I said, I support the regulations as far as they go. I do not know where the problem is—is it that the Government do not want to go any further? Is it that the retailers will not co-operate? Is it the mobile phone companies? Who is stopping us going that bit further? I would be interested if the Minister could tell us that.

The regulations are fine as far as they go but much more ought to be done. These are really serious issues. Lives are ruined by drug dealing but also by the criminal records that people get. There is a risk of violence, abuse and death. It is a horrific situation. I agree with the general points made by the noble Lord, Lord Paddick, regarding drug use, including that it is a real health issue. All these issues—drugs, knives, mental health—are now at epidemic proportions. The pressure that people are under was quite clear in my time with the Metropolitan Police over the past few months. In each London borough, on most shifts quite small numbers of people are trying to keep things under control.

I was also shocked to learn—maybe I am naive—that it is not illegal in this country to buy cannabis seeds. Apparently you can go out and buy them, and the lamps and the other equipment, on the high street. I never knew this. I was told by the police which high street shops sell them. It is a ridiculous situation. The Government should deal with that straight away. Is it not ridiculous? Anyway, I will leave it there and look forward to the Minister’s response to the points I have raised.

My Lords, I thank both noble Lords for the points that they raised. The noble Lord, Lord Paddick, made a series of very good points about this issue, including about the perhaps marginal benefit of disconnecting the phone. I guess that assumes that the phone is used by one person to make one call but in fact it is not. It is often used by hundreds of drug users to facilitate thousands of deals every single day. Therefore, giving no notice of the intention to close down the mobile phone stops the criminals from posting to the users the fact that the phone is going to be closed down. So that is one benefit of it.

Both noble Lords suggested that this is just one very small step. It is something that the NCA and the Government have been concerned about. It is one step. It is not the whole solution. The noble Lord, Lord Paddick, talked about the general support that users need with rehabilitation and perhaps with mental health problems. The other issues around guns and gangs often go together with drugs. He is right that there is often a multiagency approach to just one of the problems that these young people face. As I said to, I think, the noble Lord, Lord Kennedy, before the debate, often these young people are in care, so they are very vulnerable. These are the people who are being used for the county lines activity. It absolutely needs sorting but noble Lords are right that this is not the full answer to what is quite a complex problem.

The noble Lord, Lord Paddick, talked about the police cuts. As I have explained on many occasions, the police budget has been protected over the last few years. The NCA shows that police forces across the country are very engaged in tackling county lines. They are not linking any problems with budgetary issues to being able to tackle these problems.

I understand that new CPS guidance has been issued, as well as awareness guidance on health and social care problems. I do not think the police or the Government want to criminalise a young person at 16 for drug use. They want to rehabilitate that person, as the noble Lord says. Access to jobs and a life away from drugs, guns and gangs is much more preferable to a life dealing with drugs, albeit such a life can be quite lucrative.

I think the noble Lord, Lord Kennedy, asked why the NCA cannot launch criminal proceedings against the phone line. The ownership of the phone line is concealed and often anonymous. The noble Lord makes the point about identification, because we have to provide identification for everything, but someone can simply go into a mobile phone shop and buy a mobile phone. I will take that point away with me. The noble Lord also made a point on verification, and I do not disagree. He also asked whether there was an unwillingness of mobile phone operators to engage with this. I think there was that element, because the Government would not have legislated if mobile phone operators had co-operated on this. I think that that answers the noble Lord’s questions.

I thank the Minister for those replies. I am pleased that the Minister has confirmed that some of the companies involved may not be as keen as we hoped they would be. It is a bizarre situation that someone can go off down the road and buy a mobile phone. This may not be the only solution, but if you bought a phone and the line was attached to you and you had to provide your passport and credit card, and even if in the end you were not a drug dealer but the phone was used for a drug deal, someone could go back and say: “Hang on—you bought this phone six months ago and now it has been used in these operations. What have you got to say about that?”. The fact that it is all anonymous makes things very difficult for everybody concerned.

I think it is the companies—either the shops or mobile phone operators—who are not keen to co-operate. We have seen in other Bills, such as the Data Protection Bill, other issues from companies that are not keen to co-operate with the Government and law enforcement agencies. Perhaps we should look further at that, because it seems ridiculous to me. The noble Lord, Lord Paddick, will know better than I that these are really serious matters. People’s lives can be totally destroyed. A company certainly has no right not to co-operate with the Government. The Government should insist on this. As I said, you cannot get your parcel from the Post Office without producing your council tax bill or your passport, but you can go off and buy a mobile phone and become a drug dealer. It is ridiculous.

I also mentioned the point about cannabis seeds. Cannabis seeds and all the equipment can be bought in this country quite legally. You cannot run a cannabis farm, but you can buy seeds on a number of high streets, which is absolutely ridiculous. I found that out only a few weeks ago when I was out with the police on the beat. They said, “That shop down the road, you can buy all the stuff, and there’s nothing illegal in doing that”. If that is the case—and I have no reason to doubt the officers—that should also be looked at, because it is a ridiculous situation.

I forgot to mention that point. If the noble Lord would let me know the name of the shop, we can take that on.

Motion agreed.

Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2017.

My Lords, the draft order, for which the approval of the Committee is being sought, has been laid under the Government Resources and Accounts Act 2000. This allows the Treasury by order to provide for the accounts of a body to be audited by the Comptroller and Auditor General. The body must exercise public functions or must be entirely or substantially funded by the Government. It is intended to give the C&AG responsibility for auditing the accounts of a number of public sector bodies and companies. The draft order also removes from auditing, by the C&AG, 61 public bodies and companies because they have ceased operation and are, therefore, no longer subject to public sector audit.

The main provision in the draft order is to give the C&AG responsibility for auditing both Ebbsfleet Development Corporation and the Housing Ombudsman. These are central government bodies and should be audited by the C&AG. The Ebbsfleet Development Corporation is a new body set up by the Ebbsfleet Development Corporation (Area and Constitution) Order 2015. Currently, the accounts and statement of accounts of the Ebbsfleet Development Corporation are audited by the C&AG by agreement, which means that he is not the statutory auditor. This order appoints the C&AG as statutory auditor for Ebbsfleet Development Corporation accounts.

The Housing Ombudsman was incorporated by the Housing Ombudsman (Corporation Sole) Order 2013. Under the Housing Ombudsman scheme, the ombudsman prepares annual accounts in accordance with an accounts direction approved by HM Treasury. These accounts were audited by the C&AG, but the scheme gave no authority to lay the accounts in Parliament. This order corrects that anomaly and will ensure that the Housing Ombudsman’s annual accounts can be laid before Parliament. This meets the statutory requirement of the C&AG reporting to Parliament by laying certified accounts of government departments and other public sector bodies.

This draft order also makes provision for six public bodies constituted as companies to be audited by the C&AG. These are: BPDTS Ltd, the College of Policing, English Sports Development Trust Ltd, the Oil and Gas Authority, Phone-paid Services Authority Ltd and Revenue and Customs Digital Technology Services Ltd. Section 482 of the Companies Act 2006 disapplies the auditing requirements in that Act where a non-profit-making company is subject to have a public audit by the C&AG under the Government Resources and Accounts Act 2000. For this exemption to apply, the non-profit-making company must be included in an order under Section 25(6) of the Government Resources and Accounts Act 2000. There are further conditions applicable to this exemption. These are that: the company is non-profit-making; if the company is a parent or subsidiary undertaking, all undertakings in the group are non-profit-making; and the balance sheet contains a statement that the company is entitled to exemption under Section 482 of the Companies Act 2006. As currently constituted these six companies will meet these requirements, provided they include an appropriate statement in their balance sheets.

Finally, this draft order amends primary and secondary legislation to remove 61 public bodies and companies from the scope of audit by the C&AG because they have ceased operations. The primary and secondary legislation being amended for these purposes is: the Industrial Organisation and Development Act 1947; the Offender Management Act 2007; the Government Resources and Accounts Act 2000 (Audit of Public Bodies) Orders 2003, 2005, 2008 and 2012.

In conclusion, the proposals in the draft order confirm the Government’s commitment to achieve consistency in the public audit arrangements for public bodies and provide a net gain for both Parliament and the public. I commend the draft order to the Committee.

My Lords, I thank the Minister for his exposition. I shall be very brief. Ebbsfleet Development Corporation figures largely in the draft order. Can he say in some detail what it is, what it does, who leads it and what is its budget?

My Lords, I am sorry to be a bit picky, but I hope that the Minister has not moved the order; I hope that what he has in fact moved is that the Grand Committee do consider the order. The order itself, whatever his Treasury-produced paper says, will be taken on the Floor of the House after consideration by the Committee. I note the Minister nodding in agreement. I hope that his authors will get that little bit right in future.

I thank the Minister for introducing the order to the Committee this afternoon. The order provides for certain public bodies to be audited by the Comptroller and Auditor-General. In addition, the scope of audit is removed from the Comptroller and Auditor-General for a number of public bodies and companies that are no longer in operation, no longer exist or no longer meet the criteria for public sector audit. It is on the whole concept of criteria that I wish to ask one or two questions.

First, does the primary legislation that established these bodies have Henry VIII clauses that allow the changes to be made by delegated legislation? Secondly, with reference to those bodies being omitted from the scope of National Audit Office audit, why are they being omitted and against what criteria? Will the Minister outline the criteria to the Committee? Thirdly, why are the specific eight bodies being added, under what criteria are they being added and why are the Government adding them at this specific moment? Lastly, what other bodies are either waiting to or likely to be added to the list of bodies to be audited by the National Audit Office? Is there a question about the quality of the bodies waiting to be added?

Although I understand that the order is largely procedural, I would welcome a response from the Minister on those questions to give greater clarity to those who are affected by the order about why they are affected. In very simple terms, the Minister gave us an overall view that it was to add consistency, but I should have thought that that consistency must be against a general view of what should or should not be audited by the National Audit Office.

My Lords, I am grateful to both noble Lords who have spoken in the debate and will try to respond as best I can.

In answer to the last point made by the noble Lord, Lord Tunnicliffe—he asked: what is the big picture?—the big picture goes back to the year 2000 and Lord Sharman’s report, which recommended that all public bodies should have as a statutory auditor the C&AG. Since then, most new bodies that have been set up have had the C&AG as their auditor, and most existing bodies have been swept up and are now caught by the C&AG. One or two have slipped through the net, which is why we need the order to capture them. That is the basic principle—that the C&AG should be the statutory auditor of all public bodies in the interests of transparency and other broad goals.

The noble Lord, Lord Jones, asked about the Ebbsfleet Development Corporation and, in particular, I think, who reads its report and what the whole development corporation costs. I would like to write to him as I do not have those figures at my fingertips. The responsibility for the development corporations rests with the Department for Communities and Local Government, and I will contact it to pass on the noble Lord’s concerns and make sure that he gets the information that he has rightly asked for. The Ebbsfleet Development Corporation is delivering 15,000 homes and creating a 21st-century garden city in north Kent, taking advantage of HS1.

Turning to the questions asked by the noble Lord, Lord Tunnicliffe, I think I have explained the broad context of audit and accountability and where central government believes responsibilities should rest. The first statutory instruments under Section 25(6) of the Government Resources and Accounts Act 2000 made the C&AG the auditor of certain non-departmental public bodies. The C&AG was also given greater powers of access to documents held by persons in receipt of grants from, or in relation to contracts with, bodies audited by the C&AG. Under the Companies Act 2006, the C&AG was given power to audit companies and specific provision was made for the auditing of non-profit-making companies. This order continues the long-standing approach of implementing Lord Sharman’s recommendations, which I mentioned at the beginning, and which have been adopted by different Governments.

I shall address the specific points raised by the noble Lord, Lord Tunnicliffe. On whether the primary legislation that established these bodies has Henry VIII clauses that allow these changes to be made by delegated legislation, for the bodies included in the scope of C&AG audit by this order, I can advise that no such provisions are available. For the bodies that are removed from that scope, the order amends provisions previously made by earlier GRAA orders and there are no other legislative provisions which would enable all the necessary changes to be made.

Regarding the bodies that are being omitted from the scope of the NAO audit, as I said in my opening remarks, these 61 bodies have ceased operation and there is therefore nothing left to audit and they are being removed. They are listed in one of the schedules to the order. Regarding the addition of the eight bodies, again, in my opening remarks I tried to outline the criteria. To address the noble Lord’s question on why this is presented now, the Treasury originally laid the order in March 2017. However, debates were not possible as a result of the election and so the order was re-laid in September, in slightly amended form, with the Commons debate scheduled for 12 December, and was presented to the Lords today. Lastly, the noble Lord raised a question on future GRAA orders. The Treasury has informed me that no further affirmative orders are planned, which I think is good news for both of us. The last affirmative GRAA order was in 2012.

We support the policy that all public bodies should be subject to C&AG audit to increase parliamentary accountability. We are now implementing that policy, bringing full accountability to Parliament for public bodies and other central government bodies that are consolidated within a department’s accounts. The draft order before us today is an important step to realising that ambition.

Government Resources and Accounts—Act. I got three out of four off the cuff. That was a very fast ball the noble Lord bowled me right at the end, and I got three out of four.

Motion agreed.

Community Drivers’ Hours Offences (Enforcement) Regulations 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Community Drivers’ Hours Offences (Enforcement) Regulations 2017.

My Lords, these regulations are being made in order to enhance the enforcement agencies’ powers in respect of the drivers’ hours rules. For the benefit of your Lordships who may not be aware I shall make a few introductory remarks about those rules.

The drivers’ hours rules are central to keeping our roads safe. They set maximum driving times and minimum break and rest times for most commercial drivers of both lorries and coaches. For example, the rules mean that after four and a half hours driving, a driver must take a 45-minute break. Daily driving time is normally limited to nine hours.

The consequences of drivers working when fatigued can, of course, be catastrophic, so although we can be pleased to note that road accidents involving coaches and lorries have been reducing over time, we must not be complacent. The rules are enforced by the Driver and Vehicle Standards Agency and the police at targeted roadside checks and also by visiting operators’ premises. Most breaches of the rules are swiftly identified and efficiently dealt with by means of fixed financial penalties. More serious breaches are referred to the traffic commissioners or lead to prosecution.

These regulations extend the use of fixed financial penalties so that they are available for certain drivers’ hours offences committed within 28 days of a drivers’ hours compliance check. At present, this fixed-penalty approach can be taken only for current offences—those that are being committed at the time of the check. But the tachograph, the device which is used to check compliance with the rules, has a historical memory. These “on-the-record” or “historical” drivers’ hours offences can be sanctioned at present, but only through court prosecution. This is time consuming and costly, as your Lordships can imagine, both for the enforcement agencies and for the operator and driver involved.

It creates a particular difficulty in respect of non-UK drivers, which is perhaps where the biggest consequence of this change will be. Although they may be issued with court summons, regrettably they do not generally respond to them. It is costly and may be impracticable to arrest them and hold them in police custody. The regulations will enable the enforcement agencies to issue fixed financial penalties for infringements of the drivers’ hours rules by non-UK and UK drivers committed in the 28 days preceding a compliance check. The regulations will also bring the UK into line with several other European countries, including France and Germany, which already issue on-the-spot penalties for historical drivers’ hours offences. In addition, it will save the enforcement agencies time and money by giving them the option of taking fewer cases to court.

The new powers will not be used indiscriminately. The DVSA intends to carefully consider all relevant circumstances and the gravity of the offence before taking any action and will exercise its discretion when dealing with minor infringements. My department undertook a formal consultation on these changes. They received broad support from respondents, including trade associations. I beg to move.

My Lords, these regulations relate to on-the-spot fines for historical road traffic offences—that is, offences committed within 28 days prior to the driver being stopped. Drivers’ hours legislation is an important aspect of road safety standards in this country, as well as, of course, an important aspect of the welfare of the drivers concerned. These regulations apply to the so-called historical offences committed outside the UK in other EU member states and some third-party countries.

A very high percentage of freight traffic on our roads is driven by foreign drivers. Many of them are actually EU citizens resident in this country and working for UK companies here and abroad, but many of them are foreign drivers who have simply come to the UK to deliver and collect goods. Therefore, the future co-ordination and harmonisation with the rest of the EU is vital to our road safety in future—unless of course we are going to hermetically seal our borders, as some Brexit supporters seem keen to do.

I particularly want to ask the Minister about Northern Ireland, because on the island of Ireland, drivers cross all the time from one side of the border to the other. They do not even notice that they have crossed that border in many cases. It happens much more frequently and much less formally than in the rest of the UK because that border is invisible. There has been a great deal of discussion about future customs checks, but clearly the harmonisation of drivers’ hours is also vital. Therefore, do the Government intend to keep in step with EU rules on this, now and in future—deal or no deal? It is not just a case of whether the Government intend to accept the EU rules as they currently stand. The Government need to commit to keeping the EU rules as they are amended and changed over time, which happens fairly regularly. Unless Britain is entirely in step with the EU, now and in perpetuity, there will be huge problems for drivers in Ireland. In effect, a border will be created.

Of course, in the UK as a whole, as well as in Ireland, there will be an adverse impact on working conditions for drivers, and very significantly on road safety, if the Government do not maintain the standards on this and keep in step. It would be curious at the least if, by abandoning these rules and the cross-border co-operation they intrinsically involve, we allowed drivers on to our roads while ignoring the hours they had driven before they entered the UK. I invite the Minister to reassure us that the Government intend to keep absolutely in step with these rules, now and in future. It is not a case of wishing to get even better than the rest of the EU. The important thing is that we have the same rules so that drivers understand and can follow those rules as they go from one part of Ireland to another—from the EU into the UK.

My Lords, I thank the Minister for her very clear explanation. Listening to the remarks of the noble Baroness who has just taken her seat, I was reminded of the high reputation she had in the Welsh Assembly as a Minister.

The helpful Explanatory Note refers to,

“rules about periods of driving, rests and breaks for drivers of specified vehicles undertaking international carriage of goods and passengers”.

Road safety requires these rules, that is for sure. I note the reference to “international carriage of goods”. My question is: are the Government doing enough to collect the fines from drivers who have being doing things wrongly on our roads but who then go back to Europe? Often they do not pay up. If you talk to magistrates, they will say that that is the case. Have the Government any statistics on the fines not paid by drivers from overseas?

I, too, thank the Minister for explaining the purpose and content of the SI. We certainly support its objectives. I have some points to raise about the Explanatory Note and Explanatory Memorandum. I would be more than happy to have a written reply if the Minister is not in a position to respond to some or all of them now.

At least one or two of the points are probably driven as much by ignorance on my part as anything else. Can I clarify to whom the order applies? Is it only to,

“drivers of specified vehicles undertaking international carriage of goods and passengers”,

as referred to in the first paragraph of the Explanatory Note at the end of the draft statutory instrument, or does the order apply to,

“drivers engaged in the carriage of goods and passengers by road”

as referred to in paragraph 4.1 of the Explanatory Memorandum—apparently without any stipulation that it applies only to the international carriage of goods and passengers?

What is the position of drivers of vehicles undertaking national as opposed to international carriage of goods and passengers? Are they covered by similar requirements about periods of driving rests and breaks and can they already be issued with a fixed penalty notice for an offence suspected of being committed within 28 days prior to detection, or only one committed at the time they are detected?

I ask that point to clarify whether the order does or does not mean that we are treating drivers of vehicles involved in international carriage of goods and passengers differently from those involved in national carriage of goods and passengers in this country in respect of fixed penalty notices referred to in the order.

The Explanatory Memorandum refers in paragraph 2.1 to “on-the-spot” penalties being,

“available to enforcement officers when taking action in respect of both UK and non-UK drivers when they detect an infringement of certain Community drivers’ hours rules out of GB”.

In that context, I also raise a point that has just been raised by my noble friend Lord Jones: if a non-UK driver does not pay their fixed penalty notice on the spot for an offence suspected to have been committed within 28 days prior to detection, what does present evidence available indicate is the likelihood of that fine being paid in whole, and what are the costs of securing payment of such outstanding fines?

The Explanatory Memorandum does not give any indication of the likely number of cases that will no longer be coming to court, although it does refer to court proceedings being “costly and relatively cumbersome”. How many cases will no longer be coming to court that currently do so, as a result of the order, and at what saving? Likewise, how many more offences is it considered will be pursued through fixed penalty notices now enabled under this order which would not have been pursued through court proceedings due to their being “costly and relatively cumbersome”?

Paragraph 8.2 of the Explanatory Memorandum refers to the assurances being sought by two trade associations. One of them appears to be that,

“enforcement officers would focus on serious offences and not penalise all minor offences”.

My comment relates to all the issues on which assurances were being sought, as referred to in paragraph 8.2. I would like to know what way forward was agreed to in follow-up meetings. All that is said in paragraph 8.2 is that:

“These concerns were addressed and a way forward agreed in follow-up meetings”.

What was the way forward agreed and what are the assurances that have been given in relation to the issues raised by the two trade associations and set out in paragraph 8.2? I also ask the question that was raised by the noble Baroness, Lady Randerson—in considerably more detail than I intend to do, since I do not wish to repeat points that she has made. I, too, would like to know, since the order apparently does not apply to Northern Ireland, what is—and what will be—the position in Northern Ireland in relation to the issues addressed by this order and, indeed, to the rather wider issues referred to by the noble Baroness, Lady Randerson, in her comments?

As I said at the beginning, I am more than happy if the Minister wishes to send a written response to the questions that I have raised.

I thank noble Lords for all their questions—at least I think I thank them. Various points were made about Ireland. Obviously, goods will be able to travel easily in Europe after we leave the EU; that is our intention. Businesses and consumers across Europe would expect both sides in negotiations to work to this end and there is no good reason why suitable arrangements cannot be negotiated.

The noble Lord, Lord Rosser, mentioned Northern Ireland and its rules and regulations. They are devolved and Northern Ireland has its own rules on tachographs. On what will happen post Brexit, we will continue to work with the industry to ensure that the interests of the road haulage sector are properly reflected in the negotiations during our withdrawal from the EU.

As for how many more penalties are expected to be issued, based on last year’s figures it is estimated that fixed penalties for drivers’ hours and tachograph offences could increase from around 10,000 to at least 14,000 per annum. Of course, on-the-spot checks and fines mean that we are saving quite a lot in court procedures, which are very time-consuming and much more expensive. An official record is not kept on how many non-UK offenders are given a warning or are fined but, since December 2013, the DVSA has recorded giving 273 warnings. However, as the recording of verbal warnings is not mandatory, the figure is likely to be a lot higher. As I said in my opening speech, enforcement officers will be sensitive as to how they give these fines and will listen to what the drivers have to say and to their explanations for what they are doing. If the fine is not paid on the spot, enforcement officers can immobilise the vehicle until payment is made.

I think that I have answered all the questions, so all I need to say is that the new powers will make a big difference to how we collect these fines. The drivers’ hours rules are at the heart of the regulatory regime governing the use of heavy commercial vehicles. They are in place to prevent drivers driving when tired and putting themselves and other road users at risk. It is important that our enforcement of them is as good as it can be, both to deter wrongdoing in the first place and to take action efficiently and effectively when it does arise.

I add that, following consultations, as I said, the main trade associations, which included the Road Haulage Association, the Freight Transport Association, the Confederation of Passenger Transport and the main trade unions, Unite and the United Road Transport Union, all supported this change. Their only criticism of the Government on this issue could have been the amount of time that it would take to change the law, but they did not even raise that as they are very keen that we should go ahead and get this this done.

These regulations are important measures for enhancing the enforcement of the drivers’ hours rules. They will mean that more offenders can be dealt with at the roadside rather than through time-consuming prosecutions. In doing so, they will help to keep our roads safe, which is the most important thing. I commend these regulations to the Committee.

Do the regulations apply only to the international carriage of goods or do they apply to national carriage of goods, that is, within this country? Does it have to be goods that are coming from abroad into this country? Also, on paragraph 8.2, I am not aware of the way forward to address the assurances sought by the two trade associations. There are a number of issues set out in paragraph 8.2 on which they sought assurances, but I am still not clear on the nature of the assurances given. I would like to know that either now or in writing.

On the noble Lord’s first question, it applies to both. On the second, the DVSA has assured the industry that its enforcement officers will ensure that offences will be recorded against the operator responsible for the driver on the date of offending and attribute the OCRS scores to the appropriate record.

What assurance was given when they wanted,

“assurances … that enforcement officers would focus on serious offences and not penalise all minor offences”?

On the face of it, that is allowing someone to get away with something. What is the definition of a minor offence that has been agreed in the assurance that has been given, or the way forward that has been agreed?

I love all the inspiration that is coming from over my right shoulder. The DVSO will be issuing fixed penalties for offences at the threshold that would normally go to prosecution. That is the whole point: it is to save prosecution. This is normally when examiners detect at least four less serious historical offences or one serious offence. So it is a build-up, really. Where normally they would say, “Right, we need to send you to court”, instead they will impose on-the-spot fines.

Motion agreed.

Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017.

My Lords, these regulations were laid before the House on 10 July 2017. They will reduce confusion for pension scheme members and burdens for industry. They enact the conclusions of a call for evidence in 2015 concerning how a scheme determines whether or not a member is required to take financial advice prior to transferring their pension savings. Plainly put, the regulations simplify how trustees and scheme managers value members’ pensions in order to determine whether the requirement to take advice applies. There is no change in the actual value of the pensions themselves.

To better understand the provisions, it is helpful to first detail the wider context in which they operate. The provisions form part of a wider package of changes that as a whole simplify, but also expand, the protections available for members with potentially valuable guarantees attached to their pensions. Since they were introduced in April 2015, the pension freedoms have given individuals aged 55 and over greater choice in how and when they access their pension savings. Members who save into pension arrangements that provide potentially valuable guarantees can generally also exercise these new freedoms, where necessary by first transferring to a defined contribution scheme or converting to defined contribution savings.

The regulations debated here apply to these pension arrangements—“safeguarded benefits”, as they are known—which include typical defined benefit schemes, but more importantly for the purpose of this debate, safeguarded flexible benefits. I should explain these terms. Safeguarded flexible benefits are flexible in that there is a pot, which is cash-based, meaning that the pension freedoms apply, but they are also safeguarded because they include a promise in relation to the secure income they may provide in retirement. Normally, but not exclusively, safeguarded flexible benefits are personal pension contracts that include the option to take an annuity at a guaranteed rate. These are commonly referred to as a guaranteed annuity rate—GAR.

Because of the valuable guarantees offered by safeguarded benefits, legislation introduced an advice requirement alongside the pension freedoms. This requires trustees and scheme managers to check that members with safeguarded benefits valued as greater than £30,000 have taken financial advice before transferring or otherwise flexibly accessing those benefits. It is this legislative requirement—specifically, how pensions are valued for the purpose of determining whether or not it applies —that I am proposing to amend today.

The Government have become aware that the methodology prescribed in regulations for valuing members’ benefits against the £30,000 threshold has resulted in firms offering GARs having to provide two values for the member’s pension: the transfer value, which an individual will actually receive, and the actuarially calculated, but ultimately notional, value against which the £30,000 advice threshold is tested. Providers and consumer groups reported members with safeguarded flexible benefits experiencing confusion over why they were receiving two valuations. This means that there is always a potential risk that members may choose to take advice and access their pension, having wrongly believed that they would be entitled to the higher actuarially calculated value, when they would receive only the lower transfer value. The regulations debated here will, if approved, amend existing provisions so that trustees and scheme managers are required to treat the value of safeguarded benefits as equal to the transfer value of those benefits when determining whether or not the £30,000 threshold is met.

Trustees of typical defined benefit schemes will continue to use the same methodology, subject to limited exceptions to which I will come later. Meanwhile, those offering safeguarded flexible benefits, such as guaranteed annuity rates, produce only one valuation: the transfer value of the member’s benefits. For most schemes, this will be the cash value of the member’s pot. This single figure is easily explained and avoids confusion for members. It is also widely used within other communications and is already produced by firms. The instrument also contains transitional provisions to accommodate the changeover from one valuation methodology to another so that members are not disadvantaged.

Finally, the regulations make an amendment to the valuation methodology that removes an inconsistency in the treatment of defined benefit pension scheme savers. Specifically, it is for members of those defined benefit schemes which use higher cash equivalents than those required by legislation. We are working with actuaries to understand and manage the impacts of this measure, in order to understand and monitor its effects. We will be able to amend this requirement should it not function as intended.

Although the purpose and focus of this debate is, of course, the affirmative instrument to which I have just referred, it is worth explaining that the measures set out in these regulations form part of a package of regulatory changes. The Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment) Regulations 2017 introduce a new requirement for trustees and scheme managers to send tailored communications informing all members with safeguarded flexible benefits of the availability of potentially valuable guarantees at precisely the point they are most engaged—that is, when they are considering whether to flexibly access and, therefore, potentially surrender those benefits. Although not within the scope of today’s debate, because they have already been made and laid by the negative procedure, on 6 July 2017, these requirements form an important partner to the regulations debated here by improving member protection through targeted and simplified communications.

I will explain the combined effect of these measures on members with a range of values of safeguarded flexible benefits such as GARs. First, there are those members who have pension pots with a transfer value of over £30,000, for whom the advice requirement still applies, only now they will also receive an indication of the guarantee’s value before they commit to incurring the expense of seeking and taking financial advice. Members who decide not to proceed with their original request to transfer, convert or take a lump sum payment will have therefore saved themselves, on average, £900. For those who still wish to proceed and access their savings, that option is of course still available. Members will receive a more detailed analysis of the implications of doing this, as they will have to pay for financial advice.

Secondly, there is a group of members who were previously required to look for financial advice but, under the new valuation methodology, would now not be required to attempt to find advice. These are typically members with pots in the range of £15,000 to £30,000. I have used the terms “look for” and “attempt to find” advisedly, because I contend that these members are better served by a combination of the new valuation method and risk warnings this package of regulations introduces. Under the current regime, many of these members are both deprived of any opportunity to appreciate their benefits and denied the ability to exercise an informed choice, because they cannot find a willing financial adviser to perform a transfer analysis for a pension pot with a transfer value of £15,000.

Replacing the requirement for members to take financial advice with a personalised risk warning therefore maintains protection while simplifying the process. It does this by removing an additional layer of cost for members, confusion about the money they stand to access from their pension savings through the use of two valuations, and consequent frustration. The combined package of regulations ensures that even members with small pots—typically below £15,000—are notified of the presence of potentially valuable guarantees in their pension scheme. These members would not have been required to take financial advice under the current regime, but they will now be sent a personalised risk warning before they transfer, convert or otherwise flexibly access their pension pot.

In conclusion, the Government are committed to the principle that those pension savers wishing to exercise choice over when and how they access their pension savings should be able and supported to do so. However, it is equally important to protect members through simplifying how they are told about their pension, while at the same time avoiding unnecessary burdens by removing needless complexity for members and industry alike.

These regulations form part of a package of changes which ensure both that more members receive timely and suitable information about their safeguarded flexible pension benefits and that industry can use a simpler method for valuing benefits for the purpose of the advice requirement. Taken together, these changes demonstrate that the Government have listened carefully to both stakeholders and consumer groups. They show that we are now meeting our commitment, made as part of our consultation exercises, not only to monitor the pension freedoms but to reform existing measures where needed. I therefore commend these regulations to the Committee.

My Lords, I thank the Minister for her measured exposition. I note that in the Explanatory Note the word “survivor” crops up. Does she have to hand a legal definition of “survivor”?

My Lords, I refer to my interests as set out in the register, in particular that I am a trustee of two occupational pension schemes. The regulations have the effect of removing some individuals—currently estimated at 2,360 per annum—from the need to get regulated advice before accessing those pension pots with a safeguarded flexible benefit, such as a guaranteed annuity rate. This is a consequence of changing the valuation process to determine whether such benefits meet the greater than £30,000 trigger for requiring the individual to take regulated advice.

The term “safeguarded flexible benefits”—the subject matter of these regulations—can feel imprecise, however many times one reads the background paperwork. I appreciate that there are problems with getting data from both contract- and trust-based schemes, but it is not always clear which benefits are included and which are not. I acknowledge that schemes may well need to seek legal opinion to get that clarity so they are sure about how they are applying these regulations to their own schemes.

I thank the DWP officials who quite late into yesterday evening were still answering my various questions. I take this opportunity to ask the Minister two questions about which safeguarded flexible benefits are included. In occupational schemes where members have a right under the scheme rules to convert their AVC saving into scheme defined-benefit benefits, does that provision come under these regulations? Is it possible to give greater clarity on which guaranteed annuity rates in occupational schemes would not be considered money purchase benefits?

Moving on to the risk warning process, I recognise that these regulations sit alongside a new requirement for schemes to send members with safeguarded flexible benefits a tailored risk warning about the guarantees their benefits offer before they proceed to transfer, convert or flexibly access them. Such risk warnings are welcome, but I have a series of linked questions for the Minister on the process around those risk warnings. First, why can the risk warning not be issued immediately following receipt of a member request to transfer, convert or directly access their flexible benefits and before commencing to process the member request? If the warning is received as late as 14 days before any live request completes, evidence suggests that by then individuals are well set on a course of action, inertia takes over and risk warnings are less effective. Some schemes run a system where there are warnings in place: the first thing is the warning, before the full process is triggered.

Secondly, will the risk warning be sent to any other potential beneficiary of the benefits, such as parties involved in a pensions sharing order or, as my noble friend said, possibly survivors? This is a duplicate question, in that sense. Why is the warning restricted to signposting the member to free and impartial guidance? Is this not exactly the type of case where a person should be given almost a default access to the guidance service in line with the recent amendment agreed to the Financial Guidance and Claims Bill? Just a written reference to signposting can often get lost in the detail of the information sent to members, and we are talking about safeguarded benefits.

My Lords, I thank the Minister for the introduction and explanation of the regulations. As ever, I am delighted to have the expertise of my noble friend Lady Drake alongside me on these occasions.

The regulations derive, as we have heard, from Section 48 of Pension Schemes Act 2015 and are an integral part of the pension freedoms introduced with effect from April 2015. They focus on the requirements on trustees or managers of a pension scheme in Great Britain to ensure that appropriate independent advice has been received before safeguarded benefits can be converted, one way or another, to flexible benefits.

These regulations, as we have heard, sit alongside other regulations, of the negative variety, which concern requirements for schemes to provide risk warnings where members have the benefit of a GAR—guaranteed annuity rate—which they might otherwise be in danger of relinquishing. Together with the transitional provisions for the advice requirements, these are described in the Explanatory Memorandum as a package and we comment on them on that basis.

The requirement to get regulated advice currently operates when an individual’s safeguarded benefits are valued at more than £30,000. It is suggested that the detail of this requires amendment because the basis of calculation is unduly complicated in some circumstances and can lead to situations where the calculation of the advice threshold exceeds £30,000 but the pension pot size is different. Having two different valuations is said to be confusing, and we understand that point.

The impact assessment explains that these complications exist because the valuation regulations currently applied were previously used only by occupational DB schemes and that the circumstances in which they now have to be applied do not generally have standardised processes in place to value GAR benefits in terms of the current value of the future income they offer. As we have heard, the solution offered by these regulations is to adopt the transfer value of the pot in the calculations determining whether the £30,000 threshold for getting regulated advice is reached.

On an ongoing basis, this will save individuals with safeguarded flexible benefits some £11 million per year in advice fees. As we have heard, it will remove some 12,000 people per year from the need to get advice before they access pension pots, although they will be brought within the risk warning arrangements. This seems to be taking matters in the wrong direction. Changing the basis of calculation might be administratively or arithmetically convenient, but what assessment have the Government undertaken of the appropriateness of removing so many people from the benefit of advice?

It is accepted that individuals will no longer have to meet the cost of advice, but they will not be getting the benefit of that advice either. Of course, fewer requirements for regulated advice means fewer fees paid by individuals, but will the Minister remind us about the circumstances in which individuals can access their pension pot to pay for advice, the limits and the tax treatment? Do the Government have any information about the extent to which this is used?

The Explanatory Memorandum makes reference to the potential for inconsistent treatment of members regarding when advice is required when schemes can exercise more generous transfers. Will the Minister tell us how this issue is to be dealt with? We support the concept of risk warnings and the principle of informing members of their safeguarded flexible benefits. This should be the responsibility of ceding schemes and should happen before proceeding to transfer, convert or flexibly access scheme benefits. It should apply to survivors with safeguarded benefits.

We agree that those already required to take advice should be included in the risk warnings. We support there being no de minimis exemption on the basis of pot size. On timing, which my noble friend raised, it is proposed that the risk warning should be sent at least 14 days before any live request completes. Why can the warning not be sent, as my noble friend asked, as soon as a member request to transfer or access the flexible benefits is received?

The Government’s response to the consultation on these matters has confirmed the approach to the content of the risk warning and the inclusion of two comparable pension illustrations tailored to the member’s age, pot size and contribution rate and with details of guarantees available.

Paragraph 44 states that the Government are not convinced of the need to explain the difference between personalised tax warnings and the statutory money purchase illustrations. Will the Minister expand on the rationale for this position?

Can the Minister also confirm that she is confident that there should be no confusion arising from obligations in respect of retirement wake-up packs and personalised risk warnings? The written element of the risk warning is, according to the impact assessment, to include the signposting to free and impartial guidance—Pension Wise currently or SFGB, or whatever it is going to be called, in due course. As my noble friend has said, this is about the weakest indication of support, bearing in mind that many would previously have had to take advice. As my noble friend proposes, is this not the type of situation now potentially covered by amendments to the Financial Guidance and Claims Bill where individuals can be defaulted to the guidance service with an obligation to demonstrate that they have received guidance before proceeding?

We will not oppose these regulations, although in some respects we consider them a missed opportunity. However, they illustrate the complexity of aspects of our pensions system and the importance of ensuring that individuals are fully supported to understand the value of their pension entitlements.

I thank all noble Lords and the noble Baroness, Lady Drake, for taking part in the debate. I will do my level best to respond to the questions as fully as I am able. The noble Lord, Lord Jones, first asked about the legal term “survivor”. “Survivor” in the regulations means a person who has survived the member and has a right to future benefits or is entitled to benefits under the scheme in respect of that member. The noble Baroness, Lady Drake, and the noble Lord, Lord Jones, referred to survivors. I want to make clear that these regulations apply to both members and survivors. Where an individual inherits a member’s subsisting rights in respect of safeguarded benefits and those benefits exceed the advice threshold of £30,000 the survivor is also required to take financial advice. Survivors who inherit a member’s safeguarded flexible benefits will also receive a personalised risk warning should they decide to transfer, convert or flexibly access their inherited pension rights. The risk warning is sent to whoever is making a decision about their pension saving at the point they are most engaged in that decision.

In response to the question from the noble Baroness, Lady Drake, about what is included in the definition of safeguarded flexible benefits, the simplest description of a safeguarded flexible benefit is a cash pot with some form of promise or guarantee that the member can convert their pot into a pension income at a predetermined rate. We have framed the definition in fairly general terms, rather than specifically to the types of pension arrangements it covers, such as guaranteed annuity rates, in order to limit the scope for omissions or avoidance. Those uncertain whether the regulations apply should seek appropriate legal expertise and advice.

I turn to the question of what GARs in occupational schemes are not money purchase. GARs that are included in the rules of the pension scheme irrespective of whether this was reflected in the terms of a contract between the trustee and a third party, such as an insurer, are not money purchase. In this situation, the scheme would be liable to fund benefits over and above what the scheme assets—including the contract—can provide. So the benefits are technically non-money purchase and are, therefore, safeguarded benefits.

The noble Baroness also asked about members who are told about their guarantees too late. The question was, why not require schemes to tell members about their guarantees earlier on? The regulations laid alongside these regulations will require trustees and scheme managers to send members information about their valuable guarantees at precisely the point that the member is most engaged in considering what to do with their pension savings. This, we believe, makes them more effective at increasing awareness of guarantees among members than forcing schemes to send regular information long before members’ retirement, when they may not be actively considering a decision.

Reference was made by the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, to the single financial guidance body Bill, which references signposting and regulations with regard to giving advice and also, in this instance, the availability of free and impartial guidance. Noble Lords will be aware that existing regulations and rules require trustees and providers to signpost members to the availability of free and impartial guidance. They do this as part of what we call wake-up packs, which they are required to send when they communicate with members about their retirement options and, where applicable, via retirement risk warnings.

In addition, the regulations that accompany the regulations that are the subject of the debate will require schemes, when they issue personalised risk warnings, to signpost members to the service that delivers that free and impartial guidance. Presently, that is Pension Wise, but in future it will be the single financial guidance body. Both the Pensions Advisory Service and Money Advice Service also provide free information and guidance on GARs, for example, guidance on what to look for when deciding whether to take up a guaranteed annuity rate and comparing the income available from a GAR with the income available from shopping around through the Money Advice Service annuity tool to calculate and compare annuities. These services will continue to be provided by the new single financial guidance body. We are currently working on the fine detail of the amendments to what is now Clause 5(2) of the Financial Guidance and Claims Bill.

We believe that these regulations, by providing an additional nudge to free sources of guidance, are compatible with the amendment laid by the noble Lord, Lord Sharkey, during our debates. We will of course review and make consequential amendments, where necessary, to all regulations that currently refer to pensions guidance to ensure that they continue to operate correctly when the new arrangements under the Financial Guidance and Claims Bill come into effect. I ought to add that there is of course no guarantee that this amendment will pass through another place. We cannot be firm about any of this until the Bill receives Royal Assent.

Just on that point, is it the Government’s position that they would support those amendments as currently carried and included in the Bill?

I thank the noble Lord for the question. Yes, the Government will accept the amendment in the other place but of course we cannot speak for other Members in the other place, who may think differently. Certainly, the expectation is that the amendment will see Royal Assent.

There was a suggestion that our legislation is reducing protection for members of defined benefit schemes, but these regulations have no impact on the vast majority of such schemes or their members. They will still be subject to the same requirement for regulated financial advice where their benefits exceed the same threshold, and the same valuations will continue to apply. In the small proportion of schemes that choose to offer more generous transfer values than are required by law, members whose defined benefit pensions are worth in the region of £20,000 to £30,000 are being treated more fairly. They will not be forced to take advice when members with the same rights in other defined benefit schemes are not. These members can of course opt to take advice and will be able to seek guidance, which can signal the option of advice before transferring.

There was a question about whether we were reducing member protection and making it easier for savers to surrender their guarantees. We remain committed to the principle of the advice safeguard. That is why the threshold to whom it is applied remains the same—those with safeguarded benefits with a value of over £30,000—and with the introduction of these regulations, for the majority of members with safeguarded benefits there will be no change in how their pension is valued and calculated for the purpose of the advice requirement.

However, where a pot is cash-based but has a safeguarded element, such as the option of a guaranteed annuity rate, these regulations deliver simplification and clarity. Trustees and scheme managers now have to produce only one valuation of the member’s pot. A single figure is easily explained and avoids confusing members because it makes it clearer what the members may receive if they proceed to transfer, convert or otherwise flexibly access their savings. At the same time, parallel regulations introduce new protections that are timely—sent at the point members are making a decision—and increase the total number of members informed that their pots contain guarantees.

The noble Lord, Lord McKenzie, asked about the work that has been done on assessing the impact of the regulations. The Department for Work and Pensions estimates that there will be approximately 12,400 individuals per year who no longer need to try to find advice. The noble Lord said that he felt that these regulations were a missed opportunity. I reconfirm, as I said at the outset of this brief debate, that it is very important to take on board the fact that the Department for Work and Pensions is continually reviewing and assessing the impact of regulations, following the protection freedoms. If it is found that more needs to be done, changed or amended, we will certainly do that through secondary legislation.

The regulations debated here today simplify how trustees and scheme managers value members’ pensions when determining whether the requirement to take advice applies. Pension schemes with members who hold safeguarded flexible benefits—mainly but not exclusively personal pension contracts that include the option of an annuity at a guaranteed rate—can use the transfer value of the member’s pot, instead of undertaking a complex actuarial calculation.

Representatives of consumers and industry have both sought and supported the simplification of the current valuation method that these regulations deliver, and both groups will benefit from its implementation. Consumers with safeguarded flexible benefits will be less confused when they inquire about transferring or accessing their pot because they will receive only one valuation, and the difficulties for industry when valuing these guarantees will be removed.

Finally, these regulations form part of a package of measures. If approved, they will come into force alongside a new requirement to send all members tailored communications, ensuring that all members are told about their valuable benefits in a more timely and accessible manner. There will also no longer be a cohort of individuals who are required to seek financial advice, but are often unable to locate an adviser willing to advise on their pension savings. I hope I have set out for the Committee the need for these regulations and have responded to the matters raised. I commend these draft regulations to the Committee.

Motion agreed.

Selection of the President of Welsh Tribunals Regulations 2017

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Selection of the President of Welsh Tribunals Regulations 2017.

By way of background, there are seven devolved tribunals that are the responsibility of the Welsh Government: the Mental Health Review Tribunal for Wales, the Special Educational Needs Tribunal for Wales, the Agricultural Land Tribunal for Wales, the Adjudication Panel for Wales, the Residential Property Tribunal Wales, the Welsh Language Tribunal, and a tribunal covering the registered school inspectors appeals panels and the registered nursery education inspectors appeals panels.

There are 41 judges currently appointed to those tribunals. Each tribunal has its own judicial lead but these judges have limited access to senior judicial leadership within Wales, which is inconsistent with other judicial officeholders in England and Wales. Sir Wyn Williams, a retired High Court judge, has been undertaking an informal leadership role, but he does not have any statutory powers.

To address this, Part 3 of the Wales Act 2017 created a new post: the President of Welsh Tribunals. The president has responsibility for making arrangements about the training, guidance and welfare of Welsh tribunal members, as well as for representing their views to Welsh Ministers and other Members of the National Assembly for Wales. The president will also be able to give practice directions and will be responsible for deploying tribunal members between the different Welsh tribunals, as well as between the UK-wide tribunals and the Welsh tribunals.

The president will also be responsible for establishing and communicating the judicial strategic direction for the Welsh tribunals. He or she will provide leadership and build effective relationships with the judicial leads of the Welsh tribunals, as well as with the Welsh Government’s Welsh Tribunals Unit, the Lord Chief Justice, the Judicial College, and Ministers and officials in the Welsh Government, relating to policy issues affecting the Welsh tribunals.

Paragraph 2 of Schedule 5 to the Wales Act 2017 provides two routes for the appointment of the President of Welsh Tribunals. The first is by agreement between the Lord Chief Justice, the Lord Chancellor and the Welsh Ministers with regard to a person who is, or has been, a judge of the Court of Appeal or the High Court. The second route, in default, is following selection by the Judicial Appointments Commission.

If agreement cannot be reached between the Lord Chief Justice, the Lord Chancellor and the Welsh Ministers on the appointment, paragraph 2 of Schedule 5 to the Wales Act 2017 requires the Lord Chief Justice to make a request to the Judicial Appointments Commission for a person to be selected for appointment to the office of President of Welsh Tribunals.

Elements of the procedure for appointment by the Judicial Appointments Commission are set out in the Act itself. These include that the Judicial Appointments Commission must appoint a selection panel which must include at least two members who are non-legally qualified, at least two judicial members and at least two members of the Judicial Appointments Commission.

The Lord Chancellor is also required to make additional provision about the process to be applied. That is what these regulations do. In particular, they specify that the selection panel should consist of five members and make further provision about the appointment of people to that panel, including that the chairperson of the panel is to be a person designated by the Lord Chief Justice who holds, or has held, office as a judge of the Supreme Court, a Lord Justice of Appeal or a puisne judge of the High Court.

The regulations also make further provision relating to consultation during the process and to the reporting of the panel’s selection to the Lord Chief Justice and the Lord Chief Justice’s options when deciding on that selection. In order to be consistent with the relevant primary legislation and the nature of the new office, the appointment process closely reflects that which applies to the selection of the Senior President of Tribunals.

The Wales Act 2017 established the role of the President of Welsh Tribunals and the requirements for the appointment of a judicial officeholder to that office. These regulations allow that appointment to be made. I therefore commend the regulations to your Lordships and beg to move.

My Lords, I very much welcome these regulations, although I hope that the machinery that they set up will not be used, because of course the alternative way is by agreement between the Lord Chancellor, the Lord Chief Justice and Welsh Ministers.

At a time when the independence of the judiciary has been under attack, when we have heard expressions in the press such as, “Enemies of the people”, and when the press has questioned the impartiality of judges in many ways and the degree to which they are in touch, it is very important that the independence of the judiciary in Wales should be emphasised. In most of these tribunals, one of the parties concerned will almost certainly be the Welsh Government or local government, and it is very necessary that the administrative tribunal should be seen to be impartial.

I am very pleased that my old friend Sir Wyn Williams has been acting in an informal capacity as President of Welsh Tribunals—we used to meet on many a rugby field in our youth. Hopefully, he will continue in that role, and maybe he will be a candidate for president. I could not imagine the independence of the judiciary being in better hands to give leadership and direction. So many of the 41 judges who are sitting on these tribunals are lay persons without necessarily any lengthy experience in the law, so it is important that they should be properly trained and properly led. I am sure that that has been done under Sir Wyn Williams and that it will continue under these regulations.

My Lords, I will be very brief as I do not have a tenth of the background that the noble Lord, Lord Thomas, has with regard to legal operations in Wales. But I can from my own knowledge, and by reputation, endorse the comments the noble Lord made about Sir Wyn Williams.

I have one specific question, relating to the Welsh language. As noble Lords will be aware, and as I am sure the Minister has been made well aware, the Welsh language has full official status in Wales now, as it has since the legislation six or seven years ago. From 1967 onwards, it had equal validity, and the 1993 Act gave it equal status with English. That being so, operations of the law in courts and tribunals may take place in Welsh. That is the normal state of affairs in Wales. Proceedings may or may not take place in Welsh, but the choice is there and it is equal handed—as the noble Baroness in the Chair well knows.

In the specifications that have been put down, at Regulation 3(13) there is a list of the characteristics that are “desirable” for the members of the selection panel, including that members should be,

“both men and women … drawn from a range of different racial groups”—

—both fair enough—and have,

“an understanding of the administration of justice in Wales and Welsh devolution arrangements”.

That too is fine. But why is there no paragraph there about having at least some knowledge of the Welsh language, particularly as that will arise from time to time in the work that is being undertaken? I do not object to the instrument in itself, but that should have been covered, unless there is some explanation of which I am not aware.

My Lords, I have a very brief, possibly technical question, which is probably because I am not legally qualified or an expert in this matter. Paragraph 3.2 of the Explanatory Memorandum says that,

“the territorial application of this instrument includes Scotland and Northern Ireland”.

Further down, under “Extent and territorial application”, it says:

“The territorial application … is the whole of the United Kingdom”.

I was curious why those two provisions were there and whether it is a standard phrase that appears in all these things. It just seemed a little odd.

My Lords, I of course defer to the experience of the two noble Lords from Wales, who clearly have a greater insight into the position than either the Minister—with due respect—or I could have. Of course, I join them in welcoming the instrument. However, according to the Explanatory Note, the consultation process was very limited, as it was apparently confined to officials of the Welsh Government and the Lord Chief Justice. Was there any consideration with the professions in Wales about this? Presumably many members of the legal profession would have an interest in the matter.

On the concern about diversity, I wonder whether the noble and learned Lord is in a position to say—if not, perhaps he could subsequently advise me—what is the present composition of tribunal membership and chairs of the tribunals in terms of gender and ethnicity. Clearly there is an implicit aspiration at paragraph 12.2 of the Explanatory Memorandum to promote diversity. I would be interested to know what the starting point is. Although the question of developing a baseline against which progress can be measured is apparently still incorrect, it would be helpful to see where we are starting from, if not today by a note to those Members present.

This is clearly a welcome step forward. One hopes that it will work well and in particular that the diversity issue will be addressed properly and in a timely way. I join other noble Lords in welcoming the regulations and trust that their impact will be beneficial.

I am obliged to noble Lords and to the noble Baroness for their contributions. I begin with the point raised by the noble Lord, Lord Thomas of Gresford. I entirely agree with his observations about the importance of maintaining the independence of the judiciary and, equally, of defending the judiciary from inappropriate attack. There is an important distinction to be made between what can be regarded as justified criticism and what is tantamount to abuse. We have to underline that distinction if we are properly to defend the judiciary. Of that there can be no doubt.

On the question of whether these powers should be used, I again entirely agree with the noble Lord. This is the alternative mechanism to be employed, but it is contemplated that it will be employed only in circumstances where there is a breakdown in agreement between various parties. It is not something that is contemplated, but because the Act makes provision for this alternative mechanism it is only appropriate that we should have regulations in place so that, if necessary, it can be employed.

On the matter of who will be the president of the Welsh tribunals and his role so far as defence of tribunal members is concerned, remembering that some of those tribunal members are lay members, it is doubly important there is somebody there who can advise and defend their interests. One of the responsibilities of the President of Welsh Tribunals will be not only the training and guidance of members of the tribunals, but consideration of their welfare. That again is important.

On the point raised by the noble Lord, Lord Wigley, on the Welsh language, of course we recognise the importance of the Welsh language in the context of proceedings in Wales, but we have to remember that we are making an appointment to the judiciary of England and Wales. While the proceedings of those tribunals may take place in Welsh as distinct from English, it is not considered appropriate that we should extend the criteria for the appointment of this post to include the Welsh language itself.

I hear what the noble and learned Lord says. There are numerous bodies that have responsibilities that go beyond the borders of Wales where the status of the Welsh language is recognised. I would not have been surprised if there had been no provision at all for equality here on the basis that other legislation covers it, but if we are writing the equality of men and women and racial equality into this, surely it is not unreasonable to write the language in because some of the work will be undertaken in Wales, if not all of it.

With respect to the noble Lord’s observations, language is not an equality issue in that context in the same way as the other criteria he alluded to. It is a matter of context. Of course it is important we recognise that the use of English and Welsh have equal demands on any tribunal process in Wales, but that is quite distinct from how you go about the appointment criteria.

I am sorry; I do not want to labour this unduly. The language question has, to a large extent, been put to rest in Wales over recent decades after there was a lot of strong feeling about it on the basis that there was recognition of language being an equality criterion. I do not know whether it is technically so in the legal framework here but, surely in terms of the spirit of what is being done here, it should be accommodated.

With respect, there is no issue about whether an individual applicant would be prejudiced whether he spoke only Welsh or only English or both. That is why I say, in this context, it does not arise for the purposes of this schedule. If an applicant came forward who did not speak English but spoke only Welsh, there would be no issue about that applying to the suitability of his appointment.

May I help the Minister? I do not want to see issues like this boiling up to become another bullet in a language war, as it were. It is the sort of thing that we need a harmonious approach towards. Equality is regarded as being relevant in a language context, as in other contexts, and therefore, if it is necessary to write it into the terms as they are here, I cannot see why they are not broad enough to encapsulate language, but I have made my point.

If I can make one short addition, it is that these regulations are concerned with the technical operation of judicial appointments and therefore, again, our view is that the question does not arise in this context.

I turn to territorial application. My understanding is that technically, in the context of tribunal appointments, we are looking across the UK and not just at England and Wales, which is why the regulation extends as it does. There are circumstances in which tribunal membership can move between the various jurisdictions.

On the consultation process and diversity in particular, diversity is of course taken extremely seriously. I believe that we have some figures with regard to tribunal membership. I am not sure that I have figures with regard to the chairmanship of tribunals. As regards male and female membership, about 40% of tribunal members are female. In the senior courts, the figures are of course different but, for tribunals, the figure is as high as it is anywhere. As far as BAME in tribunals is concerned, the number is about 10%. Interestingly, perhaps, we even have a figure for those who are of a non-barrister background. I am not quite sure what a non-barrister background amounts to, but 66% of tribunal judges come from a non-barrister background. On whether that is regarded as a good thing or a bad thing, I will not comment. If the noble Lord, Lord Beecham, wishes to have figures about the chairmanship of tribunals, and their gender mix, I can undertake to write to him, if those figures are available. I do not know if they are; I know that the overall figures are there, as I have just mentioned. That, I hope, addresses the points that noble Lords have raised.

Motion agreed.

Committee adjourned at 6.43 pm.