Lords Sitting of 19 November 1992

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chester.

Murder: Mandatory Life Sentence
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether they will take steps to abolish the mandatory life sentence for murder.
The Minister of State, Home Office (Earl Ferrers): My Lords, there are no plans at present to change the existing legislation.
Lord Ashley of Stoke: My Lords, does the noble Earl recall that the general case against the mandatory life sentence for murder was effectively deployed in this House last April by the noble Lords, Lord Nathan and Lord Richard, and the noble and learned Lord, Lord Lane, among others during debate on an amendment to the Criminal Justice Bill? My reason for pressing the matter today is the growing understanding of the state of mind of women who are subject to physical and mental violence in the home. Surely it is wrong that such women should be subject to the same life sentence as vicious murderers, mass murderers or sadistic murderers. So will the noble Earl please try to persuade the Government to think again on this issue and bring another place in line with the progressive thinking of this House?
Earl Ferrers: My Lords, the noble Lord, Lord Ashley, is quite right. The committee chaired by the noble Lord, Lord Nathan, put forward a very powerful argument which was discussed in your Lordships' House. Another place did not agree. Of course these matters are enormously sensitive, but at the moment the Government take the view that the worst of crimes must receive the most condign of sentences. That remains the position.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that for a very long time murder—the taking of somebody's life—has been regarded as an especially dangerous and terrible offence? Is he also aware that many people regard it as right that there should be a special penalty exclusive to murder in order to mark the particular abhorrence of society for that offence?
Earl Ferrers: My Lords, my noble friend Lord Boyd-Carpenter is quite right. Whatever the arguments may be, and there are powerful arguments, public opinion would take the view of my noble friend Lord Boyd-Carpenter. Therefore we do not propose to make any changes as yet.
Lord Ackner: My Lords, does the noble Earl agree that in the absence of any categorisation of murders it
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is quite impossible to lump them all together under one heading and say they are the most heinous of crimes?
Earl Ferrers: My Lords, that is an expression which has frequently been used about murder. The noble and learned Lord, Lord Ackner, may take a different view but not everyone would go along with it.
Lord Hutchinson of Lullington: My Lords, will the noble Earl consider the recent case of the doctor who administered a lethal injection to his suffering patient? Does he appreciate that if the result of that injection had been to shorten that patient's life, by however short a time, the doctor would have been convicted not of attempted murder but of murder? Does the noble Earl agree that the doctor would have been sentenced to life imprisonment in circumstances in which the British Medical Council took the view that his act was so venial that no professional penalty was necessary? Is the Minister really happy for a law which is so discredited to continue?
Earl Ferrers: My Lords, I do not believe that the law is discredited. Nor do I consider it profitable to argue the pros and cons of one particular case across the Floor of the House at Question Time. The noble Lord quite rightly drew attention to a case which has serious implications but the fact is that the law should remain as it is.
Lord Hailsham of Saint Marylebone: My Lords, does my noble friend not agree that if I were to shoot at the Lord Chancellor sitting on the Woolsack I should be liable to the death penalty if I hit him because that would be treason? If, on the other hand, I were to shoot at anybody else in this House and hit him that would result in a mandatory life sentence, but if I missed it would not. Does not my noble friend occasionally have a flicker of doubt as to whether there is any sense in the belief that murder is a uniquely heinous crime? Does not the law of homicide need clearing up, not merely as to sentence but also as to definition?
Earl Ferrers: My Lords, my noble and learned friend Lord Hailsham has the advantage of a vivid imagination, which he occasionally shares with your Lordships. I should have thought that his main concern would be not whether he shot the Lord Chancellor but whether someone else had shot the Lord Chancellor while my noble and learned friend himself held that position. In either event it would be a tragedy. However, that should not happen and has not happened.
Lord Morris of Castle Morris: My Lords, amid all the uncertainties surrounding this very serious matter, including the advice of the Select Committee of your Lordships' House, does the Minister agree that we should give the greatest and most serious weight to the opinion of the noble and learned Lord the Lord Chief Justice? Quite recently he has been quoted as saying:
"There may be a great deal to be said for the mandatory life sentence going".
Earl Ferrers: My Lords, we attach great and serious weight to anything said by the noble and learned Lord

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the Lord Chief Justice, as indeed we do to the opinions of your Lordships' House. The fact is that the Government have to make decisions and at the moment they are not persuaded that the law needs to be changed.
Lord Harris of Greenwich: My Lords, I return to the example given by my noble friend Lord Hutchinson of Lullington. Does the Minister accept that it is wholly absurd that a doctor in that situation whose patient had died should be subject to precisely the same penalty as the man who blew out of the sky at Lockerbie 200 or more people? Does the Minister realise that the present law is an infernal mess and the sooner it is changed the better?
Earl Ferrers: My Lords, that is a perfectly respectable view. I do not feel that it is appropriate to discuss individual cases because one must always act on the dictum that hard cases make bad law. There are so many cases that go right across the spectrum of murder and homicide that they cannot be taken individually. One has to try to make a law which covers them all. At the moment we take the view that the crime of murder is a particularly serious one.
Baroness Platt of Writtle: My Lords, does my noble friend agree that although the mandatory life sentence may be kept as a minority member of the Select Committee referred to, I agreed with its retention—at the same time, during the time after the murder and after conviction, the period of imprisonment can be adjusted according to the seriousness of the crime and the degree of repentance as well as the possible danger of that person to the public?
Earl Ferrers: My Lords, my noble friend Lady Platt took a very worthy line, even though she might have been in the minority. She is perfectly correct to say that the tariff applied and the length of time a person spends in prison can be altered and adjusted. Indeed, there is one person who is still in prison after 40 years.
Baroness Seear: My Lords, does the Minister take into account the fact that the contrary view was expressed by your Lordships' House, a House of which he is a Member? Its overwhelming opinion was that the mandatory sentence should go. Does he agree that this is a case where your Lordships' House has a right to reassert its view that the mandatory sentence, as recommended, should be abolished?
Earl Ferrers: My Lords, the noble Baroness is perfectly correct. Your Lordships did come to that conclusion. The other place came to a contrary conclusion.
The Earl of Onslow: My Lords, will my noble friend answer the question put by my noble and learned friend Lord Hailsham? Is it not the case that the law of homicide is in a mess and something should be done about it?
Earl Ferrers: My Lords, the law of homicide is kept perpetually under review.
Lord Ashley of Stoke: My Lords, can the noble Earl say whether the Government believe that public relations or justice is the most important issue?
Earl Ferrers: My Lords, one cannot encapsulate a complex problem such as this into a choice of two sentences.
The Lord Privy Seal (Lord Wakeham): My Lords, I wonder whether we may now move on. We have had a very good go at this Question.

European Convention on Human Rights
3.17 p.m.
Lord Kirkhill Lord Kirkhill asked Her Majesty's Government:
Whether they intend that Parliament should incorporate the provisions of the European Convention on Human Rights into the domestic law of the United Kingdom, and if not, why not.
Earl Ferrers: No, my Lords. The Government are fully committed to the principles of human rights but we consider that it should be Parliament rather than the judiciary which determines how human rights are best secured.
Lord Kirkhill: My Lords, I thank the noble Earl for that reply, which was predictable. It reflects the Government's long-standing view. Does the noble Earl agree that a person who has made his submission in the United Kingdom domestic court at considerable expense to himself and feels aggrieved can take his case to the Commission of the Court of Human Rights in Strasbourg where the judges are able to invoke the articles of the convention? Does he further agree that as a consequence that submission is frequently upheld and then, in the United Kingdom context, his submission is sustained? Will he accept, therefore, that on the one hand our judges have one hand tied behind their back and, on the other, the aggrieved person has too much difficulty in seeking justice?
Earl Ferrers: My Lords, the individual person can always seek justice. It may be difficult if one has to go to a European court or commission but it can be done. The view we take is that the incorporation of the convention would undermine our constitutional tradition. Parliament has supreme responsibility for enacting and changing our laws. Therefore, while we are in accord with the convention and have signed and ratified it, because Parliament is supreme we do not believe that it is right to put it into legislation.
Lord Hailsham of Saint Marylebone: My Lords, I accept completely what my noble friend says about the position of Parliament and the duties of the judiciary. Will he accept that it would save a great deal of time and money were British judges able to give effect to some of the provisions in the human rights convention? Would they not then be able to do it with a knowledge of British conditions?
Earl Ferrers: My Lords, that could well be the case but the fact is that Parliament makes the laws. If we were to put such a procedure into our laws we would

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end up with judges in the High Court determining whether or not matters which Parliament has decided are within the European legislation.
Lord Holme of Cheltenham: My Lords, is the Minister aware that at present British citizens who believe that their rights have been infringed can appeal to the European Court and the Commission? In that sense Parliament already acknowledges that human rights are protected by a court. The problem is that the court is in Strasbourg and it takes hundreds of thousands of pounds and many years for British subjects to have their rights redressed. Might not the rights of British subjects be more immediately and inexpensively redressed in British courts by British judges?
Earl Ferrers: My Lords, it is true that to go to the European Court takes a long time and is sometimes expensive. However, that is the route by which the European Convention is applied. It would be a difficult process to try to change that method and introduce it into our courts.
Lord Allen of Abbeydale: My Lords, this is a complicated subject which we have debated on a number of occasions. Is the Minister aware that some of us agree with his comments about remaining uneasy about the responsibilities which this would put on our judges, rather than on Parliament, to say what a new law is "on the spot", as it were? Does the Minister agree that as a consequence there is a risk that, as in America, the social and political views of our judges might become matters of public interest?
Earl Ferrers: My Lords, I believe that the noble Lord is, not for the first time, 100 per cent. right. If the judges have to determine matters of political substance, which is normally determined by Parliament, they could find themselves in an uneasy and uncomfortable position.
Lord Stoddart of Swindon: My Lords, if the Minister and the Government agree that Parliament is supreme, why are they proposing to bring back the Maastricht Bill, which will make Parliament less supreme?
Earl Ferrers: My Lords, I was wondering how on earth the noble Lord would manage to introduce the Maastricht Treaty. If Parliament is supreme and I believe that even the noble Lord will agree that it is and if Parliament decides to agree to the Maastricht Treaty, Parliament will remain supreme.
Lord Monson: My Lords, in the light of the case reported last Saturday in which, apparently under pressure from the European Court, British taxpayers were obliged to fork out the preposterous sum of £8,000 to compensate someone for having been caned on one occasion at a private school nine years ago, does the Minister agree that there is something to be said for distancing ourselves from the European concept of justice rather than binding ourselves more closely to it, given that our concept of what is right and wrong evidently differs considerably from the continent al concept?
Earl Ferrers: My Lords, I do not know that we want to distance ourselves from European justice, but the noble Lord might want to distance himself from the result of one particular case.
Lord Morris of Castle Morris: My Lords, is it not a fact that the United Kingdom is the only one of the 23 member countries of the Council of Europe which has no written constitution or enforceable Bill of Rights? Should we not be taking appropriate and rapid steps in that direction?
Earl Ferrers: My Lords, the noble Lord's figures may be correct. However, other countries in Europe have different constitutions, but we find that the way in which we run our country is the best.
Lord Kirkhill: My Lords, does the Minister recollect that the United Kingdom was the first signatory to the convention? Does he agree that the perhaps unfortunate consequence of the articles of the convention being outwith the United Kingdom domestic court jurisdiction causes the frequent overturn of our judges' decisions?
Earl Ferrers: My Lords, I agree with the noble Lord that we were one of the first to sign the convention. Indeed, we played a major part in drawing it up. All legal arrangements have their own complexities and problems. We believe that the way that we use the European Convention suits this country best without involving ourselves with the legal problems to which the noble Lord, Lord Allen of Abbeydale, referred and by not incorporating a Bill of Rights within our constitution.

GCSE
3.25 p.m.
Baroness David Baroness David asked Her Majesty's Government:
What plans they have for the future of the General Certificate of Secondary Education.
The Minister of State, Department of Education (Baroness Blatch): My Lords, the General Certificate of Secondary Education (GCSE) will continue as the examination marking the end of compulsory schooling at age 16. The Government are taking firm action to correct deficiencies revealed by the recent HMI report on GCSE examining standards and to secure those standards in the future. A mandatory code of practice will be introduced to regulate the conduct of GCSE examinations from 1993. Compliance by the examining groups with that code will be a condition for the continuing approval of their GCSE qualifications.
Baroness David: My Lords, I thank the Minister for that Answer. As in the past few years there have been so many changes in what is expected of teachers and students as regards the contents of and preparation for the GCSE, and with no research to back those changes, will the Minister assure the House that in future the Schools Examination and Assessment

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Council will be responsible for the examination and that there will not be the interference of Ministers, as has been the case during the past two years?
Baroness Blatch: My Lords, the school curriculum will be kept under constant review by the Schools Examination and Assessment Council and the National Curriculum Council.
Lord Merlyn-Rees: My Lords, did the Minister note that in the recently published list of schools there was a special school in my former constituency, the pupils of which could not possibly take the GCSE? As a result yesterday's published list read, "0, 0, 0". Does the Department of Education know what special schools are for and that the GCSE is not a judgment on such schools? Somebody ought to be sacked.
Baroness Blatch: My Lords, it is well known that the special schools in the system had no results for the GCSE because there are special schools which do not offer that examination. That is known nationally and it is certainly known locally.
Lord Mackay of Ardbrecknish: My Lords, will my noble friend assure me that while the GCSE exists results will be published annually, as was done recently? Will she also advise me why up and down Whitehall all kinds of private and confidential government documents can be leaked to newspapers but the most secret information appears to be the results of school examinations?
Baroness Blatch: My Lords, there is now an end to that absolute secrecy. The examination results are rightly the preserve of parents and from now on that information will be made available to them every year.
Lord Addington: My Lords, does the Minister agree that the new examination places greater emphasis on written work? Does she also agree that when people with special educational needs such as dyslexics apply for special dispensation they will have printed on the bottom of the examination certificate the fact that the examination was taken with a concession? That is seen by many staff and pupils as a disincentive to applying for the special provision which allows them to take the examination. Does the Minister further agree that that matter should be considered because there is a great danger that pupils will not take the examinations using the correct methods and therefore will have less chance of passing them?
Baroness Blatch: My Lords, that information is not put into the public domain but is printed on the certificate which is particular to an individual. It is important that we continue to make available help and assistance to people who have difficulties with the written and spoken word.
Lord Carr of Hadley: My Lords, while I strongly support the publication of such information, might it not be sensible to exclude from the list those schools which for good reasons do not sit the examinations rather than including figures which give the wrong impression?
Baroness Blatch: My Lords, my noble friend makes an important point, as did the noble Lord, Lard Merlyn-Rees. We need to take note of it. This is the first exercise of its kind. It is important to get the information into the public domain. A number of lessons will be learned from this first attempt. I shall certainly draw your Lordships' remarks to the attention of my right honourable friend.
Lord Dormand of Easington: My Lords, is the noble Baroness aware that the worst feature of the matter is the constant chopping and changing? That seems to be inspired by the Government and, as my noble friend said, is often based on inadequate research. Is the noble Baroness aware that when any change is made, it is sheer common sense for that change to be given a fair trial? Is she further aware of the effect that these provisions are having on parents, governors, pupils and not least on teachers who are quite dismayed at what is happening as regards the GCSE at present?
Baroness Blatch: My Lords, I believe that the noble Lord overstates the case. In education the lead-in time for change is considerable. It will be 2003 before the first cohort of children leave school at the age of 16, having taken GCSEs and having studied the national curriculum from the age of five. That is an extremely long lead-in time for change.
Baroness Oppenheim-Barnes: My Lords, is my noble friend aware that no fewer than four schools in my old constituency are at the top of the list as published? They are proud and grateful for being able to preserve their grammar school status.
Baroness Blatch: My Lords, my noble friend is rightly proud of those achievements. There are schools which many people would have written down in their expectations for example, schools in inner city areas —which have performed extremely well. The object of publishing the results is to make public those achievements.
Lord Taylor of Blackburn: My Lords, the Minister should realise by now that what teachers, parents and governors are asking for is a period of stability. People are sick and tired of the changes that have been taking place. I know that changes must take place. However, will the Minister not realise that the time has come for a period of stability so that people can look at the situation and work on it?
Baroness Blatch: My Lords, I understand what the noble Lord is saying when he refers to implementation of the national curriculum. However, the most recent changes have been as a direct result of talking to teachers and making implementation easier for them. We shall continue to do that.
Baroness Blackstone: My Lords
Lord Wakeham: My Lords, I believe it is time to move on. We should be fair to all those who have tabled Questions.

Museums Policy
3.34 p.m.
Lord Morris of Castle Morris Lord Morris of Castle Morris asked Her Majesty's Government:
How they propose to implement the proposals in the report Museums Matter by the Museums and Galleries Commission.
Viscount Astor: My Lords, the Government very much welcome the report, which recognises the important role that museums and galleries have as part of our cultural heritage. We shall take careful account of the views expressed by the commission in the report in so far as they relate to government policies.
Lord Morris of Castle Morris: My Lords, I am grateful to the Minister for that reply. Since the report Museums Matter places such emphasis on the role of local authorities, is the time not now ripe for the Government to include and set up realistic components for museums in the standard spending assessments for local authorities?
Viscount Astor: My Lords, the noble Lord, Lord Morris, was a distinguished chairman of that august institution—the Museums and Galleries Commission from 1985 to 1990. Local authorities play an important role in the provision of the museum service. However, it is for local authorities to provide adequate support for their local museum service. I am sure that they recognise the important role which museums play throughout the community.
Lord Rees: My Lords, I am sure that my noble friend has studied the report in great detail. As it is hoped that the national lottery Bill will he introduced before Christmas, will my noble friend pay particular attention to, and comment on, the recommendation that under that legislation museums and galleries with nationally acclaimed collections which are not supported by central or local government should be given either a special endowment or at least an assured source of income?
Viscount Astor: My Lords, clearly museums and galleries will benefit from the proceeds of a national lottery. It is too early to say what will be the amount of such benefit. We must wait for the Bill to be published.
Lord Jenkins of Putney: My Lords, is the noble Viscount aware that page 47 of that excellent report says that eight out of 19 of the national institutions —galleries and museums—are now charging for admission? Is it not the case, as the report says, that the institutions have reluctantly decided to impose an admission charge because of shortage of proper funding? Will the noble Viscount suggest to his colleagues that, if the museums are funded properly, it will not be necessary to charge for admission, which discourages people from visiting those institutions?
Viscount Astor: My Lords, that is absolutely not the case. It is for the museums and galleries to decide whether or not they wish to charge. It is their choice.
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Of course, receipts of national museums and galleries from trading and other activities have risen from about £3 million in 1979–80 to an estimated £48 million this year; that is a considerable sum of money.
Lord Montagu of Beaulieu: My Lords, does my noble friend agree that one of the most urgent problems to which the report refers is the future funding of the 300 university museums and collections? Does he accept the suggestion in the report that the change in the funding of universities which is due soon will be an excellent opportunity to tackle the problem?
Viscount Astor: My Lords, the Universities Funding Council is providing special factor funding of £5.8 million for selected university museums and galleries in 1992–93. The new Higher Education Funding Council for England has been reviewing all special factors. It has recently agreed in principle that special factor funding for museums and galleries should continue and intends to consult on proposals for special factor funding with a view to announcing decisions in January.
Baroness Birk: My Lords, the new flexibility given to national museums and galleries in the Autumn Statement is at first glance welcome. However, is it not also misleading? A single grant-in-aid to cover running costs, purchase grant, building and maintenance looks attractive. But does the Minister agree that that depends entirely on the amount of funding? According to the tables in the Autumn Statement, in the next three years the museums will receive something in the region of 2 per cent., which is totally inadequate. May that not mean that in some cases purchase grants will be cut because of the huge demands made by maintenance?
Viscount Astor: My Lords, I do not believe that the noble Baroness is correct. The funding for museums and galleries has increased from £181 million in 1991–92 to £192 million in 1992–93. Of course, museums and galleries will be given a new flexibility to help them to manage better and to secure value for money. They will not have to seek permission from the department before re-allocating funds from one category of expenditure to another in any year.

Business
Lord Hesketh: My Lords, perhaps I may say a brief word about sustenance this evening. As your Lordships will be aware, dinner was arranged in the Dining Room. However, I understand that only one table has been booked so far and that there is plenty of space available in the Barry Room. It is therefore proposed that dinner will not be served tonight in the Dining Room, although your Lordships desirous of sustenance will be able to have recourse to the Barry Room, as will those who had booked into the Dining Room, at no extra charge.

Criminal Justice Bill [H.L.]
3.38 p.m.
Earl Ferrers: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Earl Ferrers.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Offences to which this Part applies]:
Earl Ferrers Earl Ferrers moved Amendment No. 1:
Page 2, line 41, leave out subsection (6) and insert:
("(6) No order shall be made under subsection (4) unless a draft of it has been laid before and approved by a resolution of each House of Parliament.").
The noble Earl said: On Second Reading the noble Lord, Lord Wigoder, suggested that if it were proposed to alter the list of offences to which Part I applies, that should be done by affirmative resolution of both Houses of Parliament rather than by the negative resolution procedure, as the Bill at present proposes. I undertook to consider that. In a nice, helpful kind of way I came to the view that the noble Lord, Lord Wigoder, is right.
The noble Lords, Lord Harris of Greenwich and Lord Wigoder, have tabled Amendment No. 2; I have tabled Amendment No. 1. They have the same effect, but I am advised that mine is the better—of course. Amendment No. 1 uses conventional words whereas the amendment of the noble Lord, Lord Wigoder, omits the word "resolution", which I am assured is a vital ingredient of the effective wording of such an amendment.
I hope that the Committee will agree to incorporate my amendment into the Bill and that the noble Lords, Lord Harris and Lord Wigoder, will not move Amendment No. 2. I beg to move.
Lord Harris of Greenwich: On an occasion such as this my noble friend Lord Wigoder would not want to argue the merits of his amendment rather than that of the noble Earl. The noble Earl surprises us a great deal in saying that he prefers his amendment to ours when both have exactly the same effect. However, on this occasion we are glad to meet him more than half way and accept his amendment. At the same time we express our pleasure that he tabled it.
Baroness Mallalieu: From these Benches perhaps I can say that the amendment of the noble Earl is extremely welcome. The addition of any offence to the list covered by the Bill which in effect renders conduct liable to criminal prosecution when that would not otherwise be the case is a matter which we believe should be subject to a high degree of scrutiny by Parliament. We are grateful that the noble Earl paid heed to the anxieties expressed at Second Reading. We support his amendment.
Earl Ferrers: I am grateful to the noble Lord, Lord Harris, and the noble Baroness, Lady Mallalieu, for such happy sentiments.
On Question, amendment agreed to.
[Amendment No. 2 not moved]
3.45 p.m.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Baroness Mallalieu: My agreement with the noble Earl comes to an end. I oppose the Question that Clause 1 shall stand part of the Bill. I do so, I hope, in order to be helpful not merely to the noble Earl, but also to those who will have to try to work with, and understand, the legislation in due course. I hope that I understand what the noble Earl is trying to do in this part of the Bill. If I correctly understand it I believe I support his intentions.
It was clear as long ago as 1986, when the fraud trials committee under the chairmanship of the noble and learned Lord, Lord Roskill, reported, that jurisdictional problems were arising from frauds committed across national boundaries. Under the present law, in the case of substantive offences—offences which are actually carried out—none of the participants can be prosecuted in this country unless the last event which makes up the crime occurs in England and Wales. At the stage of preparation—where the crime has not actually been committed but is at the attempt stage, is a conspiracy or is an incitement—and where those concerned are detected before they have completed their purpose—it is unlikely at present that they will be prosecuted where they plan to reap the benefits. At the moment they cannot be prosecuted here either because the underlying crime has not yet been committed here. I therefore fully support what the noble Earl is trying to do to improve the law in that respect. In part, in the Bill as it is presently drafted, he has achieved that object.
In relation to the substantive offences of dishonesty and blackmail—what the Bill classifies as Group A offences—I am entirely with the Minister. Such offences should be triable in this country if any part of the conduct or any of the results forbidden by such crimes take place here. In the Bill as presently drafted the Group A offences are set out with commendable clarity so that anyone, lawyer or layman, who wants to know what offences are covered by the legislation, can read them with ease in Clause 1(2) (a), (b), (c) and (d).
Clause 2 goes on to tell him, again with clarity, when the courts have jurisdiction to try such offences here in relation to those Group A offences. So far so good.
The confusion arises in the Bill as presently drafted when one comes to the Group B offences. The Bill is clear in regard to the list of Group B offences down to paragraphs (a), (b), (c) and (d) of Clause 1(3), which set out clearly the conspiracy, the attempt and the incitement offences which are covered by the legislation. The difficulty arises when one comes to paragraphs (e) and (f). Paragraph (e) states,
"an offence which is triable by virtue of the new section 1A inserted in the Criminal Law Act 1977 by section 5(1)".
That adds to the list of Group B offences.

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The Criminal Law Act, Section (1), merely defines the law of conspiracy. Subsection (1) states,
"Subject to the following provisions of this Part of this Act, if a person agrees with any other person or persons that a course of conduct shall he pursued which will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement if the agreement is carried out in accordance with their intentions, he is guilty of conspiracy to commit the offence or offences in question".
Clause 5(1) of the Bill goes on to define the circumstances where an agreement relating to a Group A offence falls within that section. Much the same thing happens in relation to paragraph (f) of Clause 1(3) in relation to the Criminal Attempts Act 1981. The Criminal Attempts Act, Section 1, simply defines an attempt to commit an offence as follows:
"If, with intent to commit an offence to which this section applies, a person does an act which is more than merely preparatory to the commission of the offence, he is guilty of attempting to commit the offence".
Clause 5(2) of the Bill then goes on to deal with jurisdiction in relation to certain attempts.
I therefore ask the noble Earl why paragraphs (e) and (f) of Clause 1(3) appear in the Bill. What do they add except confusion? I ask him to indicate what additional offences are added to the Group B List by paragraphs (e) and (f). It appears to me that there are only two possibilities. The first is this. Notwithstanding the Title of the Bill, which claims quite specifically that it is to,
"make provision about the jurisdiction of courts in England and Wales in relation to certain offences of dishonesty and blackmail"
paragraphs (e) and (f) in fact extend the jurisdiction to all attempts and all conspiracies. With respect, that cannot be intended. Indeed, it would be a nonsense if substantial offences which are not on list A and therefore cannot be tried here are nonetheless included when they form attempts or conspiracies and in that way come under the provisions of Group B.
The alternative is that the additions in paragraphs (e) and (f) simply relate to Group A conspiracies and attempts, in which case they are already plainly covered in the existing provisions of subsection (3). The clarification of the new jurisdiction position in relation to conspiracy, to attempt and to incitement, could be neatly and clearly set out in accordance with what appears though in a jumbled form—in the later Clause 5. It is done with commendable clarity for conspiracy to defraud, though again it is tucked away in subsection (3) of the clause. There seems to be no reason why it should not be done with commendable clarity for the other Group B offences.
If it is necessary to draw attention to the existing provisions of either the Criminal Law Act 1977 or the Criminal Attempts Act 1981, that could surely be done with a single clause which simply states that in relation to the Group B offences the existing provisions of both those Acts should be extended in relation to jurisdiction.
The noble Earl is not wholly to blame, I suspect, for the jumbled wording. It is a wording which originated from the Law Commission in its draft Bill. It may be that it was included in this way in order to tie up loose ends in existing legislation. I hope that simply from a reading of the provisions Members of the Committee
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will see that the result is a jumbled mess. This is a lawyer's Bill, drafted for lawyers, and which can only in reality be understood—and then only with considerable difficulty by lawyers.
I ask the noble Earl to look again at these provisions, because they can be both clarified and simplified and still achieve the noble Earl's desired object without causing what will ultimately be, if this part of the Bill is not later changed, a great deal of grief and public and private expense in years to come as laymen have to seek legal advice to understand these provisions and lawyers clock up huge fees advising on what these words really mean.
Earl Ferrers: When the noble Baroness, Lady Mallalieu, said that this is a lawyers' Bill which will be considered by lawyers and that it will only be understood by them, she evoked a certain chord of sympathy with me. I am also glad she said that this is supposed to be a helpful measure. To remove Clause 1 from the Bill is an exceedingly unhelpful measure because it would completely kibosh the whole of Part I and make it inoperative. I am grateful to her for explaining the reason why she tabled her opposition to this clause. When I first saw it it caused me a great deal of concern.
If the clause were not approved, it would emasculate the whole of Part I of the Bill. That would be quite wrong. I do not believe that Part I extends our courts' jurisdiction in an unacceptable or draconian way. It simply provides that, as regards specified substantive offences of dishonesty, our courts will have jurisdiction if any necessary component of the offence took place in England and Wales, rather than just the last offence; and that, in relation to the related conspiracy, attempt or incitement which are in Group B, our courts will have jurisdiction either if the offence was aimed at the commission of an offence in England or Wales or if the conspiracy, attempt or incitement took place in this country but was aimed at the commission of an offence abroad. If there is no link with this country then it would obviously be inappropriate for our courts to have jurisdiction and this Bill would not give it to them.
The noble Baroness's alternative is clearly the correct one. Clause 5 deals with plots here and offences committed overseas. It deals only with Group A offences and not with all offences. There is a difference between a conspiracy to steal, which is covered by Clause 1(3) (a), and conspiracy to commit what would be theft if it were committed here. That is covered by Clause 1(3) (e). The noble Baroness has made a number of legal points and they were entirely justified. I would like to consider those rather than give her an off-the-cuff answer which would probably be erroneous. I shall consider her points and get in touch with her later about them.
Baroness Mallalieu: I am most grateful for that encouraging indication from the noble Earl. In those circumstances I beg leave to withdraw my objection.
Clause 1, as amended, agreed to.
Clause 2 agreed to.
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 3:
After Clause 2, insert the following new clause:
("Jurisdiction in respect of Group B offences
. A person may be guilty of a Group B offence if any relevant event occurred in England and Wales.").
The noble Baroness said: I can take this matter shortly because it follows on from the arguments which I have already addressed to the Committee as regards Clause 1. It is essential that one should be able to look at this Bill without reference to other legislation and to read at a glance in what circumstances the courts of this country have jurisdiction. The Bill does it clearly as regards Group A offences. It may be necessary to have separate clauses relating to the other aspects that are covered by Group B; in other words, conspiracy, attempt, conspiracy to defraud and incitement.
The matters are set out, but in an unclear form and linked to other legislation, in the existing Clause 5. I invite the noble Earl, when he comes to look at not only the way in which the Group A offences are described, but also the way in which the Bill deals with the jurisdiction which it now gives as regards each of those groups' offences, to consider inserting clauses in relation to them with the same degree of clarity as that which at present appears in Clause 2 of the Bill for the Group A offences. The intention of this amendment is that there should be such a clause. It may be that Amendment No. 3, which I now move, deals rather globally with the position and that it should be dealt with in rather more detail. I invite the noble Earl to give a similar indication to that which he has already given. I beg to move.
Earl Ferrers: When I first saw the noble Baroness's amendment I was not sure whether it was intended simply to assist the Government by overcoming a problem which we in fact recognised in the new Clause 3, which misleadingly refers to the relevant event in the context of a Group B offence, but which does not define what a relevant event is; or whether it was intended to change the basis on which Part I of the Bill will give our courts jurisdiction over Group B offences.
I appreciate the noble Baroness's concern over this amendment but it would create insuperable difficulties if it were accepted by the Committee. That is because the idea of a relevant event is appropriate only in the context of a substantive Group A offence where our courts would be given jurisdiction provided that some necessary element of the completed offence occurred in England and Wales. As regards what is called an inchoate offence of the type listed in Group B, there is no completed offence but rather a conspiracy, an attempt or an incitement to commit an offence. In that kind of case the court's concern is not simply with what has actually happened, but with what might have happened if the conspiracy, attempt or incitement had achieved its object.
Part I of the Bill gives our courts jurisdiction over Group B offences which are aimed at the completion of an offence in England and Wales whether or not the Group B offence itself took place here. For those
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reasons, I hope that the noble Baroness will not press her amendment. I shall take into account what she has said and will read it with rather more care.
Baroness Mallalieu: In the light of that indication, I seek the leave of the Committee to withdraw the amendment. When the noble Earl has had a chance to consider the position, I hope that he will feel it right to spell out with clarity the jurisdictional position as regards each of the groups of the Group B offences so that they can be read in the same clear way which the draftsman has already achieved as regards Group A offences. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Clause 3 [Questions immaterial to jurisdiction in the case of certain offences]:
Earl Ferrers Earl Ferrers moved Amendment No. 4:
Page 3, line 11, leave out ("the time of the relevant event") and insert ("any material time").
The noble Earl said: In moving this amendment I wish to speak also to Amendment No.5. These are simply drafting amendments which are not intended to affect the substance of Clause 3, but to clarify it. Some of your Lordships may have been puzzled by the reference in subsection (1) to "the relevant event" when, of course, in relation to a Group B offence there will be no relevant event, while in relation to a Group A offence there may be more than one relevant event. This amendment makes clear what this subsection really means, and that there is no time at which citizenship is relevant to jurisdiction. I beg to move.
On Question, amendment agreed to.
Earl Ferrers Earl Ferrers moved Amendment No. 5:
Page 3, line 12, leave out ("that") and insert ("any such").
On Question, amendment agreed to.
Clause 3, as amended, agreed to.
Clause 4 agreed to.
Clause 5 [Conspiracy, attempt and incitement]:
Earl Ferrers Earl Ferrers moved Amendment No. 6:
Page 5, line 7, after ("if") insert ("the incitement").
The noble Earl said: I beg to move Amendment No. 6, and to speak also to Amendments Nos. 7 and 8. I am grateful to the noble Lord, Lord Airedale, for this amendment because his Amendment No. 9 brought to my attention the drafting difficulty which appears in Clause 5. I am glad to be able to agree with the noble Lord, Lord Airedale, that the phrase "in respect of" in line 9 adds nothing to the subsection and ought to be deleted. Indeed, my own amendments go somewhat further in simplifying this subsection and will remove the need to retain even the phrase "a charge of incitement". I hope that the noble Lord will agree that my amendments do all that his does—and a bit more too. These amendments simply tighten up the drafting of subsection (4) without affecting its meaning and I commend them to your Lordships. I beg to move.
Lord Airedale: I am grateful to the noble Earl and am much obliged for what he has said.
On Question, amendment agreed to.
Earl Ferrers Earl Ferrers moved Amendments Nos. 7 and 8:
Page 5, line 8, leave out ("the incitement").
Page 5, line 9, leave out ("a charge in respect of incitement").
On Question, amendments agreed to.
[Amendment No. 9 not moved.]
Clause 5, as amended, agreed to.
Clause 6 agreed to.
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 10:
Before Clause 7, insert the following new clause:
("Sentencing policy
After subsection (3) of section 28 of the Criminal Justice Act 1991 there shall be inserted the following subsection
"(3A) Where an offender has been convicted of one or more drug trafficking offences, a court sentencing the offender may exercise its discretion to mitigate the sentence by taking into account any such matters as, in the opinion of the court, are relevant in mitigation of sentence to the same extent as in the case of an offender who is convicted of one or more offences other than drug trafficking offences." ").
The noble Baroness said: As this Bill deals with a number of other aspects of criminal legislation and as Part II, to which we now come, deals with drug trafficking offences, I move this amendment to deal with the problem which has arisen in relation to the sentencing of drug trafficking offences and which is giving rise to considerable concern in a number of quarters.
The amendment deals with the question of sentencing and, in effect, underlines the court's discretion to take into account mitigating factors when sentencing a drug traffic offender to the same extent that that discretion is available in relation to other criminal sentencing. It may seem that such a provision is unnecessary because in sentencing an offender a judge has total discretion within the legislation to impose what sentence he feels fit in the light of the offender's circumstances and the circumstances of the offence. However, what has happened—no doubt as a result, quite properly, of expressions of concern about inadequate sentences and the gravity of drug trafficking offences—is that increasingly judges and courts have felt bound by guideline cases from the Court of Appeal. I suppose that it is fair to say that, in this area rather more than in almost any other, there have been a number of guideline cases which, in effect, set a clear tariff to judges of the sentences which they can impose.
Those sentences in themselves may well be totally justified when one is dealing with the main offenders —people who have organised large-scale importations of drugs into this country. This amendment arises in particular from the widespread concern that is being expressed by welfare organisations about the position of men and women—and particularly women—from countries such as Nigeria who are currently receiving long prison terms, often ranging from four up to 14 years, for drug smuggling. They are usually from poverty-stricken areas—people of no substance who are induced to act as couriers by the organisers of the drugs trade.
In typical cases the Court of Appeal has said, for example, that eight years is an appropriate sentence for the importation of something of the order of three kilograms of heroin. In other cases, the court has said
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that sentences of 10 years and more are justified. There would, of course, be widespread support for the imposition of long sentences on people who plan, direct or organise drug trafficking, but those guidelines are also applied in the sad cases when naive, often poverty-stricken people have been manipulated (often for very little reward) and have succumbed to a one-off apparent opportunity to alleviate their particular economic troubles.
The rigidity with which the courts are currently applying those guidelines means that such offenders are today routinely receiving sentences which are much longer than their personal culpability would appear to justify. What is more, the Court of Appeal has on more than one occasion indicated that the usual factors which mitigate sentencing in criminal cases—for example, the good character of the courier and any particular economic difficulties should seldom, if ever, apply in cases of this type. It seems that the thinking behind that view is that drug couriers are likely to be deterred by knowing that if caught they are likely to receive very long terms of imprisonment here. In fact, however, all the evidence shows that they are people who, on the whole, are profoundly ignorant of the British legal system or the sentences that are likely to be imposed. Indeed, they have often been assured that the only possibility if they are caught is of being returned to their own country and of the drugs being confiscated.
An extensive survey into the position has been carried out in the past two years. Research has been published by the Howard League for Penal Reform. Dr. Penny Green, a lecturer in law at Southampton University, studied some 900 imprisoned drug importers, interviewing about 50 of them in depth, of whom it appeared only five were what could be classed as professional drug smugglers with previous criminal records. The majority seemed to be people of the type that I have already described.
A further difficulty is arising in relation particularly to women. Very often the women involved are mothers either with children at home, in which case the lengthy terms of imprisonment are having a disproportionate effect both on them and on the children from whom they are separated for long periods, or they are pregnant, in which case the length of the sentences means almost inevitably that at some stage they have to be parted from their children during the sentence. The children are then either fostered or placed in local authority care.
Those involved can also be people who come to this country to carry out the courier job with their children in attendance—no doubt on occasions in order to provide a better blind for the Customs. In those circumstances, the children tend to be separated from their mothers and placed in the care of strangers, the mothers being reluctant for their families back at home to know what has happened to them. The children suffer not merely the initial separation from the parent but, at the end of the lengthy sentence, they are then removed from the foster parents with whom they may well have settled and returned to the natural mother who may be a stranger to them. It is telling that, as I understand it, in the past three years all of

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the children taken into care by Hillingdon social services, which covers the area of Heathrow Airport where many of the arrests take place, have been Nigerian children who have come to this country with these women.
So the purpose of the amendment is really to underline something which may be implicit but which has in a sense been lost sight of in the sentencing for these offences. Although the Bill does not as it stands at present have within it provisions in relation specifically to sentencing in this connection, dealing as it does with the confiscation order aspect of drug trafficking offences, it would seem appropriate that something of this nature should be inserted. I do not in any way intend to indicate that one wishes to be lenient with those who bring drugs into this country, but our efforts should be directed primarily at those who are chiefly responsible and who stand to gain from the organisation of this wicked traffic. I beg to move.
Lord Windlesham: The noble Baroness has done the Committee a service in bringing forward this new clause. It draws our attention to the sentencing of certain couriers who have been convicted of drug trafficking offences. We can all agree that organised drug trafficking for profit is an appalling trade and one that has devastating social consequences. Most of us, I suspect, can also agree that severe sentences are fully justified for those who plan, direct and organise the trafficking in the most harmful drugs. But what happens when we come to interpret that general proposition? We find that, although the statute law allows the courts discretion to sentence up to a prescribed maximum—the levels of penalty set by Parliament—the guideline judgments in the Court of Appeal have limited the use that is to be made of that discretion in practice in a number of particular categories of offender. The noble Baroness has explained what those are as they relate to drug trafficking offences.
Whatever the gravity of a criminal offence, a fixed sentence can lead to a wrong sentence if it does not allow for particular circumstances. Your Lordships exchanged opinions yet again earlier this afternoon on the indefensible anomalies which have arisen because of the mandatory penalty for murder, one of the very few mandatory fixed penalties—indeed possibly the only mandatory fixed penalty—on the statute book. But because of guideline judgments and the very inflexible way in which the guideline judgments by the Court of Appeal have been interpreted, these are coming very close to being fixed sentences of imprisonment.
I have been struck, as have those noble Lords who visit prisons, by the number of West African women in women's prisons. They are a very noticeable group —certainly in prisons in the south of England. Many of them have come from Nigeria. They are usually passive and uncomprehending. As the noble Baroness said, many of them do have very young children with them in prison, either because they have been pregnant at the time of their conviction or because they had young children with them. They can keep
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those children with them only for a few months until the age of 18 months. But since they are serving sentences of up to 10 years' imprisonment, or perhaps shorter periods of six to eight years—colossally long periods—there is very little possibility of those children remaining with their mothers throughout the sentence. So the children are removed, as they must be, and they are either fostered in this country or they are taken into the care of local authority social services.
I too have seen the report to which the noble Baroness referred. It is one of the most devastating comments that have been made that in the London borough of Hillingdon, where the local social services have the responsibility for Heathrow Airport, all the children taken into care over the past three years 100 per cent.—have been Nigerians whose mothers, in almost every case, have been convicted for this type of criminal offence. It is true that these women have often been exploited and manipulated by the real organisers of international drug smuggling. It is the ironical fact that they are likely to evoke sympathy should they be caught that may make it more desirable to the organisers to use them as couriers. So, for pitifully small sums of money, these naive and often desperate people—I speak especially of the women couriers are persuaded to carry quantities of dangerous drugs —sometimes highly dangerous drugs—usually as a solution to their own acute problems and with little appreciation of what it is that they are doing, of the risks that they are taking, of the harm which will be caused to others and the consequences to them should they be apprehended.
The noble Baroness referred to a profound ignorance on the part of couriers of this kind of the British legal system. There is no evidence whatever that these couriers are deterred by, because normally they are not even aware of, the prospect of very lengthy prison sentences in the United Kingdom and it is only too easy for the professional organisers to replace them. Therefore what the amendment proposes in the form of a new clause is that, without altering the maximum penalties which should stand on the statute book as an indication of the gravity of this kind of criminal offending, which should properly be condemned by the legal system, the courts should have a discretion to mitigate the sentence by taking account of such matters as would normally be considered to be relevant as mitigating factors where the charges do not relate to drug trafficking.
When he replies, the Minister may tell us that this is not a matter for legislation and that it is not a matter which would fit easily into the Bill. I would accept that answer. But I hope that he will also tell us that this is a serious matter relating to sentencing policy which the Home Office is aware of and which it is prepared to discuss with the higher judiciary.
Lord Ackner: The noble Baroness, as always, was perfectly right when she indicated that she wondered whether this clause added anything at all. It is my respectful submission to the Committee that it adds precisely nothing. The judges have a discretion to sentence as is appropriate. The guidelines do not, as the noble Lord, Lord Windlesham, seemed to

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indicate, provide a fixed sentence or any fixed sentences. They are indications to judges as to the considerations which should be taken into account in sentencing in order that sentencing should achieve the necessary consistency and precision so that persons are not treated differently by chance arising from their appearance in different courts.
The noble Baroness may have great substance in her submissions that that class of offender should be treated more leniently. I can understand another school of thought which says that the more leniently one treats that class of offender, the more one plays into the hands of the organisers of a crime which, next to terrorism, is the most serious and vicious that one can come across. If the noble Baroness has wisdom and justice behind her submissions, the proper place for the submissions to be made is the Court of Appeal.
If a judge rigidly applies sentencing guidelines that produce the wrong result, the proper avenue for dealing with that is the Court of Appeal, and, if it is considered that the guidelines go too far in a particular direction, it is for the Court of Appeal to change them. The Court of Appeal is perfectly capable of saying, "We have a new problem. We have read a new and detailed report. We have had the benefit of careful advocacy, explaining to us that we need to moderate or further explain the position". If that is justified, I have every confidence that the Court of Appeal will do so.
The new clause places no pressure on the Court of Appeal to do anything. It merely tells the Court of Appeal the obvious: that a judge has discretion in imposing sentences. I respectfully submit that the proper approach and the proper recipient of the noble Baroness's moving appeal is not the Committee, it is not the Bill; it is the Court of Appeal (Criminal Division).
Lord Hutchinson of Lullington: I strongly support the noble Baroness and the amendment and disagree as strongly as I can with what the noble and learned Lord, Lord Ackner, has just said. The reason the noble Baroness, supported so eloquently by the noble Lord, Lord Windlesham, has had to bring forth the amendment is the mischief caused by the Court of Appeal's increasing tendency to lay down tariffs for specific offences. The noble and learned Lord said that the court has complete discretion. It does not have complete discretion because the cases establish guidelines of three to six years' imprisonment for importing medium quantities of cannabis and 10 years or more for large scale importations.
Lord Justice Watkins, in a case in 1989, said that there are certain cases in which the court can act with mercy, but he did not see this as such a case. He further said that once a person knowingly acted as a courier bringing heroin into this country, there was seldom, if ever, room for mercy. With the greatest respect to the Court of Appeal, it is, is it not, here setting itself up in the role of legislator? Parliament has not said, and would never, I hope, say, that there is no room for mercy in any case which comes before the criminal courts.
As has been said, these cases involve women who are often impoverished, unsophisticated and open and
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vulnerable to blackmail in Nigeria. They are uneducated and unable to understand any of the court proceedings. The trouble and mischief which arise from laying down tariffs—I say this without any disrespect—result from the fact that it is the view of two or three judges in the Court of Appeal which lays down the tariffs for all courts to follow. It is an example of what the noble and learned Lord, Lord Woolf, so strongly emphasised in his report: that it is essential in this day and age for all parts of the criminal process, and those involved in it, to understand and know about the other parts.
The trouble with older members of the judiciary is that they are often unaware of the results of what they lay down in the Court of Appeal. All of us in this place who are aware of what goes on in the women's prison at Holloway, where the vast majority of those on remand are women from Nigeria who overcrowd the prison and make conditions insupportable, recognise that that is the direct result of the tariffs being laid down in the Court of Appeal by judges who—I say this with the greatest respect have no idea of the results of the tariffs they lay down. For those reasons, I sincerely hope that the noble Baroness will pursue the amendment as far as she possibly can.
Lord Boyd-Carpenter: The noble Lord, Lord Hutchinson, was franker in the grounds he gave for supporting the amendment than was the noble Baroness who moved it. He brought out with complete clarity that the purpose of the amendment is to overrule the advice and guidance which the Court of Appeal has been giving in this type of case. The noble Baroness was more tactful—perhaps a little more adroit—in that she did not spell that out. It is a serious thing to do. After all, with all respect to Members of the Committee, we do not have the knowledge of these cases which the higher judiciary has had to acquire. We are discussing the matter for a few minutes this afternoon. Members of the higher judiciary have sat on cases—many cases, I am sorry to say—when they have seen the whole situation and when, as a result, they have come to the conclusion that in general severe sentences are called for. I therefore suggest that the Committee should hesitate before seeking to overrule them, especially over offences of this nature.
It is all very well to be sympathetic with perhaps uneducated people who smuggle for reward dangerous drugs into this country; but surely one should have even more sympathy for those people in this country who become hooked on these drugs and whose whole lives are ruined. We are dealing with a subject which results in serious consequences for many people in this country—far too many at the moment —who are induced to take to these drugs and who thus ruin their lives. There again, I hesitate to support any proposal which reduces the penalties which fall upon those who cause them the trouble by importing these dangerous drugs.
This is a serious matter. If we have to balance the hardship caused to uneducated people who are induced to smuggle those drugs and the interest of those people who are foolish enough to buy them, and in many cases ruin their lives, I take the view that we

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should err, if we do err, on the side of severity. The habit is terribly dangerous. Earlier this afternoon, we had a discussion on murder. After murder, perhaps the sale of drugs comes almost next in heinousness. It is terrible that people should make money solely out of ruining other people's lives.
If the Court of Appeal's judgment is that severe sentences are necessary then we should be taking on a serious responsibility by approving an amendment which seeks to mitigate them. The story will get about quickly in those countries—Nigeria was quoted as an example—that the House of Lords had laid it down that the courts are to be less severe on those caught smuggling. Therefore, some of the deterrent effect of the sentences that have been imposed would be lost.
I hope therefore that on balance the Committee will decide that the interests of those whose lives will be damaged by taking drugs are the most important consideration and that we should follow the line of maintaining the severest sentences on those who bring that about.
4.30 p.m.
Lord Campbell of Alloway: Perhaps the Committee will allow me a brief intervention from my personal experience of sentencing in such cases over the years when I sat as a recorder and from my experience as an advocate, both at first instance and in the Court of Appeal.
I stress that although well intentioned—and, if I may say so, the noble Baroness does us all a great service by having put the matter before the Committee —the amendment is an attack upon the guidelines. As the noble and learned Lord, Lord Ackner, said, although in a sense it is an attack on the guidelines, in effect it does nothing because it does not affect the way in which the guidelines are applied at the moment.
I make the further point that, so far as I am aware, there is no public disquiet as to the way in which the guidelines are applied at present. I accept the point made against me that no deterrent operates on these unfortunate carriers. They suffer a desperate, sad human misery. But to me it is an insoluble problem. If we relax the rigour of the sentence too far, then we act contrary to the public interest of this country.
There is no perfect answer, but for once it is refreshing for me to be able to say that I agree—I think for the first time ever—with every word the noble and learned Lord, Lord Ackner, said. Although I accept that this is a serious problem and a well-intentioned amendment, I hope that my noble friend the Minister will not accept it.
Lord Harris of Greenwich: In any argument on sentencing policy, I tend to agree with my noble friend Lord Hutchinson of Lullington and disagree with the noble Lord, Lord Boyd-Carpenter. But on this occasion I do not find myself in that situation. Certainly, if the matter is pressed to a Division I shall abstain for one clear reason. I do not think that passing the amendment would have the slightest effect, as the noble and learned Lord, Lord Ackner, pointed out.
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However, there are more substantial issues involved. I begin by saying, on the various issues raised by the noble Baroness, the noble Lord, Lord Windlesham, and my noble friend, that I agree with them. It is wholly true that a substantial number of West African women are in prison in this country. They have been induced to import large quantities of Class A drugs into the country. It is true that many of them are no doubt ignorant of the possible consequences. It is also true that their imprisonment for long periods leads to tragic circumstances arising for their children.
It is also right, as the noble Baroness, Lady Mallalieu, said, that the people we should like to get our hands on are the organisers of the trade. But those organisers go to considerable lengths to ensure that they never come within the jurisdiction of the British courts.
We are therefore left with the situation of what we do with the people who are bringing substantial quantities of Class A drugs into the country. Without going into the remarks of the noble Lords, Lord Boyd-Carpenter and Lord Windlesham, on mandatory life sentences (both of whom touched on the issue at Question Time today) I take the view that in many cases the importation of large quantities of heroin and cocaine into the country is a more serious offence than the murder of a single individual. The case of the doctor was cited by my noble friend earlier today and I wholly agree with him. That is why I disagree with mandatory life sentences.
It seems to me an absurdity that we have a situation in which at Question Time today the noble Earl said something to the effect that the offence of murder was the worst crime of all; yet that could be a loving husband who helps his wife to kill herself, exposing himself to the risk of being sent to prison for life. Contrast that with someone who brings in several hundred thousand pounds worth of heroin and cocaine which we know as a fact is likely to cause the eventual deaths of a number of young people in the country. That, bluntly, is the reality.
There is a second reality, as I attempted to point out during the Second Reading debate on the Bill. The trade is growing at an alarming rate. Year after year the quantity of Class A drugs being imported into the country rises steeply. People involved in the trade are now involved not simply in trafficking in drugs but in armed robberies and many other extremely serious criminal offences. There is an inter-relationship between the drugs industry, the armed robbery industry, and so on, which is having a profound effect on the quality of life of many of our fellow citizens and also on the lives of many people.
I do not believe that there is any easy solution to the problem; none whatever. I feel just as strongly as others who have spoken about the tragic consequences of women who find themselves in this position. But I am also aware that one does not want to have a situation where one makes things easier for those who organise the importation of the drugs into the country. If the amendment were phrased differently, no doubt one might take a different view.

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I come back to the point which I made at the outset. I cannot see what the effect would be of passing the amendment. I find myself in almost complete agreement with the noble and learned Lord, Lord Ackner. It seems to me that the effect of passing it would be precisely nothing except to indicate in some form or another that we believe that a different attitude should be adopted towards people who are convicted of committing this offence.
Lord Hutchinson of Lullington: I am obliged to my noble friend for giving way. I refer to the point about the amendment having no effect. The amendment says that the court:
"may exercise its discretion … to the same extent as in the case of an offender who is convicted of one or more offences other than drug trafficking offences".
As I pointed out, the Court of Appeal has said that discretion should not be exercised; seldom if ever should it be exercised in a case of this kind. So what the amendment is clearly doing is trying to make drug trafficking offences come into exactly the same class as all other offences as far as the discretion of the court is concerned.
Lord Harris of Greenwich: I am much obliged to my noble friend, but of course the effect is that the Court of Appeal will still set the guidelines on conviction for an offence of this character. It would still be at its discretion to determine the appropriate length of sentence. There is nothing in this form of words which leads inexorably to a situation whereby there would be shorter sentences. Quite apart from that, as I indicated, I have considerable concern at the moment about the scale of illegal drugs importation into this country. I am doubtful whether this is an appropriate or prudent moment to change our attitude towards offences of that kind.
Earl Ferrers: This has been an interesting debate and a number of different strands have emerged. The noble Baroness expressed her concern, as she did on Second Reading, about the sentencing of drug couriers and particularly women from third world countries. Some, she said, were pregnant; others were separated from their families. I would not deny that there are some pretty traumatic cases. I would not dispute that some people are duped or are driven by economic necessity to attempt to bring drugs into the country. At the same time there are the professional traffickers who are well aware of the consequences of their activities. Parliament has provided the courts with high maximum penalties for convicted drug traffickers in recognition of the seriousness with which the offence is viewed.
I am glad that my noble friends Lord Boyd-Carpenter and Lord Campbell of Alloway referred to the matter. My noble friend Lord Boyd-Carpenter described the drugs we are discussing as the most terrible and awful things, and he was right to lay that emphasis. My noble friend Lord Campbell of Alloway said that they were against the public interest, which is perfectly true. But my noble friend Lord Windlesham came on to the same tack as the noble Baroness, saying that these were pitiful people engaged in drug smuggling for small sums of money,
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that they little appreciated what they are doing, and therefore, I suppose, that they should be treated more lightly.
My noble friend said that in Hillingdon all the women are Nigerians. That may be, but my answer to that is, so what? If all these people have been convicted for bringing in drugs and are put into a prison, and my noble friend finds to his distaste that they are all women from one country, what is he suggesting? That the sentence should be more lenient? That cannot be right. Obviously the sentencers have to be firm and tough.
The next interesting strand was the guidelines. We witnessed the spectacle of what might be described as the double act between the noble Lord, Lord Hutchinson of Lullington, and the noble and learned Lord, Lord Ackner. It is always fascinating. Not only do they never agree; they always disagree. I believe that the noble and learned Lord, Lord Ackner, was right. He said that sentencing is a matter —at least he did not say it but I am saying what I think the noble and learned Lord would agree with—for legislation and the courts, and it is right that there should be tariffs.
Why are there tariffs? It is because in the past people have said that there is too much disparity in sentencing and therefore the Court of Appeal should lay down some tariffs. I agree with the noble and learned Lord that if the tariff is to be altered, that is a business for the Court of Appeal and those who are professionally motivated and who know about it. But the tariff is only a tariff. It is not set in tablets of stone.
We then come to the amendment itself. The noble Baroness seeks to put into the Act that,
"a court sentencing the offender may exercise its discretion to mitigate the sentence by taking into account any such matters as, in the opinion of the court, are relevant in mitigation of sentence".
She wishes to put that into the Criminal Justice Act 1991. If she looks at the Criminal Justice Act 1991, Section 28(1), she will see:
"Nothing in this Part shall prevent a court from mitigating an offender's sentence by taking into account any such matters as, in the opinion of the court, are relevant in mitigation of sentence".
The noble Baroness's amendment does virtually the same as what already appears. I agree with the noble Lord, Lord Harris of Greenwich, that the amendment is not necessary.
I go further—and here I agree with the noble and learned Lord, Lord Ackner—and say that because the courts have the power already to sentence and to mitigate the sentence, the onus of the problem that the Committee has been discussing is already covered. The courts can mitigate the sentence. They can take into account individual conditions and circumstances, whatever the tariff may be.
The noble Baroness has opened an interesting subject, but I think she will agree at the end of it that what she is trying to do is already covered in law.
4.45 p.m.
Baroness Mallalieu: I am sad that there was no crumb of comfort from the noble Earl. However, on some aspects of the matters that have arisen in the course of this short debate his department might feel

737
it right to discuss concerns with senior members of the judiciary. The noble Lord, Lord Boyd-Carpenter, was wholly wrong in describing this as an amendment that in any way seeks to overrule the Court of Appeal. It does not. Guidelines clearly have an important purpose and point in avoiding disparity of sentence, but they are merely guidelines. Unfortunately, because of the way in which they have been operating in the Crown Courts and because of the way in which the Court of Appeal has reacted when test cases have come before it, they have assumed the status of tablets of stone with all but the strongest and most independent-minded judges. That applies in particular in relation to drug trafficking offences. It is not something that appears to be the approach of the courts in relation to other offences.
Nor is it right to say, as the noble Lord, Lord Campbell of Alloway, indicated, that there is no public disquiet about these matters. It may well be that most people are not aware of the large numbers, particularly of Nigerian women, who have been hit —many would say excessively—by the effect of the guidelines. They are after all in prison. They are not known or seen by the majority of members of the public. But those who do have to deal with them, those who are involved in our prisons and in the welfare organisations with their children, are deeply concerned about what is happening and what appears to be an increasing trend.
Lord Boyd-Carpenter: Would the noble Baroness allow me to intervene? She referred to my observations. Has she not in the last few moments admitted that I was right inasmuch as she indicated that there were these guidelines and that the only purpose of the amendment was to overrule them?
Baroness Mallalieu: What the noble Lord is saying precisely illustrates what has gone wrong. People are assuming that the guidelines set out a position that must be followed. Therefore, the noble Lord is assuming that the amendment is intended in some way to undermine them. The guidelines are intended to be no more than guidance to judges. They are being treated by most judges as if they are rigid rules.
The amendment simply seeks to restate the position. The noble and learned Lord, Lord Ackner, put it, I fear, correctly. It is in effect expressing the obvious or what ought to be the obvious, but an obvious that needs to be restated because we have lost sight of it. I am greatly concerned by the Government's lack of concern as expressed by the noble Earl, but I am cheered by the expressions from all sides of the Committee about the disquiet created by the present guidelines as regards the way in which they are being used and their effect on our courts. I therefore propose to test the opinion of the Committee on the amendment.
Earl Ferrers: Just before the noble Baroness does that, perhaps she would be kind enough to have a look at her amendment and the Criminal Justice Act 1991. Is not her amendment phrased in virtually the self-same words as those in the Act?
Baroness Mallalieu: I accept that the part of my amendment to which the noble Earl referred expresses what is contained in the Criminal Justice Act, but the amendment goes on to deal with the matter by stating:
"to the same extent as in the case of an offender who is convicted of one or more offences other than drug trafficking offences".
The amendment restates that drug trafficking offences should be dealt with in precisely the same way as the Criminal Justice Act anticipated that other offences would be dealt with. The Court of Appeal has repeatedly said in guideline cases that the usual rules do not apply to drugs couriers and that it would be rare, if ever, that matters such as good character might affect sentence and that mercy might be applied to a drugs courier. The amendment restates the position; namely, that it is up to the judge, in drug cases as in other cases, to look at all the facts regarding the offender and the offence. That would take into account the anxieties about drugs that have been expressed by all sides of the Committee and would allow the judge to make a decision based on the individual aspects of the case in which he has to sentence.
Earl Ferrers: Perhaps I may make two points in response. First, do not the comments of the noble Baroness that the guidelines given by the courts are to be used in cases other than drug cases I believe that is what she said totally accord with what my noble friend Lord Boyd-Carpenter said; namely, that the amendment is designed to undermine the courts' guidelines?
Secondly, I ask the noble Baroness to consider the point—I ask the Committee also to consider this point before it divides, if that is what the noble Baroness wishes the Committee to do—that according to the law nothing in this part shall prevent a court from mitigating an offender's sentence,
"by taking into account any such matters as, in the opinion of the court, are relevant in mitigation of sentence".
That is at present an obligation on the court and I cannot see why we need to insert almost the self-same words. I advise the Committee that that would not be desirable.
Baroness Mallalieu: The Committee hears what the noble Earl says, but the courts of this country make a clear distinction when they sentence drug offenders. The guideline cases in relation to drug offenders—there are three main cases—set down with great particularity the sentence that is to be attracted in relation to each of the particular drugs and each of the particular quantities. Those guidelines are therefore very much more specific in relation to drugs offences than they are in relation to most other criminal offences where the Court of Appeal has made such pronouncements.
Earl Ferrers: The noble Baroness therefore seeks to undermine the Court of Appeal's guidelines.
Baroness Mallalieu: The noble Earl does not appreciate what I am saying. That is clearly my fault because I am not putting it clearly enough. Those guidelines were never intended to be anything other than guidelines. They are, in effect, used as if they

739
carry the same weight as statute. I am anxious that we should not lose the opportunity in this Bill to restate the position; namely, that a judge must sentence an offender for any offence on the basis of the facts before him and the circumstances of that particular offender. The amendment restates that position and in effect adds that drug offenders must be put in the same position as other offenders. It therefore adds in an important way to the Criminal Justice Act.
Lord Ackner: Perhaps the noble Baroness would be kind enough to say whether she is suggesting that drug offenders are not a special category. Is she saying—I refer to the words that the noble Lord, Lord Hutchinson, quoted from Lord Justice Watkins—that a person who knowingly acts as a courier and brings heroin into this country is not to be treated as a special category of offender?
Baroness Mallalieu: He or she is not to be treated in any way other than as an offender who has deliberately committed a criminal offence. The gravity of that offence will obviously be a matter for the learned judge who sentences. He will no doubt take account of the maximum penalties and of the guidelines in deciding the degree of severity of the sentence that he must impose. However, where a judge is faced with an offender, it must surely be wrong for him to be faced, as at present, not only with the guidelines which effectively set out the sentence of imprisonment that he must impose, but with guidelines which state that he must shut his ears to particular special factors which may relate to that offender. Having listened to those factors, a judge may take the view taken by the noble and learned Lord; namely, that this is an offence of such seriousness that those factors should not weigh in his sentence. The amendment simply restates the sentencing judge's right to look at those matters and make use of them if he feels that it is right.
Lord Campbell of Alloway: The noble Baroness mentioned my name and challenged my assertion by which I stand; namely, that, as far as I was aware, there was no public disquiet at the way in which the law is administered in that regard by the Court of Appeal and the courts generally. In answer to the challenge, she said that disquiet had been expressed in this Chamber. Perhaps I may respectfully ask the noble Baroness whether, apart from the disquiet that has been expressed here this afternoon, she has any other information on the subject.
Baroness Mallalieu: Indeed yes—from the welfare organisations to which reference has been made; from NACRO, which deals with the care of offenders and the prevention of crime; and from other sources which deal with those women in prison.
As the noble Lord referred to his experiences in the courts, I am bound to say that I too could draw on my personal experiences as regards my feeling that the level of sentencing imposed on some of those women is wholly disproportionate to the nature of their involvement. I believe that to be a general view among those practising at the criminal Bar in this field.
Earl Ferrers: Is the purpose of the amendment to seek to give lesser sentences to those who are involved in drug running?
Baroness Mallalieu: The amendment seeks to enable the courts to take into account the particular factors in each case so that, if the sentencing judge thinks it appropriate to depart from the guidelines, he may do so secure in the knowledge that, enshrined in statute, is his right to take that view. Further, he may do so secure in the knowledge that it is not merely enshrined in the earlier legislation but that Parliament has once again said that drug offenders are to be treated in precisely the same way as other offenders. In other words, the seriousness of their offence must be considered in the context of whatever mitigation they personally are able to produce before the court.
4.59 p.m.
On Question, Whether the said amendment (No. 10) shall he agreed to?
Their Lordships divided: Contents, 41; Not-Contents, 122.

Division No. 1

CONTENTS

Ardwick, L.

Kennet, L.

Aylestone, L.

Kilbracken, L.

Boston of Faversham, L.

Kirkwood, L.

Bruce of Donington, L.

Listowel, E.

Carmichael of Kelvingrove, L.

Longford, E.

Clinton-Davis, L.

Macaulay of Bragar, L.

Cocks of Hartcliffe, L.

Mallalieu, B.

Dean of Beswick, L.

Merlyn-Rees, L.

Diamond, L.

Mulley, L.

Donaldson of Kingsbridge, L.

Palmer, L.

Ennals, L.

Pitt of Hampstead, L.

Fitt, L.

Plant of Highfield, L.

Foot, L.

Rea, L.

Gallacher, L. [Teller.]

Richard, L.

Graham of Edmonton, L.

Robson of Kiddington, B.

Henderson of Brompton, L.

Sainsbury, L.

Hilton of Eggardon, B.

Stoddart of Swindon, L.

Hutchinson of Lullington, L. [Teller.]

Turner of Camden, B.

Underhill, L.

Jeger, B.

Wallace of Coslany, L.

Judd, L.

Williams of Elvel, L.

NOT-CONTENTS

Aberdare, L.

Clanwilliam, E.

Ackner, L.

Clark of Kempston, L

Ailesbury, M.

Cochrane of Cults, L.

Alexander of Tunis, E.

Coleraine, L.

Astor, V.

Cork and Orrery, E.

Astor of Hever, L.

Cox, B.

Auckland, L.

Craigavon, V.

Belhaven and Stenton, L.

Cranworth, L.

Bessborough, E.

Cullen of Ashbourne, L.

Birdwood, L.

Cumberlege, B.

Blatch, B.

Darcy (de Knayth), B.

Blyth, L.

Denham, L.

Boyd-Carpenter, L.

Denton of Wakefield, B.

Brabazon of Tara, L.

Donegall, M.

Braine of Wheatley, L.

Dudley, E.

Broadbridge, L.

Eccles of Moulton, B.

Brougham and Vaux, L.

Eden of Winton, L.

Butterworth, L.

Elibank, L.

Byron, L.

Elles, B.

Cadman, L.

Elliot of Harwood, B.

Caithness, E.

Faithfull, B.

Caldecote, V.

Falkland, V.

Campbell of Alloway, L.

Ferrers, E.

Carnegy of Lour, B.

Finsberg, L.

Carnock, L.

Fraser of Carmyllie, L.

Carr of Hadley. L.

Fraser of Kilmorack, L.

741

Gainford, L.

Park of Monmouth, B.

Gardner of Parkes, B.

Pender, L.

Gisborough, L.

Pym, L.

Goschen, V.

Rankeillour, L.

Halsbury, E.

Reay, L.

Harvington, L.

Rennell, L.

Haslam, L.

Rodger, L.

Healey, L.

Romney, E.

Hesketh, L. [Teller.]

St. Davids, V.

HolmPatrick, L.

St. John of Bletso, L.

Hooper, B.

Saltoun of Abernethy, Ly.

Jenkin of Roding, L.

Sandford, L.

Kimball, L.

Seccombe, B.

Kitchener, E.

Shannon, E.

Lawrence, L.

Shrewsbury, E.

Layton, L.

Strange, B.

Liverpool, E.

Strathclyde, L.

Long, V.

Strathmore and Kinghorne, E. [Teller.]

Lyell, L.

Lytton, E.

Swansea, L.

Mackay of Ardbrecknish, L.

Swinfen, L.

Mancroft, L.

Tebbit, L.

Merrivale, L.

Terrington, L.

Mersey, V.

Teviot, L.

Milverton, L.

Thomas of Gwydir, L.

Monk Bretton, L.

Trumpington, B.

Monteagle of Brandon, L.

Tryon, L.

Morris, L.

Vaux of Harrowden, L.

Mottistone, L.

Vivian, L.

Mowbray and Stourton, L.

Wade of Chorlton, L.

Nelson, E.

Wakeham, L.

Norfolk, D.

Walton of Detchant, L.

O'Cathain, B.

Wharton, B.

Oppenheim-Barnes, B.

Wigram, L.

Orkney, E.

Wynford, L.

Orr-Ewing, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.6 p.m.
Clause 7 [Confiscation orders]:
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 11:
Page 6, line 16, leave out subsection (2).
The noble Baroness said: In speaking to Amendment No. 11, I shall also speak to Amendment No. 20. These amendments are what I would term burden of proof amendments. Clauses 7 and 24 of the Bill amend the Drug Trafficking Offences Act 1986 and Section 71 of the Criminal Justice Act 1988, which applies to offences relating to sex establishments, video recordings of unclassified work and the use of unlicensed premises for cinema shows which require licences. Both these clauses relate to confiscation orders that come into effect once the defendant has been convicted of the offence.
Under Section 2 of the Drug Trafficking Offences Act the court, in assessing the value of proceeds from drug trafficking which the defendant may have benefited from, may make the assumption that in defined circumstances property which the defendant has is the proceeds of drug trafficking. The defendant may rebut that presumption by showing that the assumption is incorrect. Under Section 71 of the Criminal Justice Act 1988 the court may make a confiscation order against the offender if it is satisfied that the person has benefited from the commission of the offence. Both Clauses 7 and 24 of the Bill make it clear that the standard of proof on the defendant is the civil rather than the criminal standard. The purpose of
742
these two amendments is to delete the proposed clause, which would mean that the criminal burden of proof applies.
The courts have considered this matter already in relation to the Drug Trafficking Offences Act in the case of Dickens, which was reported in 1990. That case established that in relation to confiscation orders under the 1986 Act an item must not be included as one of the offender's assets which is subject to confiscation unless the judge is satisfied beyond reasonable doubt that the item is indeed part of the proceeds of drug trafficking. So Clause 7 in this Bill seeks in effect to reverse the decision of the Court of Appeal in Dickens.
I stress that these amendments, Amendments Nos. 11 and 20, are intended so far as the Drug Trafficking Offences Act is concerned to leave the position in law the same as it is at present following the case of Dickens and to bring the Criminal Justice Act into line with it.
I make it clear from these Benches that there is no intention on my part to make it in any way easier for a convicted drug trafficker or an offender under the Criminal Justice Act to keep his ill-gotten gains or to put any unnecessary difficulty in the way of the courts recovering the proceeds of crime. But I do not believe that these two amendments would have that effect. I do not believe that judges applying the present criminal standard are finding any difficulty in resolving that assets are indeed the proceeds of drug trafficking in appropriate cases following conviction.
What does concern those of us on these Benches is that the confiscation of assets is such a severe penalty that the use of anything less than the criminal burden of proof for this purpose is deeply disquieting. In practice it frequently involves an offender's house, in which often his wife and children are living while he is in prison serving a prison sentence.
It is a central principle of the English criminal law that it is for the Crown to prove guilt beyond reasonable doubt. Where a confiscation order is made in a criminal case, the burden should, we say, remain on the prosecution to show that property was acquired with the proceeds of drug trafficking. In practice, once there has been a conviction the courts have little difficulty in coming to the conclusion that otherwise unexplained assets are the result of an earlier successful drug transaction and thus in confiscating them.
What is troubling is that there is a real fear that legitimately acquired assets in respect of which suitable accounts or receipts may not be available—and the sort of people who are subsequently involved in drug trafficking and convicted in relation to those matters tend not to be the sort of people who keep careful accounts in relation to their income and expenditure—may well be wrongly confiscated. If this part of the Bill is permitted to stand, the law will be changed following Dickens to apply the civil standard and there is a real fear that injustice may result. I beg to move.
Lord Airedale: I should like to support the amendment. First, why does the subsection not set out what it means instead of sheltering behind the words that the standard of proof:
"shall be that applicable in civil proceedings"?
Every person is presumed to know the law. There is a corresponding duty upon Parliament, in respect of statutory matters in particular, to make the law as nearly as possible understandable by the ordinary citizen. Ever since Lord Chancellor Gardiner arrived on the Woolsack we have made special efforts to try to make the statutes understandable to ordinary citizens. If the noble Earl went out into the street and said to somebody, "Can you tell me the standard of proof applicable in civil proceedings?" the answer would probably be, "No". But if he said, "Do you understand what is meant by the balance of probabilities?" the answer would probably be, "Yes". Therefore why does that not appear in the subsection? I suspect that it is because it would look rather naked in a Criminal Justice Bill to have the balance of probabilities appearing.
On Second Reading the noble Lord, Lord Richard, referred to Rumpole's "golden thread". The noble Lord knows that it was not Rumpole but Lord Chancellor Viscount Sankey, delivering the judgment of the House of Lords in a 1935 case, who explained the presumption of innocence in criminal cases. He described it as:
"Throughout the web of the English criminal law one golden thread is always to be seen".
He did not say that it was always to be seen unless the Government, having, after a series of spectacular miscarriages of justice, set up a Royal Commission with wide-ranging terms of reference to delve into the administration of criminal justice—and I believe that we are on the eve of the Royal Commission report —instead of waiting for the report and digesting it, rush in and start tampering with the burden of proof. They did that in the last session in the inelegantly phrased Aggravated Vehicle-Taking Bill and now they are at it again.
If I were in a position to advise the Government on how to proceed in matters such as this, I should tell them to stop meddling with the burden of proof, to wait for the report of the Royal Commission and see what it says and then to have another look at the matter.
5.15 p.m.
Lord Boyd-Carpenter: This amendment, like its predecessor, is designed to make a little more gentle the penal provisions of the Bill in so far as they affect drug traffickers. The personal affairs of many of those drug traffickers must be very difficult to sort out. As we heard most vividly from the noble Baroness, they are often people who have come from West Africa, bringing sometimes large and sometimes small quantities of dangerous drugs with them. It must be extremely difficult to sort out whether or not their assets derive from drug trafficking.
I can therefore well understand that the Government feel that, in order to operate this provision as successfully as possible, the ordinary civil standards of evidence should suffice. Unless a much
744
stronger argument can he brought against that, I personally shall find myself opposed to the amendment.
Lord Wigoder: I should like to support the amendment. I do so on the simple ground that, although I can see a case for making an exception to the general rule in the case of the tracing of assets from drug trafficking, I am against making exceptions to the general rule unless the case is overwhelmingly proved. Every time we make an exception we weaken the principle and before we know where we are there will be movements afoot to weaken the general standard of the burden of proof in criminal cases. I therefore suggest that we ought not to make any exceptions at all unless the case is quite overwhelming.
As to whether the case is quite overwhelming, here perhaps I may ask the noble Earl one question to which I do not know the answer. To what extent have there been representations by judges to the effect that, at the end of a case, they endeavoured to decide whether assets were the proceeds of drug trafficking and, had the burden of proof been the balance of probabilities, they could have found for the prosecution and against the defendant, but because the burden of proof happens to be the criminal standard they were unable to find against the defendant and make the order which they thought appropriate? If there is a widespread feeling among the judiciary that the present standard of proof is seriously hampering their activities, I should certainly be prepared to reconsider the position that I take at present, which is that I am opposed to what seems to me a possible thin end of a very dangerous wedge.
Lord Ackner: Much emphasis has been placed upon the general presumption and the general weight of the burden of proof. Those are directed at establishing a criminal offence. As I understand the particular amendment, we are not concerned here with the establishment of a criminal offence; that has already been established. We are concerned purely with the task of proving that the defendant has benefited from the drug trafficking, and the amount of such benefit. That seems to me to be an entirely different category of situation. I do not see why in those circumstances the ordinary principle that a crime must be proved beyond reasonable doubt, to which there are many exceptions, has any application to the matter currently under discussion.
Earl Ferrers: The noble Lord, Lord Airedale, said that he could not understand why we could not put simple words into a Bill so that everyone could understand it. I can sympathise with that. He said that if he went out and asked anyone in the street whether he knew what the standard of proof was, the answer he would get was that that person had not the slightest idea. I suppose that if one goes up to any man in the street and asks him to read a will which a lawyer has made for him and then asks him whether he understands it, he will probably say, "No, I don't understand it", because that is not his profession.
There has been no difficulty, either in the courts or with practitioners, over the way in which the standard

745
of proof is dealt with or indeed how it is described. It is described in different ways. One can talk about the balance of probabilities, or what is more likely than not. The fact is that when these words are put into Acts of Parliament, it does not give any cause for difficulty among those who have to use the provision.
I return to the noble Lord's friend in the street whom he was going to ask what he thought. If he were to ask him this particular question, I would have thought that this would be one of the easier parts of the Bill and that his friend might be able to understand it. But if he were to pursue him and ask him to consider some of the other aspects of the Bill he would find them a good deal more complicated. Therefore I do not believe that there is any necessity to change this part of the Bill.
The noble Baroness's amendment suggests that the civil standard of proof, which is the balance of probabilities, or more likely than not, is an unacceptable erosion of the rights of defendants. The Committee should remember that Clause 7 does not affect decisions as to whether a defendant is guilty or not guilty of a drug trafficking offence. That question will continue to be decided on the criminal standard of proof: beyond reasonable doubt.
I believe it is wrong to suggest, as the noble Baroness did at Second Reading, that the Government are bending the law because the Crown does not have enough evidence to secure convictions, or to imply that we are in any way affecting innocent people's chances of being acquitted on any criminal charge which they may face. There is no question of that. This clause simply concerns the confiscation hearing which is held after the defendant has been found guilty; he will have been found guilty of one or more drug trafficking offences. This part concerns only the financial questions which arise at such a hearing.
The noble Lord, Lord Wigoder, asked whether there are any cases where there has been difficulty and the judges have said that they would prefer a different standard. All this has arisen because the provisions which we put into the Bill and which the noble Baroness, Lady Mallalieu, seeks to alter make clear what was originally intended but was not previously stated on the face of legislation. We do not believe in this context that the civil standard is unfair.
It all comes about as a result of the Court of Appeal case of Dickens to which the noble Baroness referred. In Dickens it was said that, taking into account the Act as it was, the criminal standard should be the one that is implemented. That was in fact different from that which was intended when the Act was brought in. We are simply making it perfectly clear what the standard is. In this case we believe that the standard should be the civil standard. We believe that allowing the criminal standard to remain in these provisions risks undermining the whole purpose of the 1986 Act, which was to confiscate the ill-gotten gains of those found guilty of drug trafficking.
Clause 7 seeks to reinforce Parliament's original intention that the courts should have the strongest possible powers with which to deprive those who
746
profit from the benefits of drug trafficking. What is at issue here is not whether or not that person is guilty. He is guilty. That would have been already decided by the court—and to the criminal standard of proof. What is at issue is whether the assets which the trafficker has are the proceeds of drug trafficking. If they are, they ought to be confiscated. That should be decided by the civil standard of more likely than not, just as it is in the nature of any normal property dispute.
There may be difficulties in sorting out a person's financial affairs. There is nothing unusual in that. The person will have gone to the court and explained to the judge what he has and what he does not have, and the judge will have to come to his conclusion. But that is not a criminal offence and therefore should not have the criminal standard. It is much more a civil offence. I therefore suggest to the noble Baroness that the civil standard of proof is the correct one.
Lord Airedale: Has the noble Earl reflected that if the accused person is to be fined, the case will have to have been proved against him beyond reasonable doubt? But if his money is to be confiscated, under this Bill it can be done on the balance of probabilities. That is rather a fine distinction, is it not?
Earl Ferrers: It is a perfectly normal distinction in a civil case. The criminal aspect of this person's case will have been decided and decided on the criminal standard. How much money he has and whether or not his house in the Bahamas is a result of drug trafficking is a straightforward civil question.
Baroness Mallalieu: The noble Earl is intransigent on this matter. He has not in fact looked closely at the effects of such a provision. It is not strictly true to say that by the time these provisions come into force decisions about guilt or innocence will have been completed. Certainly the defendant will have been convicted of the drugs offence in relation to which he is currently charged. But at that point the judge who is dealing with the inquiry will have to form some assumptions about the origins of the property that he is known to have.
It may be that during the course of the trial evidence has emerged that he was paid, say, £500 for being the courier and bringing the drugs in and that £500 is found on him. In those circumstances there is little difficulty in concluding that the £500 is the proceeds of drug trafficking. But in many other cases the defendant has assets which may involve a house or lesser matters, assets for which, on the face of it, there can be no legitimate explanation. In those circumstances, in effect, the judge has to make a finding that the defendant has on previous occasions been engaged in drug trafficking, occasions when he has been successful in committing the crime, and that those are the proceeds, unless the defendant can rebut that assumption.
So the judge often has to make a further decision as to guilt or innocence in relation to often unspecified earlier transactions. That is where the danger comes in. Somebody has been convicted on the evidence and on the appropriate criminal standard of committing

747
one offence. Once that has happened, on the basis of these provisions the burden shifts and the judge may well have to make decisions about the man's previous culpability and how he came by things that seemed to be beyond his apparent means on the basis now of a civil standard.
I find it somewhat ironic that a very short time ago a matter of less than an hour I was castigated by the noble Lord, Lord Boyd-Carpenter, for trying to overrule the Court of Appeal. That is precisely what this provision in the Bill introduced by the noble Earl proposes to do.
I notice an overt change in the Government in respect of this matter. I am grateful to the noble Lords, Lord Airedale and Lord Wigoder, who expressed their support. I propose to withdraw the amendment but I shall return to it at a later stage in the Bill.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clauses 8 to 11 agreed to.
5.30 p.m.
Clause 12 [Revaluation of proceeds of drug trafficking and discovery of further assets]:
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 12:
Page 11, line 24, leave out ("six") and insert ("five").
The noble Baroness said: I can deal with the amendment briefly. This provision gives us some anxiety. It deals with the ability of the Crown, following the resolution of a case, to return to it again and again if further assets which were not assessed by the court at the time of the original hearing come to light.
It must be right that, if assets were concealed and knowledge of their existence later comes to the prosecutor, the defendant should not be able to retain what I have already described as his ill-gotten gains. That important feature has to be balanced against the need for a final resolution of such matters. In other words, there must be a limit to the time during which the defendant who has already been sentenced for his offence can be brought back to the court. Surely there must be some resolution to the number of bites at the cherry which the Crown can have.
For a reason which I cannot anticipate but which I hope the Minister will explain, the clause as presently drafted fixes a period of six years during which such further applications can be made. It is important that if a prison sentence is imposed, which is almost invariably the case in such matters, there should be a final resolution so that if there is to be rehabilitation the offender can, when released, carry on with his life. There must also be a question of balance. We believe that six years is too long. If there is a good reason why that period has been chosen I shall willingly seek to withdraw the amendment. However, the amendment proposes to reduce the period to five years, which appears to be at the outer limit of what is reasonable in the circumstances. Perhaps the Minister can indicate the reason for the six-year period. I beg to move.
Earl Ferrers: At Second Reading the noble Baroness warned us that she was worried about the length of time during which people can he chased for their assets. I explained that the period of six years appeared in the Bill. Perhaps that had escaped the noble Baroness's attention but it had not escaped the attention of her noble friend Lord Richard, who reminded her. I was obliged to remind her too; so she was told, as it were, from both ends.
The noble Baroness now says that six years is too long and is asking for five years. I find the situation curious because the amendment on which we voted sought to give more lenient sentences to drug traffickers. The previous amendment which the noble Baroness moved attempted to ensure that drug traffickers would be more likely to retain more of the money which they had acquired from their ill-gotten gains. Now the noble Baroness comes along and says, "We do not want to be able to chase them for six years, only for five years. After that they can keep whatever they have. If any other assets appear after five years they cannot be confiscated".
Six years is considered to be a reasonable limit on these powers because we believe that it is long enough to make the new provision worth while but not so long as to leave the offender under an indefinite threat of further assets being confiscated. Members of the Committee will note that the six-year period already plays a part in the Drug Trafficking Offences Act 1986 in the assumptions provided for in Section 2. The court may assume that any property which appears to the court to have been transferred to the offender at any time since the beginning of the period of six years ending when the proceedings were instituted against him or her is received as a payment for drug trafficking.
The noble Baroness suggests that that period is too long but that she will be happy to withdraw her amendment if there are good reasons for the provision. I have given one good reason but another is the interests of consistency as well as justice. It was decided that six years was the most appropriate limit because that period was originally decided when the 1986 Act was being discussed, as it corresponded with the provisions of the Finance Act 1985 providing that value-added-tax traders must retain their records for six years. Six years is also the ordinary period of limitation applying to most actions in tort and contract law and actions to cover arrears of rent or to enforce a judgment or a mortgage. There are good precedents and I hope that the noble Baroness will agree that, in terms of consistency, justice and fairness, six is better than five.
Baroness Mallalieu: After that explanation, I can only beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clause 13 [Effect of imprisonment for default]:
On Question, Whether Clause 13 shall stand part of the Bill?
Baroness Mallalieu: I oppose Clause 13 standing part of the Bill. I expressed anxiety about the clause at Second Reading. Under Section 6 of the Drug

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Trafficking Offences Act, provision is made for terms of imprisonment in default of compliance with a confiscation order. In effect, the clause enables the prosecution to have its cake and eat it. When a man has served a term of imprisonment for failing to pay the compensation order he is under this clause still obliged to pay the money. I am unaware of any precedent for such a provision in any other compensation, confiscation or fine provision. I should be grateful if the Minister could draw my attention to it. The very wording of the Bill suggests that these are alternatives. This is a sentence of imprisonment in default.
As I have said already—the noble Earl never hears me, so I repeat it—of course it is not our intention to prevent the recovery of the proceeds of drug dealing. I do not accept the noble Earl's contention, which he expressed at Second Reading, that offenders are choosing in effect to do the time and keep the money. That certainly is not my experience. Even if it were correct, the proper course would be to increase the penalties which could be imposed in default. But again in my experience they are already extensive and involve lengthy terms of imprisonment.
Where there is a conviction for an offence of this nature the likelihood is that there will be a lengthy term of imprisonment for the offence. The period in default of payment will then be added to that if confiscation is not met. As I said in relation to the previous clause, there must be an end if reform and rehabilitation are to play any part in sentencing. We contend that a provision of this nature is, in ordinary language, "plain unfair". In so far as I am aware it is also a novel departure and I ask the noble Earl to think again about it. If there is a precedent for it I should be grateful if he will draw the Committee's attention to it.
Lord Ackner: The case of Dickens has been referred to and it might be convenient if I read two or three sentences from The Law Reports 1990. It is in the second volume of the Queen's Bench Division, at page 105, dealing with the 1986 Act. The noble and learned Lord the former Lord Chief Justice, Lord Lane, said:
"It is plain that the object of the Act is to ensure, so far as is possible, that the convicted drug trafficker is parted from the proceeds of any drug trafficking which he has carried out. The provisions are intentionally Draconian".
If that philosophy is right—and I suggest that it is —I do not see anything wrong with this provision at all. As I sought to point out on an earlier amendment, we are dealing here with what is essentially a civil situation. A person ex hypothesi has property; he will not part with it so he is sent to prison. In a civil case a person commits contempt of court if he fails to hand over property when an order directs that he should do so. If he continues contumaciously to insist on refusing to comply with the order he is sent to prison. That does not wipe out the obligation either to pay the debt or to hand over the money.
As I understand it, what has been done here is once again to apply the civil analogy and ensure that the convicted drug dealer is not in a position to say, "It would suit me better to enjoy Her Majesty's
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hospitality in prison with, of course, the realisation that I shall get remission and possibly parole. When I come out I can unearth my sizeable nest-egg and live happily ever after". That is not a scenario of which I hope this Committee would approve. It seems to me that, very sensibly, this clause seeks to make that not practical.
Earl Ferrers: The fact is that some convicted drug traffickers are opting to serve extra months in prison in order to avoid paying their confiscation orders. Any such extra term of imprisonment in default would also, under the rules, attract remission for good behaviour. I am glad that the noble and learned Lord, Lord Ackner, agrees with me. This cannot be right. It undermines the original intentions of the 1986 Act; namely, that illicit profits should be removed from circulation and that those convicted of drug trafficking should not keep their ill-gotten gains.
At Second Reading and again this afternoon the noble Baroness, Lady Mallalieu, opposed Clause 13 on the grounds that it runs counter to the principles of imprisonment for debt; that it runs counter to English criminal law in general; and that it runs counter to fairness. She said today that the prosecution is trying to have its cake and eat it. I thought that that was rather a curious expression. However, she went on to say that she is against drug traffickers, and I am glad to hear that.
The Government are not forcing a drug trafficker to serve a period of imprisonment in default and meet the cost of the confiscation order. The offender has a simple solution open to him: he can and should pay the confiscation order before default becomes an issue. The fact of the matter is that the court would not have made a confiscation order if it was not satisfied in the first place that the offender had enough realisable property to meet it. If the defendant believes that the value of his realisable property is lower than the court assessed it to be, it is always open to him to apply to the High Court for a downward variation order. Moreover, the courts will not commit an offender to imprisonment in default unless they are satisfied that he or she has the resources to pay the outstanding order.
What we are seeking to do is to make the offender pay up. If he does not do so, he then goes to prison for failing to do what the court has told him to do. The term in prison does not release him from the requirement to forfeit his proceeds. What we do not wish to do—but the noble Baroness does—is to give him a choice: "Either pay up or go to prison. If you go to prison you can hang on to your money". The noble and learned Lord, Lord Ackner, agrees that that is wrong. I believe it is wrong.
Contrary to what has been said by the noble Baroness, this is not an unprecedented provision, especially for a civil type debt, to which the noble and learned Lord, Lord Ackner, referred. Income tax, community charge and maintenance debts all remain in force even after a term of imprisonment is served. Confiscation is not a punishment as such. It is a debt which must be paid. The offender should not be permitted to choose whether or not to pay.

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On reflection I hope that the noble Baroness will agree that Clause 13 is correct.
5.45 p.m.
Baroness Mallalieu: The noble Earl has not allayed my anxieties about the provision. He has not been able —and I am not surprised that he has not been able to draw attention to any precedent within the realms of the criminal law. Yet he is proposing to insert this provision into a Criminal Justice Bill.
It troubles me that the noble and learned Lord, Lord Ackner, considers that legislation of this type, which he described as draconian, is appropriate. I suspect that that is because the provision deals with the highly emotive matter of drug dealing about which we all-and I repeat this—feel strongly. If the object of the provisions is to make a convicted offender pay up and disgorge the money which he obtained by drug dealing, the proper means of doing so, if he does not do so willingly, is to face him with a term of imprisonment which is so long that he will pay up. Those provisions are available. If they are not being used, it is about time that the Court of Appeal issued one of its famous guideline cases in relation to this matter to make sure that the provisions are properly used.
The noble Earl says that there is evidence that people are choosing to serve a further term of imprisonment and then collect the money at the end. I can only query his evidence for that. He produced no evidence in support of his contention. It runs contrary to all that I have seen, given that any drugs offender faces an extremely substantial term for the offence itself, quite apart from what is imposed in relation to these matters. I may well return to this matter on Report.
On Question, Clause 13 agreed to.
Clauses 14 to 16 agreed to.
Clause 17 [Acquisition, possession or use of proceeds of drug trafficking: Scotland]:
Baroness Mallalieu Baroness Mallalieu had given notice of her intention to move Amendment No. 13:
Page 15, line 29, after ("conduct") insert ("custom of trade or profession").
The noble Baroness said: I do not move this amendment and in due course I shall not move Amendments Nos. 19, 23 and 25. They arose from anxieties which the Law Society of Scotland had about aspects of the Bill relating to Scotland. It is giving further consideration to the amendments. Therefore, I shall not move Amendment No. 13.
[Amendment No. 13 not moved.]
Clause 17 agreed to.
Clause 18 [Offences in connection with laundering money from drug trafficking]:
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 14:
Page 16, line 34, leave out ("suspects") and insert ("believes").
The noble Baroness said: My noble friend Lord Irvine of Lairg wishes to apologise to the Committee that he is unable to be here.
In moving this amendment I shall speak also to Amendments Nos. 15, 21 and 26. In one form or
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another they all deal with the deletion of the words "suspicion" or "suspects" and the substitution of the words "believes" or "belief". There are essentially three reasons for replacing "suspicion" with "belief" in the Bill. First, to provide that a person is guilty of an offence if he suspects something is to legislate for an offence which is easy to prove but extremely difficult to refute. In answer to the comment, "I suspected nothing", it is easy to say, "Well, you should have done". That line of reasoning imparts an objective test when the test should be subjective. Miscarriages of justice are only too likely to result.
Suspicion sets the necessary state of mind too low for a criminal offence, which in this Bill carries a penalty of up to five years' imprisonment. Indeed, juries are told daily in our courts that suspicion is insufficient. Clearly the standard of proof is much higher.
Secondly, the proposed offence will make it difficult, for example, for the conscientious bank employee to decide whether or not he should disclose any payment into an account above a certain amount —say, £2,000. If he felt obliged to do so that might well destroy the relationship of trust which normally exists between banks and their customers.
Section 22 of the Theft Act 1968 makes it an offence to handle stolen goods "knowing or believing" them to be stolen. Juries are directed that they must be satisfied that the defendant knew or believed that the goods were stolen; suspicion is not enough. The proposed offence is analogous and the same provisions should therefore apply. I beg to move.
Lord Airedale: I note a distinction between Clauses 18 and 28. In Clause 18 the single word "suspects" appears; in Clause 28 we find the words,
"having reasonable grounds to suspect".
I should have thought that the words in Clause 28 were the appropriate words to be used in both cases.
Clause 18 creates a criminal offence. A person who "suspects" money laundering will be under a duty to go to the police and say so. Lawyers will make play with those differences in wording and say that mere suspicion of money laundering for which one has no reasonable grounds is nevertheless an offence. They will say that if reasonable suspicion was intended under Clause 18, it would have been included as it is in Clause 28.
The result will be that people with suspicions but without reasonable grounds for them will be committing an offence if they do not go to the police and explain their unfounded suspicions. Droves of people will be arriving at police stations, wasting enormous amounts of police time to no purpose.
I urge the noble Earl to consider whether or not it is intended that the words,
"having reasonable grounds to suspect",
should be included in Clause 18 as well as in Clause 28. Lawyers will have a field day discussing the matter unless the position is resolved.
Lord Hutchinson of Lullington: I support the amendment and the comments of my noble friend, having some knowledge of field days in this area. "Suspect" is far too dangerous a word; it depends

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entirely on the subjective judgment of the specific person. Policemen suspect everybody's behaviour the whole time. One person is suspicious while another is not. For instance, I am sure that the noble Earl "suspects" that I speak only when the noble and learned Lord, Lord Ackner, says something with which I can disagree. However, I am quite sure that he does not believe that, which is a completely different matter.
The question of suspicion can arise, as my noble friend said, without any basis whatever. Any self-respecting person can be asked, "Did you not suspect this? Was it not suspicious?" Suspicious behaviour to one person is not necessarily suspicious to another. It must be tied down. Experience of handling stolen property cases, as the noble Baroness said, and of the words, "knowing or believing", leads us to believe that that is what is justiciable in a court of law, whereas the word "suspicion" is far too wide.
Earl Ferrers: The noble Lord, Lord Airedale, said that lawyers would have a field day discussing the difference between "suspects" and "believes". It will not only be lawyers who have such a field day. It is difficult to understand exactly what the difference is between the two. However, it is significant. The question of the mental test which should attach to new offences invariably raises differences of opinion. It may be helpful for me to set out the background and reasons for the tests in the Bill.
In Clause 18, which makes it an offence to fail to disclose knowledge or suspicions of money laundering, the onus is on the prosecution to prove that the defendant actually suspected that money laundering was occurring. It is quite a high test, but certainly not as high as expecting the prosecution to prove that the person actually believed that money laundering was occurring, which is the effect of the amendment.
It is a difficult question for any prosecution to have to prove that a person "believes" something, and totally different to prove that he "suspects". I am sure that the Committee will appreciate that imposing such a high test would have severe implications for the reporting requirement being introduced by the clause and would seriously reduce the reports made to the enforcement authorities. As a result, detections of drug traffickers could be expected to decrease and the amounts which criminals succeeded in laundering could be expected to increase. We cannot allow that to happen.
The noble Lord, Lord Airedale, said that streams of people would go to police stations saying that they suspected people of drug trafficking or money laundering. I believe that that may be an exaggeration. Even if it were not, it would be a good thing for people to go to police stations and say, "I suspect that someone is money laundering". It would then be up to the policemen, the professionals, the investigators to decide whether or not that was true. If we say that one should only go to a police station when one "believes" that a person is money laundering, then the number of people reporting their belief will be considerably reduced.
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Clause 26 is identical to Section 24 of the Drug Trafficking Offences Act 1986. It introduces an offence of assisting another to retain the proceeds of criminal conduct, as does Section 24 for drugs. The knowledge, or mens rea, test in Clause 26 therefore comes from Section 24 of the 1986 Act, which has so far worked perfectly well. We see no reason why the same test should not apply to the new all-crime money laundering offence, particularly as applying the higher test of "belief" will make it less effective and benefit those who participate in crime and those who help to launder the proceeds derived from crime.
With regard to the amendment in relation to Clause 28, I should say again that Clause 28 replicates an existing drug money laundering offence, this time one found in Section 14 of the Criminal Justice (International Co-operation) Act 1990, of concealing or transferring the proceeds of criminal conduct. Under Section 14 and the new offence in Clause 28, the prosecution is required to prove that the defendant knew or had "reasonable grounds to suspect" that the property involved was the proceeds of criminal conduct. The "reasonable grounds to suspect" test is an objective one, whereas the proposed "belief" test is a subjective one and therefore more difficult to prove.
The existing test in the Section 14 offence has worked well in practice. The lower test was used because the offence centres on the fact that the concealment or the transfer of property is done with the intention of avoiding prosecution or the making or enforcing of a confiscation order. Bank employees and other such people could not therefore fall foul of the offence unless they actually set out with the intention of helping a drug trafficker to avoid prosecution.
Were the amendments to be moved into the Bill they would severely handicap the law enforcement authorities in their task of combating money laundering. I hope therefore that the noble Baroness will not seek to press them too hard.
6 p.m.
Lord Wigoder: Perhaps I may make one comment to the noble Earl. On Amendment No. 14 as it stands, the Committee is being asked to decide between the words "suspects" and "believes". I appreciate that that is the decision before us today. My noble friend Lord Airedale raised a matter which is not at present the subject of an amendment; that is, that instead of "suspects" it would be better to use the phrase, "has reasonable grounds for suspecting", as occurs in a later clause in the Bill.
Perhaps I may ask the noble Earl to consider that matter or comment upon it. We appear to be creating the same offence whether he "suspects" or "has reasonable grounds for suspecting", but putting it in a form which is intelligible to a jury. If a jury is asked, "Did the defendant suspect?", and the defendant says, "I did not suspect", what is the jury to decide? It will be asked by the judge, "Should he have suspected? If he should have suspected, why should he have done so?". The answer would be, "Because of the following grounds on which the prosecution say he should therefore have suspected". As I say, at the moment I accept that this is not a matter for immediate

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consideration as an amendment. As my noble friend has put it forward, would the noble Earl care to comment on its feasibility?
Earl Ferrers: I would prefer not to comment on it now, but I shall certainly look at the matter. These words are very much a matter of fine tuning. One wants to see their effect, but I shall certainly look at the point.
Baroness Mallalieu: I am unhappy particularly with the illustration which the noble Earl gave as regards a person having to know before he can go to a police station to make a report of suspicious conduct. The offence with which we are dealing makes a person guilty if he knows or suspects that another person is engaged in drug money laundering and does not make such a report. Here we are not talking about information being given to the police or information which might assist the authorities in the ordinary course of events. We are talking about people being guilty of a criminal offence if they do not make such a report.
In the light of the answer which the noble Earl has given to the noble Lord, Lord Wigoder, I hope that the noble Earl will also look at the totality of the wording in these provisions. It is deeply troubling that the concept of suspicion should be imported into the criminal law in the way in which it is in these measures. In the light of the noble Earl's indication, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 16:
Page 16, line 41. after ("constable") insert ("or, in case of a person in employment, to the appropriate person,").
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 17 and 18. The reason for deleting Clause 18(5) and putting the substance of it in subsection (6) in the form of a definition of "appropriate person" is that the failure to disclose on the part of the employee should be part of the offence; in other words, the prosecution would have the burden of proof rather than the defence where the burden would fall on the employee. It seems wrong that the employee should bear the burden of proving that he did disclose something when the essence of the offence is a failure to disclose. Accordingly, the purpose of these amendments is to ensure that the prosecution bears the burden of proof in relation to the proposed offence. I beg to move.
Earl Ferrers: I am grateful to the noble Baroness for explaining the purposes of these amendments. If we were to accept them they would alter the very nature of the new offence which we are creating of failing to report knowledge or suspicion of money laundering. We are doing that in order to implement an EC directive. As drafted, the clause makes it an offence not to report to a constable a knowledge or a suspicion of money laundering which is gained in the course of trade, business or profession.
A key defence to this offence is having a reasonable excuse for failing to make a report. After we had representations from the banking community a
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further defence was added of making a report to the appropriate person in accordance with the procedure laid down by the defendant's employer. As Members of the Committee will know, the banking community has already established fairly effective systems for the internal reporting of suspicions to supervisors. That has happened with the support and co-operation of the police.
These amendments would make it more difficult for the prosecution to prove that the offence had been committed. It would be for the prosecution to prove to the criminal standard of proof that the person who held the knowledge or suspicion had not disclosed that either to a constable or, as it were, up the line. It is very difficult for the prosecution to prove that. However, the Bill as drafted would allow for the defence to prove on the balance of probabilities that the person did so disclose.
The Bill already requires the prosecution to prove that the person knew or suspected another person's involvement in drug money laundering, that this information came to notice in the course of trade, business or profession and that the person with the knowledge or suspicion did not disclose that information to a constable as soon as reasonably practicable. In those circumstances I hope that the noble Baroness will agree that it would not be right to compromise our armoury in the battle against drug trafficking by requiring the prosecution to prove yet more matters which are fundamentally within the knowledge of the defendant. It is difficult for the prosecution to be able to prove that, whereas, as the Bill is drafted at the moment there is both the possibility for the prosecution to prove an easier matter and for the defendant to show that that was not the case.
Baroness Mallalieu: I sometimes despair of the noble Earl's replies. He appears to base the justification for much of the legislation which he is introducing on the argument that it is important not to make things difficult for the prosecution. If the intention of legislation is to make it easy for the prosecution to obtain convictions, then one might as well abandon the whole principle of the burden and standard of proof.
The noble Earl says that this is a particularly difficult instance because these are matters which are peculiarly within the knowledge of the defence. That is so as regards countless criminal offences; for example, all those where the prosecution is required to prove intention. I believe that there is no suggestion, even from the noble Earl, that in cases where intention has to be proved the law should be altered to make it easier for the prosecution to establish guilt.
As regards this legislation—particularly when one is dealing with emotive matters such as the noble Earl has placed before us in his answers to almost every matter that we have dealt with—it is important that we should not lose sight of the fact that this statute is creating criminal offences and it should abide by the usual rules of the burden of proof. As regards matters such as the amendment that we are now dealing with, it should be made clear that the burden lies throughout on the Crown. I do not detect any sign

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that the noble Earl will approach this matter with an open mind and look at it again in the interval between now and Report stage. At this stage I ask leave to withdraw the amendment, but it may well be one to which I shall return later.
Earl Ferrers: Perhaps I may help the noble Baroness a little because she said that she despairs of me. That is a very traumatic and disagreeable thought. Of course I shall consider everything that she has said. When the noble Baroness tables an amendment I believe that this one was tabled only last night so we were not given that much time—one has to consider what it means and its effect. I give the noble Baroness what is our considered view. But that does not mean to say that our minds are closed, although by saying that I am not inviting her to raise her expectations too greatly.
Of course I shall consider anything that the noble Baroness says between now and the next stage. I do not believe it is very likely that I shall come round to her point of view for the reasons I have tried to explain, but I shall consider what she said.
Baroness Mallalieu: I am very grateful to the noble Earl for those crumbs of comfort and I shall make what use I can of them.
Amendment, by leave, withdrawn.
[Amendments Nos. 17 and 18 not moved.]
Clause 18 agreed to.
Clause 19 [Offences in connection with laundering money from drug trafficking: Scotland]:
[Amendment No. 19 not moved.]
Clause 19 agreed to.
Clauses 20 to 23 agreed to.
Clause 24 [Confiscation orders]:
[Amendment No. 20 not moved.]
Clause 24 agreed to.
Clause 25 agreed to.
Clause 26 [Assisting another to retain the benefit of criminal conduct]:
Baroness Mallalieu Baroness Mallalieu moved Amendment No. 21:
Page 28, line 18, leave out ("suspecting") and insert ("believing").
The noble Baroness said: In moving Amendment No. 21, perhaps I may speak also to Amendment No. 22. I have already addressed some arguments to noble Lords on the matter of suspecting and believing, but in relation to Clause 26 I should like to add just this: the clause as drafted provides a defence in subsection (4) (a)—in other words, that the defendant did not know that the arrangement related to the proceeds of crime. The effect here is to reverse the normal onus of proof. Under the existing provision, the defendant would have to prove that he did not know.
I am perhaps repeating matters, but I shall do so briefly. The usual rule is that the prosecution should prove all matters relating to the defendant's guilty knowledge. I can see no justification for departing from the principle in this case. The effect of the amendment would clearly be to put the burden on the prosecution. I beg to move.
Earl Ferrers: The offence created by Clause 26 reproduces in all its elements the offence found in Section 24 of the Drug Trafficking Offences Act 1986 —the offence of assisting another to retain the proceeds of drug trafficking. Section 24 has worked perfectly well and has proved to be a well drafted and well balanced provision. To have one offence of laundering the proceeds of drug trafficking and a materially different one of laundering the proceeds of criminal conduct would be rather odd, to say the least, as well as confusing to the courts.
The amendments proposed by the noble Baroness would have the effect of making the job of the prosecution far harder—I know that she does not want to do that, but that would be one of the effects —in proceedings which are brought under this provision. An adequate defence of neither knowing nor suspecting that the arrangements related to the proceeds of criminal conduct is provided by subsection 4(a). As in any other defence, the onus is on the defendant to prove to the civil standard of proof (about which we have already heard a great deal today) that he had such a defence.
The amendments would mean that the knowledge or suspicion that the arrangement related to the proceeds of criminal conduct would become part of the offence and the prosecution would therefore have to prove to the criminal standard that that was the case. I am sure that the noble Baroness would agree that this would be an unnecessary additional burden to place on the prosecution. Under the clause as drafted, the prosecution already has to prove that the retention or control of a person's proceeds of criminal conduct was facilitated by the arrangement, that the defendant actually participated in the arrangement and that the defendant knew or suspected that the person owning the proceeds had been or was engaged in criminal conduct or had benefited from such conduct.
The intention of this clause is to criminalise the laundering of criminal proceeds. The amendments would severely restrict the effectiveness of a provision that has proved its worth in cases where the laundered money is the proceeds of drug trafficking and would make life much safer for those who launder the proceeds of crime. I do not think that the noble Baroness would wish that to be the case, but I think that that is how it would turn out in fact.
Baroness Mallalieu: I propose to ask the leave of the Committee to withdraw Amendment No. 21, as I did earlier with similar amendments relating to this subject. As with those amendments, I shall in all probability return to this matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 22 to 24 not moved.]
Clause 26 agreed to.
Clause 27 [Acquisition, possession or use of proceeds of criminal conduct]:
[Amendment No. 25 not moved.]
Clause 27 agreed to.
Clause 28 [Concealing or transferring proceeds of criminal conduct]:
[Amendment No. 26 not moved.]
Clause 28 agreed to.
Clauses 29 and 30 agreed to.
6.15 p.m.
Clause 31 [Meaning of "securities", "issuer" and related expressions]:
Lord Mottistone Lord Mottistone moved Amendment No. 27:
Page 34, line 19, after ("local") insert ("government").
The noble Lord said: In rising to speak to a series of amendments which, as I have already advised my noble friend the Minister, are probing amendments, I have to declare an interest, in that I have been advised on them by the Confederation of British Industry. I must apologise to my noble friend the Minister and to the Committee for not having taken part in the Second Reading, but my noble friend Lord Alexander of Weedon did and substantially put forward the views that the CBI agreed with.
Amendments Nos. 27 and 28 seek simply to improve the wording of the clause. In the case of Amendment No. 27, I propose that the clause should read:
"a local government authority in the United Kingdom or elsewhere".
This is really because of the "or elsewhere". This may be a small point, but perhaps I may suggest to my noble friend the Minister that the term
"local authority in the United Kingdom"
is well known but it could well be that when one is talking about "or elsewhere" it would be more appropriate to say "a local government authority". I hope that my noble friend will see that there is some point in this and that he may be able to give some thought to it between now and the next stage of the Bill.
With regard to Amendment No. 28, I am suggesting that it may be necessary over time to have other definitions for public sector bodies, especially those outside the United Kingdom, and that the extra flexibility that will be ensured by giving authority to the Treasury to designate additional bodies may be found useful. I beg to move.
The Minister of State, Department of Transport (The Earl of Caithness): We now have a change of batting the first batsman having retired with, I am glad to say, his wicket totally intact.
I should like to take my noble friend's two amendments in succession. I turn first to Amendment No. 27, which seeks to insert the word "government" after the word "local". I must advise him that the term "local authority" is used in the EC treaty and in many Community institutions. It is a well understood phrase and is free from ambiguity. I must advise my noble friend that it is not apparent at this stage that his proposed amendment would add to the clarity of the legislation.
I find myself in an unusual position with regard to Amendment No. 28. It is usually I who from this Dispatch Box am asking for these very words to be inserted and who is having to battle with your Lordships. This time I am on the defending end. We believe that we have covered all the necessary institutions which the amendment embraces: the Government of the United Kingdom and other
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governments, local authorities, international organisations, the Bank of England and central banks. Therefore, we do not believe that it is necessary to provide the power to extend this definition, and I imagine that that will be welcomed by some of your Lordships. There is no point in putting an "asking power" into an Act if we do not believe that we are going to make use of it.
Lord Mottistone: I thank my noble friend, especially for his first point that the European Community uses the phrase "local government" in the same way as the British. Of course, as time goes on other people who are not within the Community may creep into insider dealing. That is not a very strong point, however.
With regard to Amendment No. 28, I am delighted that the CBI thought the Treasury would like the provision. I do not know whether it was trying to butter up the Treasury. Whatever it may be, I take the point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
On Question, Whether Clause 31 shall stand part of the Bill?
Lord Mottistone: I have given notice of my intention to oppose the Question that Clause 31 stand part of the Bill because I want to raise a general question. In fact I had prepared a whole series of amendments on this point but I decided not to put them down. It seemed to the CBI and to me that although Clause 31 defines "person" pretty thoroughly in relation to a public body as a person, subsequent clauses of this part of the Bill do not identify where it is referring to an individual human being as a person. The general line of the amendments which I did not put down was to change in those places the word from "person" to "individual". I did not put down those amendments partly because an enormous number of amendments would have been needed and also because I have a feeling that I have seen before in other legislation that there is not any doubt about this point. However, in the case of insider dealing, it seems that in some cases, in the narrow sense where it refers to a human individual who commits, or is alleged to have committed, an offence, it would be worth making sure that it is not muddled with a body doing the same kind of thing.
I should be grateful to hear whether my noble friend can unequivocally say that there is not a place for this. If there is, I should be very happy to put down the amendments at the next stage of the Bill. If my noble friend agrees, perhaps he may like to put them down and change the relevant persons into individuals where that is appropriate.
The Earl of Caithness: I have to admit to my noble friend that I was a little surprised to see that he intended to oppose the Question but I am grateful to him for letting me know his purpose in doing so. The paper which he was able to submit allowed me to focus on the particular point of his concern.
The word "person" as used in the Bill can apply both to natural persons individuals—and to legal

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persons, such as companies. At different places the Bill needs to refer to individuals because the offences can only be committed by them. But it also needs to refer to persons, legal and natural, to ensure, for example, that an insider cannot deal through a legal person and evade the legislation.
It may be helpful to my noble friend to illustrate this by example. To remove "person" from Clause 32 would require it to be amended to read:
"an individual deals in securities if he procures … an acquisition or disposal of the securities by any other".
The effect of replacing the first person in Clause 32 would be to blow a hole in Clause 36(2), which relates to encouraging another to deal. If Clause 32 were restricted to dealing by individuals, it would allow an insider to encourage a company or other legal person to deal without there being an offence. Again, that would create an enormous loophole in the legislation which could readily be exploited. Further, in Clause 32, who would be "any other" if the amendment were made? It is not clear but it is certainly arguable that it must be any other individual. That is not an effect that would be desirable. It would leave an insider free to deal through a company he controls. There would of course be no ambiguity if the reference to "any person" were retained.
That is why the word "person" can refer to both individuals and companies. I have been advised, because I did ask exactly this question, that lawyers would not find it difficult to determine the difference between the two.
Lord Mottistone: I thank my noble friend very much for that full explanation which I hope will set at rest the minds of those who were worried about reference in the Bill to "person".
On Question, Clause 31 agreed to.
Schedule 1 agreed to.
Clause 32 [Meaning of "dealing"]:
Lord Mottistone Lord Mottistone moved Amendment No. 29:
Page 35, line 3, at end insert:
("() A person is not to be regarded as procuring an acquisition or a disposal of securities by another merely because he refrains from prohibiting that other from acquiring or disposing of the securities.
() For the purposes of this Part, a person does not deal in securities if the acquisition or disposal of the securities is carried out by another on his behalf acting under discretionary investment authority in the course of carrying out or exercising that authority.").
The noble Lord said: With Amendment No. 29 I am trying to bring out a particular point I am trying to bring it out in relation to other clauses—on the definition of key phrases relating to insider dealing. The CBI is uneasy that individuals who deal professionally and honestly in securities in accordance with accepted practice may be inadvertently caught by the Bill unless the definitions are expanded in appropriate cases. Amendment No. 29 is an example of that. It provides specifically for two situations when an individual is not to be considered as dealing for the purposes of this part of the Bill. I beg to move.
The Earl of Caithness: Both situations referred to in my noble friend's amendment relate to situations
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where someone possesses inside information, but there is no legitimate use by him of the inside information. I can say to my noble friend that there would be no breach of the law in either case.
Taking the part of the amendment which relates to procuring, the concern is that someone may possess inside information about a company which he has kept to himself but may nonetheless find himself guilty of an offence if, without his knowledge, someone else dealt in the shares for his benefit. There is no question that he would commit an offence in those circumstances. In order for there to be an offence there would have to be a positive act. Without it —and there is no doubt that there is no positive act in the example my noble friend gave—there is no offence.
Likewise, a client under a discretionary management agreement who possesses inside information about a stock in which the manager deals would not in any sense be intending to make a profit or avoid a loss from the information he possesses. It is difficult to see how it could be argued that this was not the case given that the person who made the investment decision—the fund manager—did not possess the inside information. Clause 37 makes it quite clear that there is no offence in such circumstances.
Further, the situation stressed by the amendment could arise under our existing legislation—the Company Securities (Insider Dealing) Act 1985—but there has in practice been no difficulty. I hope that that is of reassurance to my noble friend. Part IV carries forward the approach taken in that legislation. This should provide additional reassurance that there will not be problems in those areas in future.
Lord Mottistone: I thank my noble friend for that very full explanation. I shall need to read it with some care to see whether it meets all the worries that have been suggested to me. There is a possibility that I may come back at the next stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Clause 33 [Meaning of "inside information"]:
Lord Mottistone Lord Mottistone moved Amendment No. 30:
Page 35, line 10, leave out paragraph (c).
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 31. It seems that subsection (1) (c), which I am seeking to remove, is too brief. More explanation is required of the circumstances when the information is to be regarded as having been made public, on the one hand, and not made public on the other. I propose the introduction of the concept that information is not to be regarded as inside information if the information is publicly and readily available to members of the public in the United Kingdom. However, information which is only available overseas should be regarded as inside information. It should be made clear that publication by a regulated market in the United Kingdom makes the information public and is not inside information. It should also be made clear that, to be inside information, information should be true and not mere rumour or speculation. I beg to move.
6.30 p.m.
The Earl of Caithness: As my noble friend explained, the amendment seeks to make two changes to the definition of "inside information". Let me take the two elements of the amendment in turn. The first would itself contain two distinct elements: that the information is true and, a different matter, that the information is not rumour or speculation. It is not the case that information has to be true to be capable of being used for insider dealing. What matters is not whether it is true but whether the market will believe it to be true. Thus, it would be possible for there to be insider dealing on the basis of a company's unaudited figures which subsequently had to be revised.
There is no requirement in the directive that information be true, so this is not an area where there can be discretion in our legislation if it were considered desirable.
The prohibitions do not apply to actions based on rumour and speculation on two counts. First, information has to be precise or specific: that excludes mere rumour. Secondly, there can be an offence only if an insider or tippee knows that he has inside information; someone cannot be in that position if all he knows is a rumour. There is therefore no need to include an additional reference to rumour into the clauses.
The second element of the amendment—that is, new subsection (f)—relates to what is in many ways the most difficult single element of the part. It seeks to replace with a narrower definition the provision in the directive that for information to be inside information it must not have been made public, in the hope of providing more certainty than does the directive.
The amendment would, if adopted, render illegal actions which are properly regarded as being quite legitimate. For example, what about the position of a diligent research analyst who makes a recommendation based upon disclosure in an obscure Japanese journal which is not available in the United Kingdom? That is an obvious criticism of the amendment.
More fundamentally—here I put another example to my noble friend—what about the position of an analyst who makes a recommendation based on his combination of expert knowledge of a sector and a research report which was only available at great expense? The information in such a report could hardly be said to be readily available to the public. Is the analyst to be liable to prosecution? That is surely not the intention behind the proposal but it could well be the result.
Those problems arise because the amendment does not make clear when information is readily available to the public, nor what is meant by members of the public: all the public, actual or potential investors or a narrower section of the public and, if so, what?
The amendment includes a single example of when information is to be deemed to be made public: when it has been disclosed in accordance with the requirements of the relevant market on which the securities are traded and the trading takes place after the information has been published in accordance with its rules. That example does not take matters any
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further forward. It is inconceivable that information which has been disclosed in that way would not be considered to have been made public.
Those comments help explain why the Government have not provided in the Bill an explicit definition of when information has or has not been made public. Any attempt to do so would serve either to address situations where there can be no real doubt that information has been made public or would impinge upon legitimate activities of analysts and the like.
There is a third possibility. The publication will be defined in a narrower way, perhaps in terms of it being available to only some but not all potential investors in a security. However, that would run the risk of undermining completely the effect of insider dealing legislation because it would allow those with access to the information to deal to the disadvantage of those who are not in such a privileged position.
I have given my noble friend a full explanation because he has put his finger on an important point. I thought it only right to explain why the Government have drafted the Bill in the way that they have.
Lord Mottistone: I am grateful to my noble friend for that full explanation which I am sure will be read with great care by the people concerned. He made a point about an analyst, which I hesitated to do. I was talking to a friend in the City, independently of the CBI, on that point. The points that my noble friend said the Bill, unamended, would protect with regard to an analyst who has special knowledge were the ones that my friend in the City thought that it did not cover. However, neither did he believe that the CBI's proposed amendments did so. It is a tricky area. I am grateful to my noble friend for dealing with it so fully. If I return to it, it will be because we have found a loophole which we hope to close at the next stage. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 31 not moved.]
Clause 33 agreed to.
Clause 34 ["Insiders" and "Tippees"]:
Lord Windlesham Lord Windlesham moved Amendment No. 32:
Page 35, line 23, leave out ("a tippee") and insert ("as one who received or obtained it directly or indirectly from an insider").
The noble Lord said: On Second Reading the expression "tippee" contained in Clause 34 found little favour. Indeed, it attracted some ridicule. It was pointed out that the word was unknown to the statute book; that it did not appear in the European Community draft directive co-ordinating regulations on insider trading which are implemented by the Bill; and that it was unnecessary anyway since a tippee was no more than a person who received or obtained information from an insider.
My pleasure in seeing my noble friend Lord Caithness at the Dispatch Box speaking for the Government on a Criminal Justice Bill which he has done in the past when he was at the Home Office is, I must confess, mitigating to some extent the absence of my noble friend Lord Ferrers. In reply to the debate on Second Reading my noble friend Lord Ferrers was candid enough to reveal that he too had originally

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thought the word "tippee" to be "a perfectly awful word". He had questioned whether it was a good or suitable name. He had been given some justifications by officials, but they did not seem to be compelling justifications. He did not say whether he had been persuaded by those arguments.
My noble friend undertook to take those anxieties into account before the next stage, and those Members of the Committee who took part in the Second Reading debate and who are here today will be waiting with keen anticipation to see whether that anxiety has been transmitted through the Whitehall network from the Home Office to the Treasury.
The word "tippee" has attracted a clutch of amendments from different parts of the Chamber, as my noble friend Lord Caithness will have seen. My noble friend Lord Renton drafted the amendment which stands in his name and in mine. He asked me to apologise on his behalf for his inability to be here tonight to move it himself.
Each of the amendments provides an alternative form of wording which would enable the Government to dispense with the word "tippee", described, we must not forget, by no less a figure than my noble friend Lord Ferrers as "a perfectly awful word". I should be happy to accept any of the other formulations if the Government were prepared to dispense with the word "tippee". I beg to move.
Lord Brightman: Perhaps I may speak to Amendment No. 33 which is grouped with Amendment No. 32. My suggestion is to substitute "secondary insider" for "tippee". It is short, it is self-explanatory, and it has the virtue of being English. I do not mind what word or expression is substituted for "tippee" so long as "tippee" is shot stone dead. There is no such word. It is not English and, in my respectful submission, it would be undignified to send to the other place a Bill containing such a monstrosity.
Lord Wigoder: Now that we have reached the real crux of the Bill, I wish to add some comments in speaking to Amendment No. 34 and also Amendments Nos. 38, 40 and 42 which are part of this group. Amendment No. 40, which I have tabled, deals with Clause 34(3), the definition clause. At the moment, it reads:
"A person has information as a tippee if he has received or obtained it from a person who is an insider; or whose direct or indirect source of information was an insider".
In order to remove any doubt, I propose that the subsection should begin with the words, "For the purposes of this Part", or "For the purposes of this Act", whichever is more appropriate, in order to make it clear that whatever word we use has a definition which only relates to the Act.
We are then left with a definition subsection which is perfectly clear. I tried to explain to the noble Earl, Lord Ferrers—it caused him, I am afraid, to be not very well when I tried to do so just after Second Reading—that provided there is a clear definition subsection, it does not matter what word we use. Instead of "tippee", we could use the word "elephant",
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"umbrella", or whatever. Provided we say, "For the purposes of this part, this is what the word means", the actual word is not of great importance.
The reason I propose the word "recipient" instead of "tippee" throughout is threefold. First, whatever the word used it ought to be in the English language. That eliminates "tippee" straightaway. Secondly, it ought to be a word or phrase which is not entirely inelegant. That certainly eliminates "tippee" again. I am not sure that one would call the phrase "secondary insider" entirely elegant, although I appreciate that it is clear in concept.
The third consideration I suggest is that the word we choose should have some conceptual relationship to its meaning. That is why the words "elephant" or "umbrella" would be highly unsuitable, whereas the words "secondary insider" or "recipient" are totally suitable because they relate to the meaning being given to the words by the definition subsection.
In those circumstances I venture to suggest that provided the definition subsection is clear and it is made plain that the word we are defining in that definition is limited to this Bill and cannot be used in construing any other statute, then all we need is a suitable word to replace "tippee". I suggest that either "secondary insider" or "recipient" qualifies for that privilege.
Baroness Mallalieu: From these Benches, we are in agreement with all Members of the Committee who have spoken in saying that "tippee" has got to go. I hope that under the great pressure of numbers and the weight of argument, the noble Earl will see the force of that. From these Benches, we respectfully support the suggestion that the noble Lord, Lord Wigoder, has just made. Surely the shorter English word must be the better and the meaning is then clear.
The Earl of Caithness: It may be that I am the only defender of "tippee" left in the Chamber. I was rather surprised by what the noble Lord, Lord Wigoder, said about "tippee". Perhaps I may refer him to the Oxford English Dictionary which defines "tippee" as,
"one who receives inside information about a company or business and uses it to trade profitably in stocks and shares".
That is an elegant turn of phrase to define a word that has a certain ring to it. I do not hold the same objection as my noble friend Lord Ferrers to it. Indeed, the word is not new. Its first recorded use was in 1897, although it was then used to describe the recipient of a gratuity. Its first use in the context of insider dealing dates from 1961. Nor is the word one which is used infrequently. If the noble and learned Lord, Lord Brightman, has a spare moment this weekend, perhaps I may ask him to peruse Gower's Principles of Modern Company Law, or perhaps Palmer's Company Law. I refer the noble Lord, Lord Wigoder, to Gore-Brown on Companies; and my noble friend Lord Windlesham to Boyle and Bird's Company Law; Mayson Frence and Ryan on Company Law; and Pennington's Company Law. All of them have this delightful little word readily available.
The word is also used in books which relate specifically to insider dealing such as Hopt and

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Wymeersch's European Insider Dealing; Hannigan's Insider Dealing; Ashe and Counsel's Insider Trading; and Rider's Insider Trading. That list is by no means exhaustive. I should have thought it was a word that all Members of the Committee would welcome in the Bill. It is a word of long standing and aptly describes what we seek to describe.
However, the weight of objection rests heavily on my shoulders. The noble and learned Lord, Lord Brightman, did not like it at all; the noble Baroness, Lady Mallalieu, said that the word "has got to go." If "tippee" has got to go, I think we had better think it out again and come back to it.
Lord Windlesham: It is for me to thank the noble Earl for his good-natured reply. Clearly, an enormous amount of work has been done in the Treasury on the origins and provenance of the word "tippee", which is still inelegant. We are grateful for the reply. The noble Earl has taken the mood of the Committee. There are various ways of redrafting the clause: the government draftsman needs to look at it. Perhaps one of the two alternative words could be inserted or maybe there is a third. Or we could use the device of the noble Lord, Lord Renton, of simply omitting it altogether.
However, if the noble Earl, in the light of the reply he gave us, can see what he is able to do and come back at Report stage, I shall have great pleasure in withdrawing the amendment of the noble Lord, Lord Renton, and myself.
Amendment, by leave, withdrawn.
6.45 p.m.
[Amendment No. 33 not moved.]
Lord Wigoder Lord Wigoder had given notice of his intention to move Amendment No. 34:
Page 35, line 23, leave out ("tippee") and insert ("recipient").
The noble Lord said: I do not wish to move the amendment. I merely wish to say that most ordinary people, asked what they thought a "tippee" was, would volunteer that it was the supervisor of a rubbish dump.
[Amendment No. 34 not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 35:
Page 35, line 25, leave out ("director, employee or shareholder") and insert ("shareholder, director, servant or employee, or being engaged under a contract for services").
The noble Lord said: I have no views about "tippee"; my amendment deals with a different subject. I am speaking also to Amendment No. 36. These are simple little amendments to improve the Bill and make it clear that self-employed persons and those who acquire inside information by virtue of business contact or relationship are included in the definition of an insider. I beg to move.
The Earl of Caithness: The short answer to my noble friend is: yes, they are included. Perhaps I should expand on that. Someone engaged by an issuer under a contract for services will have access to information because of his employment, profession, office or duties. Someone who has access to information by virtue of a business relationship with a company will have it because of his employment by
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another company. The same would be true of someone who was undertaking business negotiations with a company or working for it under contract. The same is true of the other examples addressed in the amendments. I hope that my noble friend can rest assured of that.
Lord Mottistone: I must confess that I suggested that that might be so, but I was not given chapter and verse as to why what my noble friend said was covered by the Bill. I do not think he was either. So, grateful though I am to him, I shall have to look further at the matter and I may come back at another stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 36 not moved.]
The Deputy Chairman of Committees (Baroness Cox): I should point out that if Amendment No. 37 is agreed to, I cannot call Amendments Nos. 38 to 40.
[Amendment No. 37 not moved.]
[Amendments Nos. 38 to 40 not moved.]
Clause 34 agreed to.
Clause 35 [Dealing in securities]:
[Amendments Nos. 41 and 42 not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 43:
Page 36, line 10, after ("the") insert ("inside").
The noble Lord said: In speaking to Amendment No. 43 I speak also to Amendments Nos. 44, 45, 47, 48, 50, 54 and 55. The purpose of these amendments is to make sure that where the Bill means specifically to refer to inside information and not to information in a general sense it should say so; except, of course, in Clause 33 where "inside information" has been defined in the first place. It seems to me that this is a sensible improvement because "information" has a wider sense than just this specific one in other parts of the Bill, and indeed in other parts of this part. I beg to move.
The Earl of Caithness: Before answering my noble friend it might be worth pointing out for the benefit of the Committee that in his Amendment No. 45, to which he is also speaking, I believe the word "information" should have read "inside".
Lord Mottistone: That is quite right. I am afraid it is a typing error. It was not there in the original.
The Earl of Caithness: I am grateful to my noble friend for explaining the raison d'être behind these amendments, which seek to improve the clarity of the legislation. It is not apparent that these amendments are necessary. For example, the amendments seek to change two references to "information" in Clause 35(5) by references to inside information. But it is already clear at the beginning of the subsection, at page 35 line 35, that the information being referred to is inside information, and the same argument applies to Clause 36. I agree with my noble friend that it would be a different matter if there were ambiguity about the fact that the information being referred to is inside information, but I am advised that there is not. The amendments, therefore, would only seem to lengthen the Bill without improving its clarity.
Lord Mottistone: I thank my noble friend for his explanation. We shall look at it most carefully and might come back at another stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 44 not moved]
Clause 35 agreed to.
Clause 36 [Disclosing inside information, etc]:
[Amendment No. 45 not moved]
Lord Mottistone Lord Mottistone moved Amendment No. 46:
Page 36, line 17, after ("profession") insert (", agency or the performance of his contract of services").
The noble Lord said: This is a small amendment to make the clause more comprehensible and I think improve its clarity. I beg to move.
The Earl of Caithness: My answer to my noble friend will be similar to the one I gave for Amendments 35 and 36. Someone working as an agent for another person, or who is working under a contract for services, will be performing a duty, and accordingly will not be covered by the prohibition on disclosure as it is already drafted. I hope that that will satisfy my noble friend.
Lord Mottistone: Yes, I think it does. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 47 and 48 not moved]
Clause 36 agreed to.
Clause 37 [Defences]:
Lord Mottistone Lord Mottistone moved Amendment No. 49:
Page 36, line 30, after ("if") insert ("(a)").
The noble Lord said: This amendment, with which I shall also be speaking to Amendment No. 51, provides a necessary protection to persons who have to effect a dealing in securities in order to complete or fulfil an outstanding contractual obligation. It also establishes a defence similar to that contained in the 1985 Act, to which my noble friend on the Front Bench referred, at Section 3(2). I beg to move.
The Earl of Caithness: The amendment moved by my noble friend and its consequential Amendment No. 51 seek to import into the part provisions in the existing insider dealing legislation under which there is no offence where someone acts to facilitate the carrying out or completion of the transaction. In our existing law this provision only applies in limited circumstances such as where someone connected with a company only has price sensitive information, which relates to information about a transaction involving two companies or a company and the securities of another company.
The amendment does not carry forward any such limitation and it would therefore legitimise dealing by an insider who has inside information and uses it to make a profit, because the inside information would undoubtedly relate to his transaction and the dealing would clearly facilitate its completion. Although this cannot be the intention behind the amendment it is hard, as I am sure my noble friend will agree, to imagine a more damaging amendment.
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It is perhaps appropriate to say a few words on why the provision in our existing law has not been carried forward. In some respects it is not wide enough. For example, it is not apparent that it would protect the position of a person who took a very large number of a company's shares and sought to hedge the position by dealing in a separate transaction in related futures. That would not involve any mischief, but it is not clear that the provision in our current law is wide enough. Accordingly, rather than carry forward the provision in our existing legislation, this Bill contains the exemption in Schedule 2 for legitimate use of market information.
Lord Mottistone: I thank my noble friend for that explanation. I shall read it with great care. At first sight it appears to me to be convincing and I shall not need to carry it any further. At this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 50 and 51 not moved]
Lord Mottistone Lord Mottistone moved Amendment No. 52:
Page 36, line 34, leave out ("if").
The noble Lord said: With Amendment No. 52 I shall speak also to Amendment No. 53. In subsection (3) of Clause 37 the word "if" appears at the end of the lead in to paragraphs (a) and (b). It does not appear after (a), but there is an "if" after (b). It seems to me that the word "if" should appear after (a), as it does after (b), in order to match the English in paragraph (a) to that of paragraph (b). That is the point of these two amendments. I beg to move.
The Earl of Caithness: I agree with my noble friend that the clause as drafted looks odd, but I have to say to him that it is correctly drafted. There is no mistake. The "if" in line 34 relates to both paragraphs (a) and (b). Although there is another "if" in (b) that is part of a sub-phrase. In other words, if we accept this amendment a second "if" would have to be inserted in paragraph (b) so that it would read,
"a person lacks the necessary intent if he has such an expectation, if he does not intend".
However, I think my noble friend is on to a point about drafting. I hope he will permit me to take this away to see whether it can be improved.
Lord Mottistone: I am most grateful to my noble friend for that reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 53 to 55 not moved.]
On Question, Whether Clause 37 shall stand part of the Bill?
7 p.m.
Lord Mottistone: This is rather a longer point. As the Bill stands at present, my advisers and I believe that much clearer explanation and guidance are required, either in Clause 37 or perhaps in Schedule 2, as to the circumstances in which an individual is and is not to be guilty of the offences set out in Clauses 35 and 36 and as to the defences available to an individual as set out in Clause 37.

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First, clearer explanation and guidance are required as to when an individual is to be regarded as taking advantage or not taking advantage, as the case may be, of inside information and when an individual is to be considered as lacking or not lacking, as the case may be, the necessary intent. Secondly, greater clarity and explanation are required as to what information does and does not constitute "inside information" for the purposes of Clause 33. Thirdly, the meaning and effect of the exemptions for,
"dealers whose information is market information".
referred to in Schedule 2 and incorporated in Clause 37 by subsection (5) is also far from clear.
In order to deal with this I tabled amendments to Clause 37 to introduce us to examples set out in Schedule 2. Although there are cases of legislation which include examples in schedules, I was advised that, because the examples that I put forward were not precise enough, they could not be accepted for inclusion as an amendment. Hence my speech now in protest, as it were, against Clause 37.
If for the record I could give some illustration of the kind of examples that I believe should not be regarded as constituting an offence for the purpose of this part of the Bill, they would be as follows. First, the exemption for market information should include individuals engaged in or concerned with underwriting or agreeing to underwrite issues of securities. Secondly, there should be legitimate communications between directors of a company and its shareholders, including institutional shareholders and investors, and legitimate communications between directors and investment analysts and institutional fund managers. Thirdly, employees of a bank or finance company involved in a debt-for-equity swap in the course of a rescue operation may be held liable as their company will be acquiring shares while also holding inside information about the company to be rescued. Fourthly, information gathered about a take-over target should not be regarded as inside information. Fifthly, an individual's knowledge of his company's intention to launch a take-over and the company's dealings in the target company's shares prior to launch of a take-over should not he regarded as insider dealing. Sixthly, the position of solicitors, trustees, liquidators and insolvency practitioners requires attention. They could well be guilty of insider dealing while carrying out their legitimate and lawful duties and responsibilities.
Those are just six of very many situations in which individuals might fall foul of the provisions in the Bill as it stands and be guilty of the offences of insider dealing without there being an appropriate or valid defence or exemption available to them. I therefore submit that the Bill should be amended to incorporate examples of the meanings of the main terms, phrases and concepts used in the Bill for clarity, certainty and the innocent person's peace of mind. It is not sufficient for the Treasury to offer guidelines, as I believe it has, particularly when breaches of the criminal law are involved and a person's career and livelihood are at stake.
The Bill must be amended and I should be grateful if my noble friend the Minister would consider
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whether examples along the lines of those that I have suggested could be inserted in either a new schedule or perhaps in a third part of Schedule 2, which seems to be a possible suitable repository for these examples. I beg to move.
The Earl of Caithness: I am grateful to my noble friend for spelling out so clearly the reason why he does not want Clause 37 to stand part of the Bill. In implementing the directive the Government have gone to considerable lengths to set out in our legislation the circumstances in which someone does not take advantage of inside information. Part IV provides a general defence where someone does not intend to make a profit or avoid a loss and specific defences relating to market making, price stabilisation and circumstances in which someone possesses market information.
I must tell my noble friend that it is not practical to incorporate into the legislation particular examples of behaviour which is and is not prohibited to deal with every possible circumstance. No such attempt to do so could ever be comprehensive. There are simply too many different types of information and courses of conduct for that to be possible. Providing illustrative examples in a Bill would be unprecedented and with good reason. Either the examples provided would have to fall clearly on one side or the other of the dividing line between what is and is not prohibited, in which case they would not serve any useful purpose, or they would confuse the boundary between what is and what is not prohibited.
Nor is an approach which seeks to illustrate the difference between what is and what is not prohibited by way of examples necessary. The proposals being discussed today are in many ways similar to our existing legislation. That has worked without including examples, and I believe that the Committee will wish the new legislation to continue in the same mode.
However, the Government have said that in one area where they do not believe it is possible to provide a detailed definition in the legislation as to when information has and has not been made public, without making illegal perfectly legitimate activities or risking creating loopholes which could be readily exploited, they are considering issuing guidance, as my noble friend said, about how they believe the term "made public" is to be properly interpreted.
That is a different matter from incorporating definitive examples in to legislation which, as I have said, would either be of little practical use or would cast doubt on the definitive provisions which they seek to illustrate. However, guidance should help to soothe concerns about the effects of the legislation in practice.
I know that my noble friend will agree that insider dealing will always be a difficult area in which to legislate. The Government have said that they will listen to representations very carefully and make amendments to improve clarity where necessary. I shall write to my noble friend about the detailed points that he has raised in his example, but it would be totally wrong and inappropriate to insert practical examples into the Bill.
Lord Mottistone: I thank my noble friend for his full reply and for his promise to write to me about the examples that I produced. I fully understand the points that he makes.
Clause 37 agreed to.
Schedule 2 [Professional Intermediaries and Exemptions]:
Lord Mottistone Lord Mottistone moved Amendment No. 56:
Page 46, line 10, after ("employed") insert ("or engaged").
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 57 and 58. These are purely drafting improvements and I hope that my noble friend will see them in the same light. I beg to move.
The Earl of Caithness: The market-maker defence in Part IV of the Bill carries forward the defence in our existing insider dealing legislation. This refers only to someone whose business is being a market maker or who is employed by a market maker. The Government have received no representations which suggest that there is a need to extend the defence to persons who are engaged but not employed by market makers. Nor have there been any representations from market makers that the provisions in the schedule need extending in this respect. Although I listened carefully to my noble friend, I did not feel that he made a convincing case and I do not think that adding the words he wants would in any way clarify what we are seeking to achieve.
Lord Mottistone: I thank my noble friend and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 57 and 58 not moved.]
Lord Mottistone Lord Mottistone moved Amendment No. 59:
Page 47, line 13, at end insert:
("(4) It is not to be regarded as unreasonable for a person to deal in securities having market information at the time of dealing if the information is about one or more of the following

(a) his own intentions;

(b) the intentions of others in relation to transactions in which he and those others are jointly concerned;

(c) the intentions of someone or some body under whose instructions he is acting.").

The noble Lord said: I propose this amendment as a necessary protection for, for example, the director of a company in connection with a takeover transaction that his company is undertaking or contemplating, and to other persons and agents acting on behalf of a company in such a situation. It seems to me that at this stage there is room for this addition to Schedule 2. I beg to move.
The Earl of Caithness: My noble friend's amendment is an interesting attempt to specify circumstances in which it is reasonable for someone to deal when he is in possession of inside information. I have to say to him that the amendment illustrates the difficulties associated with doing this, as the following example shows. The amendment would make it possible for someone acting for a person who was making a large purchase of shares to deal on his own behalf in advance of the purchase and then sell his holding at a profit after the market had reacted to the
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major transaction. In other words, the consequence of my noble friend's amendment would be to legalise "front running". The directive requires such conduct to be prohibited even if, for some reason, we wished it to be allowed—but that is not the case.
Lord Mottistone: It seems to me that I was asking for something which was terribly wicked. I am grateful to my noble friend for what he said, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Clause 38 agreed to.
Clause 39 [Territorial scope of offence of insider dealing]:
7.15 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 60:
Page 37, line 24, at end insert ("or if he was not within the United Kingdom at such time he was nevertheless at such time regularly or ordinarily resident in the United Kingdom").
The noble Lord said: In speaking to Amendment No. 60, I should like to speak also to Amendments Nos. 61 and 62. I am proposing these amendments so that individuals who have a connection with the United Kingdom through residence cannot escape liability by carrying out their insider dealing on a foreign stock exchange through a foreign professional intermediary. The shares of many large companies are quoted not just on the London Stock Exchange but on a number of stock exchanges around the world. Under the wording of the present clause individuals are guilty only if they carry out their insider dealing when in the United Kingdom or through a professional United Kingdom intermediary. This will leave considerable scope for abuse, which my proposed amendments seek to rectify. I beg to move.
The Earl of Caithness: The approach taken by Amendment No. 60 and the other amendments to which my noble friend talked, Nos. 61 and 62, claiming jurisdiction over an offence on the basis that a person is normally resident in the United Kingdom, is inconsistent with the approach which the United Kingdom takes to jurisdiction over offences both generally and elsewhere in this Bill.
It was made clear in the Second Reading debate that the approach the Government proposed to take in relation to jurisdiction over insider dealing offences is a territorial one. This accords with the approach we have agreed with other members of the Community in negotiating the directive which Part IV implements. The proposals in the Bill provide a framework for preventing insider dealing in the United Kingdom. So far as acquiring and disposing of securities is concerned, for example, they will catch insiders in the United Kingdom who deal on markets which operate here or through professional intermediaries who are based here.
This territorial approach to jurisdiction over offences also underlies Part I of the Bill, which amends jurisdiction over such criminal offences as theft, false accounting, blackmail and forgery. It reflects the

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approach which is taken to jurisdiction over offences in this country. For there to be an offence in this country you have to do something wrong here.
In her speech on Second Reading, the noble Baroness, Lady Mallalieu, wrongly suggested that Part I of the Bill would lead United Kingdom law to apply to Mexican fraudsmen for frauds committed wholly in Mexico. The amendment appears to be suggesting that, so far as insider dealing is concerned, we should adopt such an approach. The amendments would make it an offence under United Kingdom law for a Frenchman in France with inside information about a company listed only on the Paris Bourse to deal in a company's shares through a French stockbroker simply because he worked in London and was thus normally resident in the United Kingdom. I am sure that my noble friend would agree on reflection that that cannot be right. It must be for French law to address such wrongdoing, as it is obliged to do under the directive. Indeed, if the amendment were adopted, it might well turn out to be a unique form of jurisdictional claim. Although some countries make jurisdictional claims on the basis of nationality our researches have not revealed any examples of criminal offences which are based on residence.
That was a long answer to my noble friend but it was an important point to get across. I should like at this point to thank my noble friend for tabling all his amendments and for probing this very important area. Perhaps I may say to him that, if he wishes to discuss any matter between now and a later stage of the Bill, my door is always open to him.
Lord Mottistone: I thank my noble friend particularly for those closing remarks. As regards what he has said here, for the first time I am not entirely sure that it covers the ground. The modern world is very mobile. People get about terribly quickly and communications are frightfully good. I think we may he forced to consider the position of somebody who lives here and periodically goes abroad—several of my own relations have jobs which allow them to live with their families here and then spend a great deal of time in Europe, America or elsewhere. There is so much mobility now that I am not sure that the area which I have touched upon in this last set of amendments does not need further study, but I shall he very interested to hear what my advisers tell me when they read what my noble friend has said. I very much take the point about my noble friend's open door, and I may come knocking on it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 61 and 62 not moved.]
Clause 39 agreed to.
On Question, Whether Clause 40 shall stand part of the Bill?
Baroness Mallalieu: I oppose the Question, That Clause 40 stand part of the Bill, really because I seek enlightenment as to the use to which it is intended to put Clause 40. Clause 35, as your Lordships have seen, prohibits insider dealing in securities. Clause 36 prohibits the disclosing of inside information and Clause 40 in effect gives immunity in relation to either
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of those activities to those acting on behalf of the Bank of England and other public sector bodies. It would be helpful to know from the Minister why officials of the Bank of England and other public sector bodies are exempt from those charges if they are using information to manage public debt.
It would seem to me that it could mean that a local authority officer could with impunity deal in shares in a company which had won a local authority contract to decrease the council tax or a Bank of England official could sell shares in order to reduce the PSBR. I wonder whether the noble Earl will tell us whether this position is included in the Bill to cover some specific circumstances and in particular whether he can give us an example of circumstances in which someone in this position might be in breach of Clauses 35 or 36 in circumstances where he should have immunity from prosecution. I should be grateful for his help.
Lord Harris of Greenwich: So would I. I raised this matter during the Second Reading debate on the Bill. Although the noble Earl, who responded for the Government, dealt, as always, very thoroughly with all the points which had been raised during our debate I am not sure that he touched on this particular issue.
Like the noble Baroness, I find this public sector immunity rather strange. This Government, in so far as they have any doctrinaire obsession, tend to be in favour of the private sector as against the public sector. Curiously, here for some mysterious reason the roles are reversed. Some of the information is very sensitive. To take only one example, the publication of the foreign exchange reserves could have the most profound effect both on the gilts market and on the stock market. Some of the other information in the public sector can, likewise, have profound implications. Thus, the question is: why is there public sector immunity? We should be very interested to hear the answer.
The Earl of Caithness: I hope that I can set the minds of the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Harris of Greenwich, at rest. The clause sets out certain limits on the prohibitions laid down in this part of the Bill. It removes from the scope of the legislation the activities of government in managing the economy. The provision reflects the fact that the Government necessarily possess information which is highly price sensitive and which cannot be made public. Examples of such information include security matters, knowledge of the Government's policy with respect to interest rates or the Government's knowledge of other governments' intentions. Without the provision it would be impossible for the Government to discharge their responsibilities, and therefore it is essential.
However, the exemption is limited. It does not apply to private dealing as opposed to public activity. Nor does it apply to the activities of the Government undertaken other than for the purposes of economic management. It does not apply, therefore, to government share sales.

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The exemption reflects an exception in the directive which all member states recognised was necessary for the purposes of managing the economy. I hope that the noble Baroness is satisfied.
Baroness Mallalieu: I am enlightened and satisfied. I thank the noble Earl.
On Question, Clause 40 agreed to.
Remaining clauses and schedules agreed to.
House resumed: Bill reported with amendments.

Export Credit Guarantees
7.24 p.m.
The Earl of Kinnoull The Earl of Kinnoull rose to ask Her Majesty's Government whether they will review the present arrangements for the guarantee of export credits.
The noble Earl said: My Lords, there are two reasons why this short debate on ECGD was postponed last Thursday. The first is that 11 o'clock at night is not a particularly popular time to debate an Unstarred Question after punishing legal discussion. Secondly, and equally important, was the fact that the Autumn Statement had been made that day and the delay has given those who are to take part, and my noble friend who is to reply, time to reflect and to obtain further information on the effect of that Statement on this particular issue.
The delay has cost us a few speakers. Sadly, the noble Lord, Lord Ezra, is unable to participate, but we have gained my noble friend Lord Selsdon. I am delighted that he is able to take part in view of his expertise. I should also like to thank those who have indicated that they are to speak as I shall not be able to do so at the end of the debate.
The last occasion on which this subject was discussed in this House was the passing of the Bill reforming the ECGD and privatising its short-term business. That day, 11th June 1991, was a notable day for two reasons. First, my noble friend Lady Denton was introduced as a new Member of this House. She is now an established and valued member of the Front Bench. Secondly, the Second Reading debate attracted one of the most powerful all-party groupings of barons of industry, who collectively exhorted the Government to give better support to our export companies and who cast doubt on the wisdom of reforming the ECGD.
That was an illuminating debate. My noble friend Lord King summed up the matter very well when he said that it was the responsibility of government to establish for the exporting companies of the United Kingdom an environment in which they could compete on terms that are both fair and reasonable. I support that concept wholeheartedly, as I am sure do other noble Lords. I am sure that my noble friend will also support that concept when she replies to the debate.
The purpose of my Question tonight is to examine what has happened since 11th July 1991. The ECGD —in fairness to its considerable experience—has been governed by the policy known as the portfolio management system. As noble Lords will be aware,
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that system was introduced in January 1991. It was a radical change. Some may say that it was a victory for the Treasury in openly reducing the cost of support to our exporters by charging increased premiums. It was justified on the back of increasing claims on the Exchequer arising from the international debt crisis. It was argued, as all good bank managers would argue, that it was a prudent way forward and that other countries would follow our lead.
I do not believe that anyone, from the board of ICI to the smallest export company in the country, believed that other countries would follow suit, despite the endless talks in Brussels. Each country values its export drive in different ways. All recognise the value of competitiveness in the support they can give.
The balance between the national interest in terms of our exporting projects versus the potential costs to the Exchequer has been an issue since the establishment of the ECGD in 1919 by Sir Winston Churchill. Unless the cost of debt has risen out of all proportion to the amount of business written and in comparison with other credit agencies that cost is, in my view, a good investment. To penalise exporters looks more and more like a thoroughly bad policy.
The CBI has disturbing evidence, which it has submitted to the Government, of lost export opportunities due directly to the PMS. I find that very disappointing. The PMS had its first annual review last April. Despite the chorus of pleading from exporters, the overall rates did not move very much downwards. They were still uncompetitive. Exporters still find premiums, cover and capacity unfavourable compared with what their competitors in other countries are offered. That is so much so that British companies with foreign subsidiaries are now considering whether those subsidiaries should bid for exports to benefit from the support offered by other countries' national credit agencies.
I submit to my noble friend that this is a sad by-product of the PMS. I think there is a very strong case for the Government to review the PMS and to accept that other countries will not follow in the near future and revert to competitiveness. This does not mean that the objective to harmonise the system in Brussels need be lost. But let us not jeopardise our exporters at a time when a drop in the pound opens up a window of opportunity and when everything possible should be done to fight out from the recession. Our export policy deserves this special priority.
Turning to the privatising of the short-term business, about a year ago the NCM took over the business. It offered 550 jobs for staff who previously were employed by the ECGRE. I think it has worked from the staff point of view very well. Britain has this year the same level of business as the previous year —about £14 billion—covering both commercial and political risk. That is, I believe, a very healthy sign. But the arrangement with the Government at the time of privatisation was that they would underpin the political risk business certainly for up to three years. That is what other governments do anyway. But there is a need for this Government to underpin political

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risk because it results in lower premiums. I hope my noble friend will take this opportunity to confirm that the Government do not intend to opt out of supporting the private sector in that key risk area.
I turn briefly to the Autumn Statement. The £700 million earmarked to increase the cover availability, the capacity, over the next two years for ECGD not only sends out a very encouraging signal, and indeed indicates support by the Government, but it will greatly help to satisfy the demand in important markets. There is some question as to what are important markets. Obviously, China and Indonesia are two examples. But I hope success in those countries in that area will not penalise the capacity just because the cover is judged to be too concentrated.
At the other end of the scale, it is equally important for ECGD to promote UK exports where there is no significant presence at the moment. My noble friend will no doubt take this opportunity to clarify more precisely points under the Autumn Statement.
Finally, I turn to the ATP (the aid and trade provisions under the aid programme). I am sure my noble friend will agree that ATP is a necessary support for the major projects in developing countries. It is a concessional finance that is essential for tendering processes. Without it, in fact, there is no tender. As the House will know, the ATP budget was exhausted a few months ago. This is a very important market in the developing countries where our contracting companies over the years have thrived and where we have won good reputations. Also, I hope my noble friend will have something positive to say about ATP. It is an important area of the whole subject under discussion tonight.
In conclusion, I hope my noble friend will take this opportunity to reassure us that the Government take very seriously the balance of support needed for our exporters and the vital role they play in our economy.
7.35 p.m.
Lord Selsdon: My Lords, I shall begin by declaring an institutional and maybe a commercial interest. I am grateful to the noble Lord, Lord Williams, for allowing me to join my Scottish kinsman in the list of speakers. My interest in this subject is great. I wish your Lordships to know that I shall promote my self-interest this evening. I am president of a body called the British Exporters' Association. I am also chairman of the export side of the Engineering Industries Association which represents some 2,000 small engineering companies in the manufacturing sector. I was chairman of the CBI Export Credit Committee. I was on the British Overseas Trade Board. I was chairman of the Committee for Middle East Trade and served on the East European Trade Council. I had the privilege of serving with my noble friend Lord Aldington on his committee on manufactures. With that background I recognise that I am a has-been, because all that is in the past.
Let me first make a form of upbeat statement on where we are now, not where we have been. Those of us with an economic background may well disagree about how we got to where we are. But that is history. Where we are now is extremely interesting. Ten years
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ago things were different. I shall concentrate my efforts not on lawyers charging £350 an hour but on manufacturers who cannot afford to pay their staff almost the going rate for the job. Today we find industry slimmed down dramatically. In a moment I shall refer to one sector of industry where one company in Northern Ireland used to employ 18,000 people and now employs 350. I shall refer to other sectors where in the past our skill and technology, when we were prime producers, led to machinery that was unbeatable in the world.
Today those companies which were uncompetitive 10 years ago and were going cap in hand to government demanding subsidy, grants and aid in order to compete no longer need to do so. They are competitive. They are probably also more competitive at this point in time than they have been at any time in the past 50 years.
I should like to issue a few caveats and warnings because the Government will say that, although manufacturing industry has been slimmed down, it is more efficient and we have a strong manufacturing base. But many of the products that we manufacture have a high import content and therefore, as our currency has weakened, so the cost of purchases rises —not so much of raw materials but semi-finished products or things which are not made here.
We have always asked for stability. We need stability of currency at whatever level because we are a buyer and a seller. Instability causes problems. I know that my noble friend will give us the assurance that we now have a stable pound, albeit at a lower level.
We also need competitiveness on all fronts. If we are to be competitive in manufacturing industry today, we must have with us a government who are competitive. Ten years ago it would have been reasonable to say that in terms of support for trade our Government were as competitive as any other government in the world. Today it is reasonable to indicate that, as the manufacturing sector has become more competitive, our Government have become less and less competitive and are perhaps the least competitive government among the OECD nations in terms of the support and encouragement that they give to trade. It is as though the Department of Trade and Industry was felt to be no longer necessary. Perhaps we do not need Ministers of departments if they do not provide any support and there is no government involvement in trade.
There were thoughts that perhaps the Government would wish to close down export credit departments entirely. With our presidency of the Council of Ministers, it was hoped to stop the beggar-my-neighbour attitude among the developed nations. Be that as it may, we go into the end of this year and the start of the single European market in a position that is potentially strong if the Government can recognise that they have a role in international trade, as they have had for 1,000 years.
I should like to give a number of examples and make several suggestions. Through what I call my own usual channels, I happen to know that the

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Government are currently reviewing all matters relating to export credit and to trade and are being more and more positive.
We are asking not so much for subsidy as for support to permit us to trade with the markets where there is a real demand. At this time among the G7s or, if we were to leave soon, the G6s there is not real demand because we are in recession. That real demand exists in countries which have primary products and plant and machinery could help them to give increased value without creating competition for the United Kingdom.
The Government are now looking at which countries should have a priority for our trade. The support is there. The British Overseas Trade Board, on which I served, has many weapons at its disposal and the Government have always set out to try to provide support and encouragement. We do not really need the Government except for their political skills and in the field of what we call political risk. The three areas of activity which I wish to talk about are declining industries—but they have stopped declining.
The first is the textile machinery industry, where, from high production and a large number of manufacturers, there are now perhaps only 110 companies and 6,000 employees. The industry is creating a wide range of jobs with total sales of about £400 million a year, of which £300 million-worth are exported. That is not bad even in this climate. Of those exports, approximately 85 per cent. go to OECD nations. That is significant because it indicates that we can compete with other industrialised nations without government support or subsidised credit.
Today those companies are looking to expand in the OECD countries but, more importantly, in the third or the second world, where there are raw materials such as cotton, wool and so forth. I shall give as examples two countries to which I shall return: Vietnam and Iran.
The second group is the mining machinery manufacturers. There are some 50 major companies employing about 23,000 people and creating jobs down the line. Their annual sales are about £900 million, of which £400 million-worth is exported mainly to the OECD nations, where they have not required government support.
The textile machinery industry had to live with a decline among our manufacturers of textiles as we ceased to be competitive with lower labour cost countries. The mining machinery industry has had to suffer a decline in mining. Perhaps I may refer in not too serious a way to the fact that the mining industry in the United Kingdom looks set for further decline and therefore the home market will be eroded still further. Those industries themselves need support, encouragement and development.
The third sector covers the oil and gas industries. As a result of the North Sea discoveries we have developed perhaps the most advanced technology of its kind in the world as regards oil and gas. But, if we are to believe some of the projections, as oil and gas run out the home demand from our industrial
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manufacturers will fade away and we shall need to fill that gap or we shall once more have a declining industry.
Those three sectors together represent a large chunk of the most important companies in the United Kingdom. They are able to compete on price, perhaps even more readily at present. But, when some of them have to import foreign plant and machinery because what is needed is no longer available at home, problems begin to emerge if we do not have a stable currency.
The Government should now be looking at manufacturers and how in co-operation with specific industries we can help to sell products to people and countries where there is a genuine need to create added value. We are not talking about subsidised orders; we are talking about the ability to provide credit to countries which have the raw materials to which our plant and machinery could add value; and could do so today.
I return to the subject of Iran. Only today I have had discussions with the Iranians. Although I represent these bodies and was a merchant banker I prefer to regard myself today as a merchant and, if I dare add to that, a venturer. Iran is a country to which, when I chaired the committee on Middle East trade, we sold almost £1 billion of goods per year. Let us ignore its politics; let us look and say that it is a country producing oil, gas, cotton and textiles. It would like to place orders with us for some £200 million-worth of textile machinery and has already made provisional indications for orders of perhaps £20 million. An exhibition is taking place at the end of this month which is sponsored by Her Majesty's Government—in the shape of the British Overseas Trade Board—and which will be attended by all the manufacturers. They will receive good orders but, if we cannot have ECGD backing for loans by banks, those orders will go to our industrial competitors. Of that there is no doubt. As anyone who goes out there will tell your Lordships, all our industrial competitors have been more successful and more active than us.
As regards mining machinery, an agreement has been signed in principle with the Ministry of Mines and Metals to set up a venture which will lead to the supply of £200 million-worth of mining plant and machinery, beginning with a £20 million order. There are £400 million-worth of orders available, and again I declare my interest because I am involved in that.
If one moves further down the oil and gas field and asks where are the potential markets, one can look at the markets of central Europe. There, our know-how fund, which is an extremely innovative and excellent idea of Her Majesty's Government, is already providing support for development in those fields. If we are providing that kind of support, we must be able to provide the covenant to permit the loans to sell the machinery to help develop oil, gas and coal in those areas and, again, textile and mining machinery.
The market in those areas and the demand is genuine. There may be political reasons why we should not work and trade with those countries but in the past the Government always bowed to trade. I for one should prefer us to devote all our attention to

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reversing a scenario which, when I was on the BOTB, arose for the first time when defence equipment sales outstripped all sales of manufacturers world wide. That to me seemed wrong and still seems wrong. The sale of manufacturers' plant and machinery must relate to genuine demand which exists in the Middle East and in central Europe. If one moves on to countries such as Vietnam, which has a big rice production and textile potential, or to Indonesia and to the whole of South East Asia, one sees that the potential is enormous.
I cannot speak for the whole of British industry but I genuinely believe that today we have a very productive manufacturing base. However, the Government have ceased to be competitive in trade. I ask once more that they give thought to recognising how serious these issues are at this time. As I have asked previously in this House, will the Government agree to call a meeting of the Board of Trade at once? I suggest that the Department of Trade should ask the Prime Minister whether it would not be appropriate for the Minister for Trade and the Minister for Industry to he made members of the Board of Trade. In the Autumn Statement and in some of the information relating to it, the Government called for closer co-operation between the private sector and government in the redevelopments at home. We do not need to call for that co-operation abroad. All we need to do as a result of this debate is to ask Her Majesty's Government to give serious consideration to performing their covenant, with all their knowledge and experience of politics and political risk, to support manufacturing industry with genuine demand in countries where good added value can be created.
7.49 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Earl, Lord Kinnoull, for raising this subject tonight. It is one that we have moved around a number of times during the past few months. Nevertheless, if the noble Lord, Lord Selsdon, is right and there are new developments in government, I look forward to what the Minister has to reveal about them. My intervention will be relatively brief because I have made so many speeches on this subject in your Lordships' House that I do not wish to repeat what I have said.
I make only three points. First, we must recognise that we are running a balance of payments deficit of £1 billion per month. Therefore, the promotion of exports must be a major government objective. If it is not, I should like to know what other objectives the Government have.
Secondly, the noble Lord, Lord Selsdon, says that we need a stable pound. Clearly, we have not had a stable pound since Black Wednesday. It is right that industry needs a stable pound. I should like to know what view Her Majesty's Government have on the exchange rate so that exporters can plan properly for their future.
Thirdly, I believe—and I have said this more times than I can remember—that the Government must ensure that, whatever our obligations are, under whatever treaty it may be, we must be competitive in
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our support for our exporters. It is no good saying that the Treasury says we cannot do this and we cannot do that. We must ensure that if we are competing, even with our colleague countries in the Community, our competitors are not getting better terms than we are.
There are two areas within that where I believe we are at a disadvantage. I believe that COFACE and Hermes give better support for long-term projects—not short-term projects—than ECGD. I should be grateful if the noble Baroness could assure me that I am wrong, but I believe that to be the case.
Secondly, as noble Lords will know, we were opposed to the privatisation of short-term credit insurance. I ask the noble Baroness whether the privatisation, to which the noble Earl referred, has resulted—because a Dutch company now provides the bulk of our short-term credit insurance—in any preferential terms being offered to Dutch exporters as opposed to UK exporters. That was the fear that I expressed when we debated the Bill to privatise short-term ECGD arrangements. I hope that the noble Baroness can confirm that my fear was unjustified. If she can so assure me, I shall be grateful.
It is quite essential, as the noble Lord, Lord Selsdon, said, that we afford our manufacturers proper and sensible credit arrangements for exports. It is equally essential that we afford our long-term construction industries proper credit in order for them to gain their fair share—not more than their fair share —of third world projects. That can only do us good and do them good.
I hope very much that we shall have a positive response from the noble Baroness this evening. As I said when I started, I have been on about this—and other noble Lords have been on about it—for a long time. We feel that the United Kingdom has been disadvantaged by the Treasury's attitude. I hope the reply of the noble Baroness will sound a different note.
7.55 p.m.
Baroness Denton of Wakefield: My Lords, first, I thank my noble friend Lord Kinnoull for bringing this matter again to the attention of the House. As all speakers have said, it is of absolutely key importance to the economy. The Government give this matter the highest priority. I thank my noble friend for changing the date of the debate so that at least the hour is somewhat more reasonable, but I share my noble friend's anxiety that we have lost some valuable contributions to our debate. However, there can be no doubt about the quality, if not the quantity, of speakers. It is always a great pleasure to hear my noble friend Lord Selsdon on these matters. His contribution is based on enormous experience. It was kind of my noble friend Lord Kinnoull to point out the notability of 11th June 1991. I must confess that it now seems a long time ago.
As your Lordships know, earlier this month the Government revealed their present arrangements for making available export credit guarantees. I am pleased to announce that, following the review, the President of the Board of Trade was able to announce, in conjunction with the Chancelllor's Autumn

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Statement last Thursday, arrangements under which some £700 million of additional export guarantees are to be made available for a number of important markets. As your Lordships recognise, that is a significant statement. It will provide a welcome increase in the amount of cover available for UK exports of projects and capital goods in markets where ECGD exposure is already high and closely controlled. I am delighted to say that those countries include China, Indonesia and Hong Kong.
However, I should point out that ECGD's £3 billion deficit with the Consolidated Fund serves to highlight the very real risks in this business, and we need to continue to exercise prudence in underwriting. I can confirm for my noble friend Lord Kinnoull that the Government attach great importance to aid and trade provision and will continue to allocate significant resources to it. Detailed decisions will be taken shortly about the future outline of that scheme.
Together with substantial reductions in ECGD premiums which were announced in April following the last annual review of premiums, I believe that those measures will serve to raise the competitiveness of UK export credits relative to those credits provided by other countries. That is tangible evidence of this Government's commitment to ensuring a viable export credit regime.
Export credit insurance is also critical to companies outside the project field selling on cash or short credit terms the vast bulk of UK exports. The Government are no longer involved in the direct provision of export credit insurance for exports sold on short terms. However, that does not mean that they are any less active in their support for exporters. ECGD is providing 100 per cent. reinsurance support to the new company to enable it to maintain facilities in those few countries where the risks are simply not acceptable to the private market in the present circumstances. As a result, there are only three countries for which short-term cover is unavailable; that is, Iraq, Libya and Zambia.
In addition, although well over 90 per cent. of the new company's requirements for reinsurance have been met by the private market, the Government are providing top-up reinsurance support to the new company to supplement the cover obtained in the private market. As my noble friend said, that top-up cover is being provided for a transitional three-year period in order to ease that move into the market.
While continuing to enjoy the benefit of government support in that way, UK exporters have been able to take advantage of the increase in flexibility which the new company enjoys in the private sector. An example of that is the new company's facility providing not only export but also domestic credit insurance under a single policy—a facility which small companies in particular appreciate.
In addition to its continuing support for export credit insurance, the Government continue to assist the efforts of UK exporters by providing a range of
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export promotion services. Without those many exporters, especially small firms, might be unable to benefit from profitable export opportunities.
The debate provides me with an excellent opportunity to pay tribute to the achievements of British exporters in difficult markets. My noble friend Lord Selsdon singled out three areas where there is much to admire. In 1991 UK exports reached record levels and it can be clearly seen that Britain continues to be one of the world's great trading nations. Visible exports in 1991 amounted to £104.8 billion, equivalent to some 19 per cent. of our total GDP, a higher proportion than in the USA, Japan and France. At more than £117 billion, Britain's earnings from invisibles were second only to the USA. Our share of world trade in manufactured goods rose for the third successive year, outstripping the performance of both Germany and Japan. That points to the great credit of British manufacturing, and although my noble friend Lord Selsdon rightly identified that, I would suggest that some slimming down was part of companies remaining globally competitive. Enormous strides have been made. But the Government are certainly not complacent; hence the extra finance announced last Thursday.
Without taking up too much of your Lordships' time, I should like to answer some of the points raised. Perhaps I can reassure my noble friend Lord Kinnoull that the ECGD is not seeking to recoup past losses by increasing premium rates on new export business, and good progress is being made in the EC and OECD discussions on premium rates. Agreement has just been reached to create a special expert group so that work can he accelerated.
The Government have said that the national interest reinsurance facility is not time limited. It will continue, subject to satisfactory financial performance, for as long as the Government consider it essential to meet the reasonable needs of exporters. I hope that that reassures my noble friends.
In the annual review which resulted in the introduction of new rates last April, 36 countries showed rate falls of substantially more than 25 per cent. Those included important countries for manufacturers such as Malaysia, Taiwan, Mexico and also Iran. The opportunity for our people to offer their skills and products to those markets is important. There were also further countries such as Indonesia where the rates fell by at least 10 per cent., and even in the more marginal areas, which included the important new market of China, there was a fall in rates.
I appreciate the noble Lord's anxiety regarding the competitiveness of our rates as against other European countries. As regards the OECD premium initiative on political risk-only premium rates in the USA, the most expensive Community country is Germany; in Israel the most expensive is France and in South Africa it is Italy. There are several other countries where the UK is certainly not uncompetitive.
The noble Lord, Lord Williams, was anxious in regard to the support from Hermes and COFACE. The ECGD premium rates are towards the top of the

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international league for some high-risk countries but the average premium rate is around the same as Hermes. For some countries COFACE rates are higher than ECGD's. They are different market assessments. I am delighted to say that there is no question of NCM operating to the disadvantage of UK exporters by favouring the Dutch customers. NCM UK is fully committed to its UK customers and has expanded its facilities available to them.
Turning to the question of Iran, ECGD reopened medium to long-term cover on Iran some time ago. However, discussions between the Iranian authorities and all the major export credit agencies are taking place over payment security to be offered by Iran for those projects. The discussions will need to be satisfactorily resolved before export credit agencies as a whole will be able to support export credits at a substantial level to Iran. It is that and not ECGD's unwillingness to give cover on Iran which is causing delay.
I can confirm that the Government see stability in currency, inflation and interest rates as the message we hear strongly from industry as a major requirement. I am pleased to say, and I hope that my noble friend Lord Selsdon will be pleased to hear, that part of the important reorganisation of the DTI was to open a division focused entirely on identifying what made a nation competitive, where we were less so than other member states, and what we would need to do not just to become level with them but to overtake them. We know that it is not a short-term activity but we shall have the information on which to build those facts.
We are determined that when our manufacturers go overseas to negotiate major contracts it will not be a
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French, German or other nationality adviser sitting next to the purchaser. It will be a British adviser; an expert who will understand the needs and be able to act as a communicator. I shall take back the message, delivered by my noble friend Lord Selsdon before in this House, that the Board of Trade should be put into action. I can assure him that the door of my honourable friend the Minister for Trade will always be open to him to discuss some of the special needs he identifies. I am sure that he will be delighted to take benefit from his enormous experience.
The noble Lord, Lord Williams, identifies the problem of the balance of payments. I can assure him that not only are we determined that the promotion of exports shall stay at the top of our priorities, but also that we will encourage the quality and design which means that goods manufactured in this country will attract from the purchaser the pound out of his or her own pocket so that we work at the problem from both sides.
Perhaps I may conclude by referring to what my noble friend Lord Selsdon said in the debate held on 11th June last year. He said that if the Government reduced inflation to 5 per cent. by the end of the year and no longer had interest rates at more than double the rate of inflation, then the need for such historic support would begin to fall away. We are not taking support away even though much has been achieved. We have just added £700 million towards export credit guarantees. I believe that we have got our priorities right.
House adjourned at ten minutes past eight o'clock.