Grand Committee
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Energy Bill
Lord Jenkin of Roding
“( ) for payments under capacity agreements to be commenced by the settlement body within six months after the national system operator has run a capacity auction;”
Lord Jenkin of Roding
My Lords, one of the themes running through our debates on the Bill has been the need to ensure that the UK has sufficient generating capacity to meet likely demands and to avoid power cuts. It is what is meant by security of supply. This concern has been sharpened by last month’s worrying 2013 report from Ofgem on electricity capacity and the forecast of margins falling perhaps even by the middle of this decade to dangerously low levels. The central purpose of this Bill, through EMR, which is at its heart, is to address this issue, and the capacity market is one of its principal instruments.
I must say at the outset that in the circumstances in which the nation finds itself Ministers have been quite right to identify this as a solution to the capacity problem—or at any rate to try to find a solution. They were right, too, to bring forward the first auction for the capacity market to 2014. But to retain 2018-19 as the earliest date for any payment under the capacity market is a serious mistake. What matters to potential investors is not the date of the auction, but the date on which they can be sure of the first payment if they are successful in the auction.
What I suspect lies behind this four-year gap between the auction and the payment is an idée fixe—an idea somehow firmly held within the corridors of DECC that what it is addressing is really confined to building new plant, for instance to commissioning new generating plant such as a combined cycle gas-fired plant. Yet what we are faced with now is that the problem is on us sooner than anyone had anticipated. The Ofgem report has aroused a great deal of concern, which is not unjustified. The National Grid, supported as one might expect by Ofgem, has reacted by suggesting what I can only describe as a couple of temporary expedients, aiming to tide the system over until the EMR really begins to bite towards the end of the decade. My impression from the welcome briefings we have had, not least that of yesterday, is that these temporary expedients are what DECC is really basing its hopes on: that we shall not in fact have any power cuts. What is strange is that these temporary expedients had previously been rejected by DECC because of their potential adverse impact.
Ofgem’s electricity capacity assessment concludes that risks to security of supply are likely as early as 2014-15, driven by further reductions in electricity supplies from the withdrawal of installed generation capacity. The report also highlights that future policy and price uncertainty are continuing to limit investment in thermal generation. The assessment bolsters the case for bringing forward a mechanism to deal with the underlying issues contributing to generation inadequacy, which some commentators have described as the “missing money” as in a world of high renewables, thermal plant will run less and less often at suppressed prices. There is also the uncertain economic viability of conventional generation going forward.
Yet against that background, the grid launched what it called an informal consultation last month on two new temporary expedients. I think I need read only the title:
“Demand Side Balancing Reserve and Supplemental Balancing Reserve: Informal Consultation on the Development and Procurement of two new Balancing Services”.
What is needed is new capacity, not temporary sticking plaster. If the required plant is not in the system, it simply is not available for balancing anything. However, it is actually worse than that. The consultation document acknowledges in paragraph 32 on page 9—I have it here if necessary—that,
“security of supply is a function of the market which is underpinned by the energy policies under which the industry operates”.
It also says that it is not National Grid’s role,
“to ensure there is sufficient generation capacity available to meet demand”.
Yet the proposals aim to ask National Grid to do precisely this, by procuring capacity through the supplemental balancing reserve and demand-side balancing reserve.
The SBR is essentially a form of strategic reserve with last-resort despatch. As I intimated earlier, the strategic reserve was rejected by DECC, while acknowledging that such a mechanism does not address the missing money in the energy market but could even make the problem worse, in that investors might fear that the strategic reserve will be deployed before it is envisaged it would be—that is, when other capacity is available, albeit at very high prices. This would dampen the investment signal for players outside the strategic reserve, leading to what one might describe as a slippery-slope effect whereby no new investment is viable without an SBR contract. More and more capacity would then have to be procured within the strategic reserve. The result is that it simply displaces the ever-dwindling part of the market, with no intervention. What is needed is to bring forward not only the auction date under the capacity market but the date on which payments under the capacity market will be received. That is the purpose of my amendment.
At Second Reading, noble Lords may well remember that I drew attention to the substantial amount of mothballed plant held by some of the larger generators. They were mothballed because it is simply not economic to run them at current prices and in the light of uncertain futures. Some of this capacity could well be brought into production over the next six to 18 months, provided—this is what has to be hoisted on board—that capacity market payments can be made as soon as the plant is available and commissioned. That would happen if this amendment were to be accepted; both Ofgem and the grid recognise that the immediate problem is about capacity, not balancing. If my noble friend is unable to accept the amendment as it stands, perhaps she would agree to reflect on the situation I have described over the recess and consult further with those who are trying to help the Government to avoid the risk of serious interruptions of supply. The mechanism would be there but the implementation dates need to recognise the growing immediacy of the problem we face.
I make just one final point. This is not primarily about improving access to the market—other amendments will address that—but about reducing the risk of blackouts. I repeat what I have said previously; if the country faces interruptions in electricity supply, it is Ministers and the Government who will be held responsible. I, like everyone else, wish to avoid that. I beg to move.
Baroness Worthington
My Lords, I am extremely grateful to the noble Lord, Lord Jenkin of Roding, for tabling his amendment. We discussed the capacity mechanism in the previous session, when our focus was on the interplay between existing generation, more supply coming on and the demand side of the capacity mechanism. This amendment gets to the heart of how the capacity mechanism is proposed to work. One of my major concerns about the Bill relates to this mechanism because it is quite a dramatic intervention into the market, yet we still have very little in the way of detail as to how it is proposed to operate. I urge the Minister to give us some reassurances that we will see the draft statutory instruments pertaining to this part of the Bill as early as possible. It is one of the most unworked-through parts of the Bill and it is only when the SIs are drafted that we will be able to answer some of these important questions raised by the noble Lord, Lord Jenkin of Roding. Can we therefore have some reassurances about the timetable for publishing the draft SIs for this part of the Bill?
Lord O'Neill of Clackmannan
My Lords, I am at a wee bit of a loss here. My understanding was that markets operate on the basis that if there is a shortage and there is a demand, the price rises, and that plant which is presently idle will be brought into play.
The noble Lord, Lord Jenkin, made no reference to those plants which are either under construction or for which planning permission has been granted, and which may well be up and available, if not running, in the period between 2014 and 2018-19. I think that he is taking the long overdue siren noises from Ofgem of June a bit too seriously. Most people just said, “It’s typical of Ofgem”. It has taken so much longer to wake up to the fact that all this capacity is going out because of European directives and the like that there is going to be a problem. So his new-found urgency here I find somewhat unconvincing, because of his dependence on Ofgem's latest edict. I am not sure whether we need to wait four years, but I do not think that six months is necessary. It would be helpful if the Minister could give us some idea; it would be nice if we could get what was going to be in the SIs in the autumn, but not necessarily that. Perhaps she could give us some idea of the estimates and what the nuancing is of the information. As far as I can see, there is idle plant which, if the price was to rise, would become attractive to operate. Furthermore, there are a number of schemes which are either in the course of construction or would be accelerated once the process started. You do not build a power station in six months; you build it in about three and a half years. I suspect that that is the reason for the four-year timeline. So I am not sure that we need the amendment at all, but it would be helpful if the Minister could give us a clearer idea of the forecasts from DECC and others on the availability of plant, which would allay some of the anxieties.
Lord Jenkin of Roding
I remind the noble Lord of some of the figures that I gave at Second Reading. I have been provided by some figures by one of the companies that have mothballed plant; its national estimate is that there would be mothball capacity that could be brought back into production within three to six months of 2.6 gigawatts; between six to 12 months, a further 1.4 gigawatts; and 12 to 18 months, 2.6 gigawatts. That is not in the least bit inconsequential; these are important figures. If nobody is going to get any payment until 2018-19, that is how they will stay—mothballed—because they will not see what their payment is going to be.
Lord O'Neill of Clackmannan
If this plant were to become necessary, the price would rise—but the “if” involved in the “were” of this plant becoming necessary is still open to doubt. The noble Lord has taken the worst possible scenario and tried to build the case on it for something that will be extremely attractive and very convenient for the companies that have been lobbying him. It might suit their purposes but it might not suit everybody else’s—and it may not even be necessary in the first place. That is why I have doubts about this sort of stuff, which is almost built on the back of Daily Express scaremongering. We know that there is going to be a terrible winter next year, as there is going to be every year—and, we are told, there are going to be blackouts. Well, we have had terrible winters and, so far, we have not had any blackouts. It is getting worse because the generating capacity is diminishing, but it is not yet diminishing at the rate that would necessarily require us to do what the noble Lord asks us to do.
Viscount Ridley
I had not intended to intervene on this point, but I would like to make a similar point to the noble Lord, Lord O’Neill, although coming at it from a rather different direction. I agree with him that what we will see in terms of the capacity squeeze are price spikes, and, therefore, capacity coming back into use. In that context, it is very well worth noting that, at the cost end of the spectrum for the generators, there is an increasing view among markets—not a consensus, which would be the wrong word—that gas prices are likely to fall over the next few years. I do not know whether anybody saw the FT blog from Nick Butler yesterday, but he made the point that for four reasons gas prices are likely to fall. Not one of those reasons included shale gas; he was saying that, even outside the effect of shale gas, we are likely to see huge new resources coming on stream in the Mediterranean and East Africa and offshore in the Americas, that the LNG market will produce a much more globalised market in gas and that the Japanese uptick in gas demand following the closure of the Fukushima nuclear plant is coming to an end. Combine that with falling demand in India and China, and it is quite possible that we will see falling gas prices. It is quite possible that, as the noble Lord, Lord O’Neill, said, we will be able to see this mothballed plant come back into operation because of rising prices for electricity and falling prices for gas without having to, as it were, bribe them. It is important that we are not in the business of making life easy for producers but in that of making life as easy as possible for consumers of energy.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I thank all noble Lords for this short debate, and I thank my noble friend Lord Jenkin for his amendment. Amendment 53BA proposes that payments under capacity agreements should be commenced by the settlement body within six months after the national system operator has run a capacity auction. The Government have confirmed their intention of running the first capacity market for delivery of capacity in 2018-19, subject to state aid approval. Capacity auctions will take place four years and one year ahead of the delivery year. For example, for the delivery year 2018-19, capacity auctions will be held in 2014 and 2017. Successful bidders at auction will be awarded capacity agreements which provide a steady payment for capacity in return for a commitment to deliver electricity when required in a delivery year or face a penalty.
Payment under capacity agreements will not occur until the delivery year. This is because we believe that payment should not occur until the plant is providing capacity. We do not want consumers to pay in advance for a service that they have not yet received. In addition, providing payment in the delivery year means that plant performance can be tested and, if necessary, penalties can be applied if performance is not as promised. If payments were made ahead of the delivery year, that would be impossible and might provide an incentive to game the system. Our position is therefore that capacity providers should be rewarded for delivery in a delivery year only, rather than in advance.
My noble friend questioned whether the capacity market’s first delivery year could be brought forward, and I suspect that that is likely to be the aim behind his amendment—in fact, he made it clear that it is. However, we have chosen a four-year gap for a good reason. If we do not have such a gap—for example, if we run a capacity audience in 2014 for delivery in 2015-16—new plant would not be able to participate, given the time required to build the plant, which was the point made by the noble Lord, Lord O’Neill. This would mean we would risk an uncompetitive auction with only existing plant competing in what could be a tight market. We believe that this would lead to a potentially inefficient auction and would risk consumers’ value for money, a point raised by my noble friend Lord Ridley.
We are not complacent about the security of supply. We recognise that Ofgem’s 2013 capacity assessment suggested that there may be a capacity problem in the middle of the decade. That is why we support National Grid and Ofgem’s current consultation on the need for and the design of a new balancing service for this period. If needed, this would keep existing plant on the system or get it back on if it had been mothballed for the period before the capacity market was in operation. This would be limited intervention and would mean that we do not have to run a full capacity auction with only existing plant competing. As such, the proposed measures offer a cost-effective means to ensure security of supply in the middle of the decade before the capacity market starts to deliver capacity in 2018-19.
I hope that I have reassured my noble friend that the measures we are taking are short-term interventions and, on that basis, I hope he will withdraw his amendment.
The Earl of Caithness
Should the situation be even more dire than my noble friend Lord Jenkin suggested, presumably there is nothing to stop the Government running a capacity auction just for the existing plant as a short-term measure. I know the Minister said she does not like it, but should the situation be very bad, or be forecast to become very bad, and the proposals for Ofgem and National Grid are not going to meet the requirement, surely it is perfectly possible to run a capacity auction in which existing plant holders could take part.
Baroness Verma
My Lords, I referred to that in my speaking notes. We are keen not to cause an imbalance in competition between new and existing plant. The proposal of my noble friend Lord Jenkin—and yourself—is that that is what would happen. It would generate an uneven competition.
Baroness Verma
My Lords, I will try to get the passion back into my voice. I was responding to my noble friend Lord Jenkin. If I can just give him a word of comfort: the current Ofgem and National Grid consultation will most likely focus on ensuring that some plant is held in reserve. I know that my noble friend is concerned that there will not be enough capacity in reserve. This is a short-term intervention to bring back already mothballed plant. The capacity market is a medium-term intervention that we hope will incentivise investment. We want to ensure that the market itself stands on its own in the coming years. We are trying to assist enough capacity on the grid.
I forgot to respond to the noble Lord, Lord O’Neill, and the noble Baroness, Lady Worthington, about the consultation on the SIs. We intend to consult from October on the detailed implementation of EMR. This will give noble Lords an opportunity to scrutinise the detail of the EMR ahead of Report. Further detail of our plans for secondary legislation can be found in the memorandum that we recently sent to the Delegated Powers and Regulatory Reform Committee. I hope that having given my noble friend that extra response, he now feels that he can withdraw his amendment.
Lord Jenkin of Roding
My Lords, I began my speech a few minutes ago by saying that I found the Minister’s response very disappointing, and I do not think that anything she has added since then alters my reaction. I am grateful to all those who took part in the debate, and particularly the points made by the noble Baroness, Lady Worthington, that it is very difficult to know how this will work until we have details of the statutory instrument that will implement it. I entirely endorse her demand that this must be available before Report so that we can make sense of it. She also agreed that we may be seeing more mothballed plants by 2020. That is an estimate that I am not in a position to either endorse or deny. She is also absolutely right that we have to get the demand side response appropriate, and I know that the Government are working on that.
The Minister said something with which I entirely agree: there must be no payments in advance. We cannot ask customers to pay for something before it actually happens. I never suggested that. If she looks at Hansard eventually she will see that I indicated, “provided the market payments can be made as soon as plant is available and commissioned”. That disposes of that argument entirely. I am not for a moment asking that payments should be made in advance. That is not how the system is supposed to work as I understand it. My noble friend also seemed to imply that we could not have different auctions for different years. For the life of me I cannot understand why it should not be possible to have an auction for people who would be able to bring back mothballed plant within, say, 18 months. If that were the conditions of the auction, the firms that have mothballed plant and could bring it back within 18 months would be able to bid for it. That does not mean that there would not be another auction, even perhaps operating in parallel. There will not be many takers in the early years. We were told the other day that contracts for CFD might be over a period—was it 60? That is the sort of numbers we are talking about. It should be perfectly possible to have different auctions for different periods with the payments made appropriate to the date of the auction. This needs to be examined more carefully and we should not just accept my noble friend’s assertion that it would simply muddle up the whole auction process. I do not believe that for a moment. We can be a great deal more subtle than that.
Baroness Verma
My Lords, let me assure my noble friend that mothballed plant will be able to participate in the capacity auction.
Lord Jenkin of Roding
Yes, but it will not be able to get any money until 2018-19. That is the point of this amendment. If they can bring the plant back and have capacity available for meeting the demand and operating under the SBR before that, and it is available and commissioned, why should they not get their money? Why do they have to wait another two years?
Baroness Verma
My Lords, let me again assure my noble friend that those who are successful in the capacity auction held four years out will receive a capacity agreement which guarantees them a steady payment in the delivery year.
Lord Jenkin of Roding
That is completely new. Does the Minister mean in advance of 2018-19? No, she is being advised from behind her. She may not have got that quite right.
I think that there is sufficient confusion on this that we must wait until we have the full details of how the scheme is going to work. That will require our having the details of the statutory instrument that implements it. I reserve my right to return to this matter.
Lord Deben
Can I underline what my noble friend has just said? It is extremely difficult to discuss these issues without having the details, and all the details have come very late. I have to say that it is extremely hard for us who may instinctively wish to support the Government if we do not have the information. This is another example of that. Either we have the information and can have a Committee stage or we do not have the information and have to spend our whole time making it difficult for the Minister, who herself does not have the information because she does not know—and it is not her fault—what will be in the statutory instrument. I therefore ask the Minister to go back and make sure that we can feel we are in charge of the facts, so that we can have a proper discussion.
Baroness Verma
No, my Lords. I have pointed out that we intend to consult from October on the detail of implementation. I have also referred to the secondary legislation. Further detail of our plans for secondary legislation is in the memorandum to which I think noble Lords have access.
Lord Jenkin of Roding
What my noble friend Lord Deben has said merely reinforces the condition that we will have every right to return to this matter on Report, because we are having to debate it in Committee with less than half the necessary information. I still think that there is a perfectly valid way through this, which is to have different auctions for different periods between the auction and the payment. For the life of me, I cannot understand why that could not happen. But it needs to be examined: there may be absolutely indisputable objections to it; at the moment, they have not been pointed out to me. However, I think that we have said enough and I beg leave to withdraw the amendment.
Baroness Worthington
“( ) Electricity capacity regulations must make provision for capacity auctions to be conducted so as to prioritise the lowest carbon providers.”
Baroness Worthington
My Lords, this is very much a probing amendment, designed to enable us to discuss again the detail of how the proposed capacity mechanism might work. One of the biggest problems with the mechanism is that, on the one hand, it purports to be technologically neutral by somehow treating all capacity as if it were equivalent; yet, on the other, interventions are proposed that go against that principle—the debate that we have just had is an example of that. Deciding to host the first auction in 2018-19 is not a technologically neutral decision; it is a decision designed to enable CCGTs to compete—so, already, we have a conflicting message coming from government.
Another aspect of that lack of technological neutrality is the proposed differing lengths of contracts. Again, this is explicitly stated as a way of trying to rig the market in favour of a certain outcome. In this case, it is offering potentially 10-year contracts to CCGTs and is designed as a kind of carrot to get those plants built. Similarly, three-year contracts might be made available for plant which is seeking significant refurbishment—again, another intervention to try to achieve a certain outcome. Unfortunately, the proposals will not work. The confusion between a desire to be technologically neutral and these interventions is creating a great deal of uncertainty.
My concern is that insufficient attention has been paid in the department to what I would call scenario planning in relation to the current two big market drivers, the cost of coal relative to the cost of gas. Here, while I do not fully agree with the noble Viscount, Lord Ridley, on everything, there is a real issue about the relative future prices of fuel. They are an essential component regarding whether this capacity mechanism will be needed. At the moment, gas prices are very high and gas plant is losing money, hence it being mothballed. That is neither environmentally desirable, nor is it desirable for security of supply. I can therefore see why the Government have come to the conclusion that a capacity intervention is needed. However, my concern is that the way that this is being done will not achieve the desired outcome.
The reasons for that are multiple. One is that we are in a situation of oversupply. Even though we have lost 7 gigawatts of old coal capacity, we were at historically high levels before those closures. We are still in a situation where the wholesale price is not sending a signal to either keep more expensive plant in the system or build new plant. That signal is further diluted by the fact that we are about to intervene in the market to create contracts for difference for significant volumes of new capacity. The net effect is that if you are sitting there with a consented gas plant and deciding on whether to invest hundreds of millions of pounds in it, there are significant, real-world hurdles before you would say yes to that project. The way that the department is approaching the capacity mechanism is not going to address that real-world problem.
My concern relates to the fact that existing plant in a capacity auction that is pretending to be technologically neutral, if we have an oversupplied market, will always squeeze out new capacity because the existing capacity is already on the bars and has none of the costs and risks associated with new capacity. The legacy plant will be bidding in the intervening period. While that legacy plant might be useful for keeping the lights on, it creates an environmental problem. The technology-neutral approach that the Government have chosen, although they are not consistent in that, poses a problem. Coal plant is making an enormous amount of money, far greater than the returns being made by gas plant. These coal plants are capable of running for many, many decades and are at a point when they are considering whether to continue operating under tighter air-quality restrictions. These plants have the capability of operating for many years to come and at high load factors if they decide to fit new filters, new scrubbers, to make themselves compliant with the requirements of the integrated emissions directive, the IED.
I am concerned that this capacity mechanism is not going to work because, in trying to bring on CCGT and reach that Nirvana of new investment, you are necessarily going to be paying a high price for capacity. That will provide a windfall to existing coal operators, which, if it were not for the carbon floor price, would certainly want to run for decades to come. The carbon floor price is the only thing holding them back because it is that which lowers their position in the merit order.
The capacity mechanism—you will not find this in any of the literature, advice or information that has been provided—could provide in the region of between £50 million and £75 million per year, per plant as an up-front payment. If a plant that is considering a life extension can win a three-year contract, it will then receive between £150 million and £240 million in guaranteed payments. I posit the problem—and I would like the Minister to respond to this—that that might be enough to nudge them in favour of investing in those air quality filters and would be sufficient to give them comfort that they should upgrade the plant and continue to operate. No one can predict the future, but the sums of money involved in the capacity mechanism are such that it could well be a material influence on decisions about what to do with those coal plants.
My fear is that the Government have no back-up plan for if that happens. Previously in Committee, we have discussed measures that could apply—an emissions limit for carbon for coal plants seeking life extensions—and they have been rejected. We have also tabled suggestions that suppliers ought to have a decarbonisation obligation. They have been rejected. It is almost as if the Government are not really committed to decarbonisation. I am sure they are, but if you look at the Bill at the moment, it is very possible that this will see a large number of coal plants opting in to the ID, refurbishing and staying on the system well into the 2020s. That is not compatible with a strategy for building CCGT because it will simply squeeze out the capacity that is expected to be brought on.
Combined with that, we have a demand profile that is flat, or falling, and the peak is falling, so not only are the demand profile and the whole not rising, but the peak is softening as demand is shifting. If we had a rising demand profile, one might be able to argue that that is where CCGTs will bid in. We would still have all the old coal, we could bring back the mothballed gas and there would still be room for CCGTs, but with a flat or declining demand profile, there is simply not the room. What scenario planning have the Government done for a situation where a larger number of plants than expected opts into the ID, fits filters and stays on the bars? What impact will that have on our emissions profile, our carbon intensity and the cost efficiency of the whole EMR package?
The EMR is meant to be about trying to transition to a low-carbon economy. We should be seeking to do that in the most cost-efficient way. It is evident that the most cost-efficient way is to switch from high-emissions coal to low-emissions gas. That is what we did in the 1990s and it delivered all our targets to date. We can obsess about tiny micromanagement of renewables and try to get nuclear on the bars, but if we get the coal to gas ratio wrong, we will be running to stand still. We will not see emissions or carbon intensity coming down. In the interests of consumers and the environment and security of supply, we have to get the capacity mechanism right. At the moment, I am very worried that it is not.
I have one or two specific questions. I have been trying to dig down to where the Government’s optimism about the closure of coal comes from. It is obviously partly because they have great faith in the carbon floor price. I do not share that faith. It is a highly political policy with only two years of forward planning. For me, it is not a politically bankable policy. There is also some analysis underpinning this. There is a reference to research done by Redpoint. I can give the reference. It is mentioned on page 30 of National Grid EMR Analytical Report. I would like to see that analysis. It seems to be the crux of the Government’s assumptions about the impacts of ID. We should see that because it is so crucial.
I could go on and talk about the falling costs of the air scrubbing equipment and the fact that there are flexible options now arriving in the market which mean that you can fit a low-cost version of SCR and still comply. There are lots of ways of trading once you are in TNP that give you flexibility, but I do not want to bore the Committee with the detail. The main point I am trying to make is that there is a great possibility that the Government’s modelling does not match what is happening in the real world.
I would like to see far greater emphasis on scenario planning that looks at the relative impact of coal. I am supported in this; the EMR panel of technical experts, in its final report for DECC, said:
“It might be helpful if DECC considered best practice from the private sector by adopting a light-touch Scenario Planning methodology. In this, the models play an important but more limited role compared with exogenous guidance. We believe that this could lead to greater realism and enhance plausibility. Most importantly, we believe this or a similar methodology could promote deeper discussion and broader consensus on the key market drivers”.
It went on to relate a whole series of advantages that would come from this light-touch scenario planning, as opposed to the pure quantitative modelling approach, which I am fearful underpins some of the Government’s assertions and plans.
Lord Deben
My Lords, this is an occasion when the Committee in the House of Lords is particularly valuable to the Government, because this is the moment when, perhaps, unexpected things in legislation can be found. There was a time when that used to happen in the House of Commons; it does not happen any longer, because of the way in which it has changed its mechanisms for dealing with these things—I think rather shamefully. So it is in our hands.
My noble friend will probably be pleased that we have debated this subject, because it is something that causes very considerable concern outside. If the mathematics stacked up, we might find ourselves supporting the very thing that we do not want to support. No one is suggesting for one moment that the Government intend that, but the consideration of the Bill leads one to discover those things. I remember sitting in the Minister’s position in the House of Commons, on a number of Bills, when one was very grateful for a discussion because issues were raised which made you think again about how you were going to do things, simply because one had not thought about that particular outcome. Although no doubt she will have some answers to this, I think that there is a real issue here that might be solved in a whole range of ways, which is why the noble Baroness is moving this probing amendment.
I do not think that many would call me a Thatcherite, but the idea that we were spending money to keep in operation entirely outdated systems would rather run against the grain of what I understand to be the view of the present Conservative-led coalition. I do not think that anybody in the coalition, whether from the right or the left, can possibly think that it is a good idea to continue with a mechanism that is manifestly unacceptable. I am sure that the Minister does not intend to do that.
I hope that the Minister will accept that there is sufficient doubt about how this might work out to make it important between now and Report to see whether there is a mechanism powerful enough at least to assuage those doubts. That is all the Committee can reasonably ask at this moment, but it is certainly something that we ought to ask and ask very strongly. If we cannot end up with that we may have to do find something ourselves at Report, but it would be very much better if the Government could reassure us and, if not, find something that will reassure us.
Baroness Worthington
I thank the noble Lord for his intervention. I want to clarify that I am not in any way saying that we should keep coal out of the capacity mechanism. I am stressing that we need to think very carefully about the design of the capacity mechanism so that it does not produce unintended consequences. I am also suggesting, as I have done in previous discussions, that there should be a back-stop measure to prevent the base-loading of coal should all the extra scenarios line up to make that the thing that they economically choose to do.
This is not about saying no to the capacity mechanism or to coal within that and I would not want to see coal closing unnecessarily. I want to see its role constrained to providing peaking and backup power rather than base-loading as it is today because it is so profitable.
The Earl of Caithness
My Lords, I could not help but smile when I heard my noble friend Lord Deben start his peroration to us because my mind went back to the 1980s when House of Lords Committees were doing exactly the same as they are doing today in a very effective way. My noble friend happened to be a joint Minister with me on a couple of Bills. He did not like what we did then I seem to recall. I am very glad now that he thinks we were right all along and doing a very good job in the 1980s as well as in 2013.
Turning to the amendment, I was interested by what the noble Baroness said because that was not how I read her amendment at all. She said, particularly when she intervened just now, that she did not want to drive coal out. But the effect of her amendment would be to drive coal and gas out and rely solely on renewables. The way that she phrased things at the end was much more balanced. She is a great crusader for renewable energy, but having read her amendment, I thought, “Well that’s great: the nuclear industry has the best advantage now. We can build a whole lot of nuclear plants because they have no carbon and that would be extremely good”.
I have always supported the nuclear industry. It is a pity that the previous Government did not support it more fully. We might not now be in the potential difficulties that we face, which my noble friend Lord Jenkin outlined in his amendment. Given what the noble Baroness said later in her intervention, I look forward to what the Minister has to say.
Lord Berkeley
My Lords, I support my noble friend. The amendment only says “prioritise”: it does not say only lowest-carbon providers should be involved. She has a very good point. The amendment, as other noble Lords said, is not the answer, but it does enable us to have a debate. Since most of the low-carbon providers are probably the independents, which are not part of the big six, this rather confirms the argument that I put in an earlier debate on Amendment 55, I think, that it would be fairer if there was a separation. There is a wonderful potential for the big six to keep many of the low-carbon providers out that they do not own. I look forward to hearing a little more from the Minister about how this can be resolved.
Baroness Verma
My Lords, I am extremely grateful to my noble friend for bringing some sanity to this debate. I begin by saying to the noble Baroness that whenever we talk about high carbon and low carbon we must also consider the costs to the consumer.
We are, through the Bill, ensuring the decarbonisation to which I know the noble Baroness is firmly committed. At the same time, it cannot be at any cost. Time and again I have stood at this Dispatch Box and said that it is really important that the measures we take do not have a profound effect on consumers’ bills. Currently, we are already seeing that there is a movement of will against the green agenda simply because people believe that the green agenda is putting extra on their bills. We are very careful in government to ensure that the measures we are taking decarbonise the energy sector at the same time as ensuring that energy is secure and that consumers do not pay heavily for the cost of our policies.
I know that the noble Baroness is passionate about this. She asked a number of questions and I will try to refer back to them. Yesterday we had a meeting. I have some notes that I hope have been distributed to the Lords’ informal scrutiny committee referring to the analyses that the noble Baroness asked about. If she does not have them, they will be made available. They give a broad outline of the analyses that we are using. But I remind the noble Baroness that it was the Conservative Party in opposition that in 2008 asked for the emissions performance standard. It was this party that was pressing ahead to ensure that we brought in decarbonisation and it was the noble Baroness’s party that opposed every action we took at that time. It is a little difficult for us to take the passion of opportunism that is now being demonstrated.
This is about working together to make sure that we not only see a decarbonised energy sector, but we make sure that consumers are not penalised heavily. The noble Baroness’s amendment seeks low-carbon technologies to be given preferential treatment in capacity market auctions. We consider that the capacity market is not the right means to deliver that objective. Decarbonisation is best achieved through other provisions that we have put within the Bill, including the introduction of contracts for difference and emissions performance standard as well as other policy interventions such as the carbon price floor and international carbon signals such as the EU Emissions Trading Scheme.
These measures are designed specifically to ensure that the economics of low-carbon generation are transformed in comparison to traditional thermal plant. The cumulative impact of these policies is such that we expect only 3% of our electricity generation to be provided by unabated coal in 2025 and none by 2030. Therefore, it is these policies that will drive the decarbonisation of the electricity sector that I know the noble Baroness wants to see, as do we all.
The capacity market, on the other hand, has been designed to ensure security of electricity supply at least cost to consumers. Again, I know that that is what the noble Baroness wants to see as an outcome. It does this by providing all forms of capacity with the right incentives to be on the system to deliver electricity when needed.
The capacity market is designed to be technology neutral and all types of capacity will be able to bid for capacity contracts, apart from those technologies already receiving support from other mechanisms. This means that no type of technology will be given preference in capacity auctions and all eligible capacity will be compared on the basis of cost.
The philosophy is one of humility and to use the power of markets. Sadly, neither I nor anyone in my department is blessed with perfect foresight. We do not know which technologies will be cheapest, what fossil fuel prices will be in the future, or what myriad other factors will determine the optimum path to decarbonisation. That is why we have designed a framework that aims to capture the power of the markets to achieve things at least cost. Prioritising the lowest-carbon generators in the capacity market would force the market to build capacity and commit capital when extending the life of an existing plant might be a better bet—both economically through lower costs to consumers and environmentally. A few years of a coal plant cleaned up to meet the emissions limits in the IED, but operating at low-load factors, while demand-side action, interconnection and CCS develop and more low-carbon capacity comes on, could be a more competitive outcome than committing capital to new gas plants.
Lord Deben
Before my noble friend sits down, I return to the question that I asked. This is not my amendment, and it is not one with which I agree. I did say that, as there is so much concern, it would be helpful to try to allay that concern. I wonder whether my noble friend feels that over the summer I could take her up on what she has just said so that we can allay the concern, which is widespread. People who are not known for being extreme, on either side, have suggested that this may work in a way that is inimical, so perhaps she would be willing to look at that and see what needs to be done to ensure that people are not unnecessarily concerned and do not unnecessarily attack a Bill that we all want to get through.
Baroness Verma
My Lords, as I said in my speaking notes, I and my officials will be happy to meet noble Lords. The invitation, of course, goes out to all noble Lords who are here today. I will make sure that that is extended to the Lords informal scrutiny committee.
Baroness Worthington
My Lords, I am very disappointed. If the noble Baroness cares to read Hansard, she will find that far from being an insane debate it is the Government’s position that risks looking insane. As you read over your own notes you will see the inconsistencies. You are saying that it is the least-cost way to get to our targets, which is what we all want to achieve. Yet, you are rigging the market in favour of new-build CCGTs, which by your own admission are not as effective as keeping on existing plant. That is the inconsistency and where the confusion comes from. There is lack of clarity from the Government and that is why the rest of the market has no idea what to do. Everyone who owns a coal plant is sitting, waiting to see whether this mess will ever be cleared up. You continue to operate in this way by refusing to acknowledge genuine concerns. This is not my personal agenda; I am merely reflecting back what I am being told by industry.
Baroness Verma
I am very aware that the noble Baroness is very passionate about this. I am also very aware that industry—I speak to industry regularly, like the noble Baroness—says that the means by which we are travelling through this Bill is absolutely right.
Baroness Worthington
Clearly, we speak to different people. Can you please answer me on whether we can see the Redpoint analysis on the impact of the IED on capacity? What I have found very frustrating throughout this process is that we have perfectly rational, interesting and varied debates in which people put forward their point, but they are then completely ignored by the Minister in response because she simply reads her notes. She is not even listening to me now. That is a reflection of the fact—
Baroness Verma
My Lords, I am listening very carefully. I am able to listen and also try to get some responses to the points the noble Baroness is raising.
Baroness Worthington
It would be helpful if they could come from you, would it not? But there we are. I am sorry this has become so annoying because you started this by making party-political points and by starting off by calling the previous debate, which was a perfectly rational debate, “insane”. I am afraid you have created a very poor feeling in an otherwise good debate.
Baroness Verma
My Lords, I think the noble Baroness has completely misunderstood the point I was trying to make. If she reads Hansard tomorrow, she will understand that the points I was trying to make were that we are all on the same sheet on this. What we are trying to deliver in the Bill is decarbonisation through a means that we think is right, and that must be at the least cost to the consumer. I am sure the noble Baroness would agree with that.
Baroness Worthington
I apologise for my lack of respect in referring to the noble Baroness, but, as you can see, this has got off to a very bad start. I hoped this would not happen because there is a very serious issue here to do with the degree of scenario planning that the Government have undertaken and the degree of rigour that they have applied to their analysis. I am very sorry that now we have lost sight of that very important point by what has just happened. I regret that deeply. I reiterate that this is a huge intervention into the market, and if you get it wrong, all sorts of unintended consequences will happen. It is simply not good enough to say that our models tell us that it will all be fine. We need to go out and talk to people in the real world, as I have done, and see what they are projecting for coal under the scenarios that we have in today’s market, the flexibilities that enable them going forward and building in the significant amount of money that is being redistributed to them through this mechanism. That is what I am seeking to explore. I have been very disappointed that there is not even an acknowledgement that this is an issue. I heard the noble Baroness’s offer of working on the detail of this over the summer; I will take it in good faith and hope that we can work through the detail.
In conclusion, it is quite wrong of the Government to pray in aid least cost to consumers. This Government introduced the carbon floor price, which has disadvantaged the UK relative to the rest of Europe for virtually no perceived outcome at the moment. We are already paying the carbon floor price. It is already impacting on our businesses and consumers. This is a Treasury money-raising exercise. If you are the party interested in keeping costs low for consumers, that is the policy you should be looking at, not the very sensible suggestion of trying to ensure that the capacity mechanism does not have unintended consequences in terms of carbon. It is absolutely clear that the quickest and cheapest way to decarbonise the economy is to switch out of coal and into gas. You can shake your head if you want to, but you need to go back to history and look at what has happened. You can build as many renewables as you like, but if you get coal and gas wrong, you will not get to those low-carbon intensities. That is the issue I am trying to get to, and for you to use least cost and cost to consumers as excuses for doing that is really deplorable when you think of the carbon floor price. I think you need to go back and think about that. I beg leave to withdraw the amendment.
Lord Jenkin of Roding
My Lords, I do not for a moment suggest that Clause 26 should not be in the Bill. I have adopted the device of having a debate on it in order to explore its intention a little more. I remind noble Lords that at one point we expected that we would reach this point last week. We have been a little delayed. I could have tabled an amendment. I would have been perfectly simple: “Page 17, line 1, leave out subsection (3)”. So I wish to ask my noble friend some questions about subsection (3).
What is the use of the four powers which the Government are proposing to take to require generating plants to operate differently? They relate to: the manner in which functions are to be exercised; restricting the use of generating plant; the way in which a plant may participate in a capacity auction; and the inspection of plant or property. These are very broad points. I am given to understand that some generators are increasingly apprehensive that the becoming involved in the capacity market could well have undesirable operational strings attached to it. There is no indication that any of the powers would be limited even once they had ceased to be part of the market. I have to warn my noble friend that I am told that this could potentially undermine the appetite of generators to become involved, which manifestly is not the Government’s intention. Here again, we have a clause which is drafted in very broad terms and we have to wait until we see the regulations and subordinate legislation that will come from it. I do not want to repeat what has been said so often, but in advance of our seeing the draft regulations, it would be helpful if the Government could explain how they intend to use the powers, especially those relating to the use of generating plant or the manner of participating in an auction. They want to ensure that generators which may be looking to participate in the capacity market can understand and have confidence in what it may mean for them in terms of plant operation once the Act comes into force.
We have heard a great deal in these debates about the problem of uncertainty and the need to engender confidence. That is hugely important if you are going to attract the necessary investment. I always come back to the meeting that we attended some weeks ago chaired by the noble Lord, Lord Oxburgh, when a lot was said by different categories of potential investor. We have got to have the Bill otherwise we will not get investment. At the end, the question was asked: if we have the Bill, will we get the investment? That was followed by a long silence. Nobody is able to guarantee this. Therefore, we must do our very best to make sure that any cause of uncertainty, any anxiety about the likely consequences, is treated as very important.
Clause 32 again gives the power by regulation to amend or repeal existing legislation. I shall not read it all out because everybody can see what is in it, but I am particularly worried about paragraph (d). Here again we have regulations that will give very wide powers of direct legislation—in a sense, Henry VIII provisions—if they are connected to the development of a capacity market, including the annual reports made by the authority on the security of electricity supplies and the report on the security of energy supplies as a whole. As I said, paragraph (d) provides for wide amendment of existing enactments. It is very broad and, here again, concerns have been raised by the industry—I am sure that it has made its views known to my noble friend’s officials—that it may take effect unpredictably. Therefore, there is increasing uncertainty and, to that extent, reducing confidence.
My amendment is simply to ask my noble friend to give an explanation. What are the likely uses of this power? How widely would it range, bearing in mind that it includes amendments to primary legislation and is consequential on provision which itself is made in secondary legislation. I understand the desire of the Government to cover every possibility, but the more they seek to cover with very wide powers of this sort without adequate explanation of how they are going to be used, the more they increase the uncertainty which undermines the possibility of investment. I hope that my noble friend will be able to give us some further information which may help to reduce that uncertainty and increase confidence.
Lord Grantchester
My Lords, we endorse the anxieties highlighted by the noble Lord, Lord Jenkin, regarding the use of powers in the Bill. In saying that, I will speak to Amendments 55ZZA and 55ZZB, as well as Amendments 55ZD and 55ZE, which are grouped with the noble Lord’s stand part debate.
As the Committee’s proceedings have continued in scrutinising the Bill, the Government have issued a response to the Delegated Powers Committee’s uncharacteristic dismay at the discretionary powers being sought by the Secretary of State in the Bill. Your Lordships’ Committee has considered this response and issued a further deliberation in its sixth report. Amendments 55ZZA and 55ZZB would implement the recommendation of the Delegated Powers Committee that all secondary legislation relating to the capacity market be subject to the affirmative resolution procedure, with the exception of Clause 27, which relates to the provision of information and advice and would be subject to the negative.
Each day in proceedings on the Bill, it has continually been highlighted that the Government are asking Parliament for an extraordinary array of powers to put at the disposal of the Secretary of State, with very little detail on how these might be used and constrained. Your Lordships’ Delegated Powers Committee stated:
“It does not … seem to us to be satisfactory that the Bill should have reached Committee Stage in the second House with so little known about the likely shape of the provision to be made about an important aspect of Chapter 3. While welcoming the additional information about capacity agreements, we remain concerned that not enough has been done to redress the imbalance between the scarcity of provision on the face of the Bill and the preponderance of delegated powers … unless the Government is able to provide the House with adequate information about the regulations for capacity auctions, the powers conferred by Chapter 3 are inappropriately wide”.
Without much more detail, it is impossible to assess the requirements for the extent and relevance of these powers.
Similarly, Amendments 55ZD and 55ZE would implement the recommendations of the Delegated Powers Committee that all regulations bar those made under Clause 7(10) would be subject to the affirmative resolution procedure. To quote again from the committee’s sixth report:
“When we first considered Chapter 2 we found it very difficult, based only on the provision in the Chapter itself and the explanatory material then available to us, to get a clear idea of the real nature of what is being proposed there, and the scale and context of the delegations of legislative power involved”.
The report continues:
“Wide and significant powers of this kind deserve a high level of Parliamentary scrutiny, and we are not persuaded that the affirmative procedure should apply only to instruments which contain regulations made under any of clauses 9 to 11”.
While the committee was grateful for the Government’s co-operation in tabling a revised order of consideration for these clauses, which has meant that we have been able to debate today the clauses on contracts for difference with the strike price published, there is still an enormous amount of detail to come. On the capacity market, for instance, the issues just debated on the impact this will have on the continuation of old coal have only just come to light as a result of information published last Wednesday, 18 July, in the draft delivery plan. Had the Committee not had this information before debating these clauses, we would have been very unlikely to pick up on this and parliamentary scrutiny would have been less effective.
I very much hope that the Government will at least accept the amendments today which implement the recommendations of the Delegated Powers Committee. It will be extremely important that the Government deliver on their commitment to publish the draft regulations by October so that, as the committee recommends,
“the House will be given time to consider the published drafts before Report Stage begins”.
We all want to see the Bill on the statute book as swiftly as possible to end the flat-lining of investment in renewables which we have seen over the past three years. Given the volume of detail delegated to secondary legislation, it will be not the primary legislation but the regulations that might in practice delay the implementation of EMR.
Lord Crickhowell
My Lords, I have not intervened before now, on hearing this afternoon’s proceedings, but the reference to the Delegated Powers and Regulatory Reform Committee has prompted me to get on my feet. I am a member of the Constitution Committee, which I think would agree with everything that has just been said about these clauses. Indeed, I am prompted to think that I must go back to the Constitution Committee and make sure that before this comes before the House at Report we will have had a look at the constitutional implications of the way in which this matter is being handled. So I have every sympathy with the points that have just been made.
I make a wider point. I have been quite astonished— although I have been a very long time in Parliament, in one House and the other—as I do not believe that I have ever seen a Bill come to this stage in its proceedings with so much information still unavailable; after all, it has been through the other place and been examined by countless committees. Indeed, if this Committee stage had been held on the Floor of the House, the Government would have been in deep trouble. In Grand Committee, we go along with it—we probe and press questions and so on—and say that we will bring things back at Report. The House as a whole would have been far more impatient with the Government about the way in which they have handled this matter.
If at times my noble friend the Minister finds there are interventions from both sides, including from the noble Baroness who speaks for the Opposition, she must not be entirely surprised. If the department has not yet addressed many of the issues that one would have expected it to address at this time or to have answers to and provide information to the Committee, it must not be surprised if it gets into trouble. Therefore, as we go through the final stages in Committee, my noble friend would be extremely wise to understand the feeling of irritation and frustration that is widespread in the Committee and temper her remarks accordingly. I am not suggesting that it is her fault; it is a nightmare for Ministers in this House who have to handle Bills of this sort, since many key issues are decided elsewhere and by others. But she must understand that, as a Committee, we face the most extraordinary difficulties. We do not know half the regulations that are going to appear; we have clauses such as this one, which give extraordinary powers; and the Committee is naturally suspicious.
I hope that, as we go further down the proceedings this afternoon, my noble friend will simply accept that the Committee is faced with serious difficulties and will be prepared to say, again and again, that she understands the concerns, will listen to them most carefully, and will be prepared to discuss them as widely as possible before getting to the next stage. I hope that she will try to avoid the sense of irritation and conflict that crept in at an earlier stage this afternoon.
Lord Roper
My Lords, I do not intend to delay the Committee unduly on this point, but I echo what has been said by the noble Lord, Lord Grantchester, and my noble friend Lord Crickhowell. I have spoken before on the remarkably trenchant language which the Delegated Powers and Regulatory Reform Committee used in its fifth report—and, in its sixth report, as we have heard from the noble Lord, Lord Grantchester, it is still very concerned, particularly on the regulations on the capacity market that we are considering. Therefore, it is essential that we have detail of the regulations that are going to be introduced well before we come to Report.
Baroness Verma
My Lords, I am extremely grateful to my noble friend Lord Jenkin and the noble Lord, Lord Grantchester, for prompting this debate on the delegated powers within the capacity market and contract for difference provisions.
Clause 26 enables the Secretary of State to make provision to impose requirements, via electricity capacity regulations, in addition to those stipulated in capacity agreements. The requirements can be imposed on persons including licence holders, other persons carrying out functions in relation to capacity agreements and current and former capacity providers.
I understand that my noble friend Lord Jenkin is concerned that the provisions in this clause are too broad. However, the Government consider that the ability to address this provision in secondary legislation is needed as the requirements may change with time. The need to consider certain matters when preparing advice regarding the operation of the capacity market may also change as the market evolves, as has been the experience in international capacity markets, such as those in the United States.
With regard to Clause 26(3)(b) about placing restrictions on the use of generating plant, certain requirements may need to be imposed to ensure a fair and transparent auction and to mitigate or close off gaming opportunities that could otherwise drive up costs for consumers. In particular, it is imperative that we know the range and type of capacity, irrespective of whether the capacity operator intends to bid at auction, and we need to ensure we can address gaming opportunities, such as a plant operator notifying its intention to close in order to drive up the capacity price. Clause 26(3)(c) allows the Secretary of State to impose requirements relating to participation in a capacity auction. An example of how we envisage using this power is that we may wish to require a plant to participate in a capacity auction if it has notified the delivery body during the pre-qualification process that it is its intention to do so.
It may be necessary to place other requirements on those who have ceased to be capacity providers—that is to say, they have assigned or traded their capacity agreements—in order to determine whether they complied with their obligations while they held the agreement. For example, requirements relating to the inspection of plant or property other than as a condition of entry into a capacity auction, as described in Clause 26(3)(d), may be imposed by the Secretary of State.
The powers in Clause 32 allow the Secretary of State to amend or repeal certain sections of the Electricity Act 1989 and the Energy Act 2004 and to make subsequent amendments to any other enactment as the Secretary of State considers appropriate as a result of provisions made by electricity capacity regulations or capacity market rules. I recognise that my noble friend has particular concerns over the provisions in paragraph (d), which allows the Secretary of State to make consequential amendments to any other enactment that he considers appropriate. I should emphasise that our intention is to limit the use of the power in Clause 32(d) to making amendments that are consequential on, or to avoid duplication and contradiction of, existing primary or secondary legislation on implementing the capacity market. For example, if we modify the standard conditions of licences under the provisions of the Electricity Act, the powers for which are set out in Clause 31, it may be necessary to make a consequential amendment to Section 33 of the Utilities Act 2000. This contains general provision about standard licence conditions and includes in Section 33(1) a list of powers under which licence modifications have been made. Furthermore, any provisions to amend primary legislation through the powers in this clause will be subject to a proper level of parliamentary scrutiny through the affirmative resolution procedure.
I now turn to the amendments proposed by the noble Lord, Lord Grantchester, relating to the level of parliamentary scrutiny of regulations made under Chapters 2 and 3 of this Bill. These amendments would make all regulations subject to the affirmative resolution procedure, aside from those relating to electricity capacity regulations: information and advice and those under Clause 7(10) which set out how long a person who has ceased to be a CFD counterparty is continued to be treated as such. These would be subject to the negative procedure. The amendments are consistent with the recommendations of the Delegated Powers and Regulatory Reform Committee. As I have said in previous debates, the Government welcome the committee’s report and I can reassure the noble Lord that it is being given careful consideration. I commit to consider the amendments further and will respond in due course. I commend that Clauses 26 and 32 stand part of the Bill, and hope that the noble Lord will feel content to withdraw his objection.
Lord Jenkin of Roding
My Lords, I start by saying that what my noble friend has said in response to the amendments about parliamentary scrutiny will be very welcome indeed. The noble Lord, Lord Grantchester, is nodding vigorously in agreement, so I am delighted with that.
I tended to examine this from the point of view of the people whose investment is being sought. This is right at the heart of the Bill. Others, perfectly properly, have concentrated on the Delegated Powers and Regulatory Reform Committee, and my noble friend Lord Crickhowell spoke on the constitutional implications of the proposals. Of course, everyone will now want to study carefully what my noble friend has said, and some comfort may be found in that. We hear that it will be only consequential amendments. We will need to wait and see. I come back to the same point that we have made again and again: by Report we must know what is to be in the regulations.
I hope that my noble friend will take very seriously what my noble friend Lord Crickhowell said. If we get to the Floor of the House and find ourselves still having to make this kind of speech, the Minister will find herself in considerable difficulty. That is the last thing I want to see. I hope that her officials will take note. It may affect the date that we deal with it in October; we do not have any dates yet for Report. Getting the detail clear to everybody before we start debating clauses and amendments on Report is of the highest importance. I make no apology at all for having raised this matter at this stage. It is a hugely important issue and I know that my noble friend has taken it on board. It may be that some of her officials will have to cut short their holidays—poor them. I am sorry for that, but we are dealing with what appears to a lot of people to be legislation being made up as it goes along. That is hugely damaging from the point of view of any department which launched into this without knowing what would come out at the other end. When we come to final parliamentary scrutiny of the Bill, which will be at Report and Third Reading in this House, we really need to know what we will be talking about. With that admonition, if it may be so described, I am happy to withdraw the objection and agree that the clauses should stand part of the Bill.
Baroness Parminter
“Strategy on interconnection
Within 12 months of this Act coming into force, the Secretary of State shall bring forward a strategy for the UK to increase its interconnection links with other European countries, in order to support the continued development of a European internal electricity market.”
Baroness Parminter
I rise to speak to the group of amendments on the value to the United Kingdom of a European internal energy market, and in particular to move Amendment 55ZB, which stands in my name and that of my noble friend Lord Teverson and the noble Lord, Lord Whitty.
The amendment would require the Government to introduce a strategy to address the policy barriers to interconnection and the distortions introduced by the proposed capacity market. I highlighted at Second Reading the benefits of greater interconnection across Europe, so I will be brief now. It makes a significant contribution to security of supply as Ofgem's recent electricity capacity assessment demonstrates. If the UK imports electricity from the continent at times when supply is tight, capacity margins increase from 5% to nearly 9%. By making more efficient use of renewable energy, it can have positive effects on energy costs, as the Government have confirmed in their response to the House of Lords EU Select Committee report, No Country is an Energy Island, which is to be debated in this House next Monday.
In her concluding remarks at Second Reading, the Minister made it clear that the Government,
“are fully supportive of increased interconnection”.—[Official Report, 18/6/13; col. 236.]
I am aware of some welcome initiatives, including a memorandum of understanding with the Irish and Icelandic Governments. Also the Government are supporting Ofgem’s integrated transmission planning and regulation project to take it forward. But there is no denying that the decision not to allow interconnected capacity to participate in a capacity auction now will distort the internal market. Why? Because an overseas power generator wishing to supply the UK market will receive the wholesale electricity price alone, while generators in the UK will receive a capacity payment and a wholesale electricity price. This would mean that there would be less efficiency resulting from less competition in the auction and, crucially, less incentive to build additional interconnection capacity.
The Government have said in very recent correspondence that they are keen to find a way for interconnected capacity to participate in a capacity market in future. This is to be welcomed, but we need a clear commitment in the Bill that this Government prioritise interconnection alongside the capacity market and demand-side reduction measures to deliver the energy that we need. We need to know what other avenues they are going to pursue for interconnection and by when. It is legislation, not the sometimes contradictory comments within government, that shows investors what government will do and creates the necessary confidence to invest. Let us be clear: the European Commission estimates that investment of more than €200 billion is needed before 2020, two-thirds of that in the electricity market, in cross-border infrastructure. Putting this amendment in the Bill would help to give that investor confidence, requiring the Government and this department actively to look at ways in which to develop mechanisms, working with the regulators and European partners to support cross-border energy trade. Doing so would show that, on energy, just as on crime, trade and the environment, we are better working with our European partners and neighbours. I beg to move.
Lord O'Neill of Clackmannan
I would like to ask those who tabled this amendment about the sources of energy that we will be interconnecting with. At present, within Germany, there will be a highly distorted market, with renewables concentrated in the north, demand in the south, and nuclear power stations closing by 2021.
As I understand it, Germany’s nuclear power stations enabled the Danes to keep nice and green by exporting some of its surplus nuclear supply to them. At this stage, we can probably discount Denmark and Germany as potential sources of supply. We have been fortunate to have had an interconnection arrangement with France. In some respects, it has probably done the French more good than us, certainly commercially, but it has enabled us to keep our lights on. On the other hand, one can imagine that the parlous state of not only the Italian economy but that country’s interconnection may present problems. In this little European tour, it is most unlikely that we could depend on Italy as a source of much energy for the United Kingdom. It would be very nice to have connections with Iceland but its significance would be pretty limited.
There is always the issue that long undersea cables have significant transmission losses, and I am not quite sure how much we would get out of Ireland on a good day. We know that there may be gas around Ireland and there have been useful discoveries there. However, the point that I am trying to make is that we could conceivably get some hydro power from Norway but my understanding is that global warming there has created problems whereby hydro power is not quite as reliable as it used to be because the glaciers are getting smaller and there is too much water at the wrong times.
It would be nice to be reassured that someone in Europe at the other end of our interconnections could provide us with a lot of electricity. If we were to obtain 30 gigawatts of nuclear power, we might be able to sell some to Ireland, although the Irish might not like nuclear power. They do not seem to mind it when it comes from Scotland, so long as it is under an agreement with a company that also owns gas-fired and coal-fired power stations. Like the Danes, the Irish are able to remain rather more environmentally acceptable to other people than perhaps they are.
The point that I am really trying to get at is that this will be very expensive, there will be transmission losses because of the distances involved and I am not sure which countries will have surplus capacity capable of providing us with what might well turn out to be extremely expensive electricity. At the moment, it has been useful and helpful to have received it from France. I am pretty certain that the French will sell it to the highest bidder and there will be people on the continent of Europe who will probably need imported electricity to a far greater extent than we do and will therefore probably be desperate enough to pay higher prices for it. Before we embark on a strategy that implies great expense and investment, given the parlous state of a lot of the energy companies in terms of even their share value, increased interconnection is a wee bit fanciful. I am happy to be convinced if there are power generators across the North Sea desperate to sell to us but I am not quite sure that they are. Even if they are keen now, will they be in 10 years’ time? Although we are having administrative difficulties in getting this Bill into a shape that we can deal with on Report, we will probably eventually get it right, but we do not get the impression that our European partners are moving with even the glacial speed at which we are travelling when trying to achieve solutions. A strategy might be very nice but, at the end of the day, it might be wishful thinking.
Lord Davies of Stamford
Will my noble friend tell the Committee what is wrong with France? We have an interconnector already. Perhaps there will in future be greater surplus capacity in France which it would be willing to sell to us on a capacity market basis or directly or a mixture of the two, and perhaps it is worth investing in a bigger interconnector. I think the present one is 2 gigawatts, so perhaps it should be another 2 gigawatts. What about Scotland if it chooses to become an independent country? This amendment is permissive. It does not require for its good sense that there should be certainty that it could be utilised. It is attempting to make sure that others have a proper incentive for participating in our capacity market to mutual advantage if they are capable of doing so.
Lord O'Neill of Clackmannan
We have been told that the dome is now on the power station at Flamanville, so in the not-too-distant-future, four or five years behind schedule, we might start to get some electricity from that station. I am not being Francophobic here, but I do not think that the French will have that much spare capacity that they will want to keep selling to us. There may well be others in Europe who would be prepared to pay more because their position will be even more dire than ours could be if the worst scenario came about.
On the other question, I am confident that on 14 September next year, Scotland will vote to remain part of the United Kingdom. Then we might start to have a Government in Scotland who will not have us living off windmills, because that is the problem that we are going to have as long as the nationalist Administration is in power and we are going to have to depend on Salmond’s hot air to keep the windmills going.
Lord Berkeley
Is the technology at Flamanville, which my noble friend said is five years late, not the same technology with which EDF is proposing to equip our stations in this country, or is it new?
Lord O'Neill of Clackmannan
It is. Not only is it slow to build, but it is more expensive than some of the other kit that could be available. It is on a wing and a prayer. We have fallen behind. It may well be that the Finnish and the Flamanville experiences will be such that all the problems will be ironed out and we will have EDF building the first reactor at Hinckley on time and within budget. One can only hope that. Companies ride learning curves. One hopes that Arriva has ironed out all the kinks. The problems in Finland were different from the problems in France, but the combination of the two seems to suggest that they had not really done so in Europe at least, because power stations of this character are being built efficiently and speedily in the Far East but unfortunately not in continental Europe.
Lord Cameron of Dillington
Perhaps we can get back to the amendment. I support it because connectivity is like an international capacity mechanism, except that it has the ability to incorporate renewable technology and even intermittent power. I say to the noble Lord, Lord O’Neill, that it is not all about the UK. It is about sharing surplus all over Europe. That is the whole point. It is very unlikely that you will get a particular moment when there is no sun in Italy, no wind in Germany or Ireland, no water behind the hydro dams of Norway and no nuclear power coming out of France. There will always be surplus here and there. For instance, at one moment last week in the German market, 33% of the power was being produced by PV. There was a complete surplus in the marketplace. It was disastrous for the coal-fired power stations of Germany because suddenly the price of electricity went very cheap.
The interconnectivity is a transEuropean thing which we can all work together. I believe that an interconnected Europe would be a secure Europe in that way. However, we have a long way to go, and the noble Lord, Lord O’Neill, is correct to refer to the glacial speed. There are different regulations in different countries and different ownership structures, including some nationalised industries and old semi-nationalised industries, which are very inefficient yet determined to fend off any possible competition from abroad. There is also the question of different voltages operating in different countries. Hovering over all these uncertainties are the European public, who seem to want their power but under no circumstances want to have more pylons.
Meanwhile, in all this the EU Commission has made £9.2 billion available for overall connectivity, including gas, when the rough estimate for the electricity grid connections is £104 billion, including £23 billion for subsea cables alone. I ought to correct one other thing that the noble Lord, Lord O’Neill, said: with high-voltage direct current there are almost nil losses in transmission. Although the power stations at either end are obviously more expensive the line itself is much cheaper, particularly if it goes underwater.
The point is that the rest of that money—the £104 billion —has to come from the marketplace but to get even a proportion of that money, the market will need the certainty of international commitment and the certainty of a plan. It will need an EU plan set out by the Commission in a way that guarantees long-term commitment and is signed up to by all the member states involved. Eurelectric, the trade body representing the European electricity sector, says that creating a predictable policy framework would help utilities to finance their investment plans and attract the necessary funds. Incidentally, Herman van Rompuy says that the implementation of such a framework, which includes electricity and gas, could save the EU consumer up to €30 billion per annum. My point is that in order to get a firm and committed EU strategy, we need to start with a firm UK strategy. That, in a nutshell, is why I support this amendment.
The Lord Bishop of Chester
My Lords, when I am in a really tedious meeting I sometimes flick to my iPhone if I succumb to the temptation. The Energywatch organisation has a splendid app which tells you exactly what electricity generation is going on at any particular moment. I can tell your Lordships that at this moment we are depending upon supplies from overseas of 7%, or 3 gigawatts. Wind is producing at the moment less than one sixth of that. Over time, I am struck by just what a significant proportion of our electricity already comes in that way. Three gigawatts is not nothing; it is a very significant amount.
When the Minister responds, it would be helpful if she could give some indication as to what security there is. I belong to those who have some anxieties that in three or four years’ time, if economic activity picks up and some outages occur at a couple of big stations that we are not expecting, and if the weather is very cold and the wind is not blowing, we are going to depend upon electricity coming from these interconnectors. We can depend on it only if we know that they will be available. If the weather is also inadvertent in other countries, what security do we have that the electricity will be available from other places? I am entirely with the view that we should have a European electricity market. That is absolutely right but it has to be with certain guarantees for supply in this country, especially when supply gets tight in a few years’ time.
The Earl of Caithness
My Lords, I support in principle what my noble friend Lady Parminter is proposing in this amendment. The evidence that we got in Sub-Committee D was that interconnection throughout Europe needed a great deal more money spent on it, as the noble Lord, Lord Cameron, has told us. It needs to be improved, but that is a two-way process. The noble Lord, Lord Cameron, referred to some of the difficulties and I recall those being adduced to the committee.
My concern with this is therefore: what is the point of the UK producing a strategy when nobody else is producing one? We can produce a strategy and the Government can be questioned in the House about it, but if the French are not altering their system so that we are compatible and one can move the electricity to and fro, or if the problems have not been resolved with Norway—as was highlighted, there was a problem getting a connection with Norway or with the Danes—it seems a little pointless us having a strategy. Surely this ought to be done within the EU context. However, my noble friend Lady Parminter and the noble Lords, Lord Cameron and Lord Whitty, have the advantage that since I have left Sub-Committee D, they interviewed the Secretary of State. Although I have read the transcript, I would hope that they can enlighten us on what the Secretary of State had to say on our report, which we will discuss in more detail on Monday.
In some ways, I support the principle of great interconnection, although there will be problems from time to time. I know that the noble Lord, Lord O’Neill of Clackmannan, is more secure about the vote in September next year than I am. I wonder whether there is a way of preventing nuclear energy getting into Scotland because Scotland will not want nuclear energy from England. Can we adapt the grid so that one cannot get nuclear energy; it would only upset the Scots?
Lord Teverson
I rise to speak to my Amendments 55AA and 55AD, as part of this group, but perhaps I can come to the interconnection amendment of my noble friend Lady Parminter first. It seems to me to be blindingly obvious that this is something that we should do. I note the comments of the noble Lord, Lord O’Neill, who may be asking the right questions but he is being slightly too negative. A strategy does not cost billions; implementing it costs billions. When talking about investment in electricity generation, network costs, and so on of potentially £200 billion, looking sensibly at a major part of the jigsaw of interconnection is very important. We should remember that this amendment refers to the capacity payment part of the Bill, so this bit is not saying that we should run UK base load and rely all the time on interconnection. It is a common-sense look at the fact that European energy markets and individual national markets operate at different times, have their own characteristics and different peaks. Therefore, it makes a huge amount of sense to try to benefit from the synergies of capacity, weave them together and make the system work better. There are all sorts of problems with the energy market, but it does not stop the UK trying to make the best out of it, and then fit that within a broader EU strategy. I, too, look forward to the debate on Monday evening.
I move on to my own amendments and apologise to the Grand Committee for using a double negative. It is a probing amendment, trying to find out the Government’s thinking. I am trying to determine what is known as an eligible supplier in terms of the CFD market—someone who has a generating capacity outside the United Kingdom. I am not at all clear about this. I know that the Government have had discussions. We have mentioned Iceland and Ireland before but it would be useful to understand generating plants outside the United Kingdom. I am especially thinking about those that are dedicated to the UK, but there is a broader issue, which is maybe more difficult, on whether they can enter into contracts for difference.
I was struck by the Minister’s comments on the importance of price to the consumer. If we looked at it on that basis, clearly we should be buying internationally as much as we could in terms of bringing extra competition into the market and trying to bring prices down. Clearly we would not entertain CFD contracts that were more than that. Of course, there is the strike price. I would hope that with that extra competition there would be pressure on bringing the strike price down over time.
My second amendment, Amendment 55AD, would put a timeframe on the Government for making arrangements for such extraterritorial generation in order for CFDs to come on board. We often talk about offshore wind generation. This is perhaps the ultimate in offshore wind generation and other forms of low-carbon electricity. I look forward to the Minister’s response.
Lord Deben
My Lords, I hope that my noble friend the Minister will look at these amendments as probing amendments, because there are some important issues which we need to cover. I declare a past interest in the sense that I was involved in trying to get a particular interconnection. My experience from that is that there are many difficulties which are not systemic difficulties, as the noble Lord, Lord O’Neill, might refer to them, but simply difficulties about the way in which we do things in this country which makes it very complex.
There are two different issues here which are covered in the first of the amendments, which was introduced earlier by my noble friend Lady Parminter. One is connection and the other is connection,
“in order to support the continued development of a European internal electricity market”.
Those are two different things, although I hope that they would run in parallel. Manifestly, in the long-distant future, it would be quite sensible to have a lot of windmills when there was wind and a lot of solar when there was sun. Being able to pass that along would be very good. Modern methods of transmission are very much less wasteful than previously and there is some indication that we will be able to move things very well in the future.
Obviously, therefore, there is a long-term interest in linking up the systems more effectively. I do not know what the latest figure is, but it has been estimated that if we made certain, not-very-difficult changes to the northern European connections, we could save about 11% of our emissions, simply because they are now wasted due to the connecting arrangement. That may have been updated now, but there are clearly savings to be made there. They are the sort of savings that we should make before we do other things. It always seems to me that wastage—I am glad that right reverend Prelate the Bishop of Chester came into this debate—is the least acceptable manner of putting emissions into the atmosphere. It just does not seem to be a right thing to do.
Even if it were not for that reason, we need to open up the opportunities for people to invest. The noble Lord, Lord O’Neill, is right that such investments are quite expensive, but if you open up the opportunities for people to invest, the market will sort out which investments are sensible and which are not. There will be an opportunity then for perhaps rather more cost-effective investment, which would involve interconnection.
The purpose of the amendments, so far as I can see, is to ask my noble friend the Minister, “Are we sure that we’ve looked at this sufficiently well in the general panoply?”. The climate change committee, of which I have the honour to be the chairman, has always talked about a portfolio of energy supplies as being the basis for energy sovereignty, for making sure that we do not become subject to very high prices of gas and for making sure that we fight against dangerous climate change—these three things come together. The portfolio approach is the one that I am always looking at. I am very keen that we should not write this Bill to exclude this. The noble Lord, Lord O’Neill, would probably go along with the concept that we should make sure that there is not an opportunity here. I am not sure that the Bill does that. If my noble friend could say to the Committee that she will make sure there is not a lacuna here, it would be a very helpful outcome of this debate.
Lord O’Neill of Clackmannan
I want to make this point to the noble Lord. We have a department that at the moment cannot provide us with important, immediately required, documents. We are asking them to produce a strategy in 12 months, a lot of which at the moment seems to be wishful thinking. Are this lot capable of doing it?
Lord Deben
I knew that I should not have raised the noble Lord’s name, because it gave him the opportunity to say what he so often does, which is anything that is not complimentary to the Government. I remind him of the early part of Wuthering Heights where there is a peculiarly nasty individual. He ransacked the Bible for the promises that he pulled to himself and the curses that he threw at other people. Sometimes, I am reminded of that in the speeches given by the noble Lord.
Lord Whitty
My Lords, my name is also on this amendment and I sat on the same committee, as the noble Earl, Lord Caithness, indicated. We are debating that whole subject on Monday night. The noble Lord, Lord Cameron, and the noble Baroness spelt out the general thesis of that report and I do not intend to repeat it.
I say to my noble friend Lord O’Neill that I do not think he entirely deserves the strictures from the noble Lord, Lord Deben, on fictional characters, but he does like to stir up a little controversy. In a sense, the title that we chose for that report in the sub-committee was intended to pre-empt the sort of attack that my noble friend Lord O’Neill produced. It is that no country is an island in relation to energy supply—not Scotland or Great Britain. Indeed, the other part of the United Kingdom, Northern Ireland, is already utterly dependent on interconnectivity both for its gas and electricity. The idea that we should ignore interconnectivity as part of the solution, particularly when we are discussing capacity markets and capacity mechanisms, seems to ignore something obvious. Certainly, by the end of our deliberations on that committee, it became obvious to us.
The noble Earl, Lord Caithness, asked what the Secretary of State’s response was to the committee. I thought that we had a very good session with the Secretary of State. He took it up. He obviously had some briefing and had to be a little cautious, particularly on delivery within the European context, but he was keen that we should take it up. To be fair to the Government, they have picked up this point but it is not yet reflected in the Bill.
The amendment of the noble Baroness, Lady Parminter, gives the Government a chance to have another look at this and see what relationship there is between an attention to interconnectivity and both the contracts for difference, which could include a contract for difference for generation occurring outside the United Kingdom, and the capacity mechanism, which should also include provision for interconnectivity to be part of it. Indeed, it is an obvious part of an overall capacity mechanism. Two-way connectivity must be a way of bringing down costs across Europe as a whole with the development of an internal market which at present does not really exist, despite what the Commission claims on occasion. That must be to the benefit of the costs of investment in energy as a whole and ultimately to the price to the consumer, whether a domestic or industrial consumer.
The message from our report—and that message also lies behind the requirement that the amendment would place on the Government—is to develop a UK strategy in order to push forward the European agenda on this, but with particular reference to those bits of interconnection between us and Ireland, us and France and potentially further afield in Norway, Iceland and Holland. For all those reasons, this needs to be seen as a way of meeting our energy requirements.
Unfortunately, in this context, the Government are not being as ambitious as the Secretary of State was in his response to the committee. They are saying that connectivity would effectively be regarded as a passive contribution. For example, in the letter that the noble Baroness wrote recently—noble Lords may have seen it—she says that if interconnection provided 2 gigawatts then clearly that would have an effect on overall costs and would be of benefit. However, that is looking at it in a very passive way. If we developed a strategy, we could look at the matter in a more constructive and creative way as one of the major contributions of the diversity of sources to meeting all our objectives: energy security, decarbonisation and lowering the price to industrial and domestic consumers.
Interconnectivity is big in that respect, and significant in avoiding disruption and shortages. My noble friend Lord O’Neill ought to look at this matter again and accept, without determining what the outcome of such a strategy should be, that part of the jigsaw must be a strategy on interconnectivity. I therefore strongly support the amendment.
Baroness Verma
My Lords, I am grateful to my noble friends Lady Parminter and Lord Teverson, and the noble Lord, Lord Whitty, for providing me with an opportunity to respond on the very important issue of electricity interconnection.
I turn first to Amendment 55ZB on electricity interconnection. The physical linking of the GB electricity market to others in Europe has the potential to offer a range of benefits, as my noble friend has ably set out. The Government firmly believe that greater levels of interconnection would be good for Britain and build on the 4 gigawatts that we have. A large number of interconnector projects are at different stages of development, including to Norway, Belgium, France and Ireland. Indeed, when you add up the capacity of potential projects, it comes to more than 12 gigawatts.
The UK Government are already playing an active role in seeking recognition of several UK interconnection projects as European projects of common interest under the EU regulation on guidelines for trans-European energy infrastructure. This regulation, which the UK Government were actively involved in negotiating, aims to accelerate the development of cross-border energy infrastructure with a view to completing the internal energy market.
Successful projects are due to be announced in early autumn, and will benefit from streamlined planning procedures and, where necessary, a mechanism to agree cross-border cost allocation. They will also be eligible to access financial instruments such as loan finance, grants for feasibility studies and, potentially, grants for works under the Connecting Europe Facility—a pot of €5.1 billion over seven years. The Government also continue to discuss interconnection with our counterparts across Europe. My noble friend may be aware that the Prime Minister committed last year to supporting the development of an interconnector with Norway, and we have signed a memorandum of understanding with Iceland to explore the possibility of linking our markets.
In part, the large number of projects in development is due to work that Ofgem has been doing to develop a new regulatory approach for interconnection. This “cap and floor” model retains the market incentives for interconnection but reduces some of the risks to revenue that merchant developers face. This regulatory model is initially going to be applied to the project with Belgium, Project Nemo. Cap and floor has real potential in driving forward interconnector investment but, by its very nature, looks to consumers to potentially take on some risk in return, which will need careful consideration. Ofgem is taking this into account as part of its wider integrated transmission planning and regulation project, in which it is exploring whether there needs to be enhanced planning or strategic evaluation of future interconnection.
I should also like to highlight two further important developments that are taking place. First, developers invest on the basis of price differentials on either side of the link. Ofgem is working to ensure that Great Britain’s electricity prices reflect scarcity to a greater extent, thereby increasing the incentives for investing in interconnection. Secondly, on 27 June, the Government committed to continuing to explore ways in which interconnected capacity can participate in the capacity market. This is not simple and no other country has found a way to do this, but a solution could further increase investment appetite. It is worth reflecting that the single market is about not only the infrastructure between member states but the way in which that infrastructure operates.
The Government, with the support of Ofgem and National Grid, are playing an active role in the development of the European technical codes that will govern how trading over interconnectors will work in practice. This is essential if the full benefits of the infrastructure investments are to be realised.
The Lord Bishop of Chester
I raised a specific point about the extent to which existing capacity, which may get as high as 12 gigawatts, is taken into account in energy security. To what extent is the Government’s strategy on energy security dependent on the interconnection?
Baroness Verma
I apologise. I had a note for the right reverend Prelate the Bishop of Chester, but I forgot to allude to it. The loss of supply from interconnection, like other forms of capacity, would be handled by the system operator in the same way as additional capacity would be sought through the National Grid’s balancing services. There would be a mechanism in place.
The Lord Bishop of Chester
The noble Baroness may want to write to me rather than answer now, but if supply gets tight under the scenario that Ofgem has said is possible—although we hope it will not come to that—does continuation of the Government’s current strategy at that point depend on the availability of electricity at a level between the current 4 gigawatts and the prospective 12 gigawatts?
Baroness Verma
My Lords, it might be wise for me to write in detail to the right reverend Prelate and the Committee with a fuller answer.
Lord O’Neill of Clackmannan
Given that the Minister is not opposed to the amendment in principle, if the words “12 months” were removed from it and the amendment were to be retabled on Report, would she look at it in a more sympathetic light?
Baroness Verma
I see that the debate has changed the mind of the noble Lord, Lord O’Neill, but, as with all debates in Committee, I shall go away and look carefully at Hansard to make sure that I have understood the debate fully.
Lord O’Neill of Clackmannan
I am just an old hand at this game. Ministers who do not have very much to offer Committees sometimes throw them bones and say, “We like the principle but not the text; were you to change it, we might look sympathetically at it”. That is the kind of thing that prevents unnecessary tensions and allows people to leave with a wee bit of a skip in their step. I was merely asking because I am sure that some of the old greybeards on the noble Baroness’s side would say that that is one way of throwing bones to other Members. Is she in a bone-throwing mood?
Baroness Verma
My Lords, as I have said, I read Hansard with great care to see what responses I can give to noble Lords, but I consider every amendment very carefully and, of course, pay great consideration to each and every point that is raised.
Lord Teverson
Perhaps I may thank the noble Lord, Lord O’Neill, for the consideration he has given to this side and for his suggestions. That was an excellent analysis of how things should work.
Baroness Parminter
I thank all colleagues on both sides of the Committee for their contributions, some of whom have made the case more eloquently than me. Certainly, the noble Lord, Lord Deben, in his imitable style, did just that with his portfolio analysis. I am also grateful to the Minister for outlining what are, in effect, the initiatives that the Government have taken to date on interconnection, which give life to what the Secretary of State told our committee last week—I think that his words were that he was as passionate as we were about interconnection. That is to be commended. I remain of the view that it would be helpful to have a clear commitment to a strategy in the Bill. In the light of the Minister’s comments, I will go away with a skip in my step and hope that over the summer the skip might progress into a run, and that we might eventually see something in the Bill. Despite all the work that we are doing to ensure that we have sufficient supply in the UK to keep the lights on, to keep consumers’ bills as low as possible and to deliver the energy that we need, it is imperative that we look to opportunities with our European partners. On that basis, I beg leave to withdraw the amendment.
Lord Gardiner of Kimble
Perhaps this may be a convenient moment for the Committee to adjourn during pleasure until 6.18 pm.
Baroness Worthington
“( ) The Secretary of State must ensure that any price designated for the purposes of 2(a) incentivises uptake of contracts by eligible generators.”
Baroness Worthington
My Lords, the amendment would add a new subsection to Clause 6. We now come to the meat of the Bill: the contracts for difference, which it is proposed will restart investment in low-carbon energy. I think that this is the bit of the Bill that we all share a desire to see succeed and do exactly as we hope.
The reason for my tabling the amendment, which, again, is very much a probing amendment, is for us to have a brief debate about the transition from the current support mechanism for the renewables obligation and the proposed contracts for difference. We will have an opportunity to discuss this further when we come on to the parts of the Bill that deal with the transition, but I have put the amendment here because it is important to highlight how important the strike prices will be in the new mechanism for supporting renewables.
The renewables obligation, which this replaces, had within it a mechanism that created a demand for renewables—an obligation on suppliers to go out and source renewable obligation certificates. That was seen as an essential part of moving us into a low-carbon system at a time when we had a perfectly well functioning system of high carbon. It was accepted that, to create the space for these new sources of power, we needed there to be an obligation to drive that market. We are moving away from that to a system whereby the contracts will be offered and strike prices published but there is no obligation on anybody to come forward and bid for them.
I am very grateful for the information that has been provided by the Minister recently, showing that a number of applicants have come forward for the financial investment early decision contracts. I think that 50 projects have come forward, with 18 potential gigawatts of capacity. So clearly the draft strike prices are driving interest and have given people a reason to come forward with projects, which is very encouraging. It would be useful to have something in the Bill that ensures that that is the situation going forward. It has been mentioned on a number of occasions that one problem we have is that, beyond 2020, there does not appear to be very much certainty for investors in renewables. There are a number of reasons or that. It is partly because the legally binding renewables targets set at a European level stop in 2020. Let us be honest in saying that that is what drives the majority of interest from the Government in seeking renewables, although I also acknowledge that the benefits that renewables bring in diversity of supply and potential cost reductions for consumers are also sought by government.
It is true—and I do not think that it would be particularly controversial to say—that there appears to be some mixed messages coming from the Government that some parts of government are less enamoured of the benefits of renewables than others. So there is this potential issue post-2020. The levy control framework will dictate a large part of how the contracts of difference work, and that, too, only has a time horizon to 2020. So there is understandable nervousness in the industry. I do not want to go over old ground, but we have had lengthy debates about the need for decarbonisation targets post-2020 to try to give back some confidence. In the absence of such targets, we are reliant at the strike prices being set at a favourable level to bring forward interest. That is why we have tabled this amendment—on the off-chance that there should be a moment in future when the Government are slightly less enamoured or, potentially, more hostile to renewables, and that there will not be the ability to kill off this market by simply offering very low and unattractive strike prices. That was not possible within the RO, because it had an inbuilt mechanism to keep demand growing for those technologies. Here we are very much more reliant on a planned, administratively and government-controlled mechanism. For that reason, we have sought to clarify that the purpose of the strike prices is to ensure that they are sufficiently attractive that investors will come forward.
This amendment also gives me an opportunity to comment on the strike prices. Those that were published are subject to consultation, and I am sure that the Government are busy receiving evidence from participants in the market and potential investors. I have heard that the offshore renewable community do not consider the proposal for offshore wind to be sufficient. Again, I think that that highlights how important the strike prices now are. The concern is that the length of contract is too short, that the digression in prices kicks in too soon and that the cost reductions expected are just not realistic. That further underlines why we need to get the strike prices right.
The amendment needs to sit alongside the amendment that we will come on to debate about an expert panel. I know that an expert panel is already in existence and has been helping the Government, which we acknowledge has been a useful part of this process. We will come on to discuss how that could be maintained and even enhanced by making it a more visible part of the infrastructure of the Bill.
I also take this opportunity to say—this is slightly technical so I apologise in advance—that the way in which the supply obligation created in Clause 9 also interplays with the strike prices is important. I am stretching the amendment a little too far, maybe, to talk about this here, but it is worth noting that how you construct the obligation on suppliers to pay towards the strike prices could have quite an impact on the incentives that the suppliers have to then go forward and seek CFDs. If you constrict the supplier obligation in one way where the suppliers are directly exposed to the prices set in CFDs, they will have a greater incentive to go forward and seek those CFDs. If, however, it is a levelised, averaged-out cost to which they are not able to hedge their position through their own participation, it dilutes that signal.
I apologise, but that is all wrapped up in our concern to get the strike prices right. We will, I hope, soon discuss the technical expertise needed to make sure that that happens. I have mentioned why I think something should be in the Bill because it acknowledges the different system that we are moving to from a situation where the RO had an in-built guarantee that there would be demand for these projects to one where we are very reliant now on getting the price right. I beg to move.
Viscount Hanworth
My Lords, we know that strike prices will differ across various technologies but I query whether that degree of flexibility is sufficient. There may be a case for varying the strike prices to cater for the different components of the same technology. I am thinking, for example, of the differences within the technology of gas powered LGC generation between the base load CCGT plant and the plant that is devoted to satisfying peak demand, which may be OCGT.
The cost profiles of the two varieties may be very different as will the wholesale prices commanded by their outputs. Should they be subject to the same market reference price and the same strike price? I am asking that question, in all innocence; it is not a tendentious question. But I have observed that the Minister has indicated or implied that there may be special accommodations within certain technologies for interconnection. If I am making any assertion, it is that we need a lot more detail and I am not sure that it has yet come forth. We need a lot more detail that would address the realities of electricity generation.
Lord Teverson
While I am sympathetic towards this, I have the impression that if the Government do not want this to work they will find a way to make it not work. Such an amendment is probably not the thing that saves this. Therefore, I am not sure that this works, but in terms of trying to make sure that there is some commitment to this form of energy generation in the future, I understand the motivation entirely. However, I suspect that any future Government who did not want to do this would find another way around it.
Baroness Verma
My Lords, I thank the noble Baroness, Lady Worthington, for her amendment and for prompting the debate on strike prices for CFDs. Amendment 55ZC raises the important point that the draft strike prices we published on 27 June must be set at a level capable of incentivising investment. This is extremely important, and I am grateful for the opportunity to reassure noble Lords. As they will be aware, the draft strike prices were published on 27 June with their supporting detail for consultation in the draft EMR delivery plan on 17 July.
I would like to provide reassurance to the Committee that the Government have put extensive effort into ensuring that strike prices are set to balance the objectives of EMR stated in the Bill we are debating currently. They are to drive the necessary investment to meet our important targets while ensuring security of supply and value for money for consumers. The Bill ensures that all the functions exercised under it will take these important objectives into account. I therefore reassure the noble Baroness that the intent of this amendment is being achieved without the need for a further statutory requirement.
Further, we are working hard to ensure the process through which final strike prices are set is transparent, robust and informed by a full range of expert input, including from consumer groups. Our reason for consulting on the draft strike prices is to allow industry and all other stakeholders to scrutinise the figures and the evidence used to develop them and provide us with feedback to inform the final strike prices.
The strike prices proposed by the Secretary of State in the draft delivery plan were informed by two pieces of independent advice: first, analysis provided by National Grid to help the Secretary of State understand the potential impacts on the Government’s objectives, including the potential generation mix that the decision may incentivise, from different strike prices; secondly, that analysis has been subject to independent scrutiny by a panel of technical experts, as the noble Baroness said. Both these reports were published alongside the draft EMR delivery plan and copies were deposited in the Libraries of this House and the other place.
Turning to the setting of strike prices for investment contracts, as we set out in our update on Final Investment Decision Enabling for Renewables, which was published on 27 June 2013, strike prices for renewables generation will use the strike prices published in the final delivery plan. The potential terms, including the strike price, for any investment contract for Hinkley Point C will be set through bilateral negotiation, with specialist advice sought as appropriate and rigorous scrutiny of proposals.
I will write to the noble Baroness regarding the supplier obligation. I hope that she will withdraw her amendment.
Baroness Verma
I am having an amnesia moment. Will the noble Viscount remind me?
Baroness Worthington
I thank the Minister for her response. I am glad we have restored our equilibrium. We have had a very good working relationship throughout this and I apologise for my—I slightly put it down to the heat, if that is okay.
I am grateful for the response. This was a probing amendment, and we recognise and welcome the Government’s efforts to have input into strike price setting. It is important to the functioning of this EMR package, and we hope that it does what it hopes to do. I acknowledge that there will be, I hope, opportunities to review those strike prices should it turn out that the first prices do not do what we expect.
The Minister mentioned strike prices for non-renewable technologies. I have seen from documents that we might expect some more information on strike prices for CCS and nuclear in early August. If confirmation of that could be included in the letter, that would be fantastic. I beg leave to withdraw the amendment.
Lord Whitty
“Expert Panel
New schedule [“The Expert Panel”] has effect.”
Lord Whitty
My Lords, this amendment would provide for the setting up of an expert committee or advisory group. Our other amendment, Amendment 55ZG, would effectively write a schedule setting out the role and operation of that group.
As my noble friend said just now, there are, of course, technical advisory groups available to the Secretary of State, the department and Ofgem on all sorts of aspects of the Bill. They exist as energy policy is developed. The importance of this role is that we would be putting it on a statutory basis to ensure that there is some check on how the process that we are setting up under the Bill is operated in practice and to give all parties some degree of reassurance and demystification about a process which is very novel and not widely understood. It is one where the Government are still working out the details and which will undoubtedly encounter some hiccups, growing pains, difficulties and setbacks as they try to implement it.
As far as the general public are concerned, this is a completely novel concept. They sort of understand a market, but this is not a market. They understood the old CEGB system, more or less, but this is not a centrally controlled system. It is not a system which is really being delivered by the regulator in the normal sense, which was how the market was for the past couple of decades. It is, perhaps, a managed oligopoly but with big companies—big oligopolists—which by and large are not trusted. These are government deals which necessarily have to be complex and negotiated behind closed doors, but the outcome will arouse misunderstanding and suspicion unless there is some assurance that they have been properly audited in some form or other.
These are contracts for a major part of our energy supply, which last for 15 or 25 years. We are locked into those contracts, and we therefore need experts to look at how they will be operated by the department or Ofgem, or possibly its successor under a different Government. The way in which they deliver will determine a lot of our energy mix and, effectively, determine what broad price business and domestic consumers will face. Hence, they will have social, economic and competitiveness implications and may have serious implications for our energy security, as they are one of the main means of delivering it.
Part of the mystery of all this—even to me, who has tried to understand it through these deliberations—is that the contracts will all be delivered by a counterparty whose form has yet to be defined. We now know that there will be a single counterparty, although that is not fully reflected in the Bill. We know that it will be a private but government-backed company. Apart from that, we do not know what its responsibilities, accountability or structure are likely to be. It will be responsible for the government side, or perhaps the societal side, of these very important contracts. Over 15 or 25 years, the contracts will go through periods of substantial change and may be required to be reviewed or reassessed. In some cases, the contracts will probably not last the full 25 years with the same company because the structure of companies is likely to change, as it has over the past 25 years.
We need some reassurance. At the moment, the Secretary of State and the rather shadowy counterparty are the responsible bodies, supported by Ofgem and by advice from National Grid. Before we go on from this part of the Bill, we need at the very least to have a formal system of advice built into that process so that on each contract for difference and each investment contract there is somebody looking at its financial and legal structure and its value for money. That would not be for the company or indeed for the strategy, but for the consumers and for the security of supply to our businesses and householders. The advice that will be given to the Secretary of State, the authority and the counterparty needs to be seen to be neutral or non-interested in the affairs of the various parties involved.
The first part of the amendment sets out the duties of such a group to advise the Secretary of State and the counterparty on the development of those contracts and to look contract by contract at their effectiveness. The last part deals simply with the composition, but the composition is important. Vitally, it has an independent chair appointed for probably two terms of up to eight years in total, and importantly has a consumer representative involved. At the end of the day, as the Minister reminded us, and as her predecessor constantly reminded us when discussing energy Bills, this is ultimately government policy focused on benefit to the consumer, by which we mean both business and domestic consumers. We need consumer representation and technical, academic, economic and technological advice to the counterparty and the Minister in drawing up these contracts. We are looking at value for money for the consumer.
I hope that the Government will take seriously the need to build into the process some form of such a body. They may not approve of the wording of the amendment and may wish to narrow or broaden its terms of reference. On the face of it, there is no reason why this should not be extended to capacity mechanism deals as well. I hope that the Government will see the sense in having a body that is publicly accountable and will report to Parliament. Certainly if the Secretary of State refuses to accept its advice in relation to particular contracts, it will require the Secretary of State to spell out why such advice has been rejected, and there will be a report to Parliament.
This must be to the long-term benefit of this process in working out at the point of delivery the policy objectives behind this Energy Bill and delivering the long-term interests of consumers of energy in this country. I hope that the Government will consider the proposition. As I say, I do not expect them necessarily to accept the wording, but I hope that they will come up with an entity that performs this and provides a degree of demystification, accountability and a high degree of public and consumer reassurance. I beg to move.
Lord O’Neill of Clackmannan
I express my support for the amendment. A number of the utilities are doing something on their own behalf to try to present themselves to the regulator as responsible citizens, as it were. They tend to use expressions, such as stakeholder engagement monitoring, which is a bit of a mouthful. If it is good enough for the utilities to do it independently to try to present themselves in a way that will meet the requirements of the regulator, it is surely appropriate that this rather complex market system that we are seeking to construct should have a degree of independence. I do not think that it should be seen as anything other than sympathetic monitoring. It is in everyone’s interests that the system works and that those who monitor are credible and independent.
The manner in which it has been constructed here, as my noble friend said, is not necessarily the final word, but the principle of having in the Bill a monitoring mechanism that is seen to be independent—to the extent that these things are possible—of government, the utilities and other players is a highly desirable state of affairs. There is an awful lot of public concern and lack of trust in the utilities and the associated bodies around them. This would go some way to reassure the public that there was an independent monitoring body.
Viscount Ridley
My Lords, I sympathise with a great deal of what the noble Lord, Lord Whitty, said, but I worry that the amendment would be counterproductive and produce a worse result. We had an interesting debate last week about the importance of competition in keeping capitalists honest. We are all agreed about the danger of setting up a system that will be extremely prone to crony capitalism, which will be such an oligopolistic system that it will be easy to game and to lobby the Government in ways that can be helpful. I am worried that this panel of experts will probably make the problem worse and will remove accountability from Parliament, which is ultimately where we will be able to scrutinise this. As the scientist Richard Feynman once said,
“Science is the belief in the ignorance of experts”.
We have to bear in mind that experts get things badly wrong quite often.
We have heard a great deal, even today, about the need to help producers of energy. I am sorry if I sound like a cracked record on this, but we are not here to help capitalists. We are not here to give certainty to investors or to make producers of energy comfortable. We are here to get the best deal for consumers of energy, whether they are pensioners, single parents or indeed the owners of small businesses. We will not do that by offering these extremely high strike prices and then leaving a group of experts, who will be easily captured not just by the industry but by other pressure groups, to monitor the system. We therefore have to be careful when handing responsibility away from Parliament and the Government to a panel of experts who, as I say, will be easily captured by industry or pressure groups.
Lord Oxburgh
My Lords, I support the general thinking behind the amendment, which is different from the amendment that we debated a week ago about a higher-level advisory committee. I am not sure that I agree with the noble Viscount, Lord Ridley, in his pessimistic approach to this. I do not see the amendment as taking power away from Parliament or diverting interest in that way. It could provide the kind of information and scrutiny that makes Parliament’s role easier.
The one point that I would make, which has not yet been made on the amendment, is that the most important thing about a panel is not just its expertise but its continuity. At the moment, there is very little corporate memory within DECC, and bodies such as an expert panel can indeed provide continuity. I agree that it has previously been very important to solve things in this way. I therefore hope that the Government will take on board the broad intention of the amendment.
Lord Jenkin of Roding
My Lords, my mind goes back to the group set up last year under the chairmanship of the noble Lord, Lord Oxburgh, to look at the draft Energy Bill. My recollection is that as a result of the evidence we received, which was very good and knowledgeable, our main worry about the contents of the draft Bill was the huge powers being given to Ministers. Some of that has now been modified. For instance, there is now an infinitely better counterparty arrangement than existed previously in the draft Bill, in which there was almost nothing. There have also been other changes.
However, certainly in the initial stages of the operation of this contract for difference, one is going to be almost entirely in the hands of Ministers. They are of course accountable to Parliament, and I entirely accept the point made by my noble friend Lord Ridley that that is the main avenue of accountability. What worries me is the question of whether the panel that has been proposed by the noble Lord, Lord Whitty, would actually make any difference. When you have so much power concentrated in the hands of Ministers—and one has to say that there is not all that much public faith in Parliament at the moment or in whether parliamentary accountability would be effective—one is running the risk of endless cases of judicial review. The growth of judicial review in our system over the past 20 years has been absolutely colossal. Everyone finds it possible in some way or another to take a complaint against authority to judicial review. Some of it has no merit at all but is enormously time consuming, very expensive for those who have to defend it, and a great absorber of the judicial power of the courts. I worry, given all these powers in the Bill, whether accountability to Parliament will be enough.
I listened carefully to the noble Lord, Lord Whitty, and there are obviously some attractions in what he was saying. On the other hand, the point made by my noble friend Lord Ridley about the way that any panel such as this could be got at is not without substance. We are all familiar with situations of that sort. In relation to another amendment, which I may not be here to move because I shall not be here in August and we will not reach it tonight, the power of very large corporations such as the big six generators and distributors, when contrasted with the power of very much smaller bodies that might be affected by their activities, is something of which people are very well aware. What is your remedy? You can go for judicial review, and a panel of the sort suggested may be subject to the same pressures.
All this is inherent in the nature of the new electricity market reform, which is the main purpose of this Bill. I agree with those who say that there is a great deal of hope about it on the part of the Government that it will work. I studied the paper sent to the Delegated Powers Committee of this House, in response to its request for more information, and wondered how anybody could make that system work. That is my great anxiety on this issue—and I am not sure that a panel would have any impact.
For the remainder of the time we have to scrutinise the Bill, we must do as much as we can to try to get the regulations in a form in which the authorities can be made accountable to Parliament as to whether they are in breach of regulations or not. Everybody has to do their best to make it work, but I shall listen with great interest to what my noble friend the Minister says in answer to the suggestion of a panel. I think that we shall hear what we heard before—that there are a great many advisers already in the department and they do not want any more, thank you very much. I understand that argument. But the more I hear about how the system is intended to work, the more we have these huge volumes of paper that are churned out by the department, which is doing its best to keep us informed. It fills me with great foreboding. I hope that I am wrong, but I have a horrid suspicion that things are not going to turn out quite as has been hoped for by everybody who has expressed themselves, as I have, in favour of this Bill.
I shall listen to my noble friend on the question of whether a panel would help or not. At the moment, my mind is not yet clear on this.
The Earl of Caithness
Given that the noble Lord, Lord Whitty, wants to formalise this proposal and put it in the Bill, does he anticipate that members of the panel, and the staff, should be paid? If so, is that going to be pensionable? If that is the case, where is the money coming from?
Lord Berkeley
My Lords, I would like to speak briefly in support of the amendment. I see it as a way of advising the parties on the details in the contracts, which are quite often unclear or not there at all. As we have debated before, and many noble Lords have said, we are dealing with some very large companies and very large amounts of money are at stake. So I think there is a comfort in having something like this, but the key is probably who will be on the expert panel and what their background, experience and history will be.
The Minister said in her response to the last amendment that the Government took independent advice on the strike price and scrutiny from technical experts. I would like to ask who they work for, or have worked for, because I am afraid that that sometimes colours how one thinks about these things and how they might like to think. If they are seconded from the big six, as consultants or something, how independent are they? It would be very helpful if the Minister could write to me and say who these people are, and who they work for or have worked for. At this stage, it would give people a lot of comfort to know that there was something like this—an expert panel to look at these things and form an independent view on things such as strike prices and all the other things in Clause 2. I do not think that Members of either House, in the Chambers or the committees, will want to look at those things in too much detail.
Baroness Liddell of Coatdyke
My Lords, I have great sympathy with what my noble friend has said. The noble Lord, Lord Oxburgh, drew attention to the fact that we see in DECC no institutional memory. We should put alongside that the fact that Ministers rotate regularly. There needs to be somebody or some organisation in the middle that is the honest broker. When I was the Energy Minister, I had a panel of experts which was hugely valuable to me. It involved people such as Dieter Helm and had real gravitas. It was really useful to be able to bounce ideas off people, but this proposal takes it to another level. My noble friend said that people in the very enclosed world of energy policy have often had opportunities to work in the big six or for some of the significant players in the field. It is useful to know who is taking these decisions. To the noble Earl, Lord Caithness, I would say that sometimes you have to spend a penny to save a penny. If you spend your money on getting people who can stop you making mistakes, you will avoid spending not just millions but perhaps billions of pounds making mistakes just for the sake of a few ha’pennies to ensure that you have proper advice. My goodness, government spends enough on consultants. Why not put some of that money to good use getting some expert advice?
Baroness Verma
My Lords, I thank the noble Lord, Lord Whitty, for his amendments. Amendments 55ZF and 55ZG would set up an expert panel to provide independent advice to the Secretary of State on setting strike prices, development of contract terms and whether to issue CFDs or investment contracts. These are extremely important matters and I am grateful to the noble Lord for the opportunity to debate them.
The Government wholly agree with the noble Lord that independence, expert scrutiny and engagement with a wide range of stakeholder views are important principles. For the purposes of setting strike prices for renewable technologies, we are ensuring that the process through which those strike prices are set is transparent, robust and informed by a full range of expert input and stakeholder consultation. On 17 July, we launched a consultation on the proposed strike prices to allow industry and all other stakeholders, including consumer groups, to scrutinise the evidence and analysis that informed them. We are asking for their feedback to inform the final strike prices.
Further, to ensure that the strike prices proposed by the Secretary of State in the draft delivery plan were informed by independent advice, we asked National Grid to conduct analysis to help to understand the potential impacts of strike prices on government objectives. We also commissioned an interim panel of technical experts to scrutinise that analysis impartially. Both those reports were published alongside the draft EMR delivery plan and copies deposited in the Libraries of this House and the other place.
The process allows us to be confident that the strike prices are informed by robust evidence in an appropriately transparent way. We have been able to use existing powers to appoint the interim panel of technical experts, so they are already performing their scrutiny role. Following Royal Assent, we intend to establish an ad hoc advisory group, with Clause 139(2)(c) providing the spending authorisation to support this work. This, with the steps described above, will ensure that the Secretary of State makes an informed decision having considered a full range of views before setting the level of support in the final delivery plan. However, I do not agree that these principles need to be delivered by creating a new public body; we are already delivering them.
On setting strike prices for investment contracts, as we set out in our update on Final Investment Decision Enabling for Renewables, published on 27 June 2013, strike prices for renewables generation will use the strike prices published in the final delivery plan. The Government have appointed external specialist advisers to help to ensure that any investment represents value for money. We will publish summaries of reports from these advisers alongside the contract, in the event that agreement is reached, when it is laid before Parliament. In addition, the Government made commitments and amendments in the Bill in the other place to ensure that investment contracts are transparent. For all these reasons, we do not think it is necessary that there is separate scrutiny of whether an investment contract should be offered by the counterparty.
Finally, the noble Lord raised concerns that the contract terms should be subject to scrutiny and that there should be independent scrutiny before the counterparty offered a contract. I strongly agree that the terms on which the CFD or investment contracts are set need to be scrutinised. However, I consider that this should be done not by a separate expert panel but by the industry and consumer groups at large. This is why, over the past year, we have been working with an expert group consisting of industry and consumer group representatives in the development of key terms, something that I am sure the noble Lord, Lord Whitty, will welcome.
We have also had extensive discussions with industry, consumer groups and others with regard to how contracts will be allocated. The allocation process will be run by National Grid which will act within rules set out in secondary legislation to allocate CFDs to eligible applicants. The intention is that the allocation process will be rules-based and relatively mechanistic to allow investors and developers to make an informed decision about their chance of being allocated a contract. If an applicant is successful, National Grid will direct the counterparty to offer it a contract. Therefore, we do not think it appropriate to include another process which would add considerable complexity to the system.
We will shortly be publishing the CFD contract spine and further detail of the allocation process, which builds on the draft contract terms and operational framework published in November 2012. This will allow industry and other stakeholders to examine the terms of the contract and the allocation process and to discuss them further with my officials. Renewables investment contracts will be based on the final standard form CFD and therefore will be subject to the same scrutiny as aforementioned.
Before I ask the noble Lord, Lord Whitty, to withdraw his amendment I shall give some further information. He asked about the structures advising the Secretary of State and the counterparty beyond Ofgem and National Grid. For the first panel, we used a procurement process but, following Royal Assent, we intend to establish an ad hoc advisory group. We have not only made a policy commitment to establish a panel of technical experts but already appointed an interim panel to ensure they are operating in a timely and effective manner.
On reviewing strike prices, we have the opportunity to revise them through the annual updates to the delivery plan, and we intend to do that to set strike prices at an appropriate level.
My noble friend Lord Jenkin asked whether there would be enough accountability. We recognise that there is a need for robust accountability and transparency with such powers, which is why we introduced a duty on the Secretary of State to report on the Government’s activities in relation to all EMR functions provided for under Part 2. There is also a five-year review in Clause 55.
The noble Lord, Lord Berkeley, asked who made up the panel. I have a list of the members and their résumés. I think it would be helpful to the Committee if I do not spend time going through them but write to members of the Committee on the make up of the panel. I hope the noble Lord, Lord Whitty, will withdraw his amendment.
Lord Whitty
I thank the Minister for that detailed reply, and I thank my noble friends Lord O’Neill and Lady Liddell and the noble Lord, Lord Oxburgh, for supporting this amendment. I think the Minister missed an essential point. Obviously, the Government have made great efforts, and a lot of people in the industry and even in consumer groups think they have been properly consulted in the process of reaching the stage we are at. However, consultation is not the same as having a firm, continuous source of advice, independent of the department.
The names that the noble Baroness will supply us with may be exactly the kind of names we would want on a Committee of this sort. It is impossible to avoid all possible accusations of conflict of interest in this because the energy field is fairly esoteric. Nobody can be as pure as Caesar’s wife in this area, as we have probably all found, but they would demonstrate a degree of expertise. The Minister described it as an ad hoc technical advisory group, which does not provide the confidence needed in the industry, among the public, parliamentarians and consumers, that this process is being put on the best possible basis with the best possible technical, consumer, economic and legal advice.
The noble Lord, Lord Jenkin, raised the issue of judicial review. All Ministers are beset with advice from officials saying, “If you do this you will be subject to judicial review”. There are both positives and negatives from that. The process in this proposed new clause would protect people against frivolous attacks on judicial review. It would mean that the Minister had to go through a process with a body embedded in statute, had some responsibilities to Parliament and consisted of people with a wide range of technical, legal and financial expertise. I am afraid that reference to an ad hoc committee is not the same. It was also argued that it is Parliament’s job. It would probably help Parliament in the guise of select committees, as my noble friend Lord O’Neill suggested, to do its job in relation to what are vital contracts that will last for an enormously long time and have tremendous implications for our future energy situation. At the very minimum, the Government need to recognise that reassurance is needed that the proper process has been gone through.
The noble Lord, Lord Oxburgh, who is no longer in his seat, mentioned continuity. People who are appointed for four and eight years in this area will outlast every Minister and most officials. It is important that that kind of expertise is retained. I would think of extending the terms if I were writing the proposal properly. The Government may have views on that. Having that separate from the day-to-day responsibilities of Ministers and officials, and the month-to-month responsibilities of a regulator is an important part of the process that we are putting into law. We are moving into unknown territory in some respects and doing so by a leap of faith—one that is well informed by those who have been involved, but not understood by those who have not been involved.
It would be a protection for Ministers, as well as for the process, the counterparty and the Secretary of State, if we had a body with this authority, independence and statutory backing. I am disappointed that the Minister is not tempted to go down this road. As I said, I never expected her to pick up the exact wording, but this concept needs to be maintained in our minds. It may well be that we will return to this later in the proceedings. I beg leave to withdraw the amendment.
Lord Berkeley
“(4) Regulations must set the duration of support provided by CFDs to renewable technologies at a minimum of 25 years.”
Lord Berkeley
My Lords, I tabled the amendment as a result of a lot of communication from the renewables sector about its concerns about raising finance, given the current uncertainties that are going on, not only around the Bill but around a few others things that I will mention. The sector says that that is making it difficult to raise finance, which of course means that less electricity will be produced.
The risks and uncertainty are around the strike price and whether and how much of their power these companies can sell. In addition to that, there are other uncertainties such as planning. The planning system has become better in recent years with the legislation that both Governments have taken forward, but it is still uncertain. We still sometimes see ministerial decisions that look a little odd. It takes time and a lot of money, as we all know. But there is also the question of political risk. However, it is not helpful when Ministers and, I am sorry to say, Prince Charles make statements about not liking windmills or something. This does not apply only to windmills, but these technologies should be developed and commissioned and permissions sought for their planning on their merits, be they offshore or onshore. We have even heard about how successful PV is in Germany today, because the sun is shining.
There is a risk to these new developments. The renewables sector has said to me very strongly that if it could get 25 years, duration of support for CFTs, it would encourage companies and their investors to go for a greater volume of the different technologies, not only the ones that are going up already quite successfully but new ones, much more quickly and easily. I beg to move.
Viscount Ridley
My Lords, I know that particularly in the case of offshore wind a Royal Academy of Engineering report is forthcoming, which I hope we will see before Report. Rumours are that it is extremely negative about the risks and dangers of the practicalities of installing wind turbines on a large scale, and in particular on their likely lifetime.
If we were to consider giving an offshore wind company a 25-year contract for a technology that is supposed to last 20 years, and many engineers think will not last more than 15 years, we will not have done the consumer and indeed the taxpayer a service. We would have let them down very badly. We have to take into account that a lot of these technologies will turn out not to last as long as we thought and deliver the benefits that we thought they would. In the case of offshore wind, once again, it is becoming clearer by the day that the carbon dioxide savings that offshore wind will deliver will be very disappointing because of the need for backup power, the need for that backup power to be open cycle, as has been mentioned, and because of the cost and carbon cost of some of these technologies.
It would be a mistake on behalf of the consumer to enter into these eye-wateringly high, £155 per megawatt-hour, strike price costs for a quarter of a century when all sorts of things may change over that time.
Baroness Liddell of Coatdyke
I should remind your Lordships of my registered interest as a director of the Offshore Renewable Energy Catapult. I am not going to debate with the noble Lord the benefits or otherwise of offshore wind, other than to say that it is not a brand-new technology. I can remember something like 20 years ago inaugurating the first offshore wind farm at Blyth in Northumberland. The technology in its basic form is tried and tested, and is another bit of our armoury. Those of us who, like me, are in our prime, remember the six-day war and the consequences of not having a wide basket of energy sources available to us.
I am not 100% certain that I agree with my noble friend that we should be talking about contracts of a length of 30 years. However, we are talking here about a probing amendment and the uncertainties. We are coming into a big part of the Bill, where we are going to talk about uncertainty for investors. It is about how you secure a rate of return and mitigate risk. That is what was in my noble friend’s mind when he tabled his amendment, and on Thursday we will come to an amendment from the noble Lord, Lord Roper, which also brings us back to the issue of uncertainty.
I support what my noble friend is trying to do. There is a bit of a debate on the length of time, but the key to this aspect of the debate is to remove uncertainty. When the noble Lord, Lord Jenkin, was speaking, I came across a good analogy. When you get on a plane, after take-off the pilot comes on and says, “Don’t worry, I’ve never flown this plane before, but I’ll have read the manual before it’s time to land”. We have a wee bit of a feeling like that about this Bill.
The Earl of Caithness
I hope that my noble friend will not be lured by the special pleading of the noble Lord, Lord Berkeley, on this issue. I particularly thought that the noble Lord was wrong to say that it was unhelpful for anyone to say that they disliked windmills. I dislike windmills; I happen to be able to count 11 wind farms out of my window, which is probably more than anyone else can in the Committee, and I would be very pleased if they were not there for 25 years. It does not do tourism much good and, as a countryman, I think that it spoils the country. If there were modern, different technologies that could replace wind farms, which I agree are at the moment essential, although perhaps not in that quantity and dispersal that I can see, I would be only too pleased if they were removed.
One of the most interesting bits of evidence that we got in European Sub-Committee D was how wrong everybody has been on energy in the past. I see that the noble Lord, Lord Whitty, is in agreement with me. For those of us who were relatively new to this subject, it is fascinating how wrong the forecasters have been time and again in the past 15 years. So for goodness’ sake let us not fall into the same mistake of tying the Government down to a 25-year timescale when things could change. I have absolutely no doubt that they will—and do not let us give too much security to the producers of electricity. Capitalism is about taking risks. In the past, people have taken enormous risks. Some have fallen flat on their face and some have been hugely successful. However, it should not be for us as the consumer or the taxpayer to featherbed them; they must take a fair share of the risk. It is a very difficult balance that the Government are trying to get right, so please let us not make it more complicated by tying them to a 25-year timescale.
Viscount Ridley
My Lords, I quickly intervene because I failed to declare an interest. The noble Baroness, Lady Liddell, mentioned Blyth, which reminded me that one of the turbines at Blyth turned out to have been built on land on which, although I do not own it, the mineral rights were reserved by my grandfather. Therefore, I discovered that I was unwittingly receiving money from a wind turbine. I shall give that money away so that I do not feel sullied by it—but anyway, I feel that I should declare it.
Baroness Liddell of Coatdyke
I should reassure the noble Viscount that the wind farm that I inaugurated was offshore, so he is to be congratulated if he managed to get some money out of it.
Baroness Worthington
My Lords, I am grateful to my noble friend Lord Berkeley for tabling this amendment for no other reason than that we found out that very interesting fact. We cannot support this amendment. I have great sympathy with the concerns that have been raised that 25 years may be too long, but the way this amendment is phrased means that it would capture all renewable technologies. There is a great range of technologies that the strike prices are seeking to bring forward, and at the moment it seems that the majority of them might be conversion to biomass. I do not think you would want to lock that in to 25 years. I support the spirit behind the amendment of questioning and trying to understand the different lengths of contracts. That is something that we could discuss, but I do not think this amendment should make its way into the Bill.
We now have the draft delivery plan and the strike prices for renewables. The plan contains some suggested lengths for contracts, but I do not think we yet have anything similar for CCS and nuclear. We are expecting some more information on that in early August, when we will all be having a much deserved and well earned rest. It would be helpful if the Minister were to say something about that in her response.
Baroness Verma
The amendment moved by the noble Lord, Lord Berkeley, seeks to ensure that renewable technologies in receipt of a CFD have a contract life of at least 25 years. As the noble Lord is no doubt aware, we have recently published more detail on the contract terms, building on the operational framework of November 2012. This reconfirms our position that the appropriate contract length for payments to renewable technologies receiving a generic CFD remains 15 years.
In determining the length of the CFD, we considered a number of factors. The 15-year length is based on a trade-off between value for money for consumers, affordability within the levy control framework and bankability for investors. For the purpose of setting the contract lifetime, we have assumed that investors will require debt to be repaid within the CFD life. Therefore, having too short a contract length could impact on the cost of debt finance, given the increased exposure to wholesale price risk. Our analysis also indicates that investors discount very heavily the last few years of revenue from a project, particularly when compared to the social discount rate. Taking all these factors into account, extending the length beyond 15 years would not necessarily be significantly valued by the investor but would come at a cost to consumers.
In addition, the noble Lord may be aware that guidance from the European Commission states that support must be less than the accounting life of the asset. Extending the lifetime duration as the noble Lord proposes would extend a CFD beyond the asset life of a number of renewables technologies, which are generally less than 25 years. All these factors suggest to us that a contract life of 15 years is still appropriate.
I should also make clear that just because there is a generic contract, that does not prevent the Secretary of State directing the counterparty to issue a contract which differs on certain terms where that is considered appropriate. We have retained the ability to do this and would look to treat such occurrences on a case-by- case basis.
The noble Baroness, Lady Liddell, asked about the uncertainties of risk, mitigating them and ensuring appropriate rates of return. The strike price provides certainty on levels of support for the length of the contract. There will also be some change in legal protections. More details on the CFD terms will be published in early August, as the noble Baroness, Lady Worthington, said.
The noble Baroness, Lady Worthington, asked about nuclear and CCS. As she knows, we are currently in negotiations on a nuclear project, so I am not able to comment further on that point. On CCS, it may be better if I write to her. I hope that the noble Lord, Lord Berkeley, will withdraw his amendment.
Lord Berkeley
My Lords, I thank the Minister for her reply and am grateful to all noble Lords who have spoken on the amendment. I did not expect that it would be accepted but we have had a good debate. The noble Earl, Lord Caithness, indicated that I had a go at him for not liking windmills, which is not true; I did not mention his name.
The Earl of Caithness
You commented that you did not like people who said that they did not like windmills; I just fall into that category and am happy to be there.
Lord Berkeley
Perhaps I may suggest that if the cap fits, wear it. More seriously, as regards whether the specified period is 30 years, 20 years or whatever, I worked briefly on North Sea oil projects 30 years ago, some of which did not last that long. My noble friend declared her interest and I am sure that windmills will need regular servicing in that time. The key question after they are built is whether they will continue to operate, produce good electricity when we want it and make a good return for their investors. We have had a useful debate and I shall mull over what noble Lords have said. I beg leave to withdraw the amendment.
House of Lords
Birth of a son to Her Royal Highness the Duchess of Cambridge
(10 years, 9 months ago)
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Lord Hill of Oareford
That an humble Address be presented to Her Majesty The Queen as follows:
“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to congratulate Your Majesty, His Royal Highness the Duke of Edinburgh, their Royal Highnesses the Prince of Wales and the Duchess of Cornwall and their Royal Highnesses the Duke and Duchess of Cambridge on the birth of a son to Her Royal Highness the Duchess of Cambridge; to signify our great pleasure at this happy event; and to assure Your Majesty of our continued loyalty and devotion”.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
My Lords, I beg to move that an humble Address be presented to Her Majesty the Queen to congratulate Her Majesty, and other members of the Royal Family, on the safe delivery of a son to their Royal Highnesses the Duke and Duchess of Cambridge.
This is a very happy day: first, for the Duke and Duchess of Cambridge personally, as it is for any young couple who experience that mixture of wonder and relief when their first child is born; but, secondly, for the whole country because it means that the succession to the Throne is further secured. No reigning British sovereign has been able to look quite so far ahead since the birth of His Royal Highness Prince Edward of York as a great grandson to Queen Victoria in 1894.
The bells are pealing from the Abbey; the guns have fired their salute. But it is the crowds which have once again gathered outside Buckingham Palace which are the real mark of the great affection in which the Royal Family is held. There, too, in the palace forecourt is the easel bearing the notice from the Queen’s gynaecologist, last used to announce the birth of Prince William of Wales in 1982. When moving a similar Address on that occasion, the late Lady Young said:
“The Monarchy, within our constitution, finds itself more securely based than ever before upon the affections of the people”.
My Lords, amen to that. It was true in 2011 at the Royal Wedding, it was true in 2012 for the Diamond Jubilee, and it is clearly true today.
The Duke of Cambridge has started his public life not only through royal duty and service in the tradition of his parents and grandparents but as a serving officer in the Royal Air Force. I am sure that his father is very proud of him, as would have been his mother, at today’s happy news.
The Duchess of Cambridge has won many admirers for the way in which she has taken up her royal duties, supporting the Queen and in her own interests of art, children and sport. She and the Duke of Cambridge were superb ambassadors for the Royal Family, and for the United Kingdom, during the Olympics and the Diamond Jubilee.
We are right to celebrate this birth as a national event, but I am sure we all hope that the Duke and Duchess, and perhaps particularly the new Prince, can have some privacy. Royalty carries burdens as well as privileges, and those burdens will fall on the young Prince’s shoulders all too soon.
Our Queen, raised in the imperial court in the first part of the 20th century, today sees a child who is not likely to succeed to the Throne until well into the second half of the 21st. When that time comes, one thing is certain. The new Prince could not have a better example of duty and service than that set by his great grandmother and, indeed, his great grandfather. We wish the child well; we wish his parents well for his upbringing; and we offer Her Majesty the Queen our continued loyalty and our warmest congratulations.
Baroness Royall of Blaisdon
My Lords, on behalf of Her Majesty's Opposition, I warmly endorse the sentiments expressed by the noble Lord the Leader of the House to Her Majesty the Queen, His Royal Highness the Duke of Edinburgh and their Royal Highnesses the Duke and Duchess of Cambridge. This is a moment of real joy for the Duke and Duchess, and we send them our warmest congratulations on the birth of their son—an extraordinary event for any new parent. It is also a moment of real happiness for people right across Britain, who will think with special affection of the Duchess, as a new mother, and her son.
Especially since their wedding in 2011, their Royal Highnesses the Duke and Duchess have given a great deal of happiness to the nation, and the occasion of the birth of their first-born child gives the nation the opportunity to make known its feelings in reply. It is clear that the nation is indeed doing so. I trust, however, that the nation will also allow them privacy to delight in their family life.
The fact that the Duke and Duchess’s first-born is a boy means that the Succession to the Crown Act 2013, which your Lordships’ House and the other place passed earlier this year, will now not need to be applied in the way it would have been had their first-born been a girl. But even so, the Act is the right thing for Parliament to have done in the modern age. It is an historic change and a welcome one, and I am sure that it will be well used in future.
Britain will rejoice in what we know will be an added delight to Her Majesty the Queen in the year celebrating the 60th anniversary of Her succeeding to the Throne in 1953. We on these Benches wish the Duke and Duchess, and the new Prince, long life and lasting happiness.
Lord McNally
My Lords, the Leader of the House and the Leader of the Opposition have moved and seconded this Address with eloquence and elegance. It is only left for me from these Benches, with a sense of honour and privilege, to wish the Duke and Duchess of Cambridge and their son a long and happy life in the service of this country.
Lord Laming
My Lords, it is a great honour and a real privilege, on behalf of my colleagues in the Cross-Bench group, to be associated with the sentiments already so well expressed. This is indeed a very happy occasion, and we gladly offer both our sincere congratulations and our very best wishes to Her Majesty the Queen and her family.
Your Lordships’ House has, time and again, demonstrated a particular interest in the well-being of children and families, so it has given us a very great pleasure to learn of the safe delivery of a son to the Duke and Duchess of Cambridge. Like so many loyal citizens in this country and, indeed, across the Commonwealth, we wish the baby a very long and fulfilled life.
We are indeed most grateful for this opportunity to express to Her Majesty and her family the joy the news has given us. We wish them well and offer our warmest greetings.
The Lord Bishop of Birmingham
My Lords, the day’s proceedings in your Lordships’ House begin far too often with the announcement of a death. My friend the most reverend Primate the Archbishop of Canterbury and my other colleagues on this Bench regret not being present today because they are attending the funeral of the late Bishop of Coventry, Colin Bennetts. None the less, it is a wonderful joy and delight for us to join in the words of colleagues in this House as we pause to celebrate the birth of a new baby. Their Royal Highnesses the Duke and Duchess of Cambridge can be assured not simply of the congratulations, prayers and good wishes of those who occupy this Bench but, I am sure, the whole of the Church and faiths in England and the rest of the country.
My friend the most reverend Primate the Archbishop of Canterbury, your Lordships may like to know, did not, as was the custom in times past, actually attend the birth. Instead, he has offered his own prayers and congratulations to their Royal Highnesses, sharing,
“in their joy at this special time”,
and praying that God would,
“bless this family with love, health and happiness”.
I am delighted to associate myself with his comments and offer my own prayers for their Royal Highnesses and their new son.
Every Sunday, up and down this country, we pray for our Sovereign Lady Queen Elizabeth that she will be guided by wisdom and by truth. It may well be that similar prayers are said for this newborn child in years to come. He will, too, we hope and trust, be the Supreme Governor of the Church of England.
It is not future responsibilities that prompt our celebrations today, but a desire that this child will have the strongest network of love and care. There has been huge interest in the royal birth around the country which, with sustained sunshine, British victories at Wimbledon and the Tour de France and an upsurge in that traditional English game of cricket, leaves the country basking in well-being. In all this warmth, we remember today that a new stage has begun for a young family. The infant has no idea what symbolic authority may one day be his; and so meanwhile, we pray that their Royal Highnesses will be guided and sustained as they take up the joys and challenges of parenthood. We humbly offer our congratulations, support and affection to the whole Royal Family.
Birth of a son to Her Royal Highness the Duchess of Cambridge
(10 years, 9 months ago)
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Lord Hill of Oareford
That a message be conveyed to their Royal Highnesses the Duke and Duchess of Cambridge in the following terms:
“May it please Your Royal Highnesses to accept the loyal congratulations of the Lords Spiritual and Temporal in Parliament assembled on the birth of a son to Her Royal Highness the Duchess of Cambridge; and to assure Your Royal Highnesses of our great satisfaction and pleasure at this news”.
NHS: Children’s Congenital Heart Services
(10 years, 9 months ago)
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Lord Sharkey
To ask Her Majesty’s Government what assessment they have made of the recommendation of the Independent Reconfiguration Panel in its report of 30 April on children’s congenital heart services that NHS England must ensure that any new review process properly involves all stakeholders.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, NHS England is taking forward the new national review of congenital heart services as quickly and effectively as possible, basing its actions on the recommendations of the Independent Reconfiguration Panel. I am advised by NHS England that it will ensure that all stakeholders have a chance to contribute to its review. Any decisions must carry the confidence of the public and be focused on the best outcomes for all patients.
Lord Sharkey
My Lords, the now discredited Safe and Sustainable review proposed closing the Royal Brompton Hospital children’s heart surgery unit, yet over the past three years this unit, along with Newcastle, has been the best performing in the country. Will the Minister reassure me that, before there is another proposal to close this or any other unit, he will publish a detailed model showing exactly what factors will be taken into account in any future proposal and how each factor will be weighted?
Earl Howe
My Lords, the first point to emphasise to my noble friend is that the new review is the responsibility of NHS England. It is not a piece of work that Ministers are in charge of. NHS England’s advice to me is that it is too soon to describe what the exact process will be. However, I can say that NHS England is developing a process that is, in its words, “rigorous, transparent and inclusive”, particularly in the use of evidence and data. As I have said, there will be opportunities for all stakeholders to participate in the review—including, importantly, the current providers of children’s congenital heart services.
Lord Walton of Detchant
My Lords, can the Minister give any estimate of how long this saga is likely to smoulder on? By all national and international comparisons, the unit at the Freeman Hospital in Newcastle upon Tyne has proved to be absolutely outstanding, and awaiting the outcome of this lengthy process is delaying a number of important and significant developments. Can the Minister give us any assurance about how long this will take?
Earl Howe
My Lords, my right honourable friend the Secretary of State wrote to NHS England as soon as the IRP’s report was published to say that it will need to work with all interested parties to ensure that progress on its new review of congenital heart services is made as quickly as possible. NHS England’s aim is that by June 2014 it will have developed, tested and revised a proposition for the review and undertaken work to identify a preferred approach to implementation.
Lord Woolmer of Leeds
My Lords, does the Minister recognise that the south Asian communities of Yorkshire, who felt deeply neglected by the previous review, will be watching with great care to see whether this review takes account of travel times and ensures that those communities most at risk of these issues are not only properly consulted but fully weighed in the balance?
Earl Howe
Yes, my Lords. The point that the noble Lord makes is extremely important. I think that there were a number of people who, for whatever reason when the Safe and Sustainable review was going on, felt left out of the picture. NHS England is clear that that should not happen again and that lessons have to be learnt so that this is a genuinely inclusive process.
Baroness Masham of Ilton
My Lords, does the Minister agree that adult and children’s services for congenital heart disease should be located on the same site to ensure continuity of care? When young people reach the age of 16, they seem to be thrown out of children’s service provision.
Baroness Howarth of Breckland
My Lords, during the previous difficulties and confusion when there was much lobbying and debate, the people who found it most difficult to follow the information and the evidence were parents. Presumably, they are the most important stakeholders, particularly in the case of children’s congenital heart disease. Can the Minister convey to NHS England the importance of finding clear and sometimes simple ways of helping parents at a time when they are stressed, anxious, worried about the geography and not able to understand the outcomes? They do not always have the best information with which to make decisions.
Lord Hunt of Kings Heath
My Lords, I refer the House to my health interests as set out in the register of interests. In the mantra of the market in the health service, which the noble Earl and his party are so wedded to, can he tell me when the Competition Commission can be expected to intervene in this issue, given that under the market mantra the decision to reduce the number of children’s heart centres reduces choice?
Earl Howe
My Lords, before I answer that, perhaps I may be so bold as to offer the noble Lord my congratulations on his silver wedding anniversary. I recognise why he has asked that question. It is too early to prejudge the final outcome of NHS England’s review, and I should stress that there is no preconceived result in its head. What I can say is that NHS England will need to engage with all key stakeholders throughout this review, including around any competition considerations.
Lord Mawhinney
My Lords, if I understood my noble friend correctly, he said that it would take until 2014 to test the process and then the review has to take place. Given the years that have been consumed in the past and that will be consumed in the future, what does my noble friend think all this is doing to the quality of service that is being provided and to the morale of those who are providing it?
Earl Howe
NHS England fully recognises that morale is extremely important and that it is fragile in certain locations. That is why the timescale is actually quite ambitious. Contrary to what my noble friend has said, its aim is to have a preferred approach to implementation ready by next June, which, given the scale of the task, is a major piece of work. It will of course build on the modelling and analysis that has already been done, so it is not going to be a wasted effort. In the mean time, I can reassure the House that children’s heart surgery is being delivered safely in all locations.
Lebanon
(10 years, 9 months ago)
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Lord Risby
To ask Her Majesty’s Government what assessment they have made of the current social and economic situation in Lebanon.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, the Syria crisis and, in particular, the influx of more than 600,000 refugees has had a serious impact on Lebanon’s social and economic situation. As part of the UK’s strong support for Lebanon’s stability, the International Development Secretary announced during her visit to Lebanon on 9 July that we are contributing a further £50 million to help Syrian refugees and Lebanese host communities. This brings our total support for Lebanon’s humanitarian response to £69 million, in addition to our contribution through the EU and international organisations.
Lord Risby
Does my noble friend agree that fate has been very cruel to Lebanon, which in living memory has suffered a terrible civil war, occupation by Syria which became destructive, an invasion, all the tensions now arising from the activities of Hezbollah across the border in Syria and, as my noble friend mentioned, the huge and tragic influx of Syrian refugees to the country? Given all this, can my noble friend give some detail about the broad spectrum of support being given to Lebanon at this extremely difficult time in its history?
Baroness Warsi
My noble friend makes an important point. The country has 7,000 years of history as a hinge between various continents and civilisations. Sadly and tragically, since its independence it has also suffered ongoing political challenges. I assure my noble friend, and indeed the House, that the UK stands firm in its support for the Lebanese state. We have a strong relationship and I can refer to a number of recent visits and support. For example, we strongly supported the UN Security Council statement on 10 July reaffirming international support for Lebanon. The Chief of the Defence Staff visited Lebanon earlier this month and discussed our plans to increase our assistance to the Lebanese armed forces. We have since announced an additional £10 million to bolster the armed forces’ ability to protect and manage the border. We also support trade and investment. UK-Lebanon exports are up 31% on last year’s figures.
Lord Anderson of Swansea
My Lords, the European Union has just decided to designate the military wing of Hezbollah a terrorist organisation. Will the Minister say how meaningful the distinction is between the military wing and the political wing of Hezbollah? What effect will it have on any representations we would wish to make to Hezbollah?
Baroness Warsi
My Lords, we do not see why the EU designation should impact on Lebanese political stability or on EU relationships with the Lebanese Government. We do not think that it will affect the EU and the UK relationship, but we feel that it sends out a clear message that the EU is united against terrorism and that there are consequences for terrorist attacks carried out on European soil. It is important, as I am sure noble Lords are aware, that the designation is of the military wing of Hezbollah. We recognise that Hezbollah’s political representatives will remain a legitimate part of Lebanon’s political scene.
Baroness Falkner of Margravine
My Lords, would my noble friend tell the House what discussions Her Majesty’s Government have had with the political wing of Hezbollah regarding its participation in the Syrian civil war?
Baroness Warsi
Discussions with all Lebanese political parties, including Hezbollah—it is a large part of politics in Lebanon—are ongoing. We have raised our concerns because there was an indication that Lebanon was to remain neutral in this particular conflict. Clearly, from Hezbollah’s own admission that has not been the case. We are deeply concerned and have raised our concerns with Hezbollah.
Baroness Uddin
My Lords, is the Minister aware of some of the allegations of violence against women, perhaps even of rape? If so, could she tell the House what work is being done to support women and families in vulnerable situations in those refugee camps?
Baroness Warsi
The noble Baroness may be aware of the Foreign Secretary’s specific initiative on preventing sexual violence in conflict. Part of that is to have experts advising at an early stage, when we look at how refugee camps are set up. For example, specific work is being done on where the toilets and wash facilities are for women—and to ensure that they are done in a way that means women are protected—and on where the food facilities are. That is part of the thinking going into the development of these refugee camps.
Lord Howell of Guildford
My Lords, the EU move to blacklist the military wing of Hezbollah is the right one, although it is a very sensitive area and EU interventions in the Middle East jigsaw have not always been a dazzling success. The Minister’s remarks about continuing and strengthening our own bilateral links with Lebanon are very welcome, but will she add to that our support for the development of its very considerable offshore oil and gas resources? If developed, they could bring prosperity to the whole region and maybe contribute to peace.
Baroness Warsi
My noble friend always understands issues in much more detail than I ever could. I am not familiar with the particular oil and gas reserves to which my noble friend refers, but I of course support his comments. We have put huge efforts into making sure that we strengthen the trade relationship between our two countries.
The Lord Bishop of Birmingham
My Lords, Lebanese communities have shown incredible generosity in coping with refugees but the flow is reaching breaking point. Will the Minister accept that, in addition to providing support for refugees, more work should be done to alleviate tension between communities and to strengthen the resilience of host families?
Baroness Warsi
I completely agree with the right reverend Prelate that there has been a huge show of generosity and a real welcome from the Lebanese people. Noble Lords may be aware that the population of Lebanon is about 4 million. The number of registered refugees is 600,000 but it is estimated that the real number could be a lot higher—somewhere around 1 million. That is the equivalent of the whole of the Romanian population arriving on British shores over a very short period. A huge amount of pressure has been put on local resources, which has of course caused tensions. It is for that reason that we are supporting not just the refugee communities but the host communities as well.
Baroness Symons of Vernham Dean
My Lords, the noble Baroness may be aware that at the recent G8 women’s conference, considerable anxiety was expressed about the economic and social impact of disruption across the region on women. Can the noble Baroness say what specific help is given at the moment to Lebanese women in that respect?
Baroness Warsi
Unfortunately I cannot, but I will write to the noble Baroness in detail on that issue.
Economy: Infrastructure
(10 years, 9 months ago)
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Lord Dobbs
To ask Her Majesty’s Government what plans they have for improving infrastructure to enable businesses and employment to grow.
The Commercial Secretary to the Treasury (Lord Deighton)
My Lords, the Government laid out their infrastructure plans at the spending review in their document Investing in Britain’s Future, committing to fund publicly specific projects worth over £100 billion and facilitating private investment by both extending the UK guarantees scheme and providing policy certainty, for example to energy businesses and investors through the early publication of renewable strike prices.
Lord Dobbs
I thank my noble friend. On this exceptionally happy day, could we perhaps spend a moment looking on the bright side? It might be too early to spot green shoots but there are certainly a number of blue shoots around. Growth is accelerating, exports are rising and unemployment is falling. Confidence among consumers and business is growing. However, many challenges still lie ahead. Does my noble friend agree that small businesses are consistently at the sharp end of economic revival? How do he and his colleague intend to ensure that the huge and very welcome infrastructure programme that he has announced gives a fair share to Britain’s small businesses?
Lord Deighton
I thank my noble friend for those observations about the signs of good news that are beginning to be seen in the economy. Based on my discussions with small businesses, they are most concerned about access to finance, improved broadband and better roads. The Government are addressing all of those through the Funding for Lending scheme to get cheaper financing and through the business bank to get about £1 billion of capital committed in non-bank funding. We are rolling out broadband as fast as possible both privately and through government intervention and we have committed a record amount not only to building new roads but to improving and repairing existing roads so that small businesses can get around. As for the participation of small businesses themselves in these large infrastructure projects, those businesses operate down the supply chain, and giving them a long-term warning that these projects are coming is extremely helpful. By way of example, I think that about 58% of the businesses which benefit from Crossrail spend would be classified as small and medium-sized.
Lord Barnett
The noble Lord will know that I strongly welcome the news of the amounts being spent. However, as he has now taken direct responsibility in this area, can he answer the vital question of how much will be spent in the next two years?
Lord Deighton
The actual expenditure on infrastructure is difficult to predict because, of course, the predominant portion of infrastructure is financed by the private sector. That is why we focused on developing our energy policy, so that we can trigger investments with offshore wind, with nuclear and with various gas developments. We have laid out our expenditure plans and the proportion of investment that is capital investment is laid out in the spending round for this year and for future years. We have shifted, I believe, £9.3 billion from current spending to capital spending during the time of this Government. We have put an extra £18 billion into capital investment in Budget 2013. As a result of those changes, public investment as a share of GDP will be higher on average between 2010-11 and 2020-21 than it was under the previous Government. We are trying to shift it into the more productive areas. Transport investment in 2013-14 will be higher than at any point under the previous Government despite the fact that we were in something of a boom time there, and it will rise every year until 2020.
Lord Forsyth of Drumlean
My Lords, can my noble friend tell the House how much less would be spent on infrastructure and capital projects if the plans of Alistair Darling and the previous Labour Government had been implemented?
Lord Deighton
Again we are dealing with a hypothetical question because in 2010 our plans for capital investment were broadly similar. Since then, because of our ability to focus on government efficiencies and the delivery of other programmes more cheaply, we have been able to transfer, first, the £10 billion to which I referred into capital spending within our fiscal envelope and, then, a further £18 billion through 2020-21. These capital expenditure investments are very focused on the most productive areas—economic infrastructure—but they are also all fully costed and within a fiscal envelope that is affordable.
Lord Harrison
My Lords, given the palpable failure of the regional growth fund, can the Minister report on the Government’s proper ambition to try to switch access to finance for small businesses from the current 80% secured from their banks in the United Kingdom to the 80% secured from the capital markets which applies in the United States of America?
Lord Deighton
I share the noble Lord’s observation that the current performance of the banks in supporting small and medium-sized businesses needs support. That is why we introduced Funding for Lending and amended it to make it more effective in cheapening banks’ funding for those areas. It is also why we have the business bank in place. I agree that some of the schemes need time to bed in, and they need to be activated faster and more effectively, because this is a critical part of our plan to get the economy growing again.
The Earl of Listowel
My Lords, can the Minister say what part high-quality, affordable childcare will play in freeing up the workforce for small and medium-sized enterprises, particularly for women entering the workplace?
Lord Deighton
I thank the noble Earl for drawing attention to the importance of flexibility in the workforce, the way that it relates to our policies in the area of welfare and its reform and the support that we are giving to get valuable members of the workforce back into being productive members of this economy.
Baroness Sharples
Can my noble friend say whether ministries are paying all their small business suppliers on time?
Lord Deighton
This goes back to the noble Lord’s earlier point about being creative about finding every possible way to get finance into smaller businesses. The noble Baroness is right: getting everybody to pay on time, including the ministries, is a critical part of that, and we have a programme in place to ensure that we perform in the same way as we are encouraging the rest of business to.
Police: Neighbourhood Policing
(10 years, 9 months ago)
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Baroness Smith of Basildon
To ask Her Majesty’s Government what assessment they have made of the finding by Her Majesty’s Inspectorate of Constabulary that neighbourhood policing is at risk of being eroded by budget cuts.
Baroness Stowell of Beeston
My Lords, the Government welcome HMIC’s report, which finds that police forces are rising to the challenge of reduced budgets. Crime is down by more than 10%, victim satisfaction is up and the proportion of police officers on the front line has increased. This Government have introduced a range of new measures to tackle community crimes and have empowered forces to respond to the needs and priorities of local communities. Decisions on how neighbourhood policing teams are resourced and deployed are now for each chief constable and their PCC.
Baroness Smith of Basildon
My Lords, that slightly complacent Answer does not really address the Question I asked. The HMIC said that neighbourhood policing is the cornerstone of British policing, not something that it is simply nice to have. As police forces struggle with a further £2.4 billion of cuts, the remaining police are spending more time on paperwork and investigations and less in the community. The Police Federation fears that this leads to crimes not being prevented or reported. Do the Government value neighbourhood policing? If they do, how will they deal with this problem?
Baroness Stowell of Beeston
My Lords, as I said, neighbourhood policing is indeed very important but it is right that police chiefs, in consultation with their elected PCCs, decide on the priorities for their area. Crime is down and satisfaction is up. Another thing that this Government have done to ensure that the public are able to hold their police forces to account is to give them greater information about the performance of their local police forces so that they can properly assess that performance and hold those police chiefs to account.
Baroness Hamwee
My Lords, does the Minister welcome, as I do, another item in the report—namely, that forces are making greater efforts, as they have been doing over the years, but with variable success, to reduce the amount of patrolling in pairs? Patrols by single officers are more successful, not least because the public are not deterred from approaching an officer, rather than thinking that if there are two officers, they are interrupting a private conversation.
Baroness Stowell of Beeston
My noble friend highlights an important example of how police chiefs are now in a position to prioritise and make decisions in the way that they see best in order to meet the Home Secretary’s strategic goal of cutting crime. The survey shows that the public support some PCSOs patrolling on their own because it leads them to think that they are more approachable than when they are in pairs.
Lord Campbell-Savours
The Minister said that satisfaction is up. Who is saying that?
Baroness Stowell of Beeston
The HMIC report includes a survey of the public, and victim satisfaction is up from 82% in 2010 to 85% in March of this year.
Lord Avebury
My Lords, what increase in the volume of neighbourhood crime does my noble friend think would be attributable to the failure of the Government to implement minimum unit pricing of alcohol?
Baroness Stowell of Beeston
One measure that this Government have introduced is the late-night levy, which comes into force when pubs and clubs decide to stay open beyond midnight. We have taken real steps to address this kind of activity by ensuring that people take responsibility for the decisions they make in their local area that might lead to an increase in consumption and local crime.
Baroness Scotland of Asthal
My Lords, the Minister said that the performance to date has been satisfactory. Indeed, the police and others should be complimented. But will the noble Baroness address the Question she was asked in relation to the future cuts that are anticipated and the fears that have been expressed in the report that the police will not be able to maintain that level of performance in the future?
Baroness Stowell of Beeston
The report identifies neighbourhood policing as an area which needs to be monitored in order to ensure that its importance is maintained. It is important to police forces; there is no suggestion that it is not. The police college is already looking at new and innovative ways to modernise local policing. It is there to ensure that best practice is spread around from force to force. We want to see them using new technology in order to maintain standards in a modern world.
Lord Naseby
Are the Government not to be congratulated on their success so far? For the past 10 to 15 years, all we have heard about is more and more crime requiring more and more policemen. Furthermore, now that we have elected police commissioners working alongside chief constables, is this not an opportunity to make further progress in this challenging area?
Baroness Stowell of Beeston
My noble friend is right. It is worth quoting Her Majesty’s Chief Inspector of Constabulary, who said:
“In these times of austerity and considerable financial challenges, it is to the credit of the police service that so many forces have shown themselves able to protect the front line and make the necessary savings.”
As I said, crime is down.
Lord West of Spithead
My Lords, does the noble Baroness not agree that crime has actually been falling fairly consistently for about the past 14 years? It is a slight conundrum, because one feels that if we had no policemen there would be no crime. Is it not true that there has been this fall?
Baroness Stowell of Beeston
The noble Lord is right. Crime has been falling for several years, but I believe that it was his party which suggested that crime would increase, because of the cuts that were necessary. We have clearly proven the Opposition wrong on that count.
Lord Alderdice
My Lords, there has been some suggestion that one of the reasons for these figures is that increased crime on the internet has not necessarily been detected. Are there any indications from my noble friend that internet crime is being monitored and included in these figures?
Baroness Stowell of Beeston
There is a range of crimes that are coming down, but one of the crimes that is increasing is fraud; my noble friend is right about that. That must be a priority and we must ensure that it is addressed.
National Minimum Wage (Amendment) Regulations 2013
Lord Popat
That the draft regulations and draft order laid before the House on 6 and 10 June be approved.
Relevant documents: 4th Report from the Joint Committee on Statutory Instruments, 6th Report from the Secondary Legislation Scrutiny Committee, considered in Grand Committee on 15 July.
Companies and Partnerships (Accounts and Audit) Regulations 2013
Viscount Younger of Leckie
That the draft regulations and draft order laid before the House on 10 and 24 June be approved.
Relevant documents: 4th and 6th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 July.
Intellectual Property Bill [HL]
15:58 - Division on Amendment 4 - Ayes: 153 / Noes: 233 - Amendment 4 disagreed.
“(b) before subsection (5) insert—“(4B) The Secretary of State may not make an order under section 15ZA unless a draft of the statutory instrument containing the order has been laid before, and approved by a resolution of, each House of Parliament.””
Viscount Younger of Leckie
My Lords, before I begin today, I should like to take this opportunity to thank noble Lords for their continued interest in this Bill and for their insightful contributions to the debate. The Government have listened to the points raised by noble Lords and have given careful consideration to all aspects of the Bill. Since Grand Committee, I have met representatives from the International Chamber of Commerce, and have been working with my officials to continue to engage with stakeholders to understand their concerns and alleviate them where possible. My officials have also issued a plain English guide to the Bill, particularly aimed at small and medium-sized businesses. It can be found on the IPO website. I hope that the amendments brought forward by the Government today will reassure both noble Lords and industry representatives that their concerns are taken very seriously. The Government believe that these amendments present a balanced and considered approach.
I am also pleased to report that since we debated the issue of e-lending in Grand Committee the Government have announced funding for the public lending right scheme, which will allow this valuable work to be taken forward. I am sure noble Lords will agree that that is a very positive development.
Turning to the amendments before us, during our first day in Grand Committee we had a brief discussion about the recommendations of the Delegated Powers and Regulatory Reform Committee. The committee and its members gave careful consideration to the order-making powers set out in the Bill. As my noble friend Lord Clement-Jones suggested in the debate:
“Simply reading the committee’s report is pretty persuasive by itself”.—[Official Report, 11/6/13; col. GC 344.]
The Government also found the report persuasive. We have given detailed thought to the committee’s recommendations and I am pleased to bring before the House today amendments that will implement the changes suggested.
Amendment 1 concerns Clause 8, which permits the UK to accede to the Hague agreement concerning the international registration of designs. The amendment specifies that any order giving effect to these provisions must be considered and approved by a resolution of both Houses. Amendments 2 and 3 relate to Clause 11, concerning the introduction of an opinions service for designs. These amendments ensure that the first time that regulations are introduced to implement the opinions service they, too, must be subject to the scrutiny and approval of both Houses. Noble Lords will note that the Delegated Powers and Regulatory Reform Committee recommended that thereafter the negative resolution procedure should apply. The Government believe that this is wholly the right approach. Once the service has been set up, following full discussion in Parliament, any changes that need to be made to suit the needs of business users can be implemented more quickly.
I also take this opportunity to briefly set out why the Government have tabled a further minor and technical amendment to Clause 21. As noble Lords are aware, Clause 21 is intended to simplify the way in which the UK currently meets its international obligations to extend copyright protection to works from other countries and their citizens, delivering clearer information for users. The need arises from the fact that the UK is a signatory to a number of international copyright conventions and treaties. This obliges the UK to extend copyright protection to works and performances created by citizens of other member countries or to works that originate in other member countries. These obligations are reciprocal: UK copyright holders benefit from the same protection in those countries.
One of these international agreements is the Berne convention, which has been amended a number of times since its original incarnation in 1886 and most recently in 1971. A small number of countries have not yet caught up with the 1971 update. This minor and technical amendment makes it clear that Clause 21 incorporates countries signed up to any Act of the Berne convention by bringing the language of the clause into line with that used in the CDPA 1988. The purpose is to ensure that countries that are not signatories to the most recent Act do not receive lesser copyright protection in the UK than those that are. I beg to move.
Lord Young of Norwood Green
My Lords, these government amendments implement the DPRR 3rd report recommendations and we welcome them on that basis. On the Clause 8 orders giving effect to the Hague agreement, the DPRR Committee found that the Bill created a Henry VIII power, and commented that it,
“would therefore expect to see some justification for the negative procedure that is to apply”.
However, the committee did not consider that the case for the negative procedure had been made for orders under new Section 15ZA and recommended that the affirmative procedure should apply instead. We are glad to see the Government accepting that recommendation.
Clause 11(1) inserts new Section 28A into the Registered Designs Act 1949 to provide for the registrar—that is, the Comptroller-General of Patents, Designs and Trade Marks—to give an opinion about matters specified in the regulations with respect to designs of a kind described in subsection (1)(a) and (b). The new section is purely enabling in that the whole provision about the new opinions service is to be set out in negative regulations. Subsections (2), (4), (5) and (7) set out provisions that the regulations must contain—for instance, about protecting the registrar from liability in respect of an opinion and about appeals. BIS explains, in paragraph 13 of the memorandum, that the intention is that the new opinions service will be similar to the existing patents opinions service. That service is provided for in Section 74A of the Patents Act 1977, but it is important to note that almost all the provision appears in the Act, with only one power to make regulations to provide for an exception.
The committee was not convinced by the Government’s argument for a need for flexibility and was critical that they did not explain why more provision cannot go into the Bill—for instance, about the scope of the opinions service. The committee remained unpersuaded that the negative procedure was appropriate for the introduction of this new service entirely by regulations, and recommended that the affirmative procedure should apply on the first exercise of the powers under new Section 28A, which is why we welcome the Government’s decision in this regard. We also welcome the fact that the Government now make it clear that Clause 21 incorporates countries signed up to any Act of the Berne convention by bringing the language of the clause into line with that used in the CDPA 1988. As the Minister assured us, this ensures that countries that have not signed up to the most recent Act of the Berne Convention do not receive any less copyright protection in the UK than those that have, and therefore we welcome the government amendment.
Lord Clement-Jones
My Lords, I join the noble Lord, Lord Young, in thanking the Minister for responding so effectively to the concerns raised on Report. I hope that these swallows which are already evident on Report will mean a summer for the rest of the Report stage.
Viscount Younger of Leckie
My Lords, I am grateful for the short contributions to the debate on these government amendments by the noble Lord, Lord Young of Norwood Green, and my noble friend Lord Clement-Jones. I take this opportunity to thank again the Delegated Powers and Regulatory Reform Committee for its consideration of the Bill.
(c) after subsection (4) insert—“(4A) Subsection (4) does not apply to the first regulations to be made under section 28A, but the Secretary of State may not make those regulations unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, each House of Parliament.””
Lord Stevenson of Balmacara
My Lords, I shall also speak to Amendments 5 and 6, which are in my name and in the name of my noble friend Lord Young of Norwood Green.
Clause 13 introduces two offences: unauthorised copying of a registered design, and dealing with unauthorised copies. Although these provisions have been welcomed by a small number of sectoral groups, the vast majority of businesses and representative bodies strongly oppose the introduction of criminal sanctions for design infringements. Many noble Lords will have received a copy of a letter from Sir James Dyson. He writes:
“In the law relating to copyright, acts of unintentional infringement are excluded from criminal sanctions. In the proposed clause of the Intellectual Property Bill relating to registered design infringement, the same is not true. If this Bill is passed unamended, innocent designers will be threatened with criminal proceedings. It is wholly wrong that a designer should go to prison for unintentional infringement. The current wording of the Bill does not exclude that possibility”.
He goes on:
“I have spent decades fighting to protect my ideas; taking on competitors who have flagrantly copied my patents and designs. I abhor intellectual property infringement. It is something I feel passionately about. But the Intellectual Property Bill's inclusion of proposals to criminalise infringement of registered designs is a serious mistake”.
There is a real concern that the legislation, as currently drafted, will open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policymakers have been keen to encourage as a driver of growth. The arguments that the Government have deployed until now are deeply flawed. They say that the treatment of design rights needs to be brought into line with existing copyright and trade mark legislation; that there is an anomaly between the application of criminal sanctions for copyright and trade mark infringement and the lack of equivalent provisions to stop the copying of registered designs. However, there are good reasons to treat design right infringements differently from piracy and counterfeiting. This is because the scope and validity of registered designs depends, as with patents, on prior art. As a result, the scope and validity of a design registration are never black and white but instead are open to a degree of interpretation. Indeed, relevant prior art may not even come to light until years later.
Lord Clement-Jones
My Lords, briefly, I express some bafflement, especially in the light of discussion in Committee, at what the noble Lord, Lord Stevenson, has said. On the one hand, half his speech was devoted to saying that the criminalisation of registered design rights under the Bill was wrong and therefore should not proceed. On the other, the second half seemed to say that, on the basis that it would proceed, it should be amended to add words such as “deliberately”, as in Amendment 4. Looking at Clause 13, however, it is quite clear that mens rea, as the term is used in criminal law, is contained within the clause as it stands.
I can understand the position of Sir James Dyson. He believes in principle that it is not right to criminalise registered design infringement. I happen to disagree with him. A number of particularly small designers represented by bodies such as Anti Copying in Design—ACID—feel strongly that this is a very important protection. It may not be favoured by the IP Federation, which represents the larger companies and their designers, but this is something that is very much to be desired by the smaller designers. The argument used that there is a chilling effect on innovation is completely rebuttable. I am sure that my noble friend will go through that in his own way.
Taking the second limb of the objections of the noble Lord, Lord Stevenson, it is clear that Clause 13 does exactly what he wants his amendment to do. There is no doubt that the act has to be deliberate on reading new Section 35ZA(1)(b)(i). I cannot see that there is any ambiguity there.
Viscount Younger of Leckie
My Lords, in Grand Committee we had some detailed debates about the introduction of criminal sanctions for the deliberate copying of a registered design. This is a finely balanced issue, and concerns were raised by a number of noble Lords. On the one hand, some felt that criminal sanctions should not be introduced as the offence may inadvertently capture innocent infringement. On the other hand, some noble Lords agreed that the offence was necessary, and indeed some felt that its scope should be extended further.
We shall no doubt return to the latter point in the course of today’s debate. However, as we consider this particular group of amendments, I would like to speak first to government Amendment 7 in order to allay some of the concerns that noble Lords have expressed regarding the application of the offence. This amendment to Clause 13 sets out more precisely the scope of the term “use” within the context of business activities. The amendment will further focus the offence with the aim of ensuring that innocent infringement will not be captured.
Before I comment further on this amendment, I remind noble Lords of the purpose of this clause. As your Lordships know, Clause 13 introduces a criminal sanction for the copying of a registered design. This will create a more coherent approach to the protection and enforcement of designs, trade marks and copyright in the UK, and should help to reduce the scale of blatant copying of registered designs by acting as a deterrent. Under the clause, it will be an offence to deliberately copy a registered design without the consent of its owner. It will also be an offence to knowingly market, import, export, stock or use the design in the course of business activities.
Concerns were raised in Grand Committee as to whether the term “use” may inadvertently capture accidental and incidental use under the offence. As the noble Lord, Lord Stevenson, pointed out in relation to the offence, it,
“includes as a criminal act the use of a product in the course of a business and the stocking of the product for use. Does the Minister accept that the word ‘uses’ is an unacceptably vague notion for criminal prosecution?”.—[Official Report, 13/7/13; col. GC 399.]
Because the offence has been drafted to require an element of active knowledge in order to be found guilty, it should be the case that accidental use will not be caught. However, the Government accept there may be cases where incidental use could conceivably come within the scope of the offence. For example, a business may lease a vending machine, which is a copy of a registered design, for use by its employees. This is completely ancillary to its main business but some have suggested that because the business is “using” the machine, a responsible person within that business who knew the machine was copied but still tendered its lease would be liable for the offence. The Government believe that, in practice, such cases should not attract the criminal offence. This is because the use of the registered design in this case would be ancillary to the main purpose of the business.
I reassure noble Lords that the Government have listened carefully to their concerns, and believe that this amendment is the right way to clarify the detail of the offence. By qualifying the word “use”, it will ensure that the mere incidental use of a copy of a registered design in the course of business will not be subject to criminal proceedings.
Amendment 4 in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would add a qualification to proposed new Section 35ZA(1)(a) in Clause 13. The noble Lords have set out their position on this amendment. This would mean a person would attract the criminal offence contained in Clause 13 only if an act of copying was undertaken deliberately. The Government are of the opinion that “copying” refers to a deliberate “taking” of the design in question. In crafting the offence of registered design copying, the Government worked hard to ensure that it caught only cases of intentional and deliberate copying. For example, the existing test for whether, in civil law, design is infringed is to ask whether the product creates a “different overall impression” on an “informed user”. This was rejected for the proposed criminal offence because it left too considerable a margin for subjective judgment within a criminal case. The offence was purposefully drawn to be narrower than civil infringement, and while it of course remains a subset of such infringement, it will not be used in cases where there has been no blatant copying of a design. This ensures that designers can continue to be legitimately inspired by, and innovate around, existing designs without fear of their actions being caught by criminal sanctions.
Lord Stevenson of Balmacara
I begin by thanking the Minister for his very full reply and his customary courtesy in dealing with all the points, for which I am most grateful. He sets a high standard in this House. However, let us be clear: we are talking about approximately 4,000 designs which are registered each year at the Intellectual Property Office and some 350,000 designers who suggest that about 18,000 unregistered designs are lodged with the asset database, so this is a very small proportion of the designs with which we are involved. We are probably arguing around a very narrow point but it is an important one. I want to come back to it, but before I do so I thank the Minister for his comments about Amendments 7 and 8, both of which we welcome, and which have gone a long way to answering points raised in Committee, for which we are grateful to him.
The issue that we are left with is the pleasing word “bafflement” which invaded the otherwise normally sane and sober noble Lord, Lord Clement-Jones. I am delighted to have struck a blow for those who believe in bafflement. However, I must say that I am not at all baffled by this. The situation is very clear: we are against criminalisation of this aspect of the design world. We accept that there may be a case for having as a very last stop a criminalisation process which would enable those who are constantly engaging in this sort of behaviour, or are doing so on such a scale, to be given appropriate penalties. The issue is whether or not the clause that we are debating has sufficient safeguards. My argument in Committee and today was that the Minister, on behalf of the Government, did not adequately defend why it was necessary to move from a very effective civil situation to criminalisation. However, I accept that it is important to consider whether criminalisation would help the design community. That is the question we have to resolve.
It is interesting that in his response in Committee and today, the Minister kept saying that these criminal measures would apply only to deliberate acts. I think he is using the mens rea argument, which is that if somebody has gone to the point of copying, by definition it must be intentional and deliberate. However, when discussing that, he used the word “deliberate”, which is what I sought to include in the Bill. Therefore, I am baffled in the sense that I do not understand why it is possible to talk about a criminalisation which is restricted to those who are deliberately engaging in this act, but not accept that it would be helpful to have that in the Bill. That is the important thing.
If we are talking about people who are blatantly ripping off individual designers, taking their designs, using them and obtaining financial reward from them without having paid for a licence, obviously there is a point where that has to become a criminal act. I am prepared to go along with that but the bar has to be set very high. I do not believe that it has been set high enough in the present wording. Therefore, I would like to test the opinion of the House.
“( ) The reference in subsection (3) to using a product in the course of a business does not include a reference to using it for a purpose which is merely incidental to the carrying on of the business.”
“Offences committed by partnerships
At the end of section 35A of the Registered Designs Act 1949 (the title to which becomes “Offence by body corporate or partnership: liability of officers or partners”) insert—“(3) Proceedings for an offence under this Act alleged to have been committed by a partnership are to be brought against the partnership in the name of the firm and not in that of the partners; but without prejudice to any liability of the partners under subsection (6) or (7).
(4) The following provisions apply for the purposes of such proceedings as in relation to a body corporate—
(a) any rules of court relating to the service of documents;(b) in England and Wales, Schedule 3 to the Magistrates’ Courts Act 1980;(c) in Northern Ireland, Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981. (5) A fine imposed on a partnership (other than a Scottish partnership) on its conviction in such proceedings must be paid out of the partnership assets.
(6) Where a partnership (other than a Scottish partnership) is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of or to have attempted to prevent the commission of the offence, is also guilty of the offence and liable to be proceeded against and punished accordingly.
(7) Where an offence under this Act committed by a Scottish partnership is proved to have been committed with the consent or connivance of a partner in the partnership, or a person purporting to act in that capacity, he as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.””
Lord Clement-Jones
“Offence of unauthorised copying etc of a design protected by design right
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) After section 235 insert—
“235A Offence of unauthorised copying etc of a design protected by design right
(1) A person commits an offence if—
(a) in the course of a business, the person copies any design protected by design right so as to make a product exactly or substantially to that design, and(b) the person does so—(i) knowing or having reason to believe that the design is protected by design right, and(ii) without the consent of the owner of that design right.(2) Subsection (3) applies in relation to a product where a design protected by design right has been copied so as to make the product exactly or substantially to the design.
(3) A person commits an offence if—
(a) in the course of a business, the person offers, puts on the market, imports, exports or uses the product, or stocks it for one or more of those purposes,(b) the person does so without the consent of the owner of the design right in that design, and(c) the person does so knowing or having reason to believe that a design has been copied without the consent of the owner of the design right in the design.(4) In this section “design right” includes an unregistered community design and a reference to the owner of the design right is also to be read as a reference to the owner of a community design right in a design.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding ten years or to a fine or to both;(b) on summary conviction in England and Wales or Northern Ireland, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both;(c) on summary conviction in Scotland, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum or to both.”(3) In section 235B (enforcement) substitute all references to “35ZA” for “235A”.
(4) In section 235C (forfeiture in England and Wales and Northern Ireland) substitute all references to “35ZA” for “235A”.
(5) In section 23ZC, in subsections (2) and (3), substitute all references to “registered design” for “design right subsisting in a design”.
(6) In section 235D (forfeiture in Scotland), substitute all references to “35ZA” for “235A”.
(7) In section 235D substitute all references to “35ZC” for “235C”.
(8) For section 235E (offences committed by partnerships and body corporate) substitute—
“235E Offences committed by partnerships and body corporate
(1) Proceedings for an offence under this Act alleged to have been committed by a partnership shall be brought against the partnership in the name of the firm and not in that of the partners; but without prejudice to any liability of the partners under subsection (2) below.
(2) The following provisions apply for the purposes of such proceedings as in relation to a body corporate—
(a) any rules of court relating to the service of documents;(b) in England and Wales or Northern Ireland, Schedule 3 to the Magistrates’ Court Act 1980 or Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence);(c) a fine imposed on a partnership on its conviction in such proceedings shall be paid out of the partnership assets;(d) where a partnership is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of or to have attempted to prevent the commission of the offence, is also guilty of the offence and liable to be proceeded against and punished accordingly;(e) where an offence under this Act committed by a body corporate is proved to have been committed with the consent, connivance or neglect of a director, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.””
Lord Clement-Jones
My Lords, my noble friend the Minister correctly said that later in the proceedings we would be coming to the issue of criminal penalties for infringement of unregistered design. This is a rerun of an amendment that I moved in Grand Committee to provide that criminal sanctions would also apply to the deliberate infringement of unregistered designs. As I explained in Grand Committee, design is of key importance to the UK economy. However, the great majority of designers rely on unregistered rights, a point that has already been made eloquently by the noble Lord, Lord Stevenson. The introduction of criminal sanctions for the deliberate infringement of registered designs is a progressive step, but for most lone and micro designers the cost of registering every iteration of a design would be prohibitive. The extension of criminal sanctions to unregistered design rights for the majority of UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trademark infringement.
Criminal sanctions have been available for copyright infringement since 1862 and for trademark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Persistently copying designs, however, is not a criminal offence at all, which is anomalous. Persistently copying a two-dimensional drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this two-dimensional work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed on the Enterprise and Regulatory Reform Act, copying that 3D version would not be a criminal offence. Nearly all designs, however, are copied from the 3D original, not the 2D drawings. How do the Government justify providing a higher level of protection to a two-dimensional design than to the 3D manifestation of that design?
I have also described the inequality of arms between infringers and designers and said that, if anything, in these circumstances, there are stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. In Grand Committee, to my arguments the Minister riposted:
“Registered rights can be readily accessed through the Intellectual Property Office and the EU designs registry website. They include crucial information, including the design that is protected, the date on which protection commenced and whether it is still in force. This is not the case with an unregistered design right”.
However, there is no registration of copyright in this country, yet infringement is a criminal offence as I have described. Why is it not for unregistered design?
The Minister went on to say that,
“the uncertainties surrounding unregistered designs, such as the difficulty of knowing when the design right came into existence, mean that it is more difficult for third parties to ensure that they are not infringing that design right. Therefore, against the backdrop of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that the design is in the public domain before building on it, thereby extending the design right beyond its term and delaying potential innovation”.
However, exactly the same arguments could be applied to copyright infringement. What is the difference between this and copyright? The evidential burden is exactly the same; it is very similar in these circumstances. It is simply that the term for copyright is longer.
The Earl of Erroll
My Lords, I rise briefly to support the noble Lord, Lord Clement-Jones, in this argument. I think that this provision should be exactly parallel to that for copyright. I would say that the Minister should have used these arguments in the copyright case to change that provision so that it was in line with the principles in this Bill—because I think that copyright is probably overprotected—but that is a different argument. However, I certainly think that the arrangements should be the same. At some time in the future we can rationalise, if we need to, the two arrangements so that they move together in the same direction. With the advent of 3D printing it is now quite possible easily to make a three-dimensional copy at not a huge cost, so I do not see the rationale for distinguishing 2D from 3D copying. 3D copies were not possible until very recently. Logically, the two principles should be aligned, as the noble Lord, Lord Clement-Jones, has just stated. Whether we think that this should be dealt with differently, in copyright or under this arrangement, is another matter.
Lord Stevenson of Balmacara
My Lords, I found a lot of what the noble Lord, Lord Clement-Jones, said very convincing and want to hear how the Minister will respond. The noble Lord made a very good case for taking the situation that we have currently, under which copying registered designs will be subject to criminal penalties, and asking why the very large number of unregistered designs that are lodged in a different register from the registered designs—with the IPO—cannot be given a similar sort of protection. I think that the arguments comparing that with copyright and trademarks are very persuasive. The noble Earl, Lord Erroll, made the point about 3D printing, which of course begins to muddle all our previous conceptions of what 2D and 3D design were about. Again, that will require some movement, if not now, in the very near future, in order to keep pace with the way that technology is changing.
Our Amendment 20 departs from the principles articulated by the noble Lord in moving Amendment 9 because we think that we have to take the situation as it is on the ground. As I have said before, there are 350,000 designers in the UK and UK businesses spend around £35.5 billion annually on design. These are substantial figures and make up a significant slice of our creative industries. However, the vast majority of designers rely on unregistered rights. There are 4,000 registered designs against 18,000 unregistered designs. Something like 99% of designers in the country rely on unregistered designs, and there has to be a question about how the Government will provide an appropriate framework for that development.
Our amendment suggests to the Secretary of State that there is another possible route to think about, which makes clearer what the effect would be of having a register of unregistered designs, even if that is perhaps a contradiction in terms. If it was possible to have within the government machinery some system that allowed a way to evidence the existence of the design right, and document its existence on a particular date, that would go some way to giving us certainty about cases, whether they were criminal or not, affecting the unregistered design right. We could perhaps use the copyright harm analogy to find a way for metadata to be applied to designs that would allow them to be picked up and trailed.
The noble Lord, Lord Clement-Jones, asked why there was a growing discrepancy between the registered and unregistered design right routes. Presumably, the Government have made a decision that they are going to bulk up what is available to those who have registered designs and give them more in the hope that that will persuade designers to sign up to the registered design route. But what will happen if they do not? The problems and difficulties will still be there, particularly in the fashion industry, where unregistered design is the mode that is used.
We need to do something and our Amendment 20 tries to make some suggestions that we hope the Government will listen to. Although we cannot support the proposal to criminalise the copying of unregistered designs as a matter of principle, we would be very interested in hearing how the Minister will respond.
Viscount Younger of Leckie
My Lords, the effect of Amendment 9, moved by my noble friend Lord Clement-Jones, would be to extend the proposed criminal sanctions to unregistered design rights. I thank my noble friend once again for presenting the Government with his strong views on unregistered design right protection. I can assure him that the Government are absolutely convinced of the value of the unregistered right and are very aware of its role in protecting small design businesses. That is why, following consultation, the UK right and its current term of protection was retained in the face of calls by some to remove it as a means of simplifying design law.
The United Kingdom has a very successful design industry and we tinker with the success of the industry at our peril. I am particularly concerned to ensure that any changes proposed in the Bill do not act as an additional burden on industry but enhance its accomplishments. As with all intellectual property systems, there is a delicate equilibrium between a reasonable return for creators and, on the other hand, access to the creation so that competitors can shape future innovation. This is the balance the Government have to be mindful of in the changes proposed. There is a real fear that extending criminal sanctions to unregistered rights will distort this balance for the following reasons.
First, the existence of the register represents a public database, which can be searched with relative ease. Third parties can quickly assess what has been registered and what has not. This means that they can take due notice of designs protected by registration with some degree of certainty. In particular, they will know accurately when it will be possible to copy a design with no degree of legal risk. With unregistered designs, there is the problem of not knowing exactly when the design right came into existence and the duration of its protection. This means that it is more difficult for third parties to discover when they can legally copy or exploit a design. Where information about the design of an article is limited but copying it attracts a criminal sanction, it is entirely possible that industry will become risk-averse. As I stated in Grand Committee, against the background of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that a design is in the public domain before building on it, therefore extending the unregistered design right beyond its term and delaying potential innovation.
I will give your Lordships an example. A furniture manufacturer is aware of a rival’s design that is successful in the marketplace and knows that it is not protected by registration. That is easily discovered by a swift inspection of the registry. He is also aware that the unregistered design right is now protected by a criminal sanction. The manufacturer will have no ready knowledge of when the item was first protected—for example, when it was in a design document, made into an article or first marketed. These all affect the term of protection. To be on the safe side, it is likely that the manufacturer will avoid copying or even engaging in reasonable follow-on innovation until he is certain that the product is out of its term of protection. With registered designs, any potential chilling effect is much reduced by the certainty of facts on duration, scope of protection and ownership, which registration creates.
Secondly, the nature of the UK unregistered right magnifies the uncertainty problem. Unregistered right in an article can relate not only to the overall design but to the individual elements of the design. The unregistered design right can therefore be seen as a basket of individual rights. For example, a kettle may have design protection in its overall shape and configuration but also in its individual parts, such as the spout, the handle and the lid. The kettle may be one of a series of kettles, so different design components may have different timelines of protection. The handle may have 10 years of protection to run because it is new, the spout may have three years as it was used in an earlier version of the kettle, and the lid may be out of protection because it is an old design. None of this information will be readily available to a business which wants to use the design or aspects of the design itself. This creates a cumulative uncertainty about the rights, which is not shared where a design appears on the public register.
Thirdly, a chilling effect is likely to be more serious in particular industries. Some designers, such as those in the fashion trade, thrive on novelty, speed of change, imitation, and rapid turnover of seasonal ranges. It is in these industries where the Government have real concerns that criminalisation of unregistered designs, which are often relied on, would have a freezing effect.
Fourthly, the potential inhibiting effect on innovation that has been identified is likely to be a particular problem in relation to functional designs, which the UK unregistered right also protects. This problem does not apply to registered designs that specifically exclude functionality. I also remind noble Lords of a further issue that relates to functional designs, which could cause difficulties in criminal proceedings. Such technical complexity should be avoided in criminal proceedings if possible.
Finally, I will say something about the protection for unregistered rights holders and, at the same time, consider Amendment 20, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, which would place, in effect, a reporting duty on the Secretary of State. I can assure noble Lords that the Intellectual Property Office is already aware of its responsibilities to SMEs and fully recognises the difficulty that designers face in enforcing their rights. The IPO will continue to work with representative groups for the design sector to help improve the situation for designers. There are many ongoing projects. For example, the IPO and the European design and trade mark office—OHIM—are working together to consider approaches to IP enforcement. This includes the costs of searching for prior rights.
The IPO currently funds IP audits to SMEs that are enrolled on one of our partner business support programmes. From next year, a number of these will be specifically allocated to design SMEs within the Design Leadership Programme run by the Design Council. This will help design-focused SMEs effectively to manage their rights, including unregistered designs, and the creation of audit trails. Such information is readily available from organisations such as the IPO and ACID.
I hope noble Lords will agree that by accepting this amendment the Government would be duplicating information already available. I have already referred to private companies such as ACID, which provide access to highly successful unofficial databases. The amendment would place the Government in direct competition with these companies.
The amendment also raises a number of questions. For example, would an official government-run unregistered designs database be compulsory for designers to use? What about the design rights that exist in other parts of the EU? These can have an effect on rights in the UK so would all European design rights owners be required to record their unregistered designs with the IPO?
These questions may warrant further thought. However, the Government do not believe that it is wise to legislate at this stage without more consideration, particularly given the ways in which the UK IPO is already working hard to ensure that designers are as informed as possible when making business decisions about their intellectual property. For example, the IPO will provide training to the Design Council’s business advisers, to help understand IP and the value of design rights, and to direct SMEs towards the audit programme. On that basis, I am not persuaded of the need for the noble Lord’s Amendment 20.
However, I would not want noble Lords to gain the impression that, in not extending the criminal sanction to the UK unregistered design, the Government regard unregistered rights as second-class rights. The Government recognise that the introduction of criminal sanctions for designs is an important issue that is subject to strong opinions. We believe that the sanction as drawn is the best option to maintain and enhance the success of the UK design industry.
My noble friend Lord Clement-Jones and the noble Earl, Lord Erroll, raised the issue of the discrepancy between protection for 2D and 3D works. There was some debate on this in Committee and it is worth reiterating a number of key points. In the view of the Government, this is a consequence of copyright protection vesting in the “work” that consists of a design drawing, and there is no direct protection of the 2D representation of the design per se. The protection arises as a by-product of the copyright in the work. As noble Lords will know, copyright will protect against the reproduction of the drawing where the defendant knows or has reason to believe that the reproduction is an infringement of the drawing. This is merely a coincidence, caused by the fact that the drawing is a literary or graphic work and nothing more, and is a result of the existence of parallel IP regimes that coincidentally overlap in this case.
It is questionable that the existence of this anomaly, which is hardly unique in IP law, counsels equalisation or harmonisation by criminalisation of unregistered design right. As the noble Lord, Lord Howarth of Newport, who I see in his place, stated in Grand Committee:
“My Lords, consistency is not necessarily a virtue and I think that we should be very careful in the field of intellectual property. We legislate not simply out of tidy-mindedness or a desire to achieve a satisfying consistency by transferring rules and regulations that may have applied relatively successfully in one area to another”.—[Official Report, 13/6/13; col. GC 392.]
The Earl of Erroll
Would it therefore be sensible to bring copyright in line with these provisions, and decriminalise the copyright?
Viscount Younger of Leckie
The noble Earl makes an interesting point but I see the two as being very separate.
The noble Lord, Lord Stevenson, raised the issue of the low number of registrations. The importance of registration should not be underestimated. Official registers in the UK and OHIM contain approximately 728,000 registrations, which may be of help to the noble Lord.
My noble friend Lord Clement-Jones asked why expert witnesses cannot be used to determine technical matters under unregistered design matters. If the noble Lord’s proposed extension to include unregistered design rights was the right way to proceed, what he says about expert witnesses could indeed be helpful. However, as I have said, there are many reasons why the Government believe it is not right to criminalise unregistered design copying, which is the overarching issue.
Finally, the noble Lord, Lord Stevenson of Balmacara, raised the issue of the Copyright Hub to apply metadata to designs, which is an interesting point. The digital Copyright Hub is an industry-led initiative, of which the noble Lord will be aware. I am sure that the noble Lord will understand that I cannot therefore make commitments about what the hub will do in this respect. However, I am happy to speak to the industry team about the noble Lord’s suggestion. I therefore ask that the noble Lord withdraws his amendment.
Lord Clement-Jones
My Lords, first of all I thank the noble Earl, Lord Errol, for his intervention. We do not often agree on matters in this kind of debate, but I very much appreciate his support on this occasion, and in particular his reference to 3D printing. That will give rise to a number of particular issues. I also thank the noble Lord, Lord Stevenson. I understand that he does not follow me down the same road of principle, but the horizon to which he is pointing in terms of the ability of the Copyright Hub to apply metadata on its database to unregistered designs, could be an extremely interesting salient. It may be that when the Copyright Hub is up and running and it includes a whole data bank of unregistered designs, I come back on a future IP Bill and say, “Right, we know exactly what the provenance of these designs is, we have the metadata applied to them and it is entirely appropriate we should now apply criminal offences to infringement of unregistered design”. I can see that on the horizon, coming down the road.
The Minister was entirely consistent. He may have praised the virtues of inconsistency, but his reply was entirely consistent with his reply in Committee. However, I thought it was more considered and more elegantly constructed than in Committee. Some of his points were good ones. The least convincing were the non-technical ones such as “tinker at our peril”, “the delicate equilibrium” and so on; but some of his more granular points about magnifying the uncertainty where you have different elements within an overall design, and those he made about functional design, had a plausible ring about them. On his point about making industries more risk-averse, in many ways people in the fashion industry would love people to be rather more risk-averse. One of the real issues is copyright and design infringement in that industry. A little risk-aversion would go quite a long way. I still do not see the plausibility of his argument about the chilling effect and so on. However, I understand that the Minister has taken great care to respond, and I thank him very much.
If we can use the principles contained in Amendment 20 to develop the Copyright Hub, we might see a better future for unregistered design, which, as we have heard in this debate, is relied on by 350,000 designers. Registered design is a very small part of that. In the mean time I beg leave to withdraw the amendment.
“(2A) In making an order under this section, which confers jurisdiction on a court, removes jurisdiction from a court or varies the jurisdiction of a court, the Secretary of State shall, where the number of patent cases is such as to meet the requirements as set out in Article 7 of the Agreement on a Unified Patent Court, consider conferring local divisional court jurisdiction on—
(a) in England and Wales, the High Court;(b) in Scotland, the Court of Session;(c) in Northern Ireland, the High Court.”
Lord Young of Norwood Green
My Lords, this amendment seeks to ensure that the Secretary of State consults with appropriate consultees before conferring, removing or varying court jurisdiction. In addition, where sufficient numbers of patent cases in the UK allow, he should confer on each separate legal jurisdiction throughout the United Kingdom a court which has local divisional court status, allowing patent cases where appropriate to be heard in that legal jurisdiction. This will effectively preserve the status quo under the existing national and EU patent regimes.
Article 7 of the unified patent court agreement provides that each contracting member state may request and may have one division of the court of first instance of the unified patent court within its jurisdiction for every 100 patent cases in each calendar year during three successive years prior or subsequent to the date of entry into force of the agreement. That is subject to a maximum of four such divisional courts per such jurisdiction. The Intellectual Property Bill as drafted does not place any obligation on the Secretary of State to consider or confer divisional local jurisdiction on the High Court in England and Wales, the Court of Session in Scotland or the High Court in Northern Ireland.
The society believes that, given the constitutional make-up of the United Kingdom, it is important that each separate jurisdiction continues to provide local access to a court and is fairly represented within the overall unified patent court structure. Without a local designated divisional court, local businesses will be forced to litigate outside their geographical areas. We suggest that a failure to confer local divisional court status may raise access to justice concerns, increasing costs and inconvenience to all businesses and litigants—including SMEs who may be impacted heavily by a potential additional cost in bringing or defending actions. I beg to move.
Viscount Younger of Leckie
My Lords, the amendments in this group relate to the unified patent court. Amendment 10, tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, seeks to ensure that the Secretary of State will consider setting up separate local divisions of the unified patent court in three parts of the UK should there be enough case load to justify more than one local division. As I highlighted in Committee, ensuring local access to justice is a key element of the unified patent court. That is why the agreement makes provisions for local divisions. The agreement does not oblige participating states to host a local division, which can be set up and disbanded upon request.
It is important that the unified patent court serves the needs of businesses throughout the United Kingdom and the Government are committed to ensuring that all areas of the United Kingdom will have access to the court. I can assure noble Lords that the Government are already giving careful consideration to the number and location of local divisions that may be hosted in the UK. I cannot say at this time exactly how many local divisions the UK may host because it is not yet clear whether there will be enough cases to justify having more than one local division. The reason for this uncertainty is that there is no common agreement among the participating states on how the number of cases in each jurisdiction will be counted. It is important that a consistent approach is taken to assessing the case load in different countries. The issue will be decided by the participating states before the court comes into being.
While it is not possible to say for certain how many local divisions may be hosted in the UK, I can give noble Lords every assurance that the Government are open to locating local divisions in different parts of the UK. The Government are working closely with the devolved Administrations and the court services in Scotland and Northern Ireland as well as England and Wales to ensure that the needs of businesses throughout the United Kingdom are taken into account. Noble Lords may be also interested to know that the Intellectual Property Office, in partnership with the Chartered Institute of Patent Attorneys and the IP Federation, is running a series of stakeholder events about the unified patent court rules in early September. One of these events will be hosted in Edinburgh. Given that the issue of UK-based local divisions is already under consideration, it is neither necessary nor appropriate to prescribe in primary legislation their number and locations.
I now turn to government Amendment 11. This technical amendment to Clause 16 is intended to provide certainty that the Government will be able to establish fully the unified patent court. The amendment introduces new Section 88B into the Patents Act 1977. It does not extend the scope of the power conferred by Section 88A of that Act. The necessity of tabling an amendment to this clause has only recently come to light as a result of the ongoing legal analysis being conducted as part of the implementation process. That analysis has identified a potential uncertainty which could, if not addressed now, result in a significant delay in bringing the unified patent court into effect.
Lord Young of Norwood Green
My Lords, I thank the Minister for his comprehensive, constructive and helpful answer. We welcome the fact that the principle is accepted and that it is a question of establishing some principles about how cases are counted and of eliminating uncertainty—that seems a very worthwhile approach. We also welcome the fact that the Minister is working with the devolved Administrations. We trust that as the Bill progresses in the other place the Minister will be able to report back on the progress made in this area. We have no adverse comment on Amendment 11 and, overall, we cannot help saying, in light of the debate to come later this afternoon, that we welcome the Government’s pro-European stance in this area. In those circumstances, I beg leave to withdraw the amendment.
“88B Designation as international organisation of which UK is member
The Unified Patent Court is to be treated for the purposes of section 1 of the International Organisations Act 1968 (organisations of which the United Kingdom is a member) as an organisation to which that section applies.”
Lord Howarth of Newport
“Freedom of Information: lobbying
(1) The Secretary of State must maintain an online register, freely accessible to the public and up-to-date, of all representations, lobbying and advocacy concerning intellectual property addressed to Ministers, their officials and advisers and to staff of the Patent Office and their advisers.
(2) The register must provide information about the names of all individuals and organisations engaged in such communications and the dates, modes and whereabouts of them.
(3) The register must provide a report of the contents of each such engagement, but need not disclose matter that, in the opinion of the Secretary of State, is properly regarded as commercially confidential.”
Lord Howarth of Newport
My Lords, Amendment 12 is a development of an amendment that I tabled in Committee, and I was sufficiently encouraged by the Minister’s response to feel that it was worth tabling this amendment on Report.
I start by saying that I have no interest to declare. No one has asked me to table any of the amendments that I have put down in the course of our proceedings on the Bill and I have no financial interest in any aspect of this legislation. I mention this simply because I think that it is helpful to parliamentarians in both Houses and to other people who may follow our proceedings to know whether any noble Lord participating in the proceedings has such an interest.
I venture to suggest that this amendment is timely. Recent unhappy events have propelled the Government finally to publish their Transparency of Lobbying, Non- party Campaigning and Trade Union Administration Bill. The Second Reading of that Bill in the House of Commons will not take place until September, so the Minister has the opportunity, with this amendment, to show that he is ahead of the game and, indeed, to do rather better than the Government seem minded to do in their Bill.
In Committee the Minister acknowledged the importance of this issue. Intellectual property can be a very valuable thing. It creates monopoly of a kind and it is not surprising, therefore, that lobbying is intense in relation to policy on intellectual property and, indeed, on specific decisions. Officials working in this area effectively have the power to enrich other people, and in that respect they are rather like planning officers. It seems to me that procedures relating to intellectual property policy formation and decision-making, just as with procedures in planning, ought to be as transparent as possible. Indeed, I was encouraged that the Minister said to us in Grand Committee:
“The Government are committed to transparency”.
He helpfully explained that Ministers, special advisers and the Permanent Secretary in his department, as in other departments, disclose on a quarterly basis on the government website the names of external organisations that they meet. It was very welcome that he announced that this practice would be extended to the chief executive of the Intellectual Property Office. He said that the publicity on the website would state what the main topic had been at the meeting, but he disagreed with my suggestion that there should be some further disclosure of the contents of the meeting—he said that disclosure must be proportionate. He observed that freedom of information law applies in this area and that an FoI request would be considered in the light of the requirements of the Act. However, at that point he said:
“We feel that we have gone as far as we can”.—[Official Report, 18/7/13; col. GC 54.]
I submit that the Minister did not go far enough in Committee. Indeed, the ministerial code, as it is, requires that the disclosure of meetings between Ministers and others with external organisations should be at least quarterly, so the Minister adopted a minimalist position in this regard.
Mr Cameron, when he was leader of the Opposition, made a speech in February 2010 entitled “Rebuilding Trust in Politics”, in which he said that,
“it’s time we shone the light of transparency on lobbying”.
Then nothing happened for three years until scandals forced the Government to act, but even now their proposals are inadequate—many would say derisorily so. I believe that the minimalist position taken by the Government will not hold. The disclosure of only the names of organisations that Ministers, special advisers, Permanent Secretaries and the chief executive of the IPO have met is palpably inadequate. The lobbying consultancies sell their services on the basis that they know how to get to the officials who are formulating policy options and briefing Ministers. There is much agitation in the media about the lobbying of politicians, but the lobbying of officials is at least equally important. Therefore, my amendment would require much fuller transparency than the Minister has so far been willing to contemplate. My drafting is amateur and could no doubt be improved, but if noble Lords are kind enough to read the amendment I think that they will be clear about what I am driving at.
I have of course made an exception to the requirement for disclosure of matter that can properly be regarded as commercially confidential. I think that that must be right, although I also have to say that the mantra of “commercial in confidence” induces quite a lot of scepticism among Members of Parliament and noble Lords who again and again have been fobbed off with its deployment when they have sought to probe government contracts for the public service—contracts that are extremely important and about which parliamentarians should be entitled to know more than the Government customarily allow. However, that is a side issue.
I make it clear that I am not opposed to lobbying. Of course it must be right in a liberal society and a democracy that people can make representations on behalf of themselves and other interests to those who are in power. It is legitimate and indeed positively a good thing that interested parties should have an opportunity to explain their case to the IPO. However, equally, other interested parties and other citizens ought to be entitled to know who is making such representations and, in broad terms, what the content of those representations may be. After all, they may have another legitimate case. Indeed, they may be able to assist the Intellectual Property Office and the Minister as they seek to make the right decisions in the public interest.
The IPO is, I believe, in receipt of a very great deal of lobbying—much of it aggressive. The public are worried about lobbying. Mr Cameron spoke of the,
“far-too-cosy relationship between politics, government, business and money”.
He spoke of the need to shine the light of transparency on,
“who is buying power and influence”.
In those words, it seems to me, Mr Cameron made a fairly serious allegation, although I note of course that it was not specifically in relation to intellectual property.
Last week in a column in the Guardian on 19 July, Sir Simon Jenkins went so far as to say:
“Doing the right thing is hardly a consideration in Whitehall now”.
I think that that remark is grossly exaggerated and unjust, but if prominent columnists are saying such things, no wonder there is some cynicism among the public.
I do not in any sense impugn the motives or the honesty of officials in the IPO, in the business department or anywhere else, but I believe that they are under great pressure. The drug companies, for example, are prepared to exert pressure on an enormous scale. I again quote Sir Simon Jenkins in that article. He says that,
“the NHS allows drug companies to spend £40m a year on gifts to doctors, blatantly, to use their products at the expense of the same NHS.”.
We have been reading in the newspapers about the extraordinary allegations against western pharmaceutical companies and their practices in China. I do not doubt that pharmaceutical companies will spend whatever it takes to influence decisions on the patenting of new drugs.
I simply think it is important to reassure the public. We have an opportunity through this amendment to protect the reputation of the Intellectual Property Office and to protect the reputation of the intellectual property regime all in all. The Government were slow to act on the commitment made in the coalition agreement, but this amendment offers the Minister the opportunity to provide an exemplary policy. I hope he will seize that opportunity. I beg to move.
Lord Young of Norwood Green
My Lords, my noble friend Lord Howarth has comprehensively analysed the need for more transparency and the need to protect integrity. We support the basis of the amendment and I look forward to hearing the Minister’s response.
Viscount Younger of Leckie
My Lords, Amendment 12 tabled by the noble Lord, Lord Howarth of Newport, relates to representations, lobbying and advocacy concerning intellectual property. It would place a duty on my right honourable friend in the other place, the Secretary of State Vince Cable, to maintain an open register of all lobbying which has taken place.
I wish to assure noble Lords that this Government take the issue of lobbying very seriously. This is the most transparent Government ever. I am pleased that the noble Lord, Lord Howarth, while not necessarily agreeing with that, certainly recognised it in his speech. We are the first Government to publish proactively meetings that Ministers and Permanent Secretaries have had with external organisations. We publish an unprecedented amount of information about whom Ministers and senior officials meet. This information is published on a quarterly basis.
The noble Lord, Lord Howarth, is right in saying, however, that the public are worried about lobbying. The Government also recognise that the public are concerned that some lobbying activity is opaque, allowing certain powerful organisations and individuals to exert a disproportionate influence on government in the shadows. We need to combat the sometimes negative perceptions of the relationship between lobbyists and government by giving people confidence that the process is transparent.
That is why only last week the Government introduced the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill, which again the noble Lord, Lord Howarth, alluded to. This Bill will bring forward a statutory register of lobbyists, which will make it clear whom lobbyists are lobbying on behalf of when they meet Ministers. Noble Lords will have the opportunity to debate this Bill, which, subject to timetabling, will be before the House later this year.
The noble Lord, Lord Howarth, tabled an amendment in Committee which would have required the annual report on the IPO’s activities, which is to be introduced by Clause 20, to include information on approaches by third parties. In Committee, as Minister for Intellectual Property, I committed to publish proactively a list of all meetings between the chief executive of the IPO and external organisations. This demonstrates the Government’s very real commitment to transparency. I also remind the noble Lord that the IPO responds to requests made by Parliamentary Question and through the Freedom of Information Act. Since 1 July 2012, the IPO has received 184 FoI requests, only five of which relate to lobbying activity.
Lord Howarth of Newport
My Lords, I am grateful to the noble Viscount for his response, not least for the facts and figures that he gave us, which I will certainly look at carefully. I welcome the progress that has so far been made. In particular, I thank the noble Viscount for the decision he announced in Committee about the new responsibility of the chief executive of the IPO. However, as he says, there are a lot of meetings and a lot of opacity. I do not think it will be possible for the Government to hold their present line. Of course, I note and respect the Minister’s point that the procedure that I have suggested in the amendment might be excessively resource-intensive and costly. On the other hand, I take it that it is the practice of the IPO, as of the business department, to take minutes of its discussions and meetings. I am therefore not convinced that it would not be possible to produce some sort of streamlined version of those same minutes or that that material could not be adapted to be appropriately displayed on the website.
There will be much more debate about this whole issue of lobbying. We should wait and see what the new Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill eventually produces. I think it will emerge at the end of its parliamentary proceedings looking very different from the air that it has as it moves towards Second Reading. On that basis, I beg leave to withdraw the amendment.
Lord Clement-Jones
“(iii) progress has been made in protecting metadata”
Lord Clement-Jones
My Lords, briefly, this is a shameless attempt to publicise a success story from the Copyright Licensing Steering Group, the people who are bringing us the Copyright Hub. I take your Lordships back to the passage of the Enterprise and Regulatory Reform Act 2013, when a number of us argued for progress on metadata protection to be included in the Secretary of State’s annual report. On 6 March of this year the Minister said,
“The Government are keenly aware of and sensitive to the concerns of creators in relation to metadata. They believe that an industry-led approach is most likely to identify the key issues and the most effective solutions. … The Intellectual Property Office will also be working with the Technology Strategy Board to consider other options to tackle the issues around the misuse of digital images as well as search and stripping of metadata. I hope that in the light of what I have said in my brief comments my noble friend can withdraw his amendment”.—[Official Report, 6/3/13; col. 1602.]
It is very gratifying to be able to report that a sub-group of the Copyright Licensing Steering Group has produced, with a very comprehensive range of people within the industry, a draft code of practice that aims to ensure that relevant licensing metadata is identified in a consistent manner and remains readily available for licensing purposes. It calls on creators of images—photographers, and so on—to make it easier for potential users to find them by ensuring that they include key information such as their name, the date of creation of the image and a contact address. For users of images, the code of practice recommends that they take all reasonable steps to check that licensing metadata is attached to an image before they use it.
I understand that the draft code of practice is currently out to consultation and the Copyright Licensing Steering Group is seeking views on whether it is pitched at the right level and whether having general principles rather than more detailed principles is the right way forward. The Copyright Hub itself is now using Getty Images technology to search and identify images. It looks as though the Copyright Hub will fulfil the hopes placed in it, together with this whole development of protection of metadata.
The irony is that metadata stripping is unlawful under Section 296ZG of the CDPA 1988. The problem until now has been the issue of policing and enforcement. It looks as though photographers will be able, through a combination of the code of practice and the fact that the Copyright Hub is coming into existence, to remedy the unlawful stripping of metadata. It is good to know that other aspects of the Copyright Hub are being developed; some of them involve metadata, others do not. In the case of music, that is in conjunction with the new Global Repertoire Database.
It is useful to reflect briefly that this has been an interesting year in terms of debating and discussing intellectual property so fundamentally, and that there is some good news out there. I beg to move.
Lord Howarth of Newport
My Lords, the noble Lord, Lord Clement-Jones, takes us back quite nostalgically to the days of the passage of the Enterprise and Regulatory Reform Bill. He is absolutely right to remind us of the importance of the metadata issue. It would be welcome if the annual report were to include a section describing such progress as may be being made on that important issue.
I will speak to Amendment 14, in my name. I very much welcome the commitment that the Minister has made in the Bill to the publication of an annual report. Policy on intellectual property is arcane and is vigorously contested among specialists and between special interests. It is very important—its effects are far-reaching—yet it is not well understood, either by Parliament or the public. I therefore hope that the annual report will be more ambitious than is suggested by the terms of the clause in the Bill. I want it to range rather more widely to help Parliament and the public better understand the major policy issues and the principles which animate the Government in taking their specific decisions and formulating their broader policy.
I take it that the role of government is to judge the balance of the public interest in relation to intellectual property between affording protection to creative individuals and enterprises, and opening new possibilities as early as possible to the wider public, consumers and other originators of ideas and knowledge, such as academics, designers and other creative people.
Of course we need to protect intellectual property in certain circumstances. It is essential to incentivise innovation. Often there is a strong public interest in that—but not invariably. It should not be axiomatic that we grant more and more intellectual property rights. Applications should be judged on their merits. The Intellectual Property Office and the Government should not be negative but should be sceptical about applications, and should all the time be ready to question the consensus. While it is desirable to achieve an alignment of international regimes, for example through agreements at European Union level, it is important not to rest on the achievement of those agreements. As the noble Viscount reminded us, consistency is not necessarily a virtue.
Intellectual property is a form of monopoly. It leads to some rigging of the market and restraint of trade—and rigged markets and restraint of trade carry with them inefficiencies and opportunity costs. Others are restrained from accessing or exploiting new knowledge as early as they might do. Price competition is postponed. The holders of intellectual property, being protected, may become complacent and less innovative. That would be an ironic outcome of a policy intended to promote innovation. The incumbent may try to use monopoly power to crush rivals and new challengers who dare to enter the field.
Historically there have been vast benefits when decisions have been taken not to patent new discoveries. Jonas Salk declined to patent his invention of the vaccine for polio—to vast human benefit. Sir Tim Berners-Lee thought it was wrong to patent the world wide web. While it will be many decades before we can begin to assess the benefits or otherwise of that decision, it certainly created large new freedoms.
In Committee, my noble friend Lord Stevenson and I used the historical metaphor of the enclosures movement. We agreed that we preferred intellectual commons to intellectual enclosures. As the House will know by now, my view is that intellectual property is a necessary evil and that we should keep it to a minimum—just enough but no more than is needed to incentivise. Yet the tendency of policy has been to lengthen protection, and Governments have been prone to brag about the number of patents that are held in the UK, as if it was a measure of success. It is a measure of inventiveness, but it is also an index of economic rigidities. The Government should not simply equate maximising the profits of intellectual property holders with the public good. The question must be asked: cui bono?
It is commonly preferable to enlarge opportunities for small and medium-sized enterprises rather than to buttress the monopoly strength of giant multinational corporations. If we want to generate more jobs, spread wealth, tackle the negative externalities of certain business practices and raise more taxes, it may be preferable to support SMEs as against corporate giants.
The methodology needed to establish the necessary minimum has to be pragmatic and based on an assessment of the benefits and disbenefits of protection in relation to the economy, social well-being, research and culture. There are different effects of intellectual property depending on different timescales, industrial sectors, amounts of market share and geographical scales, just as there are different effects between luxuries and necessities.
The Government’s vision should not just be of what is in the narrow interest of the United Kingdom. They should not take the view “my country right or wrong” in relation to intellectual property. We should not always reflexively back UK plc. As we move towards a world with a population of perhaps 10 billion people and with vast migrations, it will be enormously in the interests of the United Kingdom that the poorer peoples of the world should be able to make rapid progress in knowledge, education and the growth of their economies. Judgments about intellectual property policy need to be economically farsighted, humane, ethical and wise. They will be very difficult indeed to make in, for example, the burgeoning field of the life sciences and where bioethical issues are at stake. I very much welcome the judgment by the US Supreme Court in relation to Myriad Genetics. However, as the noble Lord reminded us in Committee, it poses a significant challenge to the European Union. The EU biotechnology patents directive may need to be reconsidered in the light of that American judgment. As we see the development of techniques of so-called human enhancement, such issues are likely to proliferate. I hope that, year by year, the annual report will offer discussion of these matters.
The Minister very understandably and rightly said in Grand Committee, at col. 53 of Hansard on 18 June that each annual report should not be “a Hargreaves-like review”. But it should be thoughtful and instructive and should be more than a catalogue or parade of BIS or IPO activities, statistics, lists of negotiations and seminars and an account of assistance given to business. It should articulate values and principles and the Government’s vision. I mean the vision of the whole Government, not just the business department but other departments that have a vital interest in intellectual property such as the DCMS, the Department of Health, the schools department and the Department for International Development.
I conclude by noting that the noble Viscount, as Minister for intellectual property, has vastly important responsibilities which go beyond what is written into the clause as we have it now—that is,
“the promotion of innovation and of economic growth”.
The annual report ought to reflect those wider responsibilities and should be the basis of Parliament’s and the public’s continuing consideration of this policy area, which has such wide significance.
Lord Stevenson of Balmacara
My Lords, I would like to pick up on the points made by the noble Lord, Lord Clement-Jones, about metadata. I endorse his feeling that good work is going on in this area in the Copyright Hub, which I think will bridge a gap between where everybody would like to be and where photographers think we are. I think that a number of steps still need to be taken on that but if the Government will keep a close eye on it and help where they can there is a reasonable expectation and hope that we will find something of lasting good coming out of that. As regards the amendment proposed by my noble friend Lord Howarth, he makes his point with great elegance. I look forward to hearing from the Minister.
Viscount Younger of Leckie
The first amendment in this group from my noble friend Lord Clement-Jones would require that the annual report from the Secretary of State to Parliament include specific mention of,
“progress … made in protecting metadata”.
As I said in Committee, this report will have value to the extent that it addresses issues pertinent to the year in which it is published. While some issues such as innovation and growth are bound to endure, other issues may rise and fall in their topicality.
My noble friend Lord Clement-Jones talked about the work being carried out currently by the industry-led Copyright Licensing Steering Group to develop a voluntary code of practice on the handling of metadata. The Government support the voluntary approach being taken by industry to look at this problem, and we welcome the consultation that was published on 27 June. This consultation exercise, which is indeed good news, ends on 28th August, and I would encourage anyone working in this area to contribute their thoughts. I am sure that noble Lords join me in hoping that this work by industry will mean that metadata stripping is not a significant problem in years to come, and as such I hope they will also agree that although it is topical today, it would not be right to require the Secretary of State to report on progress with the issue every year. Of course, that does not mean that the Secretary of State cannot include such information in the annual report at his discretion while it is both topical and of interest. It is fair to say that, for the initial report at least, that will be the case. Accordingly, I am happy to commit today that the first report will contain an assessment of progress made on this issue.
Amendment 14, tabled by the noble Lord, Lord Howarth of Newport, is intended to require the Government to report on how the activities of the IPO impact on the interests of wider society and the economy. The amendment returns us to the debate which we had during Grand Committee on the detail of what should be included in the Secretary of State’s annual report on innovation and growth. Indeed, the noble Lord tabled a similar amendment at that time. In Committee, I explained:
“I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones”.—[Official Report, 18/6/13; col. GC 51.]
However, as the noble Lord has returned to the issue today, I return to the Hargreaves review to which the report responds. The review stated that the IPO should focus,
“on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets”.
The intention of the report is to sharpen the focus of the IPO on this core objective. Broadening the scope of the report would reduce its effectiveness in clearly setting out what the IPO is doing to promote innovation and growth.
However, I reassure the noble Lord that the Government take very seriously the need to balance the protection of intellectual property with the promotion of the wider interests of society and the economy, both in the UK and throughout the world. I was delighted to see that international negotiators, including representatives from the IPO, came to an agreement last month on a new treaty to improve access to books for millions of people who are blind, visually impaired or print disabled.
Also last month, the World Trade Organisation Trade-Related Aspects of Intellectual Property Rights Council decided to extend the transition period for least developed countries to comply with the TRIPS agreement until 30 June 2021. This has been government policy since 2011 and is about balancing the potential value of IP policy to least developed countries with the real-life priorities in those countries. The report will include such examples where the interests of wider society have been balanced with economic objectives.
The noble Lord, Lord Howarth of Newport, said that the Government should not rest on the achievements of international agreements. The Government are determined to improve the global IP system so that it benefits the UK and the global economy. I reassure him that we are certainly not resting on our laurels. Whether it is reducing patent backlogs or agreeing transitional periods for least developed countries in TRIPS agreements, we take a global view and seek continuous improvement. In the light of this, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Clement-Jones
My Lords, I thank all noble Lords for their remarks during the course of the debate, particularly about the importance of the protection of metadata. I thank my noble friend in particular for his assurances that the first annual report will include a report on progress on metadata protection. The marvellous thing is that it will be a good news report in that respect. I beg leave to withdraw the amendment.
Lord Clement-Jones
“Lookalikes
(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.
(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.
(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.”
Lord Clement-Jones
My Lords, I return to an amendment on lookalikes which was first proposed by my noble friend Lord Jenkin in Grand Committee on 18 June. He and the noble Lord, Lord Borrie, from the opposition Benches, made an eloquent case that this kind of parasitic copying was designed to—and did— confuse and mislead the consumer, and should have a remedy available to those whose products are copied in this way.
The Minister responded with a number of points on, first, the IPO study, the amendment itself, the Consumer Protection from Unfair Trading Regulations, the Which? report and TRIPS compliance. I will take each of his statements in turn and comment on them. First, the Minister said that the findings of the IPO study,
“were, perhaps surprisingly, fairly equivocal”.—[Official Report, 18/6/13; GC63.]
Having now studied the IPO study findings, I believe that they are unequivocal in key areas. The review of existing surveys concluded the following:
“It is clear across all these studies that consumers report making mistakes in what they have bought and in high numbers”.
In addition,
“where the packaging is similar then it appears that more people think the own brand has a common origin with the manufacturer”.
The study also states that,
“as the similarity of packaging increases it becomes more likely that consumers will perceive the quality of products to be the same”.
The study’s own consumer surveys found:
“Increased perceived similarity of packaging to manufacturer brand product packaging of one own brand product relative to another is significantly correlated with higher perceptions (ratings/expectations) of price, quality, suitability for intended use and (marginally) value for money … Substantial proportions (50-60%) of the UK, German and US populations report having purchased a lookalike accidentally or mistakenly at least once or twice … In summary, across the three national samples 5-15% of accidental purchasers of lookalikes rated the purchases as having been of the highest level of disadvantage … to them, and 30-40% rated the purchases as having been of the next highest level of disadvantage”.
The study also concluded that,
“some lookalikes are already unlawful in the United Kingdom as they are contrary to the Consumer Protection from Unfair Trading Regulations 2008”.
Tellingly, it went on to say:
“However, certain lookalikes already being unlawful under the 2008 regulations is of little significance if trading standards (or others) do not have the resources to take action against those breaching the regulations”.
The Minister went on to say that,
“there is a fine line between confusing packaging and the use of ‘generic cues’ to signal to customers”.
Competitors may adopt a category cue—typically this is one design element. The Minister quoted green for mint toothpaste. Nevertheless, each product can be distinct from others carrying the same cue. There is a big difference, however, where competitors set out to mimic a range of features associated with a familiar brand in order to create a similar overall appearance. Where there are borderline cases, the courts should have no difficulty in drawing an appropriate line. They must do so, for example, when determining whether or not a product is a counterfeit.
Category cue arguments are often used to justify copying familiar brands. However it is one thing to say that green equals mint or yellow equals lemon, it is quite another to say that red equals cola or squat, dark bottles equal Marmite. The Minister went on to say that,
“a substantial majority of consumers had deliberately purchased a lookalike and, of those consumers, most of them found the experience to be advantageous. The research did not analyse why some consumers perceived the purchase to be advantageous”.—[Official Report, 18/6/13; GC63-64.]
It should not be inferred from these findings that similar packaging is benign. A copy may be purchased deliberately, in the belief that it is comparable to the brand. This is what the copy intends to convey and the consumer may feel advantaged. However, the consumer would be misled were the copy not to share all the functional and emotional attributes normally associated with the brand. The IPO study demonstrates that similar packaging increases perceptions of quality and price. A consumer may feel advantaged, but actually may be paying more than would be the case were the product not free-riding and boosting its appeal artificially on the back of a brand.
The IPO study also demonstrates that similar packaging increases the belief that the product comes from the same manufacturer as the brand. The consumer may feel advantaged, but is actually misled when the product is not made by the brand owner. As the study states, crucially the research did not analyse why consumers perceived an advantage. It also makes a far-reaching and rather far-fetched assumption that shoppers have perfect information about the products on offer in supermarkets. This is clearly absurd. The finding therefore has little value in policy analysis.
Lord Stevenson of Balmacara
My Lords, the noble Lord, Lord Clement-Jones, has gone through the case originally made in Committee together with the Minister’s response. He has done it in some detail, so I do not want to delay the House going forward further. I should just like to pick up on two points.
It is certainly true that, as the noble Lord said, lookalikes are to a large extent already unlawful in the United Kingdom because they are contrary to a variety of measures introduced by previous Governments—in particular, the Consumer Protection from Unfair Trading Regulations 2008. The point that he made—and I think that it is important—is that these regulations are of little effect if the responsible authorities, such as trading standards, do not have the resources to take action against those breaching the regulations. Therefore, the point that the noble Lord makes, and I support it, is that we need a bit more detail from the Minister when he responds on whether it is true that trading standards are able to deliver on this point.
The noble Lord also mentioned that there was a fine line between confusing packaging on the one hand and the use of generic cues to signal to customers. This was something that the Minister gave us examples of when he spoke in Committee. However, the point here is that, if similar packaging prompts mistaken purchases and creates false assumptions, there must be a sales effect. If there is a sales effect, then it is surely right for the Government either to strengthen the existing powers so that they are effective or to introduce new legislation.
Viscount Younger of Leckie
My Lords, the effect of the amendment put forward by my noble friend Lord Clement-Jones would be to protect the distinctiveness of product packaging. Noble Lords will be aware that the amendment reflects the one tabled by my noble friend Lord Jenkin in Committee, which was mentioned by my noble friend. I thank my noble friend Lord Clement-Jones for his detailed and eloquent introduction to the amendment. Indeed, his and other noble Lords’ contributions in Grand Committee caused me to reflect at some length in the interim. This reflection has reinforced my understanding that the Government are committed to protecting intellectual property.
Like my noble friend, the Government recognise the importance of brands. In recent years the Government have held two brands conferences and established the Brands Industry Forum—a vehicle for brand owners to discuss directly with the Government the policy issues that matter to them. The research on lookalike packaging, which I spoke about when we discussed this issue during Grand Committee, was commissioned by the Government in response to concerns raised by brand owners. This demonstrates that the Government are receptive to the needs of brand owners and willing to explore their concerns. However, we also have a duty to the public and wider economy. It is on this basis that the Government will be resisting the amendment. We consider that it would impact on competition and risk damaging future growth.
I now propose to set out the key issues in more detail. First, as I said during Committee, protection for brands already exists through the IP rights of trade marks and registered designs, and through the tort of passing off. A trade mark is a very powerful monopoly right—the most important identifying feature for any brand. It can last in perpetuity. The first ever trade mark registered in the UK, the Bass red triangle and motif, is still in use nearly 130 years later. If packaging is distinctive, it can be protected as a trade mark.
Secondly, registered design rights protect the appearance of a product if it is novel, has individual character and is not dictated by technical function, which I hope my noble friend agrees would be necessary elements of distinctive packaging. Thirdly, passing off protects one trader’s goods from being represented as those of another. An act of passing off requires existing good will in the goods, a misrepresentation causing confusion as to the origin of the goods and likely damage to the good will from this misrepresentation. These three aspects address the issues that lookalike packaging is suggested to cause, so it is logical that redress is sought through this existing mechanism.
Lord Clement-Jones
My Lords, I thank my noble friend the Minister for a very careful and well crafted reply, which had resonance in a number of areas. I particularly appreciated him saying that he and his officials were committed to protecting IP, that the Government are very receptive to the interests of brand owners, and that he had a real interest in discussions with brand owners and in continuing that dialogue. That is very important. I do not think that we are going to get very far in debating equivocal versus unequivocal—that seems to be a tomahto versus tomayto-type debate—but it will no doubt continue nevertheless. That continuing discussion and dialogue is extremely important and the noble Lord, Lord Stevenson, put his finger on it when he said that it could well be that enforcement of the CPRs is absolutely at the root of this. They are not being enforced currently. It may well be that there are some equivalent remedies to the comparative advertising rules that the Minister mentioned and I very much hope that, whichever way it goes, that continuing dialogue bears fruit. In the mean time, I beg leave to withdraw the amendment.
Lord Clement-Jones
“Copyright in broadcast
Omit section 73 of the Copyright, Designs and Patents Act 1988 (reception and re-transmission of wireless broadcast by cable).”
Lord Clement-Jones
My Lords, this is a rerun of an amendment I tabled in Grand Committee. On 18 June in Committee, the Minister said in response to this particular amendment:
“Given the interrelation between Section 73 and many other rules and regulations, it is key that this is looked at in the context of the wider framework”.
He said that the DCMS was essentially leading the work on this and that the department,
“will set out the next steps on this issue when it publishes its approach to digital connectivity, content and consumers, which is planned for publication before the end of July”.
I hope that the Minister can give us some news on that hot off the press but I am not totally optimistic. He also said:
“It is right and proper that any proposal will be consulted on with the relevant stakeholders and interested parties. This proposed amendment to the CDPA would pre-empt the Government’s approach to this area”.—[Official Report, 18/6/13; col. GC 94.]
I set out, fairly comprehensively, the reasons why it was not right to retain Section 73 of the CDPA, largely because of the outcome of the case involving an app that is retransmitting ITV and other commercial—
Lord Foulkes of Cumnock
I wonder whether the noble Lord will give way. He has spoken eloquently and diligently in Committee and now on Report on this matter, as he did on the previous amendment. I wonder whether he could give the House and me some reassurance as to whether there is any link between any of these subjects and the interest that he has declared in the register.
Lord Clement-Jones
My Lords, there is no connection at all. I am very surprised, quite honestly, that the noble Lord is asking that question, since I have spoken on this issue both in Committee and today.
Lord Foulkes of Cumnock
So none of the clients of DLA Piper UK have interests in any of these matters—is that correct?
Lord Clement-Jones
My Lords, none of those clients of DLA Piper are personal clients and therefore I have no obligation either to include them in the register or to declare them when I stand up in the House. I am sure that when the noble Lord reads the Code of Conduct, he will be absolutely clear on that point.
Lord Foulkes of Cumnock
I was not raising it as a question of obligation or, indeed, challenging what he has properly declared in the register. All I was seeking to ascertain was whether any of the many clients of DLA Piper—personal or otherwise—have interests in these matters. I wonder whether he could clarify that.
Lord Clement-Jones
My Lords, DLA Piper has something like 80,000 clients. I am sure that some of them have interests in virtually everything that passes through this House on a daily basis. However, that does not require a partner in a law firm, like me, to make a declaration or, indeed, to state who their clients are. Otherwise, I would take up even more of the House’s time than I already am. Perhaps I could continue.
The current regulatory regime governing the relationship between PSB channels and TV platforms rests on three assumptions: that some of the analogue terrestrial value enjoyed by the PSBs should be used to encourage platform competition in the UK; that platforms effectively offer audiences to commercial PSBs to sell to advertisers; and that platforms do not inhibit the ability of commercial PSBs to exploit content, originally delivered free to air, in secondary markets.
The first assumption no longer holds—there is no analogue spectrum and there is a highly successful and well resourced pay-TV platform in the UK. Increasingly, however, the second and third assumptions are also in jeopardy, in particular as a result of the rise of subscription-based, high-capacity personal video recorders. PVRs are now in the vast majority of Sky and Virgin households and are key to both platforms’ proposition to consumers. PVRs are rented or sold by the main pay-TV platforms to their subscribers as added-value services and enable pay-TV platform customers to record and keep copies of very significant amounts of commercial PSB content. They also allow viewers to skip the advertising in such content, as they are doing in increasing volumes, particularly in genres such as drama.
For example, the Sky+HD 2TB box is now capable of recording the entire ITV peak-time schedule for 11 months of the year, and storage space is expanding exponentially. The concern is not about PVRs per se—they are a great enhancement to consumer choice—but rather the fact that the regulatory regime now allows platform operators to extract further value from PSB content, which is supplied either for free or, worse still, following payment to the platform operator in the first place. The PSBs are not able to capture any of this value by renegotiating the original terms of supply to the platform, as a result of the following components of the current regulatory regime: Section 73, which this amendment attempts to deal with; the Ofcom-regulated technical platform services regime, under which PSBs have to provide content for free and have to pay several million pounds to a platform operator for the technical platform services that enable viewers to receive the PSB channels; and thirdly, the time-shifting exception to copyright that allows customers to record and keep TV content. Around 10% of all viewing is now time-shifted, which is nearly five times greater than the highest level of time-shifting in the VCR era. PSB content is the most time-shifted—drama in particular, where levels of time-shifting and advertising-skipping are far higher.
Lord Stevenson of Balmacara
My Lords, despite the points made by the noble Lord, Lord Clement-Jones, Section 73 of the CDPA 1988 is but one component of a complex web of regulations that provides equilibrium in the UK broadcasting market. It is true that Section 73 is relatively old, created when the cable industry was in its infancy. It is also true that the cable industry is in a different position now. I certainly acknowledge that the catch-up TV case referred to by the noble Lord, Lord Clement-Jones, raises legitimate concerns about the use of Section 73 as a defence for the retransmission of free-to-air channels online.
However, the point surely is that this amendment points out the need to look again at the objective of Section 73 and to ask whether the outcomes it delivers today are still relevant to the Government's public policy objectives. I understand that the Government are currently looking at how Section 73 might be amended and tightened to ensure that the beneficiaries of the clause are the intended platforms that are acting within the law. Perhaps when he responds, the Minister will let us know what progress is being made in that review and indeed, as has been mentioned, what progress is being made on the communications White Paper, which has been promised on a regular basis since 2010.
While the recent catch-up TV case may require an adjustment to the current law, abolishing the clause entirely, as the noble Lord, Lord Clement-Jones, proposes, seems entirely contrary to the interests of 4 million cable customers who access public service content, at no cost to those broadcasters, through the cable platform. The right thing to do is to ensure that this issue will be considered in some detail when the Government eventually publish their communications White Paper. In these circumstances, the amendment proposed by the noble Lord, Lord Clement-Jones, seems somewhat previous, as well as being contrary to consumer interests. I hope that the Government will resist this amendment.
Viscount Younger of Leckie
My Lords, I note the continuing interest that my noble friend Lord Clement-Jones shows in this area. The legislative framework that supports our vibrant and successful TV industry is incredibly important and is deserving of our time and attention. This amendment would repeal Section 73 of the Copyright, Designs and Patents Act 1988. This would remove the copyright exemption for the retransmission by cable of certain public service broadcasts, or PSBs. This issue will be addressed shortly when the Department for Culture, Media and Sport sets out its approach to digital connectivity, content and consumers. I reassure my noble friend that we still anticipate publication of the strategy paper by the end of this month.
This is an area where many competing interests must be balanced. As such, it is of vital importance that the Government proceed carefully, giving each of the opposing views due consideration. I can assure my noble friend that it will be consulted on fully to ensure that the views of all those affected are taken into account. I hope that I might be able to help the development of this debate by setting out some of the key points of discussion and their relationship to key pieces of legislation, including Section 73.
Discussions about Section 73 tend to focus on two key areas. First, they are concerned with the impact on the relationship between PSBs and cable platforms. Secondly, they relate to the use of the Section 73 exemption by internet-based television streaming services. I will look at each of these areas in turn.
This piece of legislation affects the relationship between PSBs and cable platforms by providing cable platforms with an exemption for the retransmission of certain PSBs. This means that PSBs are not able to charge cable services for the inclusion of certain channels on their services. However, this piece of legislation fits within a much wider framework that supports the availability of TV and investment in television programming in the UK. This framework consists of a variety of rules and regulations that affect the production, availability and ease of discovery of public sector programming and its relationship with the services or platforms that carry it. These include the obligations on PSBs to offer their content to all relevant platforms, the rules governing payments by broadcasters for technical platform services, and the powers for regulators to compel these services to carry PSB content.
The Government have been clear that their objective is to ensure that, for the core PSB channels, there is an overall zero balance of payments between the PSBs and the services or platforms, regardless of whether these are based on cable or satellite. This is a fair and pragmatic approach that ensures the wide availability of PSB content and allows PSBs to continue their high level of investment in high-quality UK content. The current framework, including Section 73, is delivering this outcome for TV delivered by cable, and we want to see this continue. However, there is still a way to go before we see net zero fees on satellite, and we want to investigate how net zero fees can be achieved across the main platforms. Therefore, it is right and proper that any proposal will be consulted on with the relevant stakeholders and interested parties.
The second issue at stake is the use of the Section 73 exemption by internet-based television streaming services. This issue is the subject of ongoing legal proceedings and, as such, it is not appropriate for me to comment on the specifics. However, I can say that the Government are concerned about the use of this exemption in this way, and will address it when we set out our approach to connectivity, content and consumers by the end of this month. This proposed amendment to the CDPA would pre-empt the Government’s approach to this area. A complex framework governs the balance of payments between platforms and broadcasters, so we need to consider any changes in the round or risk unintended consequences.
In view of the fact that the Government are actively looking at this matter, I would be grateful if my noble friend would withdraw the amendment. Just before I sit down, I will answer a question raised by my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson, about when the communications paper will be published. To reiterate, the Government still anticipate that this will be published by the end of July.
Lord Stevenson of Balmacara
Before the Minister really sits down, perhaps he could unpick that a little. “Connectivity, content and consumers” is to be the title of what? Is that a strategy paper, as the noble Viscount mentioned in reply to the noble Lord, Lord Clement-Jones, or is that the White Paper?
Viscount Younger of Leckie
To clarify for the noble Lord, it is indeed the strategy paper, which is due to be published by the end of July.
Lord Clement-Jones
My Lords, I thank the Minister for that response. We have elicited a very useful heralding of the communications White Paper, which the Minister has carefully labelled a strategy paper, so perhaps we are being invited not to expect too much detail. That will be very welcome, since it has been anticipated for quite some time.
The Minister has been very helpful in responding. Clearly, I believe that the discussion about Section 73 is part of an ongoing discussion, which will no doubt take place when the White Paper is consulted on and any Bill comes forward. The Minister talked about the objective to have a zero balance of payments. While that is very helpful in clarification, it is not particularly welcome to the PSBs. The DCMS can expect some argument about that, since the PSBs believe that that means they are at a disadvantage when it comes to the use of their programmes and people inserting advertisements in them for their own benefit and not for the benefit of the public service broadcasters.
I welcome the Minister’s point about the exemption being used by internet-based companies and so on. Again, that tilts the other way in terms of helpfulness. The debate will carry on, I am sure, but this has been a useful canter round the course in anticipation of the White Paper. I beg leave to withdraw the amendment.
Lord Clement-Jones
“Criminal liability
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In section 107(4A)(b) (criminal liability for making or dealing with infringing articles, etc) for “two” substitute “ten”.
(3) In section 198(5A)(b) (criminal liability for making, dealing with or using illicit recordings) for “two” substitute “ten”.”
Lord Clement-Jones
My Lords, this amendment was tabled in Grand Committee and I am certainly not going to repeat everything I said in relation to it.
Criminal offences for online copyright theft have maximum penalties of two years’ imprisonment. Criminal offences for physical copyright theft have maximum penalties of 10 years’ imprisonment. This discrepancy came about because the new offences were introduced by secondary legislation using the European Communities Act as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal offences introduced by secondary legislation via the ECA are limited to two years’ imprisonment.
In addition, my right honourable friend Vince Cable’s Private Member’s Bill, which became the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002, increased penalties for criminal copyright offences to harmonise them with those available for trade mark offences at 10 years.
Criminal sanctions should not be dependent on whether the offence is taking place in an online or physical environment. Intellectual property is being stolen, whichever format is being used. This amendment is essentially about addressing an anomaly that arose simply because of timing. These are exactly the same offences—they are just being committed online—and therefore should have the same maximum penalties.
Having a maximum penalty of only two years for online offences can be used by defendants to argue that these are not serious offences. Prosecutors have on occasion managed to work around this anomaly by using charges of conspiracy to defraud but it will certainly not always be appropriate to use fraud legislation. The circumstances of the Vickerman case—which we discussed in Committee; he got four years in prison—will not always be repeated. In other cases there may not be a conspiracy or the Fraud Act may not be applicable. Some cases are copyright cases pure and simple but we cannot currently risk using the CDPA in serious cases because of the reasons given above.
In his response in Grand Committee, the Minister said:
“With existing legislation already providing the necessary penalties and prosecutors having a range of options already at their disposal, at the present time I see no reason to increase sanctions under the Copyright, Designs and Patents Act, despite there being a slight discrepancy”—
I would have thought that eight years was rather more than a slight discrepancy. He went on to say:
“In particular, changes should not be made without carrying out the appropriate consultation to gather evidence of the impact”.—[Official Report, 18/6/13; col. GC 98.]
Existing legislation does not provide the necessary penalties. Rather, they are different. Why would it be necessary to consult in these circumstances? I remind the Minister of comments made by my right honourable friend Vince Cable when he was steering his Private Member’s Bill through Parliament. He said:
“There is no logical reason for two sets of intellectual property law to impose different criminal sanctions … it is important that we have legislation that makes criminal sanctions effective deterrents … There are some who have argued that we do not need to change the law because it is possible to find some existing power under which sanctions can be imposed. That is an unsatisfactory way to proceed. The approach is cumbersome and costly, and often it does not work. There is an enormous inherent advantage in having a law that is clear, open and completely honest in what it is designed to achieve”.—[Official Report, Commons, 23/11/01; cols. 628-30.]
All these points are apposite today as regards physical versus digital online copyright infringement. I hope that the Minister will reconsider his position on that amendment.
On Amendment 19, in responding to the Hargreaves review, the Government committed to introducing a limited private copy exception to allow copying of content lawfully owned by an individual for their own personal use. The Intellectual Property Office has recently issued the draft private copy statutory instrument, which can be summarised as follows. First, an individual who has lawfully acquired a work on a permanent basis can make a private copy for his or her own personal, non-commercial use. Secondly, the individual cannot circumvent technological protection measures but—interestingly—will be able to appeal to the Secretary of State to intervene to obtain a private copy if the work is protected by technological protection measures. Thirdly, it does not allow contract terms to override the exception.
Amendment 19 inserts a new clause in anticipation of this draft statutory instrument. The draft SI has provoked considerable concern among the audiovisual sector—indeed, across all the creative industries. I strongly believe that copyright exceptions should be adopted only in response to a well defined public policy objective and market failure. In this regard, the Government’s draft statutory instrument disregards altogether consumers’ ever-widening choice of commercial offerings facilitated by a rapidly evolving technological landscape, and risks jeopardising these market-led developments altogether. The purpose of this amendment is to ensure that a private copy exception should not apply where a commercially available alternative already exists. This principle is entirely consistent with European and international copyright norms and, indeed, is an existing principle in UK law.
Historically, private copy exceptions were established in an analogue environment where business models and technology could not accommodate consumer offerings that provide secure copies. With the rapid conversion to digital business models in recent years, the technological and therefore the commercial landscape has changed considerably. The audiovisual sector has recognised the growing consumer demand for additional copies and portable content, and already provides many avenues for consumers to obtain legal digital copies of content they buy for their own use. Most commonly, the purchase of a DVD or Blu-ray Disc includes access to a digital copy. In addition, products such as UltraViolet allow legal and secure access to that content through the cloud among six family members for up to 12 personal devices such as laptops, tablets, smart phones and televisions, thereby enabling format shifting. Additional multicopy offerings are being brought to the market, and none requires the consumer to pay twice for the same content. At the same time, an explosion of new digital audiovisual services—currently there are more than 30 in the UK—has occurred under the existing legal framework. There are an increasing variety of means which put increased choice and control in the hands of the consumer, and are made possible only through industry-led investment and innovation.
The UK already leads Europe in its range of audiovisual services and technologies, without any change being required to the current legal framework. In proposing the introduction of any copyright exception in the absence of a clear public interest, surely the burden of proof should rest firmly with the Government to define and quantify the extent of the market’s failure to meet consumer needs. It is very questionable whether the Government have made a convincing argument in support of a private copying exception. Indeed, far from incentivising the market to continue innovating in the interest of the consumer, it may be that the private copy exception proposed will fundamentally undermine the technologies and services that the market is developing.
There are numerous other concerns expressed about the draft copying statutory instrument, not least its apparent conflict on a number of points with EU law. It needs to be strengthened to ensure that the exception applies only for the sole personal use of an individual and is not to be used by commercial operators. It should not authorise the making of a further copy by another person or entity, such as an electronic storage provider, in relation to a further copy. Without such clarification, the exception could seriously impact on the ability of the music industry to license innovative value-added services, such as “scan and match” services in the cloud.
Given the widespread concerns about the latest wording of the exception, I hope the Minister can assure us that a further draft will be presented before the formal publication of the SI. I had a letter today from the Minister saying that the SI may be tabled later on in the year but that it is not intended to bring it into force until 2014. So there is no rush; there is ample time for another draft before proceeding with implementation. However the purpose of the present amendment is to ensure that, where private copying is permitted under the terms of the original product purchase, the exception is not invocable. There is no doubt in my mind that the absence of any commercial availability test when applying a private copying exception would be incredibly damaging for the health of our audiovisual sector. I beg to move.
Lord Stevenson of Balmacara
My Lords, this group is in two quite separate halves. Amendment 18—to which the noble Lord, Lord Clement-Jones, spoke first —is the continuation of a debate that was held in Committee. It will be interesting to hear how the Minister wishes to respond to it. There is a good case here for trying to unpick some of the discrepancies between the various regimes, and in particular to try to anticipate the way in which technology is moving forward.
In Amendment 19, which has been linked in this group, we are hearing a different debate, which is about the Hargreaves exceptions which are currently in consultation. As the noble Lord obviously anticipated, some changes may well occur as that debate goes forward. However, I do not think that it fits well into this Bill and confidently expect the Minister to say that it is a matter for another time. The question, of course, is when.
At the conclusion of the Committee stage the Minister offered—and we gratefully accepted his invitation—to have a broader-based debate around the sort of issues that the noble Lord, Lord Clement-Jones, has been raising. We felt that the recourse to secondary legislation for this important issue in itself makes it difficult for the House to exercise a broader view on these matters. In particular, as there are so many of these exceptions, there is a need for what might be considered a more general debate around the overall balance and overall approach which the Government could have taken in this matter. The noble Lord made that offer and we look forward to hearing whether he has had any success in finding time for that debate. It would be helpful, for exactly the reasons that the noble Lord, Lord Clement-Jones, has given, to have a broader-based discussion around some of the more far-reaching ends of these 11 different exceptions so that when the time comes for both Houses of Parliament to consider these matters—as they will in the secondary legislation process—we are better informed and can make better decisions about how to respond to them. I look forward to hearing the Minister’s response.
Viscount Younger of Leckie
My Lords, Amendment 18, tabled by my noble friend Lord Clement-Jones, would increase the maximum penalty for online copyright infringement to 10 years. Under the Copyright, Designs and Patents Act—CDPA—the current maximum penalty that can be incurred by online copyright infringement is two years, while for physical copyright infringement, the maximum penalty available is 10 years. This is not a new proposition. A similar recommendation was made by Andrew Gowers in the report he wrote for the previous Government. At the publication of the Gowers report, the previous Government indicated their intention to implement all of its recommendations. However, after a consultation, they decided to increase the financial penalties to £50,000 but left the maximum custodial sentence untouched. I am sure that they did not reach their conclusions on this matter lightly.
This issue is sometimes presented as if there is a gap in the fabric of criminal offences which apply in this area, and that this change will plug that gap. I am not entirely convinced. The statute in question is not the only way in which criminals can be charged for copyright infringement. There is already a range of options for prosecutors looking to obtain a conviction for such activities. Many of these require a lower evidential burden than copyright offences, require less specialist knowledge and offer the sort of sentencing options which my noble friend seeks to add to this offence. Indeed, I am told that prosecutors would usually prefer to charge under the Fraud Act 2006, which carries a maximum penalty of 10 years, or use “conspiracy to defraud”, which also carries a penalty of 10 years. The Fraud Act in particular seems to have met the challenges posed by developments in technology and internet crime, helping industry to report crime as fraud, and has garnered praised from the City of London Police, among others.
There is another issue here of sentence length, by which I mean convictions and sentences actually handed down, rather than those that are theoretically available. The average custodial sentence given for physical copyright infringement under CDPA offences in 2011 was 12.7 months, the highest for five years. So the questions that occur to me are these: is this a necessary change? Is it a useful change to make? I would like to reflect on this matter further, and perhaps have the benefit of views from experts and practitioners in the field. I therefore ask my noble friend if he would be prepared to withdraw his amendment in return for an assurance that I will set in hand a study of this question, the timing of which I will confirm following the Summer Recess. If there is a need for a change to the law then I will, of course, look for a suitable legislative opportunity.
I turn now to the private copying exception, to which Amendment 19 relates. This is a measure that the Government are preparing to introduce under secondary legislation, separate to this Bill, as the noble Lord, Lord Stevenson, pointed out. I remind noble Lords of the lengthy Committee discussions which have already been held on copyright exceptions, and of the detailed information already provided to this House on the Government’s ongoing technical review process. Noble Lords will recall my invitation for contributions to that process from all interested parties. I am very grateful for the contributions we have received to this review process so far. I also remain committed to having further debate on these issues prior to the draft regulations being laid before Parliament. The noble Lord, Lord Stevenson, asked when the exceptions debates might take place and about the timing. I believe that we agreed that the timing would need to be agreed through the usual channels. I would like to await the results of these discussions first before I commit to a particular time.
In light of all this—and I am sorry to strike a rather discordant note—I will admit that I am surprised, and slightly disappointed, to see that my noble friend Lord Clement-Jones has chosen to lay this amendment on private copying, on Report, on one of the proposed changes to copyright exceptions. It is rather late in the day for an amendment that would add a new clause to the IP Bill, and appears to ignore the many opportunities there have been to debate the private copying exception. However, I will endeavour to provide my noble friend with some reassurance in the interim.
Lord Clement-Jones
My Lords, I thank the Minister for his two replies, which were rather different in their tenor. I very much welcome some of the points he made in his reply to Amendment 18. While not necessarily agreeing that it is inappropriate to change the penalties available for online infringement, the Minister said he would reflect further, set in train a review and consult with experts on this subject. That gives us a chink of light. He said that he would advise later on the timing of that review. At this stage, with noble Lords gathering for the next debate, that is as good as it gets.
Amendment 19 should be treated as a preliminary canter. I very much hope that there will be a more extended debate on this. This is the problem with secondary legislation: we may be faced with a debate simply when the order comes and we will not be able to amend it in any shape or form. The Minister should know that there is very deep disquiet about the private copying exception among various members of the creative industries. I hope that he will keep channels open to them because there is basically a fundamental difference of opinion here. Some members of those creative industries believe that their interests are threatened by the private property exception as proposed. They believe it is not narrow but actually quite broad and not explicit about the cloud. They have considerable interest in further discussion.
I hope that the Minister will keep all his channels open in that respect—on the exceptions as a whole but on the private property exception in particular. In the mean time, I beg leave to withdraw the amendment.
Arrangement of Business
Lord Ahmad of Wimbledon
My Lords, there are 24 speakers for this evening’s debate. If Back-Bench contributions are kept to less than five minutes, this should allow for the Question for Short Debate to commence at approximately 9 pm.
EU: Police and Criminal Justice Measures
(10 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:54 - Division on the Motion - Ayes: 216 / Noes: 104 - Motion agreed.
Lord McNally
That this House considers that the United Kingdom should opt out of all European Union police and criminal justice measures adopted before December 2009 and should seek to rejoin measures where it is in the national interest to do so; endorses the Government’s proposals in Cm 8671; and invites the European Union Committee to report to the House on the matter before the end of October, before the Government opens formal discussions with the Commission, Council and other Member States prior to the Government’s formal application to rejoin measures in accordance with Article 10(5) of Protocol 36 to the Treaty on the functioning of the European Union. 13th Report of the European Union Committee, Session 2012-13 (HL Paper 159).
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, today this House has the opportunity to debate and vote upon the Government’s proposal to: opt out of all pre-Lisbon police and criminal justice measures; invite various parliamentary committees to issue reports on the list of measures applicable; and then begin formal discussions with the European Commission and the other member states.
It would perhaps help our deliberations if I begin the debate by providing a little context. Between 1995 and 30 November 2009, some 130 measures in the field of police and criminal justice measures were adopted in Brussels under the so-called third pillar. These were not subject to either Commission enforcement powers or the full jurisdiction of the European Court of Justice. As a result, the Commission could not take action where it considered measures had not been properly implemented. There were no ECJ infringement rulings and unanimity was required to pass decisions in Council. The Lisbon treaty changed the constitutional structure of the European Union in police and criminal justice matters. A five-year transitional period was negotiated to delay these pre-Lisbon measures from becoming subject to Commission enforcement powers and the full jurisdiction of the European Court of Justice. This transitional period applies to and will end for all member states on 1 December 2014.
However, the previous Labour Government negotiated a provision that applies only to the United Kingdom. Under the terms of the Lisbon treaty, the United Kingdom has until 31 May 2014 to decide whether to opt out of around 130 justice and home affairs measures covered by the treaty. If the UK so chooses, the opt-out will come into effect on 1 December 2014. An opt-out of individual measures may have been preferable—I believe that was what the previous Government initially tried to negotiate—but that is not an option. The opt-out can be exercised only en masse. Only after we have opted out can we seek to rejoin individual measures. That is subject to a negotiation with the European Commission and other member states.
Two weeks ago, I repeated in this House a Statement made by my right honourable friend the Home Secretary to announce the list of 35 measures that the Government will seek to rejoin—those being in the national interest to do so. Command Paper 8671 outlines this list of measures and includes the Government’s Explanatory Memoranda on the full set of measures. I want to make clear that the Government are strongly committed to the set of 35 measures in the Command Paper and to a successful negotiation of rejoining these measures.
I am aware of concerns about the difficulty of opting back into some of the more important measures. For example, it is clearly not in the interest of any parties to have operational gaps for those subject to a European arrest warrant or any of the other measures that we seek to opt back into. These matters will be discussed further with the Commission. It is our intention to try successfully to resolve any issues in that regard but, because there is much to consider and much at stake, the exercise of the opt-out must be preceded by careful and intelligent analysis of the 130 or so measures covered by this exercise.
The Government have approached the question of the measures we should seek to rejoin from the perspective that our citizens should not have fewer protections after 2014 than they have now. We have listened to the views of law enforcement and other agencies that operate on the front line to keep our country safe. The piece of work we have put before both Houses is the result of that careful analysis. We want to continue to co-operate with our European partners where there is value in doing so—where it is in the national interest to do so. That commitment is reflected in the 35 measures listed in the Command Paper that we ask the House to endorse today. As a package, they enable co-operation over invaluable practical measures to aid our police forces and criminal justice system. These measures are a crucial tool in the fight against international crime and terrorism.
However, other measures in the original 130 are not so useful: they may be obsolete, defunct or simply unused. That is why the Government’s thinking on this issue has focused on the practical use of measures and whether we consider them valuable in the fight against crime and terrorism. This is why, for example, the Government wish to seek to rejoin the European arrest warrant. With free movement through the European Union, we clearly need strong extradition arrangements in place to see that justice is done. The record shows that since 2009, the arrest warrant has been used to extradite from the United Kingdom 57 suspects for child sex offences, 86 for rape and 105 for murder. In the same period, 63 suspected child sex offenders, 27 suspected rapists and 44 suspected murderers were extradited back to Britain to face charges. A number of these suspects would probably have never been extradited back to Britain without the arrest warrant.
The arrest warrant has transformed the extradition process within the EU from one that typically took years to a system that now takes weeks. A perfect example of this is the extradition of Hussein Osman, one of the failed July 2005 bombers, from Italy to the UK in just eight weeks. This is in contrast to the era before the arrest warrant, when it took a decade to deport terrorist suspect Rachid Ramda to France. Such success would have been unthinkable in the absence of EU police co-operation. As noble Lords and others have said, the functioning of the arrest warrant can be improved. The Government recognise this and the Home Secretary has already announced a proposed list of changes in the other place.
Another measure that the Government have also expressed a wish to rejoin is the European supervision order. This will improve the functioning of the arrest warrant by allowing suspects, in the appropriate circumstances, to serve their bail conditions in their country of residence, rather than remaining locked up in a foreign jail awaiting trial. Furthermore, we want our law enforcement agencies to continue to be able to establish joint investigation teams in order that offenders can be brought to justice as effectively as possible. One example of this is Operation Fry. This saw a joint investigation team with the Netherlands target the abuse of free movement through sham marriages. To date, this has led to 122 arrests, with 77 convictions and sentences totalling more than 100 years, and allowed us to initiate action to remove non-EEA beneficiaries of such sham marriages from the UK. That sort of co-operation would be infinitely more difficult as part of bilateral arrangements rather than as part of a wider EU framework of agreements.
We also want to rejoin Eurojust and measures aimed at fighting child pornography and other crimes that occur across borders. These measures offer a crucial method of combating cross-border crime with other member states.
On another front, I am sure all noble Lords want to see as many foreign national offenders as possible removed from the UK. The prisoner transfer framework decision provides for non-consent-based transfers throughout the EU. The Government support both the principles underpinning this measure and the measure itself, as an effective means of getting those who have abused our hospitality out of Britain to serve their sentences back where they came from.
Then there are measures such as the Naples II convention and the customs information system, which allow us to co-operate and gain access to information from across Europe that makes a real difference on the ground, such as the seizure of 1.2 tonnes of cocaine with a street value of up to £300 million that came from information received under the convention. There is also the second generation of the Schengen information system, a new way of sharing law enforcement alerts throughout Europe, which has the capacity to bring significant savings to our criminal justice system, as well as making it easier to identify foreign criminals and terrorists. The Government have been very open about their wish to connect to this database, which requires us to rejoin the police and criminal justice parts of the Schengen convention itself.
These are but a selection of the instruments that the Government believe it is vital to opt back into. The Government have done a lot of work to prepare the Command Paper and it outlines our strong commitment to measures to facilitate cross-border law enforcement. The Minister for Europe committed to a debate and vote in both Houses of Parliament. Not only do we want a debate and vote, however, we also want consultation with the committees. In inviting the committees both in this House and in the other place to submit reports, the Government are ensuring that Parliament is fully involved in the decisions taken.
Although the Command Paper outlines the Government’s current thinking, we will not begin formal discussions with the Commission and member states until after Parliament has had the chance to express its views. That is why today’s Motion from the Government also invites the appropriate committees to contribute to an analysis of the measures. The committees in the other place were invited to do the same in last week’s debate. The result of this process will inform the Government’s formal negotiations with the European Commission and the other member states.
Lord Maclennan of Rogart
Before my noble friend sits down, will he give us a categorical assurance that the opt-out will not result in a referendum or referenda having to be held in respect of what the nation has to opt back into? It appears that the opt-out moves responsibility and competences back to this country, whereas the opt-in would move them to the European Union and it might fall foul of the Government’s own Act.
Lord McNally
My Lords, that is hypothetical and we could spend the rest of the night on it. I have made a very clear statement of government policy, and it does no service to the House at all for hypotheticals such as that to be thrown across.
Lord Hannay of Chiswick
To move, as an amendment to the above Motion, to leave out from “House” to the end and insert “declines to give an opinion on the block opt-out under Protocol 36 to the Treaty on the functioning of the European Union until such time as the Government have (1) given a detailed written response to the Report of this House’s European Union Committee EU police and criminal justice measures: The UK’s 2014 opt-out decision (13th Report of 2012–13, HL Paper 159), and (2) sought endorsement for the list of measures the United Kingdom should seek to re-join set out in Cm 8671”.
Lord Hannay of Chiswick
My Lords, before I address the procedural issues covered by the amendment to the Government’s Motion that stands in my name on the Order Paper, I would like to make some observations about the substantive issues raised by the Home Secretary’s Statement of 9 July and the introduction to this debate by the noble Lord, Lord McNally, which set out the Government’s intention to trigger the block opt-out under Protocol 36 of the Lisbon treaty and to seek to rejoin 35 of the measures that fall within the scope of that opt-out. In doing so, I do not speak in the name of the sub-committee on home affairs, health and education that I chair since, lamentably, due to the Government’s delay in replying to the recommendations in the EU Select Committee’s report of 23 April, that report is not formally part of today’s debate, so I speak in a personal capacity.
The subject matter of our debate is, I fear, formidably complex and difficult to address in a simple and straightforward way. Just in case anyone is inclined to blame these complexities on the fearsome Brussels bureaucracy, though, I should point out that the complications are entirely of our own making. No other member state is in such a quandary. It is legitimate, I think, to criticise the previous Government, who negotiated the Lisbon treaty, for leaving such a cat’s cradle to their successors. I suggest that the challenge we face in this debate is to sort out the wood from the trees, tempting though it is to linger over some of the individual trees—for example, the Government’s decision to opt out irrevocably from the measure dealing with xenophobia and racism, surely a bizarre choice that could be considered sinister, just plain silly or a combination of both. It is a trifle difficult to explain or defend.
The first salient point that I would make is that the Government clearly have no objection of principle to the extension of the jurisdiction of the European Court of Justice and the enforcement powers of the Commission to cover justice and home affairs matters. Why otherwise have they opted into a large number of the post-Lisbon measures adopted in the past three years, as well as the 35 pre-Lisbon ones that they now say they are seeking to rejoin? No doubt, as the Minister has said, it is in our national interest to do so, but why then deny those extensions to the European Court of Justice and the Commission in the case of rather a large number of less significant measures? Presumably, that is to placate their critics on the wilder shores of Euroscepticism. However, they have obviously not succeeded in doing that, since some of those critics want to rejoin nothing and quite a few of them actually want to repatriate the post-Lisbon opt-ins as well.
A second salient point emerges from a study of the Explanatory Memorandums provided in Command Paper 8671. In not a single instance is it suggested that a measure currently in force is damaging to the national interest, or would be damaging if the Court’s jurisdiction were extended to cover it. The Explanatory Memorandums also state that not a single one of them impairs the human rights of British citizens. Why then do the Government want to opt out irrevocably? The most that can be said is that it would not make much difference. However, I suggest that that is a singularly feeble basis on which to found negative decisions that could have far-reaching implications for our wider relationship with the other member states. I should add that in the course of taking evidence we asked all our witnesses, some of whom were strongly in favour of the block opt-out, whether they could identify a single measure that was damaging to the national interest, and they could not do so.
It is sometimes suggested that to accept the European Court of Justice’s jurisdiction would be to undermine fatally the basis of our common-law system. Not one of our legally expert witnesses could substantiate that, and most of them contested it vigorously. There are, after all, three other member states that have common-law systems—Ireland, Cyprus and Malta—and they do not seem to be feeling any stress. Much is made of the so-called judicial activism of the European Court of Justice, but an examination of its track record in the justice and home affairs field provided no evidence at all for those assertions. In fact, the treaty requires the Court to pay proper respect to national jurisdiction in these criminal justice matters, so it is perhaps not altogether surprising that it actually does so. However, that seems to be overlooked by the Court’s critics.
If so far I have been rather critical of the Government’s position, let me say how much I welcome their decision to seek to rejoin Europol, Eurojust and the European arrest warrant. To have done less than that would have been to have put at serious risk important aspects of our national security—I was glad to hear the Minister recognising that quite explicitly—not least those relating to our greatly improved and crucial relationship on these matters with Ireland. We looked carefully at the assertions that we could comfortably move to a network of bilateral arrangements, in place particularly of the European arrest warrant, but we found no merit in that approach, which would in all likelihood be slower, more costly and less effective than the European arrest warrant.
The Government’s intention to implement the European supervision order is also very welcome. As the Minister said, that will enable British citizens sought under an arrest warrant to be bailed here rather than held abroad for long periods awaiting trial, one of the most justified criticisms of the arrest warrant. The fact that this country missed the deadline for implementing that European supervision order, which expired last December, should be a cause of shame for the Government, and the sooner that it now comes into force the better.
Where does that leave the debate over whether Britain should make use of the block opt-out, which it is undoubtedly entitled to do under the provisions of the Lisbon treaty? Nothing contained in the Home Secretary’s Statement in the other place on 9 July, in the Explanatory Memorandums published in Command Paper 8671 or in what the Minister has said today seems to justify a change in the judgment that your Lordships’ Select Committee reached last April: that the Government have not yet made a convincing case for triggering the opt-out. Indeed, the Government’s recent decision to ignore the views expressed by this House on 1 July, and therefore not to opt in from the outset to the negotiations on the new post-Lisbon Europol regulation, further undermines the credibility of the Government’s approach and further increases the potential risks to our national security.
What is new is that the Government have now, very belatedly, revealed the list of 35 pre-Lisbon measures that they will seek to rejoin. That is welcome, as is the content of that list—at least, so far as it goes. It seems to cover most of the main pre-Lisbon measures that the European Union Select Committee identified as being essential. Whether it covers all that needs to be covered remains to be seen; I am afraid that the period since the publication of Command Paper 8671 has been far too short to give the matter the detailed consideration that it requires. That consideration will now be undertaken by the two sub-committees working together as before, and will form the object of a further report that will be provided to your Lordships’ House before the end of October, as the Government have invited us to do, with a new call for evidence issued on 18 July.
That brings me to the procedural issues covered by the amendment standing in my name on the Order Paper. I placed that amendment on the Order Paper when it seemed as though the Government were seeking authority to trigger the block opt-out while doing no more than asking the House to take note of the list of measures that they might seek to rejoin. In this way, they were dividing in two the integrally linked parts of a single set of decisions which our report to the House made very clear had to be taken together. How could this House reasonably be asked to endorse the block opt-out when it was not being asked to endorse the list of measures we should seek to rejoin? The amendment to the government Motion that was moved by the noble Lord last night has, however, changed that position and has asked the House to endorse the list of 35. That is a major step forward.
It meets the more important of the two requirements set out in my amendment and, as so often when you are standing waiting for a bus, two come along together. So on this occasion the Government have now, in something close to a death-bed conversion, produced their response to our report, which I spent the afternoon reading, but on which I will certainly not attempt to comment now. Although I can do a bit of speed reading, these matters require a little more care than that. In any case, the result of this is that the two points in my amendment have been met by the Government. I therefore make it clear that I do not intend to divide the House on that amendment.
Lord Bowness
My Lords, it is a pleasure to follow the noble Lord, Hannay of Chiswick, with whom I, as the then chairman of the justice, institutions and consumer protection sub-committee, worked closely in the previous Session of Parliament when that sub-committee and his home affairs sub-committee conducted the inquiry into the UK opt-out. I agree with many of his comments and I should tell your Lordships that, had a new Motion not been laid before the House tonight, and had we been debating the terms of the original Motion, I would have supported the amendment of the noble Lord, Lord Hannay, and voted for it, had he called a Division.
I speak tonight, however, on my own account and I cannot speak for the current chairman, the noble Baroness, Lady Corston, or the current members of the committee, of which I am no longer a member. Members will understand that for that reason, and because it arrived in the House at about 2.30 pm, I will not comment on the Government’s response to that report.
I can however speak of the findings contained in that report and the evidence on which it was based. The sub-committees had decided to carry out an inquiry prior to 15 October and the announcement of my right honourable friend the Home Secretary, who stated on that occasion that the Government were minded to exercise the option, that it would be the subject of a vote in each House, and that the relevant committees of each House would be consulted before reaching a definitive position, the process of which tonight’s Motion forms part was set in train.
Subsequent to my right honourable friend’s Statement, five Explanatory Memorandums were promised to your Lordships’ committees. They were promised for January or early February—and latterly promised an impact assessment. The impact assessment has not yet, to my knowledge, been seen and the Explanatory Memorandums were produced as the White Paper referred to by the noble Lord, Lord Hannay, only on 9 July, when the Home Secretary made her Statement to the other place. She also made it clear on that occasion that what must happen next is a process of negotiation with the European Commission and other member states, and that those negotiations will determine the final list of measures that we formally apply to join.
The Motion originally laid before the other place expressed the belief that we should opt out, rejoin the measures that were described as being in the national interest to rejoin and seek further reports from the relevant committees prior to formal discussions with the Commission and the Council on the set of measures in the White Paper—all prior to formal application to rejoin. In parentheses, I think the delay in opening the negotiations until October will prove unfortunate, as time—and as much time as possible—will be needed for the negotiations to rejoin.
That original Motion at least contained a definitive linkage between the decision to opt out and the 35 measures described at various times as being in the national interest and a commitment to negotiate on those matters. However, that Motion was amended and the Motion carried in the other place omits reference to those matters in the national interest and the Command Paper. The right to exercise the opt-out is absolute and is in the treaty, but readmission to measures to which we wish to be readmitted is not.
The Schengen measures require unanimity in the Council; the other JHA measures are dealt with by the Commission, who may present a proposal to the Council for transitional arrangements—decisions in which we will not necessarily participate. The principle of coherence means that we may not be able to rejoin one measure without rejoining another linked measure, and that may not be acceptable to the UK
This will all take time and there is no certainty. When we were preparing the report, we received no evidence that the Commission would seek to frustrate our rejoining. As to the other member states, the Government were unable to tell us what conversations had taken place. However, like the noble Lord, Lord Hannay, I agree with the proposal to reapply to join the 35 measures described as being in the national interest.
The Motion originally laid before the House, as has been stated already, was merely to note those proposals and that was not good enough. I am therefore very grateful to my noble friends Lord McNally and Lord Taylor of Holbeach for recognising the significance of these measures and agreeing that the Motion should endorse the Government’s proposals in the Command Paper, which sets out the 35 measures that they will seek to rejoin.
The final decisions as to opting out and the measures to apply to rejoin are executive decisions for the Government, albeit that they have spoken about consulting Parliament. So I ask the Government to assure the House that the House will be informed if their intentions regarding the 35 should change.
What of the other 130-odd measures? These, together with the 35, are the subject of the Explanatory Memoranda in the White Papers. I have to say with regret that the Explanatory Memoranda are extraordinarily badly prepared—and even worse presented. It is not clear on what basis the Government chose the 35. No clear reasons are given, apart from the Prüm decisions where there are concerns about costs. Some are stated to be defunct and so presumably of no real concern; some are said not to be needed because we have dealt with them administratively or in domestic legislation. As the noble Lord, Lord Hannay, said, none is stated to be harmful.
House of Lords reports are generally acknowledged as being evidence-based. The report on the opt-out was so based. We made it clear that decisions on the opt-out should not be made without certain information on which to base that decision. In our report, members of all parties and none concluded that the Government had failed to make a convincing case in favour of the opt-out. We also made it clear that we could not form a view about which measures we should seek to opt back into without a provisional list of measures and an analysis supported by the impact assessment, and that the decision to exercise was necessarily linked with the measures that the Government wished to be able to rejoin.
We were struck by clear and preponderant evidence from witnesses from the legal, law enforcement and prosecutorial professions as to the potentially negative impact of exercising the opt-out. Now, somewhat belatedly in the whole process, we have the provisional list of measures but not the other elements required for final decisions. We are being asked to express a view about opting out without a proper assessment or analysis of whether the benefits of opting out outweigh the possible risks and uncertainties of an application to rejoin. In short, is the game worth the candle? I ask the Government in due course to report to Parliament on the progress of the negotiations so that judgment may be made.
In the mean time, while I remain profoundly unhappy about many aspects of the whole process, I will not oppose this Motion, which goes some way towards addressing the concerns of those who believe the idea of exercising the opt-out to be misconceived. However, and this is crucial, were we to defeat this Motion, we would lose the opportunity, which was lost in the other place, of placing on record and binding in our belief that the 35 listed measures are in the national interest; and we will have lost the opportunity to endorse the Government’s welcome intention to apply to rejoin the same. We can return to the other 130 later, and no doubt they will feature in the reports that have been requested from committees of your Lordships’ House.
Lord Richard
My Lords, I will deal with a small point to start off with. As I understand it, no impact assessment will now be coming until the final list of measures to which the Government are proposing to opt in is determined, as the noble Lord, Lord Bowness, will notice from the document that we got this afternoon—at long last, the government response to the Select Committee report.
I find it difficult to see the reasons for this debate. I am not absolutely certain why it is being held, or held in this way, or of the procedures through which we are being put. The Government have produced a procedural mess into which, unless we are very careful, they, the country and these issues will sink. It may be worth while briefly going back to the origins of this whole affair.
The Government having declared that they were minded to exercise the opt-out, the matter was then inevitably transferred to your Lordships’ Select Committee for scrutiny. The committee decided that, since the matter was so unusual, the scrutiny should be conducted by a joint committee consisting of Sub-Committee E and Sub-Committee F sitting together. This was a precedent but it seems to have worked extremely well. As a former member of Sub-Committee F, I express my thanks to the noble Lords, Lord Hannay and Lord Bowness, for the way in which they jointly chaired that committee.
I will not bore the House tonight with details of how the committee proceeded. Suffice it to say that we took a great deal of evidence and heard from a large number of witnesses, including the Home Secretary and the Lord Chancellor. Rarely—I think never before—have I participated in a process in which the evidence was so overwhelmingly in one direction. It was really quite extraordinary. Members of the committee were actually looking hard for evidence on the other side of the argument, but evidence was there none.
I will quote two paragraphs from the report. We said:
“Beyond concerns about the EAW, which we have already discussed in Chapter 6, very few of our witnesses drew our attention to any specific measures that they considered to be detrimental to the interests of the UK”.
The committee’s conclusions were clear and quite firm:
“We therefore consider that there are compelling reasons of national interest for the United Kingdom to remain full participants in most of the measures and agencies referred to in this Chapter. As to the remainder we have identified no persuasive reason for the United Kingdom to withdraw from them”.
We have waited until today to get the Government’s response to that report. On the very day of this debate, indeed, at last we got it. That is very interesting and, indeed, rather revealing.
In the mean time, however, the Government acted by tabling a Motion in the House of Commons last week, and in your Lordships’ House today, determining that the opt-out should be exercised. It is not a question of discretion. It determines that the opt-out should be exercised, and that is expressly the opinion of this House if it passes the Motion. At the same time, the Government accepted an amendment in the other place that the process of opting back in should be delayed until after three Select Committees of the House of Commons had reported on the measures in respect of which we should exercise the opt-back-in.
The reason for this extraordinary mix-up seems to have been the inability of the Government to produce Explanatory Memoranda in the timescale that they had themselves specified. They had told us that we would get them in February of this year. Had they produced them in Feburary, those Select Committees in the other place could have been engaged in their scrutinising role for some months past. As it is, they will have to do it by October.
The main difficulty that arises from all this relates to the credibility of the Government’s commitment to opt back in to the 35 measures that they have set out. The Lord Chancellor, in his closing speech in another place, said:
“The Government have taken a decision in principle that it will be in the interests of the UK to join a number of measures that involve international co-operation in fighting serious … crime”.—[Official Report, Commons, 15/7/13; col. 851.]
That statement understandably provoked a reaction from Mr Cash, who immediately asked whether the Government could take the view that it was not appropriate to opt in if the evidence taken by the three committees led to the conclusion that that was not in the interests of the United Kingdom.
That is precisely the point on which some of us on this side of the argument need reassurance. Can I take it—and I hope that the Minister will deal with this directly in his summing up—that the Government’s firm intention is that they wish to opt back in to the 35 measures set out in the Command Paper and that they consider those to be in the national interest?
This is really a political argument and not a legal one. There are obvious risks in the policy that the Government are pursuing. There is no guarantee that the Commission and member states will be prepared to give Britain an easy route back in. There are bound to be some gaps and delays.
If one looks at the 35, I do not think that one can objectively doubt that they are in the national interest. Indeed, if one looks at the Government’s response to the Select Committee’s report, it is clear that they are quite warm towards these measures; I am conscious of time and will not go into the details on that. The tone of the Government’s response is favourable to the opt-back-in of the 35 measures, but this brings us to the real difficulty. If we pass this resolution, that, coupled with the Commons, will give the Government parliamentary authority to exercise the opt-out. There is no such parliamentary authority for the Government to exercise the 35 opt-ins, and there is certainly no obligation—only a declaration of intent. Let us assume that we opt out and then nothing happens. What are the consequences of that? The result is that the 35 measures will lapse. Moreover, the procedure now being used by the Government in the other place—namely, giving Select Committees opportunities to look at this matter in the way that they are—is itself a recipe for delay and continued friction.
The truth is that this procedure is politically disingenuous. The noble Lord, Lord McNally, referred to smoke and mirrors. There is a lot of smoke, and there are certainly one or two mirrors around the Government’s position on this. The noble Lord shakes his head. I do not agree with him. The Government position is to pretend that they are getting rid of significant things in the hope that nobody will notice that what they are doing is not getting rid of significant things but getting rid of things which are defunct, unimportant or irrelevant. Then they will opt back in, so it is said—if they can get the Commission and other bodies to agree—to things which are important and relevant.
The safe way to do this would have been not to opt out in the first place. There is absolutely no reason why we should have taken that risk. Alternatively, if we did opt out, the other way of doing it would be to do the two things together, at least as far as Parliament is concerned. Why could we not have had a vote on a Motion approving both the opt-out and the list of measures to which the Government wish to opt back in? We do not have that. It is not in this Motion. It was certainly not in the Motion that was debated in the House of Commons last week. If that had happened, it would have been neater, crisper and more comprehensive. As it is, we should not vote to approve one side of the equation without being in a position also to approve the other side. That is by far the safer way to proceed.
Lord Sharkey
My Lords, today’s version of the Government’s Motion asks your Lordships to approve the block opt-out of 133 JHA measures. It also asks us to approve the rejoining of measures that are in the national interest and now suggests, without quite saying so in the Motion, that these are the 35 measures set out in the Command Paper. The Motion also invites your Lordships’ EU Select Committee to report on the matter before the end of October, when negotiations with the EU institutions will start—which is, perhaps, an unusual way for the Government to communicate with a Select Committee.
The Government, or some parts of it, seem to have got themselves into rather a tangle over all this. This tangle seems to have led them into, at the very least, discourtesies to Select Committees here and in the Commons and, by extension, perhaps to both Houses as a whole. The very long delay in providing the promised Explanatory Memoranda is a case in point, as is the failure to respond to the report of your Lordships’ EU Committee in the agreed timeframe.
Perhaps the most important and straightforward interpretation of the events of the past few months is the following. The Prime Minister seems to have decided, on or before the date on which he made his now famous Rio speech, that he would exercise the block opt-out. That was on 28 September last year, 10 months ago. There followed a series of not wholly convincing denials that the Government had in fact made up their mind to exercise the block opt-out, and not wholly convincing assertions that they had an open mind on the issue. It seemed pretty clear that the Prime Minister and, perhaps just a bit later, his Conservative colleagues in the coalition had in fact decided to opt out. The moment this became clear—and it was pretty immediately clear—the real political task was not to try to prevent the block opt-out but to agree a sensible, comprehensive and coherent package of rejoin measures. I doubt that, despite the overwhelming evidence against opting out, it was ever going to be possible to persuade the Prime Minister not to do exactly that. The Prime Minister had committed himself and his colleagues far too early and much too clearly.
It is easy to see that the Government were almost certainly not going to be moved. They were going to exercise the block opt-out, come what may, as it were. That meant that the real political debate would be over which measures to apply to rejoin. I know that there has been very extensive debate within the Government over exactly this. The Government’s original Motion appeared to be coy about exactly what these measures might be, but today’s version of the Motion is pretty unambiguous. The rejoin measures for negotiation are the 35 set out in the Command Paper. These rejoin measures proposed in the Command Paper represent the outcome of negotiations within the coalition. On any objective reading, this list of proposed rejoins seems to be entirely satisfactory. In fact, the Lib Dem negotiators, and Danny Alexander in particular, should be congratulated on what they have persuaded their Tory colleagues to accept. It may be, of course, that to pass the Commission’s legal requirements for coherence we will have to add to this list one or two other minor and technical measures. However, this would not be difficult and would certainly not be harmful to the national interest.
One of the oddest things about this whole imbroglio is that the Government have not been able to demonstrate that any of the measures they do not want to rejoin is harmful to the national interest or damaging at all. I repeat that the list of proposed rejoins set out in Command Paper 8671 seems to be entirely satisfactory. We must acknowledge that we are where we are but we must also acknowledge the time pressure. It is critical that we get on with this so that we absolutely reduce the chances of any interregnum where we are out of 133 measures and not yet back in to 35, or however many it turns out to be.
I hope that the House will agree with this and will agree to the Government’s Motion. I look forward, as a member of your Lordships’ EU Sub-Committee F, to examining and reporting on matters as they will then stand.
Lord Williamson of Horton
My Lords, I declare an interest which is in the register. Because of the advisory time limit I intend to speak as fast as Benedict Cumberbatch, who plays Sherlock Holmes on the television.
I shall speak separately about the opt-out—the Government’s decision to exclude the application to the UK of some 130 measures, which of course the UK is entitled to do under the Lisbon treaty—and the opt-in, which is a separate proposal to opt in again to the 35 measures. That requires confirmation by the European Commission, which can impose conditions in the case of the non-Schengen measures, and in some cases agreement of other member states—the so-called Schengen measures.
In order to judge the best result for Britain, the two issues should be examined together. I welcome the Government’s decision to do this in the Home Secretary’s Statement of 9 July and in the submission of these issues to Parliament in the House of Commons and now in this House. We have also had the advantage of the careful examination of these questions in the EU Committee and the very substantial 155-page Command Paper 8671. I did not find it easy bedtime reading but it is a very thorough statement of the Government’s position which we are now invited to endorse—a vital and important change, which I welcome. I have noted that as a result of discussion in the House of Commons the timing is now not quite as speedy as was originally thought.
Although I will first speak about the opt-outs, it is the choice of the 35 opt-in measures and the conditions that we might wish to apply which are the more interesting. However, I will begin with the opt-out. It is important to stress that we are in the five-year transitional period under the Lisbon treaty—Article 10.1 of Protocol 36—and infraction powers under Article 258 of the treaty do not currently apply. However, if we do not opt out, of course all these measures will become subject to the European Court of Justice and the enforcement powers of the Commission on 1 December 2014. Quite simply, if we do not want that, we must opt out. If we are satisfied with it, we do not need to opt out. That is the basic situation before us.
An examination of these measures, set out in Command Paper 8671, shows that in the Government’s view, a good number of measures have little or no impact in the UK. Your Lordships will frequently find statements such as:
“The Government considers the economic impacts of non-participation in this measure to be negligible”,
or that a measure,
“does not appear to be in force, nor is it likely that it will come into force”.
There are many examples of this. We can draw two conclusions. First, these measures do not matter very much to the UK, which is the Government’s view. Secondly, as a general principle—which for me is important—it is always wise to question the need for legislation, whether from national or EU sources, unless it can be shown to be essential.
A mountain of secondary legislation passes through this House—there were 11,414 pages in 2009. This legislation is dominantly of national origin and the proportion that is Brussels-derived and under the European Communities Act is quite small. However, in the area of justice and home affairs there are a lot of regulations and legislative measures and the Government have decided that they want to go for the full opt-out. We might say that whatever the arguments advanced so far—and I respect them—this may make a small contribution to reducing exaggerated claims of the role of EU legislation in Britain.
I turn to the opt-in proposal, which is intended to safeguard and reinforce our national interest against organised crime and trafficking and to favour the most efficient administration of justice across frontiers. As I have already indicated, there are two types of these measures, the Schengen and the non-Schengen, and the procedures are quite different for bringing this to a conclusion as recommended by the Government.
There are some quite important measures among the 35, but they are mainly non-Schengen measures in the form of Council acts or decisions. Examples are the Council act on mutual assistance and co-operation through customs administrations—the so-called Naples II, which I believe is the basis which we use now. Then there are the Council decisions strengthening Eurojust in the fight against serious crime; the Council decision establishing Europol, whose excellent work was specifically pointed out by the Home Secretary in her Statement; and, of course, there is the decision on the European arrest warrant, which was dealt with extensively in the Home Secretary’s Statement together with the specific proposals she put forward for amendment of UK law to respond to some problems in practice.
I will say a few words—speaking as fast as I can but not as fast as Benedict Cumberbatch—about Europol and the European arrest warrant. Europol is just the sort of organisation that we need if we are to keep pace with—or preferably outpace—trans-border crime. It is common sense that we should stick with it in the interests of our law-abiding citizens, and that we should obtain the two assurances mentioned by the Home Secretary on data sharing and security and on there being no power for Europol to initiate investigations. I hope that we can deliver the Europol opt-in simply and quickly, by whatever method we go at it, because I am in favour of it.
The European arrest warrant is highly valued but it is much more controversial. It makes sense to operate on an EU-wide basis in order to avoid the complexity of negotiating extradition agreements with many different countries. The Home Secretary has indicated the changes that she wants to make in national law. I will not go over them again. They are in her Statement. They are all very sensible and we should endeavour to stick with them as the decisions on opt-ins go forward.
To conclude, the Government have made their choice, but the end of the operation will be when the Commission confirms the opt-ins, or in some cases when the member states agree them. It will be a good thing to have another report from the EU Committee. The changes that we have just discussed—the introduction of the word “endorse” and the other actions by the Government—indicate that we have a basis for responding to the motivation behind the amendment that the noble Lord, Lord Hannay, will not now press.
Viscount Eccles
My Lords, I am a recently appointed member of Sub-Committee E. It has been an interesting baptism, dealing with the opt-out decision: all or nothing. From time to time it seemed that we were dealing with a booby trap on which was written, “I wonder how they’re going to get out of that”.
As the noble Lord, Lord Hannay, and my noble friend Lord Bowness said, we came to a clear, utilitarian answer to a rather complicated question. We made quite a long answer to that question, which was that the case was not convincing. As the Irishman said when he was asked for directions, “I wouldn’t start from here”. Perhaps it never was a utilitarian question; perhaps it was political; and perhaps we came up with the wrong answer.
I am a European. I am in favour of co-operation and against centralised control. I was lucky enough to be in Strasbourg in 1949 when there were 10 members of the Council of Europe and Winston Churchill made the keynote speech. One member of the 10 is not a member of the Community, but now, 64 years later, there are 47 members of the Council of Europe, and more than half of them are members of the European Union. Since the Commission and the Council are, as it were, the children of the Council of Europe, they should refer to the Beatles’ song, “When I’m Sixty-Four”, the last line of which is:
“Will you still need me, will you still feed me,
When I’m sixty-four?”.
From time to time, any institution needs a renewal of its mandate. Many people in this country and elsewhere are not sure why the Commission and the Council should have that renewal. Every now and again, a wild card is thrown on the table that makes people worry. The preamble to the Lisbon treaty refers to,
“ever-closer union among the peoples of Europe,”
and,
“a new stage in the process of European integration”.
I suggest that many people will not know what either of those aspirations means. As far as I know, nobody has ever given them a clear definition. Are we still intent on the avoidance of a third world war? I rather think that we no longer have the weapons with which to create it. Are we just a trading bloc? Will harmonisation of law across Europe one day end the defence of members’ legal systems? In short, what is the European project now? Is it intent on enhanced co-operation or centralised control? The public do not know the answer. It is a very complex question—not just this decision but the whole state of Europe—and it needs clearing up. The complexity and uncertainties must be exposed and discussed, and this Government are doing just that.
Tonight, the decision to opt out and opt back in is about co-operation and not central control. It is almost a housekeeping issue. However, the uncertainty about where it might lead means that many people do not see it that way. Therefore, the Government are entirely right to decide to opt out and opt back in to the 35. They will do that successfully, and that will restore public confidence in their ability to level with the European Union—not always a certainty in many people’s minds, and certainly not seen by many members of the public as being the case.
The relationship with the Commission and with the Council will be improved by our willingness to enter into long and serious negotiations. Therefore, it is entirely right to take this opportunity to renegotiate a system of international justice to the best advantage of ourselves and of other members of the European Union. I fully support the Motion.
Lord Tomlinson
My Lords, over recent months, so many things have been said on so many occasions about opt-outs that most people had not heard about before the decision was taken to consider the consequences of Protocol 35 of the treaty of Lisbon. We heard so many contradictory statements. Today, we are not really having a debate about what our relations should be. Our debate has nothing to do with the improved governance of Britain. It has precious little to do with our relations with the EU on police and criminal justice measures. Our debate has everything to do with appeasing Eurosceptics on the Conservative Benches in the House of Commons. So concerned are we about appeasing them that we cannot even put the same Motion before the two Houses. The Motion that they approved did not ask them to endorse anything, and, as recently as yesterday, we were not asked to endorse anything. It is all down to the process of changing your mind as you go along to appease the Eurosceptics. I warn the Government that what they are doing is not appeasing them but driving them to seek ever greater concessions.
Everywhere, the tactic has failed. Their Motion to appease Euroscepticism differed from the one we are dealing with here. They could not be asked to endorse the list of the 32 measures. When we were beginning to have controversial arguments about the measures for police and criminal justice measures, I was somewhat reassured by a Written Ministerial Statement made on 20 January 2011 by Mr David Lidington, the Minister for Europe. He included references, for example, to consultation before the Government make a formal decision. He also referred to consultation on the arrangements for the vote. All those ideas were there.
There were further statements on the issue. The Home Secretary wrote two letters to the European Union Select Committee which repeated the undertaking and provided the first list of these police and criminal justice measures. She assured us of prior consultation. Yet within the space of the two letters, between the first one promising continued consultation and the second one promising continued consultation, the Prime Minister, probably thinking that he was escaping the glare of publicity by speaking in Rio de Janeiro, made a speech in which he promised that we would opt out. He announced it at a press conference, saying that,
“the opt-out is there. We’ll be exercising that opt-out”.
This was at a time when your Lordships’ Select Committee was working hard on the basis of the promises that we received from the Minister for Europe and in two letters from the Home Secretary. Yet the Prime Minister pulled the rug from under their feet because he thought that that would gain him a few extra brownie points from the Eurosceptics in the House of Commons—so much for the assurances of the Minister for Europe and the Home Secretary.
I contrast the work of your Lordships’ Select Committee with the rather tawdry, shoddy apology of a response to Parliament from the Government which they sneaked into the Printed Paper Office today, several months too late. Your Lordships’ report was a thorough, evidence-based analysis. However, the Government’s response to it came at the very last moment and is hardly worth the paper on which it is written. There are some good bits in it but most of it comprises points which the relevant Members should be ashamed of writing. It has the same level of competence as what purported to be an Explanatory Memorandum.
I have almost observed the five minutes speaking limit. However, at the risk of really getting up the nose of the noble Lord, Lord McNally, I will ask him the same question that the noble Lord, Lord Maclennan, has asked. We are opting out of all the relevant measures by 31 May next year. At that point none of those measures will apply to us. We will apply to rejoin some of them but by the time we do so we will be extending new competences to the European Union which we have given up through the opt-out.
The noble Lord, Lord Maclennan, asked a fair question and did not deserve to be muttered at and abused by the Front Bench: namely, are these the sort of measures—where there is a transfer of competence back to the European Union—whereby, under the rather stupid legislation that the Government introduced in relation to European referenda, we will be required to have a referendum? Will the referendum be on the whole package or will there be one on each of the 35 measures? The noble Lord, Lord Maclennan, has a right to know that. When the Minister replies to him, I would like to be told the answer as well.
Lord Taverne
My Lords, I, too, would have voted for the amendment moved by the noble Lord, Lord Hannay, if the Motion had remained in its original form. Now it is one which I can support because it commits the Government to opting in as their official policy to the measures which matter most. However, the history of where we have got to needs to be borne in mind because it is a reason for exercising a certain amount of caution. When the negotiations started between Oliver Letwin and Danny Alexander, the Government—at least the Conservatives—were absolutely clear that certain red lines existed, including the European arrest warrant and more jurisdiction for the European Court of Justice. There was strong opposition from Open Europe and, naturally, from the UKIP tendency inside the Conservative Party, but there was also opposition from leading figures in the Conservatives such as Dominic Raab, who kept on explaining that you did not need Brussels at all and that you could organise a whole lot of separate bilateral negotiations. Fresh Start said that it would not opt back into anything. However, matters have changed and we are now in a position whereby, on the face of it, the Government are committed to serious opt-back-ins.
However, the House of Commons debate was not exactly reassuring. In particular, the speech by the Home Secretary was in my view pretty disgraceful, reiterating the claim that this was the first step in the major repatriation of powers because 100 measures would be left opted out of. It was in fact one of the ablest of the Europhobes, Mr Jacob Rees-Mogg, who completely exploded that idea by asking which were the important measures that we were no longer going to opt back into. In addition, the whole tone of the Home Secretary’s speech was one of trying to appease the Europhobes. She assured them that they did not have to worry too much because they always had the right to vote against the opt-ins when they came to Parliament again.
I want an assurance from the Government, which I believe the Minister will give, having talked to him on this issue very recently. We need an absolute assurance that the Government will not yield one further inch towards the Europhobes. It is not a happy history. The Prime Minister had made a number of pro-European remarks but when the going has got tough he has always given in. That is why he bought peace with the promise of a referendum in 2017, which is a ridiculous commitment because by 2017 we will not yet know what sort of Europe—which is in a state of flux—we will either have to stay in or leave. Therefore we need an assurance that there will be no further surrender and that there will be a strong Whip in the House of Commons and not be endless speeches that would delay the whole procedure—because every single opt-in measure will be challenged by the Europhobes, who will not give up their opposition.
If the Government stand firm, I think this is a good result. I am not as worried as the noble Lord, Lord Tomlinson, about a legal challenge. Having looked at this, I do not think that there are grounds for a legal challenge. However, the tactic of judicial review could be used to try to delay a decision. I am more worried about that than about the merits of a challenge. If the Government stick to it, this will be a good result. It will be the first defeat for the UKIP tendency and for UKIP and I hope that there will be many more. I hope that in the 2014 elections all the parties—or at least those that support these opt-in measures—will expose UKIP’s position as that of a party which is soft on crime and does not want measures that can deal with people traffickers, money launderers, porn merchants and all the rest. We should seize that opportunity provided that the Government stick firmly to what they have now promised.
Lord Anderson of Swansea
My Lords, as a member of the Joint Committee I was surprised that neither in the Statement to Parliament on 9 July nor in the Command Paper of the same date did the Government bother to refer to, let alone commend, our work. However, as if attempting to remedy this slight, the Home and Justice Secretaries, in an undated letter sent about 19 July, went perhaps over the top in glowing superlatives relating to our report. Yet, at the same time, they compounded their cavalier attitude to the committee by informing us when we should conclude our next inquiry on the subject without consulting us in advance.
The point of criticism of the Government’s process has already been well made, so I turn to substance. I pose this simple question: how would a judge conclude if the evidence that we had received were placed before him or her? Surely that judge would find the one-sided comparative weight of the witnesses before us absolutely compelling and overwhelming.
Supporting the Government were Mr Dominic Raab, both in his own right and again as the drafter of the Open Europe submission. Then, of course, there was the United Kingdom Independence Party. The committee staff managed to locate Mr Martin Howe, a senior lawyer but also a Conservative activist, having sought nomination on several occasions.
However, critical of the Government’s position were all the professional bodies, all the enforcement agencies and the prosecutorial bodies. Our committee report was endorsed by the Law Society of England and Wales, the Bar Council, the Faculty of Advocates and the Scottish Government. Our one witness from the Republic of Ireland was, frankly, baffled by the Government's stance. In short, the weight of critical evidence was overwhelming and our judge would surely have been driven to the same conclusion as that which the committee reached unanimously—namely, that the Government had not made a convincing case for exercising the opt-out and that to do so would have significant negative repercussions for the national interests of our country. Nevertheless, the Government have ploughed on regardless and claim to have acted in the national interest.
The noble Lord, Lord McNally, was moved to write in the Liberal Democrat Voice that “we”—the Liberal Democrats—
“have fought hard to keep the public safe, in the face of a Euroscepticism which would put public safety at risk in the pursuit of its anti-European agenda”.
That is hardly a flattering description of his Conservative colleagues in the coalition. In the same article, he proudly claimed that the deal with those Conservative Eurosceptics illustrated the influence of Liberal Democrats on the Government. The truth, of course, is that the Liberal Democrats could have blocked the opt-out entirely had they so wished, but chose not to do so.
Again, having reviewed all the evidence, our learned judge would have noticed the leitmotif of suspicion, almost obsessive in its intensity, of the Government's attitude to the Court of Justice of the European Union. That is particularly puzzling in the light of the fact that the Government have over recent years opted into a number of measures subject to the court and must therefore have no objection in principle to subjecting themselves to the court's jurisdiction—paragraph 104 of the report. It is puzzling also because the court already has jurisdiction over pre-Lisbon EU civil asylum and immigration matters, surely central to national sovereignty. Paragraph 96 of our report pointed out that there are very positive aspects regarding preliminary references to the court. In paragraph 89, the committee, having examined all the evidence—as no doubt would our judge—dismissed the bogeyman of excessive activism:
“we can discern no convincing evidence that the CJEU has been either judicially activist or that its rulings set out to undermine the autonomy of Member States’ criminal justice systems”.
Our judge would probably consider the question of costs not to be within his remit, but there are threefold elements of costs: potential financial costs of seeking to opt back in; the general uncertainties and potential hiatus in the transition period; and, of course, the potential loss of influence in Brussels by the signal which the Government have so clearly given. Who can forget the position of the then Conservative Government from 1993 to 1997, when we lost much influence by the turmoil in the Conservative Party at the time?
All that turmoil for what? Again in the words of the noble Lord, Lord McNally, in the same article:
“The measures which are being dropped on the other hand are, by and large, those which are now redundant, those which have been superseded by newer instruments, those which have already been incorporated into UK law, and those which have very little operational use for the UK. So we’re keeping the wheat and losing the chaff”.
Similarly, the Economist of 15 July headed its article,
“Britain wants opt-outs from EU rules, as long as they don't much matter”.
Of course the Government have made some positive suggestions, for example by remedying deficiencies in the European arrest warrant, but not by diktat. The normal European method is by consensus, by forming alliances, and by working with our European partners consensually. Again, the Economist stated:
“Mrs May’s statement was designed to please Eurosceptic Tories. Instead they denounced it”.
That is, all this trouble is a political decision not a legal decision, one designed to please what one senior German parliamentarian called the Tea Party tendency within the Conservative Party.
I have one warning for the Home Secretary—I end on this. Her Tory colleagues will not be satisfied by her gesture. Like the keeper in the zoo's penguin house, she may regularly be inclined to throw fish to them, but they will swallow them down and ask for more. She should be warned: they will indeed ask for more.
Lord Lloyd of Berwick
My Lords, it is a pleasure to follow the noble Lord, Lord Anderson, with whom I so often find myself in agreement. I hope that tonight he is not casting me in the role of his hypothetical judge.
I was of course very glad that the Government decided to include Europol, Eurojust and, above all, the European arrest warrant among the 35 measures, but I am not yet persuaded that an opt-out in 2014 is the way ahead. One argument used by those in favour of the opt-out is that it would set limits on the jurisdiction of the Court of Justice of the European Union over our domestic affairs. I could understand that argument—although I would not agree with it—if we were going to get shot of the court of justice altogether. Of course, that would be pure fancy. We would still be subject to the jurisdiction of the court in respect of all the many police and criminal justice measures we have signed up to since Lisbon, and would also be subject to its jurisdiction in respect of the 35 measures which we all hope to rejoin. So the European court will be there anyway in one way or the other, and I think we should pay little attention to that argument in favour of the opt-out.
The argument against opting out is simple. We may not succeed in rejoining all 35 measures which are agreed to be in our national interest, at least on terms which we would want. When I put that point to the noble Lord, Lord McNally, on 9 July, he replied that of course there would be that risk, but he said that with good will on all sides and with colleagues who want us to succeed, the risks would be minimised.
If we do opt out, I can only hope that the noble Lord, Lord McNally, is right. If there is indeed that risk, as I think that he accepts, in opting out, surely the next question should be: what do we actually stand to gain by opting out; what are the advantages? Here, I find myself in agreement with the speech of the noble Baroness, Lady Smith of Basildon, on 9 July. It is true that the Government could say that they had repatriated, to use that great word, 95 powers taken from us by the European Union, but what would that mean or be worth in practice? How many of those powers have any importance for us today? How many are even relevant today? I am, of course, not referring to the 35, but to the other 95.
The noble Baroness asked the noble Lord, Lord McNally, to give us some details about what we have to gain by opting out of the other 95. As I remember, she pressed him for some figures. At the bottom of column 234, the noble Lord did give some figures. However, he went on to say that, in asking for figures, the noble Baroness was missing the whole point. He said:
“Through today’s Statement, the Government have sent a clear message that we have addressed the problem left by Protocol 36”.—[Official Report, 9/7/13; col. 234.]
With respect to the noble Lord, it was surely he who was missing the point, not the noble Baroness. If we have nothing to gain by repatriating the powers contained in the 95 measures, what on earth is the problem to which the noble Lord referred? What is the point of opting out? It could be said that we might be able to renegotiate the European arrest warrant if we opt out, but why cannot we do that without opting out? What is the objection to our attempting to do so?
Until, therefore, it is demonstrated that there is something to gain from opting out, there is, to my mind, no problem. The game on which we are embarked—as the noble Lord, Lord Bowness, said on 9 July and repeated again today—is simply “not worth the candle”. That was the view expressed by the European Union Committee at paragraph 274 of its report and it was the view expressed by a group of distinguished academics led by Professor John Spencer last August. I hope that even now the Government will listen to that view and call a halt to this unnecessary and possibly even dangerous exercise in which we seem to be involved.
Lord Hodgson of Astley Abbotts
My Lords, I must declare an interest, as a member of EU Sub-Committee E, one of the two sub-committees that produced the report that we have been discussing this evening. I also remind the House that I am a trustee of Fair Trials International, which has a particular interest in the operation of the European arrest warrant. Given the lengthy speakers list and the short time available to us, I will cut to the chase.
For me and my noble friend on the Front Bench, judging by some of his opening remarks, one of the fundamental problems that the Government faced in addressing this opt-out decision is the nature of the wording of the opt-out negotiated under Protocol 36 by the last Government. This is its all-in or all-out nature. There is no picking and choosing; no matter how futile, irrelevant or unnecessary a particular measure may be, the totality has to be accepted or rejected.
I was glad to hear from the noble Lord, Lord Hannay, that on reflection he would not divide the House on his amendment. That would have seemed an unwise course of action. First, it would have treated the issue as black and white. As I said, while that construction is placed on us by the wording of Protocol 36, within the areas covered by the protocol the pluses and minuses of the policy issues are much more nuanced. Secondly, while the Government should have responded earlier to the joint sub-committees’ report—I entirely share the view of other noble Lords that producing the response at noon today is really not good enough—nevertheless Members of the House not on those sub-committees should have the opportunity to express their views this evening. That answers the point made by the noble Lord, Lord Richard, about the rationale for this debate. It will no doubt help to inform the Government’s thinking. Finally, as I understand it, this is only the first time round the track, because we will come back for a further debate and discussion as the Government’s thinking and approach to each individual opt-in or opt-out decision become clear.
Lord Richard
My Lords, since the noble Lord quoted me, I thank him for giving way. He says that the purpose of this debate is to help to inform the Government’s views. Why, in that case, is this not a take-note Motion? Why is it framed in the express terms of the opt-out?
Lord Hodgson of Astley Abbotts
If the noble Lord reads the Motion before the House, he will see exactly what it is. It gives Members of your Lordships’ House, particularly those who have not participated in the sub-committees’ deliberations, a chance to express their views. That is entirely appropriate.
Lord Hannay of Chiswick
My Lords, earlier in the noble Lord’s speech, he congratulated me on the wisdom of not putting my amendment to a Division. However, he failed to note that the reason was that the Government had conceded both points that were contained in it.
Lord Hodgson of Astley Abbotts
That is true, but it would have been unwise to have proceeded with a black-and-white decision along the lines that we are operating, as I explained.
In the remainder of my remarks, I want to concentrate on just three points. These are the different categorisations of the 130 opt-out decisions that we are looking at. First, there are the 40 or so that are considered redundant or inapplicable. Some noble Lords and some members of the sub-committee have argued that there was no point in disturbing these particular sleeping dogs. I am afraid that I take a more fundamental approach than that. Where possible, one should remove redundant provisions from the statute book. Leaving such provisions extant, however innocuous they may seem at the time, can cause unforeseen problems in the future, as to both applicability and compliance. From my point of view, the Government were right to take this opportunity to clean up the directives in this way.
The second category is of those directives to which the Government seek to opt back in. Primarily, they focus on enhancing the international dimension of the fight against organised crime. It is more than ever a self-evident truth that crime, along with many other activities, has gone global. The European dimension to this global challenge has formed important elements of many reports from your Lordships’ various EU sub-committees. I strongly support decisions to continue with hard and practical measures in this field: the joint investigation teams, exchange of information under ECRIS, mutual recognition of confiscation orders and so forth.
Not all the directives are perfectly formed. I am pleased that, while recognising the value of the European arrest warrant—I entirely share the views of noble Lords who have pointed to its particular importance in the relationships between the UK and the Republic of Ireland—nevertheless improvements can and should be made. These should be in areas such as proportionality, not allowing people to be held for long periods without trial overseas and using videoconferencing to enable people not to have to travel, particularly where the case against them is not as sure as it might be. For these global security matters, we should opt back in and I am glad to see us doing it. If it is in our interests to improve global security, I see no reason why fellow European members should not wish to collaborate with us to ensure that.
Finally, I turn to the third category of directives, to which the Government propose not to opt back in—the most challenging area of our discussion. I am no lawyer, but my concerns as an external viewer are threefold. First, how does one combine into one legal framework cases that emerge from two different legal traditions: the investigative approach, followed by most EU member states, and the adversarial common law approach of the UK, Ireland, Cyprus and Malta? Secondly, to what extent does any potential judicial activism of the European Court of Justice represent a challenge to our established legal procedures? Thirdly, what will be the long-term impact of the European Convention on Human Rights, although an entirely separate structure, on the first two? I do not pretend to have clear answers to these questions and I am not sure that many other people do either. In the circumstances, the Government are wise to proceed slowly, to watch developments and to react accordingly. Joining in will surely represent a one-way ticket and I am not yet convinced that the UK should be embarking on that journey.
In conclusion, given the restrictions imposed by the wording of Protocol 36, the Government are taking a broadly sensible approach by, first, removing superfluous and redundant legislation; secondly, by rejoining those directives that help to increase the security of Europe as a whole; and, thirdly, awaiting the clearing of the fog that still hangs over a number of important public policy issues. That is why I shall be supporting the Government tonight.
Lord Foulkes of Cumnock
My Lords, my old friend the Minister was right on one thing, anyway—the European Union Select Committee’s report is an excellent one. That is why it was deeply disappointing not only that we did not get the Government reply until around lunchtime today but that it is such a flimsy response. It is 22 and a half pages long, most of it just repeating the recommendations of our Select Committee and making inadequate responses to them. In apologising for the delay, the Government have said that it arose to ensure as comprehensive and as detailed a response as possible. Comprehensive and detailed—that is an unbelievable description of this reply. Perhaps the Minister who is to reply could tell the House what detail we had to wait for. What detail could not have been provided many weeks ago?
This is a serious matter. We are talking about the threats of terrorism and organised crime. The Government, in moving in this direction, are putting back the fight against terrorism and organised crime and thus putting citizens in danger in a vain attempt to appease anti-European Tory MPs and particularly the UKIP-ers, as my noble friend Lord Tomlinson said. It is a vain attempt. The Guardian today reported that the first report of the balance of competences review has been published, which is supposed to help to appease the anti-Europeans and UKIP. It has failed to satisfy Mr Farage, the Alf Garnett of British politics, who described it as a,
“futile and cynical PR exercise”.
Perhaps I can say this to my friend the noble Lord, Lord McNally: Mr Farage will never be satisfied. One of my colleagues likened him to Oliver. He will continually ask for more and more, so it is no use trying to appease him.
Over the past five or six hours I have been able to look at the reply to the report. On the balance of competences review, of which we have had the first part today, the Government claim that they are two separate exercises. That is complete nonsense. Of course the balance of competences review has a much wider remit, but reviewing justice and home affairs and not completing that until 2014 means that these two exercises are related to each other. Surely there must be some follow-through or cross-over between one and the other.
The response to the report refers to the devolved Administrations and gives a list of all the meetings. In fact, almost a page is taken up by a list of the meetings that have taken place, but what the response omits to say is that as far as Scotland—just one of them—is concerned, the Lord Advocate and the Cabinet Secretary for Justice have grave concerns about opting out of the European arrest warrant without any guarantee of being able to opt back in. The crucial point is that lack of a guarantee of the ability to opt back in. They point out that the European arrest warrant is an important tool to combat cross-border crime; I think that we would all agree with that. So why opt out of the warrant? In its report, the Select Committee said that,
“there are compelling reasons of national interest for the United Kingdom to remain full participants”,
and that,
“we have identified no persuasive reason for the United Kingdom to withdraw”.
The noble Lord, Lord Hodgson, has just said that all these defunct measures clutter up the scene, but given his background I would ask him to take a look at some of the defunct measures that we have in our United Kingdom legislation. There are 10 or even 100 times as many, but we are not spending time clearing them up or repealing them. If they are doing no harm, why are we going through this huge exercise just to get rid of things that are not causing any harm to anyone when we do not know whether we will be able to opt back in to things that are absolutely vital to everyone? The Government say that they are “seeking” to rejoin. The word “seeking” is the important one. The European institutions may “seek” to impose conditions, as the Government have conceded.
The delay also means that we are wasting valuable time, as a huge number of officials are involved in these kinds of debates. The cost is enormous as well. The noble Lord, Lord Maclennan, asked a serious question: if we opt out and then we opt back in, are we then subject to the terms of the European Union Act 2011? Do we have to go through the referendum procedure? The noble Lord, Lord McNally, did not have time to consider it so I do not blame him for not replying, but the noble Lord, Lord Taylor, has had a few hours to do so. He has officials, around five of them, who no doubt are on the telephone to lots of others. I hope that they will come back so that he is able to answer that question.
I do not want to go on for too long so I shall make two last points. I must say that I think that this is a very sad day for the Minister. As I said, the noble Lord, Lord McNally, is a good friend of mine. I ask him to remember the 1970s and early 1980s when he and I were members together of the Labour Movement for Europe, arguing for greater competence and more powers for the European Union. Indeed, he went much further than I did; he went so far as to leave the Labour Party and set up a new party with the noble Baroness, Lady Williams, and others so that he could fight for Europe. Where is he today? Where is that Lord McNally now? Where is the Tom of those days? He comes in and reads out verbatim something handed to him by the Tories—his master’s voice.
Finally, I must say that the one person who disappoints me even more than the noble Lord, Lord McNally, is the noble Lord, Lord Hannay. The noble Lord, Lord Hannay, knows more about this than anyone else. It reminds me of the Schleswig-Holstein question. There were three people who knew about it: one had subsequently died, one went mad and the other one was the noble Lord, Lord Hannay of Chiswick, in this case. The noble Lord, Lord Hannay, knows more about this issue than anyone else. He knows—I have heard him say it in the committee—better than anyone the dangers of opting out without any guarantee of being able to opt back in on these vital issues. That is why I am very disappointed that he has been conned by the Government. In all the machinations that have taken place, the noble Lord, Lord Hannay, and his supporters have been conned. The opt-out is bristling with problems. The only way to express concern about it is to vote against the Government today. I urge any Member—not just on this side and on the Cross Benches but on the other side—who has real worries about opting out to take that course of action.
Lord Elystan-Morgan
My Lords, it is a pure joy to follow the noble Lord, Lord Foulkes, and also to be able to say that I agree wholeheartedly with everything that he has said. I declare an interest as a member of Sub-Committee E of the European Committee.
We are dealing with 130 different measures. Whether that figure is exactly right—whether it is 128 or 132—matters not. We are dealing with a body of measures that essentially constitute a potpourri. There is no family or monolithic consistency to them. They spread over a huge range of possibilities. Some of them are vital to the national interest. Some are highly relevant and useful. Others, at the other end of the spectrum, have fallen into dissimilitude. Many of them have never been relevant at all. Others had only a most minimal and marginal impact upon our interests. If anybody therefore concentrates upon one, two, three, five or 10 of those, one is doing the whole issue a disservice. One can look at them only as a totality. Looking at all of them together and asking where the United Kingdom’s interest lies—whether it is a disbenefit or an advantage to take course A or course B—is surely the only possible way that reasonable, fair-minded and balanced people can look at this situation.
This has now been going on for five years; we have had a long time to think about the matter altogether. It seems to me that the Government can never say that from any point in time have they had an open mind on the matter. If they were able to show that, I would gladly withdraw that serious accusation. However, I do not think that there can be any question of their having looked at the matter in an objective, cool and statesmanlike way and having asked, “What is our duty towards this kingdom in the circumstances?”.
In fact, there is a howling fallacy in the government case and it is as simple as this. If one looks at the Motion tonight or the matter that was placed before the House of Commons, the Government’s argument is on two levels. As far as 95 matters or thereabouts are concerned, they say nothing in justification of their being ousted for ever. As far as 35 matters are concerned —the ones to be rejoined and readopted—they say that there is a test of the national interest. The question that I very humbly ask the House is: why should the test of national interest be applied to one group but not the other? Why should the test of national interest not be applied to each and every one of the 130? However, that is not the test. In so far as the question of ousting some 95 or so is concerned, the test is a knee-jerk one. It is Europe. We do not like Europe. One can almost hear the words of Cato in the Roman Senate—not “Carthago delenda est” but “Europa delenda est”. That is the clarion call. Europe must be defeated and challenged at every point. That is the real issue.
If one looks at the statements made by the Government over the past few years, it is abundantly clear that there has never been any objective, open-minded approach to the question. Mr David Lidington, the Minister for Europe, in December 2011 made it quite clear that as far as he was concerned all the evidence would be produced, all the discussions would be reported and Parliament would be assisted in every way to come to the most mature and objective conclusion with regard to this matter. Then, on 15 October last year, we had the Home Secretary making clear that there would be a general opt-out—it had to be en masse; there was no other way—but that the 35 would be regarded in the light of the national interest. However, three weeks previous to that, as we have already heard, the Prime Minister had seen fit to speak to journalists in Rio de Janeiro and had said that we would exercise the opt-out.
The situation, therefore, is that the opt-out is a fact and a reality. It is an irrevocable legal consequence once it occurs; but in so far as rejoining is concerned, that is an aspiration. We may be able to achieve that in respect of all 35, but we may not be able to, as there may well be conditions that we will find impossible to accept. There may well be a hiatus. I cannot remember now whether hiatus is a second declension noun and therefore whether “hiati” is the plural, but there may be several hiatuses and it may very well be utterly destructive as far as many institutions are concerned, including the European arrest warrant, Europol and Eurojust and so on. Therefore, a high price may well have to be paid. What for? For nothing at all. The Home Secretary made it clear on 15 October last year that some of these 95 matters never applied to us in the first place. Many were redundant and many were minimal in their effect. What earthly motivation can there be to take a risk just in order to wipe the slate clean of such irrelevant matters?
I believe that the Government are acting here with less than total sincerity and honesty. Somebody asked Cardinal Richelieu, at the end of this life, why he had been so successful in the government of France. He said, “My son, I lied, I cheated, I dissembled, I misrepresented and I swept it all inside my cardinal’s robes”. The Government here have hidden a very great deal about what their actual selfish motivation is and swept it all into the silken robes of the union jack.
Lord Blackwell
My Lords, the change in wording of the government Motion poses me with a dilemma. Although I wholeheartedly support the decision to exercise the opt-out, I have to say that I am not in any position today to want to commit to endorsing opting back in to 35 measures and, in particular, these 35 measures.
Various Members opposite have suggested that the Government were seeking to pander to, as the noble Lord, Lord Hannay, said, the “wilder shores of Euroscepticism”. I am afraid that the Government, in attempting to cosy up to the Europhile cabal, have left the mainstream Eurorealists in the country out there somewhat bemused. It is a dilemma that the Government will have to resolve. I believe that a strong justification is needed to remain in any of these measures, although I know that that goes against the conclusions of the EU Select Committee report. I am normally a great supporter of the wisdom and analysis that comes out of the European Select Committees but I have to say that I was thoroughly disappointed with this report, which started off with the assertion that the committee concluded that proponents of opting out offered no,
“convincing reason for exercising the opt-out”.
If it started with that assertion, it is no surprise that it ended up—
Lord Hannay of Chiswick
I am very grateful to the noble Lord for giving way. If the report started with that, it is odd that the paragraph is numbered 275. The report ended with that because its conclusion was based on a vast amount of evidence and was supported by members of both sub-committees and the overall committee, from all parties and from none. That is worth remembering.
Lord Blackwell
The noble Lord might like to note that the phrase is in the summary at the front. I will explain why I, for one, think that that is a totally incorrect conclusion. There is a strong reason for opting out of all these measures. Maybe there are reasons for opting back in to some of them, but there is a strong reason for starting with the presumption that we should opt out. The mistake that the committee, and I am afraid maybe the Government, made was to look at each of these measures pragmatically, on the marginal basis of whether there was some value in each particular measure. That ignores the fact that every one of these measures has a price, which is the transfer of some sovereignty from the UK Parliament and the UK courts.
There is a bigger issue, which the committee totally failed to address, although I am sure that the evidence was presented. Where measures are transferred to European legislation and European courts, where is the democratic accountability for those laws and judgments that govern the freedom and justice of UK citizens?
Lord Anderson of Swansea
Would the noble Lord not agree that a measure such as the European arrest warrant is not a transfer of sovereignty but a measure of co-operation?
Lord Blackwell
No, my Lords, I would not agree, because it comes under the jurisdiction of the European Union. A measure of co-operation would be if such a thing were agreed under the European Council, which is what I would certainly advocate. We are talking not about co-operation but about legislation from a European body, and opting in to any of these measures is a one-way, irreversible transfer of the power of this Parliament to legislate on the justice, freedom and criminal acts of UK citizens.
Lord Liddle
What is the point of having parliamentary sovereignty if you cannot use it to catch criminals who take refuge outside our country?
Lord Blackwell
There is no reason why the UK cannot co-operate with other countries to do exactly that. It does not need the European Union to legislate for that. I am going to make progress because otherwise we will be here all night.
The fact is that, once we have opted in, the normal EU legislative processes take over. That means that any one of these measures, however nice or gentle they may appear now, can be changed by the EU legislative process. That means that there will be qualified majority voting on all these measures once we have opted in. The UK will not have a veto, and the UK Parliament will not be able to take a view on whether those measures are just and appropriate treatment for UK citizens because we will have opted in to something where the European legislator can decide on changes to any of these measures by qualified majority voting.
When we pass laws, we have to think not just about how Governments act now but about what future Governments may do. We have very little control over the way in which future Governments in this country may operate, and we have even less control over what may happen to Governments in other parts of the European Union. This amounts, in effect, to a huge Henry VIII transfer of powers out of this country to a body over which this Parliament will no longer have control. This is happening in a vital area of law affecting the criminal justice system and the freedoms and rights of every UK citizen. I cannot see how the UK Parliament can happily stand by and say that we should not opt out of that, and opt back in to things only where there is an irrevocable case that it is the right thing to do.
It seems to me that many of these 35 measures go far beyond what one could justify in terms of benefiting UK citizens without running the risk of democratic deficit. The European arrest warrant has been mentioned many times. Fundamentally, it allows courts outside the UK, by laws passed outside the UK, to determine that a UK citizen should be deprived of his rights and sent to another country to face justice and internment without any UK court having the right to decide whether those laws were just and whether the evidence justified it. I do not believe that any of us can stand in front of a UK citizen and justify that as being in their interest. It may be efficient—dictatorship is efficient—but it is not democratic. The Government say that they have some measures that will ameliorate the worst aspects of that. I am not sure—and this House needs to be sure—that those measures will actually stand up against the European Court before we can be satisfied that the European arrest warrant has been dealt with. The same is true of the measure on the mutual recognition of confiscation of assets, where individuals in this country can have their assets frozen and confiscated by order of a court outside the UK without any UK court having the right to challenge the evidence and interrogate whether or not those laws were being applied appropriately.
Europol and Eurojust may sound like good ideas but what may they become? Once they are evolved by QMV over a period of years, what will we have signed up to? We do not know. That is why I believe that we should opt out and negotiate things on a bilateral and multilateral basis under the Council of Europe, where we have the choice that if we do not like those measures, we can pull out and Parliament can legislate. Parliament should retain sovereignty over things which affect fundamental freedoms and justice in this country.
The noble Lord, Lord Richard, asked the Government for an assurance that the word “endorse” in this Motion meant that the Government were committed to these 35 measures. I have to ask my noble friend to give exactly the opposite assurance—that while the Government may go into these negotiations seeking reasonable agreements on these 35 measures, there will be no irrevocable decision tonight that the UK will opt in to them without this House having a much longer and more detailed opportunity to debate each one, and the Government giving us a sound justification for why they thought it was appropriate to remove sovereignty from the British people.
Lord Davies of Stamford
Well, my Lords, that was the authentic voice of dogmatic anti-Europeanism and Euroscepticism. Clearly, the noble Lord very honestly believes what he said. He is totally entitled to say it and those of us on the other side of the argument can only take comfort from how weak, emotional and, in respect of his remarks about the Select Committee report, footling his arguments were.
I have been enormously struck, as I imagine the whole House has been, by three aspects of the Government’s nature and manner of doing business, which have been thrown into relief by this whole episode. The first is their extraordinary incompetence in evidently not getting any legal advice before they proceeded down this road. Nobody in the private sector would dream of going into a complicated negotiation of a totally new kind, with new risks attached to it, with important partners on an important matter, and not getting appropriate legal advice.
It was quite clear from the embarrassment and evasion of the noble Lord, Lord McNally, when he was asked the question by the noble Lord, Lord Maclennan, earlier that he did not have the faintest idea as to whether or not the procedure proposed by the Government risks triggering a referendum under the Government’s own European Union Act. I hope that the Minister will have thought about this and perhaps got some legal advice by the end of the debate, but the Government should have got a definitive opinion from the Attorney-General before they set off down this road in the first place.
Viscount Eccles
Perhaps it may be of some help to say that the Minister who is set to reply from the Front Bench was asked that question earlier today and was able to give a very definitive reply, in a meeting to which all the Members of this House were invited, if they wished to attend.
Lord Davies of Stamford
I am sure that the Minister is very grateful for the defence which the noble Viscount has just given him. No doubt at the end of proceedings the noble Lord, Lord Taylor, will be able to deal with this matter definitively.
The second aspect of the Government’s conduct that strikes me, and I think would strike anybody, is the extraordinary way in which they have treated Parliament. Not to reply at all to a very weighty document produced by two sub-committees jointly, which is unusual procedure in this country, for three months until a few hours before the relevant debate arises, is either almost unbelievable incompetence or discourtesy to the House that borders, frankly, on insult.
This Government like to say that they wish that national Parliaments had a greater say in matters in the European Union. In future that sort of statement will be treated with ribaldry, as hot air—there is another English word that better describes it but it is probably an unparliamentary word so I certainly will not use it. It is quite clear that on this occasion the Government have provided a really appalling example of cynical and dismissive treatment of their own national Parliament and I hope that no other Government in the Union are tempted to follow them down that very bad path.
The third aspect of the Government’s performance is the one that most attention has quite rightly been focused on—the way in which they reach policy decisions and their policy-making procedures. When I was a Minister and was faced with difficult choices, I would draw up a balance sheet of costs and benefits of any particular measure. I would try to weight them to achieve a balance and use that as an intellectual framework for discussions with officials or, where necessary, with colleagues. I was never conscious that I was doing anything remarkable or unusual; I assumed that most responsible Ministers went through a similar kind of procedure either explicitly or implicitly. Not so this Government.
The Motion mentions national interest, but it is quite clear that national interest has not guided the Government in this matter at all. You might assume that if you have 135 measures and you want to opt out of 100 definitively and opt back in to 35, those 35 were in the national interest and the 100 were not, which is why you want to get rid of them. The Government are even prepared to pay a significant price in terms of uncertainty, use of good will on the continent with their continental and Irish partners, and the administrative cost of going through all sorts of elaborate renegotiations, no doubt having to cope with the lacunae and lapses that arise. They are prepared to do all that in order to save the country from being tied to the 100 measures that they wish to opt out from.
In fact, as has been said this evening, of those 100 measures that the Government do not want to be associated with, not one of them is contrary to the national interest. Some of them are regarded as defunct or unnecessary, in which case they have a neutral significance. They are neither positive nor negative. But some of them are useful, although not dramatically vital in the way that the European arrest warrant or Naples II are really vital to the national interest. However, the Government’s own document, the White Paper—which, believe it or not, I have read through—deals with some of the measures that the Government propose to drop, to opt out of and not to opt back in to. Take, for example, item number 2 on judicial co-operation. The Government’s own document says:
“We judge that non-participation in the network may diminish the ability of the UK to coordinate complex investigations”,
et cetera. So there is a cost to opting out of that, which the Government themselves acknowledge. It is not in the national interest to opt out, it is contrary to the national interest. It is a cost, not a benefit.
The same thing applies, for example, with item number 5 on the exchange of information on drugs. The Government say:
“We judge that there may be a minor reputational risk if the UK does not seek to rejoin this measure”.
It is minor; it is not very important, but it is nevertheless a negative. It is reducing the national interest, not enhancing it, to opt out.
On item number 20 on new synthetic drugs and a warning system, the Government state:
“The UK’s participation in time-sensitive EU wide information about prevalence and harms of new substances enables us to influence EU and Member States’ legal responses, supporting enforcement and judicial co-operation … especially with the role of the internet and use of internal transit countries”.
This is a positive thing that the Government are giving up; it is not negative.
Similarly, on anti-corruption measures at item number 5—they are important, one might suppose—the Government say that given the increasing focus on tackling corruption in public office:
“The costs of membership are minimal and there are some benefits”.
So the Government are again giving up some benefits by their own admission.
Item number 87 is on combating terrorism, which is an important matter. The Government state:
“The offences created by the Decision are a useful standard for terrorist offences and by ensuring other Member States can prosecute relevant terrorist behaviours a more hostile environment for terrorists ought to be created across Europe”.
The Government are again giving up something of positive importance.
On item number 43—the prevention of unauthorised entry, transit and residence—the Government state:
“The framework decision assists with EU-wide enforcement of UK law”.
Surely that is in our national interest.
On item number 66, on the exchange of information and co-operation concerning terrorist offences, the Government state:
“Continuing to share information is therefore important both operationally and in reputational terms”.
And so on and so forth. There is another one on football hooligans, where the Government say that,
“non-participation may result in some increased costs”.
Again they recognise that there are costs, not benefits, in opting out. I could provide many other measures if I had time.
What all this amounts to is simply that, yes, the main national interest in these measures is secured by opting back into the 35 but by opting out of the remaining 100 we do not add to the national interest, we reduce it. In other words, the Government have taken a completely irrational decision. They incur the costs and risks of this complicated process of opting out and opting back in not to protect this country from some problems or costs but to deny it some additional benefits—if not enormous ones. We all know why they have done so: to buy off the Eurosceptics, and the cost of that is quite easily calculated. First, there are the costs and risks associated with the opting back in procedure; secondly, there are the not insubstantial or non-existent benefits—as I have explained—of those measures that we are now definitively opting out of. That is how this Government take their decisions. National interest has been sacrificed for a purely party political agenda. That is a fact and the Government cannot get away from it.
Lord Stoneham of Droxford
My Lords, I was also a member of the Select Committee on the opt-out decision, under the wise and thorough chairmanship of the noble Lord, Lord Hannay, and my noble friend Lord Bowness.
It is right at this stage in the debate to remind ourselves what that report said in a number of summary points. There is no detriment to the national interest of not activating the opt-out, no undermining of our common law legal system and no evidence that the Court of Justice of the European Union has been judicially activist or that its rulings set out to undermine the autonomy of member states’ criminal justice systems. It also expressed concern about our own security as a country if we no longer co-operate with the European arrest warrant, Europol and Eurojust. So I certainly started out opposed to using the opt-out, in contrast with my noble friend Lord Blackwell. I welcome the decision of the Government to support not only the 35 articles but also the supervision order that has been delayed by recent discussions. The coalition has arrived at a fair and workable compromise on the justice protocols and I will support the government Motion tonight.
Let us remind ourselves what the Select Committee said about the initial problem, which started in the manifestos of the three main political parties. The Conservatives in their manifesto,
“sought a mandate to negotiate the return of ‘criminal justice’ powers, among others”,
back to the UK. The Liberal Democrats in their manifesto pledged to:
“Keep Britain part of international crime-fighting measures such as the European Arrest Warrant … Europol … Eurojust, and the European Criminal Records Information System, while ensuring high standards of justice”.
The Labour Party manifesto made no reference at all to this matter, despite the fact that Labour initiated the whole opt-out procedure. I do not know why it did not mention it. Was it divisions between the Blairites and Brownites, or was it simply trying to disguise its own pro-Europeanism? As the noble Lord, Lord Hannay, said, it actually set up a cat’s cradle of the opt-out that we have had to resolve. Sadly the noble Lord, Lord Foulkes, is not in his place but I will certainly not take any lectures from him on fighting the cause for Europe. We left the Labour Party, but it was Labour that gave us the complexity of the opt-out. I cannot accept his judgment.
There are key issues that I hope my noble friend Lord Taylor will respond to. We have to answer certain questions. Can we negotiate the opt-ins to our satisfaction? Can we avoid a gap between the opting out and the opting in? Are we using good time to renegotiate the opt-ins when we could have used it to update and improve the existing provisions? However, it is practical politics—it is foolish not to accept and admit that—which are determining this outcome. There has to be a compromise and we in this part of the coalition believe that this is a firm and solid compromise: we have to use the bricks that we have achieved to consolidate our future in Europe.
Lord Judd
My Lords, I have known the noble Lord, Lord Stoneham, for a number of years and we have become good friends. I am sure he will not mind my saying that it pains me to see Liberals whom I have respected for their idealism and uncompromising stand on so many things that are vital to our nation going through the process of rationalising and trying to persuade themselves that compromises that they would have condemned out of hand in their days of opposition are somehow acceptable.
I should also like to draw attention to what my noble friend Lord Foulkes said about the letter we received today with the Government’s reply. He drew attention to the disingenuous words about wishing “to ensure as comprehensive and detailed a response as possible”. What the hell is the point of the reply? The reply is there to inform the debate. How on earth can a reply to a serious report, which has been prepared over many months, be taken properly into account in a debate if it arrives just hours before the debate begins? The Government ought to be ashamed of themselves for behaving in this way. We quite understand the tangles and difficulties with which the Government are faced within their own ranks, but this amounts, in effect, to a wanton disregard of the significance and dignity of Parliament itself.
I want to make a couple of points. We have been talking a great deal tonight about the measures—what we will accept and what we will not accept. The measures are not the end in themselves: the measures are means to achieving certain objectives. The objectives that I hope we are trying to achieve are the safety and security of the British people in the sphere of crime and, very much, in the sphere of terrorism. The reality with which we are confronted is both that crime has become highly sophisticated on an international basis in our lifetime and that terrorism is, almost without any doubt, where it is most dangerous, involved in international realities.
There is no way that we can protect the well-being, the safety and the interests of the British people by fooling ourselves into thinking that we would be better at doing it on our own—that we may have to make certain concessions to Europe but that we can pick and choose those things that happen to suit us. If we are to tackle this mammoth strategic task for the safety and well-being of the British people, we have to create an understanding and culture in this country that their interests and well-being are inseparably intertwined with the well-being and interests of other people within Europe, and that we must have institutions working within the realms of security and policing that are effective at the international level. If they are not effective at the international level, we shall be trying to put our thumbs in the dyke that is crumbling all around us. It is crucial that we give this leadership to the nation, and the trouble is that the Government are—
Lord Lawson of Blaby
I am grateful to the noble Lord, whom I have known for many years, but he is making a totally false point. Does he not know that there is the most intense and intimate co-operation, for example, between this country and the United States in the intelligence sphere and in other ways, against international terrorism? That is very necessary. These sorts of protocols and directives are totally unnecessary. There will be co-operation with the United States, with Europe and with other countries around the world whatever happens, because we all share the same objective.
Lord Judd
Similarly, I respect the noble Lord who has just intervened, but I ask him to read the reports to which we are referring today. Under the distinguished chairmanship of the noble Lords, Lord Hannay and Lord Bowness, we listened to witness after witness from the front line of this operation saying how badly they needed this European co-operation and how it would be very unfortunate in any way to jeopardise it, because it would not make the work that they were trying to do on behalf of the British people more effective. Read the reports: one expert or front-line worker after another in this operation said that.
I have one further point. What has been so sad in this debate—not the debate today but the one that is going on all the time in Britain—is the failure to distinguish between what is emotion, what is prejudice and what is fact. Because I was so concerned about a particular issue that was receiving a lot of attention about the way in which European institutions made it difficult to repatriate prisoners when they had completed their prison terms, I tabled a Question on the issue. I asked the Government,
“on how many occasions in 2012 they were prevented from deporting criminals who were not United Kingdom citizens following the completion of their sentences by rulings of the United Kingdom courts citing Article 8 of the European Convention on Human Rights”.
I would have thought that the answer to that Question would have been pretty central to serious deliberation in a debate of this kind. It is seven weeks since I tabled that Question. Do the Government not keep records? Do they not do any analysis? Why have I had no answer to that Question? It is part of the refusal to face facts that I suspect will not be very helpful to the Government’s case or to prejudice and the xenophobic cause. Why can we not have these facts before us before we try to undertake serious consideration in Parliament?
Baroness O'Loan
My Lords, I speak as a member of the sub-committee of the European Union Committee and as one who participated in the inquiry that resulted in the 13th report. I do not speak on behalf of the committee.
It is perhaps desirable not to proceed with undue haste in making a decision on this matter. No decision is required until May 2014. The Government are arguing that they need the additional time for negotiations, but it might be wise to contemplate the fact that, as other noble Lords have said, some of the consequences of the opt-out, if matters proceed as indicated, may be less than favourable for the United Kingdom. If the decision is made, on 1 December 2014 the Court of Justice and the European Commission will have no powers in respect of these matters over the UK, but the pre-Lisbon measures will remain in effect in the other member states. If the decision was made, then until—or perhaps unless—we rejoined we would have no access to a number of processes and facilities that expedite the fight against crime and terrorism.
We would cease to have access, as has been said, to the European arrest warrant. We would cease to have access to Europol, led by Rob Wainwright, who has been described by the Home Secretary as doing a very good job as director. We would lose access to the EU judicial co-operation unit, which costs just £360,000 a year and provides centralised facilities for liaison in The Hague. Instead, we would have to have bilateral arrangements with the judiciary in each member state. We would lose our capacity to be involved in joint investigation teams. The Government told the committee’s inquiry into the EU internal security strategy that they considered these joint investigation teams to be a valuable tool, and the Government supported the Commission’s plan to expand their use.
I could go on and on describing the benefits that we would lose if the Government were to opt out, or even to fail to opt back in within a limited period. The Home Secretary said that the Government are acting on the grounds of principle, policy and pragmatism in making this decision. The EU Committee took extensive evidence, as noble Lords have said, from a wide range of witnesses in the course of the inquiry. Overall, the response was one of massive concern about damage to the UK’s interests. I refer the House to paragraph 157 of the 13th report, which states:
“The Lord Advocate told us that he would have ‘real concerns’ if the UK were to opt out of the EAW and the DPP told us that to do so would result in a poorer deal for victims of crime. ACPO … emphasised the significant percentage of EU nationals from other Member States that were arrested in London each year and suggested that it would be more difficult to return them to their Member State of origin”.
It also suggested that,
“withdrawing from the EAW would be a mistake and could jeopardise justice and public safety … the President of Eurojust told us that it would make it harder for the UK to tackle cross-border crime”.
JUSTICE and Justice Across Borders stated that,
“criminals would exploit any differences that arose between any different extradition arrangements … and others suggested that it could result in the UK becoming a ‘bolt-hole’ or ‘safe haven’ for criminals … organised crime or terrorism”.
The report concludes that the European arrest warrant is the single most important pre-Lisbon measure and that it is inevitable that the extradition process would become more protracted and cumbersome, potentially undermining public safety.
No system is perfect. International co-operation on criminal justice measures will always require amendment to make them work as well as possible. Even the criticisms that have been made of the European arrest warrant relate mainly not to the warrant itself but to the consequences of people being sent to certain countries in terms of long periods of pre-trial detention et cetera.
Withdrawing from protocols or exercising the opt-out will not enable us to have any influence to improve matters in that respect. In his review of the operation of the European arrest warrant in 2011, Sir Scott Baker concluded that it had improved the scheme of surrender between member states and that broadly it operates reasonably well. He made recommendations and the Government committed to work with the Commission and other member states to improve the situation.
At a time when we are fighting international terrorism with all its devastating consequences for individuals, national economies and the general global situation; at a time when international organised crime is growing rapidly and when levels of people trafficking, smuggling and white collar crime represent a significant threat, there can be no logic in withdrawing from existing arrangements that work in the interests of the UK, even if we hope to rejoin on our terms—something which may not be available to us.
In all the evidence we took as a committee, very few witnesses drew our attention to any specific measures that they considered to be detrimental. The committee concluded:
“We therefore consider that there are compelling reasons of national interest for the United Kingdom to remain full participants in most of the measures … As to the remainder we have identified no persuasive reason for the United Kingdom to withdraw from them”.
We need an extradition process. We need to continue to have access to Europol and Interpol—as the noble Lord, Lord Lawson, says—and other national and international intelligence-handling operations so that we can become aware of suspected threats of crime or terrorism, and so that we can act accordingly. We need the benefits of joint investigations with all their logistical support mechanisms. We need to be able to take advantage of these measures. The Government of course recognise this and state that they will opt back in. However, it will not necessarily be as simple as that. As the committee stated in paragraph 223 of its report:
“While in our discussion with the Commission we found no inclination on their part to obstruct or make the process of opting back in difficult, seeking to rejoin particular measures would not necessarily be automatic or straightforward. Either the Commission, or where appropriate, the Council, may seek to impose conditions on such requests”.
The Home Secretary, in evidence to the Committee, accepted that the Commission may make it a requirement that the UK rejoin or opt into a particular measure to preserve the coherence of the totality of the policing and criminal justice measures. The Commission made clear in its evidence that it considers coherence to be a matter of paramount importance.
All this is happening in the context of debate about the current European arrangements and our membership of the European Union. Other noble Lords have spoken quite passionately about that on occasion.
For Northern Ireland and for the UK as a whole, the issue of continued involvement in these measures is critical. There is still a terrorist threat from republicanism in Ireland, north and south. There is also a threat from international terrorism. Today, according to the Government, the situation is that in mainland Britain an international terrorist attack is a strong possibility, and in Northern Ireland a terrorism-related attack is possible but not likely. In Northern Ireland, an international terrorist attack is a strong possibility and a Northern Ireland-related attack is highly likely.
It may be that the Government are relying on the interests of other member states in our participation in these arrangements to force Commission acceptance without undue conditions on the UK’s request to opt back in. I have heard and seen extensive concern being expressed both internationally and within the EU about what the UK is doing and its potential damage not just to our country but to other countries’ interests. However, while the Commission will make the majority of the decisions, the Commission of course comprises commissioners from member states who are required by virtue of their position to act in the interests of the European Union rather than in their national interests. Notwithstanding that, it would be unwise to anticipate that the Commission will simply accede to requests for re-admission. It is surely necessary to ensure that our anti-terrorist, crime prevention and detection operations are as strong as possible.
The biggest number of European arrest warrants to the UK over the period from 2009 to 2011 were from Ireland, the Netherlands and Spain. In Ireland and Spain there are a significant number of terrorist incidents.
Baroness O'Loan
If noble Lords will just bear with me, I am nearly done. Of all surrenders to the United Kingdom, 70% were from those three countries. I am not scaremongering in drawing these matters to your Lordships’ attention. I have lived with terrorism for 36 years. I have worked in many countries seeking to make good the damage from it. The evidence that the committee on which I was privileged to serve received was both compelling and overwhelming. Let the Government take more time to respond and to contemplate the consequences of the proposal. It is never wise to act when one does not have a full understanding of the possible consequences of such action. We do not yet know the consequences of what the Government are now proposing.
Lord Wasserman
My Lords, I hesitate to prolong this debate at this late hour, particularly as I am very much a novice in matters European. I felt moved to intervene, however, because although my experience in European issues is limited, I have had long and varied experience of policing, fighting crime and keeping communities safe on both sides of the Atlantic. This debate is at least as much about ensuring public safety as it is about the Government’s attitude to the European Union and its institutions.
The Government’s decision to opt out of all the police and criminal justice measures agreed to prior to the coming into force of the Lisbon treaty, and to opt back into only the 35 which my right honourable friend the Home Secretary believes will help us tackle crime and keep our country safe, has been characterised by several noble Lords on the Benches opposite as putting the security of the nation at risk for purely party political reasons; that is, to mollify—I believe that the word used is appease—the Eurosceptics in the Conservative Party. I will make two short points about this claim, which I find unfair and without foundation.
On the basis of my long experience as a civil servant serving Home Office Ministers of both parties in this country, and my experience as a consultant advising public officials on policing in the United States, I assure your Lordships that I have not dealt with a single Minister or public official on either side of the Atlantic—including the legendary Rudy Giuliani—who is more committed to reducing crime and making communities safe than my right honourable friend the present Home Secretary, with whom I have had the great pleasure of working closely for almost two years following the general election.
As for the claim that my right honourable friend is frightened of upsetting the Eurosceptics in her party, frankly, I find that ludicrous. As everyone in British policing knows, my right honourable friend is not frightened of anyone. Her courage and determination are legendary, particularly when she believes that what she is doing will make ordinary families safer.
Finally, I will make a brief point—and it will be brief—about what European professionals in your Lordships’ House call proportionality. I have no doubt that the 35 measures which the Home Secretary intends to seek to rejoin will be useful and will make it easier for our policing agencies to prevent some major crime and even terrorist activities. However, here is where proportionality, or a sense of proportion, comes in. There is no way in which these 35 measures—or, dare I say it, all 130 pre-Lisbon measures—can be described as critical to the overall public safety of our society.
As noble Lords will recall, the official Crime Survey for England and Wales was published only last week. It reported that a total of 8.6 million offences had been committed last year. These numbers do not include the much larger number of incidents of anti-social behaviour which plague our most vulnerable communities on a daily basis. Does anyone really believe that the European arrest warrant, Europol or any of the other 35 measures which the Government wish to retain will make a significant difference to these numbers or to the feeling of security which our friends and neighbours across the country experience as they go about their daily lives?
I do not for a moment minimise the importance of international collaboration or of any of the other measures that the Government want to rejoin. They will certainly help our local police forces and also help our new National Crime Agency to do its job more effectively. However, it is both misleading and irresponsible to argue that the Government are risking the safety of our communities by opting out of the whole package of pre-Lisbon proposals with a view to being able to opt back into those they believe will be most useful. I strongly commend the Government’s Motion to the House.
Lord Grenfell
My Lords, I hope that noble Lords will indulge me if I repeat a quotation that I used some time ago in your Lordships’ House from the French writer Antoine de Saint-Exupéry, who said:
“Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away”.
As the final Back-Bench speaker in this debate I take his advice to heart. I have nothing more to add to the debate, and I have taken almost everything away from the speech that I would have made if I had spoken earlier. Of course, that does not guarantee perfection, but it might result in brevity.
I will say a word about the question that the noble Lord, Lord Maclennan, raised—and I am sorry that he had to scratch from the debate. On 15 July, the Home Secretary was asked the same question by Mark Reckless MP. She answered:
“I do not believe that opting back into these measures would trigger a referendum under the powers that the Government have”.—[Official Report, Commons, 15/7/13; col. 783.]
Note the words “do not believe”. We do not want the Government’s best guess on this—we want certainty. Are the Government incapable of interpreting their own European Union Act 2011? If so, I am astonished. I hope that the noble Lord, Lord Taylor, can reassure us on this point.
I have much sympathy for part of the amendment in the name of the noble Lord, Lord Hannay, on which he is choosing not to divide the House. It takes the Government properly to task for their cavalier attitude towards—and I might say disdain for—your Lordships’ European Union Select Committee in waiting until today, of all days, to publish their response to its report. As a former chair of that Select Committee, I felt outraged. I am delighted that the noble Lord, Lord Boswell, is initiating an inquiry in his committee into the role of national parliaments in the European Union. This Government, who never cease to trumpet the urgent need for closer parliamentary involvement in EU affairs, must cease to betray their spoken intentions with actions that undermine them. I venture to speculate that, had the Motion been set for a later date, we would still be waiting for the Government’s response. They have been panicked into producing it, and I congratulate the noble Lord, Lord Hannay, on having applied the necessary shock treatment with the wording of his amendment.
Of course, the Government’s Motion refers to a set of circumstances that we on these Benches do not accept. We do not start with the premise that the UK should ask for a block opt-out under Protocol 36—least of all when there is no certainty that our seeking to opt back into measures deemed to be in our interest will meet with the approval of our European partners. The Select Committee’s warning that a blanket opt-out would damage our internal security and the administration of criminal justice has fallen on deaf ears, despite the fact that, as the noble Lord, Lord Bowness, emphasised in his speech, the committee reached its conclusion after listening to the expert views of leaders in the legal, law-enforcement and prosecutorial professions.
In order to opt back into the measures they need never have opted out of, the Government will now opt out of everything and hope for the best. If ever there was a risk of seeing several healthy babies thrown out with the bathwater, this is it. Of course, that is what the wilier and wilder Eurosceptics are itching to see happen. They are happy to support the blanket opt-out, but for them the greater prize would be the failure of the Government to achieve the opt-back-into some if not all of the 35 measures listed in Cm 8671. The Government, with their unwarranted optimism that they will secure from their European partners a successful opt-back-in, risk damaging our national interest and humiliating themselves.
Why does the Prime Minister insist on a wholly unnecessary risk? We know why. It has little if anything to do with improving our internal security or the administration of justice. It has much to do with the security of the Prime Minister and the administration of his divided party. Is that how we must now define “national interest”? The Government risk writing a shameful page in the history of our relations with our European partners if they go on in their current manner on this matter. I believe firmly that the Government have lost the plot—and tonight, they have certainly lost the argument.
Baroness Smith of Basildon
My Lords, this has been a fascinating debate. Although in some ways the opt-out/opt-in issue is complex, with the Command Paper showing how technical and detailed each measure is, it is also very simple. The first duty of any Government is to ensure the security and safety of their citizens. Will opting out and then—as the government Motion states—seeking to opt back into the key measures fulfil the first duty of a Government to their citizens? The key word is “seek”. There are no guarantees and there is no definite confirmation that we will opt back into those measures that are necessary to fight crime and terrorism: just an assurance that we will seek to do so. That is not good enough.
Until the opt-back-in is guaranteed, there remains a risk. The consequences of that risk must be evaluated. Crime does not stop at Calais. EU co-operation with police and criminal justice measures are essential in the fight against organised and serious cross-border crime. Drug trafficking, people trafficking, abduction, money-laundering, paedophilia, cybercrime and, of course, national security and terrorism are all the more dangerous and complex because they transcend borders.
Essential reading for this debate is our EU Committee’s report on the implications of the opt-out. It concluded:
“On the basis of the evidence we have received we do not consider that the Government have made a convincing case for exercising the opt-out ... we find that the evidence supports the reasoning of those opposed to its exercise. Opting out … would have significant adverse negative repercussions for … internal security … and the administration of criminal justice in the United Kingdom”.
Those are powerful words indeed from an all-party committee of your Lordships’ House. It took written and oral evidence from 50 witnesses with experience and expertise, including government Ministers, and had numerous hearings and discussions. Its unanimous, comprehensive and detailed report is the result.
Despite earlier rhetoric, the Government have made clear that they accept that a permanent opt-out from all these measures would not be in the national interest. They now accept that the 35 measures listed in the Command Paper are necessary. Therefore, if the Government opt out, there must be a quick, easy and effective opt-back-in.
The noble Lord, Lord Hannay, has succeeded in persuading the Government to amend their Motion to seek to ensure that the Government will honour their commitment to the details of the 35 opt-in measures. Can I therefore ask the Minister who will reply to the debate—the noble Lord, Lord Taylor—to clarify that this is how the Government view the significance of the word “endorse”? Would this Motion preclude the Government from deciding later to change the number of measures contained in the Command Paper—that is, the 35? Are the Government now absolutely committed to the 35 measures? The answer to that is difficult, it seems to me, because on the one hand the noble Lord, Lord Hannay, and most of the noble Lords who have spoken tonight want the assurance that they are but, on the other hand, that risks antagonising the noble Lord, Lord Blackwell, and the 100 Conservative MPs who wrote to the Prime Minister seeking a permanent opt-out of all 133 measures.
A number of questions have been raised in previous debates that Ministers have so far failed to answer, as the noble and learned Lord, Lord Lloyd, said. Have the Government secured a guarantee that we can opt back into these important measures? If not, will the Government still opt out without such a guarantee? What timescale do the Government envisage, or consider is reasonable, from the opt-out until the process of opting back in is completed? Are the Government seeking to amend any of the 35 measures other than the European arrest warrant?
The political negotiations to opt back into these 35 measures could be time consuming, difficult and will no doubt be subject to some political horse trading. Has any assessment been made in this age of austerity of the cost of such negotiations? What are the implications and consequences if we fail to opt back in, including financial? If the opt-back-in is not immediate, transition measures will be essential. The example often used by the Government to justify the opt-out is the European arrest warrant. This was to be part of the great repatriation of powers, the transfer of real power back to the UK that Ministers were so fond of talking about.
The Prime Minister said that the European arrest warrant was “highly objectionable”. Government MPs voted on a three-line Whip against a Labour Motion that would have maintained the principle of the European arrest warrant. One of the reasonable criticisms made of the European arrest warrant is that British citizens can be held in custody for excessive periods in foreign prisons while awaiting trial in conditions that would not be acceptable in the UK. Therefore, I welcome the announcement tonight by the noble Lord, Lord McNally, that the Government will now implement the European supervision order. But why did they not do so before the December 2012 deadline? Why the delay? Are those British citizens in foreign prisons victims of the Government’s anti-Europe rhetoric? But now, the Government have had to admit the effectiveness of the European arrest warrant and that, without it, criminals can evade justice. Criminals could seek to escape British justice abroad, and would be able to hide in the UK to evade the justice of other countries.
I concur entirely with the excellent examples that the noble Lord, Lord McNally, gave, and I have others which I will not go into this evening. I therefore welcome the Government’s U-turn on this issue. However, there are unanswered questions to be addressed before we can be satisfied that public safety is not being put at risk by any interval between opt-out and possible opt-back-in. It is a reasonable question to ask, particularly given that the committee notes in its report that since Denmark exercised its opt-out,
“the Commission had frequently refused permission for the Danes to conclude agreements in certain areas”.
I thought that the question from the noble Lord, Lord Maclennan of Rogart, about a referendum was a perfectly reasonable one to ask. I was surprised by the somewhat heated and exasperated response which he received from the noble Lord, Lord McNally, and by the refusal to answer, especially given the noble Lord’s comments in an article last Monday in which he wrote:
“if Liberal Democrats were in government on our own I suspect we would not be exercising the mass opt-out”.
The noble Viscount, Lord Eccles, helpfully gave an explanation on that point which he had heard from the noble Lord, Lord Taylor. However, as the noble Lord, Lord Grenfell, said, we need certainty on that point. I hope that, in responding to the debate, the noble Lord, Lord Taylor, will be able to give that certainty without the hyperbole that we heard earlier from the noble Lord, Lord McNally. The European arrest warrant is a legal framework that allows countries to extradite. Transition measures will have to be legally robust to ensure the satisfaction of the courts dealing with extradition. I appreciate that I have asked a number of questions, but they are not new or unexpected and would be very straightforward for the Government to answer at this stage. I alerted the noble Lord, Lord Taylor, earlier that I would be repeating these questions this evening.
When we debated the Government’s Statement on 19 July, I asked the noble Lord, Lord McNally, similar questions, plus two very straightforward ones. I did not receive any replies then, but obviously, the Government have now had time to consider those points and I would welcome answers tonight. I am confident that the Government have answers to them now. These questions strike at the very heart of this issue. They were also referred to by the noble and learned Lord, Lord Lloyd. If the Government are prepared to take this course of action—to opt out and then seek to opt back in to the key measures—there must be good reasons why the permanent opt-out from the other measures is so important. So, how many of the measures which the Government want to permanently opt out of are relevant to the UK and are currently being used, and what impact will their removal have? What is the exact number of practical, workable and working measures that the Government are seeking permanently to opt out of?
Of the 133 crime, law and order and policing measures, the Government want to opt back into 35, and an additional seven have already been replaced and the Government have opted in. My understanding is that the measures that the Government seek permanently to opt out of are basically harmless and irrelevant or, as the noble Lord, Lord McNally, said in his opening speech, “obsolete, defunct or simply unused”. His article also referred to the measures negotiated by the Liberal Democrats in the Government as,
“keeping the wheat and losing the chaff”.
Can the Minister tell your Lordships’ House which, if any, of the measures which the Government are seeking permanently to opt out of are harmful to the UK? Or are the Government prepared to risk those measures that even they consider essential by being strong and bold in jettisoning the irrelevant?
Unless the Government now have guarantees that the UK can opt back in with no delays, no interregnum where UK citizens are left exposed, what is the point? Or is the Minister going to inform your Lordships’ House tonight that this is a serious and important repatriation of powers from the shackles of Brussels? I suspect not.
There remain so many questions, but the biggest has to be: why? I look forward to receiving some answers from the noble Lord, Lord Taylor, this evening, because the questions were raised in previous debates and we are still waiting for answers. The Minister has to convince your Lordships’ House that the Government's actions are in the public interest and not, as it so clearly appears, a ridiculous piece of theatre designed to placate what the noble Lord, Lord Hannay, called “those on the wilder side of Euroscepticism”.
Despite the welcome and successful efforts of the noble Lord, Lord Hannay, to achieve what I hope are cast-iron assurances on the 35 measures, without guarantees that we will be able to opt in with no time lag that puts British citizens at risk, we cannot support the Government in their Motion this evening.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, I am sorry about the noble Baroness’s unwillingness to support the Government on this Motion. If people say that there is no passion or conviction in British politics, they should have been listening to this debate, because it has shown that there is indeed a lot of passion and conviction on this issue.
Before I address the points that have been made during the debate, I join my noble friend Lord McNally in thanking the noble Lords, Lord Boswell, Lord Hannay and Lord Bowness, for their chairmanship of the committee, which produced a formidable body of work for the Government to consider, and its ongoing role in scrutinising this matter. The Government are appreciative of the committee’s high-quality and thoughtful report, which has been integral to the decision-making process behind our decision to table the Motion this evening. I look forward to working with the noble Baroness, Lady Corston, as chairman of Sub-Committee E.
The Government have today replied. Noble Lords have said that it is plenty late enough, but we have replied to the committee’s report on the matter. Copies of the reply are available and I am sure that a number of noble Lords have taken the opportunity to look at it. We would like noble Lords to consider it alongside the letter of 18 July, sent to the noble Lord, Lord Boswell, which can be found in the Library of the House.
To return to today’s business, I am grateful to the noble Lord, Lord Hannay, and to my noble friend Lord Bowness for meeting me yesterday. It was incredibly helpful to me personally, and the amended Motion that we have tabled reflects the outcome of these discussions. I hope that the whole House can support the government Motion. I would regret it if that were not the case.
On 9 July, the Home Secretary reaffirmed the Government’s intention to exercise the opt-out. Noble Lords will be aware of the background to the opt-out and there is no need to remind them of its origins. However, as I listened to the speeches from the Benches opposite, I wondered why, when they were in office, they negotiated the opt-out. They must have believed in it once, so what has happened to that belief? As my noble friend Lord Hodgson asked, why did they take such care to ensure that the Lisbon treaty contained this protocol, the provisions of which we now seek to exercise?
In the other place on 15 July, there was a debate on this issue and a vote to exercise the opt-out and rejoin the measures where it is in the national interest to do so. I am grateful to my noble friends Lord Sharkey, Lord Bowness, Lord Eccles and Lord Hodgson—and many other noble Lords—who said that they find the 35 measures that the Government seek to rejoin sensible. The noble Lord, Lord Williamson, also agreed that these were sensible measures for the Government to seek to rejoin.
I must reassure my noble friend Lord Blackwell that the Government have made a considered judgment on this issue. They are confident that, in using the test of the national interest, they have properly identified those 35 measures that they will seek to rejoin. These 35 measures listed in the Command Paper represent government policy. My noble friend and I will have to agree to differ about whether we are right to seek to rejoin those 35 measures.
It might help noble Lords if I explain what happens next. On that point, I must return to the question of scrutiny and the work of the European Union Committee. I think that all noble Lords accept that the European Union can play an important role in tackling cross-border crime. This Government understand that, but equally we understand that decisions taken at EU level, or about the EU’s role in dealing with crime, must be subject to rigorous scrutiny. That is only correct and the UK Parliament must be sovereign in exercising this scrutiny.
Scrutiny can be an iterative and long-running process, especially on a matter such as this. That is why today’s Motion from the Government invites the European Union Committee to give a further view on what measures it believes we should rejoin. I hope that Command Paper 8671, which sets out those measures that the Government believe are in the national interest to rejoin, provides a useful starting point. I hope sincerely that the House can endorse that list today, but let me be clear that any endorsement cannot pre-empt the work of either the committee here or the committees in the other place in looking at all the measures. I expect that that is the point at which the noble Lord, Lord Davies of Stamford, can apply his scrutineering endeavours, since he went through various measures on which he had comments to make. I expect our committee in this House to come back with a thorough examination of the Government’s decision and I look forward to receiving it.
However, I have to ask the House to note that the Government have committed to not beginning formal discussions with the EU institutions or other member states until November. That is to ensure that the committee in this House and the relevant committees in the other place have time to report. All the reports will be carefully considered by the Government. Further to that, noble Lords will know that there are methods whereby committee reports can be brought before the House for debate. I hope that those will be promptly exercised in this instance as I look forward to a prompt debate on our committee’s report.
Lord Bowness
My Lords, I am sorry to interrupt my noble friend, but while he is talking about process and procedure can he perhaps explain to me, if to no one else, the following? In the debate in the other place, my right honourable friend the Home Secretary said that the mandate that she was seeking that evening would lead to the UK exercising the opt-out. Precisely when is it envisaged that we will give formal notice to the Council of our intention? Is it to be after we have passed, if we do, the Motion tonight or will it be after there has been consideration of the reports by the relevant committees?
Lord Taylor of Holbeach
The Government do not have to give formal notification until 31 May, but the votes in this House and in another place provide authority for the Government to commence negotiations with the European institutions, which is why this debate is important. It provides an opportunity for those informal negotiations that will lead, post November, to formal negotiations with the European institutions. Perhaps I may turn—
Lord Richard
I am much obliged to the Minister. He says that this vote tonight is necessary so that negotiations can begin. Why is it that the House of Commons was not asked to endorse the Government’s view that the 35 measures were in the national interest, whereas in this House we have been asked to endorse that? Why is there that difference between the Motions that have been put to the two Houses?
Lord Taylor of Holbeach
Noble Lords conduct their own business in this House and I think that the Motions—
Lord Taylor of Holbeach
We have presented to noble Lords the Motion that we believe reflects the position of this House.
Lord Taylor of Holbeach
I will give way to the noble Lord, but I want to make this point absolutely clear. The noble Lord, Lord Richard, is plucking at straws. Let us get to the substance of this. There is a Motion before the House this evening that gives Members of the House an opportunity to express an opinion on both the opt-out and the rejoining of 35 measures. That is quite clear and it was the purpose of tabling this Motion. It is up to noble Lords to decide how they react to it, but there is nothing devious or obscure in the way in which the Motion has been derived.
Lord Richard
With great respect, I am not clutching at any straws at all. Having been drawn into a conversation with the noble Lord, I think that I am entitled to put this point to him. It is a question not of clutching at straws but of asking a very simple question of the Government. Why have they asked this House to endorse their proposals when they did not ask the House of Commons to endorse them? Why is there a difference between the Motions put to the two Houses?
Lord Taylor of Holbeach
I can give no other answer and I will give no other, because I have given the noble Lord an answer.
I should like to get to the substance of this debate. We can talk around it, but we should get to the substance. I was challenged by my noble friend Lord Maclennan and by the noble Lords, Lord Tomlinson and Lord Grenfell.
Lord Hannay of Chiswick
I am most grateful to the noble Lord for giving way. I want to get clarification on something that he said before he started the exchange with the noble Lord, Lord Richard. He said that the Motion before the House tonight, which endorses the Government’s list of 35 measures in the Command Paper, would be the basis on which the Government would start informal consultations with our partners. Can he confirm that that is true?
Lord Taylor of Holbeach
Exactly. There will be informal negotiations to start with because, until the reports from the sub-committee are produced in November, the Government do not intend to open up formal negotiations. The noble Lord is exactly right and I am grateful. I should have given way to him earlier. It was a very helpful intervention on his part.
I was going on to say that the noble Lord, Lord Maclennan, challenged my noble friend Lord McNally on the whole business of the referendum. The noble Lords, Lord Tomlinson and Lord Grenfell, and the noble Baroness, Lady Smith, repeated this. There is a very clear answer and I will read it. The European Union Act sets clear criteria for when a referendum would be necessary. These are set out in Section 6 of the Act. This decision is not one of the areas where a referendum is required. Changes to the Treaty on European Union, the TEU, or the Treaty on the Functioning of the European Union, the TFEU, or a decision made under Article 48(6) of the TEU potentially attract a referendum under the European Union Act 2011. The 2014 decision is not a treaty change, nor a decision under Article 48(6) of the TEU. Instead, it is something that flows from the existing treaty and, as such, it is not subject to a referendum. I hope that that categorical assurance reassures the House on this issue.
There have been some discussions about whether we are right to exercise the opt-out. The noble Lord, Lord Richard, raised doubts early on in the debate about whether this was a wise decision. My noble friend Lord Taverne questioned whether we were doing the right thing and a number of noble Lords have also done so. The Government are of the view that we should exercise the opt-out for three reasons: principle, policy and pragmatism. On principle, it is our view that the UK’s international relations in the field of police and criminal justice are a matter, first and foremost, for the Government. For example, the Government believe that, if necessary, we should have the option to amend our bilateral UK-US extradition and mutual legal assistance treaties as we and the US wish. However, currently any changes would need to be in conformity with the EU-US agreements.
In terms of policy, the UK has and will continue to have the ability to choose whether it should opt in to any new proposal in the field of justice and home affairs. It is therefore only right that we take the opportunity to consider on a case-by-case basis whether we wish to retain the pre-Lisbon measures and allow the CJEU to exercise jurisdiction over them. The key question that the Government have asked themselves in this regard is whether it is in the national interest to rejoin a particular measure.
Finally, we are being pragmatic. We are not going to be in a position to implement Prüm, for example, which requires member states to allow reciprocal searching of their databases for DNA profiles, vehicle registration and fingerprints, before December 2014. Implementation is likely to take years and require substantial funding. By choosing to remain bound by Prüm after 1 December 2014, we run the very serious risk of being infracted for failing to meet our obligations under the EU. The Home Secretary and Justice Secretary set all this out in a letter last Thursday. Others can disagree with it, but the case has been made and that is the Government’s position.
There is some concern, which has been stressed again by noble Lords, about why we are having this vote today. I think the nub of the question put to me by the noble Lord, Lord Richard, was, “Why do we need a vote today?”. We need, as I have said, to begin these informal discussions but we need also to allow some time for scrutiny of the measures and the decisions as they go along. The EU Committee has suggested in its report that the Government should have started negotiations at a much earlier stage. However, the Government would have been presumptive to have done so without allowing Parliament to have a say on the matter. The Commission DG for Justice, Françoise Le Bail, has said:
“But I guess the key issue is to have a decision by the British Government. There is nothing else we can do before that”.
That is why we have asked for this vote today. In effect, from this moment, we will be able to enter into those informal negotiations.
A lot of anxieties have been expressed, and the noble Baroness, Lady Smith, repeated the point about the risk of a gap between our opting out and our rejoining. Noble Lords will of course understand that there will be a transitional arrangement. The timetable is that the actual opt-out does not occur until 1 December 2014, so there is a period for negotiations, which we believe will include transitional arrangements. We do not see a gap as being a serious obstacle for us in presenting to our European colleagues a proper case for renegotiation in respect of those bodies that we want to opt in to. Indeed, all the discussions that we have had with colleagues in Europe have given us the feeling that we can be confident that they will be pleased that we have actually made a decision on this matter and that we will be in a positive position in respect of the 35 measures to which we will be opting in.
Lord Blackwell
Can my noble friend give me one more assurance? Can he confirm that, once the British Government have concluded their negotiations and we know what the conditions will be for opting back in to, for example, the European arrest warrant, Parliament will then have an opportunity for a final say on whether or not it agrees with those opt-ins?
Lord Taylor of Holbeach
Yes, that is indeed provided for. After 31 May, not only will impact assessments be generated for each of the measures to which we are opting back in but there will be a second vote on the 2014 opt-ins. This is a journey which Parliament and Government have to undertake together. I understand the passions of noble Lords on this issue but I hope that we can establish, on the terms of the debate that we have had this evening, a proper dialogue so that we can actually discuss these issues and give those people who disagree with the Government a proper sense that they have an opportunity for dialogue with us.
Lord Hannay of Chiswick
The noble Lord has just said something a little startling. He assured the noble Lord, Lord Blackwell, that the second debate and vote will take place after 31 May—that is, after the date that we have to give a legal notice to the European Union that we are opting out. I do not quite see how a vote after that date can vary that decision in any way.
Lord Taylor of Holbeach
There will be a second vote on the whole package after 31 May.
Lord Taylor of Holbeach
There will be a deadline of 31 May. The Government will make the decision but it will be up to Parliament to endorse it in a vote after 31 May. This is a matter where the Government and Parliament will be in constant dialogue. As I have said, there will be a debate in this House, I hope, in November. I hope that noble Lords will be furnished with arguments by the committee of this House that will enable us to discuss this issue properly at that time.
This has been a good debate. This Government are not frightened of criticism and are prepared to seek to answer it. The choice before us is whether we exercise the opt-out and rejoin measures, where it is in the national interest to do so, or we do nothing. I am firmly of the view that we should opt out, but it is most certainly in the national interest to seek to rejoin measures that help to combat cross-border crime and keep our country safe. I hope that the House will also endorse the measures in Command Paper 8671 and strengthen the Government’s negotiating hand. I know that the European Union Committee can further help the Government and this House by further scrutinising the measures that it feels the Government should rejoin. This can only enhance the debate. I am very pleased that the terms of today’s Motion have encouraged the noble Lord, Lord Hannay, not to press his amendment. I hope that I have also shown that the Government are prepared to listen to these concerns.
Lord Taylor of Holbeach
I am sorry; I am not going to give way. I have some important information for the House. The brief I had that said that the vote would be after 31 May was incorrect. It has now been corrected. The vote will be before 31 May, which I am sure reassures noble Lords. It certainly makes my life a little easier, if I may say so.
I hope that the noble Lord will forgive me. It is late and I am coming to the end of my remarks. There will be another vote before we formally apply to rejoin these measures. Today is not the end of the process but just a step along the road. I hope that noble Lords will support the position set out by the Government. It gives us a chance to be involved in a continuing discussion on this issue. I commend the Motion in the name of my noble friend to the House.
Lord Hannay of Chiswick
My Lords, I confirm what I said at the end of my intervention—that I do not propose to divide the House on the amendment in my name on the Order Paper.
European Court of Human Rights: Khodorkovsky Case
(10 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Trimble
To ask Her Majesty’s Government what representations they have made to the governments of Russia and other European countries about the Khodorkovsky case at the European Court of Human Rights.
Lord Trimble
My Lords, the question is, “Why Khodorkovsky?”. There are a number of reasons. First, he is a successful businessman. He turned around a high-cost loss-making company into profit and increased production so that by 2003 it produced 20% of Russia’s oil and was Russia’s second-largest taxpayer. The leading Russian business newspaper, a joint Financial Times/Wall Street Journal venture called Vedomosti, awarded Khodorkovsky its entrepreneur of the year prize. Secondly, he challenged Putin. In a televised confrontation with Putin he cited opinion polling showing, among other things, that half the public believed that corruption had spread to a majority of state officials—including at the highest levels—and that more than 70% thought the use of the official justice system a waste of time. He concluded, “Corruption is spreading in this country. You could say that it started right here. And now is the time to end it”.
Thirdly, many feel that Putin’s response—arresting Khodorkovsky in October 2003 and driving his company into bankruptcy—marked a turning point in the development of the regime. The journalist Andrei Kolesnikov, described by Ben Judah as “the only ever defector” from Putin’s inner circle of St Petersburg friends, recalled a conversation with Putin in 2005 when he said, “I don’t like that after you arrested Khodorkovsky, I lost the feeling that I lived in a free country. I have not started to feel fear—”. Putin then interrupted him and said, “And did you not think that this was what I was aiming for”?
Kolesnikov recalls that after Putin’s inauguration in 2000 he was approached by a senior member of Putin’s inner circle to manage some funds for him. The funds initially came as gifts from various oligarchs. Kolesnikov was told that Putin wanted part of this money put into offshore funds. By 2005, $200 million had accumulated in this fund. In that year he was told to build a small house by the Black Sea for Putin—just 1,000 square metres, costing just £14 million. The project ballooned. The house became four times the size and was joined by a casino, a church, swimming pools and helipads, a summer amphitheatre and a winter theatre. Until the 2008 financial crisis, Kolesnikov divided the special fund between the building project and investments in a host of other businesses across Russia. Then he was told that all the funds were to be spent on the Black Sea palace. Kolesnikov later broke with Putin and fled the country. Ben Judah, in his book Fragile Empire, comments:
“What the Kolesnikov documents seem to show us is that Putin never changes. Instead, as he has grown more powerful, he grew ever more corrupt … He cannot change—and as long as he is in power, neither can Russia. Nor can the incestuous relationship of power and corruption that spiralled out of control under Yeltsin ever end”.
In 2007, after four years in detention, Khodorkovsky, whose trial had concluded in 2005 with an eight-year sentence, would have been eligible for release on parole, but in February of that year, new charges were announced which led to another conviction in December 2010. In February 2004 Khodorkovsky made his first application to the European Court of Human Rights, which concerned the circumstances of his arrest and pre-trial detention. In May 2011 the court ruled that there had been breaches of the convention and awarded the modest claim for $10,000 in full.
In March 2006 a second application was made to the ECHR concerning the first trial. This was ruled admissible in 2011 and last week it became known that judgment would be given on 25 July. A third application to the ECHR remains pending as does a fourth. As to the substance of these cases, I think it is sufficient to note that the International Bar Association’s Human Rights Institute, which had an observer at the second trial, concluded that the proceedings were unfair and had not produced clear proof of guilt. Many others agree.
Khodorkovsky will become eligible for parole in a year’s time but there are fears of a third trial. These fears are reinforced by current events. Sergei Magnitsky, a young lawyer who exposed a huge tax fraud in which many government officials were involved, was arrested and died in prison in 2009. Last month he was posthumously tried and convicted of tax offences. Bill Browder, a British citizen, was convicted in his absence in the same trial. How do the Government view that conviction? Last week Alexei Navalny was convicted of embezzlement in another sham trial. Navalny came to prominence as a blogger exposing official corruption. He coined the phrase, “United Russia is the party of crooks and thieves”, and was prominent in the demonstrations protesting the fraudulent elections in 2010 and 2012. Putin weathered those protests, which were mainly confined to the emerging Moscow middle class. This led Navalny’s wife, Julia, to say in despair, “Putin has decided to turn Russia into an authoritarian state like Belarus. He is pushing, a bit here, a bit there, to find out how far he can go. And there is only one thing that can stop him. A gigantic protest, or the West”.
Yet Putin’s current policy is based on a huge gamble. In 2007 he could balance the budget on an oil price of $40 a barrel. In 2012 he needed a price of $110 a barrel and he cannot compensate by increasing production. The technological changes pioneered by Khodorkovsky have run their course and oil production is predicted to decline by 20% in the coming decade, while shale and liquefied natural gas pose long-term problems for Russia’s gas.
What should we do? First, we should be careful about the messages we send. Sixty individuals have been identified as being involved in the tax fraud Magnitsky uncovered and in his torture and death. In the USA, legislation has been enacted banning them from entering the US. In April, Dominic Raab tabled a Written Question asking if any of those had visited the UK. Mark Harper replied in July saying that the Government,
“is already aware of the individuals on the list and has taken the necessary measures to prevent them being issued visas for travel to the UK”.—[Official Report, Commons, 18/4/13; col. 499W.]
However, a few days later he wrote to Hansard with a different Answer, this time saying in a letter that “applications for travel ... are flagged up for careful consideration on a case by case basis, no decision has been made to refuse their leave outright”. The amended Answer went on to refer to the longstanding policy not to disclose details of records of individuals and to reiterate that applications were treated on their merits,
“in line with our usual practice”.—[Official Report, Commons, 9/7/13; col. 2MC.]
The best thing that I can say about this apparently craven response by the Home Office is that it may be driven by a fear that in the absence of legislation it could not defend the policy to deny entry, but I am sure that the Kremlin will regard this as a fear of offending it.
The same, I fear, is true of last week’s decision by the Home Secretary to refuse a request by Sir Robert Owen, the coroner conducting the inquest into Litvinenko’s death. The coroner had requested a public inquiry because he could not hear in public secret evidence that might show the involvement of the Russian state in Litvinenko’s murder. Theresa May’s letter to the coroner conceded that international relations were a factor in the decision, and went on to say that inquests were more readily explainable to foreigners than an inquiry established by the Government under a chairman appointed by the Government. I am sure that the reaction to that in the Kremlin can be imagined. On this issue, I must ask the Minister: does this letter indicate that the Government are intending to amend or even abandon the Inquiries Act 2005, with the Home Secretary saying in effect that she could not use that Act in this case for the reasons that she gave?
In conclusion, we should have no illusions about the regime, and neither avert our eyes nor appease. Russia’s legal system is an extension of the ruling party, and the party and the Government as a whole are deep in corruption and will stop at nothing to preserve their power. I hope that the European Court of Human Rights will indicate the fundamental rights and freedoms of the convention in the cases that come before it, but what do we say to such a member of the Council of Europe? We should firmly oppose human rights abuses and the distortion of democracy; we should remind the Russians of their obligations as a member of the Council of Europe; we should press for a European law on the Magnitsky case—I say European because the Russians are adept at trying to divide the European countries on these issues—that imposes visa bans and freezes assets; and we should address the corruption that pervades the Russian system and, at the very least, stop the laundering of the dirty money that flows from there to here. That at least would hurt them in their pockets.
Lord Judd
My Lords, I congratulate the noble Lord, Lord Trimble, on raising this important matter in this debate. We should put on record our appreciation of the All-Party Parliamentary Group on Human Rights for the work that it does on this issue and the material results of its research, which are made available to us.
There are 13,600 people serving prison terms in Russia for what are described as economic crimes. The routine criminalisation of business disputes is all too symptomatic of the weak rule of law in Russia. Entrepreneurs are too often jailed on trumped-up charges by manipulative investigators and judges. Only 1% of cases in Russian courts result in acquittal. Indeed, the workings of a court in Russia have been described as “telephone justice”, with external pressure all too evidently exerted on judges to produce a particular verdict.
The noble Lord has spoken well about the case of Mikhail Khodorkovsky. The oligarch has spent a decade in prison after two consecutive trials—the second said to be more legally questionable than the first—but just as he is due to be released next year there are sinister hints that a third case could be on the way. The heaviest hint came in the form of the release of a documentary from the once independent but now wholly tainted television channel NTV, alleging that the oligarch was behind the murder of the mayor of Nefteyugansk in 1998. Putin himself has alleged several times that Khodorkovsky has blood on his hands.
He is not alone, a point that the noble Lord made forcefully. As he reminded us, there was the case of Sergei Magnitsky and his posthumous conviction for tax fraud, having died in prison after terrible experiences at the hands of the authorities. William Browder was also convicted of tax fraud in absentia and sentenced to nine years. He plans to appeal. The Yaroslavl mayor, Yevgeny Urlashov, was also recently arrested in the middle of the night. The former member of the United Russia party was elected last year as the city’s mayor. In local elections this autumn, he was preparing to support candidates from a new party started by billionaire Brooklyn Nets owner Mikhail Prokhorov. He has been accused of taking bribes and a judge has ordered him behind bars until 2 September.
We have all been heartened to hear of the release, pending appeal, of Alexei Navalny after intervention by Putin. However, there is a good deal of room for suspicion that this may all be cat and mouse—that, in fact, he will stand in elections that will be fixed, he will be defeated and he will then be more severely treated in court than before. The objectives of the President will have been achieved.
All this is bad enough, but we also have to look at it in the context of other things that are happening in Russia at the same time. There is, of course, the terrible crackdown on NGOs, which are standing up for human rights and humanitarian issues. As of the end of June, at least 62 groups have received warnings or orders to register as foreign agents or have been taken to court by the authorities. Of seven groups already taken to court, five have lost administrative cases and have been ordered to pay fines and register. At least one has been closed. Another 15 organisations that received direct notices of violation from the prosecutor’s office may face administrative charges if they fail to register as foreign agents. Authorities have warned at least 38 groups to register as foreign agents if they receive foreign funding and plan to carry out what are described as political activities, which would be seen in this country as very legitimate lobbying, on the issues that concern them.
The treason law expands the legal definition of treason in ways that leaves broad room for officials to arbitrarily interpret and selectively apply it against individuals engaged in routine discussions with foreign counterparts or presenting human rights reports to international conferences. Russia’s public assembly law, adopted in 2012, dramatically increased the maximum penalty for violating rules regulating protests and introduced new restrictions on public protests. Russia’s constitutional court has ruled that several of the law’s provisions were unconstitutional and the Venice Commission of the Council of Europe has found that the amendments represent a step backward for the protection of freedom of assembly—and indeed urges Russia to repeal or revise key provisions. Libel, decriminalised at the end of the Medvedev presidency, has been recriminalised.
Some argue that these sad and disturbing trends in the administration of justice started with Putin’s re-election as president in 2012, in response to the protest movements in 2011. Personally, I do not accept this. It may have accelerated them, but there was far too much indefensible myopia in the West to what has been going on since the end of the 1990s. I was for some years rapporteur to the Parliamentary Assembly of the Council of Europe on the conflict in Chechnya, with its inevitable consequences for Dagestan and Ingushetia. All I can say is that the numerous disappearances, the torture, the intimidation of witnesses, the home burnings, the indiscriminate bombardments and the extra judicial killings—not least of brave journalists and human rights activists such as Anna Politkovskaya and Natalya Estemirova, who tried to speak the truth—were cruel and terrible and provided ample evidence of the ruthless distortion of so-called justice.
Attempts to pin down the Russians became frustrating in the extreme. We would repeatedly be told that an investigation would be initiated but seldom, if ever, did we hear of the completion of such an investigation, with those responsible brought to justice. There have been 200 European Court judgments against Russia with reference to the North Caucasus, the majority involving multiple violations of the European convention. The lamentable inadequacy of official investigations in too many of these cases has been on a scale that indicates a systemic and continuing failure. Recently, Putin has certainly been shoring up his political base by mobilising reactionaries, nationalists and xenophobes. He puts his public money where his purpose lies; the salaries of the riot police have been doubled.
In conclusion, to the cynics who say, “But what on earth can be done about all this?”, lots of things can be done. One is to make sure that far more frequently, far more vigorously and in many more cases what is happening is brought to public attention and a stand is made. The Committee of Ministers in the Council of Europe must stop pussy-footing around and pursue Russia relentlessly in carrying out what has been ruled necessary by the European Court. It raises these issues, but it does not pursue them as vigorously as it should.
Lord Alderdice
My Lords, I also commend my noble friend Lord Trimble for bringing this important matter to your Lordships’ House and presenting it with his usual methodical and forensic accuracy. The timing of this debate is important, as he has pointed out, given the legal cases in Russia and those coming up at the European Court of Human Rights. However, the timing of the debate at this hour of the evening means that I do not intend to repeat what he has already said with such clarity about the case itself.
Part of the importance of this case, as the noble Lord, Lord Judd, said, is its significance regarding the deterioration of freedom and democracy in Russia. Since Mikhail Khodorkovsky’s arrest, there has been an extraordinary increase in the number of political prisoners in Russia; by most estimates, there are now more than in Belarus. The arrest of Khodorkovsky and Platon Lebedev in 2003 on fraud charges was probably the first major such politically motivated case brought against Kremlin opponents under Putin. Khodorkovsky was supporting the liberal opposition Yabloko party of my old friend, Grigory Yavlinsky, and challenging corruption and authoritarianism in Russia under Mr Putin, as my noble friend has said. The Russian leader—not the first to do so—saw the legal process as one that could be used to intimidate dissenters. In the words of one of my Russian colleagues, he almost killed off politics from 2003 until December 2011, when the people, outraged by election fraud, came out en masse to protest. In 2009, as my noble friend has pointed out, additional charges of embezzlement were brought against Khodorkovsky and Lebedev and, now, a third case against the defendants may effectively result in life sentences for them.
Then there was the case of the Yukos executive and former company director, Vasily Aleksanyan, who, according to the European Court of Human Rights, was improperly imprisoned and treated in an inhuman and degrading fashion, resulting in his premature death in 2011, some time after he was released from prison as a result of international pressure. In the Yukos case, Russia abused the European Court of Human Rights by, for example, repeatedly replacing the ad hoc Russian judge five times, so that every time a new judge came in, he or she would have to familiarise themselves with all the papers, thus delaying the whole process.
The Pussy Riot case is another example of manipulation of the court system to silence critics. Here, three young women were convicted in August 2012 of hooliganism, motivated by religious hatred, for an illicit performance by their rock group in the Cathedral of Christ the Saviour in Moscow. Advised or ill-advised as that may have been, these performance artists were challenging the Kremlin’s increasingly close relationship with the Russian Orthodox Church, which has, sadly, become a central player in Putin’s strategy for national unity. Two of these women are currently serving two-year prison sentences.
The Bolotnaya Square case, brought against 12 defendants for allegedly rioting on Moscow’s Bolotnaya Square on 6 May, the eve of Putin’s inauguration, was largely viewed as a provocation by police to undermine the protest movement. Those 12 people, many of whom had never before even participated in political demonstrations in their lives, are now defendants in a show trial and face up to 10 years in prison.
Therefore, with Khodorkovsky, Lebedev, the pre-inaugural 6 May case and Pussy Riot, Russia is now host to many political prisoners—and their numbers are rising. For example, there is the recent case of the opposition leader, Alexei Navalny, and that of Yabloko’s Pyotr Ofitserov, whose only crime was knowing Navalny; Magnitsky’s post-mortem conviction has already been mentioned; Yabloko’s activists now in jail such as Maxim Petlin, on a trumped-up bribery charge as he fought with a developer who tried to destroy a public garden; and Ivan Bolshakov and Vasily Popov, who were convicted and given sentences on fake evidence for their political activities. Then there are the suspected murders of journalists and human rights activists. Anna Politkovskaya was mentioned by the noble Lord, Lord Judd, and Yuri Shchekochikhin investigated corruption in the KGB and died mysteriously—like Litvinenko—a couple of months after the first publication of his investigation; and there are many more.
Therefore, the Khodorkovsky case is important not just in itself but because it has paved the way for politically motivated reprisals in Russia. Intimidation and reprisals against political dissenters and opposition have turned into daily practices for the Russian authorities—from intimidation, searches and wiretapping to imprisonment and even, it is clear, extrajudicial killings. In addition to human rights concerns, this increase in political persecution is resulting in increased Russian asylum cases in the European Union, which has a direct impact on the EU economy and society. For example, one young man, Mr Dolmatov, was implicated in the Bolotnaya case, fled, and then committed suicide in a Dutch detention centre after being denied asylum in the Netherlands. Other well known figures such as Garry Kasparov and Sergei Guriev have left Russia for the US and France respectively due to their fear of arrest.
Amid these discouraging highlights, it is important to remember that there are many Russians inside the country who are fighting for democracy and human rights. They need our unwavering political and moral support—from the whole of the international community. Thousands of Russians are working steadily for peaceful democratic change in Russia. Putin’s attempt to use the legal process and other processes to frighten his citizens through the prosecutions we have mentioned will not ultimately work. Dozens of new political parties registered last year and are running candidates in the local elections on 8 September. Thousands of civic activists are preparing to monitor those elections. Those anonymous but courageous Russians want to change their country for the better and they deserve our continuing attention and support.
While my colleague Sergei Mitrokhin maintains that Khodorkovsky is a courageous, inspirational and increasingly symbolic figure for the Russian opposition, Khodorkovsky himself, writing in an opposition newspaper interview just a few weeks ago after his 50th birthday and around 10 years in prison, remains cautious about the prospects. He said:
“The struggle for power with an authoritarian regime always involves serious and mass sacrifices—the loss of a business, a job, or liberty”—
and, he might have added, even your life.
These are serious matters. The least we in this country can do is to give Khodorkovsky and others in the Russian opposition all the support we can in their fight for freedom and democracy in their great country. I welcome the statement by the Prime Minister at the Banqueting Hall and I look to my noble friend to be as robust and strident as she can in condemnation. However, it would be dreadful if our response was only words and we were intimidated, as my noble friend Lord Trimble said, into not taking the kinds of actions that need to be taken to emphasise that we mean what we say. I look to my noble friend to encourage us in that way, too.
Lord Hylton
My Lords, I thank the noble Lord, Lord Trimble, for raising this matter tonight. After the end of the Soviet Union, I had a long involvement in Russia with both churches and organisations for disadvantaged children and young people. In the course of this, I met Mr Khodorkovsky when he was a free man visiting London. I was impressed by him and by his efforts to make Yukos Oil a normal, responsible and transparent internationally quoted company. I also admired the work of the Open Russia Foundation that he started, which sought to make the young Russian generation full participants in a globalised world.
I agree that Mr Khodorkovsky may have breached an informal agreement with his Government by taking a position in politics. However, it is worth noting that he returned voluntarily to Russia in 2003 when he could have stayed abroad and joined other exiled oligarchs. He went back to prove his innocence, and in solidarity with his partner, Mr Platon Lebedev, who had by then been arrested. In the same year, the then chairman of the Russian President’s advisory commission on the judiciary said of the trial:
“There are more features of political games here than of justice”.
It is also true that his legal counsel was harassed and wrongly called as a witness. In 2007, the European Court of Human Rights found that Mr Lebedev’s trial had violated international law, and in 2011 it awarded damages to both men. Have these damages yet been paid?
The fate of Yukos Oil was also most unsatisfactory. Its assets were compulsorily sold for less than full value to semi-state companies such as Gazprom and Rosneft. It is likely that the treatment was a breach of the Energy Charter Treaty 1994, to which Russia was a party. The fact that Russia got away with this behaviour led naturally to BP’s bad experience in its joint venture with TNK, and to Shell’s serious problems over Sakhalin Island.
I turn to the second trial, which took place over 21 months in 2009-10 and led to a prison sentence of 13 and a half years. It is highly relevant that it was criticised by Russian institutions as well as by the International Bar Association and Amnesty International. More important critics were our Foreign Secretary and the noble Baroness, Lady Ashton, on behalf of the EU. A further point is that the location of Mr Khodorkovsky’s imprisonment may have violated Russia’s criminal executorial code, which states that convicted persons should be held in their home region and not sent to Siberia. The implications for visits from their family and others are obvious.
A wise former British ambassador to Russia commented on the case in 2009. He wrote that our two countries had many common interests and that it was unwise to expect a rapid Russian evolution to the full rule of law and democracy, but that nevertheless Her Majesty’s Government should stand by the European Convention on Human Rights and Russia’s other international obligations, and should make clear their abhorrence of Russian behaviour in the Litvinenko case, over Abkhazia and South Ossetia and over the cyberattack on Estonia.
In the light of this advice and of this debate, what is the Government’s response? Will they press the European Court of Human Rights in Strasbourg to bring forward consideration of pending applications by Khodorkovsky and Lebedev? This, along with a strong British response, could prevent the holding of a third trial of the two men. It could also lend some protection to Mr Alexei Navalny, who has already been mentioned in the debate. He is a Russian anti-corruption lawyer and opposition leader who faces a five-year sentence. I urge the Government to take up this matter very strongly and not to let it fade away.
Lord Bates
My Lords, I would be happy to give way to the noble Baroness because I am sure that her remarks will be of greater interest to the House than mine. Like the noble Lord, Lord Hylton, I pay tribute to the noble Lord, Lord Trimble, for securing this debate and, also like him, I had the opportunity to meet Mr Khodorkovsky in 2003 at the World Economic Forum annual meeting, where he spoke very passionately and persuasively. He was the star of the show. At the time, he was Russia’s richest man and chief executive of Yukos and could seemingly do no wrong. He spoke of the importance of corporate governance and independent oversight and was innovative in bringing foreign investors on to the board of his company to improve oversight. He was passionate about shareholder rights and issues of that nature. We were all greatly impressed by this man. At that meeting he invited us to attend the first annual corporate governance summit on investment in Russia, which was to be held in Moscow later that year. We all dutifully turned up in Moscow only to find that our host and sponsor was in prison. That was a bit of a shock and did immense damage to foreign perceptions, particularly as regards foreign investment as many institutional investors had turned up.
I do not think there is any doubt about how this situation came about. Mr Khodorkovsky was a very rich and powerful man. In the period between the January Davos summit and his own summit in Moscow he had declared that he intended to stand down from the chief executive position at Yukos in 2007.Given that President Putin’s term was to come to an end in 2008, that was a very clear indication that Mr Khodorkovsky’s intent was to pursue political office. It would not be the first time that the lethal cocktail of oil, political ambition and extraordinary wealth led to some pretty unpleasant happenings. The mechanism by which the events happened became clear afterwards. In an article in Time magazine in January 2011, there was a very interesting interview with Igor Yurgens, who was principal adviser to President Medvedev. Igor Yurgens said:
“Everyone understood [the first trial] was a case of selective justice. They all broke the law and only one was put in prison”.
A senior official stated:
“No one said it out loud, but of course it’s impossible to mention Russia’s investment image”
abroad without referring to what happened to Khodorkovsky. Therefore, it was clear that immense damage was done to foreigners’ perception of the country.
William Browder, whose Hermitage Fund was the largest foreign investor in Russia, said in the Time article:
“It seems they’ve decided they don’t care what anyone thinks outside of Russia”.
Browder says that the Russians need to ask themselves why Russian stocks have a market value 50% to 70% below their peers in other emerging economies. The reason is simple: in Russia, you have property rights conditional on the whims of various corrupt officials who may decide your future. We hear all that and we think, “There the Russians go again. We have seen it all before. The Russians are up to their usual tricks. Putin is up to his usual tricks”.
I close by making a slightly wider point. I would argue that, going back through history, one of the greatest weaknesses of British foreign policy is that we have manifestly failed to understand Russia. Churchill famously described Russia in 1939 as,
“a riddle, wrapped in a mystery, inside an enigma”.
It has puzzled us and we have never quite got to grips with it or how to respond to Russia in foreign relations.
In a thoughtful paper by Andrew Monaghan for the Foreign Policy Centre entitled, UK-Russia Relations: a Bad Case of Mutual Misunderstanding, he says that the political other is the problem,
“particularly as often portrayed in an over-simplified, headline-based approach. Each appears to be a major target for the mass media of the other, which tends to emphasise and often exaggerate the conspiratorial element of the other, usually framed in spies, hostile intelligence operations, ‘cloak and dagger’ intrigue and murder, and competition for international influence”.
That is indeed probably a pretty accurate description of how relations have been, but in many ways, it belongs to the pages of a John le Carré novel such as Smiley’s People. We need to think about how our perceptions of Russia can themselves come in from the cold.
In this regard, we need to recall how, going back through history, Russian-UK relations have been a strength. As far back as the Napoleonic Wars, the Great War and the Second World War, we have been on the same side; our interests have been aligned. When we are tempted to engage in that rather simplified gesturing towards Russia, it does little to improve our misconceptions. If we really want to understand the Russian people, we need to start reading a little more of Pushkin, Chekhov, Tolstoy and Dostoevsky and a little less of John le Carré, because Russia is today an important point of reference for us in foreign relations. If we want to do anything about the bloodshed and the appalling situation in Syria, if we want to do anything about Iran and its nuclear aspirations, there is no question but that we cannot do it without Russian engagement.
The Russians, in my limited experience, are fully aware of the shortcomings of their own systems of government, but they are also hugely proud of their country and implacable in their belief that it is solely their responsibility to sort it out, because they are the only ones who truly understand it. In that respect, at least, they are rather like us.
Baroness Williams of Crosby
My Lords, I apologise to the noble Lord, Lord Bates; I had not realised that he was there waiting to speak. I join in his congratulations to the noble Lord, Lord Trimble, not only on embarking on this debate but on giving us an extremely concise and excellent description of the whole of the Khodorkovsky case. He did it in a brilliant way.
I am rather like the noble Lord, Lord Hylton: I know Mr Khodorkovsky to some extent. I have come across him when I have spoken or been lecturing at various higher education institutions in Moscow and in other parts of Russia. What I can say about him is that he is an extremely direct man. He is not very good at the more gracious elements of the language, but he cannot stop himself from speaking out honestly about the things that concern him, the things that he thinks are wrong. He is also a man of that rather rare Russian characteristic, an almost crazy kind of courage. One can say to him and to other Russian dissidents that perhaps it is unwise to speak out, that it may be foolish to fall out with the authorities, but they are almost unable to be stopped, in many ways. They have the kind of almost crazy kind of courage that one associates with the work of Dostoevsky or Chekhov. It is still there.
That brings me to what the noble Lord, Lord Judd, said. Alongside the long list of terrible misjudgments, unfairnesses and abuses, about which my noble friends Lord Trimble and Lord Alderdice have already spoken, it is also true of Russia that there is always an amazing new harvest of attempts to get freedom going again. NGOs spring up like grass in the spring. New parties spring up all over the place; they die and come back again. What is very striking about Russia—and one can see it slowly moving on—is the level of growing commitment among young Russians to something resembling not so much the rule of law as the rule of liberty, and their willingness to put themselves at risk in order to achieve it.
The noble Lord, Lord Hylton, spoke about the efforts that Mr Khodorkovsky had made to try to deal with the plight of disadvantaged and abandoned children, for example. He supported them financially in a courageous and not at all prejudiced way. It does not seem to have done him any good, but there is no doubt that he went out of his way to spend money for that purpose. He also went out of his way to spend money on educating young Russians, and has been willing to take part in quite risky episodes of opposition. One that I might refer to involved Pussy Riot, which has been mentioned. In prison, Mr Khodorkovsky suddenly made public statements about his support for them, which seemed to many of us a rather extraordinary thing to do.
What can we do about it? There is a real prospect of a new generation in Russia which is much more open to democracy than the present one. Yet it sees itself as having a President who talks the language of the old Tsars, because they were brilliant at imprisoning almost everybody. That was their favourite way of silencing opposition and Mr Putin seems to be following in that tradition.
There are three points to make. One was implied by my noble friend Lord Bates. He is quite right to ask whether there might not be reactions in the market to attempts to stop, for example, innovation and technical and other relationships with other countries. That is something that we have not explored sufficiently and is something that Mr Putin would understand; perhaps much better than a great many other fine moral statements about freedom, which all of us share but which appear to cut little ice with the Russian President.
The second area, which is extremely important, is where we can exercise influence through the many other links we have with Russia: educational, musical, artistic and so forth. The third area—which I shall be quite blunt about—is something that we as a country might want to consider rather more carefully: which Russians we allow to come and rest in our country and which Russians we might find not fully acceptable. There is something that, in a way, grinds on one’s mind when we allow such a string of Russian oligarchs with dodgy pasts in terms of their behaviour in the economic world by seizing Russia’s resources and exploiting them, then to come to Britain where they will be protected by the police in order to pursue obscure rows with one another, which are then dealt with in the British courts. There is something odd about the fact that it is not Russian dissidents, asylum seekers and courageous, outspoken men and women who come to this country, but increasingly people who come here almost entirely because of the assets they hold and the money they have. We will often find that those seeking asylum are likely to be turned back.
I once again praise my noble friend Lord Trimble and thank him for bringing this debate before us. I also thank my noble friend Lord Alderdice for what he had to say. It was important to speak about the long string of Russian crimes, sentences and misjudgments, and to say loud and clear that we need to exercise over a much wider range than we have so far sought to do, steps that will make it very difficult for Russians to continue to do what they are doing with Khodorkovsky.
I end by saying what my noble friend Lord Trimble has talked about: for example, exploring money-laundering practices, washing and cleaning out money which has come by dubious methods. This is something that we should explore. The OECD has just mounted new action in this field. Perhaps that is something that we should look at, which might speak more loudly to President Putin than most of the statements we might make—even in the most oratorically splendid ways—in this House and elsewhere.
Lord Pannick
My Lords, I declare an interest or, more precisely, a brief. For the past five years I have represented Mr Khodorkovsky as his leading counsel in his applications to the European Court of Human Rights, where he is complaining about his two trials, convictions and prison sentences. It would therefore be inappropriate for me to comment at all on the merits of those applications and I will not do so. However, I am grateful to the noble Lord, Lord Trimble, for introducing this debate. He has provoked valuable contributions from all noble Lords who have spoken and has given me the opportunity to address certain wider issues.
The first of these is the quite extraordinary delays by the European court in reaching its judgments. Your Lordships know that Mr Khodorkovsky has been detained and then imprisoned by the Russian authorities since October 2003. His first application to the European court was filed in February 2004. It complained about his arrest, his detention, the conditions in which he was detained and a number of other matters. The European court took more than seven years to reach a judgment, which was delivered in May 2011, finding a number of violations of the convention by the Russian authorities.
Mr Khodorkovsky filed a second application in Strasbourg in March 2006, and that one complained about his first trial conviction and sentence, the trial ending in May 2005. The European court will give judgment on that application this Thursday coming, which is more than seven years after the application was lodged in Strasbourg. There is a third application which Mr Khodorkovsky filed in November 2007, and that complains about his second prosecution and subsequent trial, conviction and sentence. The second trial began in March 2009. It ended with a further prison sentence in December 2010. This third Strasbourg application remains pending some five and a half years after it was filed, and indeed it is still in the early stages of consideration by the European court.
The Minister will know that the Strasbourg court regularly criticises national courts for failing to decide cases within a reasonable time, contrary to Article 6 of the European Convention on Human Rights. Can I ask the Minister whether the Government think that it is satisfactory for the European court itself to take such lengthy periods of time to decide cases, particularly in relation to an applicant who is complaining about his detention and his imprisonment? What representations will the Government make to the Strasbourg court and what steps will the Government take in the Council of Europe urgently to address these delays?
The second point I want to touch on is the record of the Russian Federation in Strasbourg. Last year, in 2012, the Strasbourg court gave 134 substantive judgments in cases concerning the Russian Federation. In 122 of those, it found at least one violation of human rights. Some 36 of the cases concerned breaches of the right to a fair hearing, while 64 cases involved breaches of the right to liberty or security of person. The year 2012 was typical of the appalling human rights record in Strasbourg of the Russian Federation. The Minister will also know that from 2004 until 2010, the Russian Federation, alone among all Council of Europe countries, refused to ratify Protocol 14 to the convention to make the Strasbourg procedures more efficient. What representations are the Government making to the Russian Federation about Russia’s appalling human rights record, and, to echo other noble Lords tonight, what action are we taking in this respect?
There is a third and final point that I want to touch on. The United Kingdom Government have regularly and regrettably reacted to adverse judgments in the European Court of Human Rights with complaints, criticisms, and sometimes years of delay in implementing adverse judgments against this country. The issue of votes for prisoners is the most extreme example but, regrettably, it is not the only one. Earlier this month, the Strasbourg court decided that prisoners serving whole-life tariffs must receive a periodic review of their sentence. The Prime Minister’s spokesman was quoted as saying that the Prime Minister was,
“very, very, very, very disappointed. He profoundly disagrees with the court’s ruling”.
Does the Minister recognise—do the Government recognise—that the prospects of encouraging the Russian Federation to respect judgments of the Strasbourg court and to adhere to basic human rights principles are simply undermined by the Government’s own lack of respect for the judgments of the Strasbourg court?
I am very grateful to the noble Lord, Lord Trimble, for introducing this debate, and I look forward to hearing the Minister’s response.
Lord Wood of Anfield
My Lords, I, too, would like to commend the noble Lord, Lord Trimble, for the great knowledge, conviction and clarity with which he spoke about this subject. I thank him for bringing this timely debate, coming as it does two days before an important judgment by the European Court of Human Rights on whether Mr Khodorkovsky’s rights to a fair trial under Article 6 of the European convention have been violated.
Mr Khodorkovsky has been detained and imprisoned by the Russian authorities since October 2003, nearly 10 years ago. It is fair to say that he is a controversial character in post-Soviet Russian history, as the noble Baroness, Lady Williams, pointed out. Prior to his arrest in 2003, he enjoyed an astonishing—and astonishingly rapid—rise to economic success, and to cultural and political prominence. He had a career ranging from internet trainer, philanthropist and funder of political parties to Minister of Fuel and Energy and financial trade magnate. If the proposed merger between Yukos and Sibneft had gone through after 2003, he would have been at the helm of one of the world’s largest oil companies.
During this period, however, he became the subject of a range of allegations concerning fraudulent activity: allegations that he engaged in asset-stripping of Yukos for private gain, and that he engineered forced sales of oil within the holding company to transfer billions of roubles to shell companies owned exclusively by him. Whatever one’s view of these allegations, the concern, which tonight’s debate has shown is shared by Members on all sides of the House, centres on Mr Khodorkovsky’s experience of Russian justice—the circumstances and process surrounding his arrest, trial and continued detention. The central point is that expressed by the Council of Europe Parliamentary Assembly’s Committee on Legal Affairs and Human Rights in November 2004, when it said that,
“the circumstances of the arrest and prosecution of leading Yukos executives suggest that the interest of the State’s action in these cases goes beyond the mere pursuit of criminal justice”.
I want to talk briefly about three aspects arising from the long and continuing saga of this case: first, the circumstances surrounding Mr Khodorkovsky’s arrest and charges; secondly, his treatment in the Russian judicial and prison system since he was detained; and thirdly, wider lessons for the state of justice in Russia today. Starting with his initial detention in 2003, Mr Khodorkovsky was arrested after an investigation into the tax and financial arrangements surrounding Yukos’s purchase of a stake in a company called Apatit. He was arrested to appear as a witness, but within hours of being in custody he was charged with fraud. In 2011, the European Court of Human Rights found that his arrest was,
“unlawful as it had been made with a purpose different from the one expressed”,
and that he had been held in “degrading and humiliating conditions”.
It has been widely thought that the motives for his arrest and prosecution go well beyond the pursuit of justice. Many have noted, for example, that in February 2003, just a few months before formal investigations began, Mr Khodorkovsky accused the Russian Government of large-scale corruption at a meeting with President Putin that was broadcast on Russian television. The European Court of Human Rights found in 2011 that it did not have sufficient evidence to conclude that his first trial was politically motivated and that the charges against him were grounded in “reasonable suspicion”. However, Mr Khodorkovsky’s family and supporters, as well as the Council of Europe committee that I referred to earlier, see his detention as motivated by a desire to weaken an outspoken political opponent.
Whatever one’s views on political motivation, two worrying aspects of Mr Khodorkovsky’s initial prosecution seem clear. First, the arrest furthered a widespread impression that the Russian authorities were engaged in selective prosecutions against those oligarchs and senior businesspeople who had come into conflict with the Putin regime. In the words of the US State Department, the arrest,
“raised a number of concerns over the arbitrary use of the judicial system”.
It damaged not just the Russian economy and the climate for investment but confidence in the consistent application of the rule of law in Russia.
Secondly, it is difficult to avoid the conclusion that part of the motivation behind his arrest and subsequent treatment was to enable the Russian state to regain control of strategic economic assets. A 2009 Council of Europe report spells this out clearly, noting that,
“Yukos, a privately owned oil company”,
was,
“made bankrupt and broken up for the benefit of the state-owned company Rosneft. The assets were bought at auction by a rather obscure financial group, Baikalfinansgroup, for almost €7 billion. It is still not known who is behind this financial group. A number of experts believe that the state-owned company Gazprom had a hand in the matter”.
What representations we have made to Russia about the Government’s view of this first trial, given that this is the issue at hand in Thursday’s judgment? In addition, given that the Russian criminal procedure code stipulates a direct dependence between the court’s acknowledgement of the violation of Article 6 of the European convention and the necessity of cancelling a sentence, can the Minister tell us whether the Government have talked to the Russian Government about our expectation that they should comply with the decision of the court and adjust his sentence accordingly?
I turn now to the second set of issues: the way in which Mr Khodorkovsky has been treated by the Russian judicial and penal system since his trial. The timeline of his 10 years in prison is both depressing and bizarre. In 2005, he was taken to a labour camp attached to a uranium mining and processing plant—at which, according to my quick Google search on it, inmates now have,
“much better chances of survival than in the past”.
In April 2006, he was attacked by a prison inmate. In February 2007, new charges were brought against him just before his parole was due, one year before the Russian presidential election. The emergence of new charges related to the alleged crimes of which he was initially convicted. At the time, President Obama said it looked like,
“a repackaging of the old charges”.
France’s Human Rights Ambassador expressed a similar view, saying:
“It seems odd that Khodorkovsky could be sentenced twice on facts which look the same, or even contradictory … the charges seem to be so unclear … the defence does not even know what the precise charges are”.
In August 2008, he was denied parole for myriad reasons including—famously—because he refused to attend sewing classes in jail. When he was convicted of the second tranche of offences in October 2010, the judge convicted him and colleagues of stealing 40% more oil than the prosecutors had even alleged.
Alongside this, as set out in a joint letter by Human Rights Watch, Freedom House and three other reputable NGOs, there is evidence of: intimidation of defence counsel, Yukos executives and witnesses; repeated procedural irregularities during the second trial over the use of evidence; and prosecutorial misconduct. An assistant to the judge who convicted Khodorkovsky in his second trial in 2010 alleged that the judge had the verdict read against his will. She remarked that,
“everyone in the judicial community understands perfectly that this is a rigged case, a fixed trial”.
It is little wonder, in light of these and other facts of the case, that Amnesty International designated both Mr Khodorkovsky and Mr Lebedev “prisoners of conscience” in 2011 and that grave concerns about his treatment at the hands of Russian justice have been expressed by Parliaments in Italy, Germany and the United States, as well as by President Obama, Angela Merkel and our own Foreign Secretary.
Lastly, I turn briefly to the wider set of concerns, of which this case is merely a particular example, about access to justice in Russia. Other noble Lords have talked about people such as Sergei Magnitsky, Anna Politkovskaya and Natalya Estemirova. This is not an isolated case. Just last week we saw Alexei Navalny, an anti-corruption campaigner, sentenced to five years’ imprisonment for embezzlement. The case bore many familiar hallmarks: ambiguity about the charges; an admission by investigators that the authorities’ inquiries were prompted by political activities on the part of the defendant; and near-universal condemnation of the verdict by Russian media and public opinion, as well as NGOs abroad. Mikhail Gorbachev commented after the verdict:
“Everything I know about this case ... unfortunately confirms we do not have independent courts”.
We are also seeing a more restrictive social and legal climate for free expression since President Putin returned to power. Human Rights Watch has commented that the Russian authorities have,
“introduced a series of restrictive laws”—
the foreign agents law, the treason law and the assembly law”—
“harassed, intimidated, and in several cases imprisoned political activists … and sought to cast government critics as clandestine enemies”.
Does the Minister share my anxiety about these developments? In what forum have the Government shared these anxieties with the Russian Government?
Finally, some may argue that issues of internal due process should remain a matter for national Governments, a point to which the noble Lord, Lord Bates, alluded in his remarks. My honourable friend Emma Reynolds, the shadow Minister for Europe, has said,
“raising human rights issues is not about interfering in the affairs of the Russian Government, but is a way of holding Russia to its international obligations. Russia has signed the European convention on human rights, the universal declaration of human rights, the charter of Paris and the EU-Russia partnership and co-operation agreement … In signing each of those agreements, Russia made a solemn commitment to respect human rights … It is therefore reasonable to ask whether the Russian Government are living up to their side of the bargain”.—[Official Report, Commons, 7/3/12; col. 932.]
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I am grateful to my noble friend Lord Trimble for calling this important debate on the Khodorkovsky case, and I am grateful once again for the quality of this debate and the expertise of noble Lords.
I start by assuring noble Lords that we have raised our concerns about the serious shortcomings in the Russian judicial process and the wider human rights situation with Russia on many occasions. We will continue to encourage them to address these issues as a matter of urgency. Many noble Lords have spoken in detail of the case of Mikhail Khodorkovsky and his business partner Platon Lebedev. We have heard that, as his wealth grew, Khodorkovsky became increasingly politically minded, that he was cautiously critical of the Russian system of managed democracy, and that his relations with the Russian leadership took a downward turn.
The case has highlighted serious flaws in the Russian judicial process. These were compounded after new charges of theft and embezzlement were brought against him, which, critically, ensured that Khodorkovsky would not be released prior to the presidential elections in 2012. Khodorkovsky and Lebedev are set to be released in 2014. I stand with those in this House and in the international community who call on the Russian Government to honour those release dates. It would send exactly the wrong message about the state of the Russian judiciary and the rule of law in Russia if their sentences were extended further.
The European Court of Human Rights ruling recognised many of the serious human rights violations suffered by Mr Khodorkovsky: degrading prison conditions; inhuman and degrading conditions in the courtroom, unjustified detention and unfair hearings. While it ruled that there was no direct proof that the prosecution was politically motivated, the court recognised that the weight of evidence presented by Mr Khodorkovsky’s lawyers would be sufficient to satisfy even the most assiduous of domestic European courts, and that they would refuse extradition, deny legal assistance and issue injunctions against the Russian Government on this evidence. As the Government have intimated on numerous occasions, we, like this House, continue to have serious concerns about the application of the law in Russia.
It is also important to put this discussion in context by setting out the current state of the rule of law in Russia, where recent cases and developments fuel concerns about the politicisation of judgments and the lack of judicial independence. Three years after Sergei Magnitsky’s death in pre-trial detention, there has been no meaningful progress towards securing justice. The investigation into his death has been dropped. The fact that Mr Magnitsky was posthumously convicted of tax evasion earlier this month, by definition without the opportunity to defend himself, simply adds to the already negative perceptions of the judicial process in Russia. We continue to call for a full and transparent investigation into his tragic death, as my right honourable friend the Foreign Secretary did when he met Foreign Minister Lavrov earlier this year.
Just last week my right honourable friend the Foreign Secretary again highlighted concerns about the selective application of law in Russia, this time in relation to the case of Alexei Navalny, which was referred to by the noble Lord, Lord Wood. An outspoken anti-corruption advocate, Navalny has become the face of the Russian opposition movement. But, in an increasingly familiar story, he has been charged with embezzlement. During his recent trial, his legal team were prevented from calling any defence witnesses to give evidence. On Thursday he was sentenced to five years in prison. Huge protests broke out in Moscow and on Friday he was unexpectedly released on bail, pending his appeal. In 30 days we will know the outcome of his appeal. For the moment, he will continue his campaign for the Moscow mayoral election.
One cannot ignore the common threads between these cases—the selective justice and the violations of due process—which lead to a lack of domestic and international faith in the integrity of the Russian legal system. The fact that there are scant signs of improvement is worrying.
In parallel, President Putin’s third term has been characterised by a clampdown on civil society; the noble Lords, Lord Judd and Lord Wood, referred to some examples of this. A string of new pieces of legislation has led to a narrowing of civil liberties, with serious curbs on freedom of expression and the right to peaceful assembly and protest. Russian people now face a fine greater than the average annual salary for violating the “public order”.
NGOs now face the threat of raids by various bodies since a new law requires any non-governmental organisation that conducts “political activity” and accepts foreign funding to bear the label of “foreign agent”. Critically, the definition of what is and what is not political is unclear. In addition, lesbian, gay, bisexual and transgender members of Russian society have been directly targeted. In June, a law was passed which bans the promotion of “non-traditional sexual relations”. This effectively makes all LGBT rallies and sharing information on LGBT issues illegal and subject to heavy fines.
In short, it would be no exaggeration to say that what little progress there has been in Russia on human rights has now stalled. So now, more than ever, we must work to kick-start change. We must work to retain and build on the channels of influence we have available to us from all levels of our network. This must be our focus, and it is one from which we have not shied away.
I remind the House that the United Kingdom is unique among all EU member states in holding annual bilateral meetings to allow formal discussions about human rights. This gives us the opportunity to hold Russia to account on the human rights obligations into which it has entered through its participation in various United Nations conventions and the European Convention on Human Rights.
At the 2013 UK-Russia human rights dialogue, senior officials reiterated the very plain concerns articulated by my right honourable friends the Prime Minister, the Foreign Secretary and the Minister for Europe, and made it clear to the Russian authorities that we hoped to see both Khodorkovsky and Lebedev released according to schedule in the second half of 2014. This dialogue is a forum in which we can confront the Russians’ shortcomings and try to call them to account.
However, this is about more than just setting out our concerns. It is also about offering support to both the Russian authorities and civil society in their efforts to try to strengthen the rule of law in Russia. On a Government-to-Government level, we signed a UK-Russia memorandum of understanding on justice co-operation in 2010. In this, we undertook to exchange information and expertise through contact between legal professionals, officials and NGOs.
There has also been high-level contact between our respective Ministries of Justice. My noble friend Lord McNally attended the St Petersburg International Legal Forum in May this year, which allowed the opportunity for us to offer support and advice on the value of a strong and independent judiciary. Russian uptake of our offers in this area has sometimes been slow since we signed the MoU, but we have a long-term commitment to delivering in this area.
We have also offered practical support and shared UK best practice through a series of projects, including working with the Supreme Commercial Court of the Russian Federation and the Russian probation service. It is true that these projects sometimes take place in a difficult environment but we believe that they have had a direct impact on the rule of law environment in Russia, and in a small way have empowered those elements, described by my noble friend Lord Alderdice, in the Russian system committed to making real progress.
The noble Lord, Lord Hylton, asked specifically about compensation to Khodorkovsky. We understand that the Russian Federation has paid him €10,000, as instructed by the European Court of Human Rights, but the noble Lord, Lord Pannick, may well have more information through his involvement.
Indeed the noble Lord, Lord Pannick, asked about our view of the European court’s delay in dealing with these cases. We recognise the importance of the European Court of Human Rights for the protection of human rights across Europe, but we recognise that it needs to be more efficient and to focus on cases where it really is needed. These were the two priorities that we felt were needed for reform of the court. The Brighton declaration agreed last April has gone some way towards achieving these, and we will continue to push for further meaningful reform when negotiations start later in the year.
The noble Lord asked a broader question about the UK’s approach towards human rights and the European Court of Human Rights. I can assure him that the Government’s commitment to human rights is strong and clear. Human rights contain many of the basic rights and freedoms that have been fundamental to British law for centuries, such as the right to a fair trial, freedom from torture and freedom of speech. These rights are vital in Britain today, as they were in earlier years and as they are throughout the world. The Government agreed in the coalition agreement that their obligations under the European Convention on Human Rights will continue to be enshrined in British law.
My noble friend Lord Alderdice spoke about the case of Pussy Riot. I can assure him that the Prime Minister raised this case specifically with President Putin. My noble friend Lord Trimble spoke about the Litvinenko case. The Government remain committed to seeking justice in this case. We want to see a trial in the United Kingdom of the suspects named by the Crown Prosecution Service. The Russian Government are in no doubt about the strength of our feeling on this case. We believe that the coroner’s inquest can continue to investigate effectively the circumstances of Mr Litvinenko’s death, and we will continue to co-operate fully with it.
My noble friend Lady Williams spoke about asylum cases from Russia. She is of course aware that asylum cases are not determined by foreign policy considerations, and that all decisions around asylum claims are taken according to the relevant UK and international laws, which are subject to strict and impartial judicial scrutiny.
My noble friend Lord Bates spoke about the broader UK-Russia relationship, and said that British foreign policy has struggled to understand Russia—to find a common mutual understanding. I accept that this is important, and that is why, although there are well known differences in the relationship, the Government have continued to favour high-level and frank dialogue with Russia.
In conclusion, it is right that the UK continues to call Russia to account for this situation and other cases. Khodorkovsky is due to be released on 15 October 2014. We must continue to encourage Russia to fulfil its commitments to strengthen the rule of law and promote the independence of the judiciary. President Putin has publicly said he wants Russia to move up the international “ease of doing business” tables, and make Russia a more attractive destination for foreign investment. For this to happen, his Government need demonstrably to support the development of a strong civil society and to demonstrate that the rule of law is respected in Russia. Business leaders must see evidence of the fair application of law. It is that climate that will bring foreign investment to Russia. The release of Khodorkovsky and Lebedev would be seen as a huge step internationally towards that goal.