asked Her Majesty's Government:

What priority they are giving to public health awareness campaigns relating to HIV and AIDS.

My Lords, we are committed to funding health promotion work for groups most at risk of HIV, and the general population. A budget of £3 million has been allocated for sexual health promotion work for the year 2000–01, including HIV/AIDS health promotion.

My Lords, I thank my noble friend the Minister for his reply. He may remember earlier campaigns in the 1980s on HIV awareness featuring icebergs and gravestones, some of which were fairly incomprehensible and not very relevant. Can my noble friend say how specific groups will be targeted for HIV awareness campaigns, such as young people and ethnic minority groups?

My Lords, my noble friend is right to suggest that for any public awareness campaign to be effective it needs to be targeted at the various groups concerned. Some of the material that is being funded by the Department of Health is already so targeted. I should mention in particular the work on CHAPS for gay men and work with Enfield and Haringey Health Authority for African communities. As far as concerns my noble friend's more general point, I can tell her that the sexual health and AIDS strategy that is now being developed will of course pick up those issues.

My Lords, I welcome the fact that the sexual health strategy is being combined with the HIV/ AIDS strategy. Clearly we hope that that will be produced in a very short space of time. I was lucky enough to be invited to visit a group of young people infected with HIV/AIDS. They wrote back to me saying how much they appreciated being able to meet parliamentarians and thereby understand the political processes. They also said:

"However we feel, from our own experiences, that HIV is still left in the closet' and we would like to see HIV-AIDS being taught in schools to raise the awareness of other people our age and younger".

Will the Minister include that suggestion in his plans?

My Lords, the noble Lord raises a most important point. As part of the strategy that is being developed, we shall be looking very closely at the most effective forms of communication with young people. If we can give as much information as possible in as sensitive a way as possible, I believe that we can do much to remove the stigma of HIV/AIDS, which is so crucial to the success of future prevention programmes and to securing a more tolerant society.

My Lords, does my noble friend agree that young people find it notoriously difficult to accept health warnings? Indeed, we know this from their reaction towards campaigns aimed at stopping youngsters from smoking. Therefore, does my noble friend agree that any campaign, or anything in the nature of posters and advertisements in newspapers, must be particularly sensitive and involve a psychological approach to young people's feelings and problems?

Yes, my Lords. I very much agree with my noble friend. Past experience with health promotion campaigns over many years has shown that, unless they are developed with young people in mind, they very often fail. When it comes to young people, I am convinced that the development of our strategy will enable us to ensure that the focus is both sensitive and informative. It must also ensure that the message gets across to young people.

My Lords, following the supplementary question from the noble Baroness, Lady Rendell, I sat on the all-party investigation into AIDS a year or two ago. It was made very clear to us then that many of these groups have almost their own language and terminology. Indeed, literature based on such language is much more appreciated and effective. Can the Minister assure us that he will take such matters into consideration?

My Lords, the noble Baroness may recall that too, sat on the all-party group's inquiry on AIDS. It was an extraordinary and moving occasion to have appear before us witnesses from so many different groups, especially young people. They certainly made a big impact on the Government's thinking about the way that we should develop programmes in the future. Yes, I do agree with the noble Baroness. Some of the campaigns that have already been developed—for example, the recent television advert entitled, "Clem and Lydia"—very much took the point that, if we are to get through to young people, we must speak their language.

My Lords, my noble friend is aware of my special interest as president of the Haemophilia Society. Can he help me by updating us now on the number of people with haemophilia who, having been infected with HIV by their NHS treatment, have since died of AIDS; and how this compares with the number who, after being infected with Hepatitis C, have since died of cancer of the liver?

My Lords, I do not have the exact information to hand. However, I am very much aware of my noble friend's concerns in this area. As far as concerns people suffering from haemophilia, this Government are determined to ensure that they receive the most appropriate services possible. I am shortly to meet directors of the haemophilia centres to talk through such matters with them.

My Lords, bearing in mind the rate of growth of HIV and AIDS among heterosexuals, what guidance is given to people travelling abroad, and in particular people travelling to sub-Saharan Africa?

My Lords, the noble Baroness is right to raise that issue. The latest figures I have for 1999 show that the number of new diagnoses among heterosexuals exceeded those among gay and bisexual men. For those who have been classified by place of infection, 77 per cent were infected in Africa. As regards any future targeted prevention programme, we shall have to think carefully about how best to get messages across, particularly in the context of people travelling abroad. That is the whole purpose of developing a sexual HIV/AIDS strategy. It is a matter that we shall clearly need to reflect upon.

My Lords, am I correct in believing that English health authorities between them submit 100 annual reports to the Department of Health on the prevention and treatment of AIDS under the AIDS (Control) Act 1987, and that these reports are not consolidated in any way? Is that not unsatisfactory? Would it not be better for the Department of Health to publish a single report to give an overview of HIV/ AIDS prevention and treatment across the country as a whole?

My Lords, there is no doubt that health authorities have a crucial role to play in the development of effective strategies at local level. Approximately £54 million is allocated to health authorities for the NHS HIV prevention budget. It is important that in reflecting on how successful those prevention budgets are, there is an effective mechanism for reviewing performance and progress. I do not wish to commit myself on whether collating the returns from health authorities in one annual report is the right direction to take. However, I am perfectly prepared to consider that. It is right to consider that matter alongside the development of the new strategy.

asked Her Majesty's Government:

What steps they plan to take to persuade other European Union member states rigorously to enforce in their territory the provisions of Council Directive 91/628/EEC on the protection of animals during transport, in respect of lambs and sheep which are being transported from the United Kingdom to or through other member states.

My Lords, the European Commission is responsible for ensuring that EU legislation on animal welfare and transport is fully implemented and properly enforced by all EU member states. High animal welfare standards are important to the Government. We continue to press the Commission to take action to ensure that it meets its obligations in this respect. We shall also take an active role in EU and other institutions to encourage best welfare practice and discuss our concerns with individual EU member states whenever it is necessary to do so.

My Lords, I am grateful for that reply. However, does the Minister recall—I am sure she must—that when the directive that we are considering was introduced in 1995 all member states in the European Union welcomed it because it suggested that at long last there would be some ease in the suffering of animals having to undergo long journeys on their way to slaughter in various parts of Europe? Is the noble Baroness aware that the responsible body, Compassion in World Farming, has recently conducted an investigation over 18 months and has proved beyond any question that most European countries ignore this regulation, and that in consequence suffering has greatly increased? The noble Baroness rightly mentioned the European Commission. I believe that it is due to review this regulation. Will the noble Baroness please ensure that when the Commission's report comes before the European Agriculture Committee, the UK will use its strongest endeavour to seek a fundamental change from transportation of live animals to trade in meat?

My Lords, I am aware of the issues that the noble Lord raises. Certainly the Government would prefer to see a trade in meat rather than live animals. As the noble Lord said, the Commission has started work on a review of the directive. We intend to press our view as regards the preferability of the carcass trade over the export of live animals. My right honourable friend the Minister wrote to Commissioner Byrne in February restating our deep concern about the failure of other member states to enforce the law as it is at present. The Commission is looking hard at ways of improving enforcement. It has initiated a series of working groups in which we have been able to stress the importance that we attach to improvements in the area. One of the groups is due to meet this week. We shall continue to emphasise the issues that the noble Lord rightly highlights.

My Lords, the noble Baroness has said again that the Government are anxious to encourage carcass trade as opposed to live exports. The Government have called for that since the election and indeed well before it. Yet the Government's charging policy for inspectors of small abattoirs has the effect of closing down local abattoirs and causes animals to have to travel further, both in this country and overseas. What have the Government done during their time in office to bring about some improvement and some increase in the carcass trade?

My Lords, as my noble friend will be aware, the review of charging policy for abattoirs is being undertaken at the moment by the Food Standards Agency. Earlier I outlined the view that we have tried to promulgate within Europe about the preferability of carcass trade. As regards trying to ensure that carcass trade is supported within this country, last week in your Lordships' House I answered a Starred Question about what we are doing to try to facilitate the export of whole unsplit carcasses to France—because that is what the market prefers—for cutting in that country. That is exactly the kind of measure which will support a carcass trade rather than any other.

My Lords, many farmers will feel that the Minister has not gone anything like far enough in her response today. They rightly feel that the farming industry in this country is penalised because farmers on the Continent can do whatever they like and no one seems to enforce any of the regulations. Can the noble Baroness say how many prosecutions—successful or otherwise—have been brought on the Continent since the regulations were introduced in 1995?

My Lords, I am afraid that I do not have those figures with me. I certainly undertake to try to find them and to write to the noble Lord. But I outlined the work that we have done in terms of raising this issue with Commissioner Byrne. I can tell the noble Lord that the Swedish agriculture minister has now echoed our concern by requesting a debate at the June Agriculture Council on what should be done about the widespread non-observance of the welfare-in-transit rules. We shall be supporting that Swedish initiative. Equally, the action plan on farming pointed out our recognition that we needed to do more on this issue—not only in the EU but in an international context—and that we shall look at what we can do to support those with high animal welfare standards. I do not accept the charge that we have not acted in this area.

My Lords, when will the Commission complete its work in relation to the working parties that have been established? Does the Minister agree that it is not good enough that the Commission should buy time in order to deal with this urgent matter and that there is an important requirement on the Commission to produce a definitive result?

My Lords, I agree with my noble friend. That is why we are pleased that three meetings of the working groups have taken place already—there will be another one this week—to improve enforcement in this area. Equally, it is important that a review of the directive overall is undertaken. The Commission has now been stirred into taking that action. We have had a positive response to my right honourable friend's letter from Commissioner Byrne and we hope to see action taken soon. The commissioner made it clear that he, too, is unhappy with the current position as a reflection of the importance that animal welfare issues should be accorded within the EU.

My Lords, although, of course, we should be pressing the EU to make reforms, is it the case that the Government have not commissioned any study into transport issues in this country since the closure of so many abattoirs? Will the Minister consider initiating a study into animal welfare in this country before we teach our overseas friends about them?

My Lords, I am not sure that we need to commission a study. When the review of abattoirs for the over-30 months scheme was undertaken, the issues of the effect on journey times and the importance of enforcing the strict regulations on journey times that we have in this country were considered. We have regulations in this country and we ensure that they are complied with.

Next question.

My Lords, we have now reached 17 minutes which, as the House knows, really means 18 minutes. I am sure that there is as much interest in prisons and pigeons, which I believe are the subjects of the next two Questions.

asked Her Majesty's Government:

Whether they have yet reached a decision on the future of the inspectorates for prisons and the probation service.

No, my Lords. We are considering how best to ensure that the arrangements for inspection of the prison and probation services support closer working between the services as well as ensuring that the individual services continue to be inspected rigorously and independently, as they have been. I shall be making a further statement to your Lordships on this in due course.

My Lords, I am grateful to the Minister for that reply. Does he accept that there is a link between this Question and the future of Her Majesty's present Chief Inspector of Prisons, Sir David Ramsbotham? At a time when there is a good deal of discussion inside all political parties about sending yet more people to prison without any evident understanding of the state of our prisons today, would it not be a mistake to take steps which silenced the voice of Her Majesty's present inspector, Sir David Ramsbotham, because he—prison by prison, report by report—tells us what is happening in our prisons in a voice which is clear and strong and, above all, independent?

My Lords, I agree with the noble Lord's assertion that Sir David Ramsbotham has done an excellent job in reporting on the state of our prisons. He has been robust, independent and forthright. He might not always say things with which we feel entirely comfortable, but he has the honesty and integrity that should go with his post and he does a very good job indeed. It is not the Government's intention to undermine that independence of spirit in any way, shape or form. We intend simply to ensure that whatever we do contributes towards driving up standards in prisons and in the Probation Service, as in all other services. That is our intention in looking at the ways in which the two inspectorates work.

My Lords, can the Minister assure the House that the education and training programmes, so resolutely and consistently supported by Sir David Ramsbotham as the best hope of rehabilitation, will continue to be at the forefront of government policy?

My Lords, I am more than happy to give that assurance. Sir David Ramsbotham has in particular highlighted those important elements in prison regimes. It is, and has been, our intention to ensure that training and education are provided. They are central to the constructive, well worked out regimes that enable offenders to return to a normal life and to take up a more honest, law-abiding existence when they come out of prison. That is our intention and our policy objective—and we are working very hard towards achieving that end.

My Lords, can the Minister say how much longer Sir David Ramsbotham's contract has to run and whether he is eligible to be reappointed?

My Lords, the noble Lord will probably be aware that my right honourable friend the Home Secretary recently announced that Sir David Ramsbotham's term has been extended by a further eight months until July 2001. His eligibility to continue in post is not in question. This exercise is simply to ensure that we get the best of both worlds when looking at the future shape of the prison and probation inspectorates. That is why the two terms have been run together to conclude at the same point in time. It is for that reason that I made it clear at the outset that I would be bringing forward a further report to your Lordships' House.

My Lords, is the Minister aware that many of us have a great deal of sympathy with the point made by the noble Lord, Lord Hurd? Is he further aware that any proposal to merge the prison inspectorate with that dealing with the Probation Service would be fiercely opposed by many in this House? The merger of the two inspectorates would undoubtedly have the effect of undermining the strong position of the Chief Inspector of Prisons.

My Lords, perhaps I should reiterate the point that it is not our intention to do anything that would undermine the independence or effectiveness of the Chief Inspector of the Prison Service in any way, shape or form—or, for that matter, of the Probation Service. I suggest that the noble Lord should ponder the point that issues of sentencing, combination orders, flexible punishments, throughcare, and the CARATS programme—all regimes that attempt to address offending behaviour, and in particular the offending behaviour of those with drugs or alcohol abuse problems—are properly concerns of the inspectorate. Looking at different ways in which the probation inspectorate and the prisons inspectorate may work together with that independence and robustness of nature will help us to improve the regime in prison and the treatment of offenders outside prison.

My Lords, surely the way to keep the closeness between the inspectorates is by close conversations between the inspectors, not by turning their appointments into one post. Is the Minister aware that on this side of the House, among Members with whom I am familiar, there is a strong feeling that to reduce or dilute the authority of the Chief Inspector of Prisons by giving him another job—that of looking after the Probation Service—would reduce his authority? It is most important that whoever takes the post shall have absolute security of tenure during his contract so that he may give his opinions—however unpopular—without fear.

My Lords, I take to heart the comments made by the noble Lord. They are both well meant and well measured. We do not wish to dilute or in any way undermine the position of the Chief Inspector of Prisons. That is not the intention of the Government. We need a robust and genuinely independent inspectorate. Sir David has done a splendid job in that regard and I trust that he will continue so to do. His reports are widely circulated; they are also widely read and well understood. Their importance should not be undermined in any way.

asked Government:

What action they propose to deal public health posed by feral pigeons Trafalgar Square.

My Lords, no significant risk to public health through casual contact with feral pigeons has been proved either in Trafalgar Square or elsewhere. Her Majesty's Government therefore do not propose to take any action on the issue.

My Lords, I thank the noble Lord for that Answer. However, I should point out that his response appears totally to contradict the statement made by Dr Tim Wreghitt of the Public Health Laboratory Service, who said that 60 per cent of pigeons are infected with disease. He further stated that, "inhaling dust from dried faeces can give you an infection".

Is the noble Lord also aware that a South Yorkshire coroner has warned against people coming into contact with feral pigeons? He pointed out the particular problems caused by pigeons in Trafalgar Square. Given that the noble Lord's department issues licences to enable people to sell pigeon food, would he consider changing over to issuing licences for the sale of disposable face masks in order to help those licensees to retain their livelihoods?

My Lords, advice from our veterinary team states that although diseases are carried by birds, those diseases are likely to be conveyed to human beings only when they are in prolonged contact with pigeons; in enclosed spaces or in the presence of dust from feathers or guano; and when eating food contaminated by pigeon droppings. None of those conditions applies in Trafalgar Square. For those reasons, we do not think that the South Yorkshire coroner was right to come to such a conclusion as regards Trafalgar Square as a result of hearing a case concerning extrinsic allergic alveolitis which had been reported in the local area. Under the circumstances, no, we do not take the view that the last remaining licence for selling pigeon food in Trafalgar Square should be withdrawn. It will in any case expire on 30th September. After that the responsibility for renewal will fall to the Mayor for London.

My Lords, although I am entirely in favour of private enterprise, does the noble Lord agree that a health risk could be posed from the practice carried out by some who trap the pigeons with nets and then flog them to restaurants? I do not believe that eating Trafalgar Square pigeons can be good for one's health, or at least not for mine.

My Lords, is the noble Baroness suggesting that restaurants serve pigeons from Trafalgar Square?

My Lords, yes.

My Lords, I am appalled at that suggestion. I should have thought that they would be too tough and taste too unpleasant.

My Lords, does the noble Lord agree that feral pigeons form as much a part of the London scene as do red buses and London taxi cabs? Surely the health of citizens and visitors is affected more by the emissions from those vehicles than by the feral pigeons?

My Lords, I do not think that under any circumstances the atmosphere in Trafalgar Square would be conducive to good public health. However, the noble Viscount is quite right. In 1996 a study was carried out on the pigeons in Trafalgar Square. The recommendation at the time was that steps should be taken to reduce the pigeon population. However, there was a public outcry and any suggestion that the licence should be taken away from the last pigeon foodseller found no popularity.

My Lords, while reflecting on the situation in Trafalgar Square, is there any truth in the rumour that the Government are contemplating erecting a statue of the Prime Minister on the vacant plinth in order to test whether the feral pigeons have a higher regard for him than does the Women's Institute?

My Lords, I answer serious questions.

My Lords, in view of the noble Lord's response to the question put by my noble friend Lady Trumpington, does he know that a court case was held because a man was trapping pigeons in the square? Many felt that he should have been applauded rather than charged for so doing.

My Lords, that rather depends on the reason why he was trapping the pigeons. If he was trapping them for sport, I dare say that there are those sitting on the Opposition Benches who would defend that practice on other grounds. If he was trapping them to sell as food in restaurants, I repeat what I said to the noble Baroness, Lady Trumpington; it seems to be a very unpleasant idea.

My Lords, as one who has been treated in a most unseemly fashion by the pigeons in Trafalgar Square, may I stand up for their right to do the same to anyone who follows in my footsteps?

My Lords, for his age, my noble friend has a very fine head of hair.

My Lords, after Consideration of Commons Amendments to the Financial Services and Markets Bill, my noble friend Lord Bassam of Brighton will, with the leave of the House, repeat a Statement which is being made in another place on hunting with dogs.

My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(Lord McIntosh of Haringey.)

My Lords, I beg to move that the House do not insist on their Amendment No. 180 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 180A in lieu thereof.

I do not propose to detain the House with a detailed discussion of the background to these amendments. It is well-trodden ground and it has received plentiful coverage in the press. However, in order to avoid any doubt, I shall reiterate the Government's full support for the work done by the Takeover Panel in overseeing the process and conduct of takeovers. The panel carries out an important job and does it extremely well. We want to see that continue.

Contrary to some misleading reports that have appeared in the press, this is not a Bill to regulate takeovers. Our amendment does not give the FSA any powers to interfere in the work of the panel nor does it require the panel to seek the views of the FSA before taking action. At earlier stages we gave careful consideration to the arguments concerning the Takeover Panel. We concluded that nothing needed to be done. Indeed, it remains our view that the Bill, as introduced to your Lordships' House, would not have affected the position of the panel. The FSA intends to adopt robust policies which will keep it out of tactical manoeuvres by parties to a takeover. We are satisfied that those policies will work well.

It is important to remember that there is at present a measure of overlap. It exists between, on the one hand, the panel's rules and the regulatory regime and criminal offences of market manipulation and misleading statements on the other. To date, this has not caused any problems. The courts have taken a strong line, refraining from interfering during the course of takeovers. The noble and learned Lord, Lord Donaldson of Lymington, referred to that in the debate at Third Reading when he said that the courts would give no injunctive relief. We have no reason to suppose that in the future the courts will take a different view.

However, we have responded to the arguments that have been put forward in the House. In light of those arguments, we judged it prudent and sensible to propose a "safe harbour" amendment for the Bill. We did so at Third Reading. The amendment then brought forward would have allowed the FSA to provide a safe harbour for behaviour in conformity with all or part of the City code produced by the panel. However, again, concerns were expressed at Third Reading that the FSA should not be able unilaterally to impose its own interpretation, but in essence should be guided by the panel's interpretation.

We have addressed those concerns. Although we cannot allow Amendment No. 180 to remain part of the Bill, for reasons that I shall explain, we have made important improvements to the amendment previously tabled in this House.

Perhaps I may repeat what I said at Third Reading:

"Given … the nature of the [City] code and the panel's role in interpreting and applying it, I would naturally expect the FSA to take the panel's view before it decided whether behaviour fell within the safe harbour which the government amendment would enable it to provide. It would be very foolish if it did not ֵ I would expect the tribunal and, if the matter came before them, the higher courts, to attach due weight to the panel's views in accordance with established case law"—[Official Report, 18/5/00; col. 403.]

Our Amendment No. 180A will ensure that that happens. The FSA will be under a statutory duty to keep itself informed of the way in which the panel interprets and administers the relevant provisions of the code. This will mean that the FSA will have to have arrangements in place for seeking the panel's views on whether behaviour is in conformity with the City code. It will have to take this fully into account when deciding whether to act in cases of possible market abuse. The panel's views will be bound to carry a lot of weight with the FSA, the tribunal and the courts.

This issue was one of great importance in our earlier debates. I am pleased to have found a form of words which meet the concerns expressed by the noble Lord, Lord Newby, and others. This the right result. To go further would be to go too far and to make the panel the final arbiter of market abuse during takeovers. Apart from being objectionable as a matter of principle, this would also have consequences for the panel which might cause it a great deal of concern if it really thought about it. Under our amendment, the decision on whether behaviour amounts to market abuse will always rest with the FSA, the statutory regulator, and ultimately with the independent tribunal to be established under the Bill. Amendment No. 180, on the other hand, provides a safe harbour for behaviour which in the panel's opinion conforms with the City code. This would give the panel the power to decide that a person has not engaged in market abuse.

In another place, the Liberal Democrat spokesman, Dr Vincent Cable, having listened to the arguments on both sides, supported our approach. He said:

"If there is a conflict of jurisdiction and a choice has to be made, the FSA should prevail. The amendments make that clear so that the uncertainty and ambiguity about which Conservative Members have expressed concern do not arise".

He went on to say, before his party joined the Government in the Division Lobby, that,

"The peers' judgment"—

that is, on our latest amendment—

"was that there was no need to raise further objections because the fairness point had been accepted, the jurisdiction had been clearly defined and the work of the takeover panel had been incorporated".—[Official Report, Commons, 5/6/00; col. 100.]

As I have said previously, the issue of principle is simple. Should the ultimate decision on whether action constitutes market abuse, as defined in the Bill, rest with the statutory regulator, the FSA and the tribunal, or with the non-statutory Takeover Panel? The answer is equally straightforward. It must be right, in what I should expect to be the very rare event of a disagreement between the FSA and the panel, that the last word should rest with the FSA and the independent tribunal.

If Amendment No. 180 were allowed to remain in the Bill, I believe that, having taken advice at the highest level, there would be important consequences, particularly in terms of the European Convention on Human Rights, which were not appreciated by those who drafted the amendment. Giving the panel the final right to decide whether particular behaviour amounted to market abuse would, in effect, give it statutory functions. These functions would involve the determination of civil rights, and even possibly what would be regarded as criminal charges under the European convention.

Throughout the passage of the Bill, the Opposition have rightly insisted—the noble Lord, Lord Kingsland, has been admirably persistent on this point—that in exercising such functions the FSA should be fully accountable and that there should be the safeguard of access to an independent tribunal. We have ensured that the market abuse regime is fair, transparent and certain, with appropriate safeguards set out on the face of the Bill. These include the safeguards necessary to ensure compliance with the ECHR where what is at issue is the determination of criminal liability.

Let me make it clear that I am not questioning the arrangements for the accountability of the panel in the usual context in which it operates. This simply means that they are not appropriate here. They were never designed to deal with the determination of whether market abuse has occurred under Part VIII of the Bill. Against that background, I am sure that the amendment proposed in another place is the right one to deal with the concerns that have been expressed. Amendment No. 180A will ensure that if problems arise in this area—we are confident that they will not—adequate and effective safe harbours can be provided. That will be done without compromising the position of the panel or the single statutory regulator, the FSA.

I do not know whether the noble Lord, Lord Alexander, would like me to speak to his amendment now or to reserve my remarks until the end of the debate. The noble Lord indicates that he would like me to reserve my remarks. I commend to the House the proposed amendment made in another place in lieu of Amendment No. 180.

Moved, That the House do not insist on their Amendment No. 180 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 180A in lieu thereof.—(Lord McIntosh of Haringey.)

My Lords, I beg to move Amendment No. 180B, as an amendment to Commons Amendment No. 180A.

This is a long, technical, regulatory Bill, but this is not an arid technical point. I believe—as, unanimously, does everyone who works in the City—that it is an important point of principle for your Lordships to consider. Can we preserve the well established, effective current system under which the Takeover Panel does its work? Or are we—as the government amendment would do, in spite of the Minister's eloquence—to risk undermining the panel's authority, to open the door to the disruption of the takeover process and stifle the work of the panel in the rampant bindweed of tactical legal manoeuvres? As takeover activity is a significant part of business in financial markets, the issue is one of considerable importance to shareholders, great and small.

I am well aware that the Conservative Party supports my amendment. But I in no sense raise the issue as a party-political one. I do so as a former chairman of the panel. I hope that the House will recognise that the success of the panel transcends party politics and affects the strength of City markets to which, or so I believe, all of us are committed.

Perhaps I may briefly remind your Lordships of the history of the panel and its achievements. It was established under aegis of the Bank of England more than 30 years ago and has been consistently supported by the Bank. The impetus for its creation was the need to make sure that all shareholders received equal treatment during takeovers, that they were properly informed of the sometimes complex arguments and that a bid was conducted within an orderly and clear timetable. The panel has to supervise bids to see that parties comply with the well known code and it has to guard, during a bid, against market abuse such as share ramping.

Over the years, the panel has monitored some 7,000 bids. In the last full year alone, it has supervised some 300 proposals. These are not just important to the Titans of the corporate world; they directly affect pension funds, investment trusts and small shareholders. The panel has a conspicuous record of always being vigilant to see that the interests of small shareholders are not overlooked and that they are fully protected.

No one would pretend that the monitoring of takeover bids is an easy task. The bid process often represents a gladiatorial contest where there is much at stake both for companies and for their investment banking advisers. Powerful company chiefs lay their reputation and their future on the line. Behaviour is tactical. The parties to a bid, as I know from experience, will pursue any course of action within the bounds of law and regulation which may advance their cause. Advisers are paid large fees to be inventive and forceful, and the earning of those fees sometimes depends on their success. They often seek to tough it out with the panel.

In this demanding task the panel has a record of very considerable success. Its processes have been speedy, open, fair and relatively inexpensive. The panel has a tradition of giving firm judgments and properly reasoned decisions. It has always been chaired by a senior lawyer, from the time of Lord Shawcross to that of Sir David Calcutt QC, the present incumbent. It has its own appellate procedure, with an appeal panel invariably chaired by a former senior judge of high standing. The importance that the City attaches to the work is reflected by the willingness of experienced senior figures to take part and to do so at short notice.

There are other merits of the panel system. The code is interpreted flexibly to ensure compliance with the spirit of the rules and not just with the letter. The panel will give rulings in advance of proposed action so as to keep the train on the rails and not just pick up the pieces after the accident. In more than 30 years in the law I have found this the most effective process I have known for the fair and speedy resolution of disputes. Nor, so far as I am aware, has there been a shadow of a suggestion that its procedures have not complied with the European Convention on Human Rights.

May I give your Lordships one illustration of the strengths and virtues of the panel in action? In 1987 there was a contest between Guinness and Argyll, which were vying with each other to acquire the ailing business of Distillers. Some months after the bid was over, Guinness having won, it was discovered that some of its conduct raised concern that there had been market abuse through share support operations. The panel was able to investigate within a matter of months and ordered Guinness to pay almost £80 million by way of compensation. Guinness sought judicial review and claimed that the panel should have taken no action until all the criminal proceedings arising out of the incident had been completed. That would, of course, as was no doubt the intention, have held up action for years. But the Court of Appeal, presided over by the noble and learned Lord, Lord Donaldson, rumbled what the aim was and dismissed the case. That was fortunate, since both criminal and other regulatory procedures limped on for years. Only the panel was able to take clear, firm and decisive action to give prompt redress to shareholders.

I believe that it has been widely recognised that the effectiveness of panel judgments would be seriously diminished if they could not be promptly enforced. Indeed, in the well known Datafin case the Court of Appeal held precisely for that reason that the panel should not normally be subject to judicial review during the course of a takeover; otherwise, tactical litigation by parties seeking to gain time and disrupt the bid process would be inevitable. Successive governments have recognised the wisdom of that decision by speaking up firmly at Brussels in debates on a European takeover directive to preserve the panel's non-statutory status and so prevent its being sucked into the legalistic procedures of the courts.

The noble Lord the Minister made it clear the last time the issue was before your Lordships, and he has made it clear again today, that the Government fully support the work of the Takeover Panel and that they want it to continue doing the job in the way that it has been doing it. The paradox is that their proposal would in reality foul up the process. As the noble Lord said today, it would allow the panel's decisions to be second-guessed. The FSA, he said, would take them into account. The implication of that is that he is contemplating that it will be second-guessed. That means that the panel will be brought into a legalistic framework from which it has previously been healthily exempt.

That fear has been widely expressed across the City and by a virtually unanimous press in recent weeks. Any participant in a takeover disappointed by the panel's decision could—and the noble Lord appears to suggest that this is a virtue—go over the panel's head to the FSA. Once the FSA had ruled, whichever party did not like its decision would in turn take a taxi and head from Canary Wharf to seek judicial review in the Law Courts in the Strand. The floodgates would be open for tactical manoeuvring, delay and uncertainty. As The Times said very recently,

"the way will be open for almost any company that finds itself in a takeover situation to shriek 'market abuse' and head for the courts where any bid could be barred for months, even years".

The Government's reaction has been extremely curious. They were slow to respond to the panel's concerns and to understand that the argument might have any validity. They now say that they see that it does, for what they have put before your Lordships is an amendment that suggests that behaviour that complies with the City code shall not amount to market abuse. The amendment is a start, but it clearly completely misses the mark. Who is to decide whether there has been compliance? The Government say that the FSA must be the final arbiter, because it is the statutory regulator. I find that response both doctrinaire and perverse. Who will understand the takeover process better—the panel or the FSA? Who has a proven track record of success in this area—the panel or the FSA? Will the panel's authority be undermined if participants know that it is simply a staging post on the road to the FSA?

Nor could the FSA decline requests to second-guess the panel, and the noble Lord does not suggest that it could. The government amendment imposes a clear statutory duty on the FSA to hear the case, and that means that it cannot decline jurisdiction; nor can it in any sense fetter its discretion by saying that it will invariably or normally uphold the panel. After that, whichever party was discontent, if there had been a division of opinion between the panel and the FSA, would seek judicial review from the successors of the noble and learned Lord, Lord Donaldson.

It is no wonder that on the last occasion the noble Lord, Lord Newby, speaking for the Liberal Democrats, said very wisely that he supported

"a form of words that makes it absolutely clear that the interpreter of the City code is indeed the Takeover Panel—it is its code—rather than the FSA".

The noble Lord concluded:

"That is important".—[Official Report, 18/5/00; co1.406.]

I entirely agree with him. Exactly the same principle is at stake today.

When the House considered this issue a few weeks ago your Lordships accepted that a somewhat different amendment would have protected the panel's work. I do not believe that the essential mischief has been cured. My amendment seeks to improve the amendment from the other place, which, as it stands, would undermine the panel's work. I am not suggesting for a moment that your Lordships play indefinite ping-pong with the other place, but it should be given the opportunity to recognise that this amendment is appropriate and indeed necessary to sustain proper City regulation.

"unless this Bill is amended, there will be significant damage to the quality of takeover regulation in the UK. This will in turn damage the reputation of the UK financial markets for integrity and efficiency".

Are these not strong words coming from the most consistently successful of City regulatory bodies? For some time, I hoped that a government who assert that they understand and are committed to business, would respect and heed that view. I hope that the House will do so.

Moved, That Amendment No. 180B, as an amendment to Commons Amendment No. 180A, be agreed to.—(Lord Alexander of Weedon.)

My Lords, I agree with and support the amendment of the noble Lord, Lord Alexander. However, I am troubled by a different point; namely, subsection (2) of the Commons amendment. It provides that the FSA cannot exercise this power under the amendment without the consent of the Treasury.

I understand from what has been said in another place and today that there is no criticism of the work of the panel. There is general agreement that the City needs the panel. It is an essential part of its infrastructure. There is general agreement that the panel must be allowed to continue to operate as it now does. I can summarise the two essential operational requirements of the panel. They are these. First, it must be capable of giving almost instantaneous rulings in the course of a bid. That is the case at present and I do not think that it would be varied by the Government's proposed amendment. The second essential operational requirement is that the rulings must not be capable of challenge in the context of the takeover in which they are given. It is that second requirement which is absolutely vital. At present it is guaranteed by the policy of the courts to which the noble Lord referred. In the context of the suggestion that a statutory body must always have more authority than a non-statutory body, I must point out that the courts were faced with a choice between exercising their own powers—they are certainly as great as those created by a statutory body, and possibly greater—and those of the Takeover Panel. They decided that as long as the Takeover Panel was confined in its proof against attack to what was done in a particular takeover, its authority should prevail.

Perhaps I may use an analogy. In effect the courts were saying that the Takeover Panel is in the same position as a referee in a tennis or football match (with which we are much afflicted at present). It does not mean to say that one cannot review what has happened by means of television and other wonders and by that process prove beyond a doubt that the referee was right or wrong. But if he were wrong, the decision stands. That is what we must have in the context of the panel.

That does not mean that a review of its decisions is impossible or would be unprofitable. That second look in a more leisurely context may enable the FSA, the panel or both to decide that there must be a change in the rules in the future. However, the rulings in the context of the bid must remain inviolate.

That is why I am troubled by subsection (2). The Government, the Treasury, might be minded to say that the panel could exercise permissive powers granted under subsection (1) in any way it likes provided that it maintains the overriding authority of the FSA. If so—I agree with the noble Lord, Lord Alexander—there will be a traffic jam between Canary Wharf and the Strand; and that we cannot have.

We shall have to see. I do not understand why this clause, of all clauses relating to the FSA panel, has to require Treasury consent. Any other provision in the code can be made by the FSA and all it has to do is to tell the Treasury. No doubt it would tell the Treasury in advance and the Treasury would have a view. But that is not the point. It could just make the code and tell the Treasury, but it cannot do so under this provision. Why not? I know that the Economic Secretary to the Treasury in another place stressed that the FSA must be preferred in the case of a conflict because it is a statutory body. The Minister said much the same today. That is what frightens me, even if there is not an amendment today.

My Lords, in considering these matters it is important to begin by recognising what the government amendment represents; namely, a major concession by the Government of the safe harbour principle in respect of the provisions of the takeover code. It would not have been introduced if it had not been possible to have close working relations with the Official Opposition with whom we have worked on a number of amendments. It is also worth reminding ourselves that on a number of key issues, whether corporate governance, the role of the practitioner and consumer panel, and other matters we in this House have successfully improved the Bill in a substantial way.

The single principle which now confronts us is not the safe harbour provision but an important matter which arrived in this House at the latest possible stage of our consideration of the Bill; namely, who decides whether the takeover code has been followed in cases of possible market abuse.

The two options are either to argue—as in the Alexander amendment—that the Takeover Panel should always have the final say; or to say—as in the government amendment—that the FSA must keep itself informed about the way in which the panel interprets the code. The government amendment recognises that the Takeover Panel will remain the principal interpreter of a code on a day-to-day basis but, consistently with their view about the primacy of the FSA—it is a view which we, on these Benches, have accepted, in particular in respect of the gatekeeper proposal which was discussed on a number of occasions in this Chamber—that the FSA will have the final word. This amendment is a significant improvement on the amendment which we considered at Third Reading because the role of the panel is recognised on the face of the Bill.

Perhaps I may make one point about referees and umpires. When there is a difficult issue in Rugby League and cricket (as there were as regards a number of run-outs at Lords on Saturday) there is an immediate reference to a second, higher authority—a television replay. While it is always dangerous to take sporting analogies too far, one can argue either way in respect of best practice on the sports field.

The amendment of the noble Lord, Lord Alexander, has the benefit of clarity which, as he kindly pointed out, I sought at Third Reading. However, the amendment inevitably cuts across the principle that at the end of the day the statutory body, the FSA, should prevail over the non-statutory Takeover Panel. The ECHR implications—the noble Lord did not refer to them—became apparent only at a late stage. They could significantly undermine his amendment.

The question before us today is somewhat broader than simply whether the Alexander amendment is technically preferable. It is whether this is an issue on which we wish to initiate a ping-pong procedure with another place. As noble Lords are aware, on these Benches, we have no aversion in principle to sending Bills back to the Commons for a second time. We have done so previously in this Parliament, and we may well do so again before this Session ends. We accept, however, that this power should not be used lightly, particularly in cases such as this where we support the principle of the Bill and wish to see it on the statute book as soon as possible.

The tests which we have to apply in deciding whether or not a ping pong should be initiated are those of principle and substance. We believe that we should only be prepared to send a Bill back to the Commons on an issue of clear principle and major substance. How then does this issue fare against those tests?

First, on the question of principle, the principle covered by this amendment is whether there should be safe harbour provisions in respect of the takeover code. That is the subject of this amendment, and that is the key concession which has been made. The question of who interprets the code requires a judgment to be made between the rival merits of two bodies—the panel and the FSA—which in any event are required to co-operate closely on the whole question of countering market abuse. In our view, that is a matter of judgment; it is not essentially a matter of principle. The issue, in our view, does not pass the test of being a matter of major principle in the context of the substance of this amendment, namely, safe harbour.

Secondly, how much substance is there in this issue and how great is the difference between the Government's amendment and that proposed by the noble Lord, Lord Alexander of Weedon? It has been our view throughout the debates on this issue that too much has been made of the possible damage which could be caused to the regulatory process in respect of takeovers by the passage of this Bill. Some of the language used in support of the panel's position has, in our view, been exaggerated. I do not believe that it is unanimous City opinion that this House should die in the ditch, back and forth to the Commons, in order to get the Alexander amendment through.

The difference between the amendment proposed by the noble Lord, Lord Alexander, and that of the Government will only have a significant impact on the way in which takeovers are regulated if the FSA and the panel fail to find a sensible modus operandi in dealing with potential market abuse during the conduct of takeovers. There is no reason to believe that they will not do so. We believe that when this Bill is on the statute book it will be possible for the FSA and the panel to reach working arrangements which will minimise the scope for mischievous legal action to gain a tactical advantage during takeover bids. We therefore believe that this issue fails the major substance test.

This Bill has occupied a very large amount of parliamentary time. It has been significantly improved during its passage through your Lordships' House. The time has now come to get it on to the statute book to enable the FSA and the panel to get on with their job. We shall, therefore, not support Amendment No. 180B but will support Amendment No. 180A.

My Lords, for good reason, a very large amount of parliamentary time has been devoted to this Bill, as the noble Lord, Lord Newby, mentioned. The Bill is designed to ensure that the financial services industry in this country is properly regulated by the FSA. The FSA is to be the central building block of the new regime, and there is agreement on all sides that that is the right approach.

The essential feature of the amendment proposed by the noble Lord, Lord Alexander of Weedon, is that its object is to enable the FSA to delegate what are vital regulatory powers to the Takeover Panel, although the Takeover Panel is non-statutory, unregulated and essentially an unaccountable body. Needless to say, I have the highest possible regard for the views of the noble Lord, Lord Alexander, not only on this but on almost every subject. However, I believe that on this occasion his amendment is wrong in principle. The FSA should not delegate its powers to the panel.

It has been said that the Bill in its current form involves some implicit criticism of the panel or suggests that it might not be up to it. I do not believe that that is correct. Everybody agrees that over the past 32 years the panel has done an excellent job. One hopes that it will continue to provide a first-rate service. The problem is that the world has changed. Unfortunately, the days when everyone in the City takeover community knew each other have gone. Virtually all the great houses have been gobbled up by American, Swiss, German or Dutch financial institutions. The amounts of money at stake are fabulous and occasionally unpronounceable.

The powers of the panel are, as they always have been, extremely limited. For example, the panel has no direct power to enforce a simple demand for information. Many of us may regret it, but the truth is that these voluntary arrangements no longer reflect the needs of the market place. This Bill is designed to deal with the new global markets and, through the FSA, to sustain London in particular as a world class financial centre.

It has also been said that the Bill in its current form would be a stimulus to mischievous lawyers' activities. It is said that there will be numerous applications for judicial review and that unjustified or frivolous attempts to frustrate bids or to upset the workings of the market place will be made. I do not accept that there is any force in those arguments. I believe that they are more imagined than real.

The Datafin approach was admirably summarised at an earlier stage of the Bill by its inventor, the noble and learned Lord, Lord Donaldson, with the memorable phrase, "masterly inactivity". The FSA can hardly be convicted of unreasonableness if it seeks to achieve its statutory objectives by non-interference in the fast moving circumstances of the 60-day bid period and against the legal backdrop of the principle established in the Datafin case. The common sense of the principle in the Datafin case will surely prevail in the courts. No doubt someone will wish to test the point against the FSA. So be it. There never was any form of bullet-proof legislation which could prevent that from happening. Speaking as a professional lawyer, I am delighted that that is the case. Once tested, the validity of the approach of the FSA will, I believe, be vindicated and any uncertainties will disappear.

The other side of this coin is that there will be cases in which the FSA may take the view that it should move in the period during which a bid is taking place. Many of your Lordships will recall the Guinness scandal some 15 years ago, to which the noble Lord, Lord Alexander made reference. If the true facts of that case had emerged in the course of the 60-day period, that would have been an obvious example of market abuse under the Bill.

On that particular point, I digress for a moment. The noble Lord made reference to the Guinness scandal and also to the great success of the panel on that occasion. The panel's conduct in securing a sum of about £80 million for shareholders who had been swindled represented a singularly magnificent achievement in the sense that it had never previously been done nor has it ever subsequently happened. But the truth is that that part of the performance of its role by the panel took place long after the bid period had come to an end, and that is precisely the sort of thing which certainly would not now be dealt with by the panel in any event but would fall precisely within the role of the FSA in dealing with market abuse.

Another example was the bid about three years ago by the Galileo Group for the Co-operative Wholesale Society. Your Lordships may recall that transaction. In that case, an officer of the target company was filmed in a carpark handing over highly sensitive, confidential documents to officers of the predator company. An injunction was granted preventing the predator from using the documents. As a result, the lines of finance for the bid collapsed and the bid was abandoned. That was a case in which the court interfered during the currency of the bid.

It is an example of what would be market abuse under Clause 109. In such a case, one might well expect the FSA to move in the course of the bid. By contrast, it is the kind of case which the panel is not well equipped or designed to deal with, but the FSA would be because of the powers which have been granted to it—or which will be granted to it when the Bill becomes law.

It seems to me that the Bill in its current form, as amended in another place, provides a balanced solution to the problem. It will ensure active co-operation between the FSA and the panel. They will together make operating agreements; they will liase with each other; and they will share information.

I believe that in the usual case—by which I mean the vast majority of takeover bids—things will go on very much as they do today, without interference either from the FSA or from the courts. I believe that we should adopt that approach and that this House should reject the amendment tabled by the noble Lord, Lord Alexander.

My Lords, I shall be suitably telegraphic. My noble friend Lord Saatchi and I have been speculating on why the noble Lord, Lord Newby, has changed his mind since Third Reading. During the past three months, my noble friend and I have much admired the way in which the noble Lord, Lord Newby, has represented his party in your Lordships' House. We dared to entertain the speculation that his decision not to continue to support was not entirely his own.

However, whatever the basis of the noble Lord's decision, I suggest that he cannot have made it on the merits of the case. The noble Lord, essentially, supported the amendment tabled by my noble friend Lord Alexander at Third Reading; and the Minister told your Lordships today that the Government have not changed their position on the matter.

The truth is that, for whatever reasons, the Liberal Democrats have chosen to turn their backs on this most vital question. Having heard my noble friend Lord Alexander and the noble and learned Lord, Lord Donaldson, none of your Lordships can be in any doubt about the crucial importance of this issue to the City of London, with all that that entails for the economy beyond.

For the Opposition to accept the Government's amendment, that amendment must ensure that safe harbours not only provide for compliance with the text of the code, but also for compliance with the interpretation by the panel of the text of the code in any circumstances arising in the course of a takeover bid. Otherwise, no one—either bidder or defender of a bid—can have any confidence in the guidance issued by the panel.

For those reasons, the Opposition support the amendment introduced, most eloquently, by my noble friend Lord Alexander and to which he brought such authority.

My Lords, no one is better qualified than the noble Lord, Lord Alexander, to launch into the encomium which he rightly made about the distinguished history of the Takeover Panel. After all, he knows much of what he speaks from his distinguished personal knowledge. We agree with what he says about the work of the panel and I made that clear at the outset. Nothing I have said, or shall say, will detract from our respect for its work.

However, the noble Lord's amendment is still subject to the same fundamental objection of principle that I have explained. Under the amendment, the FSA, with Treasury approval, would be able to decide—the word used in the amendment is "may"—that the panel should be allowed to determine whether market abuse has taken place. It will be clear from what I said at the outset that the final determination of whether market abuse has taken place is key to all our arguments on the Bill in this place. The objectionable point of principle and the convention difficulties—to which I referred and noticed were not responded to in any way by the noble Lord, Lord Kingsland, who was so keen on the convention difficulties which he saw elsewhere in the Bill are the same as with Amendment No. 180, to which I have spoken.

I have to say that we cannot conceive of circumstances when the FSA and the Treasury would agree to take that step. We cannot and will not legislate to provide for something which we believe would be wrong. The determination of whether market abuse has been committed amounts to the determination of a civil right. On any analysis, if a safe harbour of the kind provided for in Amendment No. 180B were to be brought into force, the panel would be determining a person's civil rights.

There must be a real question whether the hearings before the panel at which such a decision was taken constitute what is required by Article 6 of the European Convention on Human Rights; that is, a,

"fair and public hearing … by an independent and impartial tribunal established by law".

The panel's success is based on speed, informality and voluntary subjection to its rulings. We do not want to lose that and with the Government's amendments we shall not do so.

It has been argued notably and frequently by the noble Lord, Lord Kingsland, that market abuse is criminal for convention purposes. He went much further than our belief, but nevertheless we have taken into account his arguments and provided for all the protections to convention-proof the market abuse regime for which he asked.

We have taken advice at the highest level. Last summer, we took advice from Sir Sydney Kentridge. We believe that these arguments are overstated, but we thought it prudent to introduce criminal safeguards into the FSA's procedures. If the noble Lord's amendment is carried, will the panel do the same? Will the panel introduce criminal safeguards? It is impossible to conceive how that could happen.

It is clear that the general effect of the amendment would be to make the rules and actions of the panel significantly more justiciable—more open to legal challenge—than they are now. We do not want that to happen. We support the panel's current approach to the regulation of takeovers. We are not prepared to agree to an amendment which, however well intentioned, will in due course undermine the panel. We cannot believe that when it has the chance to take a long, hard look at this latest amendment the panel will want it either.

In introducing the amendment, the noble Lord, Lord Alexander, said that he did not want to see pingpong between this House and another place. This is already ping-pong. This matter has been debated at length during its many stages through this House. It has been returned to another place which has had a second look at it. I put it to your Lordships that it is not acceptable for us to challenge it, particularly when we are right.

I was interested in the Minister's peroration. Much as I like him—as I do—and much as I respect him—as I do—I thought it was a bit rich of him to suggest that my amendment would undermine the work of the panel. In so far as the arguments have been put to the Government with tot al clarity, this has been a dialogue of the deaf. Even in his response, the noble Lord indicated a lack of comprehension. Perhaps I may quote from a very experienced financial commentator, who said last week:

"This is a crucial piece of legislation for the City. In particular, the survival of the Takeover Panel as the final arbiter in takeovers is something regarded as essential by the practitioners. It is an institution that works to the benefit not only of investment bankers but everyone. It must be kept".

I am grateful to all noble Lords who have spoken in the debate. I am particularly grateful to the noble and learned Lord, Lord Donaldson. Indeed, a barrister always finds it a considerable comfort when a judge with unrivalled commercial experience agrees with and accepts his argument. It was he who decided that the panel should not have its decisions regularly second-guessed. That is simply what I seek.

The noble Lord, Lord Grabiner, suggested that the panel is unaccountable. That simply is not so. My amendment enables, but does not require, the FSA to say that conformity with a panel ruling is conformity with the code. It enables the FSA to withdraw that ruling if it so permits. Therefore, in terms of accountability, a clear link is created between the panel and the law. With regard to accountability, the noble Lord, Lord Grabiner, surely will recollect that it is a condition of Stock Exchange listing that public companies comply with panel rulings. That is a very effective form of enforcement and accountability.

I was interested to hear that the European Convention on Human Rights was relied upon. That hare has come to the fore more prominently as the Government have realised that they do not have many other steeds entered in this race. In a cricketing analogy—the noble Lord, Lord Newby, used one—it is a longstop. Of course, we who love cricket know that the worst fielder is always put at longstop. If those fears were ever to be made good, the FSA could withdraw the authority. However, attempting to terrorise this House with the convention may not impress.

In the time that I knew the panel—and the panel has been a party to the convention during its entire existence—there was never a suggestion that its procedures, of which I briefly reminded your Lordships, were unfair.

I conclude by reference to one or two arguments put forward by the noble Lord, Lord Newby. Of course, I do not understand the political processes to which my noble friend Lord Kingsland referred. However, with the greatest respect to the noble Lord, perhaps I may say that the merits of those arguments were absolutely barren. He said that the government amendment recognises the position of the panel. It does not. It recognises the position of the code, but not that of the panel, as the noble Lord, Lord Newby, would have had it when we last discussed the Bill, as the authority which determines compliance. The noble Lord said that the government amendment contemplates that the panel will normally give the first ruling. Where, I ask? The Bill is absolutely silent on that point.

I could go on. I speak to the noble Lord in the hope that he and his colleagues, whom I very much respect, on reflection will decide that the principle that they supported last time round is right. I certainly appeal to your Lordships to respect, if not my view, the view of the noble and learned Lord, Lord Donaldson, the views of the City and of the financial press, and to speak for UK business. In the light of the encouragement that I have received, I should like to test the opinion of the House.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 589A to Lords Amendment No.589.

I hope that noble Lords on all sides will welcome the consensus that we have been able to reach on the final amendment to this Bill. The Government will agree to Amendment No. 589A, which was moved from the Opposition Front Bench in another place and which amends Amendment No. 589. Amendment No. 589A restores the power of the investigator to investigate in accordance with the complaints scheme any complaint of which he has been notified by the authority but which the authority has decided not to investigate. This is an amendment to a Lords amendment carried on a Division despite my assurances that we supported the principle that the investigator should have power to make ex-gratia payments. The amendment removes an anomaly which we believe was not intended.

Moved, That this House do agree with the Commons in their Amendment No. 589A to Lords Amendment No. 589.—(Lord McIntosh of Haringey.)

My Lords, I should like to thank the noble Lord for the Commons amendment which slightly redrafts the one which was before your Lordships' House. It meets all our criteria perfectly.

On Question, Motion agreed to.

My Lords, I beg to move that the House do now adjourn during pleasure for five minutes.

Moved accordingly, and, on Question, Motion agreed to.

My Lords, with the leave of the House, I should like to repeat a Statement which is being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:

"With permission I would like to make a statement on the report of the Committee of Inquiry into Hunting with Dogs in England and Wales, which I am publishing today. Copies are available in the Vote Office.

"The House will recall that last November, I announced that there would be an inquiry into hunting and that the noble Lord, Lord Burns, had accepted my invitation to be chairman. The other members of the inquiry were appointed for their expertise in agricultural and rural economics, and in veterinary science. I am most grateful to the noble Lord, Lord Burns, and to the members of his committee, for their hard work and for the fact that the report has come in on time.

"The question of whether hunting is right or wrong is a matter for Parliament to decide. The committee was not therefore asked to recommend whether hunting should be banned nor was it asked to consider moral or ethical issues.

"The Burns report instead covers four key areas in relation to the activity of hunting. First, it considers the contribution hunting makes to employment and the rural economy as well as to social and cultural aspects of life in rural areas. Secondly, it deals with the animal-related aspects of hunting—that is, principally animal welfare and their population management. Thirdly, it considers whether drag hunting is a viable alternative to hunting. The final area covered by the report is an assessment of the consequences of any ban on hunting, and how a ban might be implemented. It also assesses how some people's concerns in regard to particular aspects of hunting might be addressed should hunting not be banned.

"The committee visited different parts of England and Wales to witness at first hand a number of hunting activities. Academics were commissioned to undertake research into various matters related to hunting activity. The inquiry attended seminars, organised by all sides of the debate. It also held a number of public meetings and ensured that working papers were placed on its website.

"This inquiry into hunting was the first official one since the Scott-Henderson inquiry reported to this House in June 1951. I have had the opportunity to read the report over the weekend. I thoroughly commend it to all Members of the House. I hope that when honourable and right honourable Members have had the same chance as have I to study the report they will share my view that it is a profoundly impressive study—cogent, and well argued, dispassionate and careful in its conclusions.

"The report needs to be read and considered as a whole, and it is hard to do justice to its views in a few paragraphs. None-the-less the House would, I think, wish me to summarise some of its key observations. They include the following.

"On employment, the report says that,

'between 6,000 and 8,000 full-time equivalent jobs depend on hunting'.

It says that most of the employment effects of a ban could be offset in the long term, say seven to 10 years. But in the short and medium term the individual and local effects might be more serious, as they would for a small number of local communities.

"The report contains details of research commissioned in four rural communities where hunting is actively pursued and says that this suggests higher levels of support for hunting than previous surveys have indicated.

"In chapter 6 the committee considers animal welfare aspects of hunting and the relative effects on the welfare of foxes and other species of different methods currently used to kill them.

"A ban on hunting with dogs would not have any significant impact on the population of foxes in lowland areas, but could lead to an increase in numbers in upland areas.

"A number of recommendations are made about regulation and licensing if a ban is not imposed, and the committee also concludes that generally any ban should apply nationwide, without different legislative provisions in different regions of the country.

"The purpose of the inquiry was to get to the facts and so better to inform the debate. I am sure that when right honourable and honourable Members have read the report they will see that it has achieved this objective.

"Let me now turn to the arrangements I propose to the House for it to consider the report and reach conclusions on it. Right honourable and honourable Members will want the chance first to study the report. Then, subject to the agreement of business managers, I would like the House to have the opportunity, if at all possible before the Recess, of a debate on the report itself on a Motion for the adjournment.

"I should like to say what I propose should follow that debate. In our manifesto we said that there would be a free vote on hunting with hounds. The Government are, and remain, neutral on the merits of whether hunting with hounds should be banned, but we do have an obligation to ensure that the decisions of this House can have effect.

"Last November, when I announced the establishment of the Burns inquiry, I therefore said that the Government would provide government time and assistance to allow this House to come to a proper legislative conclusion on a free vote on the matter. Our original plans were to take this forward with a Private Member's Bill in government time. I now however believe that it would be for the convenience of the House if there was a government Bill in government time which contained a series of legislative options on the merits on which there would be free votes. Such a Bill could, I believe, provide for a more structured debate and will better allow for consideration of a wider range of alternatives in the light of the report. The House will recall that this arrangement worked satisfactorily for the Sunday Trading Bill in 1994.

"Arrangements will meanwhile be made for the main interest groups to be consulted so that the options are set down as accurately as possible in the Bill to reflect the alternative legal regimes which could be put into force. The consultation will take place as soon as possible, and while the House will be aware it is not just a matter for me I anticipate a Bill will be introduced early in the next Session.

"I well recognise the strength of feeling on this matter. It is only right that all sides of the debate should be given the opportunity to have their point of view considered fairly and that Parliament should have the chance to come to a proper conclusion. I hope the House will agree that procedure of the kind I have described provides that opportunity. Meanwhile, I repeat my thanks to the noble Lord, Lord Burns, and his committee, and commend his report to the House".

My Lords, that concludes the Statement.

My Lords, I am grateful, as I am sure is the whole House, to the Minister for repeating almost exactly the Statement which the right honourable gentleman the Home Secretary made in another place.

First, I want to make it clear that this matter will continue to be a free vote for our supporters in this House, as in another place. But I remain a consistent supporter of hunting and have supported it since long before I was a Member of another place and during the whole of the time that I was such a Member. Is the Minister aware that there is strong support for the freedom to hunt among many who have never hunted at all, and from many uncommitted people, such as those who belong to the Women's Institute?

I am sure that we are all grateful to the noble Lord, Lord Burns, my noble friend Lord Soulsby of Swaffham Prior and their colleagues on the committee who have produced this report. But is the Minister not ashamed of the discourtesy—I put it no stronger—to the noble Lord, Lord Burns, and his colleagues, wherein Ministers leaked their decision to promote a government Bill before even reading the report that they themselves commissioned? This was, I think, disgracefully premature.

The Home Secretary said that Parliament should have the opportunity to come to a proper conclusion. He also said that in another place there would be a debate on the report, preferably before the Recess. Does this also apply to your Lordships' House?

When the Government put the proposed Bill before your Lordship's House, will the same options be available to this House as are available to the other House of Parliament, and, if so, how? Will the three options be fully costed as to the expense of enforcement, which is not covered as far as I can see in the few minutes I have had to look at the Burns report, particularly in terms of the heavily stretched police and the time that it will cost them? What is the position on compensation, which again the Burns committee was not asked to look into?

Will Members of another place who represent Scottish constituencies be able to vote on this matter, given that the Scottish Parliament is deciding the issue for Scotland, as is its right under the legislation that was passed, whereas the proposed Bill will apply only to England and Wales?

Lastly, will the Minster guarantee that this is not stage one, with stages two and three to cover fishing and shooting?

My Lords, from these Benches we too thank the Minister for repeating the Statement made in the other place. The Government commissioned the Burns inquiry, which we warmly welcomed, but it is regrettable that they made a decision to bring forward a Bill before we have had an opportunity to debate the report of the inquiry. We do not feel that that knee-jerk reaction will forward the debate in any constructive way. We shall have this debate, and indeed debates on the Countryside and Rights of Way Bill, before the rural White Paper. That is entirely the wrong way round. We should have had the medium and long-term strategy for our rural areas clearly laid out well before the Government began to impose changes that are bound to have a social and economic impact, whether or not we approve of those measures.

Initial feedback from the Burns inquiry suggests that some areas—albeit a few—will, indeed, be deeply affected. They are likely to be those areas already affected by the crisis in agriculture and by the strong pound affecting tourism. As it stands, people living in rural areas feel that they are the butt of other people's moral judgments. They have seen no plan for their futures and have had no opportunity to comment on them.

From this Front Bench I shall pass no personal opinion on hunting with hounds because we, too, will have a completely free vote on the issue. However, there are many of us who believe that this is another fundamentally authoritarian step from a Home Office that is intent on forming judgments on society without adequate consultation and debate.

I must ask the Minister to confirm that this House will be presented with a Bill for debate containing all the options, and not with a Bill as passed in the other place and on which we shall be able to debate all the options, bar one. Uncomfortable though it may be for the Government, this House must have the same opportunity to debate the Bill as the other place.

My Lords, I am grateful to the noble Lord, Lord Cope, and the noble Baroness, Lady Miller, for their observations. I am not sure that my thanks will extend further than that, but observations they were and I shall try to respond to them as best I can. I have noted that the noble Lord, Lord Cope, said that on his side the matter will be subject to a free vote. I congratulate the noble Lord on making that statement. I extend similar congratulations to the noble Baroness. The Government have made it plain from the beginning that we shall have a free vote on this matter. We made that matter clear at the outset when we discussed our manifesto. In fact, it was a manifesto commitment.

The noble Lord raised the question of leaks. There has been no leak, so far as I can determine, from the Home Office. There has been press speculation, but that of course is another matter. The noble Lord asked when there might be a debate. I should hope that there would be a debate before the Recess, but of course I cannot determine that. That is a matter to be agreed through the usual and proper channels and no doubt that will be properly processed, and the matter will be sorted out in the usual and efficient manner.

The noble Lord also asked whether the options would be fully considered in your Lordships' House. That is an interesting question. I think that probably we shall have to look at how this worked when there were options on Sunday trading. Probably Members of your Lordships' House will have a better memory of that than I. My understanding is that all the options on Sunday trading—there were very many in the end—were fully debated by your Lordships' House and were considered in the legislation. I think that that template, that model, is one which will work well in this situation.

The noble Lord made an interesting point about the position of Scottish MPs who are Members of the UK Parliament. No doubt they will express their views as Members of that Parliament. Of course, this is a matter which is devolved to the Scottish Parliament. The noble Lord also made the speculative point as to whether this was stage one of a process covering other matters relating to fishing, hunting and so on. This is an issue which stands on its own. It should be considered on its own. No doubt Members of your Lordships' House will have varying and different opinions on that issue, but that is how we see the matter.

The noble Baroness, Lady Miller, I think perhaps somewhat unkindly, accused the Government of being authoritarian on the issue. I find it hard to believe that we are being authoritarian when we have provided an opportunity for a full debate on many of the background issues that lie behind the understandable controversy over this issue. To call us authoritarian suggests in some way that we are skewing the debate when we are providing the opportunity for debate and then proper consideration of a Bill with options. That is very strange indeed. I think that is a very strange judgment for the noble Baroness to have formed. I understand her concerns, coming from the political background that she does, and representing an interest with large rural areas and constituencies, and they are not to be dismissed lightly. I reject the suggestion that we have been authoritarian. As I said in the Statement, we intend to provide for full consultation. We intend to provide as many opportunities as can be reasonably managed within the proper processes of your Lordships' House for reasoned debate on this issue. That will make a very important contribution indeed.

Those were the points raised at the outset. I look forward to other comments and observations by Members of your Lordships' House in the next few minutes.

My Lords, perhaps the noble Lord could first, particularly arising out of the last part of his answer, tell the House how it will be possible to provide the amount of time that this House could reasonably request, both to debate the report and indeed to consider properly a Bill, given the enormous backlog of legislation we already have. Therefore, could the noble Lord undertake to ensure that this House is not blamed if there are delays in the consideration of this Bill when we are already overcrowded with business?

Secondly, could the noble Lord cast his mind back to the great Countryside Alliance march a couple of years ago which ended in Hyde Park and the remarkable fact that the guardians of Hyde Park did not have occasion to pick up one single bit of litter, that the law was obeyed throughout and that the guidance of the police was not only sought but followed? Would he therefore care to contrast the behaviour of those demonstrators with that of the rather more recent demonstrators round the Cenotaph and Parliament Square? Also, could he and other Members of the Government consider how sensible it is for them at this time of their remarkable popularity to alienate a section of the population which, perhaps more than any other, instinctively wants to obey the law?

My Lords, I am grateful to the noble Viscount for his question. I understand his point about the legislative backlog but of course we are not planning to legislate in this current Session but in the next Session, providing that we can fit in all the pieces of legislation that we want to have. I make the point that I made at the outset: agreement about debate is best decided upon and worked through the usual channels. That is the most sensible way to proceed: it usually works extremely well. Members of your Lordships' House have debated many issues with opportunities being given through the usual channels.

The noble Viscount makes comparisons between the members of the Countryside Alliance and those demonstrators who defaced the Cenotaph and insulted the intelligence of all of us by their poor and ill-judged behaviour, their violence and their general unpleasantness. The point is simply this: with all these things, however strongly held our views may be and however passionate our feelings on issues of the day, it is for all of us to make sure that we have a reasoned, fair-minded and open-minded debate. That is an encouragement I would offer, particularly on a subject like this which, I think we must all acknowledge, stirs up very strong feelings all round on all its different aspects. These debates are best conducted in a fair and open-minded way.

My Lords, may I ask the noble Lord the Minister whether he happened to see his honourable friend, Kate Hoey, yesterday on television, when she said that surely there are more important things facing this Government than a Bill to ban hunting with dogs?

My Lords, I did not actually catch that particular interview, but I understand the sentiments. This is an issue which has been around for a very long time and it is not unreasonable for us to try, as a Parliament, to resolve it one way or the other. I do not pretend that it is a straightforward issue: I do not think that anybody would say that. It is a complex matter and I believe that the report will help us to get to the heart of some of the issues involved and deal with the complexities.

My Lords, perhaps I may say to my noble friend that I agree with him that there will be many views expressed in this House. I hope that reasoned views will be expressed but may I say, as someone who has always lived in the countryside and who lives in the uplands, that, if we had to rely on fox hunting to control foxes in our area we would have been overrun long ago? May I ask him whether he has seen reports that certain hunts are breeding foxes, which seems to me to be a contradiction if they are supposed to be exercising pest control? May I ask him, if a Bill comes forward containing the various options, would it also apply to stag hunting and hare coursing? Finally, is my noble friend, like me, expressing some surprise that the party opposite now, in relation to Scottish Members, appear to be against the Union?

My Lords, the noble Lord speaks with a longer parliamentary experience than I do on these matters, and he also speaks with great wisdom. I am somewhat surprised by some of the observations made by Members of the party opposite. As I said earlier, this issue is one which needs to be carefully thought through and resolved. The report provides us with that opportunity and I think that we should try to concentrate our minds on that issue. As to whether foxes, deer, mink and hares will be covered, I think the answer is yes.

My Lords, some of us are becoming increasingly puzzled by the mechanics of this. The noble Lord said a moment ago that we would have the Bill if it could be fitted in among all the other pieces of legislation that the Government wanted to bring in. Can he tell us whether there is actually a firm commitment by the Government to bring Bill in? Also, can he answer more precisely the question that has been asked from both Front Benches as to what sort of Bill it will be? Is it going to be a "No. 2" Bill, in which we see exactly the choices to be faced by the other place and make our decision on those, or are we merely to pick up whatever the other place have decided we should have, after having made their own amendments to whatever sort of Bill it is?

It is difficult to believe that a government who were actually ready to announce the introduction of a Bill before the report on which we thought the Bill would be based have not thought through the mechanics of how it would be handled in Parliament. I presume that the noble Lord has the answer to hand.

My Lords, I thought I had made it reasonably clear. One can never be absolutely precise about how many Bills there will be in any parliamentary Session this far in advance: it would be unwise. A Bill with options will come to this House— that is to say, with the options preferred by the other place. That procedure worked for the Sunday Trading Bill, as I recall—I think my recollection is right— but that does not mean that this House will not have the quite proper opportunity to look at, debate and discuss all those options.

To make it crystal clear once again, we will provide in another place—and it is my hope and expectation that we shall have that opportunity here as well—the opportunity for a full debate on this report. We did not say at the outset that this report would somehow be the legislation. We said that the report would be there to provide the background and the framework for a debate about key issues which have been raised. This would lead to a better informed debate. I think that is a very sensible way forward, and we will make sure that arrangements are made for this House to look at all the options which have been considered by the other place.

My Lords, would the Minister inform us whether there is any possible objection to drag hunting? My father was a master of foxhounds and I was brought up to believe that was a noble sport. That still leaves a human point of view. Later, the cruelty to the fox has rather overwhelmed me so that I do not favour fox hunting but I do favour drag hunting. Is there any possible objection to drag hunting? Everything is fine about hunting except that it is cruel to the fox.

My Lords, I think it is worth putting on the record that this is an issue which was considered very carefully by the noble Lord, Lord Burns, and his committee. The report looks at drag hunting and I would simply commend the report to the noble Earl so that he can read it carefully. It goes at length into that subject. Of course, drag hunting is a popular pastime and sport and it is one of the things the report encourages us to look at more closely. It is obviously something which many people enjoy.

My Lords, do not the Government understand that there are many on this side of the House who have never hunted but who nevertheless believe that to criminalise hunting would be a gross interference with individual freedom? Have not the Government themselves said on many occasions that a tolerant society is one that respects the strongly held views of minorities, particularly minorities who are not inflicting their views on other people but who merely want to be left alone to pursue an occupation which has been part of country life for generations? Will the noble Lord please recognise that there are many like me who have actually joined their local hunt to demonstrate how much they resent the idea that a majority in another place should inflict their views on people who want to continue to follow a perfectly proper recreation?

My Lords, I respect and understand the noble Lord's view. The Government have no great desire to criminalise people who seek pleasure—

Oh!

My Lords, if I may conclude my point, we have no great desire to criminalise people. I understand entirely the strength of feeling held by Opposition Members. It is best to look dispassionately at the issue. The purpose of the report was to have more informed debate, which is an entirely sensible way to proceed.

As I said at the outset, the Government are neutral and it is a matter for Parliament to decide on a free vote. That is an entirely sensible and logical way through a complex issue on which there are many strongly held views.

rose—

Mallalieu.

My Lords, I sense that your Lordships wish to hear from my noble friend Lady Mallalieu.

My Lords, I speak with a keen interest on this matter because, if one of the Bill's proposed options were adopted, myself, my husband, children and neighbours, together with many of my best friends, would be imprisoned if they continued to behave as they do now—which we believe to be perfectly lawful.

I ask my noble friend the Minister to convey to the Home Secretary the gratitude of many people for the establishment of the inquiry, which for the first time gave many the opportunity to have their say to someone they felt was listening. I pass on the thanks of all those on both sides of the argument to the noble Lord, Lord Burns, and his team. Nobody could have spent more time, taken more trouble or shown more patience in seeing for themselves and listening.

This issue has become incredibly divisive. It is not simply a matter of town against country, as it is sometimes billed. It is a case of people against people—sometimes in the same village or family. I suspect that the Government were elected by such a large majority in 1997 because people wanted to see a nation working together. It would be hard to find something more likely to destroy that feeling than a Bill of this type.

I hope that this matter will not drag on and on. If we spend the next Session on the Bill, the result is inconclusive and people stick to entrenched positions, the battle will be carried on after the next general election—possibly for some years beyond that.

I wonder why we were not allowed to see the report a little earlier today, so that we could have some idea of its content before the Statement. The report is incredibly detailed and complex and it is likely to take up a great deal of legislative time. I hope that within it are the seeds of solutions that all reasonable people on both sides of the debate can grasp and accept. If so, perhaps we can prevent a recurrence of today's sad spectacle of people having to come from all over England to appeal to Members of both Houses to defend their rights.

My Lords, I commend my noble friend's general approach. She is absolutely right to say that we need sensible, rational and dispassionate debate. She is right also to congratulate the noble Lord, Lord Burns, on his careful, detailed and thoughtful report. She is correct in saying that the Government seek to heal divisions. That is why we were elected. There is no getting away from the fact that this is a vexed issue. The report tries to provide useful background, to enable us to find a sensible way through. The concept of options and debate carefully constructed around them will allow us to do that. I am grateful to my noble friend for her kind comments and I will be more than happy to convey her gratitude to my right honourable Friend the Home Secretary.

My Lords, the Minister says that the Government are neutral but the Prime Minister said on television that he wanted to abolish fox hunting. Is the Prime Minister neutral towards his own Government? He said also that he does not have any disagreement with shooting or fishing, so he accepts that it is quite satisfactory and morally correct to kill for fun. What is the difference between the morality of shooting a pheasant and the morality of chasing a fox?

My Lords, perhaps the noble Earl is better at morals and the killing of animals than I am.

My Lords, I want an answer.

My Lords, the noble Earl is entitled to ask his question but he is in some danger of trivialising the report.

Oh!

Your Lordships are entitled to disagree but that is my view. The noble Earl asked about the Government's position. I made it plain earlier that we are neutral. The noble Earl asked also about the Prime Minister's view. My right honourable friend is a Member of Parliament and clearly expressed his view. We are all entitled to express our view. The noble Earl is entitled to express his view. The noble Lord, Lord Cope, expressed his view cogently at the outset. No doubt he will continue to do so.

My Lords, could not the arguments of the noble Lord, Lord Waddington, equally be applied to the maintenance of cock fighting or bear baiting? It is perfectly obvious that I am not a countryman but am I correct in thinking that most countrymen regard foxes as vermin? Does my noble friend know of any other vermin that is deliberately kept alive?

My Lords, I may have been brought up in the countryside but do not claim to be a countryman. As to foxes being vermin, we seek to control them in different ways. Fox hunting is undertaken by some for pleasure and by some for fun. I draw no conclusion although it is not something that I particularly see as fun. The report clearly and fairly states that banning fox hunting would not make much difference to the size of the fox population. We would undoubtedly apply instead means that are commonly in use.

My Lords, is the Minister aware that foxes are the most destructive vermin in this country? They are very damaging to poultry, game and other wildlife. Hunting is the most certain and least cruel way of keeping the number of foxes down. The alternative of shooting often results in the fox getting gangrene. Poisoning and trapping are in any event illegal. Will the Government bear those points in mind before doing anything to stop fox hunting?

My Lords, we have heard those views expressed before and will no doubt hear them again in the wide-ranging debate on the Bill. Some people see foxes as vermin and undoubtedly that is the case. The Burns report is helpful in some of its observations on that matter. The noble Lord asks the Government to consider his points. I have made it plain that this matter is for Parliament. All parties have openly and honestly said—and have repeated this afternoon—that the matter is one on which Parliament should decide, not Government, and that there should be a series of free votes on the options. That remains the case. From the tone of debate in your Lordships' House this afternoon, it seems that people are pleased that there will be free votes on all the options.

rose—

My Lords—

My Lords, I am sorry that the noble Lord, Lord Kimball—whom I greatly respect—has not had the opportunity to contribute but we have had our 20 minutes of Back-Bench Questions. The rules of the House dictate that we should move on.

My Lords, on behalf of my noble friend, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Bach.)

My Lords, I apologise for interrupting the proceedings at this point, but I believe that I can address the House on an important matter before we move into the detail of the Committee stage. I should like to ask the Minister whether the Government have taken account of the strongly developing opinion against this Bill. When we debated the Second Reading a few weeks ago, it was generally true to say that the Bill was of serious concern only to the e-community, broadly speaking. However, opposition has grown much wider since that time, which means that the Bill has achieved the rare, if not unique, distinction of having The Times, the Financial Times and the Guardian all call for the Bill to be withdrawn and reconsidered.

A similar rare combination of allies against the Bill has developed among business and financial organisations. Today, the British Chamber of Commerce has published a detailed report by an impressive panel, edited by two gentlemen from the London School of Economics and one from University College London—neither institution is normally known as a force of conservatism—which concludes, among other things, that the costs to service providers of compliance would be £650 million over five years, and continuing thereafter. It has also concluded that the effects on the economy would be well over £35 billion over five years in the transfer of business to overseas jurisdictions. These are very serious figures.

The report also says that the Bill as it stands is entirely inadequate as a mechanism to achieve efficient and reasonable interception and surveillance and that its effect is likely to be loss of confidence in e-commerce, unacceptable costs to businesses and to the UK economy, confusion and uncertainty at numerous levels of business activity and an onerous imposition on the rights of individuals. In those circumstances, can the Minister say whether the Government are treating these growing and much wider criticisms very seriously?

My Lords, I am grateful to the noble Lord, Lord Cope, for intervening in this way. I should like to thank him for giving me notice of his intention to do so. Like the noble Lord, I have read the press coverage. We have received many representations. We wish to be as helpful as we can. However, the public debate has revealed some very serious misunderstandings about the Bill. We must, first, try to correct those misunderstandings because some of them are ill judged, while others are misconceived. They are also beginning to skew somewhat the debate.

We are more than happy at all times to consider serious and properly argued amendments. Perhaps it is worth pointing out to your Lordships this afternoon that we are very much in listening mode on this Bill. However, we shall not be deflected from our course; nor shall we withdraw the Bill, as suggested in some of the wilder public comments. None of our industry contacts asks us to withdraw the Bill. They ask for it to be amended in many and various respects. We shall see what we can do in that regard.

As regards some of the misunderstandings in the media, it may be useful if I quote from a letter that my right honourable friend Jack Straw, the Home Secretary, has written in response to The Times editorial today, in which he runs through some of the myths:

"The first myth is that the Bill requires all Internet service providers in the UK to install black boxes with a link to the Security Service to monitor traffic. This is completely untrue. The Bill introduces comprehensive statutory controls for the first time governing access to data, such as billing records. Access must be properly authorised for specified purposes only. This is subject to independent oversight … The second myth is that the Bill criminalises the innocent user of technology. Again, this is wholly wrong. It targets the serious criminal. There is a sanction for not complying with a decryption notice. But the burden is on the prosecution to prove beyond reasonable doubt that a person has, or has had, possession of a decryption key. Forgetting passwords or keys is a reasonable thing to do, so the Bill includes statutory defences for such cases".

The Home Secretary then goes on to look at a third myth; namely, that companies will be required to surrender private keys to their entire network and will be prevented from divulging this. He says:

"But we have made it clear that, where legitimate businesses are concerned, we fully expect that disclosing material in an intelligible form rather than a key will normally be sufficient. The Bill reflects this. It contains restrictions on when keys may be required and when the 'tipping off' provision may come into play".

We do not want to see the burgeoning e-commerce market overrun with high-tech criminals against whom law enforcement finds itself powerless; neither does industry with which we have actively engaged in consultation. So we need to update our laws. But we also need to ensure that we protect citizens' legitimate rights and that we do not overburden business. It is all about balance. I believe that the Bill strikes the right one.

As I said at the outset, I am grateful to the noble Lord, Lord Cope. We are very much in a listening mode. We want to hear what Members of your Lordships' House have to say on the very important matters contained in the Bill. We continue to listen to points that are reasonably put to us from all sections of industry. The noble Lord made particular reference to the report of the British Chamber of Commerce, which we received today. A representative from the BCC recently visited our officials. We are more than happy to meet the authors of that report, and of other reports, in order to go through some of the serious issues raised. We are seeking to find solutions to the problems.

Much of the Bill is uncontroversial and much of it is already on the statute book in another form. However, we seek to update, modernise and make more effective those parts of the legislation that require such amendment, as well as dealing with the difficult issues surrounding encryption. That is the primary purpose of this piece of legislation.

My Lords, I apologise for entering the Chamber a little late for what was obviously a well prepared response to the opening remarks of the noble Lord, Lord Cope. This Bill seemed to start off as something of a "sleeper" in terms of public concern in that it went through the Commons stages without a great deal of public debate, although it was thoroughly dealt with in Committee in the other place. However, judging by my postbag and—dare I say it?—my e-mails, as well as comments in the editorial columns of the newspapers, there has been a growing concern since our Second Reading debate not just from civil rights lobbies, but increasingly from industry that this Bill is not good enough.

The Minister said that the Bill was "uncontroversial". That is a very generous comment for a Bill about which there is growing doubt as to whether it covers the relevant areas of technology. As I said, there is also increasing concern on the part of both industry and civil rights lobbies. The noble Lord, Lord Cope, was courteous enough to tell me what he planned to do; indeed, judging by the thoroughness of the Minister's reply, I think that the noble Lord may even have given him a nod and a wink in that respect.

Rather than go through the toil and the turmoil of a Committee stage which, if the Government's complacency remains, I fear will result in some defeats for them, would it not be better to take away the Bill and perhaps hold some public hearings and obtain some more expert advice on it? I believe that the Government are heading for the rocks if they do not realise that the warnings that have been given from some responsible quarters are valid. These are warnings from people who want pornographers, drug smugglers and others to be apprehended but who do not believe that some of the provisions in the Bill address those problems and, where they do, that they give the authorities far too many powers. There are real problems with the Bill. The Government should listen carefully to the wise advice of the noble Lord, Lord Cope, before we become embroiled in a Committee stage where I do not believe that we shall make much progress.

My Lords, as ever, I am grateful to the noble Lord, Lord McNally, for his careful reflections. He always speaks with great common sense. However, I thought I had made it plain in my response to the noble Lord, Lord Cope, that we are aware of the growing volume of concern. Two editorials on this matter appear today in the Guardian and The Times. I have read those and I understand the arguments that are put forward. As I said earlier, I am more than happy to listen to concerns. As always, I have invited noble Lords to discuss points of the Bill that trouble them. It is an important piece of legislation. We are certainly not complacent about it, far from it, but it is a necessary piece of legislation. It makes plain—I think perhaps for the first time—that we need to have a proper regulatory framework for the interception of communications. It tries to address—I believe that it succeeds in this—the serious issue of the way in which technology is changing and evolving. That is no easy exercise. I can well understand that people may be concerned, as the noble Lord suggests.

Committee stage gives noble Lords a full opportunity to discuss the detail of legislation with a view to improving it. I recognise the strength of opinion on certain issues. We shall try to be as helpful as we possibly can as we proceed through the Committee stage. However, as I say, this is essential and important legislation. Our security services, our police service and many of the agencies covered by the Bill would be seriously concerned if we were to be deflected from our intended course of action. We should try to concentrate on resolving the serious issues of concern as best we can in Committee to improve the Bill. As I say, we are ready to listen to all views on these matters.

moved Amendment No. 1:

Page 2, leave out lines 38 to 40.

The noble Lord said: I have tabled a large number of amendments to the Bill. I shall try to deal with them as expeditiously as possible. In this case I think that it would be best to start with a short exposition from the Minister as to what lines 38 to 40 of page 2 are intended to achieve and a couple of practical examples of how they will be used in practice. I beg to move.

I certainly congratulate the noble Lord on his—

Order! The amendment should be put.

Amendment proposed:

"Page 2, leave out lines 38 to 40".

Before I was quite rightly interrupted I endeavoured to congratulate die noble Lord on his desire to be expeditious. However, that is in the noble Lord's nature.

This, and subsequent debates today, will, quite properly, seek to scrutinise—as I suggested earlier—the provisions of the Bill, which is a complex piece of legislation. The Bill has already been improved by scrutiny in another place. I repeat that it is for this Chamber to seek further to improve it.

During our debate on each of the amendments it is worth reminding ourselves what the Bill is all about, and why it is crucial that we legislate on these matters. As we are debating Part I today I hope that no one will mind me trying to put the Bill into perspective. This legislation is all about countering the threats which are posed to our society by criminals and terrorists. I believe that that is commonly agreed. The threats exist now and, in our view, the current legislation is either out of date or the law enforcement, security and intelligence agencies have been working on a non-statutory basis which we must rectify before the Human Rights Act comes into force in October. We should bear that date strongly in mind this afternoon.

This is an important Bill. Rather than backing up that claim with generalities or poorly researched figures, I shall give the Committee some facts regarding the effectiveness of interception. Successive governments have shied away from giving too much detail about its effectiveness—for reasons which we shall debate later—but these figures give an indication of just how successful interception is.

During 1996 and 1997 lawful interception of communications played a part—often the crucial part—in operations by police and HM Customs which led to 1,200 arrests; the seizure of drugs with a street value of some £600 million; and the seizure of some 450 firearms. During a 12-month period during 1998–1999 Customs seized 1.25 tonnes of Class A drugs, and made 93 arrests in connection with those drugs, through interception. In fact, in 1998, 52 per cent of the total amount of heroin seized by Customs was a direct result of interception. The total value of drugs seized in 1998 as a result of interception was in excess of £185 million. This comes to over 10 per cent of the total sum spent on drugs per annum in the United Kingdom, an amount which could cost the country up to £500 million each year.

Meanwhile, in work against alcohol and tobacco smuggling, recent Customs interception operations have been so successful that the number of staff working on interception against these targets has doubled. Just this morning I saw some updated figures on the results that interception continues to achieve. By their very nature, it is not possible to share these figures publicly and I shall not do so. However, I reassure the Committee that the results I have just mentioned continue to be highly relevant. These are important powers for law enforcement. We, the public and businesses alike, cannot afford to do without them.

The Committee will note that I have not given any figure or quantification of the success of interception against terrorism. However, I assure the Committee that it is an equally potent weapon and has contributed significantly to the prevention of terrorist atrocities, including some which would undoubtedly have caused loss of life and extensive damage to property. I have today seen the latest monthly results accruing from interception. They remain impressive and I have no doubt of the benefit which serious criminals and terrorists would derive if we were not to bring our interception legislation up to date. Therefore, while I do not wish to labour the point, we need to consider what the Bill is designed to achieve and work towards that.

As I said earlier, I have seen comment in the press today. There are some serious misconceptions around. We have tried, and will continue to try, to get our message across. But this debate must be rational and based on the facts. When all sides have considered all the facts, we can focus on specific suggestions for improvement of the Bill. I am happy to do that but before accepting any changes, I shall want those who propose them to have a full understanding of their impact.

I refer to specific points on the amendment. With regard to Amendment No. 1, Clause 1(1) of the Bill creates the offence of unlawful interception, and then goes on to provide defences to that offence in subsection (5). But through the act of interception, the interceptor may commit other offences or torts, in particular under the Human Rights Act. The final part of subsection (5) ensures that there is a defence to those liabilities.

I trust that the noble Lord understands where we are coming from in terms of this particular clause and that those few comments will assist him in considering whether he wishes to withdraw his amendment.

Presumably these three lines protect the prosecutor from the kind of case that happened recently, where judges decided that there had been an abuse of process and people who were probably criminals were released. Judges punishing the police—and, effectively, the public—by releasing people who are probably criminals because there has been a technical abuse of process, is not the way to deal with the problem. In general, we should punish the authorities for an abuse of process quite separately. That should not invalidate evidence which may well convict a clearly guilty criminal—and therefore protect the public—even if that evidence has not been garnered correctly. It should carry over from this Bill into other areas to ensure that cases cannot be thrown out on various technicalities. I know that it sounds complicated.

It may be helpful to the Minister if I intervene before he replies to the noble Earl. I apologise that I was not here at the Second Reading debate; unfortunately I was abroad. I declare an interest, which I hope will suffice for the remaining stages of the Bill. I am a non-executive chairman of a company called Streetnames Plc, listed on AIM, which is an address-related Internet domain names company. It will offer e-mail addresses to businesses and private users and, by subscription, access to an Internet-based e-mail service for sending and receiving messages and attachments, and will include automatic e-mail forwarding. Therefore it might be affected by parts of the Bill—although the Bill is so complicated that I have not yet worked out which parts. No doubt I shall find out as we go through it.

Having said that, perhaps I may make a general point. I do not think that anyone on this side of the Committee doubts that interception is successful and important to the Customs and to the police. I do not think that any noble Lords want to take away those interception powers. We are concerned with the additional powers proposed in the Bill, and it would be helpful if the Minister could focus on that element.

As to my noble friend's amendment, subsection (5) concerns conduct. The final part of that subsection, which my noble friend wishes to delete, states:

"shall also be taken to be lawful for all other purposes".

The words "other purposes" raise a question in my mind. To what "other purposes" does that refer?

Perhaps I may raise a point that the Minister does not seem to have covered which concerns the words,

"(whether or not prohibited by this section)".

Since these three lines refer only to conduct specifically authorised under paragraphs (a) or (b), what is that phrase in brackets doing there? Does it not have the effect of making any conduct authorised for other purposes, even if it is not authorised for the purposes of the Bill? It seems a very odd phrase. I do not understand what it means and I should like some examples.

The noble Lord and the noble Viscount have put their fingers on issues which will come up time and again. It may be useful for the Minister to deal with them. There is no doubt that where phrases such as,

"(whether or not prohibited by this section)"; "lawful for all other purposes";

and, as I mentioned on Second Reading, lots of "anys", get into the clauses, it causes concern—and the kind of blanket permissiveness which runs through this Bill is causing concern.

Going back to the initial intervention of the noble Lord, Lord Cope, it would have been far better all round if we could have seen the code of conduct under which some of these powers will be used by the authorities. We should then have been able to make a judgment on whether or not it is wise. But at the moment we are being asked to take the code of practice on trust. I am not sure that we have had any assurance from Ministers that we will see it in this House during any stage of the Bill. It would be a step forward to at least get a timetable of when we will see the code of practice and some appreciation by Ministers that,

"lawful for all other purposes"; "(whether or not prohibited by this section)";

and all the "anys" that run through the Bill, is certainly not the kind of legislation that should be tolerated when Parliament is passing extensive powers to the executive and to the security and other services. Parliament has to be very careful.

It would probably save time as we go through the Bill if we acknowledge that we know—as the Minister emphasised—there are a lot of bad guys out there and that the authorities need powers to get after them. We want them to get after the drug smugglers and the paedophiles as much as anyone in any Whitehall department wants them to do so. But Ministers must not use the scale of the problem as a way of scaring and bouncing this House into passing slipshod or over-powerful legislation.

I associate myself with the concerns and points raised by my noble friends Lord Lucas and Lord Astor. Almost for the first time I associate myself with concerns raised by the noble Lord, Lord McNally, from the Liberal Democrat Benches.

The issues that my noble friend Lord Lucas has highlighted within the subsection are a motif that runs throughout the Bill. Either this subsection gives very wide powers or it is badly drafted and a number of us have misunderstood it. Either way, we need a clear explanation from the Minister as to how exactly these powers are restricted when the subsection states,

"(whether or not prohibited by this section)".

I should also declare an interest at this stage—albeit a tangential one—in that I work for a financial institution that from time to time advises companies with e-commerce interests.

Perhaps I may first respond to some of the comments made by the noble Lord, Lord McNally. He offered me good advice in his observations. It is not the Government's intention to try, as he put it, to bounce the Committee into accepting poorly drafted legislation because of security needs or the needs of the various law enforcement agencies. That is not our intention. Like the noble Lord, I, too, have trouble in reading and getting my mind fully round some of the legalese language in which much of our legislation is drafted. It is not an easy task. I share his frustration and the frustration of other noble Lords in doing so.

As to the noble Lord's point about the code of practice, that will be based on the existing public code which has been used and issued by ACPO. We intend to publish a draft and to provide a full opportunity for public consultation; I cannot be precise as to when. The noble Lord makes a useful point. Perhaps it is something that should be published during the course of our discussion and debates. If that is possible, we shall seek to do that. That seems to me to be reasoned and sensible.

But, to give the noble Lord a flavour, the code shall be based around the current one, which is very useful. As I said in my opening remarks, much of the legislation is not controversial in the sense that it has been incorporated into our statutory framework, but is littered across it in small pieces. What we are trying to do here is to bring all that legislation together in a coherent fashion, modernise it, update it and make it more intelligible. I apologise if it appears that we have not succeeded in achieving that, but of course that is what we are aiming to do here.

I shall turn to the comments made by other noble Lords. I am grateful to all those who have declared their particular interest as regards this issue. I believe that we all have a certain interest here. The intervention from the noble Earl, Lord Erroll, was well intentioned but perhaps wrong. There is a prohibition on the use of intercept material. Given that, the point that he made probably does not arise. It is worth reminding ourselves that the ECHR demands that any interference with the human rights set out in Article 8 is carried out,

"in accordance with the law".

It would not be enough to say merely that an interception warrant gives a defence to a narrow criminal offence. That is why we have set out the circumstances under which interception would be permissible. If those tests are met, the interception will generally be lawful.

I am not sure that I shall be able to provide a specific example of how that will work for the noble Lord, Lord Lucas. However, I shall give further thought to the point he made. A description of how something will work in practice is always helpful.

This kind of provision may become more common as human rights legislation begins to kick in substantially. It is no longer right to believe that an action is lawful unless it is prohibited. That is an important point to make clear. If something interferes with fundamental rights, it is generally unlawful unless it is positively allowed. I believe that we shall all come to understand the process better once the human rights legislation begins to have an impact on the way in which we legislate.

The amendment moved by the noble Lord would make the demands of the law unreasonable. The danger of the amendment is that it could make law enforcement staff engaged in carrying out interception liable under other legislation, even if they were operating under a properly authorised warrant. There lies the danger of this amendment and, in essence, that explains why we must object to it. I therefore suggest to the noble Lord that it might be better if the amendment was withdrawn.

Before my noble friend decides what he wants to do with his amendment, perhaps I may say that we are grateful to the Minister for his remarks about the code of conduct, in particular when he said that a draft may be made available to noble Lords at the earliest opportunity. It would be of enormous benefit if that is the case. Indeed, I hope that it can be made available before we consider the Bill on Report. That will be advantageous to all noble Lords and, indeed, no less so to the Government, because we shall then be able to proceed through the Report stage with a much clearer understanding of the effects of the Bill.

I hope that I can be even more helpful to the noble Viscount. I understand that we shall be able to publish a draft form of the code by the end of the month. When considering the timetable for this legislation, it is likely that the House will have an opportunity to look at the draft code before the beginning of the Report stage. Furthermore, public consultation is to follow.

I am even more grateful to the noble Lord. As I said, this will be to the advantage of the Government because it will mean that we shall be able to conduct a far speedier Report stage.

I am grateful to the Minister for answering at least one-half of my question. I am beginning to understand in general terms why we need these three lines. However, it seems an odd concept to include in legislation and I hope that the Minister will be able to write to me giving further information on why, having said that an action is lawful, we need to say that it is specifically lawful for all purposes and how we expect to see this put forward in further legislation, if only from the point of view of better understanding the Human Rights Act.

However, I do not believe that the noble Lord has addressed my question as regards the words,

"whether or not prohibited by this section".

I am still unclear as to their meaning or why it is necessary to include them here. Without those words, the clause would read:

"and conduct … which has lawful authority for the purposes of this section by virtue of paragraph (a) or (b) shall also be taken to be lawful for all other purposes".

That now seems to me to be reasonably straightforward. However, any conduct "prohibited" by this section is still to be,

"lawful for all other purposes".

That implies that conduct prohibited by Clause 5 is lawful for all other purposes. In any event, I cannot see the point of the wording here. If it has a point, it seems to me that it could be extremely dangerous. I sure that there is an innocent explanation, but given that I gave the Minister's officials several days' notice of what I meant when I tabled the amendment, I had hoped to receive a clear answer today.

I am always willing to try again. Clause 1(5) allows only conduct authorised by Clauses 3 or 4 or by an interception warrant. That conduct can be only interception, but it may be interception that is not prohibited, for example, the interception of a private postal system. I think that I understand that. If, on reflection, the noble Lord finds that he, too, understands it, I shall be delighted. However, if on reading Hansard he is still not certain, perhaps we shall need to address the finer detail of his point in correspondence or return to it at a later stage.

The wording may be a little opaque, but I think that it is in fact more transparent than perhaps we believe it to be. Perhaps we are being a little too suspicious of it.

I shall not detain the Committee for any longer than is necessary. I shall be grateful if the noble Lord could write to tell me what would happen if the words set out in brackets were deleted from this paragraph in the Bill. What harm would accrue to the Bill? I shall then be able to consider sensibly what provision to put down when we return to the Bill on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 2:

Page 2, line 48, at end insert—

("and the interception is in accordance with provisions of regulations made under section 4(2) with the object of ensuring that the senders and recipients of such communications are made aware of the purposes for which, and the circumstances in which, those communications may be intercepted").

The noble Lord said: With this amendment we move to one of the first areas in which concerns have been expressed about the treatment of individual rights in the Bill. We are trying to establish what might be described as the legitimate expectations of privacy for employees when they operate a private system. There is a danger that overly inquisitive employers could bug their own staff; indeed, in the past we have seen examples of that kind of behaviour, using older technologies. We need also to consider the circumstances of whistle-blowers and how they need to be protected.

The amendment seeks to ensure that the arrangements for the interception of communications in the course of transmission by means of a private telecommunications system are compliant with Article 8 of the European Convention on Human Rights. Again, I suspect that the compatibility with the human rights convention of some of the powers conferred by this Bill will be a recurring theme throughout our deliberations in Committee.

The European Court of Human Rights has decided that the definition of "private life" can extend to business activities and to the office. A case that comes to mind is that of Deputy Chief Constable Halford, who was bugged by her own police force. The European Convention on Human Rights requires that any interference with rights set out in Article 8 must be prescribed by law. In its current form, Clause 1(6) provides too wide an exemption when it refers to,

"The circumstances under which a person makes an interception … by means of a private telecommunications system".

However, if it were subject to the arrangements we propose under Clause 4(2), this difficulty would be removed.

This is a probing amendment to see whether Ministers have considered such an approach. However, I think that it covers a far more fundamental issue as we begin to embrace quite breathtakingly new technologies. I freely admit that the Minister and I are soul brothers in this area—when the parliamentary draftsmen meet the Internet geeks, simple souls like us need to look for protection. Nevertheless, this issue deserves clarification and I look forward to the Minister's reply. I beg to move.

If I happen to telephone the Minister in his office, he is in effect "bugged" in a rather old-fashioned way. The private secretary will listen to the telephone call on the extension to make sure that after the call I am unable immediately to telephone the press and say that the Minister agreed to something to which he did not agree. That practice exists for the Minister's protection.

More sophisticated techniques are used in modern offices. In my place of work—the "day job—the telephones are regularly taped on all the trading floors or in any part where business is done. That is a protection not only for clients, but for those who work in the building, so that what they say is not used by anyone else. Indeed, the e-mail system in my office—if it works properly, which it does not very often, because we keep being attacked by outside things—has a capacity for copies to be retained for certain purposes. It is perfectly reasonable for that to happen in a commercial environment.

But the noble Lord, Lord McNally, refers to a form of protection for the individual. The very least that the individual must know is that the interception is taking place. The second point relates to the uses to which the e-mail copies or taped conversations can be put by an employer or anyone else. It is a theme to which we shall return throughout the passage of the Bill. We do not need not to be frightened by the concept; however, we do need to pay careful attention to the safeguards that should be in place for the protection not only of employees but also of employers. This is an important issue. I shall be interested to hear the Minister's reply.

This short exchange has been quite useful. It has set out the parameters of the debate and some of the awkwardnesses in terms of legislation with which we are attempting to deal.

The effect of the amendment would be to replace the civil liability for a person making an interception on a network that he has a right to control or use with a criminal offence unless that person had carried out the interception in accordance with regulations made under Clause 4(2). I believe that my interpretation of the amendment is correct. The noble Lord attempts to ensure that every person who may be monitored is made aware of the purposes and the circumstances in which that might happen.

The Government are as keen as anyone present to ensure that the privacy of the individual is protected—hence Clause 1(3), which enables a civil action to be brought against anyone who intercepts a communication on a private network. One of the key drivers for this legislation is that such interception should be in accordance with the law. It must be within the legal framework and for a lawful purpose—hence also the lawful business practice regulations, which will govern the actions of businesses in this context and of any public authorities which monitor calls to the switchboard or the communications of the staff. These will contain the stipulation that businesses have reasonable grounds to believe that all parties to any communication are aware that monitoring may take place.

However, applying these regulations to the general public at large is an entirely different matter. The amendment would place a legal obligation, for instance, on all parents to inform every person who called them on the telephone. The same would apply to the circumstances described by the noble Viscount, Lord Astor, where ministerial conversations are monitored. In such circumstances the child, the Minister's private secretary, or any individual present might conceivably pick up a second handset and listen in. We do not believe that the amendment is either reasonable or realistic. Such communications are already protected by the civil action provision in Clause 1(3). I trust that with that assurance the noble Lord will feel able to withdraw his amendment.

I shall readily withdraw the amendment. However, perhaps I may point out to the Minister's advisers as much as to the Minister himself that I hope that the response every time we put forward an amendment will not be one of reductio ad absurdum. We are not worried about 10 year-olds listening to their parents' conversations—although I am desperately trying to stop mine doing just that! We are moving into the use of awesome new technology. The amendment attempts to express concerns about the rights of the employee in the working environment The Minister referred to the civil redress that is contained in the Bill. I shall ponder on his reply. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 3:

Page 3, line 17, leave out ("postal").

The noble Lord said: I am interested in the word "postal" which appears twice in the Bill, where my amendments seek to delete it. The reference is to "postal items". So far as I can see, the term is not defined in the Bill; nor does it appear in the Postal Services Bill—the closest that that Bill comes is in its use of the term "postal packets".

The general sense of the interception capability ought to be that the authorities, when suitably authorised, can look at any item in the course of transmission if that item contains a communication. My amendments would make sure that anything is considered "post"—it could be a piece of heavy plant, but if there is a communication with it, the provision in the clause would apply. If the restriction is to something "postal", I should like to know what the word means in this context and why there is no common definition with the Postal Services Bill. I beg to move.

I, too, am interested in the definition, which does not seem satisfactory. What it really says is that a "postal service" means any service that consists in the collection and so on of postal items. So it does not define anything at all. It is fairly obvious that the service has to do with collection and I am not sure that the definition is necessary. I accept that lawyers may think it wise to include a definition, even if the Bill does not define "postal", which is the nub of the matter.

The matter becomes difficult in relation to considerations arising out of the speech of the noble and learned Lord, Lord Brightman, at Second Reading. The noble and learned Lord complained about the definitions in Clauses 2 and 72. The Minister was kind enough to send me a copy of a letter that he wrote to the noble and learned Lord. It is undated, but is recent—I saw it this morning, therefore it may have arrived after I left at the end of last week.

In the letter, the Minister explains that,

"Part I of the Bill introduces some difficult and complex concepts relating to interception and telecommunications".

and says that,

"These are fundamental to the subject matter of Chapter I of Part I".

The Minister goes on to say that that is why it has been thought right to put them at the start.

Whatever it is, this definition is not a difficult and complex concept relating to interception. It is a much simpler definition than that. I should have thought that it could well have been left in Clause 72, where there is already a reference to it in any case.

"Postal service" and "postal item" are found in two different parts of the clause. I am sure that noble Lords will have read them. On reading "postal service" I thought that it was pretty clear what it meant. For the purposes of the record, I point out that the clause says, in subsection (1),

"'postal service' means any service which—

(a) consists in the following…the collection, sorting, conveyance, distribution and delivery (whether in the United Kingdom or elsewhere) of postal items".

Subsection (10) says:

"'postal item' means any letter, postcard or other such thing in writing as may be used by the sender for imparting information to the recipient, or any packet or parcel".

If noble Lords can find more than that defining "postal item" or "postal service", I should be most grateful if they would tell me.

As I understand their effect, Amendments Nos. 3 and 4 would dramatically extend the offence of unlawful interception by applying it to any goods at all, rather than communications, as intended by the Bill. As I have said on a number of occasions, the Bill is designed to update legislation, primarily the Interception of Communications Act, in the light of new technology and legal and market developments, not to extend the powers, which would I think be harmful to the Bill. That would be the effect of the amendments.

I think that the phrases "postal item" and "postal service" cover everything that we would wish to catch within the legislation, without extending the criminal offence unnecessarily. If the noble Lord has some examples of things he thinks we have missed, I should be most grateful for further elucidation of his point, but perhaps in view of what I have said he will feel able to withdraw the amendment.

I had missed the fact that "postal item", rather than being in the alphabetical list in subsection (1), is stuck away in subsection (10). For the purposes of this Bill we have a different definition from that current in another Bill going through the House—the Postal Services Bill. I should be grateful if the noble Lord the Minister would consider whether those two definitions might not with advantage be brought into coincidence.

I am grateful to the noble Lord for reminding me of that important point. I shall of course look at the two definitions and see whether they in any sense contradict each other in terms of effectiveness of the law. I am certain that they will not, but we shall make a further check on that.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Moved Amendment No. 5:

Page 3, leave out lines 23 to 33 and insert—

(""private telecommunication system" means any such parts of a telecommunication system which do not comprise a public telecommunication system;").

The noble Lord said: In moving the amendment, I should like to speak also to Amendments Nos. 9 and 11, which are grouped with it. The noble Earl, Lord Northesk, will speak to Amendment No. 14, which is in the same group.

I must declare an interest, to this extent: I might reasonably claim to be a highly experienced lawyer, but I am a remarkably inexperienced computer buff. Maybe that is an advantage, in that the world at large will have to grapple with this extraordinary legislation. While we all criticise it, and try to be constructive in our criticisms, I acknowledge as a lawyer that drafting this measure must have been one of the most complex and difficult jobs that the parliamentary draftsman has had to confront in many a long day.

The amendments to which I am speaking are both purposive and probing. After listening to me the Minister may say that they could be better dealt with in some other way, but the point revolves around the difference between Chapter I and Chapter II of Part I. The Committee will recognise that I am here referring to the fact that access to information under Chapter I can be gained only with a warrant and that access to communications data under Chapter II can be gained without warrant, on a self-authenticating authorisation procedure that obviously gives far less protection to the citizen.

The reason we propose these three amendments to the definition clause is that if the definitions are right a great deal of the nuts and bolts of the Bill that follow will be correct, although what the noble Lord, Lord Lucas, said reminded me of the point made on Second Reading about the unhappy fact that the definitions are spread around the Bill. Nevertheless, if we get the definitions right, the Bill is more likely to be right. If the definitions are inappropriate, everything else will collapse, particularly in a Bill of this nature, which is so complex and interlaced.

The points that we seek to rectify by the three amendments concern requests for information, or for what are sometimes called datagrams, which, as the Bill is drawn, will fall within Chapter II as being communications data and not within Chapter I, which covers the content. On the face of it a request for information using the huge search engines that are now a feature of this world would seem to concern what are classically communications data, rather than significant content. However, I am advised, and can readily understand, that in investigating all the requests for information from various web servers over a period of time, using one of the now commonplace analytical programmes that can draw salient points, salient trends and so on, out of a mass of detail, one has an extraordinary tool for obtaining a profile of those in respect of whom the searches are made that will build up to a highly sensitive intrusion into their lives. It will get at their life's concerns, contacts, political views, plans—all by building up patterns that emerge from analysing a thousand separate datagrams.

It should be made absolutely clear—and we believe that it is not—that that sort of inquiry, that sort of access, must be possible only by warrant, and not under Chapter II. I am told that the rate at which the technology is developing makes this point, which may seem arcane to some, one of immense importance, since most telephonic conversations will be carried by these means, by so-called datagrams, in the near future. We believe that changing the definitions in this clause, as would be done by Amendments Nos. 5, 9 and 11, would achieve our purpose.

Finally, we seek to establish that the end points of a transmission are not part of the telecommunication system—that is, that no interception warrant may require any interference with the origin or destination. I beg to move.

I have to advise the Committee that if Amendment No. 5 is agreed to, I cannot call Amendments Nos. 6 to 8 inclusive.

Amendment No. 14 is in this grouping. For the convenience of the Committee, and at the invitation of the noble Lord, Lord Phillips of Sudbury, I shall speak to it now.

I hope that the Minister will find it music to his ears if I tell him that it is very much a probing amendment. I am only too well aware that the phrase "general reception" in Clause 2(3) is intended to be very much wider than my substitute formulation of "reception by the general public". Nor, per se, do I quarrel with that. It merely strikes me that the phrase is woolly. It lacks clarity.

I am aware that the phrase has been used previously in drafting, I believe in recent legislation related to broadcasting. But its context in this Bill seems somewhat different. It is conceivable that messages transmitted to pagers within a closed network—let us say that of a political party—could be interpreted as falling within the terms of,

"any communication broadcast for general reception".

In the case of a properly registered and legitimately constituted political party it is difficult to imagine an occasion when interception of such communications could readily be justified, even on the grounds specified in Clause 21(2). That is all good and well.

Equally, it is possible to envisage instances—in particular in the context of organised crime—where such closed networks could be the preferred mode of communication even though they could be interpreted to fall within the ambit of "general reception". Either way it is important that the Government's intended parameters of the phrase should be more clear-cut.

While I do not believe that the Bill would be improved by a copious list of the communications and broadcasts that the Government have in mind, none the less I should be grateful if the Minister can put some flesh on what are, as they stand, very bare bones.

I am grateful to both noble Lords who have spoken and for the probing nature of the amendments.

Amendment No. 5 would include within the definition of a "private telecommunication system" all self-standing private systems in the United Kingdom, and all telecommunications systems abroad, whether public or private. I think that that is the correct understanding. The scope of the prohibition on interception would be widened to include all such systems. Amendments Nos. 6, 7 and 8 have this effect only for self-standing private systems. Under the Interception of Communications Act 1985, only the interception of communications in the course of their transmission by means of a public system is unlawful. The Bill extends this to make unlawful also interception on a private system attached to a public system: for example, an office or hotel network, or the telephones in a domestic household. This extension implements the requirements of Article 5 of the European Telecommunications Data Protection Directive. That is how we see it working. That is where it comes from. That is its root.

Our understanding is that Amendments Nos. 9 and 11 would change the definition of telecommunication system to exclude the origin and destination. The noble Lord made that clear in his explanation. But a primary purpose of this part of the Bill is to ensure that wherever along the path of a communication it is intercepted, the required level of authority, handling, safeguards and oversight remain the same. It would make no sense for interception of a telephone wire in the street to require a Secretary of State warrant, yet no warrant to be required if the interception was to occur at the telephone handset. Indeed, this was the deficiency identified by the European Court in the case of Halford v. UK which this Bill seeks to remedy. An important step is being taken with this legislation.

Amendment No. 14 seeks to clarify the meaning of the phrase "for general reception". Clause 2(3) is designed to ensure that listening to a publicly available communication—for example, a radio or television programme—is not treated as interception for the purposes of this Bill. It uses a phrase which is used and well understood in other legislation. The noble Lord acknowledged that point. For example, the Broadcasting Act 1996 uses it in its definition of a "digital programme service". In Section 1(4) it states that this means,

"a service consisting in the provision by any person of television programmes (together with any ancillary services, as defined by section 24(2)) with a view to their being broadcast in digital form for general reception".

In Section 1(7), we are told that "for general reception" means for general reception in, or in any area in, the United Kingdom. I hope that the noble Lord will be reassured that the phrase here has the same meaning. I trust that with those reassurances, the noble Lord will feel able to withdraw the amendment.

On Amendment No. 14, police and ambulance broadcasts were, and sometimes still are, able to be picked up on short-wave radio. People sometimes listened to them out of interest and sometimes because they were criminals wishing to ensure that the police were not headed in their direction. It became a relatively common practice. I am not sure whether that counts as "general reception". It is no fault of the person that he or she receives the broadcast. But is it an offence not to retune immediately one's radio should one come across such a broadcast? I am not sure whether that would be a new offence. It would be of interest to know the position.

From the Minister's remarks and the definition he cited from the Broadcasting Act 1996, my noble friend Lord Northesk has hit the nail on the head. "General reception" means anything that is intended to be received generally. In the case of television, that includes signals intended to be used only by people who have paid the fee to unscramble them, or the pay-per-view fee. "General reception" clearly includes signals broadcast generally which are intended to be used only by those who have paid the fee or fulfilled specific requirements.

Under the Bill, even if I were to intercept and make use of a signal for Sky Sports 1, I would not be committing an offence under this Bill. However, if that technology is to be legitimate under this provision—under the definition given by the Minister it is—then, as my noble friend Lord Northesk said, interception of a signal to a pager or to a mobile phone, both of which are broadcast for general reception but are intended to be decrypted by an individual or group of individuals, falls within the definition and falls outside the prohibitions in the Bill. Therefore tapping mobile phones and pagers is not covered. It is an area that the Minister should consider. His own definition compounds the difficulties that my noble friend Lord Northesk outlined.

Perhaps the Minister will undertake to give the matter firm consideration. We seem to have unearthed a problem that we have not encountered previously.

I think that we have. We can debate this issue further under Clauses 20 to 24.

Perhaps I may clarify the point on pagers. It is clear that to intercept pagers would need a warrant. The noble Lord seemed to think that one would not be needed; we take the view that it would.

We do not agree that communications for reception by a closed network come within the provisions for general reception. We are clear that the term "general" means available to all. However, it specifically excludes those on a closed network. Noble Lords will need to understand that precise point.

The noble Earl, Lord Northesk, makes a useful contribution. We can have further debate on the issue on Clauses 20 to 24. On reflection, perhaps he will be satisfied with the definition as we have sought to explain it.