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Vol. 737No. 8

Tuesday22 May 2012

P A R L I A M E N T A R Y D E B A T E S

(HANSARD)

HOUSE OF LORDSOFFICIAL REPORT

O R D E R O F BU S I N E S S

QuestionsDisability: Black and Minority-ethnic Disabled PeopleSchools: Careers AdvisersOlympic Games: British CompaniesHousing

Electric Personal Vehicles (Use on Highways) Bill [HL]First Reading

House CommitteeMotion to Approve

Groceries Code Adjudicator Bill [HL]Second Reading

Local Government Finance BillFirst Reading

Proceeds of Crime: EUC ReportMotion to Approve

Grand CommitteePolice (Collaboration: Specified Function) Order 2012Misuse of Drugs Act 1971 (Temporary Class Drug) Order 2012Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012Criminal Justice and Police Act 2001 (Amendment) Order 2012Greater London Authority Act 1999 (Amendment) Order 2012Health and Social Care Act 2008 (Regulated Activities) (Amendment) Regulations 2012

Considered in Grand Committee

Written StatementsWritten AnswersFor column numbers see back page

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House of LordsTuesday, 22 May 2012.

2.30 pm

Prayers—read by the Lord Bishop of St Edmundsburyand Ipswich.

Disability: Black and Minority-ethnicDisabled People

Question

2.36 pm

Asked By Baroness Thornton

To ask Her Majesty’s Government what they aredoing to address access to and use of disabilityservices by black and minority-ethnic disabled people,as outlined in the recently published Scope reportOver-looked Communities, Over-due Change.

TheParliamentaryUnder-Secretaryof State,DepartmentforCommunitiesandLocalGovernment(BaronessHanham):The Government recognise the issues around access toand use of disability services by people from black andminority-ethnic backgrounds. Our forthcoming cross-government disability strategy will reflect the input ofdisabled people, including those from black and minority-ethnic backgrounds, and will set out our priorities forensuring that we can develop ways of tackling thoseissues.

Baroness Thornton: I thank the Minister for thatAnswer and the recognition of the particular issuesthat black and minority-ethnic disabled people face,which require a cross-government approach. The impactassessments of the effect of government policies onwelfare reform, for example, are so important becausethis group is disadvantaged. I therefore seek acommitment from the Minister that the cross-governmentimplementation plan will ensure that there is a strongworking relationship between the Office for DisabilityIssues, the Government Equalities Office and her owndepartment. When might that plan be available for usto look at?

Baroness Hanham: My Lords, as I am sure thenoble Baroness knows, the Government are developingthe cross-government disability strategy at the moment.It is cross-government, so the answer to her questionabout whether all departments will be involved isclearly yes. As to when the disability action strategywill be available, there is no date for publication yet asconsultations are still going on. They include peoplefrom black and minority-ethnic groups.

Baroness Gardner of Parkes: Do other factors comeinto this? Admittedly, the culture of black and ethnicminorities often means that people care for their own,perhaps better than we do and perhaps putting us toshame in that respect. Apart from that, does the

Minister think that there is a lack of awareness? Arethese people applying for help, or are they not awarethat they need to or could apply for help?

Baroness Hanham: My Lords, the report identifiesthat quite often they do not apply for help. In part,that is because they are not known to the authorities.A large way of getting around that is for local governmentor health authorities to ensure that people are awareof the local groups that reflect black and minority-ethnicrequirements, and can thereby find out what theirneeds are. However, I accept what my noble friendsays: that in many of these groups there is a familycommitment to look after their own and not to seekstatutory help.

Baroness King of Bow: My Lords, I congratulateScope and the Equalities National Council on thereport, which draws to our attention the fact thatnearly half of all black and minority-ethnic disabledpeople live in poverty, which is staggering. Given thisextraordinary statistic, will the Minister agree to meetScope and the Equalities National Council to discussthis point and look at how impact assessments can beimproved in the future so that black disabled childrenin Britain do not have a 50% chance of growing up inpoverty?

Baroness Hanham: My Lords, I thank the nobleBaroness for that. I cannot give an absolute commitmentmyself because this goes further than the Departmentfor Communities and Local Government, but I willsee who the right person would be and I am sure thatI will be able to give a commitment on their behalfthat that meeting will take place.

The Lord Bishop of St Edmundsbury and Ipswich:The Scope report highlights certain difficulties thatmigrants have in accessing services, with that of languageamong them. Are there any plans for the Governmentto review the provision of translation services throughsocial services?

Baroness Hanham: My Lords, each local authoritycan decide what translation facilities it needs for itscommunities. Some require material to be published intheir own language, but very many others just need toensure that that material is available. It is, of course,necessary now for local authorities and health authoritiesto ensure that they have access to interpreting servicesas and when they need them.

Baroness Hussein-Ece: My Lords, I also welcomethis very important report, which has shone a light onthe desperate need of nearly 1 million people fromblack and ethnic-minority communities—a growingcommunity. I want to press my noble friend the Ministera bit more. Given that demographics mean that thiscohort of people is growing fast, will she considerdeveloping a national race equality strategy, whichwould create a joint implementation plan for these twostrategies, to be led by the Office for Disability Issuesand the Government Equalities Office, to ensure thatthese people do not fall between the cracks and canaccess services?

713 714[22 MAY 2012]Disability Disability

Baroness Hanham: My Lords, I have already mentionedthe disability plan, which is in the process of being putforward, and where that strategy has advice fromblack and minority-ethnic groups. The Governmentdo not think that a race equality strategy would addvery much to the current position, with its focus on thebarriers faced by disabled people. There are dutiesunder the equality strategy, which I think is now 90%introduced. This is not a question entirely of race anddisability but of ensuring that individuals have accessto the services that they need and are known to theauthorities when they need to be so that their requirementsare met. That goes across the board. In short answerto the noble Baroness, we do not think at the momentthat a race equality strategy would add anything to theGovernment’s position.

Baroness Whitaker: My Lords, will the noble Baronessseek to remedy the omission in the Scope report? Ittook no account of the needs of people with disabilitiesfrom the Gypsy and Traveller community. I remindthe House that Gypsies and Travellers are a recognisedminority-ethnic community.

Baroness Hanham: My Lords, they are indeedrecognised as a community, and I am aware that it is acommunity on which people concentrate. There shouldbe access to information from them about their needs.

Lord Wigley: My Lords, the noble Baroness will beaware that the report has suggested very strongly thatthere is a danger of the needs of black and minority-ethnicdisabled people falling between the remits of variousdepartments, including the Government Equalities Office,the Office for Disability Issues and the Departmentfor Communities and Local Government. Why is thathappening? If there is to be an implementation plan,will she give particular attention to finding a way toensure that that aspect is addressed?

Baroness Hanham: My Lords, I think that aspectwill be addressed by the disability strategy. We alreadyhave advice from the black and minority-ethnic groups.The strategy very much takes account of their needsand it then will be a requirement under it that localgovernment, the health service—the people who arecommissioning services—know where the people arewho need them and can identify what they requireindividually. The short answer, again, is that that willbe taken into account across government in the disabilitystrategy.

Schools: Careers AdvisersQuestion

2.44 pm

Asked By Baroness Hughes of Stretford

To ask Her Majesty’s Government why theirguidance to schools on implementing the new dutyto provide careers advice has not required schoolsto employ qualified advisers and provide face-to-faceadvice for pupils who need it.

The Parliamentary Under-Secretary of State forSchools (Lord Hill of Oareford): My Lords, the recentpublication of statutory guidance on careers marks animportant step, as schools prepare for the introductionof the new duty to secure independent careers guidancefrom September. Schools will be expected to work inpartnership with expert careers guidance providers asappropriate to ensure that pupils receive impartialadvice. The statutory guidance is clear; face-to-facecareers guidance can help pupils, particularly thosefrom disadvantaged backgrounds, to make informedchoices and successful transitions.

Baroness Hughes of Stretford: I thank the Ministerfor his Answer. The Government have commendablycontinued the work of the previous Labour Governmentto establish a national careers service for adults, andthe Business Secretary has specified the qualificationsthat advisers must have and that face-to-face advicemust be provided to target groups of adults. Why,then, has the Education Secretary allowed schoolscomplete discretion—because that is what the guidancedoes; there is nothing required of schools—in thequality of service provided to young people? Has nottherefore the Secretary of State for Education reallyfailed in his duty to young people by not setting even aminimum standard of service that every school mustmeet?

Lord Hill of Oareford: My Lords, we had thesedebates at length during the passage of the EducationAct. As the noble Baroness will know, it is theGovernment’s view, and our starting point—and it iswhat we are trying to do across the piece—to trustschools and heads and people running schools tomake the best judgments in the interests of theirchildren. That is something that we are seeking to doacross the board. It is not the case that the guidancedoes not provide any framework at all in terms ofwhat schools should take into account. It is clear, forinstance, that they should secure access to independentface-to-face careers advice when they judge that itis appropriate, particularly for children who aredisadvantaged and with special educational needs. Iagree with her about the importance of careers guidanceand advice, and there are a range of ways in which weare seeking to do that and to increase employerinvolvement in schools, whether through studio schoolsand UTCs or through getting 100,000 employers tocome into schools to explain how children can preparethemselves for the world of work.

Baroness Sharp of Guildford: My Lords, I believethat there has been some discussion of examples ofbest practice in careers guidance being published tosupplement the guidance that has already been issued.Is that likely to be the case? Such best guidance would,I believe, bring out the necessity of face-to-face guidancewhen it is appropriate.

Lord Hill of Oareford: My Lords, it is the case interms of producing statutory guidance. The department’sview, which I think is the right view, is that statutoryguidance should always as short, focused and clear as

715 716[LORDS]Disability Schools: Careers Advisers

possible. But it is the case, as my noble friend mentions,that there could be benefits in having some practicalinformation and additional support to schools to helpthem to understand what their duties are. It is the casethat my honourable friend John Hayes, who is theresponsible Minister, would be very happy to have thatdiscussion with my noble friend Lady Sharp and to seehow that practical information could best be provided.

Baroness Howe of Idlicote: My Lords, the Ministerwill know that there are many industries and careersin which girls are under-represented. Within theGovernment’s plans, do they have specific arrangementsfor seeing that girls are enlightened about some ofthe better paid and more needed careers within thecommunities that they live in?

Lord Hill of Oareford: The general point to whichthe noble Baroness refers would be well illustrated inthe kind of work that we want to do with universitytechnical colleges, trying to make sure that girls, forexample, have the opportunity to study and get thosetechnical qualifications that will lead to well paid jobs.In terms specifically of the guidance, consistent withmy earlier answer, our overall approach is to say thatwe would trust schools to take the best judgment as towhat is in the interests of their pupils, whether that isboys or girls. But I agree with her that careers guidanceis important for children of both sexes.

Lord Brooke of Sutton Mandeville: My Lords, Irealise that most of your Lordships’ House will havereceived qualified careers advice for, otherwise, theywould not be here. However, can my noble friend tellme what qualifications are needed in order to givequalified advice?

Lord Hill of Oareford: My Lords, if I had receivedgood careers advice, I would not be here. In terms ofwhat qualifications we look for in good careers advisers,the accredited providers of careers advice will have tomeet a quality standard set by the national careersservice. However, generally, we can all benefit fromadvice from a whole range of people. We have all hadit in different ways, which is why we are where we are.

Lord Roberts of Llandudno: My Lords, does theMinister really think that one short interview will besufficient? Should there not be ongoing mentoringand guidance? Some children develop late; others changetheir minds—as we all have at one time or another.However, they should be ongoing, well-resourced andthorough.

Lord Hill of Oareford: My Lords, my basic view isthat it is horses for courses. Different children needdifferent things. There will be some who will needintensive support of the sort to which my noble friendrefers. There will be others who know exactly whatthey want to do and will need less.

Baroness Knight of Collingtree: My Lords, will mynoble friend continue to bear in mind that, howevergood the careers advice may be, if the student cannot

get an apprenticeship it is often very difficult to followsuch advice that they may have received? The link isvery important.

Lord Hill of Oareford: My Lords, I agree with mynoble friend. That is why we have rapidly been increasingthe number of apprenticeships for under-18s and over-18s.The best support that one can give to children toprepare for a career is a decent education. That is whyour focus is on what goes on in schools before they are16 because careers advice, however good it is, cannotcompensate if there is a basic deficiency in the educationthat has been provided.

Lord Sutherland of Houndwood: My Lords, in agreeingwith the Minister’s last remark—

Noble Lords: Time.

Olympic Games: British CompaniesQuestion

2.52 pm

Asked By Lord Haskel

To ask Her Majesty’s Government why Britishcompanies which have supplied innovative productsto the London Olympic Games and ParalympicsGames are unable to publicise those products inorder to gain further business.

Baroness Garden of Frognal: My Lords, as suppliersare paid the full commercial rate for their goods andservices and are bound by the no-marketing rightsclauses in their contracts, sponsors who have collectivelyraised in excess of £1 billion towards staging theGames are granted exclusivity for marketing rights. Asthe Written Ministerial Statement that I made on1 May clarified, businesses can state their contributionto the Games in various contexts, including client lists,pitch documents and informal business contexts.

Lord Haskel: My Lords, I apologise for raising thismatter with your Lordships again today but the matteris urgent. Does the Minister recall that the companiesthat I spoke about yesterday have no wish to use thelogo or the Olympic rings or to do anything thatcontravenes the branding guidelines? All they want todo is use the Olympics as a shop window for theproducts and materials that they have supplied to goout and get further orders from other countries—ordersthat Ministers are urging them to get. Will the Governmentnow persuade LOCOG to lift its ban immediately sothat they can get on with it—yes or no?

Baroness Garden of Frognal: My Lords, it is not forthe Government to persuade LOCOG to lift the banbecause these firms will have signed a contractualarrangement when they made the contract with LOCOGin the first place. Of course they can promote theirwares as long as they are within the context of theterms of the contract. As the noble Lord says, we haveto ensure that they cannot promote their involvement

717 718[22 MAY 2012]Schools: Careers Advisers Olympic Games: British Companies

[BARONESS GARDEN OF FROGNAL]in the Games in a way that undermines the exclusivemarketing rights of the London 2012 sponsors. However,there are many other occasions and ways in which theGames will provide a focus for the very businesses thathe wishes to support.

Lord Moynihan: My Lords, while my noble friendthe Minister has responded on behalf of LOCOG,would she support the decision of the British OlympicAssociation which, following the return of the Olympicrights from LOCOG to the BOA on 31 December thisyear, will seek to ensure that all contractors andsubcontractors can seek recognition of their superbcontribution to the London Olympic and ParalympicGames to help them win national and internationalcontracts in the delivery of sports facilities in years tocome?

Baroness Garden of Frognal: Indeed, my Lords, theGovernment wholeheartedly support all the work thatis going on to ensure that after the Games the contractorshave a showcase for the outstanding work that theyhave done. Meanwhile, the Government in conjunctionwith UKTI and a number of other bodies are settingup visits, activities and promotional ways in whichBritish business can be highlighted during the Games.

Lord Anderson of Swansea: My Lords, the Ministerwill be aware that in spite of brave promises at theoutset of a regional spread of these contracts, theamount of contracts going to the regions has beenminiscule but the amount going to London and thesouth-east has been massive. What lessons has shelearnt from the way in which public money has beenused to buttress only those firms in areas which arealready relatively prosperous?

Baroness Garden of Frognal: My Lords, a numberof regional contracts have been awarded as well. Theymay be small in comparison with some of the London-based ones but some very significant contracts havegone to the regions. We certainly hope that in thecourse of the Games when the highlight is on the UKgenerally, we will be able to promote those areas whichare showing innovation and creativity in their business.

Lord Addington: My Lords, does my noble friendagree that although there are some restrictions on theuse of the Olympic symbol they are there for verygood reasons, primarily to allow the Olympic movement,and those sports attached to it, to raise financing andprotect their marketing? Will we ensure that that is notdamaged? These Games will come and go but theOlympic movement supporting the athletes will go on.

Baroness Garden of Frognal: My noble friend isabsolutely right: the Olympic branding is a vital assetto the whole Olympic movement. We have to play ourpart in ensuring that that branding does not get misusedwhile the Games are in London.

Lord Tomlinson: Does the Minister agree that, welcomeas the statement of the noble Lord, Lord Moynihan,was, it is a case of better late than never? A number of

companies have made substantial contributions to theinfrastructure of the Games and have paid high levelsof taxation towards the promotion of them. Shouldthey not get some of the benefits, particularly as weare encouraged to believe that the answer to some ofour economic problems is that free competition willsort everything out in the end?

Baroness Garden of Frognal: My Lords, as I set outin my original Answer, they are able to publicise whatthey are doing in connection with the Olympics aslong as it is within the context of the contract whichthey have signed with LOCOG. They will also be thebeneficiaries of the initiatives going on during theGames to ensure that our businesses are highlightedwhen the international focus is on London during theGames.

Lord Naseby: My Lords—

Lord Wade of Chorlton: My Lords, if one of thebenefits of the Olympic Games is to encourage peopleto get more involved in sport, why not keep the siteopen next year and have an industrial exhibition toencourage people to be wealth creators?

Baroness Garden of Frognal: As was explained inthe debate yesterday, the Olympic site will be closed inorder to be redeveloped for its legacy purposes intothe future. It will be used for sport in the future. Theathletics stadium will host the 2017 world athletics, forinstance, and other events will be going on. However,there is a need to close parts of the site down immediatelyafter the Games so that it can be redeveloped for itslong-term future.

Lord Moynihan: My Lords, I apologise to the Houseas I should have declared my interest as chairman ofthe British Olympic Association.

Lord Stevenson of Balmacara: My Lords, just to geta flavour of what we are actually talking about, whenthe Olympic torch started out from Plymouth, LOCOGofficials confiscated leaflets advertising an Olympicbreakfast at a local café. The officials said that flamingtorch bacon and egg baguettes were on the menu,which contradicted their guidelines. According to theOffice for Budget Responsibility, GDP is set to growby 0.1% because of the Olympics. Presumably, thatfigure would have been much higher if the enterpriseof the supplier companies had not been so grievouslyshackled in their marketing and advertising operationsthat we have heard about. Is the conclusion that wehave to draw from this sorry episode that the Governmenthave missed a golden opportunity here by caving in toLOCOG and to the IOC, to the detriment of oursupplier companies?

Baroness Garden of Frognal: My Lords, I do notthink that there is any question of the Governmentcaving in to LOCOG. We reached agreement withLOCOG and the IOC on the way in which we wouldframe the Games. I remind the noble Lord that it was

719 720[LORDS]Olympic Games: British Companies Olympic Games: British Companies

his Government who set up all these criteria in the firstplace. However, I agree that the case of the flamingtorch sandwich will live on in the memory.

HousingQuestion

2.59 pm

Asked By Lord McKenzie of Luton

To ask Her Majesty’s Government what actionthey propose to take in the light of the housebuildingdata for the quarter to March 2012.

TheParliamentaryUnder-Secretaryof State,DepartmentforCommunitiesandLocalGovernment(BaronessHanham):My Lords, the Government are already taking action.The housing strategy launched in November last yearannounced an ambitious measure to boost house-building substantially, including a £1.3 billion investmentto get Britain building and plans to deliver up to170,000 affordable homes. We are releasing publicsector land for up to 100,000 new homes and helpingbuyers through the NewBuy scheme.

Lord McKenzie of Luton: My Lords, I thank theMinister for that reply, which I suggest is massivelycomplacent but surpassed by Grant Shapps, the HousingMinister, who is on record as saying that “Buildingmore homes” in this country,“is the gold standard upon which we shall be judged”.

Yet there were just 109,000 completions in England in2011—the second lowest total of any year since 1946.Seasonally adjusted housing starts to March 2012were 11% below the December quarter and, for theyear to March 2012, 6% below the previous year.Things are getting worse not better while homelessnessand rough sleeping are increasing—even without furtherhousing benefit cuts coming down the track—andprivate sector rents are rising. At a time when theconstruction sector needs work, people need jobs andfamilies need homes, what are the Government goingto do to step up to the challenge?

Baroness Hanham: My Lords, the housing strategysteps up precisely to the challenge. Some of thecompletions depend, of course, on when the start wasand not all the starts were since 2010, so the previousprogramme had some effect on the programme now.However, the Government are determined that therewill be a big boost to housing starts, to affordablehousing and to private housing. There will be supportfor that in the programmes that we have outlined. Bythe time the spending review is completed there willbe, as I said, 170,000 new affordable homes built.

Lord Vinson: My Lords, I hope the Minister is awarethat the land value of a house in the 1960s was about25%. The land value of a house today is over 50%.That means that the present generation are paying25% more for their mortgages than most of us heretoday did. Most people who have analysed the situationbelieve that this is due to excessive land rationing

through the planning system. I applaud what theGovernment are trying to do in freeing up the planningsystem but we really have to get to the heart of this,release more land and bring supply and demand intobalance.

Baroness Hanham: My Lords, I agree very muchwith my noble friend. The Government are doing justthat. Public sector land is being freed up as we speak.As I am sure the noble Lord knows, there is a planacross all departments to free up any spare land,including Ministry of Defence land. There are alsonow policies to ensure that, where planning permissionhas already been given but the plans have not beenimplemented, there will be greater encouragement tothose people to ensure that the land is developed. Weall recognise that there is a great demand for housing.We very much appreciate the problems that first-timebuyers are suffering, and the delivery of more houses—onwhich we are determined—should help.

Baroness Hollis of Heigham: My Lords, is the Ministeraware of the effect of housing supply on jobs? As mynoble friend Lord McKenzie rightly said, each newhouse built generates two and a half years-worth ofjob—one year for the construction and one and a halfyears for the supply of materials, the furnishings, thecarpets and the rest. Not only will an enhanced housingprogramme meet desperate housing need, it will alsomeet desperate unemployment, particularly amongyoung people who wish to be apprentices.

Baroness Hanham: My Lords, I do not think thatanybody will disagree with what the noble Baronesssaid. There is no doubt that the construction industryprovides jobs and training for young people and, asshe has said, it has many offshoots as a result. It istherefore in everybody’s interests that we manage toensure that the housing market is boosted, and theGovernment are firmly behind that.

Lord Shipley: My Lords—

Lord Alton of Liverpool: My Lords—

The Chancellor of the Duchy of Lancaster (LordStrathclyde): My Lords, we have not heard from theCross Benches during this Question.

Lord Alton of Liverpool: My Lords, I am grateful.Will the Minister share with the House the number ofpeople who are currently on housing waiting lists inthe United Kingdom? Can she also share with us thenumber of underoccupied properties and the numberof empty properties in the UK?

Baroness Hanham: My Lords, I do not have thefigures with me, although I appreciate that they areavailable. Perhaps I may write to the noble Lord andgive them to him.

721 722[22 MAY 2012]Olympic Games: British Companies Housing

[BARONESS HANHAM]Lord Shipley: My Lords, we have recently seen the

establishment of a green investment bank, and somecommentators think that consideration ought now tobe given to a housing investment bank. Will that beseriously considered by the Government?

Baroness Hanham: My Lords, the noble Lord hasmade a point, which I am sure will be noted—andI will make sure that it is.

Electric Personal Vehicles (Use onHighways) Bill [HL]

First Reading

3.06 pm

A Bill to make provision for the use of electric personalvehicles on highways.

The Bill was introduced by Lord McColl of Dulwich,read a first time and ordered to be printed.

House CommitteeMotion to Approve

3.06 pm

Moved By The Chairman of Committees

That a Select Committee be appointed to setthe policy framework for the administration of theHouse and to provide non-executive guidance tothe Management Board; to approve the House’sstrategic, business and financial plans; to agree theannual Estimates and Supplementary Estimates; tosupervise the arrangements relating to financialsupport for Members; and to approve the House ofLords Annual Report;

That, as proposed by the Committee of Selection,the following members be appointed to the Committee:

L Alderdice, L Campbell-Savours, L Craig ofRadley, B D’Souza (Chairman), B Hollis of Heigham,L Laming, L McNally, B Royall of Blaisdon, L Sewel,L Strathclyde, L True, L Wakeham;

That the Committee have power to send for persons,papers and records;

That the Committee have leave to report fromtime to time;

That the Reports of the Committee shall beprinted, regardless of any adjournment of the House.

Lord Trefgarne: My Lords, perhaps I may put justone question to the Lord Chairman. In line 2 of hisMotion, he refers to the Select Committee being ableto offer “non-executive guidance” to the ManagementBoard. Are there not occasions when some plain speakingmight be required, as far as the Management Board isconcerned? Would not the words in his Motion precludethat?

The Chairman of Committees (Lord Sewel): MyLords, I am all in favour of plain speaking but, in myexperience, that often takes the form of non-executiveadvice.

Motion agreed.

Groceries Code Adjudicator Bill [HL]Second Reading

3.07 pm

Moved By Baroness Wilcox

That the Bill be read a second time.

TheParliamentaryUnder-Secretaryof State,Departmentfor Business, Innovation and Skills (Baroness Wilcox):My Lords, the Bill received its First Reading on 10 May,the day after the Queen’s Speech. This reflects the highdegree of importance that the Government place onthis measure and our desire to establish the adjudicatoras soon as possible.

The purpose of the Bill is to establish a groceriescode adjudicator to enforce the groceries code andensure that large supermarket retailers treat their suppliersfairly and lawfully. As a competition measure, this isnot a devolved matter and will affect the entire UnitedKingdom. However, the Bill has been discussed with thedevolved Administrations, who support the adjudicator’sestablishment.

Before I turn to the detail of the Bill itself, I wish toexplain why we must now take action. In its 2008report on the supply of groceries, the CompetitionCommission found that in certain circumstances thebuying power of large supermarkets was potentially acause for concern. The commission found that attimes retailers transferred excessive risks or unexpectedcosts to their suppliers. This in turn was likely to lessensuppliers’ incentives to invest and innovate, whichcould act to the long-term detriment of consumers.

As a result, the Competition Commission made anorder that required large supermarket retailers—thosewith a turnover of more than £1 billion pounds ayear—to incorporate the Groceries Supply Code ofPractice into their contracts with suppliers. The coderequires large retailers to treat their suppliers fairlyand lawfully, and places limits on a number of practices,such as the retroactive alteration of contracts. It appliesequally to British and overseas suppliers.

However, the Competition Commission recognisedthat, by itself, such a code would not achieve the desiredchange. Very few suppliers would be willing to take aretailer to arbitration or to court, due to the buyingpower of the retailers and the fact that the supplierwill be dependent on them for future business. Inconsequence, the Competition Commission recommendedthat an independent groceries code adjudicator beestablished to enforce the code and ensure that it waseffective.

I know that noble Lords on both sides of thisHouse are eager to see the adjudicator introduced. Asa former supplier to supermarkets myself, I am veryaware of the concerns that the code and the adjudicator

723 724[LORDS]Housing Groceries Code Adjudicator Bill [HL]

will address. However, I also know that in most caseslarge supermarkets act well, that they contribute tojobs and prosperity and that the groceries marketoverall is a highly competitive one, which has beenvery effective in delivering low prices and wide choiceto consumers. The adjudicator’s powers must thereforebe both adequate and proportionate, ensuring that heor she can uphold the groceries code while avoidingexcessive burdens on retailers.

The adjudicator will investigate large retailers andhold them to account if they have broken the groceriescode. There will be no restrictions on who can complainto the adjudicator, and all complaints will be kept instrict confidence. This means that the adjudicatorcan receive information from any source, potentiallyincluding direct and indirect suppliers, including farmers,whistleblowers within the large retailers and tradeassociations representing their members. If retailersdo break the code, the adjudicator will have toughsanctions, including so-called “name and shame”,instructing retailers to publish information about abreach. We think that these sanctions are powerfulenough to uphold the code. However, if this provesnot to be the case, the Bill allows the Secretary of Stateto grant the adjudicator a power to impose financialpenalties.

Aside from this investigatory role, the adjudicatorwill have a number of other functions. These are: topublish guidance on when and how investigations willproceed and how enforcement powers will be used; toadvise large retailers and suppliers on the groceriescode; to recommend changes to the groceries code tothe Office of Fair Trading; to arbitrate individualdisputes between large retailers and their direct suppliers,or appoint another person to do so; and to reportannually on his or her work.

I emphasise that the adjudicator’s direct responsibilityis restricted to enforcing the code, which concerns therelationship between retailers and their direct suppliers.By preventing retailers from passing on excessive riskand unexpected costs, the adjudicator will increase thestability of the supply chain as a whole, unlockinginvestment and innovation.

I recognise that in some sectors, some suppliershave concerns around the activities of intermediariesin the supply chain. However, any extension of thecode or of the adjudicator’s role in this way wouldneed to be based on proper evidence and due consultation.Extending the code down the supply chain would belikely to lead to over-regulation, restricting practiceswhich are not problematic and placing an undue burdenon business.

I will now discuss further two areas that I know areof particular interest to those who support the Bill:how the adjudicator will carry out investigations andwhat powers he or she will have to hold to accountretailers who have broken the code. There will be norestrictions on who can complain to the adjudicator.In order to begin an investigation, the adjudicatormust have reasonable grounds to suspect that theretailer has either broken the code or failed to followa previous recommendation by the adjudicator.Investigations are central to the adjudicator’s role inenforcing the groceries code. That is why we have

thought long and hard about what sources of informationthe adjudicator should be able to consider and havelistened carefully to the views of the BIS Select Committeeon this.

When the draft Bill was published last year, itprovided that the adjudicator not only had to havereasonable grounds to suspect a breach of the code tobegin an investigation, but that this had to be part-basedon information either from suppliers or in the publicdomain. At pre-legislative scrutiny, this proved to beone of the most contentious points, with many whogave evidence arguing that the restriction on sourcesof information should be removed. A few also saidthat the adjudicator should be able to begin investigations“proactively”—in other words, whenever he or shewanted, based on no evidence at all.

The BIS committee in the Commons advocated amiddle way: that the sources of evidence should beextended but that proactive investigations should notbe allowed. After careful consideration, the Governmenthave decided not to restrict the information that theadjudicator can consider. We agree that it is possiblethat sources other than suppliers, such as trade associationsor whistleblowers, may have information that wouldbe of value to the adjudicator, and we have thereforedecided that the adjudicator should be able to considerany information that he or she has available. Therequirement for “reasonable grounds to suspect” abreach or failure will continue to provide a necessarycheck to prevent investigations being launched withoutcause.

We have some concerns that, if trade associationsdo not act responsibly, the adjudicator could be burdenedwith dealing with larger numbers of less direct andlower-quality complaints. The Government have thereforeprovided in the Bill that at each triennial review theSecretary of State must assess whether the involvementof third parties is helping or hindering the adjudicator.If the latter applies, he will be able to restrict the sourcesof information which the adjudicator can consider indeciding whether to commence an investigation. Thiswill ensure that trade associations have a clear incentiveto act responsibly, while still allowing them to play afull role.

The Government welcome the way in which pre-legislative scrutiny of the Bill has made the provisionson investigations stronger and better. The version nowbefore your Lordships’ House strikes the right balancebetween preventing proactive investigations or fishingtrips that could be burdensome to retailers and providingthe adjudicator with the necessary freedom to begininvestigations in response to genuine complaints, fromwhatever source.

The other major area worthy of discussion is whatremedies the adjudicator will have to hold retailers toaccount. It is clearly critical that if the adjudicatorfinds that a large retailer has broken the groceriescode, he or she has adequate enforcement powers thatcan be used against the large retailer in question. TheBill provides that the adjudicator will be able to takeone or more of three possible enforcement measures:to make recommendations; to require the large retailerto publish information—so-called “name and shame”;or to impose financial penalties. I ask noble Lords to

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[BARONESS WILCOX]note that financial penalties may be used only if theSecretary of State makes an order allowing this, andan order would grant this power generally, not case bycase.

The range of enforcement measures available willallow the adjudicator to tailor his or her action to thenature of the breach in order to enforce the groceriescode most effectively. It will also allow the adjudicatorto take more than one measure if appropriate. In somecases, it may be most appropriate, for example, both tomake a recommendation and to require informationto be published to inform the wider industry.

Some noble Lords may ask why imposing financialpenalties is a reserve power only. The reason is that theGovernment believe that in a highly competitive marketretailers will not risk reputational damage fromunacceptable behaviour towards suppliers and thattherefore the powers to make recommendations and torequire information to be published will be sufficientto have a significant effect on behaviour. However, ifthey prove not to be sufficient, the Bill contains areserve power for the adjudicator to impose financialpenalties, subject to an order made by the Secretary ofState for Business. This order would need to be madeunder the affirmative resolution procedure, ensuring asuitable degree of scrutiny by Parliament.

That last point raises a final very important issue:how will the adjudicator be accountable? I would liketo assure the House that the Bill provides for a stronglevel of accountability. Every year the adjudicator willbe required to publish an annual report setting outany arbitrations and investigations that he or she hascarried out, any use of enforcement powers and, ifrecommendations have been made to large retailers,whether those have been followed. The adjudicatormust also publish a report after each investigation.Two years after appointment and then every threeyears, the Secretary of State will be required to carryout a thorough review of the adjudicator. He or shewill be required to consult interested parties, publisha report of the findings and lay that report beforeParliament.

Finally, the Secretary of State may abolish theadjudicator if he or she considers that the adjudicatorhas not been sufficiently effective in enforcing thegroceries code or that there is no longer a need for theadjudicator. The Secretary of State may also transferthe adjudicator’s powers to another public body. Allthese powers are subject to the appropriate degree ofoversight by Parliament. The adjudicator’s work touphold the code will support investment and innovationin the supply chain by stopping supermarkets passingon excessive risk and costs to suppliers. It is aproportionate, targeted and pro-growth measure thatwill act in the long-term interests of the consumer.I therefore commend it to the House. I beg to move.

3.21 pm

Lord Grantchester: My Lords, today brings a majorstep forward in the implementation of a more honestand transparent regime in the relationship between themajor retailers and their suppliers. The measure beforeyour Lordships’ House today has Labour’s fingerprints

all over it. It has been a thorough process since the initialreferral by the Office of Fair Trading of the supermarketsin their grocery supplies business to the CompetitionCommission back in 1999. There have been extensiveconsultations, reviews and recommendations sincethe second inquiry in 2008, and this strengthened thesupply code recommending the establishment of anombudsman to oversee supermarket practices.

In August 2009, the Competition Commissionrecommended that this be put on to a statutory basisas no satisfactory voluntary agreement could be reached.In February 2010, our Labour Government broughtin the new Groceries Supply Code of Practice toreplace the Supermarkets Code of Practice, with theintention of putting the adjudicator on to a statutorybasis.

In May 2011, the Conservative-led coalition introduceda draft Bill that has received widespread comment andscrutiny by both the Environment, Food and Rural AffairsCommittee and the Business, Innovation and SkillsSelect Committee in the other place. The Government’sresponse is before your Lordships’ House today.

There is little doubt that this legislation is necessary.Each step along the way has been tested and foundwanting. Suppliers in the groceries market have constantlychallenged the practices of supermarkets. I declare mypast experiences in the supply chain both as a memberof the various trade associations in the farming sectorand as chairman of a farmer-controlled co-operativesupplying milk largely to the retailer the Co-op, as wellas other dairy products to other major retailers.

The reasons for the code and the adjudicator tomonitor and receive representations are as valid todayas they have always been. While it is true that thelargest 10 retailers receive supplies for some majorbrand suppliers such as Coca-Cola and Kellogg’s, themarket is mostly characterised by many much smallercategory suppliers to dominant retailers that are dominantacross all retail food sectors. This brings features intoplay that require a strong code of practice to safeguardthe confidence and investments necessary for suppliersif there are to be benefits to consumers in the longterm.

The Bill not only delivers on the 2008 recommendationsby the Competition Commission; it upholds the willof Parliament, as expressed in the Enterprise Act. Theadjudicator must actively monitor and enforce thecode of practice and provide suppliers with the confidenceto come forward with information on possible breachesof the code.

Having said that, we are assessing the Bill before ustoday against several tests. Does it have the rightmeasures to work in practice and deliver on its promises?Will it bring about change? Does it promote enterpriseand growth, leading to sustainable jobs? Will it stimulateinnovation in the supply chain? Will the suppliers riskusing it? Will it regulate better and in a proportionatemanner at an affordable cost? Will it help consumersenjoy better products at affordable prices that translateinto sustainable returns for supplying businesses?Will it create a positive, forward-looking structure thatis informative, constructive and transparent to allstakeholders, including Parliament, and that will beresponsive and timely in its actions?

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I am sure that many noble Lords in the debatetoday will pick up and examine these points in detail.While it is unfortunate that some noble contributorsare unavoidably absent, I know that many have expressedan interest in joining us in coming forward withamendments to improve these aspects of the Bill inCommittee.

The two main issues that came out of the draft Billconcerned, first, information provided by third partiessuch as trade associations, in addition to direct suppliers,and secondly, whether enforcement powers shouldinclude the fact that the adjudicator may levy financialpenalties. With regard to third parties, we are verypleased that the Government have accepted thisrecommendation and included it in the Bill. It is verynecessary to build confidence in suppliers to provideinformation anonymously without fear of recrimination.This measure also provides a forum for trade to assessthe alleged practice at arm’s length and endorse thefact that any alleged malpractice is serious. It shouldhelp to deter overzealous complaints.

For that reason, we are alarmed by Clause 15(10),which allows the Secretary of State to delete thisprovision and revert back to the position where evidencemay come only from the supplier. Furthermore, thisprovision is subject only to the negative resolutionprocedure. Could the Minister indicate in her responseto the debate why the Government would wish to signalthis intention?

The second area of contention in the draft Billconcerned the adjudicator’s ability to levy fines. Theadjudicator may impose financial penalties under Clause 6but only after rather a rather clunky drawn-out processunder Schedule 3. Why did the Government lose theirnerve when it came to introducing the most effectivedeterrent in the Bill? This is contrary to therecommendations of the BIS Select Committee, whichstated that,“powers to fine should be on the face of the bill, and that theAdjudicator should also be given the power to escalate from alower to a higher-level penalty if Code breaches continue”.

Under the Bill, a persistently offending retailer can befined only after extensive warnings, after the adjudicatorhas published guidance, after the Secretary of State’sconsultations across a long list of organisations, includingthe Competition Commission and the Office of FairTrading, and after Parliament has agreed to a statutoryinstrument. This is regulation at its most bureaucratic.Surely we need something more agile. Will the Ministerexplain why the Government are so averse to givingthe adjudicator the ability to enforce through meaningfulpenalties?

Under Clause 9(6), any fine must be paid into theconsolidated fund. In Committee, we will explore whetherthere should be a more meaningful use for any suchfunds, for example to promote more innovation in thesupply chain. Similarly, complying retailers may wishto see this fund used to reduce their contribution tofund the adjudicator.

The retailers, through the British Retail Consortium,have argued that the Bill will increase prices to consumers.From retailers with over £1 billion of turnover, withmany multimillion pound profits, this seems ratherdisingenuous. The cost of the adjudicator will amount

to less than one-tenth of 1% of turnover. Perhaps theBRC could consider whether the levy to fund theadjudicator could be shared on a basis proportionateto each retailer’s turnover. I am sure that it is valid toconsider in Committee whether there should be somebudgetary ceiling or control on this levy.

It is important to recognise that progress has beenmade since the code was introduced in 2010. UnderLabour, we are heading in the right direction. A lot ofexcellent work has been undertaken by retailers insetting up compliance units, training their buying teams,reforming practices and sending annual compliancereports to the OFT. Asda has published a summary ofits report on its website. However, there is still a longway to go with transparency. Retailers could publishmore information and publish their reports to Parliament,to the adjudicator and to trade associations, and couldmake their customers aware that fair trade starts athome. The OFT could also be more responsive. Iunderstand that retailers liken the OFT to a black holeinto which they submit their reports, never to hearback.

The important element in all this is that the codemust be kept alive, relevant and responsive to changingcircumstances. The adjudicator must be more activethan is envisaged under Clause 13. His reports shouldbe forward looking, seek improvements and be sentwider than merely the Secretary of State and the OFT,as outlined under Clause 14(5).

The Groceries Supply Code of Practice applies onlyto the relationship between retailers and their suppliers.When the Competition Commission published its reportin 2008, it indicated that there was a case for extendingthe code down the supply chain to intermediaries,consolidators and their suppliers. It held back frommaking any specific recommendations on this as it wasconsidered beyond the scope of its remit.

There is much evidence to support the contentionthat processors, under supermarket pressure, merelypass on that pressure down to their suppliers. Indeed,only last week the dairy supply chain was braced withreports of big alterations on pricing without as muchas one month’s notice, each following down the leadtaken by Dairy Crest.

The Government must not be complacent on this.The introduction of the adjudicator is not the end ofthe process; it is the beginning. What will success looklike? Under Clause 16, the “Transfer of Adjudicatorfunctions and abolition etc” is extremely worrisome tothe supply chain because of any possible effect thatit may have on the code and its future direction. Thecode must be a living document that is open forcontinual improvement in order to ensure that theframework is responsive and aggressive and ultimatelyworks in the best interests of all businesses as well asconsumers.

3.32 pm

Lord Razzall: My Lords, notwithstanding the factthat there are 19 speakers in this debate, I am quitecertain that the Bill has overwhelming support in yourLordships’ House. Indeed, having listened to the wordsof the noble Baroness and the noble Lord, LordGrantchester, it rather reminds me of the scene in


[LORD RAZZALL]“Spartacus”. I think most people in your Lordships’House are old enough to remember “Spartacus” andthat wonderful scene when Kirk Douglas, playing theslave, was about to be arrested by the Romans andevery one of the slaves stood up and said, “I’m Spartacus”.The debate reminds me that all three political partieswill claim to be Spartacus and that this was their idea.However, I am sure that that will nevertheless producesignificant support for the Bill.

The noble Lord, Lord Grantchester, made a numberof valid points, many of which I share his view on, andI shall touch briefly on some of them. Clearly thesignificant change that the coalition has made is towiden the groups of people from whom the adjudicatorcan take evidence, particularly the trade associations.As the noble Lord, Lord Grantchester, pointed out,there has been concern that people can go on fishingexpeditions. However, the remedy proposed in the Billis fairly blunt because, were it to be found that thathad been the case, we would revert to the provision inthe previous Bill under which those powers are removed.In responding, the Government ought to indicate whetherthere should be more flexibility here. I am not entirelysure why a trade association which has not beeninvolved in fishing expeditions, and has not been provedto be defective in the way it has approached thismatter, should be excluded under the all-or-nothingnature of Clause 15(10).

The second point that the noble Lord, LordGrantchester, made, which I entirely agree with, is onthe penalties. The procedure for introducing penaltiesseems to be extremely cumbersome. Perhaps theGovernment, when we get to Committee or Report,could look at whether that process should be streamlinedto make the ability to introduce penalties more effectiveand speedy?

I am not sure whether the noble Lord referred tothe question of anonymity, which is a concern here. Clearly,with the power of the 10 leading supermarkets, peoplecomplaining to the adjudicator must have anonymity,but there are circumstances under Clause 18(3) underwhich disclosure of information by the adjudicatormay be authorised. The Government need to look atthis to explain to farmers, suppliers and the tradeassociation under exactly what circumstances theyenvisage that those anonymity rules would be breached.

I entirely agree with the noble Lord’s point that theGovernment should perhaps look at where the finesshould go, notwithstanding the current economicdifficulties. At the moment all fines, if there are any,will go into the consolidated fund. As the noble Lordhas indicated, it would be worth while seeing if we canbe a little more creative about the use to which thosefines are put.

Then, of course, there is the question of the abolitionof the adjudicator. It seems surprising that the adjudicatorunder Clause 16(2) can be abolished with a fairlysimple procedure, and I wonder if the Governmentcould look again at whether there should be a right formore serious consultation.

We have all been lobbied by the leading supermarkets,and nine of them think that the fee proposals willmake a serious dent in their profits. I am delighted to

say, as a regular shopper there, that Waitrose does nottake that view, and it has a structure that the rest ofthe corporate world should emulate. Waitrose makesthe point that there is likely to be an average cost perretailer of £200,000 a year, which for most of themajor retailers is equivalent to 0.02% of their profits,so I do not think that the complaints made by themajor supermarkets really stand up. However, I agreewith the point made by the noble Lord, Lord Grantchester,which is a Waitrose point, when he asked whether itwas fair that everybody should pay the same flat fee,and would it not be possible to have an annual reviewafter which the people against whom there had beenthe largest number of complaints should pay moreand the good boys could pay less? I very much supportthis Spartacus Bill.

3.38pm

The Earl of Sandwich: My Lords, I am anothersupporter. I should declare an indirect interest as thelife tenant of agricultural land in West Dorset and amember of the NFU, but my real interest comes frommy experience of the voluntary sector and fair tradeorganisations such as Traidcraft and the Fair TradeFoundation, many of which have links with the churches,which I know will have a close interest in the Bill, as weshall hear in a moment.

From small beginnings, these organisations havemade tremendous inroads into our supermarkets inrecent years. I also know it has been an uphill strugglefor some of them, just as it has for small farmers andmilk producers, who often operate just the wrong sideof the price margins. It means everything to themto get this sort of guarantee. The noble Lord, LordPlumb, knows about this, as does the noble Lord,Lord Knight of Weymouth, as he comes from theWest Country. I see that the BIS leaflet on the adjudicatorhas a dairy producer on its front cover, which is alwaysencouraging.

Dairy farmers have simply gone out of business allaround us and they still blame the supermarkets. Theyhark back to the time of the Milk Marketing Board,when they received a fairer and more stable price andthere was much more certainty in forecasting andbudgeting. Anyone who has worked with small businessesmust be relieved to see this legislation come forward atlast. Although it is imperfect, we must not hold it upfor long, because of its importance. Although it isessentially a Labour measure, this is not a bargainingchip for the coalition. It is long agreed by all theparties and, while capable of being improved, it mustbe allowed to pass into law—perhaps in time for theadjudicator to start work in the new year. In theMinister’s words, retailers act well on the whole, andbreaches of the code have, thankfully, been rare.

The major bone of contention is of course theextent of powers given to the adjudicator who, in theBill, still appears to be the dog that growls but has onlyone or two teeth. The supermarkets—even the goodones such as Waitrose, which was just mentioned—thatare nominally behind the code are nervous about theBill. Not surprisingly, they resent any interferencewith the market. They think that the code is working;they distrust the influence of trade associations; they


do not like flat levies—or fines, for that matter—andthey would like any powers that enforce the code toremain at the naming and shaming level. Clause 9 saysthat financial penalties on retailers can be enforcedonly via the Secretary of State and,“only if … other powers are inadequate”,

as stated in Schedule 3. It is easy to see that thisprocess could be cumbersome. Clause 19 also stopsshort of requiring retailers to pay levies towards theadjudicator’s expenses, again leaving it to the Secretaryof State. The reserve powers in both these clausessurely need to be strengthened if the adjudicator’soffice is to have credibility.

Then there is the vexed question of third parties,which was mentioned by the noble Lord, Lord Razzall,and the previous speaker. Sainsbury’s says that obtainingevidence from trade bodies and charities is impracticaland would add an unnecessary layer of bureaucracy.On the other hand, the CLA argues that third partiesmust be included and the NFU says that the GCAmust have,“the power to take credible evidence from reputable sources, andto use its judgment to assess its worth, before launching aninvestigation”.

Those points seem very reasonable. The Governmenthave listened to them and the BIS Select Committeehas spoken on this. As a result, the draft Bill has beenaltered to include third parties and, on the whole, toensure anonymity. However, under Clause 15(10) therecould still be restrictions on sources of information.I know that the Minister will cover that in her reply.

I appreciate that there is a risk of overregulationand I look forward greatly to the noble Viscount,Lord Eccles, who will expand on that. The adjudicatorcannot be expected to investigate every complaint andthe Government’s concessions will not satisfy everyone.Problems are bound to occur when retailers hide behindlarger suppliers and middlemen. The British RetailConsortium claims that very few farmers supply directlyto retailers and that most grocery supplies now comefrom large manufacturers such as Kraft and Nestlé,some of whom may have greater market power thanthe food retailers that they supply. We must keep aclose eye on how legislation affects these other suppliers.Under the Bill, their business should be covered by theadjudicator.

I do not intend to play a major part in Committeebecause others have so much more experience, but Iwanted to offer those few words and I shall be watchingto see how far the Minister will have to bend in theface of some of the strong arguments that I know willbe deployed.

3.44 pm

The Lord Bishop of St Edmundsbury and Ipswich:My Lords, my colleague the right reverend Prelate theBishop of Wakefield was very much hoping to speakin this debate but is unavoidably detained elsewhere.I know he will hope to speak at later stages. However,as I come from a rural diocese I found only toofamiliar the stories that he told me about the situationin the part of Yorkshire covered by his diocese and hisconcerns, which go back to 2004 when, on a very coldJanuary night, he picketed the Arla dairy complex

near Wakefield. Since then other noble Lords, particularthe noble Earl, Lord Sandwich, have raised this matterin this House on a number of occasions.

As we have already heard, the impact of unfairprices has been particularly severe in the dairy industry.Before I went to East Anglia, I had seven years inCheshire, a part of the country that had been notedfor its dairy produce, and saw the effect of unfairprices. I am sure noble Lords are all too familiar withall the disturbing stories about retailers and suppliers.

The Church of England is delighted with the speedwith which this Bill has been brought to this Housefollowing the gracious Speech. Detailed work withinthe Church of England on this issue began following aquestion to the 2005 General Synod; that sounds as ifI am claiming that the Church of England had aSpartacus moment about seven years ago. The ethicalinvestment advisory group conducted a detailed studyinto the practices of supermarkets in relation to theirfarmer suppliers. The ecumenical network of locallybased agricultural chaplains and rural officers interviewedfarmers in Yorkshire and the south-west and north-westof England. Such was the fear of some farmers thatthey would recount their experiences only to the churchbecause they trusted it not to betray their confidenceor reveal their identities. Such levels of fear should notbe part of ethical or efficient business practice.

Fairtrade Begins at Home, which was published in2007, was submitted as evidence to the CompetitionCommission inquiry in 2008. It identified practicessuch as: flexible payment terms, which seldom work tothe advantage of the farmer; contracts subject toarbitrary change; retrospective variations to supplyagreements; deductions from invoices without clearreason; and evidence that facilitation payments wererequired from suppliers—one such demand was £500,000.

There have been many positive developments in therelationships between farmers and supermarkets inthe intervening years. However, sufficient problemsremain for a groceries code adjudicator to be necessary,despite the introduction of the groceries supply codeof practice two years ago. It is therefore importantthat the powers outlined here are implemented rapidly.

An important and valuable component of the Billis the proposal to allow complaints from direct andindirect suppliers, as well as from whistleblowers withinretailers and third parties. This is an essential part ofaddressing the climate of fear pervading business withsome of the large retailers. It protects the anonymityof complainants and adds credibility to office of theadjudicator. In the current financial climate, co-operativesand collaborative producer groups remain essentialfor the development of farming businesses, especiallyfor livestock farmers. As indirect suppliers, it is importantthat co-operatives and producer groups operating onbehalf of individual farmers will be able to make acomplaint where the groceries code has been broken.

The decision to include enforcement throughrecommendations on how a retailer applies the groceriescode and the requirement to publish information onbreaches are positive. The adjudicator must be able toguide and encourage as well as have the means to takeaction. Nevertheless, like others who have spoken, theChurch of England is extremely disappointed that


[THE LORD BISHOP OF ST EDMUNDSBURY AND IPSWICH]financial penalties as currently proposed will notaccompany the Bill when it comes into force. Provisionsfor the imposition of financial penalties are containedin the Bill, as we have heard, but they seem to createunnecessary delay. This will result in limitations in theimmediate effective working of the adjudicator. As wehave heard, large retailers have deployed the argumentthat financial penalties will lead to an increase in foodprices but, as their turnover is several billion pounds,the Church of England does not believe that thatargument stacks up. The British Institute of Internationaland Comparative Law reiterated the importance ofteeth—financial penalties—for effective enforcementof fair commercial relationships in food supply chains.

Given that only two years have elapsed since theintroduction of the groceries code and that a fullreport on its functioning is yet to be forthcoming, weurge that the adjudicator role be given three years, ifnot longer, rather than the two years that it has beengiven, to establish itself before it is reviewed. Regularreview of any function of governance is important,but only after a proper period of time has elapsed canan accurate assessment be made.

The first annual report of the groceries supply codeof practice, when it comes, should contain informationwhich will be useful guidance as to how the adjudicatorwill work and how long it might be wise to wait beforea review is conducted. I welcome the Minister’s implicationthat a wider view of the information that can beconsidered has been taken by the Government and wecertainly support the widest possible access to sourcesof information for the adjudicator.

It is, of course, to be hoped that where disputesarise, they will be primarily resolved through the existingGroceries Supply Code of Practice, but inevitablycircumstances will arise when an anonymous directcomplaint to the adjudicator is the only suitable avenueof recourse open. After years of hard work by manypeople, organisations and others, it would be unfortunateif we were to fail at the final hurdle by not providingthe groceries code adjudicator with the budget, staffand financial enforcement mechanism needed to dothe job properly.

3.51 pm

Lord Plumb: My Lords, I declare my interest as afarmer and a member of several producer organisations.It is good to follow the right reverend Prelate and toknow that the church is as keen to see fair play in themarket as any one of us who is actually involved in it.

I congratulate the Minister on her opening statement.She led us well and answered many of the questionsthat we have in mind, but undoubtedly, as amendmentsare put before us, we shall debate some of these issuesmore fully. The noble Lord, Lord Grantchester, raiseda number of points that obviously qualify for amendmentand will therefore be interesting to discuss and to debate.

At a time when we are pressing for the removal ofred tape and market regulations, it may seem ratherstrange to be calling for a groceries code adjudicatorand possibly more controls, but as the Minister hassaid, the road towards the appointment of someonehas proved for more than a decade to be essential. Yes,

the fingerprints of the party opposite have been allover it, but now we need to put our footprint on it andclear it for some considerable time, one hopes.

The supply of groceries was referred to the CompetitionCommission in 1999. The supermarket code of practicewas established in 2006 and the Office of Fair Tradingreferred the supply of groceries back to the CompetitionCommission. All, of course, moving round, backwardsand forwards, and getting nowhere. It recommendedan independent ombudsman then to police a new,strengthened Groceries Supply Code of Practice, havingfailed to get any voluntary agreement.

We now, therefore, have the opportunity, which Ihope we will take advantage of, to create a supply codewith teeth—teeth that can control some of these issues.The dairy industry has been referred to several timesas one in need of recognition, in order to make surethat there is real fair play between the producer priceand what the consumer has to pay. It will, we hope,take over from the supply code which has been in forcefor the past few years and which, as the president ofthe NFU, Peter Kendall, has said, is,“essentially a rule book without a referee”.

It is surprising that many retailers have raised objectionsto the introduction of an adjudicator, since many havebeen taking steps to build stronger relationships throughcontracts with suppliers, but short-term financialperformance can lead to abuse in the market power atthe expense of the farmer and the grower. If supermarketsare operating fairly, surely they have nothing to fearfrom an adjudicator.

Let us not forget that there are something like80,000 suppliers and 10 buyers. That speaks volumes,because it means that the farmers and growers haveto co-operate and be stronger themselves in order todetermine a fair return for their investment.

I hope the Minister will answer some of the questionsthat will be put. She has already answered some but Ishould like confirmation in particular on the adjudicator’sinitiative investigations, which will be based on evidencefrom third parties. It is a crucial point that needsfinally to be clarified. Will retailers be fined—andfined immediately—if they breach the code? Withoutthese powers, the effectiveness and efficiency of theservice will be seriously hindered.

Of course, we do not want an appointment thatleads to all talk and no substance, and another year ofbureaucracy without action. I like to think that thecorrect action can lead to fair market practice and thestimulation of longer-term collaborative relationshipsin the whole of the food chain. It was interesting thatthe editor of Farmers Weekly observed:

“As gatekeepers of the food system, supermarkets are in apowerful position to create a greener”,

and fairer way forward for all. That may be so but,sadly, too many ride roughshod over guarantees ofsupply and prefer to take decisions driven by short-termcommercial goals.

As we all know only too well, food production is, byits very nature, a long-term and risky business. In thisHouse, we talked of the drought not long ago; a weeklater we witnessed floods. Disease and uncertainty arealways with us. Therefore, producers cannot rely on


the adjudicator alone. We need strengthening amongco-operatives and co-operation between farmers toimprove their bargaining power. I have to say that thathas been a theme of mine for the past 50 years. Therehave been improvements but there is a lot of room forgreater collaboration.

Therefore, I congratulate the Minister on many ofthe issues that she has put forward, including amendingthe Government’s initial proposals in last year’s Bill.The current Bill states in Clause 4 that the adjudicatorcan launch an investigation where there are “reasonablegrounds to suspect” a breach of the code. The tradeshould welcome the crucial element in safeguardingthe adjudicator’s duty to protect the identity ofcomplainants.

As we develop the debate on this extremely importantissue, we shall hear many of the myths that comeforward. For instance, it is already said by retailersthat a supermarket adjudicator will just add to retailers’costs and push up shop prices for customers. It isestimated that the cost will be around £200,000 a year.The cost of the adjudicator to retailers will be aminuscule proportion of the turnover of the 10 largestsupermarkets involved. Only those supermarkets witha turnover in excess of £1 billion are covered by theadjudicator, meaning that the cost will represent 0.02%of turnover at most and usually much less.

Another myth is that both famers and the Governmentargue for less regulation, whereas an adjudicator simplyadds red tape to business—the point that I made in myopening remarks. However, some regulation is necessary.Indeed, some is desirable to ensure that markets functionfairly. It is worth remembering that the CompetitionCommission recommended the establishment of astatutory adjudicator only when it became clear thatno voluntary solution was forthcoming. The retailsector was given the opportunity to provide its ownsolution to monitoring and enforcing the code ofpractice but was unable to do so. Regulation is beingbrought forward now because we see it as the onlysolution after all other avenues have failed.

I support the legislation coming forward. It is aunique situation, since all parties agree in principle.Therefore, I hope that we will not spend too muchtime in Committee arguing between ourselves. Let ushave some action and get on with the job.

4 pmLord Haskel: My Lords, I thank the Minister for

explaining this Bill because, for once, I am able to saythat I welcome a government Bill—with some scepticism,I might add. Nevertheless, it is a big day when I cansay that. As my experience is not in food, I am hesitantto speak about the food business, especially aftersomeone as experienced as the noble Lord, Lord Plumb.Like him, I am in favour of codes in business because,like him, I think markets need rules.

When I first started in business—many, many yearsago—one of my first tasks was to go and sell our newflame-retardant fabric to the contracts department ofJohn Lewis. It has a big business in furnishing theatres,hotels and restaurants. I went to its buying offices inNew Cavendish Street, did my presentation and theywere quite interested. On the way out there was a signtelling you who to contact if you did not think you

had had a square deal. “That is a company I wouldlike to do business with”, I thought, and I did for30 years. Waitrose is part of John Lewis and I imaginethe adjudicator operated there too; so it has beendoing this for a long time. I entirely agree with thepoint in its briefing—a point my noble friend LordGrantchester made—that the costs should be allocatedaccording to the number of complaints, instead of aflat levy. In this way you reward compliance.

We were a tiny company then dealing with a largeone, and the fact that there was a dispute adjudicatorencouraged us to bring all our new products to JohnLewis. It benefited and so did we. This is why Iwelcomed the grocery code Labour introduced in 2009.This Bill enforces that code because presumably itneeds new powers of enforcement. This is fine but myconcern is that if you go too far enforcing a code itceases to be a shared interest—the noble Lord, LordPlumb, implied this. It will then deliver more hopethan reality. If you have a serious argument and wantcompensation you want an arbitrator, not just anadjudicator. From what the Minister said, I think theBill leaves suppliers and supermarkets to get their owncompensation from each other unless the Secretary ofState intervenes, and that is a big step.

Another difficulty is that modern business can becomeso complicated, it is hard for an adjudicator to apportionblame. As my noble friend Lord Grantchester explained,there are now numerous intermediaries creating greyareas all along the supply chain who will be outsidethe code. It is also very difficult to assess competitionup and down the value chain. It is easier to assessbetween firms selling similar products.

As ever, the devil is in the detail. Does the Ministerrecall the regulation about extended warranties?Everybody thought it was a wonderful idea that thecost should be clearly displayed to the consumer onthe shop counter—simple. The arguments that ensuedabout where the notice should be put, the wording, theprint size and the type face were such that a simpleidea became ineffective. Looking through this Bill, tome it looks too complicated and could benefit fromsimplification.

The noble Lord, Lord Razzall, used the wordcumbersome, and I think he is probably right. I imaginethat the Bill steers clear of arbitrating claims becauseof the difficulties of establishing costs. Again, thereare so many complications: intangible costs, allocatingoverheads, hidden commissions, intermediaries, grants,hidden marketing and financial costs, and all the othersurprises that we learn about through experience. AsI said, to be effective it has to be kept simple.

At the end of the day the adjudicator will settle thedispute by interpreting the contract within the code.In practice, that is probably as much as one can expect.The Secretary of State will be very cautious aboutimposing a financial penalty, because researching allthese details and costs makes it difficult and time-consuming to establish a loss. The noble Lord, LordPlumb, said that this will make for less red tape, butthe Minister will be aware of the calls from the Benchesbehind her for less regulation and freer markets tomake British business more efficient and more competitive.With this Bill, their Government are introducing more


[LORD HASKEL]red tape and a new quango. The noble Earl, LordSandwich, mentioned this. What is the Minister’s responseto their concerns?

I am less troubled, so I welcome the Bill. Sortingout grievances between retailer and supplier will eventuallybenefit the consumer. It will also benefit the supplierand their communities. But it has to be kept simple.My scepticism concerns the value of this Bill in assistingto arbitrate financial compensation. At the end of theday, if the matter is serious, that is what most disputingparties seek. This reminds me of the Bill that theLabour Government introduced regarding promptpayment. It did not solve the problem, but it madethings better, and there is nothing wrong with that.That is what this Bill will do, and that is why in generalI wish it a fair passage.

4.07 pm

Baroness Parminter: My Lords, in the 1940s it wastypical for people to spend between one-fifth andone-third of their income on food. Now it is onlyabout one-tenth, but much of what we spend on food,in retail shops such as supermarkets, does not make itback to the producer. Companies and growers chasegreater and greater volume to cover the overheadsimposed by the all-powerful customers. Commercialunethical practices are commonplace in the food chain,but with the level of dominance achieved by thesupermarket it is an invidious process and prospect fora supplier to complain. Moreover, as margins becomethinner, there is a worrying resulting underinvestmentin creating sustainable and resilient farm businesses.For these reasons, I welcome the announcement in theQueen’s Speech of an independent adjudicator to actas an ombudsman with authority and confidentialityto investigate and hold large retailers to account, ashas been promised.

The Competition Commission has highlightedwidespread examples of abuse, but this is not justlimited to the usual suspects, with cases being reportedof even the most socially responsible supermarketsdemanding hundreds of thousands of pounds fromsuppliers. Take just one sector: horticulture. Vegetableand fruit growing is intensely competitive and themarket is dominated by the oligopoly supermarkets.These major customers have been very successful inpassing overhead costs back up the chain to suppliers,and margins are dangerously thin—with 1% on turnoverbeing typical. This is contributing to a major andworrying underinvestment in horticultural research.With the rising tide of obesity and health problems,we want more people to eat more fruit and vegetables,but if we are to make fresh produce more comparablein cost to calorific and less healthy food we must havegood research funding.

We know that more people want to buy Britishfruit, which is convenient and affordable. Indeed, onemajor retailer is looking to source 50% of its fruitfrom the UK by 2020, when presently it sources only10%. We know that rising temperatures in the UK, asidentified in the UK 2012 climate change risk assessment,could be an opportunity for growing more blueberries,apricot, grapes and peaches here.

However, how can you invest for the future whenmargins are that tight? It is to be hoped that thegroceries code adjudicator can play some part inovercoming some of the abuses in the system and thushelp deliver some of the necessary research and investmentto secure resilient farm businesses. To do that thegroceries code adjudicator needs strong powers. I findit disappointing that the Government have decidedagainst putting the powers to impose fines into theBill. To do so would have echoed the views of the 2011report by the House of Commons Business, Innovationand Skills Select Committee. I am sure that we willdebate during the passage of the Bill the holding backof automatic powers to fine, although I accept that theBill gives the adjudicator the power to impose fines ifMinisters that agree other remedies are not working.

In the absence of such an automatic power to fine,the ability to name and shame is the most potent stickthat the adjudicator has. It must be used well. Theadjudicator’s annual report needs to be transparentabout which businesses it has found wanting, and todo so in a way that allows for meaningful publicscrutiny. The Explanatory Notes to the Bill make itclear that the annual report should contain informationthat is useful to the Office of Fair Trading in monitoringthe groceries supply order and to the Secretary ofState in reviewing the adjudicator and the users of thegroceries code generally. I would like to see addedclear information of the use to consumers and to thegroups that champion their rights so that consumerscan make informed choices about where they chooseto shop.

I welcome the Bill and the proposals that theGovernment will regularly review the performanceand effectiveness of the adjudicator in undertaking itsrole. This is a complex industry with a non-binaryfood chain in many cases, and the Government areright to keep the door open to amending the scope,power and function of the adjudicator in future.

One area that I hope might be looked at in such areview is more incentives to reward compliance withthe code. This issue has been echoed across the Houseby the noble Lords, Lord Grantchester, Lord Razzalland Lord Haskel. Forcing supermarkets that burdenthe office of the adjudicator with a large number ofcomplaints to play a larger proportion of the adjudicator’sfixed costs could be a very valuable way to incentivisesupermarkets to adhere to the code and minimise thenumber of complaints made. This is surely what everyoneon all sides of the House wants.

4.11 pm

Lord Palmer: My Lords, in principle, I do not thinkthat we need more quangos. However, I, too, welcomethe Bill and congratulate the noble Baroness on herfluent and succinct introduction, which was done withher usual charm and flair.

From my earliest memories I have been involved inthe food chain, initially as a prime producer and thenas a biscuit manufacturer. I have now done a fullcircle; I farm in one of the most beautiful parts of thecountry, the Scottish Borders. I am delighted to seethat the Bill applies to Scotland. I also own a shop,mainly selling souvenirs and biscuits, with a tiny turnover


of approximately £4,000 per annum. I also declare aninterest as a member of the National Farmers’ Unionof Scotland.

It is important to realise how incredibly cheap foodis today. The noble Baroness, Lady Parminter, madethis point: 45 years ago, 40% of the national wagewent on food; today, it is just under 8%, which is ahuge difference. Twenty years ago, as a farmer I wasselling malting barley for £160 per tonne, the same as Igot two years ago, despite the price of fertiliser triplingfrom 20 years ago and the price of fuel nearly quadrupling.These are grim statistics that emphasise the hugepowers that the supermarkets have. Perhaps moreimportantly, however, prime producers are being squeezed,and hopefully this is where the Bill will make a difference.

While not wishing to throw a spanner in the works,I would be interested to know why the noble Baronessthinks that “groceries code adjudicator” is the correctterm. Some influential organisations have said thatperhaps a better and more understandable title wouldbe “supermarket ombudsman”. I am sure that that wouldmake more sense to those who shop in supermarketsand to those who supply them. When the noble Baronesswinds up the debate, will she inform the House of theexact logistics of how this very important person willbe appointed?

As other noble Lords have mentioned, the adjudicatormust have real teeth. He, or she, must be able to levyrealistic financial penalties from its very inception. Asother noble Lords have also mentioned, in that all themain political parties believe in its conception I wishthe Bill all speed and hope that it can become lawbefore the end of the year rather than, as rumour hasit, not until next year.

4.15 pmBaroness Byford: My Lords, I am happy to follow

other noble Lords in saying how much I welcome theBill. I remind the House of my family’s farming interest.Indeed, we used to supply pigs to Waitrose but we nolonger have them. Many suppliers have good workingrelationships with supermarkets. I would hate anybodyreading this debate to think that that was not true.However, there are circumstances in which thoserelationships break down and are abused. Therefore, itis right that the Government have quickly broughtforward this Bill.

The Bill has been eagerly awaited for months bymany hardworking and dedicated food producers. Theyfeel, rightly or wrongly, that large retailers make asignificant portion of their considerable profits bybrowbeating smaller suppliers into paying for a varietyof selling techniques used in the stores, by failing tohonour orders they have placed and by altering purchaseprices downwards without notice.

As others have said, the groceries code was establishedby the 2009 groceries supply order, which itself arosefrom work carried out by the Competition Commissionbetween 2001 and 2008, so the measure has been along time in gestation. That at least tells us that theallegations made by producers have some validity andthat the issue has been “live” for a long time.

I am hopeful that the role of the adjudicator will beself-limiting and that eventually he or she will not beneeded. Either it will be found that the large retailers

have reorganised and trained their staff to observethe code so that there is no longer a problem or theadjudicator and his staff will rapidly ensure that suchreorganisation, training and observance will becomethe established way of working.

The EFRA Select Committee sent sevenrecommendations to the BIS committee, four of whichI have highlighted as the Government have listenedand taken them on board. First, the ability of suppliersto make anonymous complaints is fundamental to thesuccess of the groceries code adjudicator. Secondly,the adjudicator should have the power to launch proactiveinvestigations. Thirdly, third parties such as tradeorganisations should be able to make complaints tothe adjudicator on behalf of suppliers, but appropriaterestrictions would need to be included in these provisionsso that they are not abused. Fourthly, the adjudicatorshould have the power to levy financial penalties withoutthe need for an order from the Secretary of State. I amgrateful that the Government have taken on boardsome of these recommendations but we shall return tothese issues in Committee.

I wonder whether it is just me but I was struck bythe rather “folksy” way in which the contents of theBill are set out. That worries me. Why are the headingsbetween each clause in the form of questions? Forexample, the question: “How does the Adjudicatorarbitrate disputes?” appears before Clauses 2 to 13.The question: “What are the Adjudicator’s reportingrequirements?”appears before Clause 14. Other questionsfollow in the same vein. For example, “Will thislaw mean other changes to the law?” appears beforeClause 21. I hope that when she responds, my noblefriend will say that this approach will not give theimpression that the Bill, as law, is open to doubt ordispute. It is unusual. Having dealt with many Bills overthe years, I found it slightly strange.

I must reinforce what other noble Lords have saidon the need for the Bill. Over the years there has beena real climate of fear among some suppliers. I am verygrateful that the Government have recognised this andare enabling third parties to bring forward evidence. Itis impossible for suppliers to do this themselves becausethey feel cut off at the knees and there is nowhere elseto go. They run the risk of losing a contract—even onethat has been reduced—and probably not getting itagain in the future.

There have been few changes from the draft Billand most of my detailed questions will come up inCommittee. However, I feel that there are—or maybe—issues of principle involved in the significance ofsome of the alterations as well as in the basic content.The Minister may therefore wish to comment on thefollowing points. In the draft Bill there was a clausetitled “Investigations: information” which introducedSchedule 2—then titled “Investigation Powers”. Inthis Bill, the clause has gone and Schedule 2—nowtitled “Information Powers”—is first introduced throughClause 4, “Investigations”. These are significant changesin terms of the detail of the work the adjudicator willbe empowered to do. I would be grateful for someclarification.

The nature of the adjudicator’s staff is vague, witha reference in Schedule 1 to,“staff working for the Adjudicator”.


[BARONESS BYFORD]Schedule 1 also states that the Office of Fair Trading,“may provide staff, premises, facilities or other assistance … (withor without charge)”.

There is also reference to a “Deputy Adjudicator” and“acting Deputy Adjudicators”. All of this seems toindicate a very small establishment and yet the adjudicatoris charged, under paragraph 15 of Schedule 1, withkeeping proper accounts, with preparing an annualreport, under Clause 14, and with receiving both financialpenalties and costs. Will the Minister supply moredetail on the adjudicator’s establishment?

Clause 15 held my attention for some time. There isa potential imbalance between the large retailers, all ofwhich have to be consulted by the Secretary of State,and those representing the interests of the suppliers,where he is required to consult only one. How doesthe Secretary of State intend to proceed with suchconsultations? Will the Minister also expand on thereasons for and the intention of the introduction of anew Section 4A, to which other noble Lords havereferred, by Clause 15(10) of the Bill?

Clause 18 allows for the disclosure of confidentialinformation,“for the purpose of an EU obligation”.

I am not the only one to have referred to this. Who willdecide what is obligatory and how and when will thisdecision be communicated to the adjudicator?

I do not wish to go into any greater detail at thisstage, but there are some basic questions to whichresponses from the Minister would be enormouslyhelpful. All of us welcome the Bill. We want to see fairtrade for UK producers and overseas producers. Wealso want to make sure that financial penalties do havean effect on the way in which those who do notcurrently honour the code will in future honour it.

4.24 pm

Lord Borrie: My Lords, I must declare an interest asa former director of the Office of Fair Trading. Unusually,I am able to thank the noble Baroness, Lady Williamsof Crosby, who is in her place today, because sheappointed me to that post when she was Secretary ofState for Prices and Consumer Protection back in1976.

Baroness Williams of Crosby: I may say, simply, thatit was a good choice.

Lord Borrie: I ceased to be director in 1992, andI need not therefore disclose my current interest—I donot have one.

I generally welcome the Bill because it is designedto deal with a real problem, many of the details ofwhich have been mentioned by previous speakers, andprovides a remedy to limit the market power of the top10 major supermarkets—a power that they have overthe supplier, whether the supplier is a farmer or a foodproducer of some other kind, who normally has, oroften has, much less bargaining strength at their elbow.A groceries code was promoted by the CompetitionCommission and agreed to some years ago bysupermarkets, requiring them to deal lawfully and

fairly with their suppliers. However, it was not until 2008that the commission proposed an adjudicator to enforcethe code.

The Bill is the Government’s welcome and positiveresponse to the commission’s proposal. It is intendedthat the adjudicator will be appointed by the Secretaryof State and operate from within the Office of FairTrading, sharing premises and back-office facilities.Under another Bill that is imminent and will comebefore us soon, the Office of Fair Trading is to bemerged with the Competition Commission. No doubt,it will be then that the adjudicator will be housedwithin the new combined Competition and MarketsAuthority.

Perhaps it is too late to raise the following point,but I do so in part because my noble friend LordHaskel spoke of the cumbersome nature of some ofthe provisions in the Bill. I am not at all sure why therewas a need at all to go to the lengths of creating anadjudicator under a special statute as a separate so-called“corporation sole”, plus a deputy adjudicator, as thenoble Baroness, Lady Byford, mentioned, instead ofsimply giving the power and responsibility underthe Bill to the Office of Fair Trading or its successororganisation. Why have a completely separate organisationwith apparently separate back-up facilities? I certainlysee no case for adding further to this special statutorycreation by providing for a right of appeal, as someorganisations, such as the British Retail Consortium,have been arguing.

Under the Bill, the supplier will be enabled to makea confidential complaint to the adjudicator and, morecontroversially, third parties such as trade associations—be it the National Farmers’ Union or the British RetailConsortium—may also make complaints. If theadjudicator finds on investigation that a breach of thecode has occurred, he may make recommendations.As we have heard several times, he may name andshame as appropriate, but he may not impose finesunless the Minister agrees that other remedies are notworking. If that is the case, the Minister then has tointroduce secondary legislation afresh, which requiresthe affirmative resolution of both Houses of Parliamentbefore the financial penalties can be exercised by theadjudicator. I do not think that I am the only personwho feels that such a power is, unfortunately, notprovided in the Bill. Why not? If it was provided for inthe Bill, why should not the adjudicator, who surely weare meant to trust from the outset—it would surely bea good appointment, and all the rest of it—be able todecide from day one of his statutory existence whethera fine is justified in a particular case?

One limitation on the adjudicator’s powers mademe wonder. The noble Lord, Lord Palmer, who is notin his place at present, thought that “ombudsman”was a suitable alternative word for the adjudicator.That is not at all appropriate on the basis of what is inthe Bill. The serious limitation on the adjudicator’spowers is that if on investigation he finds that a largeretailer has broken the code, and the breach affects aparticular supplier, the finding will not constitute adetermination of liability of the retailer to that supplier.That is specified in the Explanatory Notes and seemsto be perfectly clear. It therefore seems odd to refer to


the adjudicator as an ombudsman because ombudsmendecide complaints between two businesses, or betweenone individual and one business. Under the Bill, if thesupplier wants a civil remedy—if he wants damages orcompensation for some behaviour of the supermarket—hemust make his own claim in the courts or by way ofarbitration. As I read it, although I would be happy tobe corrected, the person who cannot do the arbitrationis the adjudicator; he would be regarded as havinga conflict of interest, having previously done theinvestigation.

I am assuming that, under the Bill, the price thesupplier has to pay for being able to make his complaintanonymously is that he cannot bring a civil claim.There would be a serious disadvantage in the wholesystem envisaged in the Bill if the complaining supplierhad to identify himself in the complaint right at thestart. That would seriously jeopardise his ongoingrelationship with the supermarket, as others have said.However, if the identity becomes known in the courseof the adjudicator’s investigation, would not the basisof disallowing the adjudicator from determining thesupermarket’s civil liability to the supplier disappear?Certainly, there are some disadvantages in having notonly the adjudicator but also some civil court orthird-party arbitrator going over the same ground, thesame evidence, all over again, preventing the adjudicatorfrom dealing with the civil claim and, indeed, behavinglike an ombudsman. That would be unfortunate.

Finally, I add a point which has been referred to byothers. Under Clause 19 the adjudicator may request alevy on all large retailers to cover the expenses of thenew office. Would it be more appropriate to make sucha levy mandatory?

4.33 pmBaroness Randerson: My Lords, I join with other

speakers in supporting the principle of this Bill andthe vast majority of its content as well. Indeed, thecross-party support here has been exceptional. Theprocesses that the draft Bill went through have definitelyassisted that support.

It is a rare cause that unites both trade unions andsmall business organisations in its support. It is importantto remember that this Bill is not just about the smallsuppliers, which are most obviously immediately affected;it is also about consumers. The excessive risk and coststhat have been forced on occasions on suppliers bysome supermarket chains have deterred investmentand innovation. It is innovation that helps consumersin the long run.

Seventy-five per cent of the groceries market is inthe hands of the top five retailers. That market is justabout the most reliable and stable market imaginable.It has all the conditions of monopoly power, and thatmonopoly power has increased dramatically over theyears. The Competition Commission statistics showthat the major chains account for 98% of grocerysales. Tesco is the giant of them all, accounting for30%. The spider’s web of street-corner shops, as wellas the large supermarkets, has of course increased andreinforced that power. Possibly most astonishing isthat, despite the recession, there are still 44 millionsquare feet of projected new supermarket developmentsin the pipeline, so the expansion has not stopped.

The Competition Commission has identified theadverse effect on competition of grocery retailers passingunexpected costs and excessive risks down the supplychain. Ultimately, the extra costs of this are imposedon producers, whether or not they deal directly withthe retailers, and that is an important point in this debate.As many noble Lords have pointed out, this is not anew issue; it has been debated thoroughly over thepast 15 years. I was a Member of the Welsh Assemblyfor 12 years, and the NFU and the FUW were veryvocal in their support for the need for a supermarketombudsman, as they called it.

The impact of the dominance of large retailers hasbeen phenomenal—on the way we live, on what we eatand on the shape of our towns and villages. The largeretailers have given us cheap food but they have alsocreated out-of-town shopping, with its impact on thenumber of cars on the roads and the distance we haveto drive, as well as its social impact on those who haveno car. In many places, it has led to empty shops in ourtown centres, which can be desolate in some poorerparts of the country. Very importantly, it has led to thedelocalisation of our food shopping and, hence, ofour diet. This is all part of a very fundamental movementin the way we live our lives, and the adjudicator is animportant part of that picture.

In the Explanatory Notes, several references aremade to the small scale of the adjudicator’s office andthe low budget that it will have. I greatly support andappreciate the need to save money and I am not tryingto argue with that principle. However, given that thereare more than 300,000 farmers in the UK and morethan 6,000 food and drink manufacturers, I wouldwelcome some information from the Minister aboutthe basis for this calculation and the assumption thatthe budget will be low. Because the costs will be coveredby a levy on the retailers—and several noble Lordshave pointed out how small that levy is proportionately—itseems that the total budget for this office will be some£2 million a year. However, because the climate of fearwill be removed, we can confidently expect a bigincrease in the number of complaints as a result of theBill becoming law, and I wonder whether the officewill have the capacity to deal with them.

I share the concerns of many others that fines willbe introduced only as a second step and even then by arather cumbersome process. I will listen carefully towhat the Minister has to say on this point, as at themoment I feel that it would be better to have fines fromthe start as one of a range of actions—not necessarilythe only action—that the adjudicator can take. I sharethe concerns about a flat-rate levy. Although a mechanismis built into the Bill to enable the adjudicator to orderculpable retailers, or indeed vexatious complainants,to pay costs, I believe it is unlikely to create a truly fairsystem that would financially encourage retailers toavoid breaches of the code.

Like other noble Lords, I have received briefingsfrom a variety of organisations. I have to say that theyare mainly unusual in their fulsome praise for theGovernment in the action they are taking in this Bill.Not surprisingly, the British Retail Consortium arguesthat this Bill is not necessary and that everything nowworks well. In fact, I believe that once the adjudicator


[BARONESS RANDERSON]is in place we will see a big increase in complaints, sothe British Retail Consortium should see the writingon the wall and, instead of arguing with the principleof the Bill, it should do what Waitrose has done in itsbriefing to many noble Lords—attempt to raise issuesthat may help to create a fairer and more effectivesystem.

In conclusion, I believe that this is a very soundBill. I have concerns about some small details but itsprinciple is definitely right.

4.41 pm

Lord Howard of Rising: My Lords, I must declaretwo interests: I am a farmer. Even more relevant tothis debate, I am landlord to a tenant who is a directsupplier to supermarkets. I therefore have first-handknowledge and experience of what we are discussingtoday. I shall deal with the general points rather thanthe detail, which will probably be more appropriate inCommittee.

Generally speaking, I find it difficult to understandwhy there should be a code at all, let alone an adjudicatorto police it. There is no obligation on anyone to supplya supermarket. People and businesses do so because itis a commercial decision that benefits them. In myown case I delay the rent due from my supermarket-supplier tenant to tie in with when he is paid by hiscustomer. It is an agreement freely entered into; if Idid not like it, I would not have to do it. I could let theland to someone else and be paid more promptly.

Leaving aside the pointlessness of trying to interferein markets, with all the unintended consequences thatinevitably crop up, there are other faults in this Bill.There is no doubt that, as drafted, the Bill will imposesubstantial costs on the supermarkets, which in turnwill be paid for by their customers. There is no capon what the adjudicator may spend for which thesupermarkets and their customers will then have topay. Complaints are not limited to parties to a contract.Anyone—even someone with no involvement in atransaction—can complain to the adjudicator. It isalmost incredible that someone with no connection toeither side of an agreement can complain about thatagreement. As no one knows what the adjudicator willregard as reasonable grounds for a complaint, it opensthe door to more costs with the possibility of complaintupon complaint, with the supermarkets and ultimatelytheir customers, again having to pick up the bill.

Major supermarkets already employ departmentsto deal with the Groceries Supply Code of Practice.On top of that they are being asked to pay for theadjudicator and his staff. If the adjudicator resemblesany other office of a similar type it will grow exponentially.Can your Lordships imagine the self-discipline requiredto control costs and limit activities when all that isrequired to pay for expansion is to say, “Hey you—abit more this year please”? What is it all for? Theguidance notes tell us of “potential improvements” inquality and price. Do not the Government know thatthere is a cut- throat business out there where anysupermarket not offering the best quality and choicesoon suffers? We need only to look at how quickly theresults of the large supermarkets can deteriorate to see

that. How did the supermarkets get to where they aretoday? Guess what? They offered choice and quality atattractive prices with no government interference.

Lord Vinson: Would the noble Lord be kind enoughto give way? If supermarkets sell milk for less than theprice of water, does not that indicate that the pricestructure is not exactly working properly?

Lord Howard of Rising: It indicates that people arebuying milk very cheaply. Lucky them.

Ultimately, there is only one person who will payfor all this expense, and that is the supermarket customer.I look forward to hearing from the Minister why thepoor shopper should be clobbered in this way so thatI can get paid earlier, and possibly increase the rentI receive.

4.45 pm

Baroness Sherlock: My Lords, I add my voice tothose who, unlike the noble Lord, Lord Howard ofRising, want to see this Bill go further, rather thanbackwards. I listened to his contribution with interest.

I am grateful for briefings from various sourcesincluding Traidcraft and the Grocery Market ActionGroup, as well as various retail bodies, including moresupermarkets than I knew existed hitherto. Like many—indeed, almost all the noble Lords in this debate—Iam delighted that we are where we are. I am thrilledthat the previous Labour Government brought in thecode. I am very pleased that the Government areintroducing the adjudicator, and I commend them onthat. However, I encourage them to think hard on thisquestion. If it is worth doing, it is worth doing properly.I suspect that the critics of the Bill—and there aresome even in this Chamber—would not be satisfiedeven if this were done in half stages. Therefore, if theGovernment are going to do it, they may as well take astep out and do it with some gusto.

I would like to make a few specific suggestions.First, I am delighted that the adjudicator will considerevidence from all sources, but will the Minister saywhat signal she intends to send by the ease with whichthat power could be revoked? What is that intended tosay to the world outside?

Secondly, will the Minister tell us why there is notin the Bill a clear description of the purpose of theadjudicator? I assume, having reread recently the 2008Competition Commission report, which the Ministercited earlier, that this is addressed directly to thesecond of the problems it found—the transfer of excessiverisk and unexpected costs by groceries retailers totheir suppliers. If that is the aim, would it not behelpful for that to be specified in the Bill? I know theMinister said that the only purpose of the adjudicatoris to enforce and oversee the groceries code in the waysdescribed in the Bill, but she may remember that shealso said in her opening remarks that the adjudicatorwould be tasked with recommending changes to thecode. If he or she is to do that, on what basis will thatbe done if they have not got a statutory objective forthe organisation in the first place?


Thirdly, I am another person who believes that theGCA should have the immediate power to fine peoplewho are in breach of the code. This makes it almost allof us, now, who believe this—a full house. I have heardno convincing argument against this at all. If thepower is never needed, it need not be used, but the factthat the adjudicator has the power must surely concentratethe minds of those who are tempted to sidestep theprovisions of the code. Like the right reverend Prelatethe Bishop of St Edmundsbury and Ipswich, I read thereport from the British Institute of International andComparative Law, and very interesting reading it made.I commend it to the Minister, if she has not had theopportunity to read it. It would be very good bedtimereading, and I encourage her to look at it. Very usefully,it went through all the types of mechanisms usedby different countries, and what was effective, and itproduced a category of characteristics of favourablemeans, of which financial penalties—in other words,teeth—were firmly up there.

I also agree with noble Lords who have mentionedhow important it is that the adjudicator should functionwell from the outset. That will be essential to give itcredibility from the beginning. I suggest that it needsto flex and to respond to the scale of the task. Wesimply do not yet know what that will be. I hope theMinister will consider that quite carefully.

How did the Minister reach her decision about thenature of the financing? I, too, read the brief fromWaitrose which expressed concern with the generalisednature of financing. I declare an interest as the seniorindependent director of the Financial OmbudsmanService. While I am not in any way suggesting acomparison, that and other adjudicators of variouskinds often have a two-part fee. There may be a generallevy of some sort on all those within the jurisdiction,and then either a case fee or a specific fee which isrelated in some way to the degree to which the firm isengaged in or is triggering the work of the adjudicator.Will the noble Baroness look at the fee systems employedby others making similar decisions in making a finaldecision on this?

Finally, I am concerned about whether the Governmentare being too hesitant in doing this. They have decidedto set up an adjudicator but are retaining the power toshut it down by negative resolution. They are open tothe idea of fines—but not yet—and it will take arather complicated Heath Robinson mechanism toenable that to happen at all. They want to allow thepower to take evidence from third parties but, again,want to threaten to withdraw it. Is the Minister concernedthat she is taking the right step but, in hedging itaround so much, she risks undermining the good workthat I know she is trying to do?

4.50 pm

Lord Teverson: My Lords, I declare an interest inthat I chair a modest company that supplies supermarketretailers who will not be affected by the Bill.

I enjoyed the speech of the noble Baroness, LadySherlock. She asked why we need an adjudicator.Clause 1 says, in a completely Book of Genesis style:

“There is to be a Groceries Code Adjudicator”.

What more do we need? It then carries on with arather less biblical “(see Schedule 1)”, but that doesnot help us much.

I agree in many ways with the noble Lord, LordHoward of Rising, on his philosophy about the market.However, this is the one area in the UK economy wherethere is a huge concentration of buyers and a fragmentedbase of suppliers. The purist answer would be that thesupermarket chains should not only be further referredto the Competition Commission but have their marketdominance broken up. I do not suggest or advocatethat, but it may be the alternative to this. As my noblefriend Lady Randerson said, 75% of the groceriesmarket is controlled by five suppliers. That is indeedsome market concentration and it is why we needsupplier protection in this sector rather than the consumerprotection that we have in most others.

As many other noble Lords have said, there hasbeen a gradualism over the past decade. In 2001 thegroceries code was invented, if you like; it was writtenand then put into contracts between suppliers andsupermarkets; and now we are moving towards anadjudicator. That is why I, too, think that after 11 yearsof experimentation we should surely do the deal andgo ahead with the fining side as well. For example—againthis is not directly applicable—the Financial ServicesAuthority, which is to do with customer protection,is perhaps a mirror image of what we are doing, andone of its great strengths is that it can fine the largeorganisations with which it deals.

There are many hurdles at the end of the Bill, whichstates:

“Before making an order, the Secretary of State must consult… the Adjudicator … the Competition Commission … the Officeof Fair Trading … the large retailers … one or more personsappearing to the Secretary of State to represent the interests ofsuppliers … one or more persons appearing to the Secretary ofState to represent the interests of consumers; and … any otherperson the Secretary of State thinks appropriate”.

So we are up to 9 billion at that point. The Governmentare really saying, “Guys, we are not interested in thisat all. We are going to put it in there because we wantto give ourselves a backstop, but it is not very applicable”.The Government should be courageous here, moveahead and do it now. That would be a good thing.Having said that, I welcome the fact that the adjudicatorcan impose costs on both supermarkets and vexatiouscomplainants. That is very good.

I particularly welcome the fact that—although it isnot in the Bill, this is a part of what business has beensaying—this applies not only to UK suppliers but toworld-wide suppliers. That is important, not becauseI am championing French farmers but because it willstop supermarkets avoiding this obligation by importingeven more food. It stops, if you like, regulatory hedgingbeyond the United Kingdom.

I congratulate the Government on getting on withthis. However, it is very important that this is not asupermarket-bashing Bill. I am often surprised to readthat supermarkets and multiple retailers have restrictedchoice to consumers. Frankly, it is because of ourretail organisation, our retail management and efficiencyin this country that we are able to go out and buy tensof thousands of products, normally within only a fewmiles of where we live. Having said that, yes, I shop in


[LORD TEVERSON]supermarkets and I am pleased to do so, but I also geta local food box from the Cornish Food Box Company,and I think that is a good balance. I am sure thatorganisations such as that one will be championingcompetition with supermarkets as well.

4.55pmViscount Eccles: My Lords, I have no current interests

to declare, but for 49 years I was a supplier of goods tobusinesses larger than my own—in particular, for along time, to Marks & Spencer. I was also, for a time,on the Monopolies and Mergers Commission, thepredecessor of the Competition Commission, and thenoble Lord, Lord Borrie, used to receive reports that Ihad signed. Fortunately he never sent any of them back.

I have doubts about the Bill, quite complicateddoubts, and I hope that the House will indulge me as Igo through them. Before I start on the doubts, I wouldlike to talk about anonymity. When someone is accusedof something, under our system—whether it is codesof practice or law—we would assume that they had aright of reply. I simply do not understand how aserious complaint, which might lead to some enforcement,can be handled without the retailer knowing whomade it. I would also say, just as a practical matter, ifthere had been a complaint about something, forexample a line of clothing, that Courtaulds had suppliedto Marks & Spencer and Courtaulds had wanted toremain anonymous, we would never have been able todo so. There is far too much knowledge within thebuying organisations about whose product is beingtalked about. If we try to pursue anonymity, there willbe endless bickering. I thought that we lived in anopen and transparent society.

I am not at all clear that the Bill is in the publicinterest or what the public reaction will be. The publicare largely disengaged from the Westminster villageand its lobbyists, and this is a Westminster village andlobbyists’ Bill. I think many people who shop insupermarkets would conclude that the theory of howyou deal with difficulties in competitive markets precludesthe exercise of common sense. I have been struck bythe way in which several noble Lords have dismissed£200,000 as a sum of no importance. Well, I do notknow how your Lordships have lived, but to me £200,000remains quite an important sum of money.

It has been a habit of many people to hate supermarketpower. That has gone on for a long time and indeed30 years ago, when I was a member of the group in theMMC, we did a very long report on differential discountsto retailers and we studied supermarket power. Exactlyas the 2008 Competition Commission report concluded,we found that they were not abusing their marketpower per se. That has been the conclusion of all theinquiries into supermarkets: they do not make monopolyprofits. They do not charge prices that are higher thanthey should be, which is the classic way of makingmonopoly profits.

Now we have to look at what happened in 2008 insome detail. My noble friend on the Front Benchreferred to the finding that is the base of the pyramidof what we are talking about. It is worth quoting againwhat the commission said:“we found that the transfer of”,

economic risk,“and unexpected costs by grocery retailers to their suppliersthrough various supply chain practices if unchecked will have anadverse effect on investment and innovation in the supply chain,and ultimately on consumers.”.

That was not a conventional Competition Commissionadverse finding. It was quite a complicated one, beingconditional and about the future—there will be anadverse effect but it has not happened yet. The commissionconcluded that there was no declining trend in innovationand, at the same time, no shrinking of suppliers’margins. Could my noble friend on the Front Benchprovide us with any precedent for a finding of thistype about an adverse effect on competition that wouldenable us to think about what happened previously?

It is worth noting that one member of the commissiondissented from the remedy that came up. The commissionof 2008 was not unanimous but it decided to beef upthe code of practice. I see no objection to that; it seemsan entirely sensible thing to do. the commission drewup a rather humdrum list of things that should beremembered when—as I think has not been said thisafternoon, although my noble friend Lord Howardcame close to it—the terms and conditions of purchaseand sale were being freely agreed between the supermarketsand their suppliers, and would become legally enforceable.Of course, a code of practice is not legally enforceable.

I will refer to just two of the humdrum things. Oneis shrinkage. A supply agreement must not includeprovisions under which a supplier makes payments toa retailer as compensation for shrinkage. However, thequestion of shrinkage would turn on when, for example,the property passed. If the shrinkage happened whilethe goods were still in the possession of the supplier,that would be one thing. If the goods are in thepossession of the retailer, that would be another. Allthat the code of practice does is, quite properly, toremind the supermarkets and their suppliers that theymust have a proper clause about shrinkage in theirlegally enforceable contracts. It is exactly the samewith payments for wastage. You might have someyogurt on the shelf that, for some reason, goes off twodays before the sell-by date. That cannot be unambiguouslyset out in a legal document, because it would probablydepend on who left it out on the pavement when thetemperature was 26 degrees, on what day, and so forth.As the noble Lord, Lord Haskel, said, these matterscan become very complicated when you are dealingwith detailed disagreements under terms and conditionsof purchase and sale.

From February 2010, the beefed-up code of practicehas been the subject of self-regulation. I am sorry thatthere is such a unanimous opinion that we should giveup on self-regulation. I have read the compliancereports of several of the big supermarkets— the firstones that they wrote, as they were required to, in theirannual report and accounts. Marks & Spencer recordedthat it has had two; one it has settled and one it hasnot. Sainsbury’s reported that it had a small number;they were all settled and none of them had to go to thecompliance officer. Morrisons reported much the sameand Lidl very much the same. Close attention shouldbe paid to how this self-regulation has so far worked.What is the evidence that tells us that it is not workingand that the adverse effects predicted by the Competition


Commission about innovation and investment are actuallytaking place? I do not think that they are. I have askeda lot of the representative bodies to give any evidencethat innovation and investment are being damaged, aspredicted. I have had none back at all.

We seem to depend on this climate of fear. Becausesuppliers might lose a contract if they put their headsabove the parapet, they are prevented from providingevidence. Several people have been quite complimentaryabout Waitrose. Do your Lordships really believe thata supplier would not be brave enough to raise acomplaint about the code of practice with Waitrose? Itis supposed that if we appoint an adjudicator and letanybody talk to it—that seems fine, as we have freedomof speech—in some way this climate of fear willdisappear and we shall get to know all sorts of thingsthat we do not know now. I seriously doubt it. This is ahighly competitive industry. There are 10 big retailers.If you have a row with one, there are nine others.Innovation and investment interests are held in common.The supermarkets have progressed in what they offerbecause of what their suppliers have done to enablethem to offer it. There is no shortage of investment orinnovation that I can detect.

As the noble Lord, Lord Borrie, said, the Office ofFair Trading is already there, monitoring such thingsas the code of practice. What is the purpose of settingup another cost centre? I do not think the public willunderstand why we need another one. Do we want toexacerbate the disengagement of the public from thepolitical system? If we believe that common sense,shared interests and fair dealing under the law are notenough, I do not know what the public will conclude.I have not heard a case made for the Bill today. If thereis one thing that it needs, it is a sunset clause.

5.07 pmLord Myners: My Lords, I declare an interest as a

former chairman of Marks & Spencer. Unlike manyother Members of the House, I have not been lobbiedon this Bill. That may well be because I never open myparliamentary e-mail box and therefore do not readthe e-mails that other noble Lords have been receiving.Perhaps I am in error in doing that.

As my noble friend Lord Grantchester said, the Billhas the fingers of the previous Labour Government allover it, although the right reverend Prelate the Bishopof St Edmundsbury and Ipswich also claimed somecredit for the General Synod. The Bill was promised inthe manifestos of the three main parties, but I am notpersuaded of the need for it. I am certainly unpersuadedthat the Bill as presently constructed will deliver theoutcomes that the Government promise. In short, Ibelieve that the Government are strong on assertionand light on evidence. The Bill shows a profounddistrust of markets to produce good outcomes, whichis extraordinary coming from a Minister who is aMember of the Conservative Party. The Government’shesitancy in putting this Bill forward is evident in thefact that it has taken two years for it to appear. Itsmost effective sanctions are in reserve powers that areinitially not going to be actioned. The Bill is quiteexplicit in creating an ease of repeal that suggests ahalf-hearted adoption of its central intention by theGovernment.

I propose to make half a dozen or so points. I thinkthe voters of this country might reasonably ask whetherthis is a priority. The challenges facing our economynow are those of inadequate demand, a lack of availablecredit, both in amount and in cost and terms, and aloose monetary policy and consequent financial repressionthat is clearly not working.

There is no overarching coherence to the Bill aspresented to your Lordships’ House today by theMinister. Grocers have delivered on customer expectation.We have a choice of goods now of a quality that wouldsimply have been beyond the belief of the parents ofmost Members of this House. I remember when salmonwas a luxury in our home, and my father was afisherman. It came in a John West tin. Salmon andexotic fruits from hot climates are now available atincredibly attractive prices to the consumers of thisnation. There is no evidence that voters or consumershave any sense that they are not getting choice, qualityand value for money from a highly competitive retailindustry and a highly efficient market as well.

I have a number of questions for the Minister.Perhaps the noble Baroness will answer the questionsnow. If she does not, I hope that she will answer themby writing to all Members of the House who speak inthis debate and that we will receive that answer beforethe Bill goes to Committee.

I start by asking why we are focusing on groceries.Why, for instance, are we not asking the questions thatthe Bill asks about banking? This would surely bewhat voters would like us to do. They would like us toask questions and to introduce an adjudicator to anindustry that by any definition is highly concentrated,operates with cartel-like pricing and is generally typifiedby poor service and an absence of differentiation anda dearth of innovation. Surely these are the primafacie symptoms of poor competition, on which voterswould expect the Government to be taking action.However, as we know, this Government have beensupine in the face of the banks, with the failed ProjectMerlin now being followed by a policy known ascredit easing, which does not actually benefit the endborrower at all; it benefits the banks by reducing theircost of borrowing.

I ask your Lordships’ House whether, if there is acase for a grocery industry adjudicator, there is not aneven stronger case for a banking industry adjudicator.Is there not an equally strong case for an adjudicatorof the energy industry, where people of this countryagain feel themselves at the wrong end of abusiveindustry practices by a very concentrated industry thatis expert at absence of transparency in pricing andproduct differentiation?

The Minister, in her opening address, said that theneed for financial penalties was unlikely because grocerswould recognise the reputational risk of being foundat fault by the adjudicator. This is a woefully optimisticassessment of how business operates, and it is certainlynot borne out by the way in which the banking industryhas responded to regular and constant criticism byvarious regulators and consumer bodies of its ownbehaviour. Indeed, if the House is invited to focuson an area in which there is a potential abuse of theweak by the strong—the supermarket suppliers by the


[LORD MYNERS]supermarkets—how does the Minister reconcile thatwith Mr Adrian Beecroft’s proposals to allow employersto dismiss at will? On one hand we are reducing thelegislative and regulatory protection for the weakerparty in a market-based transaction. On the other, weare seeking to introduce even greater regulation.

The Bill cites no evidence that a regulator or adjudicatorof the sort proposed has been successful or necessaryin other countries. Nor are any arguments cited tosuggest that there is something about the grocerytrade in the United Kingdom, such as excessiveconcentration, that means that we need an adjudicatorwhere other geographies do not. In comparison withmost markets, we have a relatively fragmented grocerymarket, with very intense competition among the top10 or so firms in the business. As the noble Viscount,Lord Eccles, said, if a supplier is not happy with oneof the 10 firms to be covered by the adjudicator, thereare nine other potential customers to whom they canturn for business.

The Minister also asserts that supermarket behaviourat the moment reduces the incentives and abilities ofsuppliers to innovate in new product lines and productionprocesses. Where is the evidence for that assertion?How has the Minister concluded that markets do notlead to appropriate innovation and investment? Theimpact assessment says that the proposal “couldultimately”—in brackets, I would add, “Civil Service:most unlikely”—“lead to improvements in quality and choice for consumers, aswell as lower prices in the long run”.

No evidence is cited to support that conclusion. However,the impact assessment says that the Government willmonitor improvements in investment and innovation.Am I correct to say that we will see civil servantsopining on whether a competitive market has led toimprovements in investment in innovation? If so, willthe Minister tell us how civil servants will form thatview and what experience they will bring to that task?

Next, there are some very woolly words in the detailof the proposed Bill. Setting aside for the moment thefact that the term “grocery” is not defined, there areterms such as “deal fairly” and,“pay suppliers within a reasonable time”.

Will the Minister tell us how a market process doesnot lead to fair outcomes? Can she explain why reasonabletimes are not part of the agreement reached betweenthe supplier and the supermarket, which is enteredinto openly and willingly by both parties? Which civilservants will agree on fairness as a judgment on marketoutcomes, or on the reasonableness of terms of payment?

On reasonable behaviour, am I not correct in myrecollection that Sir Philip Green recommended, in hisreport on government procurement, that the Governmentshould do many of the things that the supermarketsare being accused of doing here by applying pressureto suppliers? Sir Philip Green’s report was for theDepartment for Business, Innovation and Skills, so nodoubt the Minister will be fully informed and able toexplain how Sir Philip Green’s recommendations leadto acceptable behaviour while the behaviour of thesupermarkets is not acceptable.

I do not expect the Minister to speak on defencematters, but I note that last week the right honourablePhilip Hammond, the Secretary of State for Defence,also suggested that the Government would seekretrospectively to amend agreements with suppliers.My point is that there is a complete absence of consistencyin the Government’s thinking. Why do the Governmentnot have confidence in the market to produce the rightoutcomes?

The Bill also evidences a very poor understandingof the supply chain, particularly the activities andpresence of intermediaries within it. This will need alot of attention in Committee. I agree with the nobleViscount, Lord Eccles, that anonymity is almost certainlyone issue about which we deceive ourselves. As formajor suppliers, the specificity of the terms of acontract is such that, when an issue is raised with theadjudicator, the identity of the supplier will almostcertainly become evident in a very short period, so it ishogwash for the Government to suggest that anonymityin some way gives this Bill some superior attraction.

There are many other areas that the Committee isgoing to need to spend a lot of time examining. TheBill as proposed suggests an adjudicator who definitelywill not be independent of government. It is quite clearand is in the explanatory document that the intentionis that the adjudicator’s department should be staffedby people from the Department for Business, Innovationand Skills and should be collocated with the OFT. Asthe noble Lord, Lord Razzall, said in his contribution,the process as described is inordinately cumbersome.

I also fail to understand, and perhaps the Ministercan explain, why the penalties imposed by the adjudicator,if penalties are to be activated, should be paid to theconsolidated funds while the penalties paid to theFinancial Services Authority are paid to the FSA. Canthe Minister explain why the Government appear notto have consistency?

Finally, the Explanatory Note to Clause 15 says:“The Secretary of State”,

may,“restrict the information the Adjudicator may consider to fourspecific classes of information, which are those that might beexpected to be most useful in determining whether or not abreach of the Groceries Code had occurred”.

To be clear, the Minister will be setting the criteriaand will set the criteria to four. Again, no reason orexplanation is given as to why it should be four andhow those would be narrowed or broadened; nor isany understanding given of the basis of expectation orthe criteria of utility. What one can clearly see here,tucked away towards the end of the Bill, is that thisadjudicator will have very little independence at all.

When we get to Committee we are going to have tolook very closely at this Bill, because I do not think itis going to achieve the purpose that has been set out. Ifwe have done our work in Committee and concludethat the Bill will never deliver the purposes intended, itshould be withdrawn, otherwise we have a recipe forfurther bureaucracy and red tape, which is the lastthing the country needs at the moment.

Lord Razzall: The noble Lord quite properly disclosedhis interest in Marks & Spencer at the beginning of hisremarks. Bearing in mind his attack on the coalition


Government’s policy on the banks, would it not havebeen appropriate to disclose that he was a seniorMinister between 2008 and 2010, with responsibilityfor banks?

Lord Myners: My Lords, I think the House is awareof that. The noble Lord, Lord Razzall, has oftenimpressed me with his skill on the Floor of this House—his debating approach and his wit. Today he hasfallen well short of the House’s expectation.

5.23 pm

Lord Knight of Weymouth: My Lords, we have hada largely good- natured debate until just now aboutthis important issue for consumers, producers andretailers. As my noble friend Lord Grantchester said,we have a sense of ownership of this Bill since we firstadvocated it and since the adjudicator refereeing thecode was brought in by us in 2009. On that basis weare keen now, as the Opposition, to work with theGovernment as the Bill goes through Parliament tomake sure that the adjudicator has the best possiblechance of success and perhaps prove my noble friendLord Myners wrong in respect of its chances. As hasbeen said, we brought in the code following the 2008report by the Competition Commission which talkedabout the “climate of fear” among suppliers in relationto disputes using the code in force at the time. Thecommission recommended using a new code and anadjudicator to give it teeth.

I was delighted when I met representatives of thelarge retailers through the British Retail Consortiumlast week. They told me that they were not opposingthe principle of establishing the adjudicator in thisBill. Given that it was in all three party manifestos,they are bowing to the inevitable. This was reinforcedby the e-mail from Waitrose, which claims to havesupported this move from this outset. This attitudefrom the large retailers is positive and constructiveand reflects what will I am sure be helpful engagementfrom all stakeholders as the Bill goes through itslegislative journey.

On that constructive basis, I hope that we can getthis Bill on the statute book as soon as possible so thatthe adjudicator can get on with this important job andoffer suppliers the comfort that not only is the playingfield a little more level, thanks to the code, but—toborrow the phrase that the noble Lord, Lord Plumb,attributed to Peter Kendall—there is now a referee toensure that the game is played according to the rules.However, my noble friend Lady Sherlock is right tolook for a statutory purpose. I was amused by thenoble Lord, Lord Teverson, raising the possibility ofschedules to the Bible. I bet Michael Gove is volunteeringto write them.

Before I move to a more wholly constructive mode,I make one criticism of the Government in this regard.Why has it taken them two years? Back at the beginningof 2010, the shadow Environment Minister Nick Herbertwent to the Oxford farming conference and said:

“While the government dithers the Conservatives are clear: wewill introduce an ombudsman to curb abuses of power whichundermine our farmers and act against the long-term interest ofconsumers”.

At the same time, Labour MP Albert Owen introduceda Private Member’s Bill on the same issue in the otherplace. Clearly, the policy was worked out and workwas going on in legislation. In Opposition, the Minister’sparty was ready to go with this measure. So why didwe have to wait for two years? Is it the fault of theircoalition parties being lukewarm? From what we haveheard, that is not the case. Was it her Secretary ofState not managing to make the case for the Bill in thelegislative timetable? Or was it that Defra, the realpolicy lead, was not being listened to by anyone andfarmers were being taken for granted by the coalition?We shall see—but I am glad to get that off my chest,and I can now be more positive.

The Bill has enjoyed support across the House, withthe notable exceptions of the noble Lord, Lord Howardof Rising, the noble Viscount, Lord Eccles, and thenoble Lord, Lord Myners. I very much respect theirpurity of free-market thinking, but I disagree, as thereare times when markets need regulating when agreementsare not entered into as freely as some think. The nobleViscount, Lord Eccles, and to some extent the nobleLord, Lord Myners, asked what the public wouldthink. I do not know if noble Lords tweet, but I do,and when I have asked Twitter and Facebook aboutthis, the overwhelming response is, “about time”. Eventhough they are like me all customers in supermarkets,they believe that at times they overuse their power.

My noble friend Lord Grantchester set out the teststhat we will use in opposition as to whether the adjudicatorwill be effective. First, is it good for growth? I wasdelighted to go to the briefing for parliamentarianslast Monday, which the Minister and her ministerialcolleague Norman Lamb MP kindly offered. I waseven more delighted when Norman described the Billas a growth measure. My delight knows no boundswhen the Minister in her peroration confirmed thatthis Bill to establish a quango and a regulator is goodfor growth. This feels somewhat discordant with therhetoric we hear from the Prime Minister aboutderegulation being the key driver for growth. Butmaybe on this, as on Beecroft, the Minister’s Secretaryof State has won the argument. Perhaps she couldpass on our regards to Vince Cable, because of coursethere are times when a market needs intervention tomake competition work well, if players in that marketbecome overmighty. I note that my noble friend LordMyners wanted a similar arrangement in this Bill toapply to banks. I am sure that he is making the samepoint to our friend Ed Balls—and I wonder whetherVince agrees.

Agriculture and food processing, worth more than£80 billion to our economy, are our largest manufacturingsector. Some 3.6 million people are employed in foodproduction in this country, and to make competitionin that market function more fairly is ultimately goodfor growth and for those jobs in the food sector. Thenit can also be good for consumers if it is working well.As the noble Baroness, Lady Randerson, told us, ahealthy market will allow new entrants in and innovationin the supply chain; it will offer choice and competitionand will thereby push up quality and push down prices.

This takes us to another of our tests. Will theadjudicator be able to act on the right things? Thequestion is about updating the code. Much of what we


[LORD KNIGHT OF WEYMOUTH]have heard today concerns issues for the code and notalways issues for the adjudication of the code. Mynoble friend Lord Grantchester and the noble Earl,Lord Sandwich, talked about recent worries in thedairy industry. The noble Baroness, Lady Parminter,talked about the fruit industry. Some of the remediesfor these problems depend on renewing the code andpotentially extending its reach. While the code is outof scope for the Bill, the role of the adjudicator inreviewing the operation of the code is not. We thinkthat it is in the interest of all stakeholders that thecode is kept a living document and that it should bereviewed regularly and updated by Parliament accordingly.We will therefore explore in Committee whether theadjudicator should include in the annual report anyrecommendations on improving the code so that it isan act of consideration rather than—as the Bill stands—apassive one.

I will also be seeking a commitment from theGovernment to commission a serious look at the wholesupply chain to the large retailers. It is worth notingthat when the Competition Commission reported in2008, it had only been asked to look at the immediatesuppliers to supermarkets. Some of these, such asKraft and Coca-Cola, are bigger businesses than someof the supermarkets they supply. We need to look attheir suppliers and the whole chain to see if this processwill create a fair deal for small producers. In windingup, will the Minister give an indication of whatconsideration the Government are giving to looking atthis so that a better code can be developed? I note that,in her opening speech, she hinted that she might viewit as overregulation. Is she willing to ask the CompetitionCommission to research and test that view?

Our next test is whether suppliers will risk using theadjudicator. I applaud the Government for listening tostakeholders and the two Select Committees who didsome excellent work in pre-legislative scrutiny of theBill. It is much improved around anonymity, which wesupport. It also allows third parties to make complaints,as we have heard, which is also welcome. I will, however,want to explore whether the Bill needs a halfwayhouse if third parties do not work consistently whenthe operation of this system is reviewed.

Finally, is this measure strong enough to forcechange where needed and will it be seen to be fair onall parties? This leads to the three key issues to debateas the Bill progresses: appeal, independence and fining.Before talking about these, it would have been helpfulto have an impact assessment. Is there one beyond thatfor the draft Bill? If not, why not? Is it not a requirementthese days to have one? Currently, there is no appealfor retailers. If financial penalties are subsequentlybrought in, the Bill specifies the courts as the meansof appeal. In the interests of fairness, we may want todebate whether the potential damage of naming andshaming is serious enough for retailers to have astraightforward appeals process. Although the informedopposition to this from my noble friend Lord Borriehas probably persuaded me, we may need a quick debateto be sure.

We will also explore the independence of theadjudicator, an issue raised by my noble friend LordMyners. The adjudicator will be appointed by and

accountable to the Secretary of State. We will explorewhether it is better to have the independence andtransparency of accountability to Parliament. I knowfrom contact with Members from the other place whoserve on the BIS Select Committee that they wouldlike a say in the appointment of the adjudicator.Equally, there is merit in an annual report to Parliament,including reporting on the operation of the code andthe operating costs of the adjudicator. The latter wouldprovide some comfort to retailers who will be fundingthe operation through the levy which they regard assomething of a blank cheque.

Then there is the biggest issue of them all, mentionedby most of the speakers in this debate today—that offining. Within this, there are two issues to debate.There is the principle of whether the adjudicator shouldhave this power from day one and, if not, whether theprocess for introducing fining is, as the noble Lord,Lord Razzall, described it, cumbersome. I will certainlydraw on the experience of my noble friend Lord Haskelwhen bringing forward amendments in Committee toSchedule 3 to deal with the latter. However, first, I willtry to win the argument on the principle of fining. Likethe right reverend Prelate the Bishop of St Edmundsburyand Ipswich, I think that the adjudicator should haveteeth from day one. His comments were echoed bymany other speakers. The referee should have the redcard to help enforce the rules. I hope that there willnever be sufficiently serious breaches to invoke the useof these powers, but just having the powers there andready to go may prevent such serious breaches.

This raises the question of what success for theadjudicator looks like. I hope that the Minister willnot abolish the measure by order in a few years’ time ifit has been used to instigate not much more thanlow-level arbitration and investigation. As a footballfan, I do not like it if the ref keeps stopping play, butI would always want one there to enforce the rules ofthe game. I also think that the power to abolish thisnew quango should replicate the new processes thatwe are starting to get used to in the Public Bodies Actand not follow the simple negative procedure in theBill. Like others, I am keen for the proceeds of fines tobe used in an imaginative way, ideally in investing ininnovation in the supply chain. Unlike the noble Baroness,Lady Byford, I like the clarity conferred by questionspunctuating the Bill’s wording, however homely it mayseem to her. Unlike the noble Lord, Lord Palmer, Ilike the name of the adjudicator. I understand why theMinister might not want to call it the regulator giventhe sensitivities around that issue.

This is broadly a good Bill and has been warmlywelcomed by most speakers this afternoon. My promiseto noble Lords is to engage openly and constructivelyacross the House to improve the Bill as it goes throughits journey. I am sure that the Minister will do thesame. We look forward to helping her get an effectiveadjudicator up and running as soon as possible.

5.36 pm

Baroness Wilcox: My Lords, today’s debate has casta great deal of light on the important issues addressedin the Bill. I thank all noble Lords for their contributions.I recognise the strength of feeling and depth of experiencethat we have heard in the debate. I have been asked far


more questions than I thought I would on a Bill onwhich we all seem to agree, with two or three exceptions.I will do my best to answer as many questions as I can.

The noble Lord, Lord Myners, seemed to ask me100 questions. I am grateful to him for telling me thatI can reply to him in writing as long as I copy theresponse to everyone else. As I said in my openingremarks, the Bill has undergone substantial consultationand pre-legislative scrutiny. Wherever possible, theGovernment have attempted to find approaches thatensure that the adjudicator’s powers will be adequatewhile also keeping them proportionate. We intend tokeep the costs to business minimal while ensuring thatthe adjudicator is fully equipped to fulfil his or herrole. However, I will, of course, reflect on the commentsof the noble Baroness, Lady Randerson, the nobleLord, Lord Teverson, and others, who have expressedtheir concerns about both those statements. We thinkthat we have allowed tough powers to name andshame from the outset. We have kept back the lastresort of financial penalties as a reserve power. I notethat many, including the noble Lord, Lord Knight,have questioned this. I have no doubt that we willdebate these questions further in Committee.

The noble Lord, Lord Knight, commented on theimpact assessment of the draft Bill. That remainsvalid; hence there is no requirement for an updatedimpact assessment. The noble Baroness, Lady Byford,did not approve of the Bill’s “folksy” drafting andnoted that the style of writing was unusual. I reassurethe House that this is not a mistake. The Bill is one ofthe pilot plain English Bills that are intended to beeasier for everyone to understand. That is what it isintended to be. However, I am happy to write to thenoble Baroness on her question about the changes inclause headings and on the consultation.

My noble friends Lord Howard of Rising and LordEccles, and the noble Lord, Lord Myners, said that thesupermarkets are currently bound by the GroceriesSupply Code of Practice and questioned whether anadjudicator was needed as well. The CompetitionCommission has found clear evidence that the excessiveuse of buyer power could lead to adverse effectson consumers. The code has the commission’srecommendation, when it first introduced the code,that an adjudicator be set up to uphold it. At pre-legislativescrutiny, the BIS Select Committees in the Commonsalso concluded that a groceries code adjudicator wasnecessary. The code allows only individual cases to beresolved and only if a supplier is prepared to raise theissue with the large retailer involved. The adjudicatorwill be able to investigate suspected breaches involvingmany suppliers, not just adjudicate individual cases.

The noble Lord, Lord Myners, wishes to intervene.He did make a promise, and I have a lot of questionsto answer.

Lord Myners: Is it the Minister’s belief that thesupermarket sector is securing monopoly profits? Ifso, on what basis do the Government derive thatconclusion?

Baroness Wilcox: I am sure I did not say that theywere securing monopoly profits.

Lord Myners: My Lords, I did not say that the Ministersaid that, but the assertion that there is excessive use ofbuyer power over a diffuse supplier community wouldbe evidence of monopoly profits. Do the Governmentbelieve that our grocers are evidencing monopolisticbehaviour through excessive returns on equity or sales?

Baroness Wilcox: We are basing this on the CompetitionCommission’s evidence.

A concern was raised about the creation of a newregulatory body and I mention in particular the nobleLords, Lord Haskel and Lord Plumb. The Governmentare committed to reducing the overall burden of regulationon business. We are not creating a new bureaucracybut appointing an individual to be the adjudicator. Ihope I can reassure the right reverend Prelate the Bishopof St Edmundsbury and Ipswich and my noble friendLady Byford that the small, agile staff will be effective.We will, however, be watching all the way through—thisalso relates to the point made by the noble Baroness,Lady Randerson—to see that the office has the capacityto work with such large supermarket chains.

The noble Lord, Lord Haskel, thought that arbitrationwas more vital than the adjudicator’s investigations.I can reassure him that the adjudicator will be able toarbitrate disputes concerning individual suppliers aswell as investigate complaints.

In response to the concern of the noble Lord, LordBorrie, it is correct that the adjudicator probablywould not arbitrate himself or herself where he or shehad previously carried out an investigation into asimilar issue, due to the risk of a conflict of interest.However, in that case the adjudicator would simplyappoint a different arbitrator, and the Bill provides forthis in Clause 2.

My noble friend Lord Eccles suggested that theCompetition Commission was lukewarm in its supportfor the adjudicator. The commission said clearly inparagraph 11.375 that all but one member of theinvestigation panel considered the adjudicator to beessential for the monitoring and enforcement of thecode, but all six members of the Competition Commissiongroup who investigated groceries agreed that,“the transfer of excessive risks or unexpected costs by groceryretailers to their suppliers is likely to lessen suppliers’ incentive toinvest in new capacity, products and production processes … ifunchecked, these practices would ultimately have a detrimentaleffect on consumers”.

Viscount Eccles: I nearly accept the Minister’sdescription of what I said, but this CompetitionCommission finding was made in 2008. It is now 2012.I asked, and will ask again, whether there is anyevidence that the adverse effect which they predictedin 2008 is in fact coming about.

Baroness Wilcox: I do not have the answer beforeme, but I will most certainly write to my noble friend.

The noble Lord, Lord Palmer, suggested that theadjudicator should more accurately be called anombudsman. Such a description is not to be used inthis case because it would be contrary to the guidanceof the ombudsmen’s society, because ombudsmen dealwith business-to-consumer disputes.


[BARONESS WILCOX]The noble Lord, Lord Knight, asked whether there

should be a further investigation into the practices ofintermediaries. A decision to refer a market to theCompetition Commission for investigation is a matterfor the Office of Fair Trading, and any concernswould be raised with it. However, the question ofkeeping the code a living document is a matter thatI should like to continue to explore in Committee, ifthe noble Lord is happy with that.

We heard complaints, including from the nobleLord, Lord Knight, that the Bill has been delayed. Iknow that it has been keenly anticipated and I recognisenoble Lords’ eagerness for it to have been introduced.However, we have not delayed in this. The 2008 reportdid not lead to an immediate Bill, but I would notcriticise the previous Government for that becausethey were attempting to get the retailers themselves tocreate the adjudicator. That is why there seems to havebeen a delay—it was not in our time. Since the election,we prioritised this measure for pre-legislative scrutinyduring the first Session, and introduced it on the firstday possible of this new Session. I hope that nobleLords will work with us on the Bill and that we will seean adjudicator in place next year.

The noble Lord, Lord Grantchester, and my noblefriend Lord Razzall suggested that the way in whichthe levy to fund the adjudicator is divided betweenretailers should be reconsidered by annual review. TheSecretary of State will be able to assess, as the evidenceunfolds, how the levy should be divided to ensure thatthose who create most trouble pay more.

Concern was raised by my noble friends Lord Razzalland Lady Byford about the few instances whereconfidentiality might not be completely guaranteed.We believe that confidentiality will be vital to theadjudicator’s investigations. The circumstances in whichthe identity of a complainant might be revealed withouttheir consent are strictly limited by Clause 18. We believethat this would happen in exceptional circumstances.That will perhaps become more apparent when we gothrough the Bill in Committee. The Government willbe engaging with suppliers to ensure that they understandthe rules on confidentiality. We are confident abouttheir ability to complain.

The noble Lord, Lord Grantchester, expressed concernover the Secretary of State’s power to restrict the sourcesthat can complain to the adjudicator. We believe thatit is important that trade associations are incentivisedto act responsibly for the sake of both suppliers andretailers. I will be happy to discuss this further inCommittee.

Noble Lords, including my noble friend Lord Plumband the noble Lords, Lord Palmer and Lord Grantchester,demonstrated a close interest in the question of sanctions.I agree that getting right the sanctions available to theadjudicator is critical. I know that we will continue toexplore this issue.

The noble Lord, Lord Grantchester, the noble Earl,Lord Sandwich, my noble friends Lord Razzall andLady Randerson, and the right reverend Prelate theBishop of St Edmundsbury and Ipswich suggestedthat the process of consultation on fines could bestreamlined. Our intention is for the fining power to

be introduced promptly, if necessary, but also to ensurethat its introduction is based on proper considerationof the evidence. I shall be very happy to discuss withnoble Lords how the details of the Bill can ensure thatsuch a power is delivered.

I seem to be answering a lot of questions from thenoble Lord, Lord Grantchester, and my noble friendLord Razzall. Perhaps it is because they asked themearly on. I have a lot of answers here. I shall try not torespond to them too much again because I am notresponding to some other noble Lords.

An important question was asked about whatconsumers think of the adjudicator, I think by my noblefriend Lord Eccles. A poll by War on Want last yearfound that 84% of consumers support the establishmentof the adjudicator. The general public have a keensense of fair play and do not like to see farmers andsuppliers being exploited in any way by anyone. At thesame time, they, too, wish to see fairness in our dealings.Consumers are, of course, the ultimate beneficiariesfrom a stronger and more competitive groceries market.

Many thoughtful and incisive points were raisedtoday, and I hope that I have been able to addresssome of them. Obviously, I will write to noble Lordson any of the questions that I have not been able toanswer. I am sure that we will continue to explorethese and other issues in Committee and on Report.

I have in my time supplied supermarkets with chilledfood, before any code or the prospect of an adjudicator.In those days, the 1980s and 1990s, there was nowritten contract for chilled food, and I had no writtencontract to go to the banks to raise money. It was noteasy to get them to say that they would buy somethingfor you at that time, so I would have loved to have hada code and an adjudicator. Yet it was very exciting tosupply to a large supermarket group. We were onlya small to medium-sized company. At that time thesupermarket groups were very worried about havingvery few suppliers, and they did the best they could tomake sure they had a large range of suppliers and tohelp us to overcome the barriers to supplying so much.

However, I also remember the dreaded special offers.When they arrived, it was extremely difficult for us tofulfil them without having to work through the nightand putting on extra shifts. Any profits that we madein those two weeks went out of the door with all thestaff we had to engage. That was the price of havingcontracts, not even written ones, with very largesupermarket groups. If I had to give any advice to acompany starting to deal with them, I would say thatthe excitement of a contract should be resisted untilyou fully recognise the terms and conditions and theimplications of what they mean to you, because theyare very big contracts that you are taking on and theyhappen regularly every week.

This Bill appeared in three major parties’ manifestos.I hope that those of all parties and noble Lords on theCross Benches will wish to ensure that the adjudicatorprotects suppliers, including farmers, from any unfairdealing, and does so without needless disruption tocommercial arrangements. I look forward to my noblefriends Lord Howard and Lord Eccles and the nobleLord, Lord Myners, taking part in Committee so thattogether we can ensure that this Bill delivers on our


aims and achieves the best possible outcome for thegrocery supply chain as a whole. Fair market practicefrom the supplier through the retailer to the consumeris exactly what we want from the biggest industry inthis country.

Bill read a second time and committed to a Committeeof the Whole House.

Local Government Finance BillFirst Reading

5.53 pm

The Bill was brought from the Commons, read a firsttime and ordered to be printed.

Proceeds of Crime: EUC ReportMotion to Agree

5.54 pm

Moved By Lord Hannay of Chiswick

To move that this House agrees the recommendationof the European Union Committee that Her Majesty’sGovernment should exercise their right, in accordancewith the protocol on the position of the UnitedKingdom and Ireland in respect of the area of freedom,security and justice, to take part in the adoptionand application of the proposal for a directive ofthe European Parliament and of the Council onthe freezing and confiscation of the proceeds ofcrime in the European Union (document 7641/12)(32nd Report, Session 2010–12, HL Paper 295).

Lord Hannay of Chiswick: My Lords, I beg to movethe Motion standing in my name on the Order Paper.It is in my name because I have the honour to chair theEuropean Union Committee’s Sub-Committee on HomeAffairs, which at the end of the last Session preparedthe report now before your Lordships’ House.

As your Lordships know, when the House considersreports of the European Union Committee, this isalmost invariably on the Motion that the House shouldtake note of the report. In the case of this report, theMotion invites the House to agree the committee’srecommendation. The reason for this is that the reportdeals with draft legislation falling within the area offreedom, security and justice, and the legislation willapply to this country only if the Government exercisetheir right under the protocols to the treaties to takepart in the legislation—in other words, if they opt intoit. They have to do this within three months of theproposal being presented to the Council, which, in thecase of the directive we are considering tonight, meansbefore 15 June. The committee believes that theGovernment should do so, and the Motion invites theHouse to agree with the committee.

Last year, this Government repeated an undertakinggiven by the previous Government—usually known asthe Ashton undertaking—that time would be foundto debate opt-in reports well before the expiry of thethree-month period. I am grateful that, despiteProrogation, the Government have made time available

for this debate early enough for them to be able to takethe views of the House into account before theyformally reach a decision on whether to opt in.

Freezing and confiscation of the proceeds of crimeis one of the most effective ways of fighting crime.Since criminals are much more mobile and much moreingenious about hiding these proceeds, it clearlystrengthens this aspect of the fight against organisedcrime if such freezing and confiscation can be enforcedacross the whole of the European Union and not justwithin one country’s borders. There is current EUlegislation on the subject in a series of frameworkdecisions stretching from 2001 to 2006. Two of theseestablish minimum rules on freezing and confiscationof proceeds of crime. There is, however, nothing toprevent member states enacting more stringent legislation,as this country has done in the Proceeds of Crime Act2002. The new draft directive that we are debating thisevening would supersede these two framework decisionsand add to them fresh powers—in particular, thepower to confiscate the proceeds, despite there havingbeen no criminal conviction because, for example, ofthe death or flight of the suspected person. This is apower already available to the courts of this country.My committee supports the proposal that the courtsof all member states should be required to have thispower.

The confiscation of the proceeds of a crime is ofcourse an integral part of the penalty—the criminalshould not be allowed to profit from their ill gottengains—but even more important is the deterrent effect.Criminals who know that the proceeds of their crimesare likely to be confiscated may think twice beforeembarking on criminal activities. It is therefore aweakness in our law enforcement system that, as thingsare, the proceeds are not all that likely to be confiscated.The figures available are, unfortunately, very speculative,as estimates of the proceeds of crime vary wildly. Inthe United Kingdom one estimate is that, of the£15 billion annually criminally acquired, in 2009-10only £154 million was recovered to the state. That isnet of assets recovered for the victims and of managementexpenses but, even so, the proportion of the proceedsrecovered cannot on any measure exceed 3%. Theposition in other member states is no better. Thedeterrent effect is thus currently small but not negligible.

The Costa del Sol has been the haven of choice forcriminals to retire to and enjoy the fruits of their labours.The statistics from Eurojust show that in 2010 onecase in Spain resulted in the confiscation of ¤112 million,with many other cases netting smaller amounts and, inaddition, a number of properties, boats and luxurycars. This demonstrates the importance of all memberstates having these powers.

The Government have stated on many occasionstheir determination to pursue the fight against seriousorganised crime. In my view, this entails not justhaving adequate domestic law in the United Kingdombut bringing pressure to bear on other member statesto have provisions in their own laws on freezingand confiscation which at least meet the minimumrequirements laid down in this directive. The committeetherefore believes that it is important that the Governmentshould opt in to the proposal and play a constructivepart in negotiating a strong directive, and support

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[LORD HANNAY OF CHISWICK]other member states which may have weaker lawenforcement systems thereafter to implement the systemeffectively. That is where there have been doubts in thepast and I hope that this new legislation will provide abasis for much more effective work in the future.

There is one aspect of the draft which has causedthe committee real concern. It is a regular feature ofserious crime that the criminal will launder the proceedsinternationally and put them into assets in many countries.A conviction in one country will therefore be fullyeffective only if a confiscation order made by onecourt is automatically recognised and enforced in othermember states. There are two framework decisionsdealing with mutual recognition of freezing andconfiscation orders, but the directive being discussedtonight does not deal with that topic. We hoped thatthe directive would repeal, replace and strengthen theprovisions of all four framework decisions. Instead, itrepeals, replaces and strengthens the two dealing withthe making of freezing and confiscation orders, butleaves in place those dealing with mutual recognitionof orders made in other countries’ courts. The committeefears that that may be an unintended consequence ofthe arbitrary and illogical division of the formerCommission directorate of freedom, security and justiceinto two separate directorates, dealing respectivelywith justice and home affairs. I would like to hear theMinister’s views on this; perhaps he could in any casetell the House whether the Government will argue inthe negotiations for the new directive to be extendedto include mutual recognition provisions as well.

This is only one of a number of aspects of thedirective that we would like to see raised in the negotiations.Others are detailed in our report. Some are technical,but there is one to which I should draw attention. Ifthe Government were not to opt in, the United Kingdomwould remain bound by the current provisions of theearlier framework decisions, which will thus be includedin the list of those measures on which the Governmenthave to decide—by May 2014 at the latest—whetherall or none of them should continue to apply to theUnited Kingdom. That arises under Protocol 36 tothe treaties. I am not wishing to raise that extremelyinteresting and sensitive issue tonight, but merely saythat it is one about which your Lordships will hearmore in the period ahead of us, not least from theEuropean Union Committee, which will be carryingout an inquiry into the background to the 2014 decisionin due course, and nearer that time.

We are continuing to keep the directive under scrutiny,so at this stage one matter only comes formally fordecision to the House: whether or not the Governmentshould exercise the United Kingdom’s opt-in. For thereasons I have given, the committee is firmly of theopinion that the Government should do so. I hopevery much that we will hear from the Minister at theconclusion of the debate that this is their intention.

6.03 pm

Lord Hodgson of Astley Abbotts: My Lords, I amno longer a member of Sub-Committee F; I have beentransferred for a period of rest and recreation toSub-Committee G under the chairmanship of mynoble friend Lord Bowness. These are probably my

valedictory remarks in connection with a report of thesub-committee that I was on when it was prepared. Ienjoyed my time on the sub-committee, first under thechairmanship of my noble friend Lord Jopling andmore recently under the chairmanship of the nobleLord, Lord Hannay, who, with his impeccable style,has given us a clear exposition of the issues beforeus. We were splendidly looked after and impeccablymarshalled by our clerk, Michael Collon. His deputywas originally Michael Torrance, who has now ascendedto higher and greater things to the clerk of the committee.I am only sorry that I shall not be there to see himin action.

It is a truism that the past 40 to 50 years have seenthe trends of globalisation and interdependence ofnations burgeoning. It is hard for me to remember thatwhen I first finished university and went to work inNew York, one could not make an international telephonecall; one had to book it. At weekends and holidays,one might have to book it several days ahead. In theinvestment bank in which I worked, because I had adecent English accent, my first job was to chat up theoperators at the New York international exchange sothat the lines could be kept open until my bosses wereready to make the telephone calls that they wished to.

In those days, when you went abroad it wasdemonstrably a foreign country, in a way that isinconceivable today. With Ryanair and easyJet, peoplepop all over Europe and indeed over the wider worldin a way that in my youth was considered impossible.The emergence of global brands of clothing has meantthat some of the physical appearances of us all havebecome much more similar. I think, by the way, thatthere is a PhD thesis to be written on the role of jeansin creating a global culture, but that is for another day.

All this is no doubt a good thing—increasinginternational understanding and so on—but there isof course a seamier side, which is the subject of ourdebate today. It used to be said that if the Governor ofthe Bank of England raised his eyebrows in the City ofLondon, whatever was being complained of wouldstop, and no doubt the news that Scotland Yard wason your tail had a similar calming effect. These threatsno longer have the same power or influence, becauseof globalisation. My first reason for encouraging theGovernment to opt in to this proposal is that crimehas gone global. As our report on the EU’s internationalsecurity strategy said,“the nature of the international threat in this area was clearer andthat therefore international cooperation was”—

as one of the witnesses put it—“utterly indispensable”.

The second reason, which was referred to by thenoble Lord, Lord Hannay, is that to date our efforts atrecovery have only scratched the surface, and there isa serious need to up our game. This means that workto establish effective asset recovery offices across thecontinent of Europe is a very high priority. To see howhigh, I suggest that the Minister ask his officials tolook at Annex 2 to the Commission Staff WorkingPaper. Only eight countries are listed out of the totalin the EU. Every set of statistics is on a different basis,no headings are the same and you have no way oftelling what the level of effort is or how effective it is,or of comparing one country’s performance with another.

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Even turning to the United Kingdom, which has acommendable record in this, and looking at the Seriousand Organised Crime Agency’s report, which the nobleLord, Lord Hannay referred to—he gave the net figurefor recovery, but the gross figure is £350 millionrecovered—in the same year when the Governmentsaid that cybercrime was costing the UK £27 billion,we were recovering £350 million gross. That is thesecond reason for urging the Government to opt in.

The third reason is that we need to establish somecentralised mechanism to share information, establishbest practice and spread it across Europe. Of thereports that we have had in Sub-Committee F, one ofthe most depressing sets of evidence was from Europol,which said that all too often police forces in individualEuropean countries have bilateral arrangements anddo not send information through Europol itself. If weare not able to create a central approach to this, thenfor certain the cops will never catch up with therobbers. We need to make sure that within this proposalthe ability of Europol to set standards, find out what isgoing on and make sure that a proper level of collaborationand co-operation takes place, is critical.

What are the downsides? One answer perhaps lies inAnnex 4 of the Staff Working Paper. Pages 58-71,headed “Asset recovery in the UK”, show what a lot ofgood work is being done in the UK. However, this is ofabsolutely no value unless other countries in the EUare upping their game at the same time. Page 6 of theExplanatory Memorandum states:

“In order to address the lack of data, the main economicanalysis is … based on a model which uses proxy indicators toextrapolate from a detailed analysis of income and cost in the UK(the only Member State for which income and costs for allelements of the asset confiscation system can be estimated andwhich has a confiscation system that is a reasonable approximationof the maximal legislative sub- option)”.

So we are ahead of the game and, judging from thatstatement, most other countries are far behind us. Thesame report states that:

“EU Member States will progressively sign and ratify the 2005Council of Europe Convention”—

which is on laundering, search, seizure and confiscationof the proceeds of crime.“While this Convention is based on a relatively good consensus,seven EU Member States have not even signed it yet”.

So we have some justification in this country in being atrifle cynical. The UK is leading the way—we are takingon the associated costs and bureaucratic impediments—but who is following us?

My second reason for being concerned is that thetrans-European experience on judicial co-operationhas not always been an unqualified success. I refer inparticular to the European arrest warrant. I declare aninterest as a trustee of Fair Trials International. It is amixed experience on access to interpreters, on accessto the proper level of legal advice and on common bailconditions. Some noble Lords may say that we aretalking about something completely different here, butin the Explanatory Memorandum there are some seriousquestions about levels of proof in different Europeancountries, particularly a criminal standard of proof incountries such as Germany, while others, such as thiscountry, use a civil standard of proof to facilitateconfiscation. There is a lot of work to be done at thenitty-gritty end to make this decision meaningful.

My reasons for supporting opting in clearly outweighthose for standing aside, for the reasons that the nobleLord, Lord Hannay, gave. However, there is a lot to bedone by the Government to ensure that the detailedwork that will make this effective is given real impetus.If it is left in a half-formed state, not only will it beineffective in tackling the problem, which we all agreeis serious, but it will add another burden to this countrywhich our competitor and fellow European states arenot undertaking.

6.13 pmLord Judd: My Lords, like the noble Lord, Lord

Hodgson of Astley Abbotts, I have had the privilegeof serving on the committee and putting my name tothe report. It is very important at the outset to placeon record how the members of the committee appreciatethe leadership and chairmanship of our chair, thenoble Lord, Lord Hannay—it is good to work underhim—and the effective and professional work of theclerk and his colleagues. They made a very strongcombination and we should put that on record.

In a debate last night we paid tribute to the nobleLord, Lord Roper. We should today take the opportunityto say that it is very good that his successor is with usin these deliberations and to wish him well. He has gota difficult act to follow but, having known him overmany years now, I think he has all the talents and skillsthat will enable him to fulfil the role very effectively.Therefore, as I say, we wish him well.

We know that there are some very big issues beforethe European Union at present on which there areprofound matters of difference. We also know thatboth the Government and the Opposition frequentlytake the opportunity to restate that they are in no wayquestioning our membership of the Union and thatthey are deeply committed to its success. That is why,when we come to specific matters such as this, it is allthe more important to be positive, to engage and todo all we can to make a success of what is beingrecommended. Like the noble Lord, Lord Hannay, Ibelieve very strongly that we should get on with ratifyingand implementing this proposal.

Obviously, crime has become very sophisticatedand the rather disappointing figures on how much ofthe proceeds of crime is actually recovered is in no wayany criticism of the dedicated people who are doingthe police and other work involved. It is, however, anindication of the complexity and size of the challenge.It is not an issue that we can possibly solve on ourown; we simply have to work with others. Therefore,this proposal has great merit in enabling that to happen.In making that point I would like to emphasise oneother issue, about which frankly I get rather anxious.Due to the complexity of the kind of crime we aredealing with in these proposals, it is very difficult—infact it may be impossible—to establish a dividing linebetween what is legitimate, legal business and what isvery significant crime. There is not a clear-cut dividingline all the time; there can be overlaps. Of course, inour newspapers we read about the more sensationalevidence of this every day. That is another reason formaking sure that we have the strongest possibleinternational collaboration in making a success of thearrangements that exist.

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[LORD JUDD]I hope that we will not delay any longer in ratification.

I hope also that by showing our commitment at a timewhen we are differing from the Community on somany other issues, we will take the opportunity todemonstrate how strongly we believe in the Communitywhere it really is relevant and can help us all inmeeting the challenges that face us. If we are alwayshanging about on everything, it rather undermines thestrength of the commitment, as it is expressed, tobelonging. We really should get on with it.

Having said all that, I want strongly to endorsewhat the noble Lord, Lord Hodgson of Astley Abbotts,said. One of the characteristics of the European Unionand its activities—although it is not only the EuropeanUnion—is that everything can become terribly complexand, in a sense, abstract and intellectual. It becomesabout legislation, but legislation does not solve theproblem. It is the monitoring the detail—what is actuallydone—that achieves this. There are quite a number ofareas in which it has become clear to me since I havebeen on the committee that there is a great deal to bedone, together with our colleagues in the EuropeanUnion, to strengthen the monitoring and scrutiny notonly of the legislation and its intentions, but how theactivity is going; what is strong, what is weak, whatneeds to be put right, and what this demands of us all.I think the noble Lord was absolutely right to makethat point and it is one with which I totally concur.

I strongly support the chairman’s recommendationand I am very glad to be associated with the words ofthe report. I do hope we are going to hear a verypositive response from the Government and the Ministeron how quickly and firmly they intend to proceed.

6.20 pm

Baroness Hamwee: My Lords, the whole House willbe grateful to the noble Lord, Lord Hannay, and to hissub-committee. Even for a Europhobe, which I amemphatically not, it seemed to be a no-brainer. However,as I read the report, I realised that issues arise whichmake one consider the differences in approach betweenour law and procedures and those of other Europeanstates, and the overall principle of how far one shouldgo in willing the means as well as the end. As has beensaid, we are talking about big crime, which is bigbusiness. The Explanatory Memorandum to the directivereferred to it in what was very much a financial takeon the situation, and to the position weakening,“our ability to fight cross-border … crime”—

yes—and affecting,“the functioning of the Internal Market by distorting competitionwith legitimate businesses”.

It also referred to depriving,“national governments and the EU budget of tax revenues”.

I do not quarrel with that, but there is another dimensionto this. There are real, human victims of serious,organised international crime and therefore the deterrenceof confiscation is of great importance.

As we have heard, it is very hard to stay ahead onthese matters. Criminals seem to manage to be aheadof agencies and I wonder whether harmonisation inthe EU will drive the transfer of funds outside the EU.

You do not have to go as far as somewhere such asBelize to get outside the EU. Following the money israrely straightforward. People who have headed forbankruptcy on a rather smaller, more personal scaleknow well about trying to transfer assets so that theyare not, they hope, liable to be seized. Again, theExplanatory Memorandum deals with this. Obviously,the directive does as well but I am afraid that I cannotclaim to have read that.

Third-party confiscation raises some quite importantissues. I was interested to see that the provision,“requires third party confiscation to be available for the proceedsof crime or other property … received for a price lower thanmarket value and that a reasonable person in the position of thethird party would suspect to be derived from crime”,

which clarifies the “reasonable person” test. Given thesophistication of much organised crime, evasion islikely to be very sophisticated and there will be innocentthird parties, so that gave me a little cause for concern.I was also worried about confiscation in the absence ofconviction—something that we in this country, withour own legal traditions, would be particularly awareof. I was reassured by the explanation that this wouldbe in very limited circumstances, where the courtfinds,“that a person … is in possession of assets which are substantiallymore probable to be derived from other similar criminal activitiesthan from other”,

non-criminal “activities”; and, importantly, that:“The convicted person is given an effective possibility of

rebutting … specific facts”,

and that there are rights of appeal. “Substantiallymore probable” is an interesting phrase and not onethat we are that familiar with here. I do not know howit works with our recognised standards of proof but,reading it in a common-sense way, it seems to me to besomewhere between the balance of probabilities andbeyond reasonable doubt.

The report makes the point, which has been madein the debate, that if we do not opt in it sends thewrong message to our partners about the Government’sattitude to international co-operation and that thereare impacts beyond the subject matter. The reportstates:

“We have no doubt that the Government should opt in”.

Neither have I.

6.25 pm

Lord Rosser: My Lords, I thank the noble Lord,Lord Hannay of Chiswick, for his very helpful openingspeech, for the work that he and his committee havedone on the draft directive that we are discussing andwhich we broadly welcome, and for the report that hasbeen presented to us.

We await the Government’s response with interest,but I understand that a decision has now been taken toput back the scheduled debate upon the draft directivein the other place. It was scheduled to take placetomorrow. No doubt the Minister will confirm whetherthat is the case and, if so, will tell us why and, unlessthe reason is a lack of time in the other place tomorrow,why the Government considered it appropriate toproceed with our debate today.


The treaty of Amsterdam gave the Council the powerto legislate in this field of police and judicial co-operation,since when four framework decisions and one decisionhave been adopted covering the area that we areconsidering today. The framework decisions requiremember states to enable confiscation, harmoniseconfiscation laws and provide for mutual recognitionof freezing orders and confiscation orders. TheCommission’s view is that member states have beenslow in transposing the framework decisions onharmonising confiscation laws and providing mutualrecognition of freezing orders and confiscation orders,and that the relevant provisions have often beenimplemented in an incomplete or incorrect way. Thenoble Lord’s committee has made it clear that it findsthis most unsatisfactory, and it would be helpful toknow if that is also the Government’s view.

The new draft directive appeared at one stage to havebeen expected by the Commission to strengthen theEU legal framework on confiscation through allowingmore third-party confiscation and extended confiscation,and to facilitate the mutual recognition of non-conviction-based confiscation orders between member states. As thecommittee’s report states, though, in actual fact thedraft directive is silent about mutual recognition, andthe committee expressed its concern at the failure ofthe draft directive to deal adequately with the mutualrecognition of extended confiscation orders and todeal at all with the mutual recognition of civil recoveryorders. Once again, it would be helpful if the Ministersaid whether that concern is shared by the Government.

The principal issue considered in the report fromthe noble Lord’s committee is whether the Governmentshould opt in to the proposed directive, and it is in nodoubt that they should. The noble Lord’s committeehas drawn attention to the very small proportion ofthe proceeds of serious organised crime that is currentlyrecovered, has observed that confiscation would be amore effective weapon if there were better co-operationat international level and has stated that a failure bythe Government to opt into a measure setting outminimum provisions to be adopted by member stateswould be against our national interest, since it wouldbe in our national interest for all member states tointroduce tougher measures on the confiscation ofcriminal assets. The committee also expressed the viewthat not opting in would send entirely the wrongmessage to our partners about the Government’s attitudeto international co-operation. What is the Government’sresponse to this case for opting in that the committeehas made in its report?

The Government have stated in their ExplanatoryMemorandum that they take a case-by-case approachto the application of the opt-in protocol and that, inthis instance, the issues that they will need to considerin particular are: the ability to support or develop ourasset recovery programme; wider domestic developmentsin tackling organised crime; the burden on the legislativeprogramme; cost; and association with other internationaldevelopments. The committee was clearly underwhelmedby the strength of the issue of,“burden on the legislative programme”,

describing it as “lacking in merit”, bearing in mindthat member states will have two years from the dateof adoption of the draft directive in which to transpose

it into national law, and bearing in mind that theGovernment consider that United Kingdom law alreadycomplies with most of the substantive provisions ofthe directive. In the light of the comment in thecommittee’s report, will the Minister say if,“burden on the legislative programme”

is still seriously being advanced as an issue that needsconsidering when determining whether or not toopt in?

A decision on whether or not to opt in needs to betaken, as I understand it, by the middle of June, sincethe directive will apply to the United Kingdom only ifby 15 June the Government notify the President of theCouncil that we wish to take part in the adoption andapplication of the directive—in other words, to opt in.

In the later paragraphs of their ExplanatoryMemorandum, the Government make a number ofpoints that, frankly, could be construed as the basis ofdeveloping a case for not opting in. While the committeehas made an argument in its report for opting in, andindeed strongly supports taking that course of action,the Explanatory Memorandum appears to lack anyparticularly positive statements about the draft directive.I hope that the Minister will give us an indication ofthe Government’s current thinking on the draft directive,although maybe, if it is true that there has been ahiccup that has led to the debate in the other placebeing put back, we shall find that the Minister is nolonger in a position to say anything very much.

It would be helpful, though, if he could say what furtherdevelopments there have been since the ExplanatoryMemorandum of 26 March that update any of theissues or points referred to in that memorandum. Itwould also be helpful if he spelt out in more detail, ifthey have not yet made a decision, the specific pointsbeing considered and why they are crucial under thefive issues that the Government are considering beforedeciding whether or not to opt in, which I referred toearlier and which are set out in paragraph 26 of theExplanatory Memorandum. Included in those fiveissues is the issue of cost. What conclusions have theGovernment reached on this score, and why?

The report of the committee of the noble Lord,Lord Hannay, sets out, in paragraphs 14 and 15,certain legal questions. What is the Government’sresponse to those questions and points? The committeealso say in paragraph 20 of its report that the jointaction and certain provisions of the two frameworkdecisions are to be repealed and replaced, but only,“in relation to Member States participating in the adoption ofthis Directive”.

The report goes on to say on this point that if theUnited Kingdom does not opt in, it will continue to bebound by the existing measures and that this would bean unfortunate situation and an unnecessary complication.Do the Government share the committee’s view onthis point?

The House of Commons European ScrutinyCommittee said in its report last month that,“the draft Directive nevertheless represents a significant extensionof EU competence on such matters as third party and non-convictionbased confiscation and on the freezing of property, in some caseswithout first obtaining a court order”.


[LORD ROSSER]Is that the Government’s view as well? If so, is it

this point that is the Government’s principal concernover opting in?

We share the committee’s view about the importanceof co-operation at the international level on the freezingand confiscation of the proceeds of cross-border organisedcrime. I hope that today the Minister will be able to tellus more about the Government’s stance on the draftdirective, including issues that are still of concern tothem or are unresolved and which may still be precludinga final decision on whether or not to go down the roadrecommended by the noble Lord’s committee—namely,that we should opt in to this draft directive.

6.35 pmThe Minister of State, Home Office (Lord Henley):

My Lords, as always, I welcome the opportunity todebate the draft directive. I offer my thanks to thenoble Lord, Lord Hannay, for his introduction,particularly for his explanation of the process, for hisexplanation of the Ashton undertaking and how weare supposed to take these things forward. It is obviouslyright that the Government should listen to the expertisethat we have in this House and on the EuropeanUnion Committee. On that basis, I welcome the presenceof the noble Lord, Lord Roper, the former chairmanof that committee; the noble Lord, Lord Boswell,whom I can no longer call my noble friend now that hehas taken over that job; and all those who offer theirexpertise, particularly the noble Lord, Lord Hannay.The Government will certainly bear all that in mindbefore making their decision on whether to opt inor out.

At this point I must offer an apology to the Houseas, at this stage, the Government have not made adecision as to which way we should go. As the nobleLord, Lord Hannay, made clear, if we want to opt inat an early stage, we must do so before 15 June. Adecision will certainly be made before then. However,it is always possible that we could opt in after finaldecisions have been taken and the whole adoptionstage has been completed, when we have seen what hasbeen agreed. There are very difficult decisions to bemade. I hope I will be able to explain exactly why wehave not yet made a decision and give some thought toour reasoning behind the different options before us.

Before I do so, I will say a little about the timing ofthis debate and the debate in another place, which wasraised by the noble Lord, Lord Rosser. I know that thenoble Lord is immensely experienced and has been inthis House for a number of years. However, he obviouslydoes not realise that things operate on a very differentbasis between the two Houses in this particular matter.In line with the Ashton undertaking, the appropriatetime for this debate to take place was a matter for thenoble Lord, Lord Hannay, as chairman of the sub-committee, to negotiate with the usual channels. It wasagreed some weeks ago—before we prorogued, I think—that it would take place around now. Quite rightly, itwent ahead. Even though the Government have notcome to their final decision, it would not have beenright for me or anyone else to go to the noble Lord,Lord Hannay, to suggest that it should be put off to alater date, purely because we had not made a decision.

The debate in another place is on a governmentMotion, which is completely different. It would not beright for the Government to table a Motion beforethey have made up their mind. However, as the nobleLord is probably aware, the Government will make uptheir mind before 15 June. We will have that debateand another place will have a debate—I give thatassurance—before 15 June.

Lord Rosser: I think I understand the procedures.Will the Minister just confirm whether it is true thatthe debate in the other place was scheduled to takeplace tomorrow and that it has been put back?

Lord Henley: My Lords, my understanding is that adebate was to take place tomorrow. It was put backbecause the Government have not come to a finaldecision. There is nothing wrong with that. TheGovernment want to make the right decision. All thatI make clear to the noble Lord, who obviously doesnot understand these procedures, is that we will havedone so before 15 June. That is our timeline. I give thenoble Lord that assurance. The noble Lord seems toimply that there is some sort of conspiracy here. TheGovernment want to get it right and must put down aMotion for the debate. Procedures in this House aredifferent, which is why we do things differently. Thenoble Lord should have understood that.

I want to explain relatively briefly what our thinkingis and not which way we are going—as I have said, adecision has not yet been made—but the pros andcons of the different options before us. I want to makeit quite clear to the House that we believe that assetrecovery is a very important weapon in our efforts totackle organised crime. We believe that the proceeds ofcrime are not only a central motivation for organisedcriminals but that they also fund further criminality.Freezing and confiscating criminal finances hurtsorganised criminals and protects the public.

The United Kingdom has advanced legislation inthis area, as other noble Lords have alluded to, and wehave had real operational success. In 2010-11, UnitedKingdom law enforcement agencies froze or recoveredmore than £1 billion worth of criminal assets. Theamount of assets recovered has increased year-on-yearsince the Proceeds of Crime Act 2002 was passed. Asmy noble friend Lord Hodgson made clear, the UnitedKingdom is recognised as a leader in this field. We stillwant to do more, particularly on international assetrecovery, as we made clear in our organised crimestrategy in July 2011. In 2008, it was estimated thatsome £560 million of UK criminal assets was heldabroad. Improved international co-operation is a necessarystep towards recovering that money. That is why wewelcome the aims of this directive. It is right that weseek, as leaders in this field, to drive up standardsthroughout the European Union and to find betterways of working together with our EU partners. Tothis end the directive covers confiscation following acriminal conviction, extended confiscation, third-partyconfiscation, non-conviction-based confiscation, andpowers to freeze assets.

We must, of course, consider carefully the contentsof the draft directive. The Government’s analysis is inprogress. Our recommendation on the opt-in decisionwill be communicated to the parliamentary scrutiny


committees at the first opportunity. The United Kingdomalready has all of the powers envisaged by the directivein our Proceeds of Crime Act 2002. In almost all areaswe exceed the minimum standards established by thedirective. There are, however, areas where changes todomestic legislation might be necessary were the finalversion of the directive to include the same provisionsas this draft.

Some aspects of the directive’s provisions on non-conviction-based confiscation, extended confiscation,and freezing without a court order do not sit easilywith our domestic regime. Without prejudice to theGovernment’s final position, it should be noted thatthe directive as drafted appears to pose a risk to ourdomestic non-conviction-based confiscation regime.Our non-conviction-based confiscation powers are civillaw measures—they allow prosecution agencies to takeaction against property that they think has been acquiredthrough unlawful activity. The action is not takenagainst an individual and no criminal conviction isnecessary. It is a particularly useful tool for tacklingthe high-level, organised criminals against whom it isdifficult to achieve a criminal conviction. In 2011-12,some £20 million worth of criminal assets were recoveredusing non-conviction-based confiscation powers.

Due to its criminal law basis, the directive risksplacing non-conviction-based confiscation measuresin the UK onto a criminal law footing, opening newavenues of legal challenge to our powers. If criminallaw procedural protections and a criminal law standardof proof were introduced, our domestic regime couldbe severely weakened and our law enforcement agencieswould find it harder to disrupt the workings of someof the most dangerous organised criminals.

The Government are considering whether the bestapproach is to opt in to the directive and attempt tonegotiate out those aspects that conflict with ourdomestic regime; or whether the conflict in some areasis sufficiently serious that not opting in at this stage isthe better approach. While the directive does not offerdirect benefit to the United Kingdom’s domestic regime,tougher legislation and more effective action elsewherein the EU will help tackle those cross-border criminalswho cause harm in the UK, as the European UnionCommittee said in its report, and for that we aregrateful. We believe that it is vital that we get the detailright and we must consider the effect of the directiveon our domestic regime and its likely operational impact.

The noble Lord, Lord Hannay, wanted to knowwhether we would press for mutual recognition to beincluded in the directive from both conviction and nonconviction-based confiscation. We would like to seeeffective mutual recognition arrangements for bothconviction and non conviction-based confiscation.This aim would be better achieved through separateinstruments. The directive is a minimum standardsdirective; obviously, we will continue to work with ourpartners to seek further new mutual recognitioninstruments from the Commission.

None the less, it is certainly our intention to play anactive part in the negotiations on this directive, irrespectiveof whether we opt in or not at the outset: that is,before 15 June, the date to which the noble Lord, LordHannay, referred. The United Kingdom’s internationallyrecognised experience and expertise in asset recovery

will help us to achieve an influential position innegotiations. The directive offers us a valuable opportunityto raise the standard of asset recovery legislation inthe EU, enhance our co-operation with member states,and increase our powers to recover criminal assetsheld overseas. I repeat the fact that the expert views ofthe EU sub-committee will play a very important partin the Government’s thinking as they decide whetherto opt into this directive. For that I am very grateful,and again we will take note of everything that hasbeen said.

6.47 pmLord Hannay of Chiswick: My Lords, first, I thank

all those who participated in this short debate andhave made very valuable contributions. Perhaps I maybe permitted to thank in particular the noble Lord,Lord Hodgson of Astley Abbotts, whose departurefrom the sub-committee that drafted this report is acause of regret to all its members, because he has madea remarkable and constructive contribution to ourwork over the past three years. He will be sorely missed.

I join those who spoke about Michael Collon, ourclerk, who has guided this committee for so long andhas now moved on to greater things. He will alsobe missed.

As to the points raised in the debate, I followedcarefully what the Minister said. I understand theprocedural complexities of the matter and the need forthe Government to handle their relationship in theother place in a way that is consistent with reaching adecision on this. I admit to a scintilla of regret that theMinister could not rise to his feet this evening and saythat the Government had decided to opt in, but patienceis sometimes rewarded. I can see why they are in theposition that they are in.

The only point that I make is that from my ownexperience, and I think from the experience of muchof the legislation in this area, it is a better way toinfluence this sort of legislation effectively if one optsin and negotiates as a full negotiating partner than tohave to try to do it from the outside with the use of thepotential opt-in at a later stage when other peoplehave shaped the legislation. I am sure that the Governmentwould in those circumstances still try to exercise theirinfluence, but in my view they would have less influencethan if they opted in before 14 June. So I very muchhope that that is a decision that they will come to. Thismay be a triumph of hope over experience, but I evenhope that the scrutiny committee in the other placemay take a somewhat less negative view than it has onmany matters, particularly given the importance tothis country of Europe-wide legislation to deal withthe confiscation and recovery of assets. I do not find itbelievable that they should feel that it is not a reasonableobjective of our national policy and in our nationalinterests to see tougher provisions Europe-wide, notjust in this country.

I hope that this debate and its outcome, which Isuggest will be the House’s approval of the Motion onthe Order Paper, will be factored into the Government’sconsideration and will be given due weight.

Motion agreed.

House adjourned at 6.51 pm.


Grand CommitteeTuesday, 22 May 2012.

Arrangement of BusinessAnnouncement

3.30 pm

The Deputy Chairman of Committees (Lord Broughamand Vaux): My Lords, good afternoon and welcome tothe Grand Committee. If there is a Division in theHouse, the Committee will adjourn for 10 minutes.

Police (Collaboration: Specified Function)Order 2012


3.30 pm

Moved By Lord Henley

That the Grand Committee do report to theHouse that it has considered the Police (Collaboration:Specified Function) Order 2012.

Relevant document: 44th Report from the JointCommittee on Statutory Instruments

The Minister of State, Home Office (Lord Henley):My Lords, the order concerns the arrangements forproviding air support to the police forces of Englandand Wales. It specifies the provision of police airsupport as a function that must be carried out througha collaboration agreement applying to all police areasin England and Wales.

Sections 22A to 23I of the Police Act 1996 makeprovision for police collaboration in England andWales. Section 22A provides for the making ofcollaboration agreements involving policing bodiesand chief officers of police. Section 23FA enables theSecretary of State to specify police functions thatmust be the subject of collaboration. The order is tobe made under Section 23FA. Orders made underthis section must be approved by both Housesbeforehand; this procedural requirement is imposedby Section 23FA(4). This is the first order made underSection 23FA.

The scope of the collaboration agreement to bemade under the order will include the operation ofaircraft, staffing, equipment, airbases, ground controlfacilities, and maintenance arrangements, facilities andother resources necessary for such air operations. Theorder establishes the required outcome—a nationalcollaborative agreement for the provision of air support—but the detailed terms are a matter for policing bodiesand forces to agree.

The background to the order is a review of policeair support completed in 2009. The service-led reviewidentified scope to save £15 million per year by reducingthe number of police aircraft and bases while providinga more consistent service. Since 2010, proposals for acollaboratively organised national police air service—

the NPAS—have been developed under the leadershipof the chief constable of Hampshire. The principle ofa national service has been endorsed by all chiefconstables.

Discussions between the NPAS project team, policeforces and authorities have continued, but full agreementhas not been achieved. In January 2012 my righthonourable friend the Minister for Policing and CriminalJustice announced the Government’s intention to makethe order. The Government consulted the Associationof Chief Police Officers, the Association of PoliceAuthorities, the Mayor’s Office for Policing and Crimeand Her Majesty’s Inspectorate of Constabulary onthe proposed order. Responses were also received fromother police authorities and police organisations.

No responses directly opposed the order. Somesuggested that it was premature and some expressedconcerns about financial and operational aspects ofthe business case for the national police air service.The concerns expressed by respondents about thegovernance and management of the proposed NPASservice and about precise costs and savings were important.The Government’s view is that the best way to resolvethe concerns is through the detailed negotiation of acollaboration agreement by all forces and policingbodies. Therefore, it is timely and not at all prematureto make the order. It will ensure that all forces andpolicing bodies will focus on reaching an agreed set ofterms, conditions and governance arrangements forcollaboration.

A feature of the proposals for collaborative deliveryof a national police air service is that a single policeforce should take the lead. Several respondents to theconsultation noted that any force, and its policingbody, taking lead responsibility would require reassuranceregarding the continuing commitment to collaborationby other forces and policing bodies. The order willprovide that reassurance by ensuring that there is acollaboration agreement in place to which all forcesand policing bodies must be party.

The order provides a basis for a more efficient,effective and economical provision of police air supportthat noble Lords will want, and I commend it to theCommittee.

Baroness Doocey: I hope that noble Lords willforgive me; I am losing my voice. I have no problem inprinciple with the order. As a former chair of financeof the Metropolitan Police Authority, I am very muchin favour of anything that can be done to makeeconomies of scale and efficiencies. However, I have anumber of concerns. Wearing the hat of somebodywho sat for eight years on the Metropolitan PoliceAuthority, I emphasise that my knowledge and experienceis of the Met rather than of police forces nationwide.Therefore, with that caveat, I know that there arevarious concerns in the Met, and I wonder if theMinister can help to allay some of those concerns,particularly about the issues of governance and structureas set out in the draft agreement.

The strategy board has got quite a lot of power: itcan approve annual capital budgets and determine thedirection of the service. However, there is no representationon the board for PCCs—and in the case of London,

GC 1 GC 2[22 MAY 2012]Arrangement of Business Police Order 2012

[BARONESS DOOCEY]for the MOPC—other than from the lead force. Canthe Minister tell us how these people will be consulted,as the introduction of PCCs is clearly one of the keyparts of the government legislation, and what proposalsand process will there be for considering any concernsthat emerge?

I appreciate that the Minister talked in his introductionabout issues being resolved locally. However, I have aslight concern that if there is not quite a good steerfrom the Government on how these issues can beresolved, that might be a major problem down the line.I think that it would be helpful to address those issuesnow.

I have another concern. Although having an integratedstrategy for the air service is clearly sensible, how willthis affect the local accountability of local policeforces? I wonder if the Minister could address thatpoint as well.

Baroness Smith of Basildon: My Lords, I am gratefulto the Minister for his explanation. Like the nobleBaroness, Lady Doocey, I welcome the principle ofwhat the Government are seeking to do here—I do notthink that there can be any disagreement on it. However,like her, I have some concerns. I am sure that theMinister can help allay those concerns when he addressesthe questions.

I was interested when the Minister spoke about theconsultation that took place. He quoted the parts thatwere in the impact assessment, which was very helpful.As I mentioned to the noble Lord previously, I tried toaccess the Home Office website to get more informationon the consultation responses. I hope that my complaintsabout the website do not become a familiar theme inthese Committee sittings or when I discuss HomeOffice matters. However, I find it the most difficultwebsite to access that I have ever used. It has crashedon me something like six times in the past week, whichis as long as I have been in this post. I therefore felt at adisadvantage on this order by not being able to readthe consultation responses. I take on board entirely,and accept the Minister’s explanation, that none ofthe responses was directly opposed.

However, the situation with the website makes thisslightly more difficult. I would have liked to know thedifficulties that have prevented voluntary implementationfrom taking place. The noble Baroness, Lady Doocey,has been very helpful in using her experience with theMetropolitan Police to outline some of the issues.

The Minister says that there have been discussionsfor some time, that no one is directly opposed to it andthat everybody seems to think that it is a good idea—andyet it does not happen. So, what is the precise nature ofthe difficulties? One wonders whether those difficulties,depending on how practical they are, can be removedsimply by implementing legislation. If they are practicaldifficulties which the police are trying to resolve, puttinglegislation in place will not make them go away. Onequestion—if we can legislate to change things—iswhether he thinks that the police are simply beingdifficult by not reaching a voluntary agreement on theissues of concern which have prevented voluntarycollaboration to the degree that the Minister wouldlike. As the police, presumably, will still have to agree

the details of the arrangements being put in place, itwould be helpful to have a little more informationabout the difficulties and how they will be overcomeby legislation.

I appreciate that savings have to be made—I am notquerying that. I would never deny the need to makesavings. Indeed, I am one of those who look forgenuine efficiencies to save money. However, whenpolice forces are fully under the budgetary cosh inmany ways, collaboration can become more difficultfor them—understandably, it makes it that little bitharder to co-operate. If the Minister can say somethingmore about the agreements that need to be put inplace, and the discussions taking place to make thathappen, that would be welcome.

Perhaps I may also say something briefly aboutsavings versus efficiency. Where crime prevention andcrime detection are concerned, efficiency savings areone thing, but cuts in service, or reduction in thequality of service, is another.

I am seeking assurances from the Minister, becausethe impact assessment is perhaps slightly woolly onthis. It says that in some areas it is expected that thecollaboration will be resolved by some increases inresponse times for air support. It goes on to state thepositives, including that a 24-hour service will beavailable to all forces. Will the Minister quantify whatthose increases in response times will be? Will they besignificant? Which areas will be affected the greatest?Assurances from the Minister on that would be mostwelcome. In principle, the direction of greater co-operationand collaboration between police forces is welcome.I should be grateful if the Minister will address theissues that I have raised.

Lord Henley: My Lords, first, I apologise to thenoble Baroness, Lady Smith, for the failings of theHome Office website. We have to admit that it is notthe most perfect website. No doubt it can be improved,and in due course we will look to improve it to makesure that the noble Baroness can access information asand when she would like. That is why my noble friendLord McNally and I made it clear when we metyesterday to discuss other matters that we would providehard copies of certain information, to ensure that shedoes not have to go through this problem again.

Baroness Smith of Basildon: My Lords, I appreciatethe noble Lord’s offer. However, as I said to himyesterday, he might not appreciate a call on a Sundayafternoon when I am working at home. I appreciatehis going back to the Home Office to try to resolve thismatter.

Lord Henley: I certainly would not appreciate a callfrom the noble Baroness on a Sunday afternoon.I might not be available and I would not have access tothe papers either. Obviously we have to improve thiswebsite, because we all want to use it on a Sundayafternoon. That is the point of having an efficientwebsite. It is why all of us, in a whole range ofdepartments, have been subject to such complaints.We take that on board and will look at the website tosee what we can do.

GC 3 GC 4[LORDS]Police Order 2012 Police Order 2012

As regards the noble Baroness’s request for accessto the consultation responses, my understanding isthat it was a very limited consultation and the responseswere not published on our website. Therefore, that isprobably one of the reasons why the noble Baronesscould not get them. If they are available, I will makesure that she gets them.

I should have made clear in my opening remarkshow much I welcome the noble Baroness to HomeOffice matters. I saw her dealing with that ratherextraordinary debate we had on the Queen’s Speech,which covered a whole range of departments. On thatoccasion, I did not have the opportunity—

Baroness Smith of Basildon: Unfortunately, I wasunable to speak during the Queen’s Speech debate, butwe crossed swords across the Dispatch Box at QuestionTime.

Lord Henley: In whatever way, I am at fault in that Ihave not welcomed the noble Baroness to the HomeOffice brief. I do so with great warmness and I lookforward to many debates. She also asked about havingto look at the savings that are coming about and whatwe are trying to achieve. Perhaps I may remind herthat the exercise goes back to 2009 when her ownparty was in government. It sensibly started becausepolice forces—some 43 of them plus the British TransportPolice—vary in size enormously from the Met to, say,in my own area, Cumbria, which is a very small policeforce. Therefore, it is very difficult for some policeforces to provide the same coverage as others. That iswhy we are looking at much more working together ofall police forces and rationalisation of the servicesprovided, and into which individual forces could buyin as necessary.

As a result, quite obviously, one would be able tofind appropriate savings and produce a better servicefor the different police authorities. In the process, Iwould be able to guarantee that even a force such asCumbria, which obviously would not be able to affordsuch a thing on its own, could provide helicoptercoverage 365 days a year, 24 hours a day, in a way thatthe Met, which obviously is a much bigger policeforce, would be able naturally to do on its own. Thatis what we hope we will be able to do. Obviously, it isvery difficult for all of them to get together. That isone of the reasons why it was important to give ageneral shove to the forces, to try to deal with thesematters. The noble Baroness particularly asked whatexactly had impeded that agreement. I can say thatthere has been general agreement on the principle. Theorder provides the imperative since my noble friendannounced his intention to make the order. It givesthat extra shove from the centre, just to make sure thatthe things asked for will happen in due course.

3.45 pmTurning to the questions asked by my noble friend

Lady Doocey, I welcome her intervention in this debate,particularly with the expertise that she brings. She hasserved eight years on that police authority and we aregrateful for that. As regards local accountability, I cangive an assurance that it will not be compromised atall. Chief constables remain accountable to their PCCs,

or to the mayor in the case of the Met, for dischargingtheir functions collaboratively. As regards representationof PCCs, the point concerns the detail of the proposedcollaboration agreement for air support as a whole.This detail is under discussion with the NPAS projectand the service. I understand that the latest draft ofthe agreement provides greater PCC representation,including a representative of the Metropolitan PoliceAuthority as, obviously, it would be appropriate. Theterms of the agreement cannot be defined by theorder, but that will be dealt with in due course. We willhave to wait until then.

I hope that that deals with most of the points putby both my noble friend and the noble Baroness, LadySmith. Since I had general support from both of them,I commend the order to the Committee.

Motion agreed.

Misuse of Drugs Act 1971 (TemporaryClass Drug) Order 2012


3.48 pm

Moved By Lord Henley

That the Grand Committee do report to theHouse that it has considered the Misuse of DrugsAct 1971 (Temporary Class Drug) Order 2012.

Relevant documents: 44th Report from the JointCommittee on Statutory Instruments

The Minister of State, Home Office (Lord Henley):My Lords, this order was laid before Parliament on3 April—that is, if it is to remain in force. The orderwas made on 29 March and came into force on 5 April2012. It makes—I have to stress that this is one ofthose words that I find difficult to say—methoxetamine,and its simple derivatives, temporary class drugs underSection 2A(1) of the Misuse of Drugs Act 1971 for upto 12 months.

The Government identified and monitoredmethoxetamine, through our drugs early-warning system,in 2011. In light of the available evidence, I referredmethoxetamine to the Advisory Council on the Misuseof Drugs for advice in relation to temporary control inMarch. I thank the advisory council profusely for thequality of its advice, which was provided within 15 workingdays, allowing a decision to be made within a matterof days rather than weeks as has previously been thecase. It is the first time that the power to make such anorder has been used since it became available to theSecretary of State on 15 November 2011. It was alsothe first time that we invoked our drugs early-warningsystem to this effect.

The Home Secretary was satisfied, in considerationof available evidence, that the ACMD’s initial advicethat the conditions to make a temporary class drugorder were met. Methoxetamine is a drug being misused,and much misuse is having sufficiently harmful effectsto warrant temporary control. The ACMD likens theeffects of methoxetamine toxicity to those of acute—class C—ketamine use, including hallucinations, catatoniaand dissociative effects. It further indicates cardiovascular

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[LORD HENLEY]effects, agitation, hypertension and cerebellar featuressuch as ataxia—unsteadiness on the feet—rarely seenwith controlled drugs.

The order applies UK-wide to protect the publicwhile the ACMD prepares full advice on methoxetamine.It enables enforcement action against traffickers andhas already had an impact through self-regulation ofthe online trade. We know that at least 70 websitespreviously offering methoxetamine for sale—the numberof which increased from 14 to 52 in early 2011—haveceased this activity.

The order also sends out a clear message to thepublic, especially young people, that methoxetamine isa harmful drug. Of course, we will continue to monitordata on the drug to measure the impact of the orderthrough all available channels, and share this informationwith the ACMD.

I take this opportunity to bring to the Committee’sattention the recent publication of a cross-governmentaction plan to tackle new psychoactive substances, asan annexe to the first review of our drugs strategy. Wealso published our response to the ACMD’s advice,which helped to inform the action plan, and the 2011report of the Home Office’s forensic early-warningsystem, on the Home Office website, which I hope thenoble Baroness will find easier to access in due course.

I commend the order to the Committee.

Baroness Doocey: My Lords, I will be very brief.This is clearly a sensible precaution. It is very necessaryand I very much welcome it. In view of the very nastyand harmful effects of what is known of this drug—whichI am not even going to try to pronounce—it is, ifanything, overdue, and I think it is a splendid idea.

Baroness Smith of Basildon: My Lords, again Ithank the noble Lord for his explanation. We welcomeand support the order. The purpose and the benefitsare quite clear. I will not follow in his footsteps and tryto pronounce it. I am told the street name is “mexxy”—MXE—and I will stick with that because it is far easierto pronounce.

I have a couple of concerns, not around the specificaction taken here but about the process and time ittakes to get to this point. Both Switzerland and Russiahave already banned MXE. I have a slight concernover whether the processes in place are quick enoughto respond to the changes that are made. I know thatthe Minister is aware of the European MonitoringCentre for Drugs and Drug Addiction, which has akey role in detection and assessment of new drugswithin the EU. There is a recognition that these “legalhigh” drugs require very rapid action across Europe.

Since the Government came to power, the EMCDDAhas identified 90 new substances during 2010-11, but Iam concerned that the Home Office early-warningsystem has only identified 11. I am not clear why therewould be a discrepancy between the two. If the Ministerwas able to say something about that, it would behelpful. It may be that the processes that we employhere in the UK mean there are others in the pipeline—perhaps they are with the ACMD, I do not know.

It would also be useful to know when the HomeOffice became aware that MXE was a drug on whichaction should be taken. If the Minister can say anythingabout the work with the EMCDDA, that would behelpful. It seems quite clear that the EMCDDA is verymuch ahead of the game as to what is happeningacross Europe as a whole.

I was quite shocked when reading about this SI—andthe Minister reiterated the point—by the easy availabilityof these drugs via the internet. That does not confineitself to national boundaries. Also, the number ofinternet stores selling MXE increased in a very shortspace of time. In January 2011 there were 14 onlinestores; by July, within six months, this had risen to58 online stories selling MXE. Any delay in banningsuch drugs allows them to become established veryquickly. How is it possible to monitor such internetsites? Is this the responsibility of SOCA, which is tobecome the National Crime Agency? How are thesesites monitored to ensure that they do not take hold inthe same way?

One of the things that the impact assessment saidwas that there was a risk that a minor chemical changein the drug could make a new drug that would then belegal and unaffected by the order being made today.Are the Government looking at this issue? If they arenot, we could have a constant flow of temporaryorders each time there is a minor chemical change inthe drug.

Finally, the impact assessment and briefing notesfrom the Home Office highlighted the importance ofeducation in drugs awareness. Young people hearabout the drug, but think that it is a legal high and donot realise the quite devastating implications andconsequences. At the moment, we have the DrugEducation Forum, which brings together 30 high-profile, high-quality and knowledgeable organisationsacross the UK, including ACPO and the NSPCC.Unfortunately, the Department for Education haswithdrawn the funding from this body. My colleagueDiana Johnson, Member of Parliament and shadowMinister for the Home Office in the other place, haswritten to the noble Lord about this and I think thatit would be helpful if the Government were able tolook at this again. Clearly, by their own analysis,education is key to young people understanding thedangers of such drugs. It would be very sad to seegood action in one part of the Government beingundermined by action in another part that makes itmore difficult to tackle this problem. We certainlysupport the order but would be grateful for responsesto these questions.

Lord Henley: My Lords, I thank both my noblefriend and the noble Baroness, Lady Smith. I reiteratethat this is the first time that we have used this neworder. The point behind it is to act much more quicklythan we ever could in the past when we see new drugsbeing developed. That is why we created this system,which allowed me to refer this at a relatively earlystage to the ACMD, get its advice and then bring inthis temporary order, which will remain in effect for ayear while the ACMD does further work on decidingwhether this is right or proper.

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As the noble Baroness, Lady Smith, will know fromsome of the questions that were put to my honourablefriend in the debate in the Commons, there is this faintdanger, particularly with the way these things aredeveloping, that we are constantly chasing after newdrugs as new things develop. That is particularly thecase when, as she put it, you can have a very minorchange in something that creates a new drug that isnot covered. We therefore obviously have to considerwhether some more generic approach might be moreappropriate in the future.

4 pmAs to education, it is my privilege and honour to

chair an inter-ministerial group on drugs, which hasrepresentatives from a large number of departments.The Home Office chairs it but all the other departmentscome in. The Department for Education, along withothers, has always been involved and we are gratefulfor that. We take its involvement very seriously andlook at everything that it can do. We certainly recognisethat the Drug Education Forum, which the nobleBaroness referred to, has a very valuable role to play.Getting all Ministers together to work on this has hada very beneficial effect and will, I hope, lead to furtherthoughts about how we deal with these very difficultproblems. Sometimes, some of them seem to be almostinsoluble. Certainly, the Department for Education isfully committed to that process and Education Ministerscome to that meeting, for which I am very grateful.

The noble Baroness seemed to imply that the temporaryban had not had much effect on sales on the internet.As far as we are aware, we have seen a reduction. The70 or so websites that were offering MXE have nowceased selling the drugs. To put that into context, theEuropean Monitoring Centre for Drugs and DrugAddiction, the EMCDDA, reported that in the firsthalf of 2011 some 52 websites were offering MXE forsale. So we are making progress. We want to see howthis works. Obviously, we will want to see whether wecan use this process in the future.

I assure the noble Baroness that the Governmentare doing as much as they can to tackle the muchwider trade in legal highs, the new psychoactive substancesor whatever they are called. “Legal highs” is a ratherdangerous term to use. It could encourage some youngpeople to think that if they are legal they must be okayand not a problem. We believe that tough enforcementshould be a fundamental part of our NPS action plan.Action to restrict the drug supply, including illegalnew psychoactive substances, is a priority for all lawenforcement agencies. We certainly will work closelywith SOCA, the United Kingdom Border Force andothers on that matter. We will also make sure that theinformation getting out to individuals, particularlyyoung people through FRANK, continues to be at thebest possible level to make sure that they know that,even if these substances are referred to as “legal highs”,it does not mean that there are not serious dangersabout them.

As I have said, this is the first order that we havebrought in under this process. It obviously has all-partysupport and I hope that all parties agree that it willallow us to move much more quickly than we have in

the past. Again, I offer my thanks and congratulationsto the ACMD. The way in which it dealt with theinitial processing in only 15 days after the firstrepresentations from us was very encouraging. Wehope that it will continue to do that as and when werefer others in due course.

Motion agreed.

Automatic Enrolment (Earnings Triggerand Qualifying Earnings Band) Order

2012Considered in Grand Committee

4.03 pm

Moved By Lord Freud

That the Grand Committee do report to theHouse that it has considered the Automatic Enrolment(Earnings Trigger and Qualifying Earnings Band)Order 2012.


TheParliamentaryUnder-Secretaryof State,Departmentfor Work and Pensions (Lord Freud): My Lords, I ampleased to introduce this instrument, which was laidbefore the House on 26 March. I am satisfied that it iscompatible with the European Convention on HumanRights.

The original qualifying earnings band was set outin the Pensions Act 2008. We amended the Act lastyear to insert the automatic enrolment earnings triggerbut these figures are now up to six years old. It isessential to keep the automatic enrolment thresholdsup to date and relevant.

The original figures are subject to a mandatoryannual parliamentary review. This first review needsto catch up with six year’s worth of change. Our task isto consider the outcome of this year’s review—therevised rates that will apply when the largest companiesstart to implement automatic enrolment from July ofthis year. This is an important and much anticipateddebate. I am glad to see that we have the benefit ofhaving pensions experts and champions of automaticenrolment with us this afternoon. I have been gratefulfor their expertise in the past and I remain gratefulnow. I look forward to what I am sure will be a robustand thorough examination of these thresholds.

The power to revise the automatic enrolment thresholdis a broad, flexible power. Flexibility is important.Rather than a lock-in to a set formula with a shortshelf life, flexibility safeguards the interests of savers,employers and the public purse. Flexibility enablesthis and future Governments to react to the changingfinancial landscape, the number of people saving andthe amount they are saving, all set against the backdropof the shape of state pensions.

However, flexibility and the degree of discretionthat Parliament has allowed makes the task of settingthe automatic enrolment thresholds for private pensionsaving more challenging and perhaps more contentious

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[LORD FREUD]than the state pensions uprating exercises that we aremore familiar with. The amount of the automaticenrolment earnings trigger and the lower and upperlimit of the qualifying earnings band are critical todeciding who should be auto-enrolled, when it makessense to start saving and how much people shouldsave. Targeting is critical. We must safeguard the interestsof all workers who may be in scope for automaticenrolment including the lowest paid. If the trigger istoo low the low paid may baulk at the costs and optout.

Persistent low earners tend to find that state pensionsprovide them with an income in retirement similar tothat in working life, without the need for additionalsaving. For these individuals, it will very often not bebeneficial to direct income from working life intopension saving. If we are to meet the challenge ofpension undersaving, we have to get the pension-savingmessage out into the workplace. We are about to see arevolution in workplace provision. We are askingemployers, payroll providers and the pensions industryto take on significant additional responsibility.

Workers will need to understand how pension savingwill work. They will need to know how automaticenrolment will affect them, when it will affect themand how much it will cost. We know people will seetheir employer as a first port of call. We have to makeautomatic enrolment simple for employers to understand,administer and explain. The automatic enrolment ratesfor this year need to balance complex interactionsbetween targeting, simplicity, affordability, costs andsavings, and take account of equality issues. The problemis that simplicity and pensions are not natural bedfellows.The Government felt that the best way forward was tohave a full consultation on the proposals for the firstyear of live running. Up to now employers and thepensions industry have been working with figures thatare unlikely to be the ones for live running. We wantedto share our thinking and the evidence we took intoaccount as part of the review process.

We needed the views of employers who will have tomake automatic enrolment work in practice; of thecompanies who will provide pension schemes; and ofthe representatives of people who will be brought intopension saving, possibly for the first time. The Governmenthave now reviewed this evidence from the publicconsultation and weighed the costs, savings and low-earners issues carefully in arriving at the figures that Ipresent to your Lordships today. Targeting is criticalbut the level of the trigger is a difficult judgmentbecause everyone’s personal circumstances will differand will change over their lifetime. When householdfinances are under pressure, we do not believe it isright to encourage low earners—whatever their gender—tosave at a time when they may need to use all theirincome to meet their family’s present living costs.

We propose an automatic enrolment earnings triggerof £8,105, aligned with this year’s personal tax threshold.Tax relief is a core part of the automatic enrolmentdeal. We believe that automatic enrolment shouldtarget people once they earn enough to pay income taxand therefore qualify for tax relief, and should excludethe low paid who will have a high replacement ratefrom state pensions alone. This exclusion is from automatic

enrolment, not from pension saving per se. People onlow earnings in households with a higher earningpartner may be in a position to put something into apension. People on low earnings with an expectationof a rise may want to get a toehold on pension saving.That is why the right to opt in, with an employercontribution, is such an important feature of thesereforms. Any rise in the trigger disproportionatelyaffects women. I make it completely clear that we arenot weighing equality against cost; gender is not theissue here. The outcome of this review is right for allpeople on very low incomes, regardless of gender.

The results of the consultation were powerful andpersuasive. Simplicity is critical to the success of automaticenrolment. It is best supported by aligning the automaticenrolment thresholds with existing payroll thresholdsto give employers and individuals figures that they arefamiliar with and can explain.

I turn now to the qualifying earnings band. Theheadline message from the public consultation wasthat the band should maximise pension saving. Thissuggested that the right direction was to set the lowerlimit fairly low—and nor should we set the cap so highthat it significantly increased employers’ minimumcosts.

I am acutely aware that your Lordships’ views weremixed about the point at which we should pitch thelower limit of the qualifying earnings band. There wassome residual support for not having an earnings bandat all. The previous Administration ruled this out onthe grounds of cost, and we continue to do so.

There is a good case to be made that pensionssaving should rise as earnings rise, and that the originalthresholds in the Pensions Act 2008 should be revaluedby the rise in average earnings. That proposition wasput in place by the previous Administration. There isalso a logical argument that the automatic enrolmentthresholds that will drive minimum pension savinglevels should rise in line with the consumer pricesindex, for consistency with the Government’s widerpolicy. Price inflation affects affordability. It has a verydirect bearing on how much people can afford to payinto their pension, and a direct bearing on employercosts. However, neither price nor earnings inflationproduces a figure that aligns with existing recognisablepayroll thresholds, and the consultation rejected them.

The work on the development of automatic enrolmentand the early legislation, led so ably in this House bythe noble Lord, Lord McKenzie, gave us another solidcanon to work with. Private pension saving shouldbuild on the foundation of state pension entitlement.The Johnson review gave us a solution to the deminimis level of pension contributions, via a gapbetween the automatic enrolment trigger and the earningslevel from which contributions are collected. The lowerlimit of the qualifying earnings band must work handin hand with the automatic enrolment earnings triggerto deliver the policy intentions.

The consultation rejected alignment of the lowerlimit of the band with the national insurance contributionsprimary threshold because it increased substantiallythis year to £7,605. We, too, rejected it. It would notdeliver the policy intentions. It would be a logicalpoint of alignment and is a recognisable payroll threshold,

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but it is too high a peg for automatic enrolmentminimum contributions. It would reduce the gap betweenthe trigger and the point from which minimumcontributions are calculated to such an extent that wewould lose the critical de minimis cushion, and thenwe would be back to the problem of penny-packetcontributions.

We looked for a point of alignment for the lowerlimit of the qualifying earnings band that would deliversimplicity and maximise pensions saving. We lookedfor a threshold that worked in conjunction with thetrigger to solve the problem of penny-packet contributions.This happens at the national insurance lower earningslimit. A worker will start to build up a basic statepension on earnings above the national insurancecontributions lower earnings limit. This is £5,564 forthis tax year. The national insurance lower earningslimit is a figure that will be familiar to employers. It issimilar, in today’s price terms, to the original propositionof the Pensions Commission and to the original figurein the Pensions Act 2008.

4.15 pmWe had originally proposed to revalue the upper

limit of the qualifying earnings band by earnings toarrive at a figure of around £40,000 to cap employercosts, rather than track the national insurance upperearnings limit, up to £42,475 this year. The evidencefrom the consultation suggested that at these earningslevels, people are likely to be in a good-quality schemealready and the cap on minimum contributions hadlittle practical relevance.

Only the largest employers are staged in this taxyear. Medium-sized companies that may have a greaterproportion of their workforce on median or averageearnings will not come under the employer duty thisyear and will be less affected by the upper limit. Mostof their people will be earning much less.

The conclusion was that the difference between afigure of around £40,000 and the national insuranceupper limit of around £42,000 was not a large enoughgap to justify building a random figure into payrollprocessing, given the profile of the employers goinglive this year. For that reason, our final proposal tothe House is that the value of the upper limit of thequalifying earnings band should be £42,475 for the2012-13 tax year.

I commend this instrument to the Committee.

Baroness Drake: My Lords, starting positively, it ismost welcome that auto-enrolment will really commencein October 2012, and this order is obviously an essentialpart of getting to that position. The pay referenceperiods in the draft order and the corresponding earningsvalues in respect of the relevant sections of the PensionsAct 2008 are sensible. We can understand why, forexample, a daily pay reference period could deliverresults that were not the policy intent.

It is also pleasing that the Government have held tothe definition of qualifying earnings that reflects thecommon pay components that make up the pay packet.Aligning auto-enrolment triggers and thresholds withtax and national insurance thresholds in the interestsof simplicity for employers wherever possible would

seem a sensible approach—but only to the point wherethe pursuit of simplicity does not undermine desirableoutcomes, particularly for women.

Aligning the upper limit of the qualifying band ofearnings with the NI upper earnings limit providessimplicity, complements the policy intention and, byextending the range of earnings, increases savings alittle. Similarly, setting the lower limit for the qualifyingearnings band to the NI lower earnings limit providessimplicity and maintains contribution levels when auto-enrolment is triggered. That is the positive.

However, our concern is that the level of earningsthat triggers the automatic enrolment of a worker isset for 2012-13 at £8,105, the PAYE threshold. Thisfurther rise in the trigger excludes yet more women,and places simplicity above enabling millions of womento increase their savings pot. We remain concerned forthe reasons we have rehearsed previously: raising theearnings trigger has a disproportionate impact onwomen and the Government are repeating the errorsof the past in designing a second-tier pension systemthat does not work for the life pattern of many women.In 10 years’ time, the error will be obvious, particularlyto women themselves. I have no doubt that action willbe taken to amend it, but by then thousands of womenwill have lost out unnecessarily.

The Government’s response to the automatic enrolmentearnings threshold consultation reports that the mainfocus of consumer organisations was on equality issues,particularly the impact of higher thresholds on low-paidworkers, the majority of whom are women, but clearlytheir views are not a dominant influence in setting thetrigger. Millions of women have a life pattern in whichperiods of full-time work are interspersed with significantperiods of part-time work when their caring responsibilitiesare at their greatest.

On the Government’s figures, of the workers eligiblefor auto-enrolment, two in five—39%—are women.Raising the trigger from £5,035 to £7,475—the 2011-12PAYE threshold—excluded 600,000 individuals, 78%of them women, most of them part-time, but thatdecision was made. However, raising it to £8,105 excludesanother 75,000 women, on the grounds of simplicity.If, over time, that earnings trigger rises even further inreal terms, tracking proposed increases in the taxthreshold, the number of women excluded from thebenefits of auto-enrolment will grow even more.

The effect of excluding these women is, first, thatthey may not start to save when the reforms areintroduced. Secondly, when they transition from fullto part-time jobs they may face increased charges ontheir pension pot accumulated as a result of becomingan inactive member. Thirdly, ceasing to be auto-enrolledwhen they become part-time workers could break thepersistency of the savings habit they built up whenworking full-time.

The Government sympathise with the view thatonly those who benefit from tax relief should beauto-enrolled. This ignores the working of the taxcredit system. For example, household income broughtto account when calculating universal credit disregards50% of that income paid in pension contributions.

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[BARONESS DRAKE]Of course, before the reforms it was 100%. To quotefrom the Johnson report commissioned by theGovernment:

“Many or most very low earners are women, who live inhouseholds with others with higher earnings and/or receivingworking tax credits. These may well be exactly the people whoshould be automatically enrolled”.

Those excluded women also suffer a loss in lifetimepay, albeit deferred pay, because they do not haveaccess to the employer’s 3%—and for some employersthe figure is higher. However, they will still lose outfrom any lower wage growth that flows from the costof automatic enrolment.

If policy is predicated on the belief that mostpeople will not begin to save unless the power ofinertia is harnessed through auto-enrolment then itcannot be the case that the right of those below theearnings trigger to “opt in” will seriously mitigate therisk that many women will face lower incomes inretirement as a result of the level at which the trigger isput. As to persistent low earners, the argument thatthey should not save because they get state pensionand benefit means yet again that there will be no“asset accumulation strategy” for low earners. If 100%of pension contributions were disregarded for universalcredit calculation, this would reduce the risk of a fallin people’s welfare prior to retirement.

Furthermore, if the Government accelerate the moveto a single flat-rate pension, depending how that isdone, together with the more generous creditingarrangements for carers introduced by the LabourGovernment, then the incentive to save can increasefor significant numbers. As the Johnson review againobserves:

“earnings are highly dynamic and there are relatively few peoplewho have low earnings throughout their lives”.

A make-weight argument for the higher earningstrigger is that it reduces the number of small pots ofpension saving, which are disproportionately expensivefor the insurance industry to administer. But of coursethat argument is totally contrary to the policy intention.The answer to that problem is the public service obligationof NEST not to increase the numbers of workersexcluded from auto-enrolment.

Much is made by large employers—though havingread the review, one sees that not many of themdirectly make submissions—of certainty and businessplanning from linking the earnings trigger to the PAYEthreshold, so setting the direction of travel. In 2012-13the Government are rolling out to the large employersand are raising the earnings trigger in order to simplifythe process. However, these are large firms well versedin dealing with complexity. Surely we should not betrading fairness for women, which they need, for analleged simplicity which these companies do not require.

Many large employers have already been given thesimplifying benefit of an alternative certification test.Many use salary substitution, managing the complexityof employees opting both in and out of salary substitution.They are experienced in deploying often complex measuresto manage their pay and tax liabilities and frequently

changing tax rules. Do 75,000 more women need tolose the benefit of auto-enrolment to give them thealleged simplicity they seek?

To return to the positive: while we welcome thecommencement of the new employer duty, and recognisingsome of the positives in this order, we remain concernedabout the position of many women that is created byraising the earnings trigger.

Lord German: My Lords, I recognise in the consultationdocument and in the response from the Governmentthat three-quarters of the respondents supported thetrigger that is now being set by the Government in thislegislation. Of course, this is not an exact science; onecannot say that a specific figure is the level at whichpeople will benefit from coming in to automatic enrolment.However, we should recognise that for many low earners,investment in pensions is potentially unsuitable, andthat it is not suitable for persistent low earners. I willcome back to that point in a moment.

When the Pensions Commission did its initial work,it stated that low earners might aim for a gross replacementrate of 80% or more of their income when they retired.The Johnson review—which I, like the noble Baroness,will quote from—stated:

“This disproportionate impact on women is something wewould wish to avoid if we believed that these people would benefitfrom saving”.

Individuals who are low earners throughout their lifetimewill receive a relatively high income—I stress“relatively”—in retirement, without private pensionsaving. Paul Johnson quotes the example of an individualearning £10,000 a year from the age of 22, who wouldsee a replacement rate of around 97% from the statealone. Therefore, the question is where the targettrigger should be set. Surely the objective must be tomaximise pensions saving where that saving is valuableand minimise it for people for whom it will not beworth while.

There is no doubt that this will have a disproportionateeffect on women, but the question is whether potentiallyit would not be worth their while to invest in thismanner. Would they benefit from the savings? Thequestion that is being asked here is about what thethreshold should be and whether it should be somewherein the region of the figures that Paul Johnson quotedin his review for the Government. Individuals who arelow earners throughout their lifetime will receive arelatively similar income without private pension saving.The question is: does the trigger enable people tocome back in when their earnings level rises above thetax threshold? The question that the Minister mightlike to answer is: what will be the procedure for peoplewho have been low earners, who are underneath thetrigger, who have not chosen to opt in but who reachthat figure to be automatically enrolled? If they are inthe category of persons who will occasionally fallback below and then rise above the trigger level, howwill their re-enrolment occur? Will there be encouragement,and will they be tracked so that the re-enrolment willoccur seamlessly, without them losing out?

The other way in which people’s choices could bemade is through opting in. I note that the consultationresponse from the Government states that people will


be encouraged and that employers will be required topass on information to their workforce. However, thereis a difference between passing on information andencouraging people. The difficulty that many employerswill have with low earners is in determining whetherthis is potentially good for them. It is a very difficultjudgment to make, given that it may not be the rightchoice for a person who is a low earner throughouttheir life but might be for someone who is a low earnernow but who has the potential to move back and forthacross the trigger line.

4.30 pmPerhaps my noble friend the Minister can tell us a

little bit about the reviewing mechanism, particularlythe opt-in and opt-out rates that will be used tounderstand where we are going in the future with thisquite large group of people who are currently lowearners. We are at the beginning of a long process hereand will understand more as time moves on, butpredicting behaviour from where we are at the momentis somewhat difficult. Is the Minister considering ageneral review of the areas that are to be considered?

The other issue that relates to this is whether thetrigger will remain at the tax threshold. I notice thatthe Government said in their response that it was notset in stone and that they would review it on an annualbasis. Of course, the Government have already announcedthat they intend to introduce a single-tier pension. Inhis report, Paul Johnson said that,“we could generally expect the incentives to save (and thereforepayback) to improve as a result of”,

a single-tier pension approach. Clearly, when the newsingle-tier pension is enacted, it will be important toreview the trigger level, and it might be sensible to dothat once the Government have determined the natureof the legislation that they intend to bring forward onthe single-tier pension. If they do that, clearly thetrigger will have to be thought about again, as therewill be some tax benefit for low earners when the basicstate provision is made up to the level of £140 or moreat the current rate, because tax relief will be providedeven though people will not have reached the taxthreshold. That might be an important feature inunderstanding how we move forward.

With those questions to my noble friend, I ampleased to support the order. We will need to return tothis matter with a review and further thinking as timeprogresses—and certainly within the next year or two.

Lord McKenzie of Luton: My Lords, I begin bythanking the Minister for the manner in which heintroduced the order—and I think I spotted a few kindwords as well.

My noble friend Lady Drake set out our positionwith her usual precision and focus, so I will be brief.Auto-enrolment goes live in a few months and weshould take this opportunity to reflect on the tremendousefforts that have been brought to bear, not least by mynoble friend, to make it a reality. Although we do nothave an identity of view with the Government on allaspects of its implementation, we acknowledge theirrole in taking this forward in challenging times. Theintroduction of auto-enrolment may not be preceded

by a torch relay but its effect and indeed its legacy havethe potential to outshine the other exciting event thatwe expect to experience later in the year.

Appendix A to the Explanatory Note sets out theimpact of changing the earnings trigger and the upperand lower limits of the qualifying earnings band. Mynoble friend Lady Drake focused on our major concern:the impact of the raised earnings trigger. As sheexplained, far and away the biggest number of losersare women. There seems to be an implicit assumption—which was in a sense reiterated by the noble Lord,Lord German—that these would be persistent lowearners. I would be interested to know what evidencethere is for that. If we wanted to align it with somethingthat had a PAYE component, what about the primarythreshold, for example?

I looked at the Government’s response to theconsultation. The reason given for excluding the primarythreshold was that there was no tax relief at the lowerend. How much work have the Government done onthis? I went to the HMRC website to remind myself ofthe rules on tax relief for pensions. It states:

“Usually, your employer takes the pension contributions fromyour pay before deducting tax (but not National Insurancecontributions). You only pay tax on what’s left. So whether youpay tax at basic, higher or additional rate you get the full reliefstraightaway. However, some employers use the same method ofpaying pension contributions that personal pension scheme payersuse—read more in the section on ’Personal pensions’”.

That section states:“You pay Income Tax on your earnings before any pension

contribution, but the pension provider”—

this is for personal pensions—“claims tax back from the government at the basic rate of 20 percent. In practice, this means that for every £80 you pay into yourpension, you end up with £100 in your pension pot. If you pay taxat higher rate, you can claim the difference through your taxreturn”.

What happens if you do not pay tax?“If you don’t pay tax you can still pay into a personal pension

scheme and benefit from basic rate tax relief … on the first £2,880a year you put in. In practice this means that if you pay £2,880 thegovernment will top up your contribution to make it £3,600.There is no tax relief for contributions above this amount”.

So the assertion that there is no tax componentavailable simply because you are below the tax thresholdis not true. I recall that the proposition was that NESTwould adopt that alternative means of generating taxrelief for people who went into the NEST scheme. Willthe Minister outline in some detail the extent to whichthat issue was factored into the considerations; andconfirm what the position of NEST is intended to bein relation to the routes by which people may get taxrelief when it is introduced?

It is a great pity that the issue of the trigger has leftus apart. The noble Lord, Lord German, instancedthe fact that the tax threshold may rise to £10,000—partof a wider deal, I understand. We will see whether andwhen that comes to fruition, but it will simply exacerbatethe problem that my noble friend Lady Drake outlinedin such detail. I hope the Minister can deal with thatpoint.

Lord Freud: My Lords, I said I was expecting arobust debate. It has been short but typically robust.What has clearly come through is that the figures

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[LORD FREUD]around the earnings band seemed to get general acceptancein this Committee, and the real issue we are discussingis the trigger level. It is common ground that it wouldbe pretty hard to find an earnings trigger that wouldtarget auto-enrolment perfectly. Our aim is to maximisepension saving for those for whom it is valuable, andminimise the number captured of those for whom it isnot. Clearly this is not a perfect science.

The rise in the value of the trigger takes us to theimpact on the low paid. As noble Lords pointed out,on balance many more women are in this category—inparticular years, though it may not be a continuousposition. I should put on the record that the rise fromthe £7,475 threshold to £8,105 excludes does not exclude75,000 women; the figure I have is 100,000. We mightas well get that on the record. Of those affected, myinformation is that 82% are women. We recognise thatwomen are more likely to work part time or work lessthan men, and that they will be disproportionatelyrepresented in the group excluded from automaticenrolment by the increase in the trigger.

With the trigger, and automatic enrolment generally,we are talking about soft compulsion. We have developeda system that aims to capitalise on inertia—the defaultis saving, but we have left people who are new topension saving to opt out if they consider that theyreally cannot afford it. Automatic enrolment with anemployer contribution is an incentive to save. For thefirst year, certainly, we do not want to encouragepeople who do not earn enough to pay tax to divertwages into a pension pot unless their circumstancesmean that it makes financial sense.

A question was asked based on reading three pagesof the HMRC site, which was very assiduous. Taxrelief was one of the factors considered, but not theonly one. Maintaining an adequate gap between thetrigger and the bottom of the earnings band was alsorelevant. We also needed to make sure that the rightpeople—those who could afford to save—were enrolled.

There are two ways for a pension scheme to accesstax relief for individuals. As the noble Lord, LordMcKenzie, said, schemes using relief at source can gettax relief at the basic rate even if the individual is not ataxpayer. However, where a scheme uses a net-payarrangement, individuals can get tax relief only if theyhave taxable earnings. To answer the specific question,NEST will use the former, so that all members can getthat tax relief.

Lord McKenzie of Luton: Does that mean that thetabulation in the Government’s response—which saysthat if the trigger is set at the primary threshold, it isnot tax relievable at the lower end—would only run insome circumstances and would not run for manyscheme members, particularly if they were members ofNEST?

Lord Freud: Yes, on the basis of what I have justsaid, that is quite clear. For those saving in NEST, thefigures would not work, while those saving in someother way, as the legislation currently stands, wouldnot get the relief. NEST: yes; others: no. I think the

silence behind me suggests a good spot there and Isuspect we may look at that particular issue or anomaly—we may.

With the gently-gently approach of phasedcontributions starting at a modest level, we hope thatwe will not trigger a rush to the exit, but we do notknow. We know what people tell researchers whenthey are asked. We can look at the opt-out rates inthose countries that have similar systems. However, inthe end, the evidence shows that if people feel theycannot afford it they are more likely to walk away, andthe whole issue of pensions stays in the “too difficultto think about” pile. We are feeling our way here andthere will be chances to make adjustments.

4.45 pmI will pick up some of the other points raised. The

noble Baroness, Lady Drake, asked what our intentionsare as the tax allowance rate goes up—if it were to goup, and clearly I am not making any presumptioneither way. My answer also incorporates an answer tothe question from my noble friend Lord German. Theearnings ban and the trigger are subject to annualreview—so we are talking simply about the rates forthis year—and we will have a look at where the ratesshould go for 2013-14 on the basis of a number offactors, including the economic conditions, and indeedwhat reactions we get from the early run in experience.You will all be pleased to know that this is subject toaffirmative debate every year, so we can look forwardto many enjoyable afternoons over the years on thismatter.

The noble Baroness, Lady Drake, also raised theissue of pots. Clearly that is an issue that we arelooking at separately. It is not an easy issue, as webuild up these very small pension pots, and I knowthat it is a matter of concern all around the House. Wehave been looking at this issue, and we plan to publisha response on that this summer.

Baroness Drake: I appreciate that the Governmentare looking at the whole issue of the transfer of smallpots. The point that I sought to concentrate on wasthat it is very likely that the market will apply adifferential charging structure to inactive membersand to active contributing members. Even though theGovernment have taken powers to control that, thosepowers will not stop differential charging. If a womanis full-time, then takes on a part-time job with anotheremployer and is not auto-enrolled—and so becomesan inactive member—one of the consequences is thatthe charges on her remaining pot start to rise, becauseinertia is not turned into a positive. It is that narrowpoint. I appreciate that the wider review of pensionpot transfers is coming up.

Lord Freud: I will stand my ground a little bit onthis, because these are some of the issues that reallycome into consideration when we look at the broaderissue of pension pots. My colleague Steve Webb hassaid a few things about this in public, and I know thathe is looking in private at this differential chargingissue, so it is something that he is considering.


My noble friend Lord German asked a relatedquestion about the opt-in/opt-out rates. Those will bemonitored on an ongoing basis. He also asked aboutpeople coming in and going out as their earningschange, perhaps going from full-time to part-time.These people will continue to make and receivecontributions according to the rules of the schemethat they end up going into when they go in, but ifearnings dip to the extent that no contributions aredue in a particular period, they will restart immediatelywhen their earnings are high enough, so there is nowaiting period.

I will now return to two issues to deal with themprecisely. I only touched on the differential chargingthat the noble Baroness was concerned about. We havepowers under the 2008 Act to set a cap should chargesbecome inappropriately high. We recently extendedthose powers to cover deferred members. Therefore,we have all the necessary powers, and my colleague isaware of the issue. We are monitoring the charges withrolling research and will continue to do that as enrolmentis brought in.

I will close my answers by doing justice to the pointabout tax relief made by the noble Lord, Lord McKenzie.We will continue to take that into account. The matteris not entirely straightforward, as we established. Atthis stage we do not know how many people will getrelief at source as opposed to making net payarrangements. We will keep that matter, too, underreview.

This is our first review. It took a major consultationeffort to decide on the trigger and the earnings band.We would have preferred to come out with this earlier,and I will try to do better on timing next year becauseearly certainty is important, for employers in particular.It was right to consult this time, and to gather theviews of people who will need to make automaticenrolment work in practice: those who will have toadminister pension schemes, employers who will haveto deal with all the questions from their workers, andpeople who represent those workers. The one messagethat we got from all of them was that we should keepthis simple. I shall take that to heart for the future. Ofcourse, it chimes with the Government’s Red TapeChallenge.

As I said, we will come back to this in a little lessthan a year. I know that I look forward to it as muchas other noble Lords in the Room. I commend theorder to the Committee.

Motion agreed.

Criminal Justice and Police Act 2001(Amendment) Order 2012


4.53 pm

Moved By Baroness Northover

That the Grand Committee do report to theHouse that it has considered the Criminal Justiceand Police Act 2001 (Amendment) Order 2012.


Baroness Northover: My Lords, the order seeks toadd the following offences listed in the Royal Parksand Other Open Spaces Regulations 1997 to the penaltynotice for disorder—PND—scheme. Regulation 3(3)covers the dropping or leaving of litter or refuse;regulation 3(4) covers illegal cycling; and regulation 3(6)covers dog fouling. If Parliament agrees the order, thepenalty levels for the new offences will be made by aseparate statutory instrument.

Currently the three offences in question may bedealt with only by a magistrates’ court, so muchoffending in Royal Parks goes unenforced as prosecutionis costly and disproportionate for what are relativelytrivial offences. Offenders therefore tend to be formallyreported or verbally warned. The police advised usthat each report takes approximately two hours tocomplete. Therefore, in most cases there is no effectivedeterrent for those dropping litter, for irresponsibledog owners and for illegal cyclists, and there is increasingconcern from many Royal Parks users about the lackof enforcement action. For a number of years, theDepartment for Culture, Media and Sport, Friends ofthe Royal Parks and a number of MPs have expressedsupport for these Royal Parks offences to be added tothe PND scheme.

It is right that the Royal Parks should no longer beoutside the ambit of the law. Adding the offences tothe PND scheme is the most efficient way to addressthe lack of enforcement. It will enable the police todeal with offending in an effective and proportionateway, in order to maintain the safety and enjoyment ofthe Royal Parks. This will be valuable all year round,and particularly ahead of and during the Olympic andParalympic Games when the parks expect many morevisitors.

The purpose of the PND scheme is to provide thepolice with a swift financial punishment to deal withlow-level misbehaviour on the spot. The PND is a typeof fixed penalty notice established by the CriminalJustice and Police Act 2001, and may currently beissued for a specified range of 26 minor offences, suchas being drunk and disorderly in a public place.

By adding the offences to the PND scheme, offendersagainst whom little or no action is taken will be sent aclear message that offending will not be tolerated andthey will receive a financial punishment for their behaviour.The offenders who are currently prosecuted for theseoffences will no longer be clogging up the magistrates’courts and will instead be dealt with in a proportionateway out of court. It will also significantly free uppolice time for additional patrols and provide a moreeffective deterrent to persistent offenders. Issuing aPND takes an officer approximately 30 minutes, whereasa formal report takes approximately two hours tocomplete. The police have advised that following theinvestment of two hours in completing the report, themajority do not result in a summons.

In addition, adding the offences to the PND schemewill correct the current anomaly whereby the policehave the option to issue an environmental or roadtraffic fixed penalty notice for similar offending outsidethe Royal Parks but not within them. It was notpractical to amend the legislation governing those

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[BARONESS NORTHOVER]other fixed penalty notice schemes in the near future,so adding the offences to the PND scheme was consideredthe best option for correcting the anomaly.

We have consulted on this proposal with interestedparties, including DCMS, the Home Office, theMetropolitan Police, MPs, councillors and cycling groups.The majority of respondents were in favour of addingthe offences to the scheme. Some concerns were raisedregarding the offence of illegal cycling. Let me beclear: we are not targeting cyclists; we are tacklingillegal cycling, which can be dangerous and intimidating.Illegal cycling outside the Royal Parks can already bedealt with by a road traffic FPN and we think it isright that a similar disposal is available inside theRoyal Parks.

With regard to music events held in the parks,where people may be more likely to drop litter, whetherto issue a PND will remain an operational decision forthe police. They will use their professional judgmentand discretion to determine what is the most appropriateand proportionate response to offending based on thecircumstances of the case. Ample bins and recyclingfacilities are provided at events.

It may be helpful for me briefly to set out howPNDs will be issued for the new offences. A fixedpenalty of £50 will be issued where a police officer hasreason to believe that a person has committed any ofthe three new penalty offences while inside the RoyalParks. Once issued with a PND, the recipient has21 days to either pay the penalty or request a courthearing. If the recipient fails to take any action, a fineof one and half times the penalty amount—that is,£75—is automatically registered against them by themagistrates’ court.

Visitors to the Royal Parks will be made aware ofthe new penalty offences through effective signage andmarkings. We will be working with the Royal ParksAgency and Metropolitan Police to ensure that theseare clear and unambiguous. The Government aresupportive of adding these offences and see the benefitsto the public as well as to the Royal Parks Agency andMetropolitan Police of having an effective means oftackling this kind of offending in the Royal Parks.

I hope that noble Lords will support the order.

5 pm

Baroness Doocey: My Lords, I support this orderand I am very pleased that cycling is included. Onmore than one occasion, I have seen people cycling inthe park in a very irresponsible manner, which canhave devastating effects. However, I should like tomention parks and dogs. I love both and am in thewonderful position of living in an area where I can useBushy Park and Richmond Park.

It never ceases to amaze me how people who arecompletely and utterly responsible about their dogsand would not dream of not cleaning up after them inthe street will take a very different view in a park. Theyalso take different views between different parks. BushyPark is a wild park which does not have manicuredlawns in most places. It always surprises me that

totally responsible people will say, “Oh, it doesn’tmatter here because the deer are all over the park andwhat is the difference?”. But children play in parks andI am particularly concerned about the spreading ofthe parasitic disease toxocariasis. I know someonewho suffered as a result of this disease, but its effectsare not widely known.

I believe that everyone should be able to use ourparks. We are very lucky to have such wonderful RoyalParks and open spaces. But enjoyment for children,animals and adults should not be ruined by the verysmall minority of people who just cannot be botheredto clean up after their animals. It is not the fault of theanimals. It is the fault of the owners. Therefore, theseorders are particularly welcome and I am very pleasedthat this behaviour will be subject to PNDs in thefuture.

Lord Beecham: My Lords, it is a privilege to beinvolved in such a momentous change to the country’scriminal law. I support entirely the Government’sobjectives, particularly the observations made by thenoble Baroness, Lady Doocey. She has referred to amatter which is of considerable risk to health andclearly cannot be tolerated. The Explanatory Notesrefer to the fact that the impact of the order will bereviewed in 12 months. I assure the Minister that theOpposition will not press for such a review, unlessCabinet Ministers are seen to be depositing papersotherwise than in the litter bins in the Royal Parks,which would make a welcome change. It is hardlynecessary to go to those bureaucratic lengths for suchmodest matters as these.

However, I wonder whether at some point theGovernment propose to review the general issue offixed penalty notices outside the Royal Parks. Theremay well be other matters concerning the Royal Parksthat might be raised. But there might be other issuesthat would be worth discussing with, for example, theLocal Government Association, the national parksauthorities and organisations of that kind to see whetherthere needs to be general updating of the system. Asthe Minister has made clear, this is a cost-effective wayin which to deal with relatively low-level matters thatnevertheless cause offence and inconvenience, andoccasionally create risks to public health and safety.Having said that, we certainly support the order.

Baroness Northover: My Lords, I thank my noblefriend Lady Doocey and the noble Lord, Lord Beecham,for their support. I agree absolutely with what mynoble friend said about dogs fouling parks. Frommany years’ experience of small boys in particularplaying in the parks where I lived, not just the foulnessbut also the important health risks involved in dogsfouling was of great concern. I welcome this supportand note what the noble Lord, Lord Beecham, askedabout whether this might be reviewed and applied toother areas. I will take that back, given that I have nopointer at the moment on what we might be thinkingof doing.

Now, fortunately, I have some inspiration. We arecurrently developing a new framework for the use ofout-of-court disposals, including PNDs, and revising

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the guidance for officers. That deals with reviewing thePND scheme more generally. The noble Lord pointedto other areas where it might be applied that wereanalogous to the situation of the Royal Parks. I willtake back that question and let him know what weconclude. I hope that I have addressed the concerns ofnoble Lords, and that they will support the order.

Motion agreed.

Greater London Authority Act 1999(Amendment) Order 2012


5.07 pm

Moved By Earl Howe

That the Grand Committee do report to theHouse that it has considered the Greater LondonAuthority Act 1999 (Amendment) Order 2012.


TheParliamentaryUnder-Secretaryof State,Departmentof Health (Earl Howe): My Lords, the order before theCommittee gives the Greater London Authority theability to spend money on activities that protect orpromote improvements in public health in London.

The Health and Social Care Act 2012 confers importantnew public health duties on upper-tier and unitarylocal authorities in England. They include Londonborough councils and the City of London but not theGLA. From April 2013, those authorities must takeappropriate steps to improve the health of theirpopulations. The Act also confers on the Secretary ofState for Health the new duty of taking steps toprotect public health, and allows him to delegate hisfunctions to local authorities either by prescribingthem in regulations or by entering into other arrangements.Local authorities will be supported in their duties by anew grant, based on the current NHS spend on theequivalent activity, ring-fenced exclusively for publichealth. They will employ directors of public healthand other specialist staff who will act as local championsfor health improvement both within their authoritiesand beyond.

It is fair to say that the Act’s provisions pave theway for the most fundamental reform of public healthservices for some decades. They were broadly welcomedby both local government and the public healthcommunity. There is widespread recognition that inmany ways local authorities are the natural home foraction on public health, given their closeness to theirlocal communities, their direct democratic accountabilityand the responsibility they share already for a widerange of services that have an impact on health, suchas social care, leisure and education among manyothers.

The public health challenges in Greater London areexceptional. London has a complex population that isethnically diverse, relatively young, mobile and transient,

with pockets of high levels of poverty, crime andsocial exclusion cheek by jowl with great wealth. Londonrates below the national average on 18 key healthindicators, including mental illness and deaths fromheart attacks and strokes, while childhood immunisationrates are lower than in other large cities.

Individually, the 33 boroughs are ready and able toaddress these challenges. There is, however, currentlyno agency with the power to plan and act acrossborough boundaries, and to take an overview of whatcan be done most effectively and efficiently for Londonas a whole. We believe that such an agency would haveconsiderable potential. For example, it could be askedto commission pan-London services for smaller minoritygroups which may otherwise be at risk of slippingbeneath the radar in some boroughs. We have consultedorganisations representing minority groups in London,which agree that this would be a significant benefit.

A cross-London agency could reduce administrativecosts and obtain economies of scale, freeing up moreresources for public health services. If, for example,the boroughs agreed that it would be appropriate forthem to run cancer awareness campaigns, it would befar more effective, and less costly, to commission onecampaign for London than 33 separate campaignseach confined to a single borough.

The Government propose to fill this gap. In thegracious Speech on 9 May, Her Majesty announcedthat we will publish a draft Bill to modernise adultcare and support in England. Subject to parliamentaryapproval, we also intend to use this Bill to require theGreater London Authority to establish a Londonhealth improvement board, bringing together the GLA,the mayor and the boroughs to produce and implementan annual plan for public health in London, funded bythe boroughs from their ring-fenced grants.

I am delighted to say that the idea for this proposalcame from the boroughs and the GLA themselves, inresponse to an invitation from the Secretary of State,which I think sends us a very positive message abouttheir commitment and enthusiasm. In fact, the boardis already up and running, albeit in a limited andnon-statutory way.

This brings us directly to the matter of today’sdebate. The boroughs will acquire new duties and therelated funding from April 2013. The NHS in Londonis keen to work with the London health improvementboard on public health right now. However, it will notbe possible to establish the board on a statutory basisbefore 2014 at the earliest.

Eager as the Board is to make its full contributionas soon as possible, it faces one particularly severeconstraint during this intervening period. The GLA iscurrently prevented by Section 31(3)(d) of the GreaterLondon Authority Act 1999 from spending money onproviding any health services that can be provided by alocal authority or other public body, such as a primarycare trust.

This means that even if funds are contributedvoluntarily by the boroughs or the NHS, the GLA andtherefore the board cannot currently use them to

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[EARL HOWE]commission public health services or campaigns. It iseasy to understand the rationale for that constraint—itis the need to prevent wasteful duplication of activity.We have no intention, either now or in the future, ofgiving the GLA a standing statutory duty for publichealth that would overlap with the duties that theboroughs have for their populations.

The objective we want to achieve now, ahead ofmore comprehensive primary legislation, is simply toallow London boroughs to work in partnership withthe board from the outset as one way of effectivelyfulfilling their duties. This order removes the obstaclethat the 1999 Act presents. It is made under Section 31(9)of that Act, which provides that the Secretary of Statemay make an order to remove or restrict any prohibitionsor limitations imposed by Section 31.

The order inserts a new Section 31(5A) into theAct, which from July will allow the GLA to spendmoney on providing services or facilities that protector promote improvements in public health. This newpower will be exercised consistently with the GLA’sprincipal purposes as set out in Section 30(2) of the Act.

With this new power, the GLA will also be able tospend funds on public health activities that it raisesfrom external sponsors other than the borough councilsand, until April 2013, allow it to work with primarycare trusts and the strategic health authority in Londonif they commission the GLA to deliver public healthservices on their behalf.

5.15 pmFrom 2013, the GLA, if commissioned, will be

able to work with London boroughs and clinicalcommissioning groups, either individually or en masse,to deliver public health services on their behalf. Ishould perhaps stress that final point. The decision tofund the GLA or the board will be for the boroughs,and they will take that decision only if they see it as anappropriate step for them to take in improving theirown population’s health. In other words, the boroughswill need to be sure that funding the board offers themgood value for money. They will remain accountablefor that to their local population.

I hope the Committee agrees that this measure,modest as it may seem in some ways, opens up genuinepossibilities for public health across London that wouldnot otherwise be available unless and until we are ableto introduce primary legislation that Parliament approves.I am happy to commend the order to the Committee.

Lord Hunt of Kings Heath: My Lords, I thank thenoble Earl, Lord Howe, for explaining the intention ofthe order to the Committee. I declare an interest aschairman of an NHS foundation trust and as a consultantand trainer in NHS and health issues. As the nobleEarl explained, this will enable the GLA to spendmoney on improving or protecting public health inGreater London. It has a specific relevance to theLondon Health Improvement Board, and is consistentwith the enhanced role to be given to local authoritiesin the rest of England and in the London boroughs.

We believe that local authorities can make a majorcontribution to public health and support the generalthrust of the order.

The case the noble Earl put forward for a pan-Londonapproach to public health is persuasive. My understandingis that—as he said—it will tackle the major healthproblems in the capital, including cancer, childhoodobesity and alcohol abuse. I particularly note thecomments of Dr Simon Tanner, NHS London regionaldirector of public health, who explained that:

“Health issues in London are both complicated and specific tothe city. The capital’s biggest health problems such as obesity,cancer and alcohol abuse are often interrelated and cannot betackled in isolation”.

On behalf of the NHS, he said,

“we want to draw on the diverse skills and experience we have totackle these areas through the London Health ImprovementBoard”.

This clearly receives support from the NHS, as well asthe London boroughs and the GLA.

I listened carefully to the noble Earl’s explanationof the relationship between the London boroughs, theGLA and the improvement board. He was careful tomake clear that the London boroughs are the principalpublic health bodies for London. In essence, the LHIBwill depend on the support of the London boroughsto be able to take the necessary action. I entirelyunderstand that, but I will ask the Minister a question.He mentioned the issue of campaigns. He said that itwould be much better to co-ordinate a public healthcampaign across London, and that the board couldhave an important role to play, which is self-evident.However, I imagine that it would depend on all theLondon boroughs signing up to a particular programmeand committing a budget to it.

What will happen if the board is not able to get allthe London boroughs to join a campaign? Whenstatutory legislation is brought to Parliament, will itenable the board to take account of that in some way?Presumably, one would not want one borough to beable to veto an action that all the others had agreed to.I would be grateful if the noble Earl would alsoindicate when he thinks legislation will be broughtforward to put the board on a statutory basis. I do notknow whether it will be primary or secondary legislation.It would be helpful if he could explain that, too.

My final question is slightly outwith the issue, but Ihope that the noble Earl will not mind me asking it.We are all agreed that local authorities, whether insideor outside London, should have a stronger role inpublic health. The appointment of a director of publichealth by first-tier local authorities, and the establishmentof public health departments in those local authorities,is clearly very important. Noble Lords will be awarethat there has been concern in the public health communityabout the extent to which the ring-fencing of budgetswill actually hold. If the noble Earl is not able toexplain this, perhaps he might write to me in duecourse.

I am also picking up some concerns that localauthorities are being less than sensitive to the debatesthat we had on the Health and Social Care Bill about

GC 27 GC 28[LORDS]GLA Act 1999 Order 2012 GLA Act 1999 Order 2012

the status of the director of public health and the rightof direct access to the local authority chief executive.I realise that local government structures have changedsince 1974 and that direct access for the DPH couldpresent some problems to local authorities, but it iswidely accepted within government that the ChiefMedical Officer must have direct access to the PrimeMinister and senior Ministers—for obvious reasons inview of the importance of that office. Surely the sameapplies at local level.

There are some signs that local authorities have nottaken that message on board. It would be a great pityif local authorities, almost at the starting gate ofassuming greater responsibility, did not recognise theneed to ensure that public health has a very strongvoice at the top table. Frankly, local authorities are ontrial. There is no guarantee that the arrangement willstay for ever if they are not able to accept the responsibilitythat is placed on them. I realise that this matter goesslightly wider than the order, but any words of comfortwould be much appreciated.

Earl Howe: My Lords, I am very grateful to thenoble Lord, Lord Hunt, for his support for the order.He asked me a number of questions. First, he askedwhether, if the London borough councils cannotunanimously agree on a plan, that would affect theirability to commission services from the GLA orthrough the board. The board can and will be ableto deal with the boroughs individually if necessary.The draft Bill that we are bringing forward will makeclear in primary legislation how the board will agreeplans on a statutory basis. For example, if a group ofboroughs wished to get together, excluding other boroughs,there is no reason why they should not do so andcommission the GLA to deliver services solely on theirbehalf.

As I said, the establishment of the board as anNDPB will require primary legislation. Unfortunately,I cannot tell the noble Lord when that will be broughtforward, but the draft legislation will be publishedsoon. We published baseline allocations based on theNHS spend for public health, and our intention is tomove gradually to a more needs-based formula over aperiod of years. To move more suddenly would provedestabilising, as I am sure the noble Lord appreciates.That addresses his point about the ring-fencing ofbudgets, and whether they will hold. I was notaware of concern about that. Of course, someboroughs wish that they had more money than theydo, but it is necessary to start from a logical place, andwe believe that the baseline allocations reflect currentreality.

I was concerned to hear what the noble Lord saidabout the status of directors of public health and theextent to which they will or will not have access totheir respective chief operating officers within a localauthority. I will take that concern away with me, and Iam grateful to him for flagging it up. If there isanything I can say to him in writing, I will be veryhappy to do so.

Motion agreed.

Health and Social Care Act 2008(Regulated Activities) (Amendment)

Regulations 2012Considered in Grand Committee

5.26 pm

Moved By Earl Howe

That the Grand Committee do report to theHouse that it has considered the Health and SocialCare Act 2008 (Regulated Activities) (Amendment)Regulations 2012.


TheParliamentaryUnder-Secretaryof State,Departmentof Health (Earl Howe): My Lords, the regulations thatare before us today make a number of changes to theregistration system for providers of health and adultsocial care services operated by the Care QualityCommission.

The changes that we are proposing fall into threebroad categories. First, they make some changes tothe extent of registration, removing some providersfrom registration where the risk to service users doesnot justify regulation by the commission, or there islittle or no potential for regulation by the commissionto mitigate these risks. Secondly, they make someslight technical amendments to the regulations; andthirdly, they make some clarifications to the regulations.I shall say more about the purpose of the instrument alittle later, but I would like to reflect on the progressthat the commission has made since it was set up threeyears ago.

As the independent regulator of health and adultsocial care services in England, the commission playsa key role in providing assurance that patients andservice users receive the standards of care that theyhave a right to expect. All providers of “regulatedactivities” in England, regardless of whether they arepublic, private or voluntary sector organisations,are required to register with the commission. Providinga regulated activity without being registered is anoffence.

In order to be registered, providers have to complywith a set of registration requirements that set theessential levels of quality and safety. Where providersdo not meet these essential levels, the commission hasa range of enforcement powers that it can use toprotect patients and service users from unsafe care.This includes, in the most extreme cases of poor care,closing down services. The commission has registeredaround 22,000 providers in a number of waves. Thefinal round will be the registration of 8,000 providersof NHS primary medical services in April 2013.

During the passage of the Health and Social CareAct 2012, we made it clear that we would strengthenthe role of the commission. As our reforms to healthand social care services are implemented, the commission’sfocus will remain on its core function of registeringproviders against the essential levels of safety andquality, and taking action against those providers thatdo not meet these standards.

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[EARL HOWE]The commission has taken on a challenging workload

in bringing a large number of new providers into anew registration system in a short period of time, andin merging the work of three former regulators. Ibelieve that it should be commended on the progressthat it has made. The early years of the commission’soperation have been comprehensively reviewed overthe last year. This has included reviews by the PublicAccounts Committee, the Health Select Committeeand the performance and capability review undertakenby my own department.

The regulations before us now were consulted onand drafted before the findings of those reviews wereavailable. I assure the Committee that my departmentwill consider whether further changes to the regulationsthat underpin the registration system are required inthe light of these several reports. We are now commencinga further review of the regulations and aim to consulton any further changes, if they are needed, at the endof the year.

5.30 pmNext, I should like to outline briefly the effect of

the regulations before the Committee. Our aim inreviewing the regulations has been to adhere to theoriginal principles underpinning the registration system.These are that there is a fair playing field, regardless ofthe type of provider; that the requirement to registerwith the commission is based on the risk to peoplewho use services and the extent to which regulationcan mitigate that risk; and that all types of providersmust meet the same registration requirements.

In the autumn of 2011 we consulted on a number ofproposals to changes to the regulations underpinningthe registration system. The proposals that we putforward were not designed to remove the safeguardsprovided by the registration or to dilute the impact ofregistration. Rather, they were designed to ensure thatthe registration system was focused on the right placesand was addressing areas where services posed a riskto patients and service users that could be mitigated byregistration with the CQC. In addition, we identifiedanomalies and inconsistencies in the regulations. Inthe light of the consultation, we made some changesto the proposals and decided that others requiredfurther consideration before we could proceed. Forexample, the regulation of personal care away fromhome will now be taken forward in the next stage ofour review of the regulations.

One of the key changes to the regulations, and theone that is most pressing, is to put in place an exemptionfrom registration for activities provided on a temporarybasis solely in relation to the Olympic or ParalympicGames. The short-term nature of these services, combinedwith the security arrangements around the Games,mean that the potential benefits of registration arelimited. Other changes made by these regulations relateto partnerships and diagnostics, both of which reducethe burden of regulation in these areas.

On partnerships, we are changing the fitnessrequirements so that the necessary qualifications andexperience are held by the partnership as a collectivebody, rather than having to be held by each partner as

an individual. This recognises the fact that some partnersmay have little or no involvement in the day-to-dayrunning of the regulated activity, and that requiringthese skills and qualifications on an individual basis isnot necessary to provide protection for patients andservice users.

The final change that I should like to mention insome detail relates to the regulated activity of diagnosticand screening procedures. Our review identified a numberof relatively low-risk diagnostic procedures that wouldcurrently require registration but where this is notjustified by the risk to patients. As a result, we areamending the regulations so that these lower-riskdiagnostic procedures—for example, the taking of urinesamples without further action attached—do not ofthemselves require registration with the commission.Providers of other, higher-risk diagnostic procedureswill still be required to register with the commission.

Other changes relate to the definition of medicaldevices, arrangements for securing consent where patientsare not themselves able to give consent, and a changeto clarify the defence that is available to providersagainst the offence of failing to meet the registrationrequirements.

In addition, there are changes to the scope of theactivities which require registration. Personal care,where it is arranged by a parent, carer or trust, will nolonger require registration with the commission; norwill the activities of second-opinion appointed doctorsworking under the Mental Health Act. Suppliers ofblood-related products where there is no contact withpatients or donors will no longer require registration;nor will the providers of ambulance services wherethese operate only within the confines of a cultural orsporting event. Providers of air ambulances will alsonot be required to register where they are registeredwith the Civil Aviation Authority and they do notprovide the treatment component. In a single case, thescope of registration is being extended to includesterilisation and sterilisation reversal in the surgicalprocedures regulated activity.

Finally, we are amending the exemption that appliesto some private practice of medical practitioners. Infuture, this will apply wherever a medical practitioneris employed by a registered provider and they areeither on the performers list of a designated body forprofessional appraisal or employed by a designatedbody.

The overall impact of the changes that we aremaking is deregulatory, removing from registrationwith the commission some activities where the burdenof registration is not justified and, at the same time,freeing up the commission’s resources to focus onthose higher-risk activities where regulation is justified.Our assessment of the impact of the changes is thatthey will deliver a net benefit of more than £100 millionover 10 years.

These changes to the registration regulations ensurethat the Care Quality Commission can operate a systemof regulation that is focused on addressing the risksassociated with the provision of health and adultsocial care. I commend the regulations to the Committee.

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Lord Hunt of Kings Heath: My Lords, I start bydeclaring an interest as chairman of an NHS foundationtrust and as a consultant trainer on NHS and healthissues.

I thank the noble Earl, Lord Howe, for his veryextensive explanation of the regulations. Although theinstrument is mainly technical in respect of the scopeand definition of regulated activities, I do not thinkthat it can be divorced from more general issues facingthe CQC and its turbulent history over the past fewyears.

It is clear that the CQC faces some fundamentalchallenges over leadership, sense of direction and theconfidence that both the public and the sector it seeksto regulate have in it. The noble Earl, Lord Howe,mentioned the Public Accounts Committee report of12 March, which stated that the commission had moreresponsibilities but less money than its predecessororganisations. It pointed out that, none the less,“it has consistently failed to spend its budget because of delays infilling staff vacancies. It is overseen by the Department of Health… which underestimated the scale of the task it had set inrequiring the Commission to merge three bodies at the same timeas taking on an expanded role. The Commission did not actquickly on vital issues such as information from whistleblowers.Neither did it deal with problems effectively, and the Departmentis only now taking action”.

The PAC concludes:“We have serious concerns about the Commission’s governance,

leadership and culture. A Board member, Commission staff, andrepresentatives of the health and adult social care sectors have allbeen critical of how the Commission is run”.

I also noted with interest what the noble Earl saidabout his department’s own performance and capabilityreview. I do not disagree with the summation in thereview that:

“CQC’s achievements are considerable and should not beunderestimated”.

The review points out that since 2009 it has not onlybrought together three different organisations anddeveloped a new regulatory model but has brought21,000 providers into the new regulatory regime andcarried out more than 14,000 compliance inspectionsand reviews. I also understand from the capabilityreview that:

“CQC has now set the essential platform from which tougherregulatory action can be taken when needed, if and where standardsfall below acceptable levels”.

However, it points out that, alongside those achievements,“CQC has faced operational and strategic difficulties, as previouslydocumented. Delays to provider registration, shortcomings incompliance activity and, at times, a negative public profile haveseriously challenged public confidence in its role. With hindsight,both the Department and CQC underestimated the scale of thetask of establishing a new regulator ... Even so, CQC could havedone more to manage operational risks”.

Looking forward, the review states that there areimportant issues that need to be addressed. First, theCQC should become more strategic; and, secondly—thisis very telling in view of my later comments—accountabilities are unclear. The review says that thereis a blurring of the boundary between the board andthe executive team, with the board only recently movingto take on a stronger role to constructively challenge

the executive team. Finally, the review says that theunderlying regulatory model is new and that so farthere is limited practical evidence of its effectiveness.

I have now had the opportunity to read the Treasuryminute responding to the PAC report, in which theGovernment agreed with the PAC’s recommendationon the need for an action plan to secure the changesthat are required. I also note from the Treasury minutethat, on governance, the Government promise that anew board structure will be in place by October 2012.When the noble Earl responds, perhaps he will say alittle more about this governance structure. Can I takeit that there will be a process of reappointing non-executives? It would be helpful to know whether that isintended.

On the role of the commission, the Treasury minuterefers to the comment made by the PAC, which statedthat there was at least uncertainty about the core roleof the commission. My understanding from the Treasuryminute is that the Government accept the challenge ofsetting this out with measurements of quality andimpact to assess the CQC’s effectiveness.

Having seen the reports from the PAC and theHealth Select Committee, and the department’s ownreview, we now have an understanding of some of theactions that will be taken. Does the noble Earl considerthat they will be sufficient to ensure confidence amongthe public? I invite the noble Earl to reflect on thatbecause, however worthy many of the CQC’s actionswere, one should not underestimate the knock topublic confidence that has occurred in these turbulentyears.

Perhaps I can tempt the noble Earl to gaze into thefuture and say a little about how the CQC might fitinto the new NHS architecture. In our debates on theHealth and Social Care Act we considered the relationshipbetween CQC, the NHS Commissioning Board andMonitor. There is some built-in tension there, and Iam interested to know how the noble Earl thinks thewhole thing will fit together.

We also await the second Francis report, which Igather is now due in the autumn. Inevitably, this willhave something to say about the CQC and, I suspect,the regulatory architecture. Again, I cannot anticipatewhat the inquiry will say, but will the noble Earl say alittle about what process the Government intend toadopt following receipt of the report? Clearly it couldhave an immediate impact on some of the changesthat the Government are making as a result of legislation.

On the burden on the CQC, it was a mammothtask bringing three organisations together and, essentially,increasing the responsibility but reducing the resources.One should not underestimate the task that wasplaced on the CQC, which was expected to take onnew responsibilities. The noble Earl mentioned theresponsibility of embracing the registration of providersof NHS primary medical services. This has now beendelayed until April 2013 but, none the less, is a majoradditional responsibility. The Public Accounts Committeecommented on this and said that in the past thecommission’s inspection work suffered when it had toregister large groups of providers. The committee saidthat it shifted its focus to registration and carried outfar fewer inspections than planned. What guarantees

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[LORD HUNT OF KINGS HEATH]can the noble Earl, Lord Howe, give me that movingto take on primary care providers will not impact onthe other essential responsibilities of the CQC?

5.45 pmI note that the PAC also recommended that the

commission review and set out how it will make surethat the assessment of GP practices is meaningful. Inthe Treasury minute the Government have said thatthey agree with that recommendation. I am sure thatthat is useful but, in order for it to be effective, one hasto be reassured that the CQC has the capacity to copewith this new responsibility. How successful does theMinister think the CQC has been in focusing on areaswhere it is likely to have the greatest impact and wherethe burden of regulators on providers can be justified?

This is not an easy task. The scale of the sector ishuge—it ranges from a plus £1 billion foundationtrust not a million miles away from here, to a single-handedGP or to a small care home. It is a huge responsibilityand deciding the priorities on a risk basis is a tremendouschallenge. Over the fullness of time, it would be goodto know how the CQC is able to deal with this.

I am tempted to say to the noble Earl that, ofcourse, the CQC has not always been helped byinterventions from his ministerial colleagues. I refer tothe intervention of the Secretary of State in launchingspot checks on more than 300 abortion clinics. Let memake it clear that I accept that the Secretary of Stateshould have intervention powers. From our debates onthe former Bill, the NHS Commissioning Board willknow that I very much uphold ministerial interventions.The Secretary of State must always have an ability tosay, “Here is a concern. You as regulator need to gointo it”. I do not have a problem with that.

I am not sure that the Secretary of State got hispriorities right and I draw the noble Earl’s attention tothe comments of Stephen Dorrell, the chairman ofthe Commons Health Select Committee, who thoughtthat the Secretary of State’s approach might have beenbetter if he had drawn the CQC’s attention to the factthat the subject of abortion clinics was an issue in themedia and invited it to consider this in the context ofits priorities. The question that Mr Dorrell put waswhether the CQC, as an independent regulator, shoulddetermine its own priorities or have its prioritiesdetermined for it.

I fall somewhere in the middle. I do not go as far asMr Dorrell. As I have said, there will always beoccasions when the Secretary of State, in upholdingthe public interest in the health service, should have aright of intervention. Of course, the way in which theregulator conducts its inspection must be entirely amatter for the regulator and should not be subject topolitical interference. My concern is about prioritiesand whether the Secretary of State, in taking theaction that he did, thought carefully enough aboutwhether that would have a negative impact on theresource availability of the CQC to do the other thingsthat it needs to do.

I note that because of issues of capacity and complexitythe PAC recommended that the CQC should not takeon the functions of the Human Fertilisation and

Embryology Authority at this time. In stark terms, theTreasury minute states that the Government do notagree with the committee’s recommendations but pointsout that the department has made a commitment toundertake a full consultation of options before makingany decisions. Can the noble Earl say any more aboutthe progress that has been made in the timetable forthat consultation? It would be very helpful.

Returning to the issue of whistleblowing, which Imentioned earlier, whistleblowers have to be a keysource of intelligence in helping the commission tomonitor the quality of care. The Public AccountsCommittee was concerned with the closure of thededicated whistleblowing line that the HealthcareCommission had previously used. I see from the Treasuryminute that the department believes that that was ajustified decision. That is open to debate. I respect theviews of the Government on that but there is an issuearound whistleblowing.

I am concerned at the potential treatment of anon-executive board member of the CQC, Kay Sheldon,who gave evidence to the Francis inquiry and whosemembership of the CQC board is apparently at risk.She developed substantial concerns about the way inwhich the board was operating and believes that sheraised those concerns about the management, cultureand leadership of CQC over a sustained period. Shesays that she repeatedly raised these issues internallybut her experience was that other members of theCQC board, and the senior management of theorganisation, failed to engage on the issues she wasraising.

I would again draw the noble Earl’s attention to hisown capability review, which seemed to suggest thatthere was a confusion of roles on the board and thatthe department is now satisfied that the non-executivesare providing the scale of challenge necessary. It isquite significant that Ms Sheldon clearly found itdifficult to get her concerns treated seriously. Sheraised issues with the noble Earl’s department and theNational Audit Office but felt that those were nottreated seriously. In the end, she approached the MidStaffs public inquiry team and gave oral evidence on28 November 2011.

In describing the evidence that Ms Sheldon gave,along with another colleague from the CQC, leadingcounsel to the inquiry said that,“the great majority of the evidence of both witnesses, in oursubmission, goes to the following: clear and identifiable issueswhich are relevant to the systems and culture within the CQC as itwas at its inception, with the shadow board in late 2008 and at itsinception in 2009, and as it is now. Those are whether or not thereis a clear strategy for effective regulation in place at the CQC, theeffectiveness of the board of the CQC and the culture of managementwithin the CQC”.

The chairman of the public inquiry said:“Both today’s witnesses, I should make it clear, have come

forward to this inquiry of their own volition, and I suspect it hasrequired great courage on their part to do so. So far I have seennothing to suggest that they have acted other than in good faith,and without intending to refer in any way to the technicalities ofcurrent whistle-blowing legislation, it seems to me that both thesewitnesses are properly called whistle-blowers”.

I understand that on the day Ms Sheldon gaveevidence to the public inquiry that the Secretary ofState had set up, the chair of the CQC wrote to the


Secretary of State to invite him to use his powersunder the Health and Social Care Act 2008 to removeMs Sheldon from the CQC board on the basis thatthere was an irretrievable breakdown of trust andworking relationships. However, there has to be asuspicion that action was taken against her becauseshe had the courage to give evidence to a publicinquiry which the Secretary of State had set up.

Following the letter from the chair of the CQC,which requested that the Secretary of State exercise hispowers under paragraph 3(3) of Schedule 1 to theHealth and Social Care Act 2008 to remove Ms Sheldonfrom her position as a non-executive member of theCQC board, I understand the Secretary of State appointedMs Gill Rider, the director-general of leadership andpeople strategy at the Cabinet Office, to investigate thebackground to this request. Ms Rider prepared areview, which was coincidentally released on the sameday that the Public Accounts Committee reported—12 March 2012. The essential conclusion of the Riderreview, as I understand it, is that the public airingof concerns by Ms Sheldon caused a fundamentalbreakdown of trusting relationships between Ms Sheldonand the other members of the board. Therefore, sherecommended to the Secretary of State that he exercisehis powers to remove Ms Sheldon from the board.

I understand that the Secretary of State has writtento Ms Sheldon, inviting her to make a full response toMs Ryder’s review, indicating that she may have metthe grounds for termination set out in the Health andSocial Care Act 2008.

I do not know how much the noble Earl can respondto me today, but I use this opportunity to expresssome concerns that I have. I would have thought itclear that Ms Sheldon acted in the public interest and Iwant to take the noble Earl back to the conclusion ofthe capability review. I was very struck by the commentthat there had been a blurring of the boundary betweenthe board and the executive team, and only recentlyhas the board moved to take on a stronger role to theconstructive challenge of the executive team. My argumentwould be that, in those circumstances, surely Ms Sheldonshould not be penalised for taking her concerns to theFrancis inquiry, having already raised them at theCQC, the department and the National Audit Officeand feeling that they were not dealt with effectively.

It is very important that whistleblowing should besupported. I use this opportunity to make it clear tothe Minister that the decision of the Secretary of Statein relation to Ms Sheldon will have a profound effecton whistleblowing generally within the National HealthService. I urge a great deal of sensitivity when it comesto making any such decision.

Finally, I in some ways replicate the comment thatthe Minister made at the beginning of his remarks. Ido not underestimate the CQC’s achievements andthe commitment of its people; I believe that Dame JoWilliams, the chairman, and Cynthia Bower, the chiefexecutive, are people of the highest integrity and Ihave very great respect for them. However, verysearching questions have to be asked about the CQCand its performance and future, and they deserve tobe answered. As we have an extensive statutory

instrument that relates to the role of the CQC, it isappropriate for me to put those points to the Ministertonight.

Earl Howe: My Lords, I am grateful to the nobleLord for his comments. I begin by thanking him forthe expressions of support that he gave to Dame JoWilliams and Cynthia Bower. I am sure that they willread those with gratitude.

The noble Lord made a number of points aroundthe capability of the CQC to undertake the dutiesplaced on it. The performance and capability reviewfound that in its early stages the CQC was understandablyfocused on operational priorities. However, theachievements of the CQC should not be underestimated,and I was glad to hear the noble Lord acknowledgethat. The review also acknowledges that the CQCleadership could have done more to manage operationalrisks and provide better strategic direction. We areclear that the CQC leadership is now demonstratinggreater confidence and challenge. The recommendationsare aimed at building on performance over the last12 months, which I think has been noticeable, tofurther strengthen capability and improve accountability,including within the department.

We were very frank in our assessment of our ownrole—that is to say, the role of the department—inthis. The capability review recognised that the departmentand the CQC underestimated the scale of the task ofcombining three regulators into one organisation whiledeveloping and implementing the new regulatory model.Even so, the review found that the CQC could havedone more to manage the difficulties that it faced in itsfirst few years.

We need to address those points but, at the sametime, to look ahead. The department is committed tosupporting and strengthening the CQC. We are clearthat the CQC should continue in the future to focus onits core role of assessing whether providers meet theessential levels of safety and quality through its registrationfunction. We have every confidence in the CQC’sability to provide effective regulation of providers ofhealthcare and adult social care in England. Theperformance and capability review found that theCQC has made significant progress in the last ninemonths and is clearly focused on its core tasks.

The review has already made recommendations tostrengthen the board and the board’s structures, whichwas a matter raised by the noble Lord, includingchanging the board so that, instead of comprisingonly non-executives, it becomes a unitary board ofmajority non-executives, with senior executives on theboard where they can be better held to account. It alsorecommended that the CQC reviews and reinstates theboard’s support and development programme andstrengthens capability at executive team level withgreater strategic capability and more and wider sector-specific expertise. The department will oversee theimplementation of those recommendations.

6 pmThe noble Lord mentioned in particular Kay Sheldon,

who is a member of the board. I hope that he willunderstand that I do not want to comment on the


[EARL HOWE]position of individual members of the board, but Iassure him that the department is committed to ensuringthat the board of the CQC functions well and iseffective.

Based on the capability review, the CQC will nowbe expected to set out as part of its business plan for2012-13 an agreed action plan providing details ofhow the recommendations will be taken forward. Theserecommendations are intended to make the CQC morestrategic and responsive to risk, to set out more clearlywhat success looks like, to clarify accountabilityarrangements, including strengthening the membershipand structure of the CQC board, as I have mentioned,and to provide greater consistency and coherence inthe development and delivery of regulation. Thosethree things will run through the business plan.

The noble Lord spoke about the various new rolesthat the CQC will be undertaking. The roles that weare asking the CQC to take on are intended to strengthenits existing role as the independent regulator of healthand adult social care. At the same time, in line with theGovernment’s regulatory reform agenda, we are lookingat ways to reduce the regulatory burden on the systemfor providers. The functions considered for the CQCare those that have a natural synergy with the commission’sprimary functions. That is where the registration ofGP practices comes in. As the noble Lord knows, wetook the decision, in response to a request from theCQC, to defer the registration of around 9,000 providersof NHS primary medical services. That decision willgive the CQC additional time to improve the registrationprocess for this tranche of registrants. The CQC isoverhauling its online application process so that providerswill be able to start completing their applicationssooner than in previous application rounds. The websitewill contain full information on the registration process. Itwill provide updates on the progress of an applicationand on how long it is anticipated it will take for keydecisions to be made. That is a very welcome development.

The CQC will also put in place a central team tohandle applications, reducing the risk of the registrationof NHS primary medical care providers impacting onthe CQC’s ability to monitor compliance for otherregistered providers. The CQC is working to put inplace a different system for CRB checks for the registrationof providers of primary medical services that will beeffective, but simpler, and should avoid the delaysexperienced in the registration of dentists.

The noble Lord mentioned the Mid Staffs inquiryand the report that we expect in October from RobertFrancis QC. All I can say at present is that we willconsider Mr Francis’s recommendations when theyare published. I hope that the noble Lord will understandthat it is difficult for me to anticipate what we will dobefore we read those recommendations.

The noble Lord also mentioned the CQC’s recentactivity in conducting spot checks on abortion clinics.He asked whether it would have been more appropriatefor the CQC to direct its own priorities. The centralpoint I would make here is that the CQC needs to takeinto account any relevant information it receives within

the context of its ongoing work programme. My righthonourable friend the Secretary of State was madeaware of a potentially serious issue where providerswere not compliant with the law. The CQC actedaccordingly and, in my view, that was appropriate.

The noble Lord also asked me about the plans totransfer the work of the Human Tissue Authority andthe Human Fertilisation and Embryology Authorityto the CQC. As he knows, our report from the reviewof arm’s-length bodies nearly two years ago set out thework that the department is doing to reduce bureaucracyand improve efficiency in its arm’s-length bodies, andindeed throughout the NHS. We have not accepted thePAC’s recommendation that the CQC should not takeon the functions of the HFEA at this time. TheDepartment of Health has made a commitment toconduct a public consultation on the transfer of HFEAand HTA functions and the abolition of those bodies.We will publish the consultation shortly and we ofcourse welcome responses to inform our thinking. Weare pleased that the PAC recognises that we will beconsulting on this proposal and considers this to providea “welcome pause”.

Lord Hunt of Kings Heath: I am grateful to thenoble Earl, Lord Howe. Perhaps I may make just acouple of points. On the consultation on the HFEA,all I should like to say to him is that it might be usefulif there were some time for parliamentary discussionin your Lordships’ House around the consultation—notto second-guess the consultation process but, I shouldhave thought, in view of our previous debates, to allowfor some discussion among parliamentarians aboutthe consultation document.

Secondly, as regards Kay Sheldon, I fully understandthat the noble Earl is not prepared to comment on anyindividual case. He went on to make the point that thedepartment was concerned to ensure that the board ofthe CQC was well functioning and effective. One couldtake that both ways. I understand, in a sense, theambiguity of the noble Earl’s expressions in relationto that. All I would say to him is that I would ask thedepartment to walk very carefully in this area. I knowthat he has debated the issue of whistleblowing manytimes in the past few years, and he has always upheldthe rights of whistleblowers. Although it might beargued that a board member is a little different from amember of staff, there will sometimes be circumstanceswhen board members themselves can become frustratedthat they have raised concerns that are not then dealtwith. Taking action against a board member who hasactually given evidence to a public inquiry will sendunfortunate signals to the NHS about how strongcollectively we are in supporting whistleblowers. I donot expect the noble Earl to respond to that but hopethat it will at least encourage the department to thinkvery carefully about their actions in this case.

Earl Howe: My Lords, on the noble Lord’s firstpoint, I would be very willing to take part in a debateon the issue involved in our proposals to transfer thefunctions of the HFEA and the HTA to the CQC.I can only say that I will ensure that the noble Lord’ssuggestion is fed into the usual channels.


On the second issue that he raised, I appreciate hisunderstanding that it would not be appropriate for meto comment on the position of individual members ofthe board. I am sorry if my remarks appeared ambiguous;that was certainly not my intention. All I intended tosay was that the CQC will be facing significant challengesover the coming months, as we have been discussing,

and the department is committed to ensuring that itsboard has the skills and capabilities it will need tomeet those challenges.

Motion agreed.

Committee adjourned at 6.10 pm.


Written StatementsTuesday 22 May 2012

Anti-social BehaviourStatement

The Minister of State, Home Office (Lord Henley):My right honourable friend the Secretary of State forthe Home Department (Theresa May) has today madethe following Written Ministerial Statement.

I am later today publishing Putting Victims First—MoreEffective Responses to Anti-Social Behaviour. It setsout the Government’s plans to deliver on the commitmentto introduce more effective measures to tackle anti-socialbehaviour, and puts them in the wider context of theour reforms to the policing and criminal justice landscapeand work to turn round the lives of the most troubledfamilies.

The term “anti-social behaviour” masks a range ofnuisance, disorder and crime which affects people’slives on a daily basis: from vandalism and graffiti; todrunk or rowdy behaviour in public; to intimidationand harassment. All have huge impacts on the lives ofmillions of people in this country. None is acceptable.

Many police forces, local authorities and sociallandlords are working hard to deal with these problems.However, too often, the harm that anti-social behaviourcauses, particularly when it is persistently targeted atthe most vulnerable people in our society, is overlooked.At the heart of our new approach is a fundamentalshift towards focusing on the needs of victims, ratherthan the type of behaviour.

We know what victims of anti-social behaviourwant. First and foremost they want the behaviour tostop, and the perpetrators to be punished for whatthey have done. They want the authorities to take theirproblem seriously, to understand the impact on theirlives and to protect them from further harm. Theywant the issue dealt with swiftly and they do not wantit to happen again.

The mistake of the past was to think that theGovernment could tackle anti-social behaviour itself.However, this is a fundamentally local problem thatlooks and feels different in every area and to everyvictim. Local agencies should respond to the prioritiesof the communities they serve, not to those imposedfrom Whitehall. From November this year, directlyelected police and crime commissioners will be a powerfulnew voice for local people, able to push local prioritiesto prevent anti-social behaviour from being relegatedto a “second-tier” issue.

The Government do, however, have a crucial role insupporting local areas. We will do that by:

focusing the response to anti-social behaviour onthe needs of victims—helping agencies to identifyand support people at high risk of harm, givingfront-line professionals more freedom to do whatthey know works, and improving our understandingof the experiences of victims;empowering communities to get involved in tacklinganti-social behaviour—including by giving victimsand communities the power to ensure action is

taken to deal with persistent anti-social behaviourthrough a new community trigger, and making iteasier for communities to demonstrate in court theharm they are suffering;ensuring professionals are able to protect the publicquickly—giving them faster, more effective formalpowers, and speeding up the eviction process for themostanti-socialtenants,inresponsetorecentconsultationsby the Home Office and Department for Communitiesand Local Government; andfocusing on long-term solutions—by addressing theunderlying issues that drive anti-social behaviour,such as binge drinking, drug use, mental healthissues, troubled family backgrounds and irresponsibledog ownership.It is vital that those who will be affected by these

changes, from the professionals who will use the newpowers to victims seeking protection from targetedabuse, can continue to shape the reforms so that we getthem right first time. We will therefore publish a draftBill for pre-legislative scrutiny before introducinglegislation.

Copies of Putting Victims First will be available inthe Vote Office.

Armed Forces: Nuclear SubmarinesStatement

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): My honourablefriend the Minister for Defence Equipment, Supportand Technology (Peter Luff) has made the followingWritten Ministerial Statement.

I wish to inform the House that the Ministry ofDefence (MoD) has signed contracts, worth approximately£350 million (excluding VAT), for the first 18 monthsof work on the assessment phase of the Successorsubmarine programme.

The Successor submarine programme will deliverthe replacement for the Vanguard Class submarinesthat carry the UK’s strategic nuclear deterrent. HonourableMembers will recall that my right honourable friendDr Liam Fox, the then Defence Secretary, announcedto the House on 18 May 2011 (Official Report, cols.351-353) that the programme had obtained its initialgate approval and was commencing its assessmentphrase leading up to the main gate consideration in2016.

The assessment phase is expected to cost some£3 billion in total, and focuses on design and engineeringactivities, the purchase of long lead items, preparationfor production, technology development, informationand knowledge management, and project management.These latest contracts are part of that investment.

To deliver the assessment phase effectively, the MoDhas signed a collaborative agreement with the threekey suppliers in the UK submarine industry: BAESystems Maritime-Submarines, Rolls-Royce and Babcock.We have also signed contracts with these companies,which include the first 18 months of assessment phaseactivities, as the start of a rolling programme of work.

WS 57 WS 58[22 MAY 2012]Written Statements Written Statements

The highest value contract is with BAE SystemsMaritime-Submarines: it is worth around £328 millionand covers submarine design. The contract with Babcockis worth around £15 million and covers the designaspects of in-service support. In addition a contractamendment with Rolls-Royce has been placed and isworth around £4 million for Successor design work.

These contracts, along with our continued commitmentto the Astute submarine programme, will sustainthousands of jobs across the UK submarine industry,and will allow us to maintain this vital capability thatunderpins the nation’s long-term security.

Coroner ServiceStatement

The Minister of State, Ministry of Justice (LordMcNally): My honourable friend the ParliamentaryUnder-Secretary of State for Justice (Jonathan Djanogly)has made the following Written Ministerial Statement.

The Lord Chief Justice, following consultation withthe Lord Chancellor, has announced today that HisHonour Judge Peter Thornton QC is to take up postas chief coroner in September 2012.

HHJ Thornton, a senior circuit judge at the CentralCriminal Court, was originally appointed to the postin May 2010 but did not formally take up his dutieswhile the Government were reviewing the position.

As chief coroner HHJ Thornton will, for the firsttime, be responsible for providing national leadershipto coroners in England and Wales. He will also play akey role in setting new national standards and developinga new statutory framework for coroners includingrules and regulations, as well as guidance and practicedirections, within which coroners will operate. Thiswill help to bring about much greater consistency ofpractice between coroner areas and improved servicesto the bereaved.

While HHJ Thornton will not formally commencehis duties until September, he will in advance of thatfamiliarise himself with issues facing the coroner system.He will also continue to sit in the AdministrativeCourt to hear judicial reviews on coronial matters.

Work is ongoing on implementation of the chiefcoroner’s statutory functions and other powers in Part1 of the Coroners and Justice Act 2009, with a view tobringing them into force in 2013.

Energy Bill (Draft)Statement

The Parliamentary Under-Secretary of State,Department of Energy and Climate Change (LordMarland): My right honourable friend the Secretaryof State for Energy and Climate Change (EdwardDavey) has made the following Written MinisterialStatement.

I am pleased to be publishing a draft of the EnergyBill today, in order for pre-legislative scrutiny to becarried out on it.

The draft Bill includes measures necessary to reformthe electricity market to deliver secure, clean andaffordable electricity.

At the heart of our electricity market reform (EMR)measures are feed-in-tariffs with contracts for difference(CfDs), long-term instruments which will provide stableand predictable incentives for companies to invest inlow-carbon generation. CfDs are more affordable thanalternative incentives and will mean a better deal forconsumers. Through the work on final investmentdecisions (FID) enabling we are committed to workingwith developers to enable some of this investment tocome forward in advance of the CfD regime cominginto force, and the Bill contains measures to supportthis process. This will be complemented by a capacitymarket that will, if required, provide security of electricitysupply by ensuring sufficient reliable capacity is available.Measures relating to conflicts of interest and contingencyarrangements will ensure that the system operatorwhich will deliver these schemes is appropriate. Renewablestransitional measures will ensure that existing investmentsunder the renewables obligation remain stable. Finally,an emissions performance standard (EPS) will limitcarbon dioxide emissions from the most pollutingfossil fuel power stations by setting appropriate standardsfor all new fossil fuel powered generation. Taken as awhole, EMR will enable large-scale investment in low-carbon generation capacity in the UK and deliversecurity of supply, in a cost-effective way.

In addition to EMR, the Energy Bill will alsoimprove regulatory certainty by ensuring that Governmentand Ofgem are aligned at a strategic level through astrategy and policy statement (SPS), as recommendedin the Ofgem review of July 2011.

The Bill also ensures that the Office for NuclearRegulation will be fully able to meet the future challengesof regulating the nuclear industry, as the first newpower plants since the 1980s are built.

Finally, the Bill contains provisions that will enablethe sale of the Government Pipeline and StorageSystem (GPSS). The Parliamentary Under-Secretaryof State for Defence Equipment, Support and Technology,at the Ministry of Defence is laying a separate WrittenMinisterial Statement today.

I am confident that measures contained in thisEnergy Bill will enable us to keep the lights on, billsdown and air clean. I am pleased to commend it to theHouse today for PLS and will look forward to thepublication of the Energy and Climate Change SelectCommittee’s report.

EqualityStatement

Baroness Verma: My right honourable friend theSecretary of State for the Home Department (TheresaMay) has today made the following Written MinisterialStatement.

When I launched the equality strategy Building aFairer Britain, in December 2010, I made a commitmentto report back on its progress.

I have today published a progress update, The EqualityStrategy—Building a Fairer Britain: Progress Report.It sets out how the coalition Government’s new approach

WS 59 WS 60[LORDS]Written Statements Written Statements

to equality which is based on transparency, localaccountability, and reducing bureaucracy is beginningto make a difference across the five key priority areasset out in the equality strategy.

Copies of the report are available on the HomeOffice website.

EU: Foreign Affairs Council andDevelopment Foreign Affairs Council

Statement

The Minister of State, Foreign and CommonwealthOffice (Lord Howell of Guildford): My right honourablefriend the Secretary of State for Foreign andCommonwealth Affairs (William Hague) has madethe following Written Ministerial Statement.

I attended the Foreign Affairs Council (FAC) inBrussels on 14 May. My right honourable friend theSecretary of State for International Development attendedthe Development FAC held later the same day.

Both meetings were chaired by the High Representativeof the European Union for Foreign Affairs and SecurityPolicy, Baroness Ashton of Upholland. A provisionalreport of the meeting and all conclusions adopted canbe found at: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/130248.pdf.

Foreign Affairs CouncilAfghanistanMinisters discussed Afghanistan ahead of international

meetings in Chicago 20 and 21 May, Kabul 14 Juneand Tokyo 8 July. Conclusions were agreed (see linkabove) which reaffirmed the EU’s and individual memberstates’ commitment to support Afghanistan beyond itstransition. Ministers agreed to continue to prioritiseAfghanistan over the long term through making anenhanced contribution to support the country. Thiscommitment would be dependent on reciprocal effortsby the Afghan authorities to meet their agreed reformobligations.

Middle East Peace ProcessMinisters agreed conclusions (see link above) stressing

their commitment to a two-state solution to the conflict,and expressed concern about developments on theground that could threaten the goal of a two-statesolution, including in Area C of the West Bank and inEast Jerusalem. They also reiterated the importance ofIsrael’s security.

I welcomed the conclusions and expressed hopethat the new Israeli coalition could benefit the peaceprocess. I also reminded colleagues of some recentpositive steps including the import into the UK oftextiles from Gaza for the first time since 2007. Thereis an urgent need to relax the restrictions imposed onGaza in order to allow products to be exported to theWest Bank, Israel and the EU.

Southern NeighbourhoodMinisters agreed conclusions (see link above) and a

further round of sanctions against Syria. I made thefollowing statement after the meeting:

“I welcome the EU’s agreement on a new round of sanctionson Syria. As long as the violence and repression continues we willcontinue to increase the pressure on the regime and its supporters.We will also press others to adopt and implement similar measures.

The UK fully supports the work of the Joint UN and ArabLeague Special Envoy to resolve the crisis in Syria. The regimemust implement rapidly and fully its commitments under twounanimous UN Security Council resolutions and Kofi Annan’splan. This plan remains the best hope of ending the violence, butit is not open-ended and we will not hesitate to return to the UNSecurity Council if it is not implemented swiftly and in full”.

Ministers discussed Algeria’s parliamentary elections.I had already made the following the statement on12 May:

“I congratulate the people of Algeria on the conduct of theseelections and welcome the Algerian Government’s decision toallow EU observers for the first time. Over the past 16 monthspeople across North Africa have clearly expressed their desire forgreater openness and accountability, and it is encouraging thatthe Algerian authorities have responded in this positive way. Iparticularly welcome the greater representation of women in thenew parliament, in line with Algeria’s recent reforms.

I hope this progress will lead to further reforms in the forthcomingdiscussion of constitutional change, and in the run up to the localelections later this year and the presidential elections in 2014. TheUK has a good relationship with Algeria and I am confident thatBritish parliamentarians will seek to further strengthen ties withtheir newly elected Algerian counterparts”.

Ministers had a short exchange on Libya wheremany expressed their concern about increased migrationflows through the country. I noted that that the EU’sborder management assessment would soon be completeand that following this up should be a priority.

MexicoBaroness Ashton briefed Ministers on her two recent

visits to Mexico and preparations for the EU-Mexicosummit due to be held on 17 or 18 June. During thefollowing discussion many stressed that the summitwas an opportunity to discuss a number of issuesimportant to EU partners, including the EU-Mexicofree trade agreement and wider trade and investmentwithin the region.

RussiaMinisters reviewed Russia in light of the upcoming

EU-Russia summit of 3 and 4 June in St Petersburg. Ihighlighted the importance of focusing on issues whichwere priorities for both Russia and the EU. We need tocontinue to engage with civil society groups. Althoughmany colleagues highlighted the importance of theEU-Russia new agreement, others pointed out thatprogress on this was likely to be slow.

UkraineDuring discussions some Ministers expressed concerns

about developments in Ukraine and the EU’s inabilityto exert any influence. Many Ministers agreed that itwas too early to take any EU-wide decision ongovernmental attendance at the Euro 2012 championships.

Bosnia and Herzegovina (BiH)Under a short AOB item, the Slovenian and Austrian

Ministers briefed on their recent visit to BiH. This islikely to be a full agenda at the FAC on 25 June.

Other businessMinisters agreed without discussion a number of

others measures, including:a Council regulation suspending certain restrictivemeasures against Burma;conclusions on Somalia highlighting the stepsneeded for completion of the transition process,


committed to continuing “significant support” forAMISON, and stressing concern over the humanitariansituation. The conclusions also noted the imminentmandate of EUCAP NESTOR (Regional MaritimeCapacity Building) and extension of the mandatefor EUNAVFOR ATALANTA (counter piracy);conclusions on Yemen;a Council decision to extend the EU SpecialRepresentative in Afghanistan;the fifth implementation report of the EU ActionPlan for Afghanistan;a common position on the fourth meeting of theEU–Albania Stabilisation and AssociationCouncil; andthe establishment of the EU’s position for thefifteenth meeting of the EU-Ukraine Co-operationCouncil.Development Foreign Affairs CouncilCommissioners Piebalgs (Development), and Potocnik

(Environment) attended the meeting chaired by BaronessAshton.

Council conclusions on Agenda for Change and theFuture Approach to EU Budget Support

Ministers discussed and adopted Council conclusionsfor both the Agenda for Change and the Future of EUBudget Support. There was broad support for theprinciple of focusing EU grant funding on the poorestcountries, with the exception of Spain which arguedfor a continued focus on middle-income countries inLatin America. The Secretary of State outlined UKpriorities including the focus on results, impact andvalue for money in all EU aid. He noted the importanceof rigorous analysis before providing budget support,support for improvements in domestic accountabilityduring the provision of budget support and the importanceof co-ordination within the country receiving the support.Commissioner Piebalgs stated that the EU could learnfrom the UK on how to better communicate itsdevelopment results.

2012 Annual Report on EU development aid targetsMinisters discussed the findings of the Commission’s

annual report 2012 on EU development aid targetsand adopted Council conclusions. Commissioner Piebalgsand Baroness Ashton both stressed the need for theEU to continue to meet its 0.7% aid target. TheSecretary of State highlighted that the millenniumdevelopment goals (MDGs), would not be met if wedid not meet our commitments. He argued that it wasin the EU’s interest to support development as well asbeing the right thing for the world’s poor. In spite ofthe economic climate there was significant public supportfor continuing development aid. The Secretary of Statenoted that the Prime Minister had recently beenannounced as co-Chair for the UN’s high level panelfor the post-MDG framework.

BurmaMinisters discussed the situation in Burma. The

EU would spend ¤150 million in the next two years.Commissioner Piebalgs made the case for jointprogramming in the country, supported by a numberof other Ministers. The Secretary of State informedEU Ministers that the UK had recently quadrupled itsaid to Burma, and that donor co-ordination was essential.

Rio+20Development Ministers discussed the EU position

for Rio+20, stressing that there should be a developmentfocus to the Rio summit. Some Ministers noted theirsupport for a sustainable development council andsustainable development goals.

Council conclusions on food security under the Hornof Africa initiative

Commissioner Piebalgs presented the Commission’sapproach to SHARE (Supporting Horn of AfricaResilience) stressing the importance of private sectorinvolvement and the rural sector. The Council adoptedconclusions welcoming the approach and recognisedthe importance of support to build resilience in theHorn of Africa. Commissioner Piebalgs informedDevelopment Ministers of ongoing discussions underthe G8 regarding food security.

Council conclusions on policy coherence for development(PCD)

Council conclusions were adopted by Ministerswith no discussion.

State of play on joint programmingFrance welcomed the Commission’s written note

on joint programming and called for an extension ofjoint programming to additional countries, addingthat partner countries needed to be fully involved.

International family planningThe Secretary of State called for financial and

political support from EU development Ministers forthe family planning summit on 11 July 2012, co-hostedby the UK and the Gates Foundation.

I will continue to update Parliament on futureForeign Affairs Councils.

Government Car and Despatch Agency:Business Plan

Statement

Earl Attlee: My honourable friend the ParliamentaryUnder-Secretary of State for Transport (Mike Penning)has made the following Ministerial Statement.

I am today announcing the next stage of the reformof the Government Car and Despatch Agency. By theend of this calendar year we intend to have endedGCDA’s agency status and to have integrated it intothe Department for Transport.

We expect potential savings in administration costsof around £1.3 million to be achieved from the endingof agency status once all of the functions have beensuccessfully merged with the department. We will continueto publish information on expenditure and income tomaintain financial transparency.

I am also announcing the publication of the 2012-13business plan for GCDA.

The business plan sets out:the services the agency will continue to deliver untilagency status ends and details of the continuingsignificant change and reform programme beingimplemented there;the resources it requires, and


a framework of measures by which its performancewill be assessedThe measures allow service users and members of

the public to assess how the agency is performing indelivering its key services and reforms and in managingagency finances.

The business plan will be available electronically onagency websites and copies will be placed in the Librariesof both Houses.

Government Pipeline and Storage SystemStatement

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): My honourablefriend the Minister for Defence Equipment, Supportand Technology (Peter Luff) has made the followingWritten Ministerial Statement.

A draft Energy Bill has been published today, includingprovisions to enable the sale of the Government Pipelineand Storage System (GPSS).

The GPSS was established at the beginning of theSecond World War to supply aviation fuel to militaryairfields across the country. Since then it has grown tobecome an important commercial asset, serving anumber of major civil airports such as Heathrow andGatwick. Military use now only equates to around10% of the GPSS throughput, with the system distributingaround 40% of aviation fuel in the UK.

Following a review of the GPSS it has been concludedthat it does not need to remain under MoD ownershipand could benefit from the investment that a privatesector operator can be expected to bring, although afinal decision on sale will be subject to market conditionsat the time. Such investment has the potential toincrease the resilience of the system and allow evengreater commercial development by removing currentrestrictions unless there is an underpinning defencerequirement. Sale will not impact on defence outputsand military requirements can be met through contractualarrangements with the purchaser of the system.Consultation is being undertaken across governmentto ensure other outputs are similarly accounted for.

The primary purpose of the legislation is to create aset of transferable rights to maintain, use, remove,replace or renew the GPSS, to restore land if any partof it is removed or abandoned, to inspect or survey theGPSS or the land on or under which the GPSS runsand to access the land on or under which the GPSSruns for these purposes.

The legislation will also provide that where aninterest in land is depreciated as a result of the creationof these rights, the owner will be entitled to compensationand impose an obligation on the owner of the GPSSto pay compensation in respect of loss caused by theexercise of these rights

An exercise is being launched today to notify thoselandowners on or under whose land the GPSS runsand interested bodies of the impact the legislation willhave on them and provide them with the opportunityto comment on the draft provisions, which have beenpublished as part of the draft Energy Bill. As part ofthis exercise I am also writing today to all those MPswithin whose constituency it is situated.

More detailed information can be found on theMoD’s website at: http://www.mod.uk/gpss.

Comments on the draft provisions should be submittedby 31 July and the Government’s response will bepublished on the MoD website shortly thereafter.

Independent Agricultural Appeals PanelStatement

TheParliamentaryUnder-Secretaryof State,Departmentfor Environment, Food and Rural Affairs (Lord Taylorof Holbeach): My right honourable friend the Ministerof State for Agriculture and Food (Jim Paice) hastoday made the following Statement.

I announced on 15 December (Official Report,col. 123WS) that I had commissioned a review of theIndependent Agricultural Appeals Panel (IAAP). Ihave considered the findings and recommendations ofthe review, and following consultation with the Ministerfor the Cabinet Office I am pleased to announce theGovernment’s decision on the future of this body. TheIAAP will be retained in its current form (an advisoryNDPB) and business processes supporting the appealsfunction are to be strengthened by Defra and theRPA, providing a more accessible and informativeappeals service.

The review concluded that there remains a need forthe IAAP its current form and that it is a servicevalued by stakeholders. The report makes a number ofrecommendations that will strengthen and improvehow the appeals function is operated and increase itstransparency and accessibility for customers. TheGovernment have accepted these in full. Defra andthe RPA will work together to implement therecommendations as part of the wider programme ofwork announced in the RPA’s five year improvementplan (published on 9 February). Further details areavailable on the Defra website (www.defra.gov.uk)and the RPA’s website.

Copies of the review report, review of the IndependentAgricultural Appeals Panel, have been placed in theLibraries of both Houses.

Ports: Liverpool Cruise TerminalStatement

Earl Attlee: My honourable friend the ParliamentaryUnder-Secretary of State for Transport (Mike Penning)has made the following ministerial statement.

On 26 January (Official Report, col. 26WS) I undertookto report back to the House after taking externaladvice on an appropriate figure for grant repaymentby Liverpool City Council in order to assuage competitionconcerns sufficiently to withdraw the Department forTransport’s objection to turnaround cruise at the Cityof Liverpool Cruise Terminal.

The grant condition precluding turnaround hadoriginally been set in 2007 in order to avoid unfaircompetition with other UK ports, which had investedin facilities without grant support. Liverpool CityCouncil had requested that the condition be lifted andit was agreed that a proportion of the grant be repaid.


I have now received this advice and have decided toaccept the recommended figure of £8.8 million as alump-sum repayment, or a total of £12.6 million ifphased over 15 years. In my view this represents a fairoutcome that addresses competition concerns whileenhancing the benefits to secure which the grants wereinitially paid.

Final removal of the grant condition by DCLG willbe dependent on securing state aid clearance from theEuropean Commission, which will now be sought.The department will assist in that process.

Roads: Dartford CrossingStatement

Earl Attlee: My honourable friend the ParliamentaryUnder-Secretary of State for Transport (Mike Penning)has made the following ministerial statement.

On the 30 June 2011, the Department for Transportlaunched a consultation on proposals to revise theroad user charging regime at the Dartford–ThurrockRiver Crossing. The consultation closed on 23 September.

The Government had to make hard choices at thetime of the 2010 spending review, and accepted theneed to increase revenues from the crossing to enablethe continuing prioritisation of planned improvements.

The department’s proposal was that cash charge forcars would increase from £1.50 to £2 from late 2011,and then to £2.50 in spring 2012, and that prices forother vehicles would also increase at broadly proportionaterates. These increases were part of a strategy to bothmanage demand at the crossing and to continue toprioritise short, medium and long-term improvementsat the crossing.

On 24 November 2011, I informed the House thatin recognition of the number of representations made,and to allow the department time to carefully considerthe responses further, there would be no increase ineither 2011 or spring 2012 as set out in the consultation.

The Government remain committed to tackling thecurrent and forecast traffic congestion at the crossingin recognition of its strategic importance, its role infacilitating the movements of goods and people andits contribution to national and local economies.

The department received over 1,300 responses to itsproposals for revising the charging regime at the crossing.Following careful consideration of all the points madeduring that consultation I am today announcing thedepartment’s conclusions and the actions it intendstaking.

The department has decided to keep the road usercharging regime at the crossing as part of its strategyto manage demand for its use, and also to allow

the department to delivery its strategy for futureimprovements. This includes the medium-term measureof implementing free-flow charging technology at thecrossing in autumn 2014. To achieve this, consultationon the necessary secondary legislation will begin inautumn this year, followed by awarding the contractfor customer charging and enforcement managementservices in autumn 2013.

In terms of the charges, the department intends toincrease these in two successive steps, as originallyproposed, but to introduce the first increase in October2012 (after the Olympic period), and the second at thesame time as implementation of new, free-flow chargingtechnology at the crossing, currently scheduled forOctober 2014.

In terms of the levels of increase, the departmentintends to increase the level of the cash charge for carsby 50p in October 2012, and again by a further 50p inOctober 2014. The cash charges for other vehicleclasses will rise by broadly proportional amounts.

Discounts offered to regular users of the crossingwho pay in advance through the electronic Dart-Tagsystem will remain, with the costs of the discountedcrossing charge increasing at the same rate and at thesame time as the increases for cash payments.

Delaying the increases until after September respondsto views expressed in the consultation about the proposedtiming of increases, particularly in relation to theOlympic and Paralympic Games, and about adverseimpacts on the national and local economies.

As promised, the department will maintain thelevels of discounts to those eligible through the localresidents’discount scheme, and there will be no increasesin the levels of the crossing charge for them. Thedepartment is committed to ensure that the discountscheme for residents remains effective and easy to use,and I have asked my department to undertake a fullreview of the scheme to ensure it provides suitablediscounted benefits to local communities which areimpacted by the crossing.

One of our short-term measures to improve thecrossing included the deployment of a charge suspensionprotocol which was trialled during 2011 by the HighwaysAgency. The agency has reviewed the effectiveness ofthe suspension protocol, taking into consideration theviews expressed during the consultation on chargesand we will shortly announce the conclusions of thatreview.

Subject to the completion of the necessaryparliamentary processes, the department intends torevise the road user charging regime as set out above.

The full response to the consultation can be foundon the department’s website.


Written AnswersTuesday 22 May 2012

Armed Forces: AircraftQuestion

Asked by Lord Lee of Trafford

To ask Her Majesty’s Government whether, whenchartering aircraft, the Ministry of Defence areable to select the lowest tender, or whether theyhave to give preference to United Kingdom carriers.

[HL7]

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): The Ministry ofDefence is bound by European Union public procurementdirectives which demand fair and open competitionacross the European Union (EU) for all contractsinvolving the expenditure of public funds.

Aircraft charter contracts are awarded to carriersthat provide the best value for-money for the MoD.Commercial tenders are evaluated against a number offactors, including cost.

Any competent company can compete for aircraftcharter contracts. However, before operating to, from,or within the United Kingdom, any non-EU carriersnot established in the UK must be in possession of anoperating permit issued by the Department for Transportunder the 2009 Air Navigation Order. An applicationfor an operating permit must be made for each contract.

Under the provisions of the 2009 Air NavigationOrder, UK and EU carriers established in the UKhave the right to object to the granting of an operatingpermit to a foreign carrier if they are able to demonstratethat they themselves have a suitable aircraft available.

Armed Forces: MedalsQuestion

Asked by Lord Ashcroft

To ask Her Majesty’s Government whether theyhave any plans for the Meritorious Service Medalto be designated as a post-nominal award. [HL172]

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): No. The MeritoriousService Medal is available to recognise good, faithful,valuable and meritorious service of those who are ofirreproachable character and conduct. However, it isnot a state award and as such does not entitle theholder to adopt a post nominal. We have no plans tochange this important principle.

Children: ParentingQuestion

Asked by Baroness Thornton

To ask Her Majesty’s Government what factorswere taken into account in contracting with Bootsplc for the delivery of parenting advice vouchers;what are the conditions of the agreement; andwhether consideration has been given to extendingthe scheme across the whole of community pharmacy.

[HL160]

The Parliamentary Under-Secretary of State forSchools (Lord Hill of Oareford): The CANparent trialwill test whether offering the vouchers through a highstreet store helps to normalise take-up of parentingclasses. Boots was identified as a good candidate forinvolvement in the trial as it has customers of all ages,including parents, and is a trusted and well-knownfamily brand. It is an outlet for a range of advice andinformation on health and wellbeing needs for all ages.In addition, Boots has a strong presence in all threeCANparent trial areas and can offer insights from itsParenting Club and Advantage Card customer loyaltyprogramme.

When we were considering potential partners, welooked at two key areas—their geographical presenceand their relationship with parents. This analysis showedthat no competitor combined a similar presence in allthree areas with an existing targeted relationship withparents and supported the selection of Boots as thepreferred partner.

Boots stores will be distributing the parenting classvouchers, at no cost to the taxpayer, alongside otherhealthcare leaflets that parents can pick up in store. Aswell as being able to amplify and extend the awarenessof the trial through their communication channels,they will also be supporting the trial by participatingin the evaluation and providing expert advice on issueslike parental engagement, as required.

Alongside Boots, the vouchers will also be distributedthrough a range of professionals working with familieswith young children in the trial area—including children’scentre staff, GPs and health visitors. There is only onehigh street retailer involved because of the smallgeographic scale of the trial.

The independent evaluation of the trial will comparethe different distribution routes for vouchers to seewhich are most successful in encouraging take-up ofthe classes. Decisions on the involvement of futureretail partners in any national rollout will be informedby this evaluation.

Dangerous DogsQuestion

Asked by Lord Greaves

To ask Her Majesty’s Government what actioncan be taken against (1) dogs, and (2) their ownersor controllers, in cases of dog attacks on cats andother domestic animals. [HL163]

TheParliamentaryUnder-Secretaryof State,Departmentfor Environment, Food and Rural Affairs (Lord Taylorof Holbeach): The Dangerous Dogs Act 1991 enablesaction to be taken in cases where a dog is dangerouslyout of control in a public place or a place it has noright to be, whether or not it injures anyone. This caninclude instances where the dog attacks another animal.For dogs, this could result in them being put down. Fortheir owners or controllers this could mean a maximumpenalty of two years’ imprisonment and/or an unlimitedfine. On 23 April 2012, the Government launched aconsultation on their proposals to tackle irresponsible

WA 37 WA 38[22 MAY 2012]Written Answers Written Answers

dog ownership and these included extending the law toall places, including where the dog has a right to be.The consultation closes on 15 June 2012.

The Dogs (Protection of Livestock) Act 1953 providesfor action that can be taken by farmers against dogsthat attack their livestock. In addition, under theAnimals Act 1971, a dog owner may be liable if itinjures or kills livestock.

It may also be possible to take action under theAnimal Welfare Act 2006 against an owner whoseanimal has attacked and injured another animal.

Democratic Republic of CongoQuestion

Asked by Lord Ashcroft

To ask Her Majesty’s Government what assessmentthey have made of the comments made by WillyVangu, an opposition leader in the DemocraticRepublic of Congo, on his recent visit to Londonthat “we are asking the British Government andInternational Monetary Fund to stop spending publicmoney on aid packages and loans to the Congo...Wesay the money would be better spent preventingdeals that strip ordinary citizens of their rightfulassets”, as reported in the Sunday Times on 29 April.

[HL65]

Baroness Northover: We strongly believe that theUK should not suspend its aid programme in theDRC. Doing so would only serve to harm those thatmost need assistance. UK taxpayers’ money is achievingtangible results for the poorest in DRC. In 2011-12alone 2.5 million Congolese received life-savinghumanitarian assistance, 927,593 bed-nets were distributedand 748 kilometres of roads were upgraded. Withcorruption endemic in DRC, to protect our investmentsand ensure UK development assistance reaches thepoor and vulnerable, none of our funding passesdirectly through government systems.

We agree that the Democratic Republic of Congo’s(DRC) mining industries must be run transparentlyfor the benefit of all its people. That is why the DfIDco-funds with the World Bank a minerals sector reformprogramme (ProMines). The programme aims to improvethe governance of the mining sector in the DRC,increasing its contribution to growth, sustainabledevelopment and poverty reduction. The programmewill improve: laws and information on how to accessmineral resources to encourage investment; governmentcapacity to manage the sector including how to conductmining transactions in an open and competitive manner;and, government capacity and accountability in miningtax collection. We are also supporting the DRC toachieve compliance status under the Extractive IndustriesTransparency Initiative. This involves independent auditof taxes paid and revenues received, thus enablingpublic scrutiny of any discrepancies.

The UK Government are fully committed to andcomply with international anti-money launderingstandards and exert pressure to help ensure that theOverseas Territories comply with these, and that theyplay an active part in global bodies such as Financial

Action Task Force. Responsibility for the regulationof financial services has been devolved to the Governmentof the British Virgin Islands. Therefore, the localauthorities in British Virgin Islands are responsible forthe regulation, supervision and inspection of financialservices business carried out in or from within theterritory.

Education: EnglishQuestions

Asked by Lord Quirk

To ask Her Majesty’s Government what action isbeing taken to secure pupils’ early reading skills bythe end of key stage 1 in response to the OfstedReport Moving English Forward. [HL156]

The Parliamentary Under-Secretary of State forSchools (Lord Hill of Oareford): Securing pupils’ earlyreading skills is a top priority for the Government. Inparticular, we are committed to promoting the use ofsystematic synthetic phonics in the teaching of earlyreading. To do this we are providing up to £3,000 ofmatch-funding for phonics products and training toschools with key stage 1 pupils. The products includematerials that will help children who need additionalsupport in reading to catch up, and the training willenable teachers to embed and refine their teachingpractice.

From June this year, all pupils in year 1 will sit aphonics screening check to assess their ability to decodeand read words using phonics. The check will becarried out by teachers, and will help them to identifythose children in need of additional support.

The Government have also published core criteriathat define the key features of effective systematicsynthetic phonics programmes to assist schools inselecting resources.

Asked by Lord Quirk

To ask Her Majesty’s Government what action isbeing taken to ensure that the English curriculumat key stage 3 has a clear and distinct purpose witha view to engaging pupils with the world of workbeyond the classroom in response to the OfstedReport Moving English Forward. [HL158]

Lord Hill of Oareford: We are currently reviewingthe national curriculum in England. The review willensure that the new curriculum demonstrates a clearand distinct purpose which should engage pupils andprepare them for the world of work.

Asked by Lord Quirk

To ask Her Majesty’s Government what actionthey are taking to improve children’s communicationskills in respect of fluent and clearly enunciatedspoken English in the Early Years Foundation Stage,in the light of the Ofsted Report Moving EnglishForward. [HL165]

To ask Her Majesty’s Government what actionthey are taking to link reading and listening withthe extension and enrichment of pupils’ vocabulary,in the light of the Ofsted Report Moving EnglishForward. [HL166]

WA 39 WA 40[LORDS]Written Answers Written Answers

Lord Hill of Oareford: Securing pupils’ early languageskills is an important priority for the Government.The Government published a reformed Early YearsFoundations Stage (EYFS) framework on 27 March2012, which will come into force this September. Thisis an integral part of the Government’s wider visionfor families in the foundation years and demonstratesour commitment to freeing professionals from bureaucracyto focus on supporting children.

The new EYFS will be simpler and clearer andplaces a much stronger emphasis on communicationand language development as one of three prime areasof learning. It will include new early learning goalsthat will help improve communication and language,and reading and writing skills. The reformed frameworkwill also require teachers to assess communication,language and literacy in English when children arefive. We are also funding a new Early LanguageDevelopment Programme over the next two years,aimed at supporting professionals to work with childrenwho have early language needs. These measures shouldhelp ensure children are better placed to be ready forlater stages of school life.

Asked by Lord Quirk

To ask Her Majesty’s Government what actionthey are taking to close the gap between the standardsof achievement attained by boys and girls in Englishboth in speech and in writing, in the light of theOfsted Report Moving English Forward. [HL167]

Lord Hill of Oareford: The Government are committedto ensuring that all groups of pupils have the opportunityto make good progress and reach their potential,whatever their gender. To achieve this we have givenheads more freedom to drive improvement in theirschool to meet the needs of their pupils.

Schools with little or no gender gap tend to demonstratea positive educational ethos, high expectations of allpupils, high quality teaching and classroom managementand close tracking of individual pupils’ achievement.

Elections: RegistrationQuestion

Asked by Lord Laird

To ask Her Majesty’s Government whether theyhave plans to ensure that electoral registration formswill in future, in the case of Commonwealth citizens,include a related question on immigration statusand the individual’s leave or right to be in theUnited Kingdom, and available associated proof,to enable assessment of the requirement to be aqualifying Commonwealth citizen when registering.

[HL27]

Lord Wallace of Saltaire: British, resident Republicof Ireland and qualifying Commonwealth citizens areentitled to register to vote in UK parliamentary elections,local elections, and European elections assuming thatall of the other registration criteria are also met. Forthe purposes of registering to vote, a qualifying

Commonwealth citizen is an individual who has leaveto enter or remain in the UK or does not require suchleave.

The annual canvass form and the provisions forrolling registration effectively capture a person’s nationality.The electoral registration officer (ERO) uses thisinformation to determine a person’s eligibility to register.When there is doubt about eligibility the ERO mayinvestigate and request further information from theelector.

In future under individual electoral registration,individual application forms will clearly set out theeligibility requirements for registration. In addition,all electors declaring a Commonwealth nationalitywill be asked to declare their immigration status.

Government Departments: BonusesQuestion

Asked by Lord Laird

To ask Her Majesty’s Government how theDepartment of Energy and Climate Change definesbonus payments in the context of civil service pay;what proportion of civil servants are eligible toreceive non-consolidated performance payments;and how they are selected for those payments.

[HL331]

TheParliamentaryUnder-Secretaryof State,Departmentof Energy and Climate Change (Lord Marland): TheDepartment of Energy and Climate Change does notdefine bonus payments in the context of Civil Servicepay. However, the department currently awards bothnon-consolidated end of year performance awards andin year special awards, which may be referred to asbonus payments.

The department uses non-consolidated performancerelated payments to help drive high performance asthey:

encourage continuous high attainment because thepayments are dependent upon strong performance;prevent a permanent rise in salary and an increasein pension on the basis of one off performancewhile still allowing good performance to berewarded;have no long-term costs, in particular they do notincrease future pension payments;focus the work of employees more directly on thepriority goals of the organisation;motivate employees by linking an element ofcompensation to the achievement of objectivesrather than offering payment for time served; andtarget money at those who make the biggestcontribution.End of year non-consolidated performance awards

are used to reward the department’s highest performersas assessed in their end of year appraisal reports. In2011, 40% of DECC staff below the senior CivilService, and 25% of senior civil servants were eligibleto receive a non-consolidated end of year performanceaward.


Non-consolidated in year special awards are usedto recognise performance or behaviours which mightnot be fully reflected in an end of year performanceappraisal. All staff are eligible to be considered forsuch awards and are selected for such an award toreward staff for exceptional pieces of work or takingon additional responsibilities.

Gulf War IllnessesQuestion

Asked by Lord Morris of Manchester

To ask Her Majesty’s Government whether theyhave made any reassessment of the safety of vaccinesadministered to service personnel deployed in theFirst Gulf War in the light of the report on Theeffect of co-administration of the pertussis vaccineon specific antibody titre development to the anthraxvaccine in man prepared in February 1992 at theChemical and Biological Defence Establishment;and what action they will take in response to thereport. [HL123]

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): No. In 1998, theMinistry of Defence (MoD) sponsored a vaccinesinteractions research programme into the possible healtheffects of the combination of vaccines and tabletsgiven to service personnel to protect them against thethreat of biological and chemical warfare during the1990-91 Gulf conflict. The overwhelming evidencefrom the programme is that the combination of vaccinesand tablets that were offered to UK forces at the timeof the 1990-91 Gulf conflict would not have hadadverse health effects.

The paper referred to in the Question was publishedby MoD in 1997 and was therefore available to theindependent panel of experts and veterans’representativesoverseeing the work of the vaccines interactions researchprogramme.

Health: Addiction to Prescribed DrugsQuestion

Asked by The Earl of Sandwich

To ask Her Majesty’s Government what servicesare offered to those suffering from addiction to,and withdrawal from, prescribed medication (1) inthe Roehampton Addiction Centre, and (2) in theBorough of Wandsworth as a whole. [HL103]

The Parliamentary Under-Secretary of State,Department of Health (Earl Howe): NHS Wandsworthcommissions treatment services for addiction to alldrugs, including alcohol and prescription drugs, froman integrated drug treatment system (IDAS). Theservice at Roehampton is called IDAS Queen Mary’s.

I am sure Wandsworth primary care trust will behappy to provide further details of their services.

Health: Clinical Commissioning GroupsQuestions

Asked by Lord Patel of Bradford

To ask Her Majesty’s Government whether clinicalcommissioning groups will be added to the list ofSchedule 19 bodies to which the public sector equalityduty applies under the Equality Act 2010; and, ifso, when. [HL231]

TheParliamentaryUnder-Secretaryof State,Departmentof Health (Earl Howe): Yes. The Health and SocialCare Act 2012 amends Part 1 of Schedule 19 to theEquality Act 2010, concerning bodies subject to thepublicsectorequalityduty,toincludeclinicalcommissioninggroups. This will have effect from their establishmentas statutory bodies by the NHS Commissioning Boardwhich will commence in October.

Asked by Lord Patel of Bradford

To ask Her Majesty’s Government whether clinicalcommissioning groups will be subject to specificduties under the Equality Act 2010. [HL232]

Earl Howe: Clinical commissioning groups, as publicsector organisations, will be subject to the specificduties of the public sector equality duty under theEquality Act 2010.

Asked by Lord Hunt of Kings Heath

To ask Her Majesty’s Government what criteriawill govern the allocation of budgets to clinicalcommissioning groups by the NHS CommissioningBoard. [HL254]

Earl Howe: From 2013-14, the NHS CommissioningBoard will allocate resources to clinical commissioninggroups (CCGs) in a way that is consistent with theboard’s duty to have regard to the need to reduceinequalities in access to healthcare services and theoutcomes achieved for patients by healthcare services.We would expect this to support the principle ofsecuring equivalent access to NHS services relative tothe prospective burden of disease and disability.

The Secretary of State has asked the AdvisoryCommittee on Resource Allocation (ACRA), anindependent expert committee, to support the developmentof the formula for allocations to CCGs. ACRA’s interimrecommendations on the formula will be published.

Health: Controlled TrialsQuestions

Asked by The Countess of Mar

To ask Her Majesty’s Government whether apublicly-funded trial has to be registered in theISRCTN (International Randomised Controlled TrialNumber) Register; whether this is a condition forpublication in reputable journals; and, if so, whetherthey consider that the PACE (Pacing, graded Activityand Cognitive behaviour therapy: a randomised


Evaluation) trial registration ISRCTN54285094 iscomplete and includes records of all changes inprocedure from the point of registration onwards.

[HL43]

The Parliamentary Under-Secretary of State,Department for Business, Innovation and Skills (BaronessWilcox): There is a requirement for publicly fundedclinical trials to be registered and there are a numberof different registers.

The PACE study was funded by a Medical ResearchCouncil (MRC) grant to Queen Mary, University ofLondon. The Department of Health for England, theChief Scientist Office in Scotland and the Departmentfor Work and Pensions co-funded the trial; theircontributions were paid via the MRC grant.

The MRC has been a strong supporter of trialsregistration for many years and provided financialsupport to help set up the ISRCTN scheme. The MRCwas also involved in helping to refine the scheme andin promoting its widespread adoption in the UK.

The MRC requires that all MRC-funded clinicaltrials comply with the CONSORT Statement, which isan evidence-based, minimum set of recommendationsfor reporting randomised controlled trials. CONSORT,which stands for Consolidated Standards of ReportingTrials, offers a standard way for authors to preparereports of trial findings, facilitating their completeand transparent reporting, and aiding their criticalappraisal and interpretation. CONSORT includesguidance on ISRCTN registration.

The results of the trial were reported in The Lancet,which also follows the CONSORT guidelines. ThePACE trial report would have had to meet this standardas a prerequisite for publication.

The MRC is not responsible for assuring the qualityof data in the ISRCTN. The Government cannotcomment on the completeness of the data.


To ask Her Majesty’s Government when andwhy the PACE (Pacing, graded Activity and Cognitivebehaviour therapy: a randomised Evaluation) trialsponsor was changed from the Medical ResearchCouncil Clinical Trials Unit to the Medical ResearchCouncil and then to the Queen Mary University ofLondon; and why these changes are not recorded inthe ISRCTN (International Randomised ControlledTrial Number) Register. [HL44]

Baroness Wilcox: The PACE study was funded by aMedical Research Council (MRC) grant to QueenMary, University of London, the principal investigatorwas Professor P White at QMUL, co-investigatorswere Professor T Chalder, King’s College London,and Professor M Sharpe, University of Edinburgh.The Department of Health for England, the ChiefScientist Office in Scotland and the Department forWork and Pensions co-funded the trial; their contributionswere paid via the MRC grant.

Queen Mary, University of London, has been identifiedas the formal sponsor of the PACE trial throughoutthe duration of the study. The MRC would normally

only be identified as the formal sponsor of a clinicaltrial where the principal investigator was an MRCemployee or where an MRC unit designed and managedthe trial.


To ask Her Majesty’s Government why the recoverystatistics and other outcomes as defined in thepublished Protocol of the PACE (Pacing, gradedActivity and Cognitive behaviour therapy: arandomised Evaluation) trial have not been published.

[HL45]

To ask Her Majesty’s Government why the “normalrange” for both PACE (Pacing, graded Activity andCognitive behaviour therapy: a randomised Evaluation)trial primary outcome measures (fatigue and physicalfunction) were re-defined so that it was possible fora participant to deteriorate on both measures duringthe course of the trial yet still fall within the chiefprincipal investigator’s “normal range”; and whatimpact they consider this re-definition to have hadon the validity of the trial. [HL46]

Baroness Wilcox: The PACE study was funded by aMedical Research Council (MRC) grant to QueenMary, University of London. The Department ofHealth for England, the Chief Scientist Office in Scotlandand the Department for Work and Pensions co-fundedthe trial; their contributions were paid via the MRCgrant.

As for all MRC-funded studies, it is the responsibilityof the investigators and the relevant journals, guidedby peer reviewers, to determine how findings are publishedand when.

The investigators’ first paper on the outcomes ofthe PACE study was published in The Lancet in March2011. This includes descriptions of normal ranges andhow they calculated. The MRC understands that furtherpublications are planned, one of which will addressthe issue of recovery.


To ask Her Majesty’s Government what is theposition of the Medical Research Council as co-funderof the PACE (Pacing, graded Activity and Cognitivebehaviour therapy: a randomised Evaluation) trialregarding the subsequent reliance by the NationalInstitute for Health and Clinical Excellence and theDepartment for Work and Pensions on the outcomeas reported in The Lancet. [HL47]

Baroness Wilcox: The Medical Research Council(MRC) is an independent research funding body whichreceives its grant in aid from the Department forBusiness, Innovation and Skills. The selection of projectsfor funding is determined through peer review.

The decision to fund the PACE trial, a randomisedcontrolled trial of cognitive behavioural therapy (CBT),graded exercise, adaptive pacing and usual medicalcare for the chronic fatigue syndrome, was based onMRC’s usual rigorous peer review process for clinicaltrials. The study aimed to evaluate treatments thatwere already in use, and for which there was insufficiently


strong evidence to support their effectiveness. TheMRC strongly supported this research and the publicationof the findings.

The MRC strongly supports the publication of thefindings of all MRC funded research to advance medicalresearch worldwide and to inform new therapies andtreatments. The investigators’ first paper on the findingof the PACE study, was published in The Lancet;Comparison of adaptive pacing therapy, cognitivebehaviour therapy, graded exercise therapy, and specialistmedical care for chronic fatigue syndrome (PACE): arandomised trial, P White et al, The Lancet, Volume377, Issue 9768, Pages 823 - 836, 5 March 2011.

The MRC does not have a position on how theoutcome of MRC-funded studies are interpreted andused by regulators or policy makers although, asabove, it supports prompt publication of its researchfindings so they are widely available to all potentialusers and to support evidence-based treatment of patients.


To ask Her Majesty’s Government which diseaseor condition was being studied in the PACE (Pacing,graded Activity and Cognitive behaviour therapy: arandomised Evaluation) trial that was co-fundedby the Medical Research Council, the Departmentof Health, the Department for Work and Pensionsand the Scottish Chief Scientist’s Office, in the lightof the statement made by the Chief PrincipalInvestigator, Professor Peter White, that the PACEtrial did not purport to be studying myalgicencephalomyelitis. [HL69]

Baroness Wilcox: The PACE study was funded by aMedical Research Council (MRC) grant to QueenMary, University of London, the principal investigatorwas Professor P White at QMUL, co-investigatorswere Professor T Chalder, King’s College London,and Professor M Sharpe, University of Edinburgh.The Department of Health for England. the ChiefScientist Office in Scotland and the Department forWork and Pensions co-funded the trial; their contributionswere paid via the MRC grant.

The criteria for the PACE study were published inthe trial protocol and are also addressed in the mainfindings published in The Lancet.

Health: Human Papilloma VirusQuestion


To ask Her Majesty’s Government how manyadverse reaction reports to human papilloma virus(HPV) vaccinations have been reported for eachyear since the introduction of the vaccination forgirls in schools; how many of those reactions haveinvolved hospitalisation; and what precautions arein place to ensure that the parents whose daughtersmay have immune system dysfunctions are notpressured into giving their consent. [HL180]

TheParliamentaryUnder-Secretaryof State,Departmentof Health (Earl Howe): The Medicines and Healthcareproducts Regulatory Agency (MHRA) has responsibilityfor vaccine and medicine safety in the United Kingdomand collects information on suspected adverse reactions

(ADRs)via theyellowcardscheme.Twohumanpapillomavirus (HPV) vaccines, Cervarix and Gardasil, are licensedfor use in the UK, with Cervarix currently used routinelywithin the HPV vaccine immunisation programme.

Since the HPV vaccine immunisation programmebegan in September 2008 up to 16 May 2012, theMHRA has received a total of 6,216 suspected ADRreports associated with HPV vaccine (Cervarix, Gardasiland HPV vaccine brand unspecified) and of these 182reports involved hospitalisation. This followsadministration of more than six million doses of Cervarixacross the UK to date.

It is important to note that a yellow card report isnot proof of a side effect occurring, but merely asuspicion by the reporter that the vaccine may havebeen the cause. While some reports may relate to sideeffects, others may be due to coincidental, underlyingmedical conditions that would have occurred anywayin the absence of vaccination. These data are continuouslyreviewed by the MHRA. The independent advisorycommittee, the Commission on Human Medicines(CHM), has advised that no serious new risks havebeen identified despite substantial use of the vaccinein the UK and abroad.

The following table provides a breakdown of thetotal number of ADR reports received for each yearsince the introduction of the programme.

Year of ProgrammeTotal Number of ADR Reports

associated with HPV Vaccine

2008 1,3042009 1,9342010 1,8022011 1,081Up to 16 May 2012 95

HMS “Gloucester”Question

Asked by Lord Renfrew of Kaimsthorn

To ask Her Majesty’s Government what stepsthey are taking to ensure the future conservation ofthe wreck of the first HMS “Gloucester” (sunk in1682); whether they have any plans to “gift” thewreck to any charitable or other foundation; and, ifso, whether they will first seek to ascertain thatsuch a foundation has the financial resources tosurvey, excavate and conserve the wreck withoutresorting to the commercial sale of artefacts recoveredit. [HL107]

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): Officials are indiscussion with the finders of a wreck which may bethat of HMS “Gloucester”, lost in 1682; however theidentity of the wreck has not yet been formally determined.Specialist archaeological advice is being provided bythe National Museum of the Royal Navy and EnglishHeritage.

No decisions have yet been taken regarding futuregovernance arrangements for the management of thewreck site.


HMS “Victory”Questions


To ask Her Majesty’s Government whether theNational Museum of the Royal Navy has paid fortwo cannons recovered from the wreck of HMS“Victory” (sunk in 1744); if so, what was the pricepaid; from whom they were acquired; and whetherdue diligence was exercised to verify that they werenot already legally the property of Her Majesty’sGovernment. [HL105]

The Parliamentary Under-Secretary of State, Ministryof Defence (Lord Astor of Hever): Following initialnotification of the location of the wreck thought to bethat of HMS “Victory” (1744), authorisation wasgiven to the finder of the wreck, Odyssey MarineExploration, for the limited recovery of two cannonsto facilitate the process of identification. Followingtheir recovery, the cannons, which were Crown property,were given to the National Museum of the Royal Navyand are currently undergoing conservation. A paymentof £50,000 was made to the company for its work inrecovering the cannons; the amount was considerablyless than the assessed value of the two artefacts.


To ask Her Majesty’s Government whatarchaeological advice they have received on theproposed excavation of HMS “Victory” (sunk in1744); what assessment they have made of thepublished assertion of Odyssey Marine ExplorationInc to be “salvor-in-possession” of the wreck; underwhat conditions they have gifted the wreck to theMaritime Heritage Foundation; whether they willtake steps to prevent the sale on the commercialmarket of artefacts recovered from the wreck incontravention of the Annex to the 2001 UNESCOConvention on the Protection of the UnderwaterCultural Heritage. [HL106]

Lord Astor of Hever: Under the deed of gift whichtransferred the remains of HMS “Victory” (1744) tothe Maritime Heritage Foundation, the foundationrequires the prior agreement of the Secretary of Statefor Defence should it wish to take actions in respect ofthe wreck. The deed also identifies the responsibilitiesof an advisory group, consisting of representatives ofthe National Museum of the Royal Navy and EnglishHeritage, in providing advice to both the Secretary ofState and the foundation on the extent to which anyactions proposed by the foundation are consistentwith the archaeological principles set out in Annex Ato the UNESCO Convention on the Protection of theUnderwater Cultural Heritage. The text of the deed ofgift and the terms of reference of the advisory groupare available to view on the MoD website: http://www.mod.uk/DefenceInternet/AboutDefence/CorporatePublications/MaritimePublications/HmsVictory1744AdvisoryGroup.htm.

This arrangement provides HMG with effectivecontrol of activities on the site. We believe that thesafeguards in place are sufficient to ensure that any

actions taken by the foundation or those with whom itcontracts in respect of the wreck will be consistentwith the principles in Annex A to the UNESCOConvention.

The advisory group is currently considering theproject design for the site submitted by the MaritimeHeritage Foundation and will provide advice to bothHMG and the foundation in due course.

Odyssey Marine Exploration has been contractedby the Maritime Heritage Foundation, to which theremains of HMS “Victory” (1744) have been gifted, toprovide it with archaeological services. Any assertionsmade by Odyssey are a matter for the company andthe foundation.

Schools: Catholic SchoolsQuestion

Asked by Lord Warner

To ask Her Majesty’s Government whether theyare required by legislation to approve any proposalfor a voluntary-aided Catholic secondary school bythe London Borough of Richmond upon Thames;and whether they are considering or have approvedany such proposal. [HL110]

The Parliamentary Under-Secretary of State forSchools (Lord Hill of Oareford): The Diocese ofWestminster applied to the Secretary of State in September2011 to publish proposals for two new schools, avoluntary aided Catholic secondary school anda voluntary aided Catholic primary school outside acompetition, as permitted under Section 10 of theEducation and Inspections Act 2006. Ministerialagreement was given in December 2011 to the dioceseunder the legal provisions in force at that time.

Amendments since made by the Government toSections 10 and 11 of the Education and InspectionsAct 2006 (through the Education Act 2011), whichcame into force on 1 February 2012, now allow forproposals to be published for voluntary aided schoolsoutside a competition without the need to seek theSecretary of State’s agreement.

Schools: Free MealsQuestion

Asked by The Lord Bishop of Bath and Wells

To ask Her Majesty’s Government what is theirresponse to the Children’s Society Fair and Squarecampaign to give all children in poverty a freeschool meal. [HL144]

The Parliamentary Under-Secretary of State forSchools (Lord Hill of Oareford): Our priority is tomake sure that the most disadvantaged children areable to get a nutritious meal at school. The Children’sSociety proposal—that all children whose families arein receipt of universal credit from 2013 be entitled tofree school meals—would mean that over half ofschool age children would be entitled to free schoolmeals. We estimate that this would cost up to an extra


£1 billion per year, which in the current economicclimate is unaffordable. The department is currentlydeveloping new proposals for eligibility for free schoolmeals once universal credit is introduced, on which wewill be consulting later this year.

South SudanQuestion

Asked by The Earl of Sandwich

To ask Her Majesty’s Government what assistancethey are giving to the Office of the United NationsHigh Commissioner for Refugees and otherhumanitarian agencies to support refugees arrivingin the Unity state of South Sudan. [HL193]

Baroness Northover: The UK is the largest donor tothe Common Humanitarian Fund (CHF) for SouthSudan (£15 million this year). Our funding is helpingto provide crucial non-food items for refugee camps,run by the United Nations High Commissioner forRefugees (UNHCR) and its NGO partners, in Unityand Upper Nile states. In addition CHF funding issupporting agencies providing health, water and sanitationand protection programmes for refugees. Last monthmy honourable friend Stephen O’Brien, the ParliamentaryUnder-Secretary of State for International Development,announced an additional £10 million allocation to theWorld Food Programme in South Sudan to help feed100,000 people over five months. This support will beavailable to assist refugees as well as other food insecurepopulations.

UK National Screening CommitteeQuestion

Asked by Baroness Masham of Ilton

To ask Her Majesty’s Government whatarrangements are in place to ensure the work andfindings of the National Screening Committee arescrutinised by the Department of Health. [HL225]

The Parliamentary Under-Secretary of State,Department of Health (Earl Howe): The UK NationalScreening Committee (UK NSC) advises Ministersand the National Health Service in all four countriesabout all aspects of screening policy and supportsimplementation. Using research evidence, pilotprogrammes and economic evaluation, it assesses theevidence for programmes against a set of internationallyrecognised criteria. As an advisory group it exercisesits functions on behalf of the department.

The department works closely with the UK NSCand scrutinises the work and findings of the committeein a number of ways. It provides the secretariat onbehalf of the devolved Administrations. In this role itis responsible for ensuring that the UK NSC actswithin its remit and terms of reference and that it actsindependently and impartially. The department is alsorepresented on the committee and regularly sendsobservers to meetings. It is also responsible for holdingthe UK NSC to account for proper use of publicfunds and for the setting and delivery of its objectives.

UK Trade and InvestmentQuestions

Asked by Baroness Nicholson of Winterbourne

To ask Her Majesty’s Government, further tothe Written Answer by Lord Green of Hurstpierpointon 5 March (WA 398), when they expect to agree abudget and programme plan for the UK ASEANBusiness Council; and whether they have any plansto establish other business councils. [HL118]

The Minister of State, Department for Business,Innovation and Skills & Foreign and CommonwealthOffice (Lord Green of Hurstpierpoint): The UK-ASEANBusiness Council is working actively with partnerorganisations in the UK and ASEAN to develop itsprofile and a programme of targeted events of directbenefit to UK business. The UKTI budget contributionfor 2012-13 has been agreed at £150,000.

An events programme is underway with, for example,a briefing to business on Burma on 8 May, a networkingevent with an Indonesian official delegation on 25 May,and a further briefing planned for 28 May on regionalopportunities for engagement in the professional trainingsector. Longer term, the council is working, inter alia,with British diplomatic missions and with the Associationof British Chambers of Commerce in SE Asia toidentify decision-makers to invite to the UK, and on apossible large-scale event in the autumn, to be run inconjunction with the Asia Task Force.

UKABC was one of the initiatives announced inthe 2011 UKTI strategy. New business councils maybe established where there is demonstrable need and asresources permit.

Asked by Baroness Nicholson of Winterbourne

To ask Her Majesty’s Government, further tothe Written Answer by Lord Green of Hurstpierpointon 8 March (WA 448), who are the members andchairs of UK Trade and Investment’s sector grouptask forces and sector advisory groups. [HL119]

Lord Green of Hurstpierpoint: I am placing thelatest list of members and chairs of UKTI sectoradvisory groups in the Libraries of the House.

Water ManagementQuestion

Asked by Lord Lester of Herne Hill

To ask Her Majesty’s Government whether theyintend to increase capacity for the storage ofwater. [HL129]

TheParliamentaryUnder-Secretaryof State,Departmentfor Environment, Food and Rural Affairs (Lord Taylorof Holbeach): The water White Paper Water for Life,published in December 2011, sets out the vision for aresilient water industry across all sectors. It outlinesplans for the introduction of a reformed abstraction


regime that will provide clear signals and regulatorycertainty on the availability of water to drive efficientinvestment to meet water needs.

It is the responsibility of water companies to managethe storage of water for public supply.

Water companies plan through their water resourcesmanagement plans to ensure they are able to balancesupply and demand for water over the long term.Some water companies’ plans included proposals tobuild or enlarge reservoirs—for example, the enlargementof the reservoir at Abberton in the Essex and SuffolkWater region—while other companies have identifiedalternative solutions to balancing supply and demand.

World Heritage Sites: LiverpoolQuestion

Asked by Lord Storey

To ask Her Majesty’s Government, further tothe Written Answer by Baroness Rawlings on 1 May(WA 473–4), whether the Secretary of State for

Communities and Local Government has decidedto call in the Liverpool Waters planning application;and, if a decision has not yet been reached, when itwill be made and what process will follow. [HL195]

TheParliamentaryUnder-Secretaryof State,DepartmentforCommunitiesandLocalGovernment(BaronessHanham):The Liverpool Waters application will be referred tothe Secretary of State for Communities and LocalGovernment in due course by Liverpool City Council.The application falls within the scope of the Town andCountry Planning (Consultation) (England) Direction2009byvirtueof EnglishHeritage’soutstandingobjection,related to the impact of the proposal on the outstandinguniversal value of Liverpool’s World Heritage Site.Once referred, the Secretary of State will considerwhether or not he wishes to call in the application forhis own decision against the call-in policy set out in theCaborn Statement. The Secretary of State is very selectiveabout calling in applications and will do so only if theyraise issues of national importance.


Tuesday 22 May 2012

ALPHABETICAL INDEX TOWRITTEN STATEMENTS

Col. No.Anti-social Behaviour ........................................................ 57

Armed Forces: Nuclear Submarines .................................. 58

Coroner Service ................................................................. 59

Energy Bill (Draft)............................................................. 59

Equality ............................................................................. 60

Col. No.EU: Foreign Affairs Council and Development Foreign

Affairs Council .............................................................. 61

Government Car and Despatch Agency: Business Plan ..... 64

Government Pipeline and Storage System ......................... 65

Independent Agricultural Appeals Panel ........................... 66

Ports: Liverpool Cruise Terminal....................................... 66

Roads: Dartford Crossing.................................................. 67

Tuesday 22 May 2012

ALPHABETICAL INDEX TO WRITTEN ANSWERSCol. No.

Armed Forces: Aircraft...................................................... 37

Armed Forces: Medals....................................................... 37

Children: Parenting............................................................ 37

Dangerous Dogs ................................................................ 38

Democratic Republic of Congo ......................................... 39

Education: English ............................................................ 40

Elections: Registration....................................................... 41

Government Departments: Bonuses .................................. 42

Gulf War Illnesses ............................................................. 43

Health: Addiction to Prescribed Drugs.............................. 43

Health: Clinical Commissioning Groups ........................... 44

Col. No.Health: Controlled Trials ................................................... 44

Health: Human Papilloma Virus ....................................... 47

HMS “Gloucester” ............................................................ 48

HMS “Victory” ................................................................. 49

Schools: Catholic Schools.................................................. 50

Schools: Free Meals........................................................... 50

South Sudan ...................................................................... 51

UK National Screening Committee ................................... 51

UK Trade and Investment ................................................. 52

Water Management ........................................................... 52

World Heritage Sites: Liverpool......................................... 53

NUMERICAL INDEX TO WRITTEN ANSWERSCol. No.

[HL7]................................................................................. 37

[HL27] ............................................................................... 41

[HL43] ............................................................................... 45

[HL44] ............................................................................... 45

[HL45] ............................................................................... 46

[HL46] ............................................................................... 46

[HL47] ............................................................................... 46

[HL65] ............................................................................... 39

[HL69] ............................................................................... 47

Col. No.[HL103] ............................................................................. 43

[HL105] ............................................................................. 49

[HL106] ............................................................................. 49

[HL107] ............................................................................. 48

[HL110] ............................................................................. 50

[HL118] ............................................................................. 52

[HL119] ............................................................................. 52

[HL123] ............................................................................. 43

[HL129] ............................................................................. 52

Col. No.[HL144] ............................................................................. 50

[HL156] ............................................................................. 40

[HL158] ............................................................................. 40

[HL160] ............................................................................. 37

[HL163] ............................................................................. 38

[HL165] ............................................................................. 40

[HL166] ............................................................................. 40

[HL167] ............................................................................. 41

Col. No.[HL172] ............................................................................. 37

[HL180] ............................................................................. 47

[HL193] ............................................................................. 51

[HL195] ............................................................................. 54

[HL225] ............................................................................. 51

[HL231] ............................................................................. 44

[HL232] ............................................................................. 44

[HL254] ............................................................................. 44

[HL331] ............................................................................. 42

Volume 737 TuesdayNo. 8 22 May 2012

CONTENTS

Tuesday 22 May 2012

QuestionsDisability: Black and Minority-ethnic Disabled People ............................................................................................. 713Schools: Careers Advisers .............................................................................................................................................. 715Olympic Games: British Companies ............................................................................................................................. 718Housing ............................................................................................................................................................................ 721

Electric Personal Vehicles (Use on Highways) Bill [HL]First Reading ................................................................................................................................................................... 723

House CommitteeMotion to Approve .......................................................................................................................................................... 723

Groceries Code Adjudicator Bill [HL]Second Reading ............................................................................................................................................................... 724

Local Government Finance BillFirst Reading ................................................................................................................................................................... 765

Proceeds of Crime: EUC ReportMotion to Approve .......................................................................................................................................................... 765

Grand Committee

Police (Collaboration: Specified Function) Order 2012................................................................................................. GC 1Misuse of Drugs Act 1971 (Temporary Class Drug) Order 2012................................................................................. GC 6Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012 ............................................ GC 10Criminal Justice and Police Act 2001 (Amendment) Order 2012 ............................................................................... GC 21Greater London Authority Act 1999 (Amendment) Order 2012 ................................................................................. GC 25Health and Social Care Act 2008 (Regulated Activities) (Amendment) Regulations 2012

Considered in Grand Committee ............................................................................................................................... GC 30

Written Statements......................................................................................................................................................... WS 57

Written Answers.............................................................................................................................................................. WA 37

(hansard) house of lords - uk · pdf file(hansard) house of lords official report order of...

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