Lords Sitting of 29 July 2002

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Peterborough.

King's College, London: Proposed Land Sale
Lord Chalfont Lord Chalfont asked Her Majesty's Government:
What view they take about the proposed sale by King's College, London, of land, which is required by St Thomas's Hospital for teaching and research purposes, to a non-medical body.
Lord Davies of Oldham: My Lords, this is a matter for King's College, London as owner of the site. The Government cannot intervene in internal decisions at higher education institutions. King's College has kept Guy's and St Thomas's Hospital NHS trust and the Department of Health informed of the current position, and has yet to make a decision. King's College has been made aware of the strong opposition from the trust and from some members of the public.
Lord Chalfont: My Lords, I thank the Minister for that reply. I accept that this is not a matter on which the Government can intervene. However, it seems to be a matter in which the Government might have some interest. Is it true that King's College and the National Health Service trust have put together a working group which has produced a report strongly suggesting that, whatever happens to the block concerned, it should remain available to the medical community and should not be sold outside it?
Lord Davies of Oldham: My Lords, King's College is well aware of its obligations as a significant medical school and in terms of meeting targets established by the Government for the training of doctors and other health service staff. Its contribution to that work is continuing; and in no way, shape or form have we any doubts about its determination to fulfil its obligations.
Baroness Northover: My Lords—
Baroness Rawlings: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, could we hear the noble Baroness, Lady Rawlings, first?
Baroness Rawlings: My Lords, I thank the noble and learned Lord. I must declare an interest as chairman of the council of King's College, London, whose members are the trustees of an exempt charity. Will the Minister reaffirm that the future of this property, block 9, is purely a decision for the council of King's
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College, London, and not for any government department? For the record, is the Minister aware that no decision has been taken by the council about the future of block 9, a piece of land opposite the Palace of Westminster? Is he further aware that members of the council have a duty, as trustees, to take a free and fair decision? Does he agree that persistent lobbying and threats are not constructive to finding a way forward?
Lord Davies of Oldham: My Lords, I am not aware of any threats, but I am aware of a keen public interest in the issue—so I am not surprised that there is some fairly vigorous lobbying on each side of the discussion. As the noble Baroness indicated, it is not for the Government to dictate to King's College its decisions with regard to the site. However, it should be mindful of its obligations—as it will be, as a responsible institution of higher education.
Baroness Northover: My Lords, given that London is one of the most expensive areas in terms of real estate, under what circumstances would the Government be prepared to intervene to support London's health and educational institutions—or would they always leave decisions to market forces?
Lord Davies of Oldham: My Lords, it is wrong to suggest that the issue is purely one of market forces. This is land which is dedicated towards aspects of public service. That is why it is under the control of a higher education institution. We are not talking about real estate which is in the free market in quite the way that the noble Baroness indicated. The question relates to a responsible body reaching a decision with regard to the site. As I have reiterated, this is not a question for government intervention.
The Lord Bishop of Southwark: My Lords, is the noble Lord aware that the most reverend Primate the Archbishop of Canterbury has made it clear that media claims of a connection between the Aga Khan and himself of a kind that might influence the view of the most reverend Primate on the Aga Khan's plans for block 9 are totally without foundation? Is he further aware that I, as a member of the King's College council, have strongly argued the case for selling the site to the St Thomas's Hospital foundation, if at all possible?
Lord Davies of Oldham: My Lords, I recognise what the right reverend Prelate says. When issues reach this level of public controversy, there is always a danger of people saying things completely out of turn. The allegation that the most reverend Primate would be influenced in his decision in this way is absurd. I am glad to reinforce the opportunity that the right reverend Prelate has taken to deny any such thing.
Baroness Finlay of Llandaff: My Lords—
Lord Faulkner of Worcester: My Lords—
Lord Williams of Mostyn: My Lords, we started with a Cross-Bench Question, so I think it is the turn of this side.
Lord Faulkner of Worcester: My Lords, in fairness to King's College, is it not the case that its preferred solution is indeed to sell the site to St Thomas's but the problem of the trustees is that the offer from the Aga Khan Foundation is believed to be more than twice as great in money terms as that apparently forthcoming from St Thomas's? Does my noble friend accept that some sympathy should be shown to King's College in its dilemma, as the trustees clearly have a responsibility to put the estate to the best possible use, particularly given the funding problems of universities?
Lord Davies of Oldham: My Lords, I am grateful to my noble friend for describing the contours of this difficult decision with great accuracy. If there were not a genuine dilemma facing all those responsible at King's College, London, I doubt whether we would be discussing the issue in the Chamber. It is a difficult decision. I am merely reiterating the obvious fact that King's College is a proper and responsible body able to reach a proper and responsible decision.
Baroness Finlay of Llandaff: My Lords, what safeguards are in place for the new strategic health authority to ensure that NHS and university resources are not sold for short-term gain when other NHS, university or public bodies need the land or buildings to maintain and improve their provision in the long term?
Lord Davies of Oldham: My Lords, that, too, is an important question. Of course the Government need to be assured that their strategies for developing medical education and facilities are on course and are framed within a series of arrangements that can be guaranteed to deliver. I assure the noble Baroness that the schemes in hand to increase the number of doctors in training—the number has greatly accelerated over the past 18 months—are working their way through in full collaboration between higher education institutions and the appropriate health trusts.
Earl Russell: My Lords—
Lord Campbell of Alloway: My Lords—
Lord Williams of Mostyn: My Lords, it is time for the next Question.

Reproductive Health
2.44 p.m.
Viscount Craigavon Viscount Craigavon asked Her Majesty's Government:
Whether, in view of the present attitude of the United States administration, they will reaffirm their commitment to reproductive health as an important component of their international development policy.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the reproductive health of the poor is a key priority for the Government. We remain firmly committed to the International Conference on Population and Development target of achieving access to reproductive health for all by 2015. We are convinced that reproductive health and rights are vital to making progress to attain the millennium development goals to combat HIV/AIDS and to lower maternal and child mortality. We would like in particular to acknowledge the important contribution that the United Nations Population Fund makes in these important areas.
Viscount Craigavon: My Lords, I thank the Minister for that Answer. Does she agree that an example of the new American attitude occurred last week, when the President refused to sign the release of 34 million dollars, which had been agreed in full by Congress, to the highly respected United Nations Population Fund? Given the problems and difficult issues that she mentioned in her Answer, what signal does that send to the rest of the world? Can she give us some of idea of the lead that she could take—with our allies, if necessary—to combat this new American pressure, both financially and in terms of winning the argument?
Baroness Amos: My Lords, of course we are disappointed by the American response. We are major supporters of the work of the UNFPA. Our current core funding is £15 million per annum. In addition, we are pressing it to move ahead with reform proposals. We are considering an increased contribution. We will continue to be staunch allies of the fund and its objectives, because it is very important to tackle HIV/AIDS and maternal and child mortality.
Baroness Rawlings: My Lords, is the noble Baroness aware of the work of International Women's Healthcare, based in New York, in promoting women's health around the world? I pay tribute to it and declare an interest in knowing some people who work with it. Given the noble Baroness's commitment to promoting sexual and reproductive health services in developing countries, can she assure us that the Government will continue to place NGOs such as Population Concern, which are experts in the field, at the forefront of service delivery in promoting sexual health?
Baroness Amos: My Lords, the noble Baroness is aware that partnership is a key element of the Department for International Development's overall strategy. Working in partnership with NGOs, including on reproductive health, remains a priority for us.
Lord Avebury: My Lords, will the Government seek to persuade our partners in the European Union that we should make good the 34 million dollar shortfall arising from President Bush's capitulation to the Christian fundamentalists in the United States? Will

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the Government confirm that the criticism that has been made in the US that China uses coercive population policies has been found to have no basis by delegations from Britain and the United States that have been to China recently? In view of that, what will be the impact of the loss of that 34 million dollars on the other programmes of the population fund, including those concerned with reducing maternal morbidity and mortality?
Baroness Amos: My Lords, the noble Lord is right. Three MPs recently visited China to observe the UNFPA's programme. They found no evidence that the UNFPA is supporting coercive activity. I think that the group from the United States found no evidence that the UNFPA was engaged in those activities, but expressed concerns about the activities of the Chinese Government. The European Commission announced on 24th July an additional contribution of 20 million euros to the UNFPA.
Baroness Gardner of Parkes: My Lords, are the Government continuing to support the development of microbicides, on which I saw a presentation at the Department for International Development? They are creams that could be applied vaginally. They could be contraceptive or not, according to the situation, but they would prevent HIV/AIDS. That is one of the greatest possible answers to the HIV problem. Is her department continuing to support that research, which seemed so hopeful?
Baroness Amos: My Lords, the answer is yes. We have committed £16 million to the Medical Research Council's microbicide development programme.
Lord Patel: My Lords, does the Minister agree that the Mexico declaration made by President Bush will adversely affect reproductive health programmes in the world's poorest countries, leading to further deprivation and increased poverty in those countries?
Baroness Amos: My Lords, it is important to recognise that reproductive health and education about reproductive health are absolutely critical in the fight against poverty. More than half of the new HIV/AIDS infections occur in young people under the age of 24. We must tackle this issue not only bilaterally but with our international partners.
Baroness Walmsley: My Lords, will the Minister join me in congratulating the BBC World Service on its very imaginative partnership with television companies in India to stem the tide of HIV/AIDS in that country? Will she and her right honourable friend in another place, Mrs Short—who I know is very supportive of this project—support similar imaginative projects in other countries, particularly in Africa?
Baroness Amos: My Lords, we are constantly looking at ways in which we can get our key messages
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across, and the BBC World Service programme is but one element of that. I thank the noble Baroness for her comments about my right honourable friend.
Baroness Elles: My Lords, will the Minister kindly clarify exactly what is meant by the term "reproductive health"? In particular, does it include abortion, and if so, up to what stage of pregnancy, and on what grounds?
Baroness Amos: My Lords, the International Conference on Population and Development agreed that in no case should abortion be promoted as a method of family planning, and we agree with that. However, the conference also agreed that, where abortion is not against the law, it should be safe, and that in all cases women should have access to services for managing complications arising from unsafe abortions. We are working on various issues including reproductive health.

Regulation of Auditors
2.52 p.m.
Lord Sharman: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as a paid adviser to KPMG.
The Question was as follows:
To ask Her Majesty's Government whether they will make representations to the United States government to limit the extraterritorial effect of Senator Sarbane's Bill regarding the regulation of auditors.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, high-level representations were made to the United States Government about the extra-territorial effect of the proposed Sarbane bill by the United Kingdom Government and by the European Commission. The Accounting Bill, which combines elements of both the Sarbane and the Oxley Bills, is expected to be signed by President Bush this week. We believe that our lobbying has had some success, but concerns about the legislation remain. We are therefore continuing to pursue these matters at national and European level with the US administration.
Lord Sharman: My Lords, I thank the Minister for that very helpful reply. Does he agree, however, that the proven system of regulation in operation in the banking industry—so-called host country regulation—is much preferable to the extra-territorial application of any state's legislation?
Lord Sainsbury of Turville: My Lords, without wishing to give a definitive view about the Government's approach to international regulatory matters, I should say that we do not want to see extra

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regulatory burdens piled on British companies. In particular, we do not want an additional layer of regulatory burden to be placed on UK audit firms which are already subject to an extensive regulatory regime in the UK.

National Asylum Support Service
2.53 p.m.
Lord Greaves Lord Greaves asked Her Majesty's Government:
What steps they are taking to strengthen the work of the National Asylum Support Service in the regions.
The Parliamentary Under-Secretary of State, Home Office (Lord Filkin): My Lords, the National Asylum Support Service is currently undertaking a project designed to increase substantially its presence in the regions by the end of this financial year. It is intended that services that can best be provided by regionally based teams, such as investigations and outreach, should be included in the project.
Lord Greaves: My Lords, I thank the Minister for that Answer, and I encourage him in his work in this direction. There is still a huge need for much better liaison between NASS and local authorities in receiving areas; for much better individual support for asylum seekers, which is what I assume the Minister means by "outreach"; and for much better control of some of the accommodation providers. I should add that, recently, there was yet another television programme exposing the activities of Landmark in Merseyside. Does the Minister agree that those are three main aims in strengthening the service, and that a genuine decentralisation of the service—not just two or three more people in each region—is required?
Lord Filkin: My Lords, it may help if I amplify slightly what I said in my original Answer. There is an intention which is being actively explored to devolve four functions—investigations, outreach, intelligence and housing and contract management. It is our hope that, by the end of this financial year, we shall have substantially achieved that. As will be inferred, we substantially agree that, for example, housing and contract management benefits from close local liaison. That is one of the reasons for devolving control and management to the 12 regions.
Baroness Greengross: My Lords, does the Minister agree that many asylum seekers have great skills and abilities which need to be used particularly when they are waiting—sometimes for a long time—to know the results of their application to stay in this country? I declare an interest as the chair of the Experience Corps, a government supported initiative to enable people to use their skills on a voluntary basis. I am aware, for example, of an initiative in Derby where English-speaking asylum seekers give help, advocacy services and support to many people who have had
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great difficulty. It is a way of keeping them involved and healthy. They are also giving help to other people, which is enormously important.
Lord Filkin: Yes, my Lords, I agree that many asylum seekers have skills that could be harnessed through voluntary effort, either by giving voluntary support within legitimate parameters to other asylum seekers or by volunteering support within the community.
Lord Dholakia: My Lords, further to the question from the noble Baroness, Lady Greengross, I can well understand the Government's reluctance to connect an asylum seeker's need to work with managed migration. However, does the Minister agree that, as 70,000 applications are still pending decision, the considerable sum that NASS could save by operating such a policy would help considerably in reducing the administrative and taxation burden in this country?
Lord Filkin: My Lords, if I understand the noble Lord correctly, he is referring to the Government's recent decision. Previously, asylum seekers who had not had a decision on their application within six months were entitled to apply to the Home Office for an employment concession enabling them to work. As the noble Lord will be aware, given the considerable success in processing new applications—the vast majority of which are processed in substantially less than six months—the Government no longer see a need to give the employment concession in its previous form.

Business of the House: Standing Order 40
2.58 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 40 (Arrangement of the Order Paper) be suspended tomorrow to allow the Motion relating to financial assistance to opposition parties to be taken before the Copyright (Visually Impaired Persons) Bill.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.

House of Lords' Offices: Select Committee Report
The Chairman of Committees (Lord Tordoff): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Seventh Report from the Select Committee (HL Paper 154) be agreed to.—(The Chairman of Committees.)
On Question, Motion agreed to.
Following is the report referred to:
1. Freedom of Information: Publication Scheme
The Committee approved a draft publication scheme, prepared under the Freedom of Information Act 2000, for submission to the Information Commissioner and publication thereafter. It will be fully reviewed before the statutory right of access to information comes into effect in January 2005. A copy of the draft publication scheme has been placed in the Library.
2. Audit Committee
The Committee was informed of the decision of the Finance and Staff Sub-Committee to appoint an Audit Committee with the following terms of reference:

—To consider internal and external audit reports and other material, and to assess management responses thereto;

—To recommend to the Accounting Officer a suitable annual internal audit work programme and to monitor progress against the audit plan;

—To provide advice to the Accounting Officer in the exercise of his responsibilities;

—To evaluate the adequacy of the risk management system and the suitability of the control arrangements reported to it, and to advise the Management Board accordingly;

—To monitor value for money, good financial practice, appropriate internal controls, and effective governance throughout the administration of the House;

—To make an annual report to the House; to be submitted, in the first instance, to the House Committee and to be published with the House of Lords' Annual Report.

The Members of the Audit Committee will be as follows:

Lord Alexander of Weedon (Chairman)

Lord Best

Lord Christopher

Lord Shutt of Greetland

Dame Valerie Strachan (External Member)

3. Management Board
The Committee was informed of the appointment of a Management Board, in accordance with the recommendations of the Fifth Report of the Offices Committee. The membership of the Board reflects the aims and objectives of the House of Lords' administration, with each member representing one of the following functions:

—Parliamentary services;

—Committee services;

—Information services;

—Administrative services;

—Finance;

—Human resources.

4. Membership of Sub-Committee
The Committee appointed Lord Grocott to the Administration and Works and Refreshment Sub-Committees in place of Lord Carter, and Baroness Goudie to the Finance and Staff Sub-Committee in place of Baroness Andrews.

Employee Share Schemes Bill
Baroness Thornton: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Baroness Thornton.)
On Question, Motion agreed to.

Nationality, Immigration and Asylum Bill
2.59 p.m.
Lord Filkin: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Filkin.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE CHAIRMAN OF COMMITTEES in the Chair.]
Clause 82 agreed to.
Clause 83 [Appeal from outside United Kingdom: removal]:
Lord Filkin Lord Filkin moved Amendment No. 199B:
Page 45, line 22, at end insert "(except in a case to which section 82(5) applies)."
On Question, amendment agreed to.
Clause 83, as amended, agreed to.
Clause 84 [Earlier right of appeal]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 200:
Page 45, line 25, leave out "the Secretary of State or an immigration officer" and insert "an adjudicator"
The noble Baroness said: In moving Amendment No. 200, I wish to speak also to Amendments Nos. 201 to 205 which are grouped with it.
Clause 84 gives the Home Office power, in taking immigration decisions, to certify that a person ought to have raised an issue by way of an earlier appeal. Such persons will have no right of appeal to an adjudicator against the decision.
An essentially legal process will be able to take place without the involvement of the judiciary. We believe that this is a blot on the principles behind this clause which we otherwise can support.
The clause means that a caseworker whose rank we do not know—it could be very junior—can make a decision and certify that an appeal cannot be made against it. Such a decision could be wholly contrary to the interests of the applicant. So a junior caseworker could make the decision then the certification and the appellant would never see a judicial person. Indeed, the Minister in another place, Beverley Hughes, accepted on 11th June in Commons Hansard at col. 823 that the situation "might, in theory, arise". How she could think that it might occur only in theory defeats me. Surely it will happen in practice too if the clause bites.
As my honourable friend Mr Malins said in another place,
"There is a point of principle involved here: the taking of powers out of the hands of the judges and putting them into the hands of the state is something to be avoided whenever possible"—[Official Report, Commons, 11/06/02; col. 818.]
Can it be right that a junior caseworker can be judge and jury? Why should not the certification be made by an adjudicator rather than by the caseworker?

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Caseworkers may be well trained and good at their job but they will not carry the same weight as someone who has judicial standing.
If the Minister puts forward the view that the measure would take up more of the adjudicator's time, my further question has to be: what is wrong with that if it is a case of getting things right? Adjudicators are the right people for the job. At least the decision-making process would be fairer and more appropriate than it is under the provisions of this clause. If the Minister further puts forward the view that this would start to unravel the one-stop appeal process, I would have to beg to differ. I believe that it would still be effective and would have more force and integrity with the involvement of an adjudicator.
I turn briefly to Amendment No. 205. Although this does not overcome the fundamental objections which may be made to subsections (1) to (3), it places on the Secretary of State an obligation, subject only to reasonable belief rather than the need to be satisfied, not to deny rights of appeal unless a person has had access to competent legal advice. It is a minimum safeguard against the abuse of executive power. I beg to move.
Lord Goodhart: The grouping which includes the amendment just moved by the noble Baroness, Lady Anelay, also includes the Question whether Clause 84 should stand part of the Bill. We on these Benches believe that Clause 84 is a dangerous clause which is contrary to natural justice and ought to be removed altogether.
As the noble Baroness, Lady Anelay, has already mentioned, the main objection to the clause is that it gives the Secretary of State or the immigration officer the right to block appeals against their decisions or, in the case of the Secretary of State, those of members of his own department. The Secretary of State is not a judge and immigration officers are not judges. Therefore, if there is no appeal, there is no judicial process involved here except the possible judicial review of the certificate made by the Secretary of State or the immigration officer. In our view it is not desirable to have to rely on judicial review. However, if judicial review takes place, it is more likely to succeed in the case of a decision by an interested party than where the court reviews the decision of a judge such as an adjudicator. Therefore, we believe that the clause will be counter-productive in so far as it is likely to increase rather than diminish the number of cases in which judicial review applications will be brought and in which they will succeed.
Under subsection (1) of Clause 84 the question as to whether a person's motive for bringing an appeal on a new issue is proper or improper is much more appropriately decided by an independent person than by an executive authority such as the Home Secretary or an immigration officer. Under subsection (2) of Clause 84 the view as regards which issue should have been taken at an earlier stage is once again a matter for an independent adjudicator, not for an executive officer. Subsection (2) of Clause 84 is also defective in
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substance in that it allows a certificate to be given under paragraph (c) without considering whether there are reasonable grounds for not having exercised a right of appeal against the earlier decision.
Clause 84 caused considerable concern to the Joint Committee on Human Rights, which stated at paragraph 103 of its report:
"When making a public authority the judge of the merits of the case against it, there is a real danger of compromising the independent scrutiny which lies at the heart of the values of the rule of law".
The Government are concerned that the appeal system should not be open to manipulation. No doubt there are appeals which are brought without justification. But it is for the judicial body to which the appeals are brought, not the executive, to decide which appeals are unjustified. A process which required the adjudicator to give leave to appeal in circumstances covered by Clause 84 might be acceptable. It might take up somewhat more time and cost, perhaps a little more than with the present situation. It is not certain that there would be a saving on judicial review. But even if there is some increase in time and cost, that is surely a price worth paying for protecting the basic principles of natural justice.
Earl Russell: I want to add only a small footnote to what my noble friend Lord Goodhart and the Human Rights Committee have said. It is well known that there are certain things about which those who have suffered them find difficult to speak. It is commonly known in this Chamber that I once had a male pupil who was unjustly accused of rape and was acquitted. It is not so commonly known that on the same day a young woman came through my door who had been raped at knifepoint in a dark alley in Southwark. She was never able to bring herself to report it and I believe to this day has not done so. That does not mean that were she to tell anyone now there would be any reason whatever for disbelieving her. Refusing to believe a story told late is a very common way of denying justice.
Baroness Carnegy of Lour: I hope that the Government are saying attention to what Members of the Committee are saying with regard to the amendment, as I hope very much they paid great attention to the discussion late on Tuesday night of last week when an enormously important debate took place which, unfortunately, I could not attend.
The Government are absolutely right in their aspiration to try to speed up the handling of asylum seekers' cases. That is vital. However, it is equally important that the experience that asylum seekers have of this country, and the experience that the rest of us have in watching how the Government handle that matter, do not undermine our justice system, our sense of right and wrong and, indeed, our desire to keep in tune with the human rights convention. Therefore, I hope that the Government are paying much attention to the matter.
Lord Clinton-Davis: I hope, in following the noble Baroness, that my noble friend will understand that

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cutting out the judiciary in the way proposed is not acceptable to many of us. I shall listen very carefully to the argument that he adduces. I make it plain, and I believe that he will admit, that the onus rests heavily on the Government. My current view is that to cut out the judicial approach to the asylum seeker who seeks it is entirely wrong. It is not that I feel that the judiciary is somehow superior; it does not claim that. It claims that it will listen very carefully to the legal arguments that are presented before it before making a decision. I do not think, with respect, that the executive officers or the Secretary of State can in any way be a substitute for the judicial approach. At the moment I favour the noble Baroness's amendment.
Lord Brooke of Sutton Mandeville: By chance, Mr H.F. Ellis will be commemorated in a broadcast on Radio 4 tomorrow morning at, I believe, 11.30. He was a freelance journalist who made his living lightheartedly over many years, and he died recently. I invited him 37 or 38 years ago to address a business dinner. He confessed, when he spoke—it was at Christmas-time—that he was not sure why he had been invited until he had worked out that he was in the same business as those who were present: of seeking to sell articles for more than they were genuinely worth. He explained that his bank had just written to him to reveal that, having long since removed his money from the branch where he kept his account, it was now going to remove the account as well. He said, "You do begin to wonder why they have a branch system at all if neither the money nor the account is there".
Banks have their own responsibilities towards their customers and have to convince them that what they are doing is sensible. In this regard, we are talking about the rights of asylum seekers and the slight casualness in that regard. We are long since used to the Secretary of State being the subject of sentence after sentence in such legislation, although we all know that decisions are taken at a level below that of the Secretary of State; nevertheless, the reference is to the Secretary of State. That provision is now being widened in the clause. As my noble friend said when she moved the amendment, there is a view on these Benches that more precision and balance should be maintained and that the judicial process should not be eliminated altogether.
3.15 p.m.
The Minister of State, Home Office (Lord Falconer of Thoroton): This is an important clause. In effect, Clause 84 builds on the one-stop system that was introduced in 1999. That one-stop system in effect requires that where there was an opportunity to appeal, the asylum seeker should raise all the points of appeal at that one appeal and that they should not be dealt with bit by bit. We believe that our approach is sensible. However, in view of what the noble Baroness, Lady Carnegy, in particular said, I should deal with the matter at some length and explain in detail the reasons for our approach. I also make it absolutely clear that we are listening very carefully to what has been said in particular in the debate that was referred
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to earlier; I was present at that important debate, at which a large number of important points were made, albeit late at night, but none the worse for that.
I ask Members of the Committee to consider seriously what the result would be if Clause 84 were not agreed to or if the adjudicator's role were inserted to it, as the amendments propose. The one-stop system, which was introduced in 1999, has been a success. It helps the IND to consider all aspects of a case more efficiently. It gives those with a case the chance to put forward at an early stage the whole of that case and to have an earlier decision, and it stops those who put forward late claims preventing the reasonable implementation of an asylum decision. It stops no one having a right of appeal and a right of appeal to a judicial officer. It stops no one claiming asylum or putting forward human rights grounds. It simply stops them successfully delaying or evading a removal, the reasons for which they had an earlier chance to dispute and to do so before a judicial figure. Consider how much more efficient and fair it is to deal with all points of appeal at one go.
In the calendar year 2001, there were nearly 88,000 asylum refusals, nearly 43,000 appeals during that year and nearly 34,500 appeals were dismissed. There is no reason why those dismissed cases should have another chance to appeal. However, there is also no reason why those who did not appeal should have another chance to appeal later. Our proposed arrangements will stop that.
There were another 45,000 asylum cases that had the chance to appeal but that was not done. That is a possible 80,000 abuse of appeals that we could prevent. There would be more if there were no one-stop system and people could appeal again and again. That involves merely the asylum cases.
Earl Russell: Does the noble and learned Lord understand that justice was not meant to be convenient for the executive?
Lord Falconer of Thoroton: The noble Earl would be the first to agree that there has to be an end to litigation at some stage. An end to litigation requires a fair opportunity to put the point of view or the grounds of appeal. However, if that ground of appeal is not pursued or if it is pursued, heard and rejected, justice becomes clogged up if again and again people have the right to put again arguments that they had had the opportunity to put or which they had already put. A balance has to be struck. That is what the 1999 legislation sought to do. I shall come in a moment to the views of the courts in that regard. There have been a number of judicial reviews.
We have to look at the clause in the context of what is currently happening before we can seriously consider the proposed amendments. Clause 84, as I said, simply builds on existing legislation. This is the position. The 1999 Act introduced the one-stop procedure. The intention is that we will deal with all the applicant's issues quickly and at once instead of bit by bit. That benefits those who do qualify to stay here and gives a quicker final answer to those who think

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that they qualify to stay here but who do not. In particular, it helps to dispose of those cases where previously a hopeless application was strung out and last-minute claims were made to prevent a perfectly legitimate removal. It also reduces administration costs, support costs and legal costs. I am sure that no Members of the Committee would suggest that that is an irrational or unfair way of doing things.
Lord Clinton-Davis: I seek some information from my noble and learned friend. Have any of the cases that were heard again succeeded? If so, why have they succeeded and what is their proportion of the whole?
Lord Falconer of Thoroton: As I said, 43,000 cases were appealed and 34,500 had their appeals dismissed. In relation to those caught by the 1999 one-stop shop, 700 late claims were certified as ones in relation to which there could not be a appeal and three applications were made for judicial review, two of which were refused permission on the papers and one of which was refused after an oral hearing. The position under the 1999 Act is that 700 people were denied the right to make an appeal again. Three applied for judicial review and all the applications for judicial review were refused at the leave stage, either on paper or after an oral hearing. Therefore, it appears that the system is not unsuccessful.
As I said, the 1999 Act set up a system which, in effect, allowed the prevention of repeated appeals. Some applicants, and nearly all those lodging an appeal in-country, are required by Sections 74 and 75 to disclose their full grounds for remaining here. They are given a formal notice which warns them that, if they raise a matter later which they should have raised at that point, they may not be able to appeal on that particular ground. Therefore, applicants are being told that they must raise all their grounds for appeal.
Section 73 applies if an appeal is dismissed. We notify the failed asylum seeker that he is to be removed following dismissal of his appeal and set up arrangements with the carrier. At the last minute, he may claim that he should not be removed because he has a long-standing relationship with someone living here. We would then consider that claim fairly on its merits but, if the claimed relationship was not mentioned earlier to us or to the independent adjudicator, we would ask ourselves why. If we decided that the claim was to be refused, if it appeared to the Home Office that the claim was made to delay a legitimate removal and if the Home Office could discern no legitimate purpose in making it, then it might certify the case so that the refusal did not attract a right of appeal.
Certification does not have to take place. It is discretionary and subject to judicial review, as is the decision to refuse the claim. Therefore, decisions that are made must be reasonable. But all that takes place after the asylum seeker has had the opportunity to put forward all his grounds to the adjudicator as to why he should stay and after a warning has been given that all the grounds must be put forward. From the way that
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the system works, it is also plain that if there appears to be something in the grounds put after the opportunity for appeal and if it does not appear that it is simply a reason to delay, then no certificate will be given preventing the further appeal. Is that a sensible system? Is it one that deprives the applicant of the opportunity to put—
Lord Goodhart: I am grateful to the noble and learned Lord for giving way. He said that if something arises afterwards which shows that there are grounds for appeal, then the certificate will not be given. But is it not the case that, under the 1999 Act procedure, the one-stop shop on the face of the Bill only bars the subsequent appeal if it could reasonably have been included in the one-stop statement made on the original occasion? Why is the same type of protection of reasonableness not included on the face of the Bill now?
Lord Falconer of Thoroton: Certificates can be granted under Clause 84 only if the Secretary of State or the immigration officer or person is of the view that the only purpose for advancing the new ground is to delay removal. If it is a legitimate ground that could not have been raised previously, then such a certificate cannot be granted.
Lord Goodhart: That does not apply to Clause 84(2), does it?
Lord Falconer of Thoroton: Perhaps I may return to that point at the end of my submission so that I do not waste time. The critical point is that the certificate which prevents the further appeal can be granted only where its purpose is, as it were, to delay the legitimate removal.
Similarly, Section 76(5) of the 1999 Act prevents appeals against refusal of late asylum claims whether or not an earlier appeal has been determined. Spurious asylum and human rights issues are those most often raised at the last moment solely to delay removal and often in cases where neither element has featured previously; for example, where a sham marriage application has been refused or a student has overstayed and worked illegally. The one-stop system is needed to deal with those who give the terms asylum" and "human rights" a bad name. Such tactical applications may not only delay removal; they may prevent it altogether if the person takes the opportunity to abscond. The longer a delay goes on, the more difficult it is to detain applicants.
During debate in Special Standing Committee in April 1999, there was general agreement that the one-stop procedure was a positive development. But concerns were also expressed that judicial reviews would increase. The one-stop procedure introduced in 1999 works; and the more people become used to it, the better it will work. If applicants and their advisers know that they must disclose everything at an early stage and that spurious late claims will not get them anywhere, the tactic should not be used any more. Ideally, we should never need to certify a late claim

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because late claims should only be due to genuine changes in circumstance. We should be delighted if that were the case.
Earl Russell: Does the noble and learned Lord understand that in many communities from which asylum seekers come women who report to being the victims of rape risk disgrace and danger within their own community, as well as any penalty that they may suffer elsewhere? Therefore, when there is a late report of, for example, rape, how can he tell, until he has conducted a hearing, whether it is spurious and intended to prevent removal or whether it is for self-defence against one's own community?
Lord Falconer of Thoroton: As the noble Earl says, there may well be cases where it is appropriate for no certificate to be given. Equally, there will be cases where it is perfectly possible for a sensible officer acting on behalf of the Secretary of State to say, "It is pretty obvious that this is a late point raised simply to delay". The disagreement between the noble Earl and myself is that he rightly identifies cases where there will be real difficulty, in which case, of course, no certificate should be given. But I respectfully submit that, equally, there will be cases where it is fairly obvious that the late claim is made simply to delay removal and that is why it is being raised. It is clear cases such as that with which one is concerned and not the type of case referred to by the noble Earl where there can be a legitimate debate.
Earl Russell: I believe that what the noble and learned Lord has said is common ground between us. I do not understand how he recognises the difference between the cases.
Lord Falconer of Thoroton: It is a matter of judgment. I believe that the noble Earl is now moving his position. He shook his head when I said that certain cases were clearly raised in order to delay. That is the submission that underlies the 1999 one-stop procedure and Clause 184. I understand what the noble Earl is saying now that he accepts that there will be such cases.
Earl Russell: I do not accept that one can recognise them without a hearing.
Lord Falconer of Thoroton: There is no case so clear that it does not require a hearing. I see—that is the difference between us. That is helpful.
As I said previously, since October 2000 approximately 700 late claims have been certified to effect removal. Only three applications have been made for judicial review. Two of those were refused permission on the papers and one after an oral hearing. There have been no substantive hearings on the one-stop shop since 1999. That is good evidence that the concerns expressed then and now may well be unfounded.
Of course, some people will have been encouraged by the one-stop notice to put their whole case forward at an early stage. The result of that is that the Home
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Office, having a comprehensive view of the applicant's circumstances, is able to deal favourably with a case far sooner than would have been the case if the details had been drip fed, which is the consequence of not having a one-stop shop.
I have taken time to go back to current legislation so that we can sensibly discuss how we have built upon it and why the opposition amendments should not be allowed to undo what is a fair and successful procedure. Under Section 73 of the 1999 Act, only those who have had an appeal finally determined can have a further application certified. But not everyone appeals, and some of the most abusive cases involve those who claim asylum, then abscond, only to resurface months later when they can reapply to remain and start the whole process all over again. They may even take a quick trip abroad deliberately to achieve the same result. I hope that the Committee will agree that that is unfair. In effect, it is using the system. If one looks hard enough, one can find loopholes to exploit in every system. We want to block this one but without unfairness to the asylum seeker. The system is designed to ensure that the asylum seeker has the opportunity to make the whole of his case.
Under our proposals applicants may be advised on application or soon after that they must state all the reasons for wishing to stay in the United Kingdom. They will be warned of the consequences if they do not comply. By extending the power to give a warning to all applicants we catch those who do not mention asylum or human rights initially, so we can deal appropriately with a tactical claim later. If the application is refused with a right of appeal, the disclosure requirement will be repeated when appeal forms are sent out. We think that it is reasonable, fair and just that, if the opportunity to apply and to appeal against any refusal has been offered, and the applicant chooses not to take it, although warnings have been given, any later application can be certified under Clause 84. That mirrors the effect of Section 76(5) of the 1999 Act in asylum cases but extends it to other types of cases dealt with in this country.
We are also bringing into the system those who are liable to an adverse decision, such as deportation or curtailment of leave, without having made an application. Issue of the one-stop warning will become discretionary so that the system better targets those cases where it is likely to be of benefit. We do not intend to impose the requirement, for example, on every short-term visitor to our shores.
3.30 p.m.
Lord Avebury: As such enormous emphasis is placed on the one-stop notice, can the Minister assure the Committee that it will be distributed in languages that appellants will understand?
Lord Falconer of Thoroton: To be effective the notice must be one that the applicant understands. Perhaps I can check that before I give the noble Lord the assurance that he seeks.

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At the same time we have simplified how one-stop works in practice. That has been welcomed, for example, by the Refugee Legal Centre whose briefing speaks of our,
"simpler and more effective scheme".
Opposition Amendments Nos. 200 to 204, which I suspect are probing amendments, would take away the element which makes one-stop work; that is, the fact that a late application intended to delay by virtue of an appeal no longer has that effect. Having to put the case before an adjudicator would almost inevitably mean that the removal arrangements would have to be cancelled. Every single person whose case is certified will have had the chance to make out an asylum or human rights case to the Home Office in the proper manner. And if they have done so and it has been refused they will have had the chance to appeal. They may apply for judicial review of any one-stop certificate issued in their case and of the decision to refuse the claim, so they are not without recourse. The general principle that the certificate should deny access to the adjudicator has been with us for nearly two years now, but no-one who has been certified can say that they were not required—often twice over—to make their claim at the appropriate time.
The Joint Committee on Human Rights, to which the noble Lord, Lord Goodhart, referred, reminded the Committee (paragraph 112(n) of their report) of the need to ensure that people are not removed before they have had an effective opportunity to ask for a court's help in enforcing convention rights. The one-stop warning given under Clause 103 (which is equivalent to notice now given under Section 74 or 75 of the 1999 Act) actually requires the person to put forward any convention issues that they may have, so that any refusal can go through the full appeal process and not just through the higher courts. It is up to claimants to take that effective opportunity when it is offered by complying with the requirement. But if they do not do so, and their case is certified, they will still have access to judicial review.
Opposition Amendment No. 205 has the entirely laudable intention of ensuring that nobody's claim is certified unless they have had legal advice up to the standard set by the Immigration Services Commissioner. This is a complex consideration. Last week, late at night, we had a debate on this issue. Word would quickly spread that if one avoided seeing any legal adviser, or at least successfully claimed that no one had provided advice, one could continue to submit late claims and acquire new appeals forever. Unless the Home Office has received a letter on headed paper or an interviewer has seen an applicant in the presence of his representative, we have no way of judging whether an applicant has been given good advice or not, and disputes would lead to more opportunities for judicial review.
The Refugee Legal Centre's briefing does not object to the denial of an appeal right when the matter is raised late, but it does object to the possibility that
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claimants will have been let down by unscrupulous or negligent representatives and thus have neglected to put forward a human rights or asylum claim.
Yet we cannot force people to take advice and we cannot force people to take good advice. Those who intend all along to take the utmost advantage of our system will actively seek out the unscrupulous adviser who for obvious reasons is not registered. We feel that the best solution is to encourage claimants to take the right kind of legal advice at an early stage, and asylum-seekers going through the induction centres will be given guidance, as they will be given guidance on the one-stop process. For others, there are many reliable sources of information. The Citizens Advice Bureaux, for example, will point them in the right direction. Those systems are in place.
I turn to the point raised by the noble Lord, Lord Goodhart. Clause 84(2) applies where the matter was raised at the earlier appeal or where it could have been included in the reply to the one-stop notice that the person will be given before an appeal. If new grounds are raised, they will be considered at the appeal. However, not everyone exercises a right of appeal, so people will be told to raise everything early and they will lose the right to raise it again at the removal stage.
On the point raised by the noble Lord, Lord Avebury, the notices will be in English, but interpreters will be available at the induction centres. The interpreters will be in a position to translate them.
Lord Goodhart: In reply to my point on Clause 84(2) the Minister said that, effectively, if there were a new point it could be brought. There is nothing here that repeats the reference in Section 73 of the 1999 Act to reasonable grounds for not raising a matter earlier. Does he suggest that it is implicit, for example, in Clause 84(2)(b)? If not, how does he reach the conclusion that, if there were reasonable grounds for not raising a matter on the first occasion, it could he raised at the later date under Clause 84(2)?
Lord Falconer of Thoroton: Clause 84(2) refers to,
"a ground or matter which the person…should have included in a statement which he was required to make under section 103".
If there were good grounds for not making it, that would be a highly relevant factor in whether the Secretary of State could certify under Clause 84.
Those who make a late claim will not all he certified—only those who seek to delay a removal when there is no legitimate purpose to the claim. Those who—ill advised, well advised or not advised at all—could not have raised a legitimate claim earlier when required will not be so certified. Those who can convince us that their representative was negligent or did wrong by them may well have a legitimate purpose in making the subsequent claim. So if there is a perfectly reasonable ground why they did not raise it before, that will be highly significant in determining whether or not the Secretary of State could certify.
I have gone at some length into the justification for Clause 84. As noble Lords have seen, it is an important and significant clause. It is founded on the 1999 Act

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and seeks to strike a reasonable and sensible balance between allowing asylum seekers the opportunity to put their point of view fully and fairly and ensuring that the system is not exploited to create delay. I hope that noble Lords will bear those remarks in mind in considering what to do about their amendments.
Baroness Anelay of St Johns: I thank the noble and learned Lord for that response. I thank Members of the Committee who, with the exception of the Minister, have supported my Amendments Nos. 200 to 205. I appreciate that the noble Lord, Lord Goodhart, and I have a different approach to the principle behind the clause. I certainly respect his stance, but he will appreciate that I cannot support him on that. We support the Government's principle underlying it. Our difficulty is with the practice—in the way that the clause is to be implemented.
I am grateful to the noble and learned Lord for taking the time and care that he has today. Perhaps I may start with the last amendment. He has completely satisfied me on Amendment No. 205.
He has substantially satisfied me on Amendments Nos. 202 to 204. Throughout we have said that we were worried about the principle of ensuring that someone avoids ever having a judicial hearing on these matters. The Minister has addressed himself to the practical issues that would ensue from the amendment that we seek to make. I listened carefully to what he said. I shall read it very carefully over the Summer Recess. I shall not pursue matters now. It may well be that he has satisfied me, but I need to look carefully at the principle so clearly enunciated by the noble Lord, Lord Clinton-Davis; that is, that executive officers are not a substitute for judicial decisions. Since I start from that as a matter of principle, I must consider carefully whether I need to pursue the matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 201 to 203 not moved.]
Lord Filkin Lord Filkin moved Amendments Nos. 203A and 203B:
Page 45, line 40, leave out "or matter"
Page 46, line 4, leave out "or matter"
On Question, amendments agreed to.
[Amendment No. 204 not moved.]
Lord Filkin Lord Filkin moved Amendment No. 204A:
Page 46, line 6, leave out "or matter"
On Question, amendment agreed to.
[Amendment No. 205 not moved.]
Clause 84, as amended, agreed to.
3.45 p.m.
Clause 85 [National security, &c.]:
Lord Avebury Lord Avebury moved Amendment No. 205A:
Page 46, line 25, leave out paragraphs (b) and (c).
The noble Lord said: The wording of subsection (2) of Clause 85, taken together with Clause 86, is a variation on Section 62(4) of the 1999 Act. Section 61 of the Immigration and Asylum Act 1999 states that a person may appeal against a decision to vary, or to refuse to vary, any leave to enter or remain in the United Kingdom when, as a result of that decision, he may be required to leave the UK. But that right could be annulled if the Secretary of State certified that the person's departure from the UK would be,
"conducive to the public good as being in the interests of national security, the relations between the United Kingdom and any other country or for other reasons of a political nature".
Section 64(1) of the 1999 Act prevents appeals against a decision to make a deportation order if the ground of the deportation order is that deportation is conducive to the public good as being in the interests of those matters that I have already mentioned.
The main difference between this clause and the section in the 1999 Act is that the range of immigration decisions listed in Clause 70(1) of the Bill is far wider, including, in particular, the revocation of indefinite leave to remain. The requirement that the person's departure or deportation from the United Kingdom must be "conducive to the public good" has been moved into its own separate clause—Clause 86. With the enhanced powers that the Secretary of State is given under the clause he could theoretically get rid of someone when there is no public good involved in so doing. That means that we will be subject to pressures from dictators in places such as Saudi Arabia, Turkey, Iran or even democracies such as India, to kick out their dissidents. We would have less of an argument not to comply with their wishes if the public good condition is removed to the later clause—Clause 86.
Perhaps I may give an example. A few years ago a friend of mine, Sheikh Ali Salman, fled to this country from Bahrain. A senior Minister came from Bahrain in order to bring pressure to bear on the Foreign Office to try to get us to refuse him admission to this country, to grant him asylum or indefinite leave to remain. Probably there are many other cases that exist, of which we have no knowledge because, in the nature of things, they do not come into the public domain. The clause issues an open invitation to autocracies to expel their troublemakers, even if they have already been given indefinite leave to remain.
Looking ahead to the provisions of Clause 86, the Secretary of State has an additional and separate power in relation to appeals against a decision under Clause 70(2)(a) or (b) to refuse leave to enter or to refuse an entry certificate where the refusal is wholly or partly on the ground that the person's removal or exclusion is conducive to the public good. Whether or not a certificate is issued under Clauses 85 or 86, if the person has an appeal pending, it automatically lapses. This is also—and I should like an explanation from the Minister on it—a tightening of the screw beyond the 1999 Act. The power of the Secretary of State to issue a certificate under Sections 62 and 64 of the Act stopped a person from appealing in the future, but it did not halt appeals that were in progress as the provisions in the Bill seek.
Can the Minister tell the Committee how many certificates have been issued since 2nd October 2000 under Clauses 62 and 64? In each case how many have rested on,
"the relations between the United Kingdom and another country",
and,
"for other reasons of a political nature",
respectively? What were the countries to which these certificates related? Will she give examples of how our relations with those countries were said to have been benefited as a result of issuing those certificates? If we are told that the Minister cannot give any information about certificates because, in the nature of these cases, the circumstances have to be confidential, it then becomes clear that we are being asked to give the Government a blank cheque to get rid of people for what may be ignoble purposes to do with our supposed national interests.
I am not saying that the present Government would try to use those powers in ways that we on these Benches would disapprove, but I would suggest to your Lordships that it is extraordinarily dangerous to give these sweeping powers to any government without a better idea of how they are to be used and with no limit on the catch-all phrases that are used in the Bill. I suggest that it would be an abrogation of Parliament's responsibility to leave these matters entirely to SIAC, knowing that whether they keep Ministers on a strict rein or give them a wide margin of appreciation—as the European Court of Human Rights would do in matters of security—Parliament and the public will never know. I hope that the Government will take these paragraphs away, think about them over the Summer Recess, and come back with a more tightly drafted form of words. I beg to move.
Earl Russell: The amendment bears an uncanny resemblance to an issue that came before the House in May 1628. The House was debating the question of imprisonment without cause shown. The King asked the House to write into law a provision that he could imprison without cause shown where it was for the common good.
The House understood that there were certain occasions when national security required imprisonment before due process had been gone through. Guy Fawkes may serve for a classic example. What it was not prepared to do was to write into law that the King could have those powers in law. Everyone knows that decisions taken for reasons of a political kind are like sin: they will always be with us. A prohibition of sin will never be finally effective. But a legal permission of sin is an altogether different matter.
The amendment reminds me of King Henry VIII's attempt to reword the 10th commandment to read, "Thou shall not covet another man's wife without due recompense". Archbishop Cranmer told him that he could not do that.
Lord Dholakia: Perhaps I may put two questions to the Minister with which she may deal in replying to the debate. There are two causes of serious concern in Clause 85(3). The first is the words:
"in the interests of the relationship between the United Kingdom and another country".
Can the Minister explain precisely what is meant by that? Secondly, the following paragraph states:
"for another reason of a political kind".
No definition whatever is given of what that means.
The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal): Perhaps I may speak first to Amendments Nos. 220 and 207. They would bring advocacy before the Special Immigration Appeals Commission within the scope of the Community Legal Service. That would mean that legal aid would be available for representation before SIAC. I mention SIAC first because I want to reassure the noble Lord, Lord Avebury, and the noble Earl, Lord Russell, that there is no similarity to the position in 1628 nor any blank cheque, because SIAC will play a role in relation to the clause. I understand that relatively few cases have come before SIAC—a total of 24 since it was established in 1998. As the Committee will be aware, SIAC was set up specifically to deal with cases involving national security matters.
The Community Legal Service was established by the Access to Justice Act 1999. Schedule 2 to that Act sets out those services for which public funding, formerly legal aid, may not be funded as part of the Community Legal Service. Under paragraph 2 of that schedule, advocacy in any proceedings is one of those services, subject to the exceptions also listed in that paragraph. Advocacy before most tribunals, including SIAC, is currently outside the scope of the Community Legal Service scheme. However, proceedings before the Immigration Appeal Tribunal and before immigration adjudicators are within the scope of the scheme. That means that individuals appearing there can receive public funding for representation if they satisfy the means and merits tests.
The fact that a service is outside the scope of the Community Legal Service scheme does not mean that public funding is never available for it. A power under Section 6(8)(b) of the Access to Justice Act 1999 allows the Lord Chancellor to authorise the Legal Service Commission to grant funding for services that are otherwise outside the scope of the scheme. That is known as "exceptional funding", and cases must satisfy the means and merits tests for funding and the particular criteria for exceptional funding, such as "overwhelming importance to the applicant" or that it is of "significant wider public interest".
My noble and learned friend the Lord Chancellor has exercised that power in relation to several individuals appearing before SIAC, most recently in March this year. The nature of proceedings before SIAC is such that financially eligible applicants will almost invariably satisfy the exceptional funding criteria. So exceptional funding is currently available to the relatively few applicants before SIAC who need it, on a case-by-case basis.

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However, Amendment No. 220 will bring SIAC within the scope of normal public funding, so that applications can be dealt with directly by the Legal Services Commission without requiring a ministerial decision in each case. That will make the application process faster and more transparent. I should make clear that the amendments apply only to SIAC and will have no effect on the availability of funding for other tribunals.
Amendment No. 207, tabled by the Opposition, contains some drafting errors. Given that Amendment No. 220, tabled by the Government, will have the intended effect, I hope that Amendment No. 207 will not be pressed. I see that the noble Baroness, Lady Anelay, is nodding; I am most grateful to her.
As I said, I outlined that position first because Clause 85 as a whole removes rights of appeal under Clause 70(1) in cases where the Secretary of State has decided to exclude or remove a person from the United Kingdom on the grounds that Members of the Committee have described, namely: in the interests of national security; in the interests of the relationship between the United Kingdom and another country; or because it is desirable for another reason of a political kind.
That does not mean that a person's right of appeal is taken away. The Special Immigration Appeals Commission Act 1997 simply moves most of those appeals to the Special Immigration Appeals Commission, which was set up specifically to deal with cases where sensitive intelligence material is to be brought as evidence. Clause 85 as drafted does not represent a change in that policy.
Taken together, the amendments would remove the grounds in paragraphs (b) and (c), leaving national security as the only ground on which an appeal cannot be heard before an adjudicator, as opposed to SIAC. That would cause serious difficulties. For example, if someone had committed crimes in or attempted to overthrow the government of another country or damaged their interests, severe damage could be done to relations with that country if the United Kingdom allowed that person entry. That could result in the loss of British jobs through cancellation of contracts, or perhaps withdrawal of co-operation in other areas—intelligence sharing being one—which would not be in the United Kingdom's national interest.
Earl Russell: Is the Minister aware that all of the arguments that she is advancing go against the hospitality that we gave to members of the African National Congress—of which I remain deeply proud?
Baroness Scotland of Asthal: I respectfully disagree, because judgments must be made about requests received—about the quality and nature of the evidence produced by way of persuasion. I can certainly reassure the noble Earl that that judgment will continue to be exercised by Ministers when deciding whether such matters should properly be taken into account.
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Often, the information on which the decision not to allow a particular person entry under this category will be highly sensitive. The other country may have provided us with intelligence material, or the UK intelligence services may have their own relevant information, which could compromise sources if revealed. By removing paragraph (b) from the list of cases to be heard by SIAC rather than by the adjudicator, all the information on which such a decision was based would have to be put before the adjudicator in a public forum. If that were not possible, the Home Secretary would have to withdraw his decision and permit the person to enter the United Kingdom. That could have a significant effect on our relationship with the country concerned. It is not that the information will not be capable of being seen; we are simply talking about the fora in which it will be discussed and debated. SIAC is an appropriate forum for disclosure. The information can then be examined and appropriate decisions made.
The noble Lord, Lord Dholakia, asked what was meant by the phrase,
"another reason of a political kind".
It could include questions relating to public order, public morality and, possibly, any future threat to United Kingdom citizens or interests. Previous Home Secretaries have excluded, for example, Holocaust deniers, officers of the Ku Klux Klan and several religious cultists. Although many such cases will be dealt with on the basis of evidence that is in the public domain, in some cases—particularly those relating to possible future risk—the decision could be based on sensitive intelligence material that it would be necessary to hear in SIAC. Not including,
"another reason of a political kind"
as one of the criteria that directed an appeal to SIAC, could threaten the life of potential witnesses, if they had to give their evidence to an adjudicator, rather than to SIAC. The criterion exists to give a necessary route to the appropriate forum. Without it, the Home Secretary would have no forum in which to expose sensitive material.
4 p.m.
Lord Avebury: It is up to the Government to argue the case and not up to us to divine how the powers might have been used in the past, had they existed. Can the Minister point to cases in which sensitive material had to be revealed to an adjudicator because SIAC did not exist? Are there cases in which people have been admitted to the country who would have been excluded, if we had been able to deal with them through SIAC?
Baroness Scotland of Asthal: In asking that question, the noble Lord has raised a sensitive issue. The purpose of creating SIAC is to provide an appropriate conduit through which sensitive material can be disclosed and, if necessary, reviewed. With SIAC, the validity of the opposition to someone's admission or exclusion can be examined critically and decisions

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about the case made. About 13 matters have been certified since October 2000. I cannot give the noble Lord specific details of those 13 cases.
Clause 85 does not take away the right of appeal. The amendment in paragraph 6(f) of Schedule 7 provides for any appeal relating to any immigration decision for which there is a certificate under Clause 85 to be heard by SIAC. I say that for the purposes of clarity.
We believe that the process set out is the most appropriate one. It relieves adjudicators of the burden of hearing in public information that may, for the reasons that I have given, be incredibly sensitive and should be heard with that sensitivity in mind.
Earl Russell: I may have misled the Minister by speaking with excessive brevity in my previous intervention: I had no intention of offering any criticism of the SIAC route. I accepted that when the Anti-terrorism, Crime and Security Bill went through. My noble friend Lord Lester of Herne Hill, who was involved in its genesis, has spent a great deal of time explaining it to me. It is, in fact, the procedure that they should have adopted in this House in 1628, had they had the trust to do so, which they did not.
I am concerned that we should leave, written in the law, words that allow us to imprison people for,
"another reason of a political kind".
I accept reasons of national security. Anyone who does not deserves the reply that Carlyle gave to the old lady who said, "I accept the universe". He said, "Gad, ma'am, you'd better". However, national security is a matter that is reducible to evidence, even if that evidence is heard in camera. The criterion,
"another reason of a political kind"
is not reducible to evidence. To write into the law that we may imprison people for,
"another reason of a political kind".
is to include a phrase so general in its operation that it must call the whole concept of the rule of law into doubt. Cannot the Minister find a slightly less provocative way of wording it?
Baroness Scotland of Asthal: I hear what the noble Earl says, but that is the most appropriate way of describing the criterion that can be found at present. I have given several examples that would fall within that category. In the past, there seems to have been agreement that, for example, Holocaust deniers or members of the Ku Klux Klan, were the sort of people who should not be allowed to come in, if there was specific evidence about them. We accept that the phrase is generic, but I can reassure noble Lords that SIAC will be judicious about how it views its interpretation.
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I also agree that there is nothing new about the clauses. They have been in the Immigration Act since 1971, including the reference to reasons of a political nature. SIAC will examine evidence of whether deportation is justified on that ground.
Lord Avebury: In the past, interpretation of the phrase,
"another reason of a political kind"
has been done in public. The examples that the Minister has just given—concerning the Ku Klux Klan and the Holocaust deniers—relate to legitimate questions of public comment. I can remember many cases in which the Home Office sought to prevent people from entering the country for the reasons that we are discussing, thus provoking major rows.
Years ago, there was a case relating to the entry of someone connected to an extremist religion—I forget whether it was the scientologists or the Moonies. Sir John Foster carried out an inquiry into whether it was legitimate to exclude such people from the United Kingdom. In future, the Moonies—or whoever it may be—will be excluded under this clause, and there will be no public discussion of the merits of the decision. The matter will be dealt with by SIAC behind closed doors.
Baroness Scotland of Asthal: The noble Lord says, "behind closed doors", but the point is that there will be a proper hearing. I hope that the noble Lord is not suggesting that SIAC will, in some way, undertake the process improperly and injudiciously. The point of having SIAC is to have a robust system on which we can all rely to make sound and proper judgments. The decisions will be made by appropriate judicial officers with proper training and expertise.
Earl Russell: The complaint is that the criterion,
"another reason of a political kind"
cannot properly be judged.
Lord Mayhew of Twysden: I want to make a suggestion. I shall not invite the Minister to draft amendments while on her feet in public, but I wonder whether another form of words—such as "expedient for another reason in the public interest"—might meet the concerns raised by the noble Earl, Lord Russell. If that were adopted, we would, at least, know that such a decision would not be taken without reference to the Attorney-General, who is the guardian of the public interest. That would be the probability and ought to be the rule. Will the Minister consider that? It would be less offensive to have such a phrase in the Bill than the existing wording, for the reasons that the noble Earl suggested.
Lord Judd: As someone who supports and understands the Government in their intention, I ask them to consider whether more precise wording could cover this point. The noble and learned Lord's observations are extremely helpful in that respect.

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I am worried not only by the noble Earl's suggestion that the provision could bring the rule of law into disrepute, but also that we are moving into an age where it is too easy to think that political activity of itself is sometimes questionable, uncomfortable and unacceptable. Anything that inadvertently aids and abets such a reactionary and dangerous view is unfortunate. I therefore hope that my noble friend will take very seriously the noble and learned Lord's point and at least undertake to reconsider the issue before Report stage to sec whether better wording could be introduced.
Baroness Scotland of Asthal: I am happy to look at the wording more carefully as my noble friend suggests, but I must reiterate that "of a political kind", or "of a political nature", has been in the legislation since 1971. It does not lie outside what our courts have been used to dealing with. I also emphasise that SIAC will hear evidence in private only if it is warranted. Most of the evidence is likely to be heard in public.
We will see whether something more solicitous can be contrived and we will look at the suggestion made in relation to the wording. But because the term "political kind" has been in usage for considerable time, we may have to return to the issue.
Earl Russell: I thank the noble and learned Lord and the noble Baroness for those responses.
Lord Avebury: We are not worried about the phrase, "another reason of a political kind", which as the noble Baroness explained, has been in use since 1971, but about the difference in the procedure—which has always existed—whereby such cases could be explored in public. The noble Baroness gave two examples and I gave another of highly political reasons that led governments to exclude people from the United Kingdom but were nevertheless discussed in the media.
On the noble Baroness's figures, 13 certificates have been issued since October 2000. I do not think that any of those cases have been in the media, but I may be wrong. She said that it is always open to SIAC to hold hearings in public if it does not believe that the political matters before it are of such a sensitive nature that they have to be held in camera. So I hope that some form of words can be devised as the noble Lord, Lord Judd, helpfully suggested, that will distinguish between the two categories of case: those which can be dealt with only through SIAC because sensitive security issues are involved, and those of a purely political nature, such as the Reverend Moon or the Ku Klux Klan, which can properly be dealt with by adjudicators.
I thank the noble Baroness for what she said about the extension of Community Legal Service aid. That is a sensible concession, bearing in mind that many of the people who would be eligible under the new section being inserted by the Government will already have had their cases approved through the Community Legal Service at prior stages. If they had to go through the Access to Justice Act 1999, which the noble Baroness said had been used in such cases, it would
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mean switching from one form of assistance to another, which might create unnecessary bureaucracy. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 206 and 207 not moved.]
Clauses 85 and 86 agreed to.
4.15 p.m.
Lord Goodhart Lord Goodhart moved Amendment No. 207ZA:
After Clause 86, insert the following new clause—
"DEFERMENT OF POWER OF REMOVAL
(1) The power to remove a person from the United Kingdom under the Immigration and Asylum Act 1999 shall not be exercised while there is pending applications for judicial review of any decision to which subsection (2) applies, or an application for leave to apply for judicial review of such a decision, or while the time for making such an application has not expired.
(2) This subsection applies to—

(a) an immigration decision to which subsection (2) of section 76 applies;

(b) a decision by the Secretary of State to certify that in his opinion a claim under subsection (2)(a) of section 81 is clearly unfounded;

(c) a decision by the Secretary of State or an immigration officer to grant a certification under sections 84 to 86."

The noble Lord said: The amendment is based on the views expressed in paragraphs 93 to 103 of the report on the Bill by the Joint Committee on Human Rights. The Bill considerably increases the number of circumstances in which immigration and asylum appeals can be banned from going to an adjudicator or thereafter to a tribunal. The original decision will become subject to judicial review, but the Bill contains no protection against the removal from the United Kingdom of the subject of the decision objected to while the judicial review proceedings are continuing.
The Joint Committee concluded that the removal of a person while judicial review was pending could in some circumstances result in a violation of his rights under Article 13 of the European Convention on Human Rights; that is, the right to an effective remedy before a national authority for breach of other convention rights. Article 13 is not one of the convention rights under the Human Rights Act, but it could be the basis for an appeal to the European Court of Human Rights in Strasbourg.
The defeat of the human rights of the person removed could arise where an asylum seeker was returned to the country of origin and imprisoned there; in that case the purpose of asylum is defeated as it becomes impossible. The Joint Committee identified such problems under several clauses; the first in numerical order is Clause 76, where immigration decisions taken on certain specified grounds are excluded from the appeal structure. Those grounds include cases where a person is seeking to remain in the United Kingdom for longer than permitted, or where he is remaining for a purpose other than that for which he is permitted under the immigration rules.
Clause 81 bans an appeal on human rights grounds against an order for removal to an allegedly safe third country if the Home Secretary has certified that, in his

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Opinion, the claim on human rights grounds is unfounded. We have just been debating Clause 84. The amendment refers to Clauses 84 to 86, although where a certificate is issued under Clause 85, as we have just heard, there is the possibility of an appeal to SIAC, which in the view of the Joint Committee on Human Rights would probably suffice for that purpose.
Nothing I say casts any question on the point raised by my noble friend Lord Avebury about the possible absence of due publicity on SIAC's proceedings. This is simply looking at the position of someone who has a right of appeal to SIAC and the question of whether that right of appeal, whether or not it is publicised, meets the required criteria for the judicial process. There are problems with Clauses 84 and 86 and there is no remedy except judicial review under either clause. In each case, as reported by the Joint Committee, there is a risk that a legitimate challenge to a court in the United Kingdom could be aborted by the removal from the United Kingdom of the person against whom the order is made during the judicial review proceedings.
The reports of the Joint Committee deserve great respect. There is a risk that in some cases the removal of an immigrant or asylum seeker while judicial review is pending could prejudice human rights. There may be only a few cases hut, frankly, a few is too many. I believe that the Government should reconsider the issue. I beg to move.
Lord Kingsland: The noble Lord, Lord Goodhart, has explained that the Liberal Democrat amendment would prohibit the removal of persons who have applied for judicial review, particularly those who are not accorded the normal appeal rights by virtue of Clause 76(2); those whose asylum applications are certified as clearly unfounded; and those whose applications are certified under Clause 84 and Clauses 85 and 86.
It is my understanding that it is already the policy of the Home Office to defer removal in order to allow an applicant's legal representatives to seek permission to apply for judicial review and subsequently, while the case is under consideration by the courts.
The Minister may be aware of the terms of paragraph 7 of Chapter 13 of the Asylum Policy Instructions and Immigration and Nationality Directorate internal guidance document which has been published on the IND's website. Paragraph 7.2 of the published instructions states:
"It is Home Office policy to defer removal, firstly to allow the applicant's solicitor to seek permission to apply for judicial review and thereafter while the case is under challenge in the courts. The solicitor will be given a limited time in which to seek permission to apply".
Is the Minister, therefore, able to confirm that the Government already follow, and will continue to follow as a matter of policy, the suggestion made by the noble Lord, Lord Dholakia, in his amendment?
I have one further question regarding the final sentence of the paragraph I have quoted, which states that a "limited time" is given to legal representatives to
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seek permission to apply for judicial review. As Members of the Committee will be aware, the general rule for judicial review is that it must be sought,
"promptly and in any event within three months".
Can the Minister confirm that this is indeed the criterion that is applied when granting a deferment of removal? If so, can the Committee be told how that expression is interpreted by the Home Office?
Lord Bassam of Brighton: We greatly respect the reports produced by the Joint Committee on Human Rights and the matter has been carefully considered by Ministers in reaching the position we have adopted. We ought to put the debate in the context of the White Paper, which sets out exactly what a judicial review is and why sometimes the "abuse" of that process needs to be tackled by this legislation.
Judicial review, as we all know, is not an appeal as such: it is a way by which the decision of any public authority can be challenged in the administrative court. Applications for judicial review in immigration and asylum cases amount to more than 60 per cent of all applications for permission made to the court.
That would be fine if the grounds for application in the majority of cases warranted consideration, but it is the case that more than 80 per cent of all applications for judicial review in immigration cases founder at the permission stage. In this legislation, we are taking steps to deal with the large number of judicial review applications with the introduction of the new statutory review. The statutory review will provide for a challenge against refusal of leave to appeal to the Immigration Appeal Tribunal by way of an application to a High Court judge on a point of law.
We are also introducing tighter funding control on such applications. We hope that these new arrangements will have an important deterrent effect on abusive applications being lodged at the refusal of permission to appeal to the tribunal stage solely to prevent removal.
Last minute and abusive applications for judicial review have a debilitating effect on the process of asylum applications as they prevent the swift removal from this country of those who have no basis to remain here. Under current arrangements between the IND and the High Court, if a judicial review is threatened, removal is delayed for between three to five days to enable the application to be lodged. If an application is lodged, the removal will be deferred. At present, it takes seven to eight weeks for the permission application to be considered.
Members of the Committee discussed the arrangements earlier and know the position. Therefore, when an application for judicial review is made, in most cases the applicant is released from detention. We ask: what kind of signal does that send out? The categories for which the amendment seeks to provide a suspense of judicial review opportunity are those which, if they had the right to appeal to an adjudicator, simply could not succeed. They include those to whom the Dublin convention applies; those who have or who have had the opportunity to appeal;

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and those who are unwelcome here on the grounds of public good, including, as we discussed earlier, national security.
The amendment also seeks to prevent the removal of those who are within the time limit within which they might make an application for judicial review. The time limit under the civil procedure rules to lodge a judicial review is lengthy—up to three months—but the application must in any event be made promptly. Therefore, it is unclear whether the intention is that removal should be deferred for three months or until any such application would no longer be prompt. To stay the removal of all failed immigration and asylum applicants for three months while they consider whether to bring an application, all the while on public support or detained at public expense, is in our submission absurd. And I believe that the public would agree with that proposition.
I understand the thinking behind the amendment and why the noble Lord, Lord Goodhart, and his colleagues have been kind enough to table it. However, we do not believe that it advances the cause of asylum seekers. In fact, in some respects it may well set it back because it seems to frustrate the process. I hope that the noble Lord will not seek to press his amendment today or at a later stage.
Lord Goodhart: I was unhappy with the Minister's reply because part of it was well beyond the purposes of the amendment. We were not looking at the procedure for applying for judicial review: we were saying merely that while that procedure is continuing—either at the application stage; when leave has been granted; or when the time for application has not yet expired—there should be no removal from the United Kingdom.
If the Government chose to speed up the time limit within which an application for judicial review could be made in asylum cases, that would be another matter and we would have to consider that on its merits. However, while the law allows a three-month period, that should not be foreshortened by removing someone so that he cannot consult his advisers and is therefore effectively unable to bring judicial review proceedings or make an application.
Certainly once an application has been made and is pending or once leave has been granted, it is appropriate beyond doubt that applicants for judicial review should be entitled to remain in the United Kingdom so that they can be consulted by their legal representatives and give instructions that may well be needed. I understand that that is the position of the Government, but there is no obligation to observe the rule. It would be appropriate to put it on to the face of the Bill.
The Government should accept the amendment so that where either an application for leave is pending or leave has been granted and a hearing is pending—
Lord Bassam of Brighton: I think that the noble Lord may be operating under a misapprehension; perhaps I did not make the position clear. It is our practice not
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to remove anyone while judicial review is pending. If that helps the noble Lord, then perhaps he will feel more comfortable with the present position.
Lord Goodhart: I do not think that the noble Lord could have heard what I said. I accept that that is de facto the position, but it would be desirable—since it is so obviously correct—to put it on to the face of the Bill.
If the Government feel that it would be appropriate to shorten the time within which judicial review could be applied for in cases of this kind, then they should bring forward proposals to do just that. Such proposals would have to be considered on their merits as regards the time-scale. At the moment, however, where a longer period is allowed, it is difficult to justify removing someone while the period has not yet elapsed.
I remain unhappy with the Government's response. We may wish to revisit the matter, but for today I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Clauses 87 and 88 agreed to.
Schedule 5 agreed to.
Clause 89 [Appeal to Tribunal]:
Lord Joffe Lord Joffe moved Amendment No. 207A:
Page 47, line 25, leave out "on a point of law"
The noble Lord said: In moving Amendment No. 207A I wish to speak also to Amendment No. 207B. I am grateful to those noble Lords who have added their names to the amendments. I should also like to thank ILPA and the various immigration NGOs and associations which have provided such detailed and incisive briefings.
The amendments are based on my experience as a human rights lawyer in South Africa, which will set the context for my approach. I have listened carefully to many of the debates in Committee and to the approach taken and responses of Ministers, in particular the silken eloquence and reassuring manner of the noble Lord, Lord Filkin, as he defends what I believe to be the indefensible.
I could not help but be struck by certain parallels between this Bill and legislation in apartheid South Africa. That legislation initially deprived selected groups of some of their human rights and, subsequently, of most of those rights. In the Bill before the Committee, a group of people—asylum seekers—have been singled out and are to have many of the rights enjoyed by everyone else stripped out or diminished. There is a thread running throughout the Bill that seeks to remove the rights of asylum seekers.
The right to judicial review is to be removed. Unrealistic time-scales are to be imposed for lodging statutory appeals. There are to be new powers of search and entry without a warrant. Some appellants are to be shipped out of the country to prosecute their appeals. Children are to be banished from mainstream

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schools and provisions on bail applications are to be withdrawn. These are just a part of the slippery slope on which the Government have embarked.
When within government the mindset develops that every threat, whether real or perceived, can be met only by removing the legal rights and protections of the courts from selected groups, then the very fabric of the rule of law is in danger. There is a grave risk that the fine reputation enjoyed by this land of being a bastion of liberty and justice for all will be irreparably damaged.
I turn specifically to Amendment No. 207A, the purpose of which is to preserve the jurisdiction of the Immigration Appeal Tribunal over matters of fact. The current position is that most of those whose appeal is refused by an adjudicator can apply for leave to appeal to the Immigration Appeal Tribunal. An application can be made to appeal on the ground that the adjudicator has made an error of law or of fact. By means of Clause 89(1), the Government intend to remove the right to appeal on an error of fact. That is to be done despite the fact that the tribunal's current power to grant leave to appeal, whether on a question of fact or of law, is not wide. It is limited to cases which have a real prospect of success or where some other compelling reason is put forward to justify why the appeal should be heard.
The Government have offered no persuasive reasons for removing the specialist tribunal's ability to consider issues of fact as well as of law on appeal. It would be helpful if, in his response, the Minister could outline the reasons for the limitation and give details of any statistics which support those reasons.
Under the current practice of the tribunal, only a very limited number of cases engage its jurisdiction on matters of fact, but such cases raise serious issues. That can be illustrated by a recent example. A Turkish Kurd claimed asylum on account of his political activities in the Kurdish area of Turkey. The Home Office rejected the claim, the adjudicator finding that he had a well-founded fear of persecution in the Kurdish area, but that he could live safely in Istanbul. The tribunal granted leave to appeal on the basis that documentary evidence showed that the political Kurds cannot live safely in Istanbul. At the hearing before the tribunal, the members considered evidence about Istanbul. There was no point of law, only discussion about factual evidence. The tribunal disagreed with the adjudicator and allowed the appeal. The appellant was subsequently granted asylum.
Lord Clinton-Davis: Would the noble Lord indicate when that appeal was heard?
Lord Joffe: I do not have to hand the exact date, but I can confirm that the case was heard recently.
This case and others like it turned on matters of fact. If Clause 89(1) becomes law, appellants whose appeals have been wrongly refused because the adjudicator is incorrect about the facts will be denied the right to appeal. Without further ado they will be returned to
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the countries from which they fled and in which, at best, they will live in fear of persecution, but more likely they will be imprisoned, tortured or even murdered.
Evidence has made it manifestly clear that asylum seekers like Kurdish Turks, who are entitled to asylum, will be denied it under the proposed legislation. I should like to ask the Minister how the Government can possibly justify such an outcome. The amendment would ensure that the tribunal can continue to grant leave to appeal on the ground that the adjudicator has made an error of fact.
I turn now to Amendment No. 207B. First, however, I shall respond more fully to the question put to me by the noble Lord, Lord Clinton-Davies. The appeal for the Turkish Kurd asylum seeker was lodged around two months ago.
Lord Clinton-Davis: I am most grateful to the noble Lord for giving way. This matter is germane to the question I posed earlier when the noble Lord said that there were no such cases, as he understood it.
Lord Joffe: This case is one of a number in respect of which I have been provided with details.
I turn now to Amendment No. 207B, which seeks to retain the right to apply for a judicial review of a decision to refuse leave to appeal to the Immigration Appeal Tribunal. Clause 89 would replace this right with a paper statutory review, with no prospect of any further renewal or appeal. The current position is that in cases where an appeal is refused by an adjudicator the appellant can apply for leave to appeal to the Immigration Appeal Tribunal. If the tribunal refuses to grant leave, the appellant can apply to the High Court for judicial review on the ground that the tribunal has made an error of law.
There is nothing unique to immigration or asylum about the right to apply for judicial review. The right to apply for such a review where an administrative body or a tribunal makes a decision that is wrong in law and there is no right of appeal against that decision has long been considered as a cornerstone of our system of justice. Clause 89 would take away this right from a single group—asylum seekers. It would thus remove an historic safeguard from a vulnerable group which has more to fear than most from legal errors.
Asylum is an area where issues of life and liberty are at stake and it has long been acknowledged that there is a correspondingly high duty to ensure that decisions are subject to the most anxious scrutiny. Indeed, if Clause 89 becomes law, an individual disputing a parking ticket will be afforded greater access to justice than those whose lives and liberty are at stake.
The Government's proposals are all the more disquieting in the light of the recommendations made by Sir Jeffery Bowman, who was commissioned by the Government to undertake a comprehensive review of tribunals and judicial review. These recommendations were set out in his report, Review of the Crown Office, in March 2000. Key empirical findings and recommendations in relation to the judicial review of

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the Immigration Appeal Tribunal were that most claims against the tribunal were successful; that the right to bring them should be preserved; and that the volume of cases would best be addressed by improvements in the tribunal's decision making at leave stage, obviating the need for individual judicial review claims.
Experience has shown—and the Bowman report confirmed—that applications for judicial review which are renewed orally have a high success rate. The Government's proposed statutory review based only on a written submission is not an adequate substitute for judicial review. Consideration of written applications can be a cursory process and go very wrong. A recent example was described by Mr Justice Munby in considering a written application to the tribunal. He said:
"That the Tribunal should be able to promulgate a written determination refusing leave to appeal to the Tribunal containing such grotesquely egregious errors is absolutely deplorable. It would be deplorable in any judicial context. It is all the more deplorable when the context is one as sensitive and as human rights intensive as the context with which this particular Tribunal is concerned; that is to say, rights of asylum and the potential invasion of the human rights of an asylum seeker who, if he fails to obtain asylum, may be sent back to some place which does not respect those rights. Unhappily, as it will appear in a moment, this is not the first occasion upon which in recent months this court has had to make such complaints about egregious error on the part of this Tribunal".
Indeed, in a sample of 19 cases brought by the Refugee Legal Centre in the period 31st December 2000 to August 2001, where applications for permission to apply for judicial review were refused on the papers, the success rate on renewed oral applications was in excess of 50 per cent. Of the 10 cases in which permission was granted following an oral hearing, at least two of the applicants have since been granted refugee status in the United Kingdom. The remainder are currently within the appeal system. The Public Law Project provides similar statistics relating to a later period.
Not only do we have practitioners' evidence that the chances of success are higher on oral applications, we have also the evidence of experts such as Sir William Wade, who, in his book, Administrative Law, wrote:
"In practice it seems that the leave requirement often operates erratically. Empirical evidence shows a high success rate for renewed applications, suggesting a high rate of error at the initial stage where the judge makes only a 'quick perusal of the material', as Lord Diplock described it. The degree of arguability may vary widely, and new developments in this expanding branch of the law may be rejected at the outset as unarguable".
Under Clause 89 the decision of a statutory review cannot be appealed to the Court of Appeal. In 1985, when similar attempts were made to legislate to prevent individuals from renewing failed High Court applications for judicial review to the Court of Appeal, these met with fierce resistance from both Parliament and the judiciary. At the Committee stage of the Bill in this House, Lord Denning described the proposal as a "constitutional monstrosity". In the event, the right of renewal to the Court of Appeal was preserved.
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The Court of Appeal will frequently decide complex issues of law, often raising issues of public importance. Thus the Government's proposals will not only deprive immigrants and asylum seekers of yet another essential safeguard, they will also strike a blow to the strong body of refugee law jurisprudence which has developed to date.
The Government's determination to deny asylum seekers the right to a fair hearing is reinforced by their proposals to impose unworkable time limits for an application for a statutory review, which has to be made within 10 days compared with the three months time limit for judicial reviews. It is inevitable that if such an unworkable and draconian time limit is imposed, meritorious claims will either not be brought or will be badly prepared.
It is extraordinary that the Government, having recently appointed an expert committee to examine judicial review, should reject its findings without explanation, disregard the judgments of eminent jurists, ignore statistics which show that most judicial reviews against the Immigration Appeal Tribunal were successful, and seek to deprive one of the most vulnerable groups in our society of access to the courts through a process which has been a cornerstone of our judicial system.
The House of Lords Select Committee on Delegated Powers and Regulatory Reform was puzzled by the argument that if a right of appeal is too popular it should be ended. I suggest that many Members of the Committee will share that puzzlement. In order to throw some light on this issue and to do away with this puzzlement, perhaps the Minister will explain the justification for removing the right to apply for a judicial review.
In conclusion, I cannot put the case better than the Public Law Project, which stated:
"Everyone has an interest in ensuring that decisions on immigration and asylum cases are sound and sustainable. The government proposals do nothing to achieve that end and everything to remove a fundamental safety net from beneath a group of people who most need it".
I beg to move.
4.45 p.m.
Lord Archer of Sandwell: I support Amendment No. 207B, which has been so persuasively moved by the noble Lord, Lord Joffe. I wish to speak to my Amendments Nos. 208A and 208B. I am grateful to my noble friend Lord Judd and to the right reverend Prelate the Bishop of Derby for adding their names to the amendments.
I say at the outset that my preference is for Amendment No. 207B. My amendment represents a fall-back position if my noble friends cannot find it in their hearts to accept Amendment No. 207B. If, for whatever reasons commend themselves to her, my noble friend Lady Scotland finds it impossible to accept Amendment No. 207B, my amendment would provide a fallback position.
Perhaps we should be clear at the outset that, although the hearing before an adjudicator is technically called an appeal, it is not an appeal from a

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judicial conclusion. It will be the first judicial hearing in the proceedings. So within the judicial system, it will be a decision of first instance. The first appeal about which we are talking is the appeal to the Immigration Appeal Tribunal.
It is, therefore, appropriate that there should be an appeal to the Immigration Appeal Tribunal. As the noble Lord, Lord Joffe, said, under Clause 89 an appeal to the IAT would lie only by leave of that tribunal. But the safeguard should be that a would-be appellant who has been refused leave to appeal may seek judicial review of the decision to refuse leave. That would not entail a state trial. It would be a decision as to whether the Immigration Appeal Tribunal had followed the correct procedure and was within the Wednesbury standard of reasonableness. The clause preserves that right, but provides that the appellant shall have no right to an oral hearing.
The Government's reasoning appears to be, "Oh well, most applications are a waste of time. They're hopeless from the outset. Why overload the system with hopeless arguments?" That reasoning disintegrates on the first breath of logical scrutiny. Even if it were true that most applications were devoid of merit, that would surely render it more important, and not less, to recognise a meritorious application among the dross. But it rests in any event on a factual misconception, as the noble Lord, Lord Joffe, explained.
Among applications for judicial review of IAT decisions at present, it is true that the majority of applications for leave to apply are unsuccessful in the first instance. But of those where the application is renewed and leave is given, two out of three transpire at the hearing to be successful. Refusal of leave is judged to have been flawed. The noble Lord cited a number of examples in that respect. But there is no guarantee that the arguments that the judge found persuasive in any of those cases would have been apparent on the papers alone.
Our procedures across virtually the whole of our legal system are based on oral argument. That is because it has been found by long experience that that is the best and fairest way to clarify the issues and the arguments. It is also usually the most expeditious way. We might have conducted our proceedings in your Lordships' House by exchanging memoranda, but we found by experience that oral debate is more likely to lead to a proper conclusion.
However, what I have sought to do in this amendment is not to open the bidding as high as the noble Lord, Lord Joffe. I suggest a moderate compromise, as I say, by way of a fallback position. I am suggesting that we should leave it to the judge, if he believes that oral argument is necessary to obtain a just result, to say so. Therefore, oral argument would not be inevitably shut out from the outset: that option would be available if the judge, who is best placed in any specific case to know what justice requires, considers it necessary.
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I hope that my noble friend will not find herself in the position of saying, "Even if the judge believes that oral argument is necessary to lead to a just outcome, it will not be made available to him". That would be a monstrous affront to the judiciary, and a flagrant denial of justice. Mine is a modest amendment. If my noble friend resists Amendment No. 207B, I hope that my moderation will at least be duly rewarded.
Lord Dholakia: Amendments Nos. 207A, 207B and 209ZA have the support of these Benches. I shall speak to Amendment No. 207A and 207B, and shall leave the noble and learned Lord, Lord Mayhew of Twysden, to speak to his amendment. I am sure that my noble friend Lord Russell will want to say a few words on that a little later. I found the introduction of the noble Lord, Lord Joffe, most moving, especially the mention of his own perception about the precise impact of such clauses in the Immigration and Asylum Bill. If there are already good practices in place that we have adopted so far, I believe that it would be dangerous to remove such practices by way of this legislation. The impact of what the Government propose to do under this clause is to remove some of those good practices.
There are some very interesting examples of the way that tribunals and adjudicators perform their very important tasks. It is well established that it is their duty to ascertain whether a person fulfils the criteria of the relevant immigration rules. Obviously, in the back of the Government's mind there must be the feeling that there may be a danger of floodgates opening as regards the present situation. But it is very clear that the requirement to obtain permission to appeal to the tribunal by way of a paper application means that there is an effective mechanism of sifting out wholly unmeritorious cases.
It is currently reasonably difficult to obtain leave to appeal solely on a factual issue. The tribunal should be trusted to exercise its factual jurisdiction responsibly. At present, both practice and principle determine that the tribunal may reverse an adjudicator's findings of fact, but will give the greatest weight to factual findings that are based on oral evidence heard by the adjudicator. Thus, the tribunal does not represent simply another bite of the cherry.
There is also another reason. Adjudicators have different levels of knowledge about immigration law and practice. Some part-time adjudicators sit only on a minority of court days. By contrast, the current batch of full-time tribunal chairmen is highly experienced in immigration and asylum matters and can bring great skill to factual issues.
In relation to Amendment No. 207B, perhaps I may just say that I have a good deal of sympathy with the inclusion in this grouping of Amendments Nos. 208A and 208B, to which the noble and learned Lord has just spoken. The purpose of our amendment is to remove the proposed statutory bar to a right to an oral hearing in a higher court and retain the right to apply for a judicial review. The right to an oral hearing in a higher court is central to justice in this country. Without it, the decisions of the IAT will not be subjected to the

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"most anxious scrutiny". The noble Lord, Lord Joffe, was right to quote the Bowman report in relation to this matter.
I was delighted earlier to see the noble Lord, Lord Mishcon, in his place in the Chamber. I was able to tell him that I intended to use one of the quotes given to me by ILPA. During the passage of the Administration of Justice Act 1985 through Parliament, the noble Lord, Lord Mishcon, observed that,
"the remedy of judicial review was in the main initiated in order that, if Tribunals and Government departments acted unlawfully they could be brought to book. If it is a recommendation of a Government department to the Government that there should be an enactment which limits the rights of the person who goes for judicial review, one has to be very careful".
I believe that the Government should take that observation into account, especially as it comes from their own Benches and has now been put forward by the Cross Benches.
The Lord Bishop of Southwark: The right reverend Prelate the Bishop of Derby, who has attached his name to Amendment No. 208A, has been prevented through other duties from being present in this Chamber today. Therefore, from these Benches, I rise to support the modest amendments of the noble and learned Lord, Lord Archer of Sandwell, Amendments Nos. 208A and 208B.
The right to an oral hearing in a higher court is central to justice in this country; without it, the decisions of the Immigration Appeal Tribunal will not be subjected to the "most anxious scrutiny", which is to be expected in human rights decision making. The proposal that a review would be determined by a single judge on the papers of the case, with no oral review or appeal to the Court of Appeal, would mean that the adjudicator, who might often be a lay person, would be the only person to hear an oral argument about the law.
This proposal will make asylum, human rights and immigration appeals unique among statutory appeal procedures in providing no scope for an oral hearing before a High Court judge before the case is finally disposed of. It is recognised that the Government's purpose is to avoid delays in processing appeals, but it seems that the price being paid in terms of well-tried legal safeguards is just too great.
5 p.m.
Lord Clinton-Davis: I support the remarks of my noble and learned friend Lord Archer. The noble Lord, Lord Joffe, has put a powerful case. I personally think that the issue has been slightly exaggerated. I do not believe that the proposed legislation is in all its aspects comparable to apartheid. However, the noble Lord speaks from knowledge. From that point of view, although I hesitate to agree with everything that he has said, I want to take on board that warning.
It is highly wrong that oral argument should be removed from the judges altogether. With respect, I do not believe that putting documents before them can be any substitute, particularly where cases have established that oral argument is advantageous.
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The question of whether or not the case is comparable to apartheid does not remove the argument that the case put forward by the Government, which I generally support, is wholly wrong in this regard. I simply cannot see that oral argument has to be viewed with such suspicion. My noble friend the Minister is an eloquent advocate, and is someone whom we all respect. I do not believe that she would put forward that point of view beforehand. But that is not wholly relevant either. The onus of establishing that oral argument is irrelevant here rests fairly and squarely on her. With respect, I do not think that she will be able to discharge that. I may be surprised by her eloquence, but at the moment I do not think so.
My noble and learned friend has said that, as a fallback, we should consider his Amendment No. 208B, in which he has been supported by the right reverend Prelate the Bishop of Southwark. I do not believe that it is a wholly good thing to revert to that issue. It should be done only under some duress.
However, a powerful case has been made out for ensuring that the Government think again about this matter. It is not a slight issue. It is not something that those of us on these Benches who generally support the Government will easily forget. I beg the Government to think again about this issue. It is highly important. We should take on board the arguments that have been adduced so far, both by the noble Lord, Lord Joffe, and by my noble and learned friend Lord Archer.
It is no light thing to surrender the right of oral submissions. Those people—and there will be many—who will be the victims of that proposition will hold in their minds the idea that the Government have let them down—and I do not want them to say that.
Lord Judd: I am sure that my noble friends on the Front Bench will take extremely seriously the points made in the debates on these amendments. My noble and learned friend Lord Archer speaks with great authority, not only as a distinguished lawyer but as someone who has carried high legal office in government. The fact that he has put the case so tellingly cannot be lightly dismissed.
The noble Lord, Lord Joffe, speaks with a different kind of authority—that of a human rights lawyer who was in the front line of the battle for justice in South Africa. I understand that he was indeed the instructing solicitor for the defence in the Mandela trial. When someone with that background says what he has said in the course of our deliberations, it cannot be lightly cast aside.
My good and noble friend Lord Clinton-Davis says that he believes that the case is slightly exaggerated and that there is no comparison with apartheid. I do not think that the noble Lord, Lord Joffe, was making an absolute comparison with apartheid. He was saying that as he saw the rights of a particular group of people resident in Britain stripped away one by one as compared with the rights of everyone else, it reminded

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him of some of the characteristics of society in South Africa when he was battling for justice as a human rights lawyer.
This is the anxiety that a number of us have. With good administrative intention—not with the kind of evil objectives that those behind apartheid had—my noble friends may end up by producing a system which can be compared with apartheid rather than one that can be compared with the highest principles of British justice.
I make no apology for making the point again that I made in the debate the other evening. I find this slightly bizarre when we are beginning to introduce examinations for those who want citizenship in Britain to make sure that they understand what is good and decent about Britain. I should have said that for most people in that situation, the rule of law and justice are crucial.
Perhaps I may make two specific points and a general one. First, as a layman, it is absolutely clear to me when I look at the judicial system that a deliberation on written evidence cannot be compared in quality with a deliberation on evidence that is both written and oral. It is self-evident that it cannot be of the same quality, depth, care or integrity.
Secondly, it is very important that the credibility of the appellant can be tested, examined and seen, and that those making the assessment are able to see the response of the appellant to the examination as it goes forward. For that not to happen is very disturbing. For those reasons, these matters need to be taken extremely seriously.
My general point relates to a supplementary question that I asked at Question Time last week. I asked my noble friend the Minister whether one of the principal objectives that must concern us all was that everyone who had a valid case for asylum should be accorded asylum and that that was how we shall be judged in history. I was a bit disappointed by my noble friend's response. He said that of course that was an objective, but another objective was to have a decent, firm, fair system of law being well administered. Those are not contradictory. Both are essential.
My noble friend the Minister and his colleagues have been doing an outstandingly good job on the technical, administrative level in how they have taken the Bill through the House. There is not one of us who would not commend them on their patience and the detail and manner of their argument, all of which have been impressive and will make their mark. However, I am looking for an overriding commitment to justice from the Government. That is what they will be judged by above all. As we have said before, these people may have been through hell. Taking away from them rights that the rest of us take for granted in other dimensions of British life is the beginning of the erosion of the commitment to justice. I believe that that is what led the noble Lord, Lord Joffe, to say what he said in his opening remarks.
The Countess of Mar: I am sorry that I am not able to support my noble friend Lord Joffe. I remind the
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Committee of my interest as a member of the Immigration Appeal Tribunal. I cannot support Amendment No. 207A because I understand that it is a requirement of the law that the adjudicator considers the facts. Wiping out,
"on a point of law"
is not necessary. If the adjudicator has not considered the facts, the appeal should be on the case of law. Perhaps the Minister will put me right on that if I am wrong.
The noble and learned Lord, Lord Archer, pointed out clearly that Amendment No. 207B appears to take away the right of an appellant to appeal against the tribunal's decision to refuse an appeal. The only appeal then is to the High Court. We need that. I also agree that we need to be able to make oral submissions, as the noble and learned Lord made very clear.
I mentioned the other night, at heaven knows what hour of the morning, that there is a huge backlog of work in the Immigration Service. People making decisions cannot be expected to make the right decision every time. In case a wrong decision is made, we ought to give the appellants every opportunity to appeal. Quite often, they will not go on appealing if their case is flimsy. I often see flimsy cases and wonder how they have the guts to appeal, but never mind, that is beside the point. I do my best to consider each case on its merits. I would like to see each case being allowed to be considered on its merits.
5.15 p.m.
Lord Mayhew of Twysden: It was moving to hear the speech of the noble Lord, Lord Joffe. I apologise to him for having missed his first few sentences. I did not hear him allude to similarities with apartheid. From anybody else I should have thought that that was possibly slightly overstating the case, but from him all of us in the Committee have to take it extremely seriously, for reasons that have already been alluded to.
I referred previously to the inherent dislike of all governments of judicial review. The vehemence of the protests of the executive at judicial review from time to time makes the case for its value and for preserving it undiminished. I shall speak to my Amendment No. 209ZA. I can omit a lot of what I intended to say because of what has been said already. The record on judicial review of adjudications by the IAT is very persuasive. Almost twice as many cases are allowed as are disallowed. Much of the briefing that has been so helpfully provided tells us that since January this year the High Court has granted permission for judicial review of the tribunal on 62 occasions—29 on perusal of the papers only and 33 on oral hearing after the original application on the papers has been refused.
Now, in place of the full range of judicial review, the Bill substitutes application in the form of a statutory review to the High Court with a review on point of law only and limits the applicant to written submissions only. That is where my amendment comes in. I endorse

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everything that has been said about the importance of oral hearings, especially in the context of the life and liberty of an applicant.
If the Bill had been in force, over half of those found to have an arguable case would have lost their right of challenge, even though the case would have been granted had it been heard, because of the provisions in Clause 89(3)(a) for written submissions only.
That is had enough, but Clause 89(4) empowers the Lord Chancellor, by order, to repeal even that. The noble Lord, Lord Joffe, has referred to the Select Committee on Delegated Powers and Regulatory Reform. It is worth reminding ourselves of that committee's comments:
"The Committee is puzzled by the argument that if a right of appeal is too popular it should be ended. Unless the Minister persuades the House that there is a better case for retaining this power, the Committee suggests that subsection (4) should be omitted".
The Government's case appears on page 26 of the report in the memorandum provided to the committee by the Home Office. Paragraph 122 reads:
"Subsection (4) has been introduced as a safeguard to ensure the Government can take swift, effective action if the new statutory review process is not working as it should".
Mark those words, "as it should". The argument continues:
"If the number of applications for review exceeds those anticipated the advantages of a review to the High Court will be lost but it may be necessary to take swift action to prevent the High Court being overwhelmed".
I suggest that the Government are thinking not of the High Court, but of the Home Office being overwhelmed. The High Court will always make arrangements to deal as expeditiously as may be with a press of work. The Lord Chancellor will see to it that it can if the High Court cannot do so by adjusting the number of allocated judges itself.
What is meant by,
"not working as it should"?
The record shows that many such cases are allowed once they are heard with the benefit of oral argument. What does the provision mean, except that a tiresome number of people are having their appeals allowed? The issue lies at the root of the Government's policy in this regard.
No evidence has been given of which I am aware that the High Court has been overwhelmed so far. If it is the Home Office which has found the number of cases to be tiresome, it ought either to improve the manner in which the matters are dealt with at first instance or find a better administrative way of dealing with them internally. One might suppose that that is what the Government would wish to do—take steps to improve the quality of the original decisions—rather than to curtail opportunities to have them allowed by a High Court judge.
Under subsection (4), even this limited indulgence can be repealed by the Lord Chancellor by order. That would leave no right of appeal from the IAT because, presumably, the Government will seek to ensure by further legislation that no judicial review is allowed at
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all. I should like to know whether that is what is actually envisaged. It would be very helpful to know from the Minister what truly are the circumstances in which the Government envisage that the Lord Chancellor may by order seek to remove even that which is allowed in Clause 89.
I have to make this comment. So far, the Government's attitude seems to give rise to the perception that they are saying, "There are far too many of these purported asylum seekers. We wish to deny them an oral hearing because that will speed up the determination of their cases and their ultimate removal". The Government concede, "Certainly some would succeed if there were an oral presentation of their renewed application", but they would have to concede that by reason of the statistics cited. However, it appears to be the Government's attitude that you cannot win them all. That is profoundly unjust in my view. It is also inexpedient because it feeds a popular and very lamentable feeling that all these asylum seekers are dishonest and really ought to be removed anyway.
What the Government are doing in this clause is to give half a loaf where there should be a loaf. In subsection (4), they are reserving to themselves the right to say, "If there are too many hungry people forming a tiresomely numerous queue for their half a loaf, then we'll deal with that by taking away the right even to half a loaf". That is an unattractive attitude. I shall be very glad either to hear how the Government can justify it or to hear them disavow it.
Baroness Carnegy of Lour: In speaking to Amendment No. 209ZA, my noble friend Lord Mayhew suggested that subsection (4) should be removed. I should like to ask the Minister how subsection (4) will relate to Scotland should that subsection and indeed the rest of the clause stand as currently printed. In the next group of amendments—in Amendment No. 208, I think—the Government are acknowledging that, under subsection (2) of Clause 89, an asylum seeker in Scotland would appeal to the Court of Session rather than to the High Court for review of the tribunal's decision. That is my understanding of Amendment No. 208. Once that change is made in the Bill, could the Lord Chancellor by order, under subsection (4), repeal subsections (2) and (3) in relation to the Court of Session in Scotland? It may well be that he can, because I believe that his writ does run when it comes to these tribunals. I may be wrong about that. I am not a lawyer; I am simply trying to follow the logic of this.
It seems rather strange that it is the Lord Chancellor who will assess whether the Court of Session is overburdened with appeals, and therefore whether subsections (2) and (3) have to be repealed. Or, rather, is the point that, as this Bill is a UK Bill, if the High Court is ever overburdened, there will be no appeals to the Court of Session either? I hope that the Minister understands my perhaps rather ill-expressed question.

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However, there does seem to be a question. We need to know how subsection (4) will operate in relation to the Court of Session in Scotland.
Earl Russell: I should like to congratulate the noble Baroness, Lady Carnegy of Lour. One such accident might happen to any government, but two savours of carelessness. It does seem that the Government have not entirely taken on board thinking in a devolutionary manner. Although I think that that was to be expected, devolution has been going for a little while now and it is time that we got on with it.
I rise to second the amendment of the noble and learned Lord, Lord Mayhew of Twysden, to which I put my name. He said so much that I shall add very little. I was taught my suspicion of the Henry VIII clause by his colleague the late Lord Rippon of Hexham, the spiritual begetter of the Delegated Powers and Regulatory Reform Committee, who taught me a great deal of what I know about procedure. Obviously, in some cases, there are arguments for Henry VIII powers; the classic one is the power to uprate used in social security orders every year. However, as I understand it, it was not the purpose of the power to allow the taking away of legal rights of appeal by the Lord Chancellor by order without any parliamentary proceeding simply because they did not suit him or were a nuisance.
I think that this is a gross abuse of the Henry VIII power, and I hope that the Government will continue the honourable record of both this and the previous government of paying serious attention to the passages where the Committee says that it "must draw this to the attention of the House". I remember the late Lord Rippon insisting that the Committee must not say anything stronger than that, because the decision must be not that of the Committee but that of the House. I respected that decision of his, and I hope that we observe it.
I support also the other amendments in this group. I found, too, the noble Lord, Lord Joffe, extremely moving. I interpreted him in the way set out by the noble Lord, Lord Judd. I also found him very difficult to answer, and I shall not attempt to do so.
Like many others, I am amazed at the lack of judicial appeal on points of fact. If I may, I say to the noble Countess, Lady Mar, that I mean no disrespect whatever to the Immigration Appeal Tribunal. So many errors creep into the process in fact at a lower stage that not even an Olympian Immigration Appeal Tribunal could spot them all. For example, appeals have been turned down for lack of credibility because, under General Mobutu in Zaire, opposition parties were allowed to operate freely. That was not an error of law. People have been found not to have been tortured because the scars were "self-inflicted" although they were on their back. That was not an error of law.
Until the determination of fact at the lower stages of the process is much better than it is now, and if—God forbid—we were forced to choose between appeal on
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points of law and appeals on points of fact, I should have thought that points of fact were the more important.
5.30 p.m.
Lord Corbett of Castle Vale: I hope that I will be forgiven for reminding the Committee of one of the reasons why we have this Bill in front of us. It would be very difficult, I think, to find many people in the United Kingdom who felt that the existing law was anything like as fit as it should be for its purpose in dealing with these important matters. My noble friends the Ministers have several times made the point that one of the Bill's main aims is to reinforce the one-stop appeal system.
As any of us who have had even slight experience with people claiming asylum in this country will know—this is the fact, although I readily confess to noble Lords that I very often share the reservations of my noble friend Lord Rooker about what he calls "the legal trade"—in asylum applications, it is not unknown for solicitors and others involved in the process to say, "No; don't do all this at once. Save that bit for a later stage. In case the original claim fails, we need some other argument in order to apply for appeal and to keep that appeal process going". That must happen. Certainly it has occurred in my experience. The Committee is in danger of losing sight of that. However, that is not to "do down" those coming here to claim asylum.
It is our duty to do what we can to put in place a system which is fair to all those claiming asylum but at the same time deals expeditiously with those claims. We witnessed the result of not doing so in Lye, Stourbridge. After weeks and weeks of protracted negotiation with a family who had taken refuge in a mosque in the village of Lye on the outskirts of Stourbridge, the Home Office felt that it had no alternative but to use force to gain entry to the mosque to implement the decision to deport the family whose asylum application had originally been made in Germany and turned down. They escaped from custody in Germany—these matters must be faced—and paid to be smuggled into the United Kingdom to make a further application for asylum here without mentioning that there had been an earlier application in Germany. None of us wants to see that kind of situation. Such situations are unfair to asylum applicants and their families.
The people of Lye commendably felt that an injustice had occurred and made the point—I do not dispute that—that after two years the family concerned, who were originally from Afghanistan, had settled into their community. Such a reaction in those circumstances should make us all proud of the people of that community. However, that is not the point I wish to draw to the Committee's attention. That situation arose because of a failure on the part of the present system to deal expeditiously with that asylum claim. As I have said before, it is my view, whatever other arguments may be put forward, that we must change the present culture so that when an asylum claim is made those who handle the claim should put

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all the cards face up on the table right at the start of the process and not be tempted to save certain matters for a later day.
I have great regard for the noble and learned Lord, Lord Mayhew of Twysden, and I believe that he is aware of that. However, I find his assertion with regard to the different outcomes of a judicial review decided on paper and that decided after an oral hearing rather difficult to justify, if I may put it that way. The inference was that the oral applications succeeded primarily because they were oral and that those conducted without an oral hearing failed because an oral hearing did not take place. I say with great respect to the noble and learned Lord that there is not the slightest evidence to support that. I suppose that that inference could be drawn but I do not believe that it stands up to two minutes' investigation. I understand that we employ Law Lords on occasion to trail through the entrails of such claims.
As one or two Members of the Committee have said, we can stretch some comparisons too far. I refer to the comments in regard to the apartheid regime made by the noble Lord, Lord Joffe. We were aware of the stated legal purpose of that vile regime which existed in South Africa. I cannot believe that a single Member of your Lordships' House believes that the purpose of this Government or any other government that we can imagine in this country is anywhere remotely near that. Motives play a part in this matter. It is to the benefit of all of us, including asylum applicants and their families, that we put in place a fair process which delivers a result much faster than does the present system. That point needs to be underlined.
That said, I say to my learned noble friend on the Front Bench that I very much hope that she will take on board the points made by my noble and learned friend Lord Archer of Sandwell. I accept the general thrust of what the Government are trying to do here. I remind the Committee that we are discussing an appeal to a tribunal where there has been a refusal of an original application. We want the one-stop-shop approach. I hope that my learned noble friend who will respond to the debate will think carefully about what my noble and learned friend Lord Archer said. In my view it gives nothing away to give the sole judge who will hear the appeals we are discussing discretion to say, "I do not feel that I am able in this particular case to come to a secure judgment solely on the basis of the relevant papers" and therefore to enable that judge in those circumstances to say that he wants to hear some oral argument.
Lord Goodhart: I apologise to the Committee for making a second intervention from our Front Bench on the matter. I do so only because there are a couple of rather detailed questions on the interpretation of Clause 89 which I should like the Minister to answer when she responds to the debate.
First, I refer to subsection (2) of Clause 89. What is the meaning of the words,
"a review of the Tribunal's decision"?
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Is that decision the tribunal's decision on the actual appeal which it hears or is it its decision simply to refuse or grant permission to appeal to itself? Common sense suggests that what it ought to mean is that the High Court can review the tribunal's decision on the appeal. However, a reading of subsection (2) of Clause 89 suggests otherwise because one would then expect it to state,
"A party to an appeal to the tribunal",
instead of,
"A party to an application to the Tribunal for permission to appeal".
It seems to me that there is serious uncertainly there.
Secondly, I refer to subsection (4) of Clause 89. The Home Office in its memorandum to the Delegated Powers and Regulatory Reform Committee clearly considered that subsections (2) and (3) create certain rights which, if they were overused, might be taken away. The Delegated Powers and Regulatory Reform Committee, of which I am a Member, took at face value the effect of subsection (4). However, it can be argued that subsections (2) and (3) simply impose certain restrictions on the normal right of judicial review of an inferior tribunal. If that is so, the effect of removing subsections (2) and (3) would be to improve the position of the immigrant or asylum seeker because then the ordinary right of application for judicial review, which includes a right to an oral hearing when permission is being sought, would arise again. I hope that the noble Baroness can respond to that point.
Lord Kingsland: I should remind the Committee at the outset of my remarks that subsections (2) and (3) of Clause 89 were introduced as amendments in the Standing Committee in another place and were not spoken to by the Minister or debated by that Committee because of the operation of the guillotine Motion. Subsection (4) was introduced by the Government at Report stage in another place and could not be discussed for similar reasons. Apart from the debate in your Lordships' House at Second Reading, therefore, there has been no prior scrutiny of these provisions.
On Amendment No. 207A, which appears in the name of the noble Lord, Lord Joffe, I, like many other Members of the Committee, will be most interested to hear from the noble Baroness an explanation of exactly why the Government believe that appeals to the Immigration Appeal Tribunal should be limited only to points of law and what the Government think is wrong with the present system in that regard.
The White Paper contained no justification for the proposed change, which was covered by the single sentence in paragraph 4.66. It stated:
"The Tribunal will focus entirely on the lawfulness of adjudicators' decisions rather than their factual basis".
In particular, I should be grateful if the noble Baroness would tell the Committee how many appeals on the facts are allowed by the IAT and how many have been refused. If she cannot do that this afternoon, perhaps she would kindly undertake to place those figures in the Library.

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I turn to Amendment No. 207B, which also appears in the name of the noble Lord, Lord Joffe. It is important to note that the Government's original intention, which was also signified at paragraph 4.66 of the White Paper, Secure Borders, Safe Haven, was to make the IAT a superior court of record, as the Employment Appeal Tribunal now is. That would, of course, have had the effect of removing the right to judicial review of its decisions. The Government, plainly, have decided not to pursue that course.
The amendments brought forward in another place, nevertheless, are rather strange. They would provide for a new statutory review procedure in the case of a refusal of permission to appeal by the tribunal. I should particularly welcome the Minister's comments on the limitation of the review process to errors of law under Clause 89(2). I assume that that would not include other grounds of judicial review, such as bias on the part of the tribunal or procedural unfairness. Is it really the Government's intention to exclude those grounds of review altogether or do they believe that they are covered by the term "error of law" in subsection (2)?
I turn to the amendments tabled by the noble and learned Lord, Lord Archer of Sandwell. The Minister, as many Members of the Committee have said, will have to put forward a powerful case to rebut the arguments advanced by the noble and learned Lord. If a judge thinks that it is in the interests of justice to have the arguments advanced before him orally, why on earth do the Government propose to prohibit him from hearing such arguments on his own motion?
I turn to Amendment No. 209ZA, which appears in the name of my noble and learned friend Lord Mayhew of Twysden, and to Amendments Nos. 209ZB and 209ZC, which appear in my name and that of my noble friend Lady Anelay. They are concerned with the proposed power to repeal by order the new statutory review procedure contained in subsections (2) and (3). My argument will, broadly, follow that outlined by the noble Lord, Lord Goodhart.
In their memorandum to the Delegated Powers and Regulatory Reform Committee, the Government stated in paragraph 122:
"Subsection (4) has been introduced as a safeguard to ensure that the Government can take swift, effective action if the new statutory review process is not working as it should. If the number of applications for review exceeds those anticipated the advantages of a review to the High Court will be lost but it may be necessary to take swift action to prevent the High Court being overwhelmed".
I hope that the Minister will explain what the Government mean when they say that the advantages of a review by the High Court will be lost if there are more applications for review than they anticipate. Are the advantages that will be lost advantages for the Government or the appellant? How many applications for review do they anticipate and at what level of applications do they intend to invoke the powers in subsection (4) to do away with the review process?
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I hope that the Minister will be able to give a full response to the concerns of the Delegated Powers and Regulatory Reform Committee, expressed at paragraph 7 of its report. It stated:
"The Committee is puzzled by the argument that if a right of appeal is too popular it should be ended. Unless the Minister persuades the House that there is a better case for retaining this power, the Committee suggests that subsection (4) should be omitted".
My amendment and that of my noble and learned friend would achieve that by a slightly different route.
My noble and learned friend seeks in Amendment No. 209ZA to remove subsection (4) altogether. My amendment seeks to meet the Government's own argument that Clause 89(4) is simply a safeguard by providing for subsection (4) to cease to have effect after two years have elapsed; in other words, it is a sunset clause.
That is a generous period of time, and if the Government's intention in including subsection (4) is to stop the High Court being overwhelmed by applications for review because they are uncertain about the number of applications that will be made, they will, as a result of the amendment, be able to dispense with the power in subsection (4) if their fears prove unjustified. They would, however, be able to provide for the continuation of the power by an order made by affirmative resolution if such fears remain.
If the Minister is hostile to these amendments, she must explain why given that they meet the Government's own argument for the retention of subsection (4), as outlined to the Delegated Powers and Regulatory Reform Committee; namely, an immediate and overwhelming increase in the number of applications for review.
These provisions in the Bill went undebated in another place; given the implications of the Government's proposal, which has been questioned on all sides of the Committee, I hope that the Minister will take up the invitation that I extended to her to explain and justify what the Government propose in Clause 89.
5.45 p.m.
Baroness Scotland of Asthal: I say immediately, and to my noble friend Lord Judd in particular, that nothing that has been said by Members of the Committee today will be lightly tossed to one side. This Committee debate has engaged the attentions of my noble and learned friend Lord Archer, the noble and learned Lord, Lord Mayhew, the noble Lords. Lord Dholakia and Lord Goodhart, the right reverend Prelate the Bishop of Southwark, my noble friends Lord Clinton-Davis, Lord Judd and Lord Corbett, the noble Countess, Lady Mar, the noble Baroness, Lady Carnegy, the noble Earl, Lord Russell, and—last but by no means least—the noble Lord, Lord Kingsland, for one hour and 15 minutes. That can do nothing but put terror in the heart of those who have had to listen.
I hope that I shall be able to ease the troubled spirits of Members of the Committee on this issue. The noble Lord, Lord Kingsland, rightly said that these matters

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were not debated in another place. Clause 89 is a very important clause. It goes to the heart of our policy of ensuring that the immigration and asylum system is as fair as possible while improving the speed and efficiency with which cases are processed.
I say to the noble Lord, Lord Joffe, that we remain jealous of our procedures in this country. We jealously guard the fairness, integrity and probity of our system. The noble Lord should not be disquieted for a moment by the thought that we may negligently cast that to one side. We will not do so. The approach that has been taken in relation to the creation of a statutory review has been very careful indeed.
As I said, I am conscious that the other place did not have a chance to discuss Clause 89. Therefore, I hope that the Committee will find it helpful if I set out in some detail its purpose and effect. In doing so, I hope that I shall be able to answer fully the issues raised by a number of Members of the Committee, especially because the new statutory review process is just that—it is new. After I have explained—I hope, helpfully—the way in which we envisage the system will work, I shall, if I may, turn to the amendments that have been tabled.
Clause 89(1) allows the party to an appeal to an adjudicator to appeal to the tribunal against the adjudicator's determination on a point of law, provided that permission is granted by the tribunal. The current right of appeal to the tribunal, which is also subject to permission being granted by the tribunal, is on a point of law or fact.
At this point, I shall take up a matter to which the noble Countess, Lady Mar, alluded from her experience of sitting as an adjudicator.
The Countess of Mar: Not as an adjudicator but as a member of the tribunal.
Baroness Scotland of Asthal: I beg the noble Countess's pardon. If the adjudicator has the facts wrong, as outlined by the noble Lord, Lord Joffe, and it leads to a perverse determination by the adjudicator, that perverse determination may be appealed on a point of law to the IAT. The IAT will consider whether leave should be granted. If it agrees, the appeal will go to the IAT for a full hearing.
Subsections (2) and (3) of Clause 89 provide for a new statutory review process. Clause 89(2) allows the party who was refused permission to appeal to the tribunal to apply to the High Court for a review of the tribunal's decision on the ground that the tribunal made an error of law. Subjection (3) sets out that a single High Court judge must determine the application on the papers only. The judge may affirm—
Lord Goodhart: Therefore, do I understand the noble Baroness to say that the application is only for a review of the decision of the tribunal not to hear the appeal?
Baroness Scotland of Asthal: Perhaps I may explain. An adjudicator makes a decision. If the applicant wishes to appeal against that decision, he may then apply for leave to a vice-president or president of the IAT. If the application for leave to appeal is refused, it is that application for leave which can then be appealed to the High Court. If, under statutory review, the High Court judge determines that the adjudicator and the vice-president or president were wrong, the matter is then sent back for a full hearing before the IAT. That is how the process works.
Clause 89(3) sets out that a single High Court judge must determine the application on the papers only. As I said, the judge may affirm or reverse the tribunal's decision. That decision will be final. In addition, if the judge considers that the application has no merit under subsection (3), he is required to issue a certificate to that effect.
Clause 89(4) provides the Lord Chancellor with the power to make an order to repeal statutory review. Any such order will be subject to the affirmative resolution procedure and so will not be made unless a draft has been laid before, and approved by, each House of Parliament. We have confidence that statutory review will provide an effective alternative remedy to judicial review for this category of case.
Lord Goodhart: I am sorry to intervene again. Does it therefore also follow that, if permission is given to appeal to the tribunal and the tribunal hears a case, that decision of the tribunal will be subject to judicial review in the ordinary way? If so, that is helpful.
Baroness Scotland of Asthal: I am glad that the noble Lord finds it so. As I said, we have confidence that statutory review will provide an effective alternative remedy to judicial review for this category of case and that the order-making power will not be used. However, as all Members of the Committee know, asylum tends to be a very problematic area for the appeals and court system. We are introducing statutory review as an entirely new provision and consider it to be a sensible precautionary measure.
We have tried as hard as possible to think of a scenario which might lead to calling upon this provision. It is clear that, at present, that is difficult to envisage. But we know from experience that that which is difficult to envisage at the time of creation in hindsight becomes foreseeable. Therefore, Clause 89(4) is included as a sensible precautionary measure and nothing more.
The process of statutory review is a very important part—
Earl Russell: I beg the noble Baroness's pardon. I still do not understand the precaution. What is it a precaution against?
Baroness Scotland of Asthal: If we were to find that, contrary to our expectation, the process was neither as speedy nor as efficacious as we believed it should be or that subsequently it was found to have some other

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fundamental flaw, that is the basis on which it would be reviewed. But, as I said, that would be done by affirmative resolution. Therefore, an order would come before this House and the other place. The reasons that it was considered no longer to be feasible would be laid out, and this House and the other place would be able to express their views.
Earl Russell: If the noble Baroness wishes to reassure us on this matter, can she give a reassurance that future reform of this House will not, as suggested by the Government's White Paper, involve depriving us of the power to reject such affirmative resolutions?
Baroness Scotland of Asthal: The noble Earl knows that it would be most injudicious of me to say anything in response to his comment. Therefore, I shall save my breath to cool my porridge, if the noble Earl will allow me so to do.
This area has troubled us all greatly. We believe that it would be right to reserve the position as I have described. The new process of statutory review forms an important part of our policy for reducing delays in the asylum process. One of the biggest causes of delay is judicial review. I know that in many cases in your Lordships' House it has been said that judicial review is a blunt instrument or perhaps not the most appropriate instrument that can be used in relation to immigration cases. We bear that very much in mind.
Many asylum judicial review applications take five months or more to pass the permission stage. However, from April 2001 to March 2002 only 14 per cent of asylum judicial review applicants were granted permission. If permission is refused, the applicant can still seek leave to appeal to the Court of Appeal. Therefore, we have introduced statutory review in order to bring a speedier and final conclusion to many cases which previously would have sought judicial review. At the same time, we are ensuring that we still retain High Court judicial scrutiny.
I know that in relation to this matter the noble Lord, Lord Joffe, asked why we should treat these cases any differently from all others. A very sad fact is that in this category of cases a number of people do not seek a determination of their claim. They seek delay. That is unusual indeed because in any other form of adjudication the litigants usually want a result; they want their claims determined. Only in this area is there a category of applicant—I do not say a majority—who do not seek resolution. Realising, perhaps for good reason, that they have no legal justification, they seek an opportunity to remain within the jurisdiction.
In such cases we do not refer to those who are anxiously seeking asylum. A delay to those who anxiously seek asylum causes great pain, difficulty and hardship. Those who want to have their asylum applications determined want them determined speedily so that they can get on with the rest of their lives and so that they can have the security and safety that they crave. Many asylum seekers make that claim and say that they want to know and they want to know quickly.
6 p.m.
Lord Goodhart: In that case, if subsections (2) and (3), as I now see, are directed towards simply creating an accelerated way of dealing with judicial review of decisions not to grant leave to appeal, what good would be served by using the power in subsection (4) to remove subsections (2) and (3)? Surely such a move would restore the status quo and leave the matter open for the decision not to grant leave to appeal to be judicially reviewed.
Baroness Scotland of Asthal: That is precisely so. This is not a strategy to try to get rid of judicial review. There is nothing underhand or inappropriate. We understand that we are moving to a new process, which is different from that to which we have been used over a long period of time, namely, judicial review. We are confident that this new statutory review process will succeed. If, for a reason that we cannot currently divine, it proves not to be the most successful or most just way of dealing with such applications and we bring a resolution before the House to support an order to rescind Clause 89(4), judicial review would return.
We are not using this to make matters worse; we are saying that if we find that the justice of the situation does not fall as we currently envisage, then that would be the safety net. We would revert to the situation that we have now. I hope that I have been able to reassure all noble Lords who are concerned about it that there is no pernicious or inappropriate intent in that regard. I see that the noble Lord is puzzled because, doubtless, he thinks that this is shooting ourselves in the foot and that it would be better just to get rid of it. But noble Lords can see how open the Government are.
Lord Mayhew of Twysden: I have already asked the Minister this question. Does she now say that the Government would not come forward with further legislation to meet the perceived inadequacy of what is contained in subsection (4) rather than revert to untrammelled judicial review? Can she give the Committee the assurance that no further legislation will be put forward in substitution?
Baroness Scotland of Asthal: With the noble and learned Lord's long experience of government he will know that I would not possibly be able to say at this point that we would not bring forward further legislation. If there were a hiatus between the position that prevailed between any order and any new legislation, the gap, if I may respectfully put it so, would be filled by a re-emergence of judicial review.
Lord Mayhew of Twysden: I am grateful to the Minister. Does not her understandable inability to give such an assurance deprive noble Lords of any comfort on the point that she has made about reverting to untrammelled judicial review?
Baroness Scotland of Asthal: We would return to the status quo until such time as Parliament had an opportunity to debate the matter. At this stage I cannot say whether the Government's view would be

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to return to judicial review and that no further statutory construct should be created to fill the gap. I just do not know. I can reassure noble Lords that when we have considered this provision, we believe that statutory review will work because it is directed towards leave. Applications for leave will have three judicial eyes because they will be considered by the adjudicator, then by the vice-president or president of the IAT, and then by a High Court judge. If the High Court judge feels that there is something in it—if I can put it colloquially—it would go back to the IAT for a hearing.
A number of noble Lords have said that if the judge wanted sight of it again—the noble and learned Lord, Lord Archer, made this point—what would happen if he was not sure? One knows about the exercise of judicial discretion. If the High Court judge felt that there was something in it, it should be explored. It would be open to him to say that the matter should go hack to be heard by the IAT and thereby there would be an oral hearing.
There is also a new nuance on statutory review. On occasions when a court considers paper determinations, it is right that the court is aware that there is some other avenue available should that paper determination go against the party; for example, under JR there would be an opportunity for an oral hearing. On this occasion the High Court judges, who will be seized of this matter, will know that if their paper determination is that there should be no further appeal, their decision will be final. I am sure that noble Lords who have had anything to do with the judicial process know that that will weigh heavily indeed upon the judges who will make that determination. If there is a doubt or a concern and if the matter needs to be considered, my expectation is that in those cases the judges would be more likely to say that that is something that the IAT should consider.
Lord Archer of Sandwell: I am grateful to my noble friend. With her great experience, she will know that one of the great contributions that oral argument can make is the opportunity for counsel and solicitors to conduct research and to come forward with the requisite authorities. That would be for the purpose of enabling the High Court judge to reach a decision. Even if the judge says, "I will need that kind of assistance", is the Minister saying that that assistance will not be forthcoming and so the judge has to say either that the case has to go back to the tribunal, or that there shall be no further appeal?
Baroness Scotland of Asthal: In the example given by the noble and learned Lord, the judge will know that it is an application in relation to leave—a refusal to leave—by the IAT. The most appropriate court to hear appeals from the adjudicators is the Immigration Appeal Tribunal; if I may respectfully say, not a judge sitting in the High Court who has various generic experience, but who may not have the knowledge and acuity particularly directed towards immigration cases. So the High Court has the advantage of, first, reading the determination made by the adjudicator;
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secondly, looking at the issue on a point of law that was made by the IAT president or vice-president; and thirdly, determining whether the arguments put forward before the adjudicator and by the vice-president are flawed on a point of law, which would include a perverse assessment of facts. The judge would then decide whether on those bases he or she should say, "No, this is unmeritorious and it should stop here", or that the matter should be sent back to the IAT for the appeal to be determined on a full hearing.
Furthermore, the application is made to the High Court by the appellant alone. There is no opportunity for the Home Office to respond. The appellant is entitled to make his best case. So the skeleton argument and the basis upon which he says that the first and the second decision were flawed could be put in full before the High Court judge.
Lord Archer of Sandwell: Perhaps I may have just one more try. The High Court judge's function is to decide whether the IAT "got it right". If the High Court judge says, "I cannot decide whether the IAT got it right because I have not been given the facilities for deciding", is his only remedy to send the matter back to the IAT?
6.15 p.m.
Baroness Scotland of Asthal: On the current construction that would be so. But the judge would be saying that the vice-president in making his determination did not satisfy him that there was not an issue to be tried. He would be saying, "I need to hear oral argument". The noble and learned Lord will know that this is not a rehearing before the IAT. In fact, if one looks at how the law has developed and where the authorities point, an appeal now to the IAT is an appeal on a point of law and not on a point of fact. It is on a point of fact only if there is a perverse judgment and on law otherwise.
Therefore, I would respectfully suggest that the right response would be for the judge to say that the IAT could not have got the matter entirely right, "Because I am not persuaded. If I ant not persuaded, surely there is something for the IAT to hear. In which case, it should jolly well get on and hear it". It is not—if I may respectfully say so—that difficult. But we need to have a careful approach in relation to this. Of course it is new. That is why we have been very careful indeed about it.
The noble Lord, Lord Kingsland, said that the White Paper put forward the idea of making the Immigration Appeal Tribunal a superior court of record. The intention was that it would mean that there was no scope for judicial review of the tribunal's decision on permission to appeal. However, as is often the case, there followed some helpful discussions with the Lord Chief Justice, the president of the tribunal and other senior members of the judiciary. A statutory review process has been designed which will provide more effective protection than would exist with the superior court of record proposal. As a result of our

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discussions with the senior judiciary we are confident that we can manage the Administrative Court and its workload efficiently.
Many people make judicial review applications with good reasons. But there is concern that many others apply for judicial review with weak cases as a way of taking advantage of the lengthy delays that can ensue with judicial review. Statutory review will only replace judicial challenges of tribunal decisions to refuse to grant permission to appeal against the adjudicator's determination. It will not stop judicial review applications against other categories of decisions. We have focused on this particular type of challenge as analysis has shown that at least half of all asylum judicial review applications are triggered by the tribunal refusing permission to appeal. Statutory review should lead to a significant reduction in the number of judicial review applications to the Administrative Court.
At the moment, only around 12 per cent of judicial review applications against tribunal refusal of leave are granted. Therefore, 88 per cent are refused. I suggest that that indicates that in the vast majority of cases the vice-presidents of the Immigration Appeal Tribunal get the permission decision right, with the High Court deciding that there is a case to be heard in only a small number of applications. I am sure that the Committee would agree that where errors of law have been made, they should be corrected as quickly as possible.
We fully appreciate that a prolonged process can cause great anxiety, as I said earlier, to many who have an uncertain status in this country. For those people, speed is of the essence. However, we also know that others whose cases do not have the same merit may wish to prolong the process, possibly indefinitely. We therefore need to strike a balance. Justice demands that a case is dealt with quickly. It is important to bear in mind that this is a review of a judicial decision, not of an administrative decision by the Secretary of State.
A case will already have been looked at by three expert pairs of eyes before it can go to statutory review—the IND, an adjudicator and a vice-president of the Immigration Appeal Tribunal. They have each decided that it is not meritorious. It will then go to another expert, a judge in the Administrative Court, who works in the judicial review jurisdiction and who would usually consider judicial review applications for permission on paper. The judges can check if meritorious or novel points of law have been missed previously. If the judge considers that there has been an error of law, the matter will be sent back.
Statutory review will therefore tackle the problem of delays by ensuring that cases are dealt with quickly, while providing an effective alternative remedy to judicial review for those cases where the tribunal has made an error of law. Those with a valid case will have access to speedy justice. Those who want to make vexatious use of the judicial process will be frustrated in their aim.
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Judicial review will still exist for other aspects of the immigration and asylum process; for example, challenges against certificates or removal directions, or the administrative process in IND. We intend that the statutory review will work as I have described.
I add that our intention is that an application must be made within 10 days of receiving the decision. I also add that the time limit will be set out in the Civil Procedure Rule. That will be either in the rule or in a practice direction. So the time limit is subject of course to approval of those responsible for the Civil Procedure Rule or the practice direction; that is the Civil Procedure Rule Committee or a member of the senior judiciary. The only ground for making an application is that the tribunal has made an error of law. It is a narrow test; but not so narrow that those cases that would have once resorted to judicial review are unable to use that route.
The High Court will be expected to deal with these cases within 10 working days. A judge looking at the papers will either affirm or reverse the tribunal's decision. If the judge affirms the tribunal's decision, the decision is final. There is no oral renewal and no further onward right of appeal to the Court of Appeal. That is the end of the road. The case will therefore have been dealt with within four weeks by statutory review, as opposed to five months or more by judicial review.
In addition, where the High Court judge considers that the application has no merit he will have a duty to issue a certificate to that effect. That will go to the applicant, his legal representatives and the Legal Services Commission. If the case has received funding from the Community Legal Service the commission will decide whether the lawyer should be paid for the work done on the meritless application. That will require changes being made to the commission's funding contract and to the funding order.
It is essential that we have a properly functioning system of immigration and asylum appeals and the opportunity for High Court judicial scrutiny of decisions. We are committed to speeding up the asylum process, while maintaining proper standards of fairness and ensuring that it is not undermined by meritless applications made simply to cause delays. The statutory review is one of our key measures to achieve a better system.
I see the noble Baroness, Lady Carnegy, rising to her feet. I shall come to the points that she raised, if she will just give me a little time.
I shall now deal with the amendments in turn. I know that I am taking a good deal of time over this, but it was right that the Committee spent as long as it did exploring the issues, and I should like to give a full response.
Turning to Amendments Nos. 207A and 207B, the Government are unable to accept Amendment No. 207A, as it would maintain the present position under the 1999 Act, where the ground of appeal to the Immigration Appeal Tribunal against the adjudicator's determination is on both points of law and points of fact. Increasingly, it has been the tribunal's practice to grant permission for an appeal to

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it only where a point of law is at issue. We therefore intend primary legislation to put beyond doubt that the tribunal should be able to focus wholly on whether the adjudicator's determination gives rise to a point of law. We consider that to be a better use of judicial resources in a two-tier appeal system. Furthermore, as I am sure that many Members of the Committee are aware, Sir Andrew Leggatt recommended in his report on the review of tribunals that appeals to the second appeal tier should be on a point of law only.
The Government are also unable to accept Amendment No. 207B, as it would entirely remove the statutory review process from the Bill. For the reasons that I explained, statutory review is an important part of our policy to provide a fair but swift and efficient system. I hope that my explanation of statutory review will enable the noble Lord to withdraw his amendment.
I turn to the amendments tabled by my noble and learned friend Lord Archer of Sandwell and the right reverend Prelate the Bishop of Derby: Amendments Nos. 208A and 208B. They would extend statutory review to include oral submissions. The Government are unable to accept the amendments because they would undermine the objectives of statutory review, as I hope that I have fully explained.
I understand the depth of feeling that the Committee attaches to the giving of oral evidence in courts. If this exposition does nothing else, it demonstrates my commitment to the oral tradition. However, the provision does not detract from the oral tradition. Statutory review provides a quick process to correct errors that may have been made by the tribunal, so that cases can be sent back to the tribunal, where oral evidence can be given.
The amendments do not account for the fact that statutory review is a review of the tribunal's decision to refuse permission to appeal on the grounds that it has made an error of law; it is not a re-hearing.
Lord Archer of Sandwell: At the risk of being tiresome, perhaps I may make a short point. We are dealing not with oral evidence but with oral argument.
Baroness Scotland of Asthal: I entirely agree; we are dealing with oral argument. However, the Committee will know that the ability to translate oral argument into skeleton argument, so that the court has the full benefit of the advocate's voice—if not in its presence, on paper—has greatly enhanced the value of the written argument. That is presented in a way that was previously not the case, when one simply had the grounds and not a fully argued skeleton by which the court could judge the basis on which oral argument would be advanced if the matter came before it. As the Home Office does not have the right of response at that stage, the court has unalloyed the full flavour of what the appellant or applicant would seek to put before it had he an opportunity to engage in oral argument.
As I said, the statutory review process deals with the refusal; it is not a rehearing. Instead of going through the process of judicial review to challenge the
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tribunal's decision to refuse permission to appeal against the adjudicator's determination, the tribunal's decision will be swiftly checked on an error of law by a High Court judge considering a paper submission only. Again, I stress that it is a review of a judicial decision, not of administrative decisions, which are usually the source of judicial review applications. The original administrative decision by the Secretary of State would already have been tested through an appeal to the adjudicator, and subsequently by the adjudicator's determination by a leave application to the tribunal. The Committee will know well that usual judicial review does not offer the advantage of a full hearing before an adjudicator before the case is then heard again.
Last, but by no means least, I turn to the amendment tabled by the noble and learned Lord, Lord Mayhew, the noble Earl, Lord Russell and the noble Lord, Lord Dholakia, which would remove subsection (4). I hope that I have fully explored the reasons why we consider the provision a helpful one to keep on the stocks. I tell the Committee openly that I do not envisage our taking advantage of it. However, I may be proven wholly wrong. Something unexpected may happen and we may have to revisit that decision. The provision is there just in case.
I turn to the question asked by the noble Baroness, Lady Carnegy. As we will be introducing statutory review to Scotland, the Lord Chancellor will not make an order unless he has first consulted with Scottish Executive Ministers. From that, I take it that if the Scottish Executive were minded to continue with the provision, they could do so—obviously, having consulted the Lord Chancellor. If I have in any way misunderstood the current position, I shall write to the noble Baroness.
The Delegated Powers and Regulatory Reform Committee criticised Clause 89(4) and suggested that it should be omitted. The Committee was specifically concerned that the Home Office memorandum justified subsection (4) as needed
"to prevent the High Court being overwhelmed".
The Home Office memorandum could have been clearer and more felicitiously expressed on that point. We are not so much concerned that the High Court will be overwhelmed by statutory review applications, as we would not have made this proposal unless we had discussed its potential impact with the Administrative Court and the senior judiciary.
Baroness Carnegy of Lour: I know that time is rushing on and the noble Baroness must finish, but is she saying that the Lord Chancellor might repeal subsections (2) and (3) south of the Border, but not north of the Border—or the other way round? Perhaps she would prefer to write to me about that.
Baroness Scotland of Asthal: I shall certainly write to the noble Baroness, but, as I understand it, the Lord Chancellor would consult Scottish Executive Ministers before making an order. If the Scottish Executive wanted to keep the provision, we would seek

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to draft the order in such a way as to allow the provision to remain in Scotland, in accordance with the usual procedure. Obviously, that would be a matter for consultation. It may be that they had had a similar experience and wanted to do the same as England and Wales. One cannot legislate for the future; one does not know.
Amendments No. 209ZB and 209ZC would have the effect of restricting the Lord Chancellor's power in subsection (4) to repeal the subsections relating to statutory review to a period of two years. After that period, the Lord Chancellor could make an order, subject to affirmative resolution, extending the power for a further two years. The amendments are restrictive and, if I may respectfully say so, superfluous. They place an unnecessary burden on the parliamentary timetable by requiring the Lord Chancellor to seek parliamentary approval every two years in order to retain the power. If the intention behind the amendments is to introduce safeguards against any potential misuse of the power, they are clearly unnecessary.
Under the existing proposals, subsection (4) of Clause 98 would allow my noble and learned friend the Lord Chancellor to repeal statutory review if the order repealing it had been approved by both Houses. Therefore, the necessary safeguards are in place. It would also save parliamentary time to have an open-ended arrangement, rather than placing unnecessary restrictions on the ability of my noble and learned friend to exercise the power when he so chose.
The noble Lord, Lord Kingsland, asked some specific questions. He wanted figures for appeals on a point of law to the Immigration Appeal Tribunal. We do not have those figures; the figures do not distinguish between points of law and points of fact. I can, however, give the Committee certain figures. I have given them in part already, but, to be complete, I can tell the Committee that, of the total applications against refusal of leave, 12 per cent were granted, and 88 per cent refused. Of the cases that go on to full hearings, 70 per cent were allowed and 20 per cent dismissed. That is inevitable, given that it is the stronger cases that go on to the IAT. Under statutory review, such cases would, in all likelihood, be referred back to the IAT for hearing.
I have dealt with Clause 89(2).
6.30 p.m.
Lord Kingsland: The Minister says that she has dealt with Clause 89(2). I asked her about the scope of the expression "error of law". Can I assume that it is shorthand for the full portfolio of judicial review remedies?
Baroness Scotland of Asthal: I feel like saying that "error of law" means what "error of law" means in case law. It will include the perverse finding of facts, as I described, and cases in which the court has got it wrong.
Lord Avebury: Do the figures that the Minister has just given include withdrawals—cases in which the
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Home Office has settled the case to the satisfaction of the applicant—and cases that have succeeded on renewal or at the Court of Appeal?
Baroness Scotland of Asthal: I am not clear on the precise way in which the figures are made up. Other than giving the noble Lord the broad outline, I cannot say whether withdrawals, for example, are included in the appeals that have succeeded. They may not be included; they may be in addition to those cases. I do not know, but I will undertake to clarify that, if we make such decisions. I can certainly write to the noble Lord.
I am helpfully told by the Box that "error of law" means "error of law".
Lord Kingsland: Strictly speaking, therefore, the expression might be said to exclude matters of natural justice, procedural fairness, proportionality and the whole range of remedies that go with the Human Rights Act 1998. Is that the Government's intention?
Baroness Scotland of Asthal: As I have said exhaustively, the Government's intention is that the matter should have the scrutiny of a High Court judge, as well as the scrutiny of a vice-president of the Immigration Appeals Tribunal, after having had the advantage of a hearing before an adjudicator. It is our intention that statutory review should cover cases that would, otherwise, have gone to judicial review of the application for appeal.
Lord Lucas: Can the Minister assure the Committee that the 12 per cent of people whose appeal succeeds would be as well treated under the new legislation as they are under current legislation?
Baroness Scotland of Asthal: We hope that those who have valid claims will have a proper opportunity to advance those claims and have them reviewed and heard. I cannot, of course, say whether the figure will be the same in the future. It might be 12, 18, 20 or just 1 per cent, but those who have valid appeals will have a proper opportunity to have their case heard.
Lord Goodhart: I am sorry to intervene again, but I must follow up what the noble Lord, Lord Kingsland, said. It is normal practice that, say, the Court of Appeal, when deciding whether to give leave to appeal, will make its decision not on the basis that the court below made an error of law but on the basis that the legal issue involved is sufficiently important to justify it being reconsidered at an appellate level. Where, in that case, can we say that there is an error of law that can be used as a basis of a decision to grant leave?
Baroness Scotland of Asthal: I do not know how long the noble Lord wants me to take in responding to him; I can certainly write to him. I could give a lengthy jurist's answer, but I dare say that we would be here for another half an hour. If I may, I shall further explore and elucidate my explanation of how we construe the

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phrase "error of law", and I shall send that explanation to members of the Committee who have participated in our debate.
Lord Lucas: Will the Minister send us some information on the reasons for the 12 per cent figure for those who succeed? What, in the vice-president's consideration, has gone wrong? On what basis are the appeals granted? If we had that information, we could discover whether such appeals would come through the new system or would not have an avenue.
Baroness Scotland of Asthal: I can undertake to give members of the Committee the advantage of the information that is available at the moment. It may be difficult to divine the precise nature of every species of appeal. I can see what can be done to identify the species of judicial review that have succeeded to date. I do not know, however, whether I will be able to do that within the boundaries of what is reasonable. I shall do what I can in that regard.
If the Committee will permit me to move on, I shall answer some of the earlier questions. It was suggested that adjudicators might not all be legally qualified; in fact, adjudicators are appointed if they have such legal or other experience as appears to my noble and learned friend the Lord Chancellor to make them suited to appointment. Most adjudicators have seven years' general qualifications, as set out in the Courts and Legal Services Act 1990. Those who do not will have other relevant experience. For instance, if they have practised extensively in that area of law in another jurisdiction—South Africa or elsewhere—that experience is among the things that my noble and learned friend is entitled to take into account.
The adjudicators who deal with the matter are experienced, and they have the requisite legal knowledge. They can do the job very well. Members of the Committee who rightly praised the adjudicators, when we debated the issue last week, were right to do so. They are of high quality and do a good job.
I hope that I have now answered all the points raised by the Committee. If, by some mischance, I have not responded on a particular matter, I will, of course, write. I ask the noble Lord to withdraw the amendment.
Lord Joffe: I have one question to ask the Minister. She has not dealt with it, and it is important to my response. Will future appellants, finding themselves in the position of the Turk who was granted leave to appeal on the grounds of fact, have a remedy under the Government's proposals?
Baroness Scotland of Asthal: I have answered that question twice, but I am happy to do so again. Our construction is that if the decision amounted to a perverse judgment on the facts, it would be capable of being appealed as a point of law to the IAT.
Lord Joffe: I am indebted to the Minister for that reply and for the patient and courteous way in which she has dealt with the amendment, which has taken up
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so much of the Committee's time. I am indebted to the noble Lord, Lord Judd, for correctly interpreting my comment on apartheid South Africa. I am not for a moment suggesting that one could in any way compare the situation in the United Kingdom with the one in that country at that time. In essence I said that, as evidenced by what happened in South Africa, there is a danger in seeking solutions to threats, real or conceived, by responding by removing the rights of selected groups of society.
I will leave time to consider the Minister's response to the amendment and to seek to align her clear statement on the concern with justice for all with the range of actions being taken by the Government in withdrawing asylum seekers' rights. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 207B not moved.]
Lord Filkin Lord Filkin moved Amendment No. 208:
Page 47, line 27, after "Court" insert "or, in Scotland, to the Court of Session"
On Question, amendment agreed to.
[Amendments Nos. 208A and 208B not moved.]
Lord Filkin Lord Filkin moved Amendment No. 209:
Page 47, line 34, after "if" insert ", in an application to the High Court,"
The noble Lord said: I beg to move.
Baroness Carnegy of Lour: In view of Amendment No. 208, surely Amendment No. 209 should also include the Court of Session.
Lord Filkin: I take note of the noble Baroness's good question, which follows a theme of appropriate questioning. I would appreciate it if she would accept a written note from me subsequently.
On Question, amendment agreed to.
[Amendments Nos. 209ZA to 209ZC not moved.]
Clause 89, as amended, agreed to.
Clause 90 [Decision]:
Lord Filkin Lord Filkin moved Amendment No. 209A:
Page 48, line 15, leave out from "only" to end of line 17 and insert "the circumstances appertaining at the time of the decision to refuse."
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Clause 91 agreed to.
Clause 92 [Pending appeal]:
Lord Filkin Lord Filkin moved Amendment No. 209B:
Page 48, line 42, at end insert "or an application under section 89(2)"
On Question, amendment agreed to.
6.45 p.m.
Lord Avebury Lord Avebury moved Amendment No. 209BA:
Page 49, line 10, leave out subsection (5).
The noble Lord said: We are not sure whether the clause represents any substantive change to the 1999 Act. The Explanatory Notes say that it is merely a re-enactment of Section 58 of that Act, but paragraph 3 of Schedule 4, which deals with the determination of appeals, makes no reference to the range of circumstances mentioned in subsection (5). Where an appeal is made against refusal of leave to enter, refusal of a certificate of entitlement under Clause 10—by which a person has a right of abode—refusal of variation of leave to enter or remain when the person has no existing leave, or revocation of indefinite leave to remain, and the Secretary of State has issued a deportation order against the person, under that provision the appeal is to be treated as determined. In other words, the person lodges an appeal that would have been heard but for this subsection, but the Secretary of State cuts it off by making a deportation order.
Under paragraph 24(2) of Schedule 4 to the 1999 Act, an adjudicator must dismiss an appeal against refusal of entry clearance only if he is satisfied that a deportation order was in force against the appellant at the time. That is sensible and we agree with it. I presume that under Clause 92 such a case would not even reach the adjudicator. We have no objection to that if it is simply a question of preventing such appeals entering adjudicators' lists, and thus saving time and money.
But the clause extends the automatic determination of appeals following the making of a deportation order to the other circumstances I mentioned. At present, the Secretary of State cannot sign a deportation order under the Immigration Act 1971 until a person has exhausted appeal rights against the notice of decision to deport, by virtue of Section 63(2) of the 1999 Act. That provision is repealed by Schedule 9, but it is replaced by Clause 70(2)(j). The right to appeal against deportation orders is therefore not affected by Clause 92.
The Minister makes a decision under one of the headings in Clause 70, and while the person still has a right of appeal, the Minister decides to make a deportation order. The person appeals against that order, and the Minister cannot then sign it. This raises a substantive point. Does the first appeal go into cold storage while the appeal against deportation is considered, or is the substance of the first appeal considered as part of the deportation hearing? Perhaps the Minister would give some further explanation of how that works, and in what circumstances a deportation order might be signed while an appeal is pending.
In particular, we are concerned about circumstances already discussed of the revocation under Clause 70(2)(f) of a person's indefinite leave to remain under Clause 65. The Minister did not explain how the power would be used in relation to a person who had technically availed himself of the protection of his country of nationality, by going back on a short visit with a view to making inquiries about whether it would be safe for him to return permanently.
On the previous occasion I mentioned the example of Bahrain, where the Amir, now King, has permitted exiles to return, abolished the state security courts, and released political prisoners. Many Bahraini exiles living in London wanted to go back for a few weeks, to discuss the new situation with friends and to assess the risk that ex gratia concessions that are not protected by a vigilant parliament or a tradition of adherence to the rule of law might subsequently be put into reverse.
What the Government are saying to anybody facing a similar problem in the future is, "If you go back on a trial basis, not only can we take away your indefinite leave to remain but we can also halt your appeal against that decision by issuing a notice of deportation against you, if we think that would be conducive to the public good". No doubt the Government will say that the power would not be used arbitrarily against a person in the circumstances described, but the existence of this subsection on the statute book could be a deterrent to the normal conduct of exiles who want to consider returning to their country when the conditions that led them to fear persecution are relaxed. I beg to move.
The Deputy Chairman of Committees (Lord Elton): I have to tell the Committee that if the amendment is agreed to, I shall be unable to call Amendment No. 209C.
Lord Kingsland: I have two questions for the Minister. Why are the five types of appeal in Clause 70(2)(a),(c),(d),(e) and (f)—those amended by government Amendment No. 209C—chosen as being treated as finally determined by the issuing of a deportation order rather than any of the other types of appeal?
Secondly, the Explanatory Notes state that Clause 92 re-enacts Section 58 of the 1999 Act. However, Section 58(10) of the 1999 Act, which makes similar provision to Clause 92(5), states:
"A pending appeal under section 61 is to be treated as abandoned if a deportation order is made against the appellant".
But Clause 92(5) uses the words "finally determined" rather than the word "abandoned".
There are therefore two differences between the 1999 Act and what is in the Bill, which I invite the Minister to explain. First, what is the difference between "abandoned", the term used in the 1999 Act, and "finally determined", the term used in the clause?
Secondly, Section 61 of the 1999 Act, referred to in Section 58(10) of that Act, mentions only appeals against variations of limited leave to enter or remain in the United Kingdom. The types of appeal covered by subsection (5) of Clause 92 appear to go wider than that. They include, for example, an appeal against the revocation of the indefinite leave to remain of a refugee and his dependants under Clause 65(3), which is both covered by Clause 70(2)(f) and which is also included in the list of appeals to be covered by Clause 92(5).

735
I hope that the Minister will be able to clarify the situation; but I should understand if he would prefer to reflect over the summer adjournment and return to it at a later stage.
Lord Filkin: Clause 92 defines when an appeal is pending. That is an important determination, given that it usually prevents removal through a deportation order. The aim of the one-stop appeal system, as we have discussed at length today, is to do away with multiple appeals. Amendment No. 209BA would undermine that aim.
We see no benefit to the appellant, other than delay, in allowing an old appeal to proceed after a deportation order is issued. The reason for that is that all relevant matters can be considered in the appeal against the decision to make the deportation order. It may help if I re-emphasise that because of the right of appeal in all cases against a decision to make a deportation order, an appeal against such a decision is not covered by Clause 92(5), so no one is left with the right of appeal by virtue of this subsection.
The issues put forward in any appeal against another decision which is deemed to be finally determined can be taken up in the appeal against the decision to make the deportation order. I believe that that is the assurance sought by the noble Lord, Lord Avebury, and I well understand why. For those reasons, Amendment No. 209B would create a duplication of effort for the Immigration Appellate Authority and there is a right of appeal against a decision to make a deportation order. That order supersedes the original immigration decision and any substantive issues that were raised in the original appeal can be considered in the appeal against deportation.
The noble Lord, Lord Kingsland, raised a number of important and challenging questions; for example, the distinction between "abandoned" and "finally determined". That is merely the way the draftsman has expressed the position. That is probably the easy question to answer out of his seven difficult ones before breakfast. I shall accept his kind invitation to write to him with the ability of giving more time and consideration to the detail.
The noble Lord, Lord Avebury, mentioned the Bahrain examples of people returning. I would like to look at what I said in reply earlier to see whether there is any incongruity between that and the points he has raised. I shall write to him accordingly one way or the other.
With those assurances, I hope that the noble Lord will agree to withdraw his amendment.
Lord Avebury: I am grateful to the noble Lord, in particular for the assurance that the substantive matters which were covered by the original appeal can be dealt with on the appeal against a deportation order. With regard to the deterrent effect on exiles going back for trial periods to their countries of origin,
736
I am sure that we can deal with that in correspondence or when we meet during the summer Recess, as no doubt we will. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Filkin Lord Filkin moved Amendment No. 209C:
Page 49, line 10, leave out "70(1)(a), (c)," and insert "70(2)(a), (c), (d),"
On Question, amendment agreed to.
[Amendment No. 209D not moved.]
Clause 92, as amended, agreed to.
Clause 93 [Notice of immigration decision]:
[Amendments Nos. 210 and 210ZA not moved.]
Clause 93 agreed to.
Clause 94 [Rules]:
Lord Filkin Lord Filkin moved Amendment No. 210A:
Page 49, line 26, leave out "89" and insert "89(1)"
On Question, amendment agreed to.
[Amendments Nos. 211 to 217A not moved.]
Clause 94, as amended, agreed to.
Clauses 95 and 96 agreed to.
Clause 97 [Grants]:
Lord Avebury Lord Avebury moved Amendment No. 217B:
Page 51, line 21, at end insert—
"() advice or assistance and representation for those with a right to apply for bail;"
The noble Lord said: I shall detain the Committee only for a moment with this amendment. Its purpose is to ensure that voluntary agencies which are eligible have grants to give advice and assistance to those who have a right to bail. In Section 55 of the 1999 Act, the Secretary of State had a power to make grants to any voluntary organisation providing advice or assistance for detained persons under Part III and that included the help with applications for bail under Section 53.
We have a problem in that more than half the people being detained do not manage to make applications for bail. A study of 88 cases made by Bail for Immigration Detainees between 1st August and 31st October showed that 29 made applications and were represented; 15 were not pursued because there were no sureties; and 44, representing half the sample, were not pursued and were presumably deemed to have failed the merits test if they ever reached a legal representative. However, we do not have a sufficiently full analysis to show that that was the reason for the outcome in every case.
We know from BID that many cases succeed outside the parameters laid down by the Legal Services Commission. I suggest that means that the merits test is not properly framed for the purpose, or that there needs to be support for the organisations dealing with bail which do not presently qualify.
There is always a temptation, because of the volume of work involved in the appeals, to think of bail as of lesser importance. Practitioners are asked to make a judgment, where they consider the prospects of success to be less than 50 per cent, to take on bail only where there are human rights implications or the public

737
interest is involved. We therefore believe that more advice is needed for people who wish to apply for bail and do not at present have an opportunity for doing so. We hope that the Minister will agree that it is important that grants should be available for this purpose. I beg to move.
7 p.m.
Lord Bassam of Brighton: As grateful as we are to the noble Lord for tabling the amendment, its effect would be that organisations such as the Immigration Advisory Service, the Refugee Legal Centre and other not-for-profit organisations would be able to apply for grant-in-aid funding from the Home Office in order to provide advice, assistance and representation at all immigration and asylum bail hearings. That would include those where the subject had absolutely no right of appeal.
Clause 97 is intended simply to enable the existing provisions and arrangements for funding currently made under Section 81 of the 1999 Act to continue. The clause continues the range of provision. The organisations funded under Section 81 of the 1999 Act can already provide such advice, assistance and representation at immigration and asylum bail hearings as necessary, where the application for hail is linked to an appeal.
It is also worth pointing out that the Legal Services Commission already provides for representation at bail hearings, including situations where there is no right of appeal. So far as we are concerned, there is no reason why Clause 97 should seek to duplicate that. Thus, what the noble Lord seeks is, in effect, already in place.
We see no good reason for disturbing arrangements which are working perfectly well, ensuring that the range of advice, information and representation is in place.
Lord Avebury: The noble Lord is mistaken in thinking that the present arrangements work properly. If he took the trouble to speak to some of the agencies that are trying to find sureties for people with a legitimate right to apply for bail, he would know that one of the principal reasons why bail is not granted is the difficulty involved in bringing forward sureties who know the applicant and who are available at the court in which the application is to be made.
Lord Bassam of Brighton: We shall have a long, hot summer discussing the details of this legislation. I do not make any promises or commitments, but of course if the noble Lord is unhappy with certain aspects of this part of the Bill, no doubt he shall have an opportunity within the parameters of our discussions to air his concerns, in particular with regard to sureties.
Lord Avebury: I am extremely grateful to the Minister. I gladly take up his offer and I look forward to discussing these points over the summer. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 218 not moved.]
Clause 97 agreed to.
Clause 98 [Regulations, &c.]:
[Amendment No. 219 not moved.]
Clause 98 agreed to.
Clause 99 [Interpretation]:
Lord Filkin Lord Filkin moved Amendment No. 219A:
Page 52, line 8, at end insert "and "Convention rights" shall be construed in accordance with section 1 of that Act,"
On Question, amendment agreed to.
Clause 99, as amended, agreed to.
Clause 100 agreed to.
Schedule 6 agreed to.
Schedule 7 [Immigration and Asylum Appeals: Consequential Amendments]:
Lord Filkin Lord Filkin moved Amendment No. 219B:
Page 95, line 2, leave out from "only" to end of line 5 and insert "the circumstances appertaining at the time of the decision to refuse.""
On Question, amendment agreed to.
Schedule 7, as amended, agreed to.
Clause 101 agreed to.
Lord Filkin Lord Filkin moved Amendment No. 220:
After Clause 101, insert the following new clause—
"SPECIAL IMMIGRATION APPEALS COMMISSION: COMMUNITY LEGAL SERVICE
In paragraph 2(1) of Schedule 2 to the Access to Justice Act 1999 (c. 22) (Community Legal Service: courts and tribunals in which advocacy may be funded) the following shall be inserted after paragraph (h) (and before the word "or" which appears immediately after that paragraph)—
"(ha) the Special Immigration Appeals Commission,"."
On Question, amendment agreed to.
Remaining clauses and schedules agreed to.
Lord Filkin: I apologise for interrupting the proceedings, but before we conclude the Committee stage of the Bill, I should like to thank all noble Lords who have taken part in our seven days of deliberations. I thank in particular the Opposition Front Benches for their strong challenges. We look forward to considering those over the summer.
I should also like to thank the Bill manager who, unusually, is moving on to take up a new role. I shall not have an opportunity to thank him at the end of Third Reading.
House resumed: Bill reported with amendments.

Enterprise Bill
7.6 p.m.
Lord Sainsbury of Turville: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Sainsbury of Turville.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE DEPUTY CHAIRMAN OF COMMITTEES (Baroness Fookes) in the Chair.]
Clause 233 [Information]:
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 254:
Page 166, line 15, leave out "subsection (4)" and insert "this section"
The noble Lord said: This amendment makes a technical change to Clause 233 to ensure that both the order-making powers in the clause are subject to the negative resolution procedure. The clause contains two order-making powers for the Secretary of State. However, subsection (4), which determines the procedure under which the orders must be made, refers to only one power. The amendment ensures that both orders are subject to annulment in pursuance of a resolution of either House of Parliament. I beg to move.
On Question, amendment agreed to.
Clause 233, as amended, agreed to.
Schedule 14 agreed to.
Clauses 234 and 235 agreed to.
Clause 236 [Statutory functions]:
Lord Kingsland Lord Kingsland moved Amendment No. 255:
Page 167, line 16, at end insert—
"save that where the information has been obtained by the OFT or the SFO using the powers contained in Part 6 of this Act, and no action is taken in relation to section 183, the information cannot be used for the purpose of any proceedings under the Competition Act 1998, unless that information could have been obtained by the OFT in any event using its existing powers."
The noble Lord said: I rise to move Amendment No. 255 and speak to a number of other amendments grouped with it. I apologise to noble Lords if I take a little time over this series of amendments.
So far as Amendment No. 255 is concerned, we are worried that the provisions in Clause 236 go wider than the disclosure provisions in Part 3 of the Anti-terrorism, Crime and Security Act 2001 in that they also allow information to be disclosed in relation to civil proceedings in connection with relevant measures set out in Schedule 15.
This would mean that information obtained by the OFT—by using the more extensive powers available to it under Part 6 in the investigation of a purported cartel offence which is not pursued to prosecution, or where there was no realistic expectation that a prosecution would ensue—could be used for civil proceedings if the information indicates some other breach of the Competition Act 1998. This information may not otherwise have been available had the OFT used its existing powers in relation to civil proceedings. There should be a provision preventing the misuse of information in this way.
The purpose of the amendment to Clause 237 is to ensure that there are adequate safeguards and, in particular, that disclosure is a proportionate response to the request for information. Clause 237 provides that a very wide range of public authorities would be entitled to disclose information obtained by them for the purposes of a criminal investigation into, or criminal proceedings for, any offence in the United Kingdom or elsewhere; or for the purpose of facilitating a determination of whether any such investigation or proceedings should be initiated or brought to an end.
The Joint Committee on Human Rights has considered the provisions of the current Bill in its 18th report, published on 21st June 2000. The Joint Committee referred to the submissions from Justice and considered that the disclosure provisions engaged the right to respect for private life under Article 8 of the European Convention on Human Rights—and that the safeguards in the Bill were unsatisfactory. We agree with this. The safeguards should be in primary legislation and go beyond those set out in Clause 240.
Further, in relation to disclosure overseas, safeguards should not be left to criteria published separately under Clause 239 by the Government in a form that is not open to parliamentary scrutiny. In particular, the Joint Committee stated in its report:
"we consider that the criteria for making disclosures are important elements in the safeguards for Article 8 rights which ensure that any interference with the rights will be in accordance with the law and proportionate to a pressing social need, as required if it is to be justifiable under ECHR Article 8(2). They should be accessible and should have full legal force. As such, they should be contained in the primary legislation which confers the disclosure powers, not left to be promulgated later in a relatively informal form".
The report continued:
"We consider that, to comply with the requirements of ECHR Article 8, the draft criteria should place a good deal more emphasis on the need to assess whether, in each case, the disclosure being contemplated would be proportionate to a pressing social need which the disclosure is intended to address. Decision-makers need to be made aware that this assessment is central to the legality of their disclosure decisions, and will be open to challenge in litigation in the United Kingdom under section 6 of the Human Rights Act 1998. The guidance on making the assessment should be informative and, as far as possible, unambiguous".
The report further continued:
"we wish to see the criteria for making disclosures, and particularly the treatment of proportionality issues under the criteria, emphasise the distinction between making disclosures for the purpose of an ongoing investigation where there is already evidence that an offence has been committed, and disclosures for the purpose of deciding whether to initiate an investigation. When a disclosure is sought for the latter purpose, the person deciding whether to make the disclosure will need to be satisfied that there are particularly strong grounds for conducting a speculative inquiry, which might sometimes be little more than a 'fishing expedition', if he or she is to avoid making a disclosure which is not proportionate to any demonstrated pressing social need, and thus unlawful by virtue of Section 6 of, and Article 8 of Schedule 1 to, the Human Rights Act 1998".
We would respectfully endorse the views of the Joint Committee in pressing for the need for appropriate safeguards to be included in these provisions.
This clause is less satisfactory than a similar disclosure provision in Section 17 of the Anti-terrorism, Crime and Security Act 2001 in that it does not even have the proportionality test that was inserted into Section 17 during the passage of the ACS Act through Parliament. This is the very minimum safeguard that should be included in the provisions.
Although it is useful to use Section 17 of the ACS Act as a guide to what minimum safeguards are required, it should not be regarded as the definitive model on which these provisions should be based, particularly as the Joint Committee similarly criticised the disclosure provisions in the anti-terrorism legislation. Its views were not heeded by the Government.
Our view of those provisions is that they are much wider than necessary and will lead to a severe invasion of privacy. We agree with the view expressed by Justice that the disclosure powers in the Enterprise Bill cannot be justified by the pressing public interest considerations cited in relation to the ACS Act.
The definition of "public authority" in Clause 233(3) is by reference to Section 6 of the Human Rights Act 1998, which is in very wide terms. It includes courts, tribunals and,
"any person certain of whose functions are of a public nature".
When the Joint Committee was considering the provisions in the Criminal Justice and Police Bill, the Joint Committee heard evidence from Mr Hartnett, who said, inter alia,
"we have described a 'public authority' as that which has the same meaning … as in section 6 of the Human Rights Act. So we feel that that not only deals with the specific point about disclosure, but the fact that we have anchored this … to Section 6 of the Human Rights Act means that any disclosure that a public authority makes must be compatible with Article 8 of the Convention … and thereby it has to meet the tests of reasonableness and proportionality which we understand the Committee was concerned about in January".
However, it cannot be assumed that the Enterprise Bill will be interpreted in such a way that disclosure will be compatible with Article 8 of the convention. By including a clause which makes express provision for the tests of reasonableness and proportionality, there can be no doubt that Article 8 should be complied with.
As to Amendment No. 258, Clause 240 sets out the considerations that a public authority must take into account before making a disclosure of information. While we are pleased to note that Clause 240 recognises that business undertakings have a legitimate interest in the safeguarding of commercial secrets from leakage into the public domain, this should also be reflected in Clause 238. The Secretary of State should take into account similar considerations when deciding whether to prohibit disclosure to an overseas authority. The suggested amendment will ensure that there are further safeguards against abuse in relation to the transfer of information to law enforcement authorities outside the UK.
The amendment replicates the considerations found in Clause 240, as well as providing that the Secretary of State should take into account whether the countries to which disclosure is made will have rules of confidentiality no less strict than those of the UK. This is particularly important given that the provisions in subsection (7) have no realistic means of enforcement.
The provisions as drafted could be open to abuse, particularly abroad where there can be no control over the use of the information provided, notwithstanding any agreement envisaged by subsection (7). If information were to be provided and neither criminal proceedings taken nor even an investigation commenced, what is to stop information being used to gain an unlawful economic or commercial advantage?
I apologise for taking so long to speak to the amendments but, as the Minister is aware, we take these points on disclosure extremely seriously. I beg to move.
Lord Sainsbury of Turville: I shall speak to Amendments Nos. 255, 256, 257, 258, 260 and government Amendment No. 259.
Amendment No. 255 seeks to prevent an investigator or prosecutor from using any information obtained under Part 6 of this Bill for the purpose of subsequent proceedings under the Competition Act 1998, unless that information could have been obtained by the OFT or the SFO in any event using their existing powers. All powers contained in Part 6 of the Bill are modelled on existing powers contained in Part 2 of the Criminal Justice Act 1987. Therefore, these powers are neither new nor novel, and are regularly applied during criminal investigations.
If during an investigation evidence is uncovered that points to a different offence having been committed, it is accepted and common practice by law enforcement agencies that that evidence can be used in a court of law. The decisive point is that evidence has to be obtained using proper powers and observing all existing safeguards. Information gathered under Part 6 powers will have been obtained to the highest standard and should, therefore, be admissible for the purpose of civil proceedings under the Competition Act 1998.
If we were to accept this amendment we would put in question any evidence currently obtained under the Criminal Justice Act 1987, which is subsequently used in civil litigation. I should also point out that the Joint Committee on Human Rights expressed itself content with Part 6 of the Bill. In its 19th report it said:
"In our view the rights of suspects, including the privilege against self-incrimination, are adequately protected".
Amendment No. 256 seeks to introduce further safeguards with reference to the disclosure of information in relation to criminal proceedings. I have some sympathy with the sentiment behind this amendment. Ensuring that there are reasonable grounds for suspecting that the information is relevant to a criminal investigation or proceedings and that disclosure is proportionate to what is sought to be achieved by it appears, at first sight, to be fairly sensible.

743
However, I look less favourably on forcing the public authority to be satisfied that the subject of the information has committed an offence before making a disclosure. This could create a catch-22 situation, whereby the information is needed to establish that the subject has committed an offence, yet the information cannot be given unless that has been established. However, we agree to consider the issues raised by paragraphs (a) and (c) of the amendment.
Amendment No. 257 seeks to impose a stronger duty on the Secretary of State to ensure that directions made by her to block the disclosure of information requested by an overseas authority are brought to the attention of those parties likely to be affected. The suggested change would have little practical effect on the operation of the clause. The Bill already gives the Secretary of State a duty to take such steps as she considers appropriate to bring her decision to block the disclosure of information to an overseas authority to the attention of parties likely to be affected by the decision. In the vast majority of cases, the actions that she takes to fulfil that duty will be those that are necessary to bring the relevant direction to the attention of the relevant parties.
The use of the word "necessary" would impose a duty on the Secretary of State to ensure that all relevant parties are informed. However, there may be rare occasions when, despite taking all reasonable steps, it is not practically possible to bring the direction to the attention of all the affected parties.
I turn to Amendment No. 260, which seeks to introduce a requirement for parties likely to be affected by a decision to disclose information to an overseas public authority to be given 28 days' notice before the disclosure occurs. Information requested will be for the purpose of criminal investigations, and civil investigations of consumer or competition breaches. It could be damaging to any such investigation if the disclosure of potentially critical evidence has to be brought to the attention of any person or company under investigation. Some complex fraud or cartel investigations rely on the investigating authority being able to collect evidence without alerting potential suspects to the nature of an investigation at an early stage to prevent evidence from being destroyed.
The requirement that the disclosing authority should notify,
"any person likely to be affected",
by the disclosure of its intentions, would introduce an element of uncertainty. It would require the disclosing authority to devote time, effort, and resources to identifying all the parties with an interest in the matter to which the disclosure relates, followed by an assessment of the likely effect on each of them as a result of disclosure.
Government Amendment No. 259 proposes to add to Clause 238 a set of considerations to which an authority must have regard before disclosing information to overseas authorities. As the noble Lord, Lord Kingsland, said, the Joint Committee on Human Rights made some important recommendations to ensure that
744
the overseas disclosure provisions were subject to even tighter safeguards. The committee recommended that the considerations that will be used by UK public authorities when making decisions on disclosure to overseas authorities should not be left to be drafted by the OFT, as currently required, but should be placed on the face of the Bill.
The committee also recommended that the criteria should include a consideration on whether the disclosure being contemplated would be proportionate to a pressing social need that the disclosure would address, and whether the matter for which disclosure is sought is sufficiently serious to justify disclosure. The Law Society and the CBI have put forward similar recommendations. The Government have listened carefully to those recommendations and agree to them.
Amendment No. 259 addresses the recommendations made by the Joint Committee on Human Rights, the CBI, and the Law Society. The 19th report of the committee accepts that this amendment meets its concerns. The considerations as set out in the amendment will ensure that information is disclosed only when public authorities are satisfied that the matter for which the information is requested is sufficiently serious rather then speculative and little more than a "fishing expedition".
I return to Amendment No. 258. We hope that Amendment No. 259, tabled in my name, will meet many of the concerns raised by the noble Lord. We believe that it is right to rely on public authorities rather than the Secretary of State to take responsibility for decisions to disclose. However, our amendment recognises, as does the noble Lord's amendment, the need for careful consideration of a variety of important issues before disclosure is made—including whether the relevant country provides appropriate data protection laws, and whether the matter is sufficiently serious to justify disclosure of the information.
As regards paragraphs (b), (c), and (d) of Amendment No. 258, I should stress that Clause 240 already ensures that the disclosing authority must have regard to whether disclosure would be,
"contrary to the public interest",
or whether it would include information that could "significantly harm" the interests of business individuals. Therefore, I invite the noble Lord to withdraw Amendment No. 255, and not to press Amendments Nos. 257, 258 and 260.
I should like to take away and consider the matter introduced by Amendment No. 256, and reflect further on the issues introduced by paragraphs (a) and (c) thereof. On this basis, I also ask the noble Lord not to press this amendment. Finally, I commend Amendment No. 259 to the Committee.
Lord Kingsland: I am most grateful to the Minister for that very full and extremely helpful response. In those circumstances, I shall be delighted to comply with the noble Lord's request about not pressing the amendments. I look forward on Report to seeing the

745
consequences of some creative thinking about Amendment No. 256 on the face of the Bill. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 236 agreed to.
Lord Davies of Oldham: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage on the Bill begin again not before twenty-nine minutes past eight o'clock.
Moved accordingly, and, On Question, Motion agreed to.
House resumed.

Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
7.29 p.m.
Adjourned debate on the Motion of the Lord McIntosh of Haringey resumed.
Lord McIntosh of Haringey: My Lords, I beg to move the Motion standing in my name on the Order Paper. With the leave of the House, this is a resumption of our previous debate on the regulations. I commend them to the House.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (Amendment) Regulations 2002
Lord McIntosh of Haringey: My Lords, these draft regulations have already been debated. I commend them to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

Tax Credits (Definition and Calculation of Income) Regulations 2002
7.31 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham) rose to move, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].
The noble Baroness said: My Lords, it may be for the convenience of the House if I deal with the first of the four sets of draft regulations on the Order Paper
746
together with the third set dealing with income thresholds and determination of rates. I understand that it may be convenient for the Opposition Benches if I do so—and similarly, if I take together the second and fourth sets of regulations on the Order Paper, those dealing with entitlement and maximum rate and the child tax credit regulations.
The regulations dealing with the definition and calculation of income define what is income for the purposes of claims to the new child tax credit and the working tax credit.
For the new tax credits, income broadly corresponds to income from taxable sources—such as earnings from employment and self-employment, certain social security benefits and income from a variety of other sources such as savings and investments, property, overseas income and income from trusts and estates. We believe that this provides a fairer measure of income which is more closely aligned with the income tax rules.
Perhaps I may briefly outline the main features of the draft regulations. Draft Regulation 3 sets out the steps to be taken in working out the total income of the claimant (or claimants) to be reported in tax credit claim forms.
Draft Regulations 4 to 12 set out in detail the extent to which various categories of income are taken into account in calculating a claimant's total income for tax credit purposes. These include employment income, as well as income from self-employment, pensions, taxable social security benefits, income from property and income from most savings and investments. With the last of these, it is taxable income from capital that claimants will have to report rather than the capital itself; we also propose to disregard income from various tax-exempt savings vehicles such as ISAs or some tax-free National Savings products. We believe that this will help low-income individuals in receipt of tax credits to build up the level of their savings.
Draft Regulations 13 to 17 are, in large part, anti-abuse provisions.
Draft Regulation 14 deals with cases where, under tax law, capital is treated as income and is taxable as such—for example, when individual shareholders receive a "stock dividend"—that is, new shares—instead of the normal cash dividend. I should emphasise that we are not necessarily dealing with avoidance in this category. Secondly, the regulation also covers cases where income is diverted from one person to another through a trust or settlement, in which event the income is treated as remaining in the hands of the first person.
Draft Regulations 15 to 17 are based on the existing rules used in the working families' tax credit and the disabled person's tax credit system, which are a long-standing feature of the social security system. They seek to ensure that no one deliberately deprives himself or herself of income, or fails to apply for it, which could have had a bearing on his or her entitlement to tax credits.
Draft Regulation 18 brings other taxable miscellaneous income into account for tax credit purposes.
Finally, draft Regulation 19 provides for various disregards from the calculation of income in tax credit claims. One such disregard is that of maintenance received by single parents. I am sure that noble Lords will be pleased to see that they receive the credit unabated by any of the taper of the working families' tax credit or the child tax credit. This continues the existing practices under the working families' tax credit.
These draft regulations have been subject to detailed consultation with various outside bodies, which have made a valuable contribution to making sure that they fit the purposes of the Act.
I turn to the draft regulations dealing with income thresholds and determination of rates—those which I suggested to the noble Lord, Lord Higgins, combined algebra with Esperanto. I am sure that he now thinks that they are a model of clarity. This is a set of technical regulations containing the detailed rules setting out how the amount of tax credit due is calculated in each case. The regulations also set out the income thresholds below which a claimant would receive the maximum amount of each tax credit.
Although these regulations are technical, the substance of them was announced by my right honourable friend the Chancellor in his Budget. For instance, my right honourable friend announced that working households with an annual income of £5,060—that is a real figure not a notional one—will receive the maximum amount of working tax credit to which they are entitled. Similarly, families will receive maximum child tax credit if annual income is £13,230 or less. This is provided for by Regulation 3.
In the Budget we also provided details of how the new credits would respond to changes in income. Any claimants with less income in the current year compared with last year will have their final entitlement based on their current year income. On the other hand, a claimant whose income rises in the current year may also have his or her award based on current year income, but only when their current year income exceeds the previous year's by more than £2,500. There is no cliff edge. It is only at that point that it is taken into account. It is designed to give head space and not to discourage people from increasing their income in the course of the year.
We have also made it clear that recipients of safety-net social security benefits—such as income support and jobseeker's allowance—who are responsible for children will automatically receive the maximum rate of child tax credit for the whole period during which they are receiving them. They will not be subject to a further income test in tax credits while they are receiving one of those benefits. This is provided for in Regulation 4, which prescribes income support and income based JSA as the safety net benefits.
The remainder of the regulations set out the manner in which the rate of tax credits should be calculated when income exceeds the thresholds and the taper
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rates must be applied. These provisions are set out in a formulaic manner to show precisely how the tax credits system will calculate the rate in any particular case.
Claimants themselves will not have to grapple with these technicalities. The detailed calculation will not be sent out to claimants as a matter of course, although they will be able to request a copy if they wish. The calculation will be done by the Inland Revenue, which will be able to talk claimants through the calculation if they so wish.
I am happy to explain in further detail how the calculations are done—in other words, to seek to gloss the regulations. If your Lordships want me to do so, it may be better if I do so in summing up. What is happening may be clear from what I have said, but I am perfectly happy to expand on how the calculations are done if the House would think it helpful; equally I could at this stage leave it to noble Lords to decide whether they wish to press me further on this matter. As I see no great enthusiasm for greater description at this point, with those comments I seek the assent of the House to the regulations. I beg to move.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
Lord Freeman: My Lords, the Minister referred in her helpful introductory remarks to the fact that claimants will not have to grapple with the detail of the calculations. I wish to refer the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 and draw the attention of the noble Baroness to the problems that will arise and which will need to be watched carefully if a family's circumstances change halfway through the year and there becomes, alter the end of the tax year, an obligation to repay tax credits. These are dealt with in Regulations 7 and 8 of the set that I have referred to.
The problem arises because two different bases of calculations are used. During the course of the tax year, time apportionment applies in calculating the prospective credit to be paid if a family's circumstances change. At the end of the tax year, averaging takes place, which may give rise to an overpayment of tax credit and therefore a requirement to repay.
I do not intend to labour the point, but I shall give a simple example of a couple in which one party is working 16 hours a week and earning only £10,000 a year. They have one child. Their yearly entitlement to tax credits is £3,186, I believe. Half way through the year, on 5th October, the other member of the couple gets a job and starts to earn £30,000. The couple's joint income for the tax year becomes £25,000—half a year at £30,000 plus the remaining £10,000 earned by the first member of the couple. The couple will lose entitlement to all credits except the family element of £545. For the first six months of the tax year their income was only £5,000 and they would have been paid credits of £1,593. When they are sent their end of year notice under Section 17 of the Tax Credits Act,

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they will be notified of an overpayment of credits of at least £1,320, which will be reclaimed, because their total income for the year is averaged out.
Apart from the fact that that appears manifestly unfair, claimants will not realise that getting a job part way through the tax year can result in the recovery of tax credits for a period when their income was low.
That aspect of the regulations needs to be looked at. At the appropriate time, when details of how the new tax credits are working in practice, your Lordships should return to the subject and press a resolution of the conflict between time apportionment and averaging.
Lord Higgins: My Lords, one of the more infuriating aspects of media coverage at this time of year is the way in which they seem constantly to say that Parliament has risen for the Summer Recess when that is not the case. We are here this evening debating an undoubtedly important matter, although it may be complicated for the media. I exonerate from my remarks just now the BBC television parliamentary programme, which does better at this time of year. Instead of transmitting our proceedings at 5 o'clock in the morning, it sometimes does so as early—or late—as 10 or 12 o'clock.
The regulations cover the disbursement of £2.7 billion to particular groups of people. That is effectively the amount that the Chancellor raised in his Budget from national insurance contributions from individuals. The object of these statutory instruments is to implement over time the Act that we have recently spent a great deal of time debating, during which the noble Baroness provided us with a number of draft statutory instruments. Much of the detail that one might otherwise go into is not necessary, because we only recently discussed the definition of income and other issues. This is a question of tying up loose ends, although my noble friend Lord Freeman has made an important point. I understand that we have some time to consider it, as the point at which payments are made under the Act is a considerable time ahead.
It is convenient to discuss the two statutory instruments together, as the noble Baroness described. The first is concerned with the definition of income and the second is concerned with income thresholds and determination of rates. The first is concerned with the qualifications and the second deals with what you get if you meet the various qualifications for a tax credit.
As we have said time and again, this is a considerable extension of means tests, up to very high levels of income—up to £50,000 a year. When we discussed the Bill I said that it was appropriate to have regulations for particular quantities or aspects of the matter that changed over time, but not for permanent matters, which ought to be on the face of the Bill. The regulations sensibly deal with things that are open to subsequent amendment, by and large.
However, as my noble friend Lord Freeman said, individuals will have very limited understanding of what is happening. The Minister said that the
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department will talk people through it, but the idea of discussing some of these matters on the telephone fills me with alarm. Considering some of the calculations, the amount of likely misunderstanding will prove a much greater problem than the noble Baroness suggests.
On page 5 of the first of the regulations, dealing with people who are overseas, I am puzzled by some of the matters that can be deducted in calculating income. For example, I do not understand why,
"any banking charge or commission payable in converting to sterling a payment of income which is made in a currency other than sterling",
should be deductible. That seems a perfectly normal cost that is likely to be incurred in the circumstances described.
The next point that gives me considerable cause for concern arises in the table on page 7 of the first of the regulations. It is concerned with payments disregarded in the calculation of employment income. Item 9 lists the incredibly anachronistic extra-statutory concession that,
"Any cash payment received by the claimant as a miner in lieu of free coal, or the provision of coal itself, in relation to which income tax is not charged under Inland Revenue Extra Statutory Concession A6",
shall be disregarded. In this day and age, I do not understand why that concession should remain. I am even more puzzled by the way in which it is suddenly incorporated into this statutory instrument. The Inland Revenue concession mentioned is extra-statutory, but the regulations effectively put it into statute, which seems very strange. It is particularly difficult to understand given that the Revenue can change the conditions, qualifications or terms of the extra-statutory concession. That seems to give the Revenue the power to change its mind after we pass these regulations in statutory form.
The noble Baroness suggested that the regulations on income thresholds and determination of rates were Esperanto rather than algebra. Once again, I regret that we do not have a blackboard to draw up the five pages of possible algebraic calculations that are expounded. They will be very complicated and apparently the department will discuss each calculation with individuals on the telephone. It is not that they are not clear. If one reads all five pages, provided that one has at least an O-level—or probably an A-level, or whatever the appropriate qualification is nowadays—in algebra, one can probably get through them quite easily. They are perfectly clear, but they are extraordinarily complex. I think that both these sets of regulations are very much Inland Revenue-based regulations, whereas the other two sets of regulations are more concerned with the traditional work of the Department for Work and Pensions.
I have one particular point on the algebra. Some of the algebra deals purely with the terms of particular items such as MR over MI, which are defined in the text. However, some of the formulas include absolute numbers—such as £5,060 x N2 over N1. I hope that the noble Baroness can explain to us what these absolute numbers actually represent. If they represent

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the threshold or the rate or whatever it may be, will amendment of these statutory instruments simply alter the particular numerical figures enmeshed in the algebra?
Although these regulations are extremely complicated, on the whole they are not out of line with the debates that we had and the points that we raised when discussing the legislation itself. I therefore hope that we can have some clarification of these particular items which I think it was right to select in the course of our discussion.
Earl Russell: My Lords, after an afternoon in which the Government may perhaps not have regarded me as being particularly helpful, it is a pleasure to have in front of us regulations to which I can give a very warm but not altogether unreserved welcome. These regulations are attempting to do something rather good: they are attempting to produce a smoothing out process in the level of income between the disadvantaged and the more advantaged which I think will probably do more to increase equality than almost all the rest of what this Government have done. That I welcome. It is, of course, an extraordinarily complicated operation. While I was listening to the noble Lord, Lord Higgins, I was suddenly reminded of the old rate-equalisation grant which obviously served a necessary and valuable function but was in constant need of constant revision and uprating—as I suspect that these regulations will be, too.
There was one nice moment when the Minister was asking whether we wanted her to explain anything further that I was suddenly reminded of Dame Helen Gardner, at the Lady Chatterley trial, turning to the judge and saying, "You would not want me to explain that—I could".
I shall, however, make one small note of criticism. The Explanatory Memoranda are of not quite the quality that we are accustomed to receiving from the Department for Work and Pensions. In trying to discover what was going on, I had at all stages to turn to the regulations themselves. I did not really have a very clear idea after reading the memoranda.
I deal first with the definition and calculation of income regulations. I shall not resume my debate with the noble Lord, Lord Higgins, about the tapers; we have had that so many times in Committee. I think that we understand each other's positions, which are necessarily different. Most of the provisions follow the forms of operation of the Inland Revenue which are familiar. The provision for diversion of income, of course, will need constant revision. One of the greatest fields of human ingenuity has been finding different ways of diverting money from the Revenue, usually by separating the use of the money from its ownership. I do not think that any century has yet matched the skill of the 15th in doing that, and I hope that the 21st will not be the first to do so. So I shall be ready for occasional revisions of that.
I am very pleased by a number of the disregards in Regulation 19 of those regulations, particularly the one to which the Minister drew our attention about
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maintenance for children. That is a very valuable and hard-won concession and I welcome it. I welcome also the disregard of student loans as income. That is something which I see with delight. Student loans are not so generous that one can afford them counted as income, and in any case they are not really income as one has to pay it all back again afterwards. I thank the Minister for the disregard of royalties and public lending rights which is a concession to my noble friend Lady Barker.
I am glad to see the allowance of entertainer's expenses. I am reminded of a tax story in the New York Times. There was a violinist in a New York restaurant who, of course, had to wear a black tie every evening. Every year, he was audited by the Internal Revenue Service for his claim for expenses for the cost of laundering and dry cleaning his dress clothes. Every year he came out with flying colours, but every year they did it again the next time. The Minister, by getting this in here, has saved us all a considerable amount of bureaucratic hassle. I congratulate her on it.
I think that the Minister is probably also right to have the minimum cut-off point at £26. My wife receives an old age pension of 37½ pence a week, which I think must cost a great deal more to administer than she gets out of it. So I think that that is a sensible approach to that.
I must admit that I do not entirely follow the algebra in the tax credits income threshold operation. I actually do have an O-level in mathematics, but I got it only by the skin of my teeth. I was never more surprised in my life to be successful in an exam. Regardless, it is not enough to make me understand the algebra here. I think that I understand the theory behind it when it is explained in the Minister's words. I do not think that I have any complaint to make about it.
There is a point on banking charges and the difference between net income and gross income. What one receives from abroad, as I have been recently reminded on receiving a most unexpected royalty cheque from the United States, is actually a very great deal less than the sum on the cheque. So one is actually being assessed on the sum that one actually receives. I cannot see that that can really be a grievance. However, if it really worries the noble Lord, Lord Higgins, I merely say that it would cost us a great deal less if we were to go into the euro.
The noble Lord, Lord Freeman, raised a very serious point. However, to say that it is a serious and important point is not, I am afraid, necessarily to say that it has a logical answer. I remember that the point was made with considerable force in a CAB report, Benefits and Work, which I think was 1996, that the whole social security system, and the Inland Revenue system with it, was designed on the assumption that one was either in work or not in work. The nature of the economy nowadays is such that that is not the case.
I really do not think that there is any logical, coherent way in which any government can deal with that. I cannot see any reason for thinking that any way would be better than the way that we have here.

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No doubt we shall be wanting to smooth it out in due course, and further regulations will be put before us, and further dinner breaks will be taken up on it. However, I have no complaint to make about the way in which it is done at the moment. It is simply a problem to which none of us has come up with a solution. Since that includes me as much as anyone else, I am in no position to make any complaint. I welcome the regulations only with the few reservations that I have expressed.
Baroness Hollis of Heigham: My Lords, I am grateful for that reception. Given the number of detailed questions that could have been put to me about the meaning of these regulations, I am even more grateful for the brevity of the reception.
If I understood him correctly, the noble Lord, Lord Freeman, said that it would be unfair if someone earning £5,000 had to repay some of the tax credit topping up that income when his or her partner started work on a salary of, say, £30,000 per year. He said that they would not appreciate that they would have to repay the credit, which was calculated on an annual basis. However, as the noble Earl, Lord Russell, said, the alternative could be much worse. For example, one person could earn £5,000 for April to May, after which he or she is joined by a partner earning the equivalent of £30,000 per annum. If there were no requirement to repay, they would be receiving taxpayers' money as if their household income was £5,000, whereas in fact the family income was perhaps £32,000 or £33,000. That clearly cannot be reasonable. We shall make clear to clients of the tax credits what the situation is. We have gone some way to soften the problems that occur when there is a modest increase in income by having the £2,500 head space so that people do not have to repay money. I believe the noble Lord would agree that his possible solution, which is to ignore huge increases in income, is worse than the problem that he has identified; namely, that assessments are based on an annual income and it is not unreasonable in the following year to take the previous year's income as the basis with any repayment to follow, give or take the £2,500 head space.
I turn to the points made by the noble Lord, Lord Higgins. I believe that the noble Earl, Lord Russell, answered the point about bank charges. I refer to the practice for income assessment that already exists for WFTC and DPTC. The noble Lord asked about extra statutory concessions. He was kind enough to give me notice of that to enable me to provide what I hope will be a more helpful answer. This is an important procedural point. I believe that I may be able to give the noble Lord the assurances that he seeks. If there were to be a change in the extra statutory concessions reflected in the regulations, for example, if the Inland Revenue wished to add to its list, the tax credit regulations would have to be amended. Such amendments would be brought before this House through the ordinary procedure for regulations, probably through the negative system, as regulation changes to the Tax Credits Act. Were the Inland
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Revenue to change its extra statutory concessions for tax purposes—I understand that it does not now have to seek parliamentary approval for that—where that had a read-across to tax credits, the regulations for tax credits would have to be amended. There would be proper parliamentary scrutiny of such read-across into tax credits. I hope that that answers the point made by the noble Lord with regard to tax credits.
Lord Higgins: My Lords, I understand what the noble Baroness is saying but I am not sure that I am reassured. The situation is satisfactory as regards the Tax Credits Act in one sense, but we are none the less effectively writing into statute extra statutory concessions. I think I am right in saying that in many cases the definition of those has never been clearly established. Therefore, there is a degree of uncertainty over the situation. That is worrying. As far as I know—I may be wrong—this has never been done before. We need to be careful what we do. I am not clear to what extent the list of extra statutory concessions has any statutory basis.
Baroness Hollis of Heigham: My Lords, I cannot help the noble Lord on the second point. However, it seems to me that what matters is that the Inland Revenue extra statutory concessions are on parallel tracks with what is disregarded for income purposes and tax credit purposes. The point of that is to seek to align as far as possible the determination of income within tax credits along the lines followed by the Inland Revenue. Should the Inland Revenue seek to change what it regards as an extra statutory concession, as far as I am aware that is not enshrined in the legislation for the Inland Revenue. As far as I know it is not enshrined as such in the legislation that we are discussing, merely that we should replicate what is in the list by specifying in regulations what would be disregarded.
Were there to be any subsequent changes made by the Inland Revenue to its list, we should have to specify that in additional regulations. The terms of the extra statutory concessions are published by the Inland Revenue. The regulations refer to the terms of the concessions as published at a particular date. I believe that Regulation 2(4)(c) was published on 1st July 2002. The point I seek to make is that we are talking about parallel paths. There cannot be any extra statutory read-across from Inland Revenue to tax credits without parliamentary scrutiny intervening between those two steps.
If the noble Lord needs more help from me or from the Inland Revenue on the status of the extra statutory concessions, I shall be happy to write to him. However, I give him an assurance that if there were to be any wish to enlarge the scope of disregarded income for tax credits purposes in order to align tax credits with any changes made by the Inland Revenue for tax purposes, that could be done only as a result of changing regulations which would be scrutinised by this House through the negative procedure, if your Lordships so wished. I am not sure that I can help the noble Lord further but I am happy to try.
Lord Higgins: My Lords, I realise that it may not be possible to help me further this evening. However, it appears that the introduction of the measure inhibits the ability of the Inland Revenue to act flexibly with regard to extra statutory concessions in the way it has hitherto.
Baroness Hollis of Heigham: My Lords, I hope that the noble Lord has accepted my assurances as regards the read-across from the Inland Revenue to tax credits. However, what he is now worried about is the loop back from tax credits to the Inland Revenue. Rather than try to hypothesise, it is better to write to the noble Lord on that point, if I may.
I am sure that noble Lords will understand why the algebra is complex. In the course of the year some of the relevant premiums might change. For example, as regards the premium for working for 30 hours, a lone parent might decide to work for 20 hours. That means that one has, first, to gross up all the entitlements, then to disaggregate down to a daily basis for each period of entitlement and then to reaggregate before one then starts to set against income and work the taper. That is the reason for the complexity and the reasons that the formula appears so mechanistic.
Lord Freeman: My Lords, I am most grateful to the noble Baroness for giving way. I thank her for her earlier comments. While she is on this specific point, I apologise to her that I did not express my arguments as clearly as I should have done. I do not seek to be profligate or to suggest that families being supported by tax credits should receive more than their due. I refer to a specific point which perhaps in the fullness of time the noble Baroness may consider; namely, when a family's circumstances change during the year could we please use averaging rather than time apportionment? If we do that, no problem of overpayment arises and at the end of the tax year a family does not have to be asked to make repayment. I do not suggest that we should spend more of taxpayers' money; it is a mathematical point—to use the phrase of my noble friend Lord Higgins—which I ask the noble Baroness to consider.
Baroness Hollis of Heigham: My Lords, I believe that both averaging and time apportionment are taken into account. The following year's entitlement will be based on the preceding year's income. What one cannot do is cherry pick and have the advantages of the tax system—which the noble Lord will welcome—while also seeking to maintain the continued income assumptions without repayment which currently exist under the six month rigidity of the working families' tax credit. As I understand it, the noble Lord, Lord Freeman—although I suspect that he would not own up to this—is seeking to cherry pick the two together. What is important is that we ensure—I shall seek to do so—that the literature and the leaflets we send out to clients and the advice we give them are absolutely clear. There is no solution apart from the one—which I think would be profligate—of public money.
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The noble Lord, Lord Higgins, asked me about absolute numbers. The figure of £5,060 is a real figure. It represents the income threshold under which one gets the maximum entitlement to working tax credits and above which the taper starts to kick in. It will be reviewed in upratings which are carried into practice by further regulations under the affirmative procedure. Therefore, there will be plenty of opportunity for parliamentary scrutiny.
I welcome the welcome given by the noble Earl, Lord Russell, to the disregards on maintenance, student loans and royalties. I am absolutely delighted about that. I am sure that like me he will welcome the fact that for this Parliament the children's element will be uprated in line with earnings—he required me to be clear on that point in the House—and the working tax credit will be uprated at least in line with prices for the rest of this Parliament.
At the end of the day, we get down to quite techy detail about who gets what and how much. The small details about how much extra disabled children and severely disabled children receive will transform people's lives. I am delighted by the response of noble Lords to the regulations.
On Question, Motion agreed to.

Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002
8.10 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].
The noble Baroness said: My Lords, in moving to this Motion, I shall speak also to the Child Tax Credit Regulations.
I am delighted to introduce the Working Tax Credit (Eligibility and Maximum Rate) Regulations, which are made under powers provided by Sections 10, 11 and 12 of the Tax Credits Act 2002. They set out the detailed eligibility rules for various elements of working tax credit, including help with childcare costs and the maximum rate of each of the elements.
The working tax credit is aimed at making work pay for families on low to moderate incomes. It replaces the working families' tax credit, the disabled person's tax credit and New Deal 50-plus employment credit. It will also—this is the important advance—for the first time extend support to people aged 25 or more without children or a disability where they work at least 30 hours a week. In other words, for the first time one can have tax credits without having children. For those over 25 who are in low-paid situations, in particular, that is an extremely important advance.
The key to being eligible for working tax credit is to be engaged in "qualifying remunerative work" and Regulation 4 sets out the four conditions that must be met if a person is to be treated as being in such work. Those conditions are that the person is working at the date of claim; that the person meets the appropriate

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age and hours conditions—that is, that he or she is aged at least 16 and working at least 16 hours a week or is aged over 50, and so on; that the work will last for at least four weeks from the date of claim; and that the work is done for payment.
Regulation 4 goes on to set out types of work that will not be classed as qualifying remunerative work. These follow the categories that are excluded currently for WFTC: for example, voluntary work, training allowances and sports awards.
The regulations do not follow the current WFTC/DPTC model of saying that hours of remunerative work must be calculated around a particular cycle or period around the date of claim. That approach would not be suitable—it is less responsive than our proposed system.
The qualifying remunerative work test will be based on a person's "normal" or "typical" working hours. The important point will be to establish the number of' hours a person actually does.
Regulations 5 to 8 cover situations where people will be treated as being in qualifying remunerative work when they are not actually working. That, again, is good news. Women on statutory maternity pay or maternity allowance, and anyone on statutory sick pay, will satisfy the work test, provided they were working the requisite number of hours immediately before their statutory payments began. Regulation 6 extends that protection to self-employed people who would have been entitled to statutory sick pay if they had been employees.
Regulation 7 provides that people with a recognisable cycle to their work pattern (such as ancillary workers in schools, for example) will be entitled to working tax credit during holiday periods. Under working tax credit they will in future be treated as being in qualifying remunerative work during school holidays provided that they expect to resume their normal working hours at the start of the new term. Again, that is a welcome change.
Anyone who satisfies the qualifying remunerative work test will be entitled to the basic element of working tax credit. Additional elements will be available depending on claimants' circumstances; those other elements are covered in draft Regulations 9 to 18.
The disability element will be paid to anyone who works at least 16 hours a week, has a disability that puts him or her at a disadvantage in getting a job and has received or is receiving one of a range of qualifying disability benefits. That is broadly similar to Regulation 9—it replicates the conditions for DPTC. The working tax credit will also include a 30-hour element to encourage people to increase their working hours. Again, that replicates what we currently do.
On childcare, Regulations 13 to 16 inclusive contain detailed rules for the childcare element of the WTC. That is an important part of the regulations—the childcare element is central to this Government's commitment to making work pay and builds on the success of the childcare tax credit in WFTC; it mirrors
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them. However, we seek to improve the circumstances under which we pay childcare tax credit in important ways. First, we extend under Regulation 14(2) financing of approved childcare that is provided in the child's own home. That is particularly valuable for a disabled child or when the parents are shift workers. We are also providing it in a more flexible way. At the moment, the 26-week rule can cut across people's entitlement to childcare. We have also set out the maximum rates for the various elements of the WFTC in Part 3 of the regulations, which can be adjusted under the Budget procedure.
I turn to the Child Tax Credit Regulations. That credit will be available to families who have the main responsibility for one or more children, whether the adults in that family are in work or not. Under the new tax credits, one need not have a child to be eligible to claim WTC and one does not have to be in work in order to claim CTC. We are producing instead a single continuous stream of income-based support that will sit alongside universal child benefit, whether the family is in work or not. It will be paid to any family who is "responsible for" a "child" or "qualifying young person". Each of those terms is defined by these regulations.
Regulation 3 sets out the circumstances in which a person will be regarded as being responsible for one or more children or qualifying young people and when they cannot be treated as being responsible for them. Noble Lords will remember that in response to the noble Earl, Lord Russell, I explained that we have put headspace into the primary legislation, not the regulations, to deal with the developing response to shared care in this regard, should we need to come back to this House in due course.
Regulations 4 and 5 define what is meant by a child or a young person respectively. The child tax credit will be available for a child up to 1st September following their 16th birthday. Beyond that date, support will continue up to their 19th birthday, provided that the young person continues in full-time non-advanced education.
Regulation 8 defines when a child qualifies for the higher disability elements. Regulation 6 rightly allows entitlement to continue for a period of eight weeks after the death of a child or young person to avoid unseemly hassle at an already difficult time. Regulation 7 sets out the rates of child tax credit, including the properly generous allowance for disabled children. I hope that noble Lords will be happy to welcome the regulations. I beg to move.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the House is again grateful to the noble Baroness for her exposition of the regulations. A number of points that I was going to raise have already been covered by her.
As I pointed out earlier, we have had many opportunities in this House to discuss the whole issue of tax credits. As we have also stressed, those in

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another place were not quite so fortunate—they were rather more inhibited by programming Motions and so on. However, they debated these issues on 16th July in another place. At the conclusion of that debate Mr Bercow pointed out that there was an error in one of the regulations and the Minister, Dawn Primarolo, replied that there were another two errors: there were two paragraphs 14 and two paragraphs 5. She said that that was due to the "slippage rule". That was the only point in the entire debate that gave me considerable cause for concern. I am not the least bit clear about what the slippage rule is. When the following regulation was moved, Mr Bercow began—at least, according to Hansard—by saying that he was in a state of exultation and had nothing further to say. I think that that probably should have been: "I am in a state of exhaustion"! So far as the usual suspects around the Chamber are concerned, that might well be true in relation to tax credits.
I want to raise a few points with the Minister. The Child Tax Regulations, as has been pointed out, are in many ways to be welcomed, particularly with regard to childcare and so on. However, I am puzzled about one matter. It states:
"A child or qualified person shall be treated as not being the responsibility of any person during a period in which any of the following Cases applies".
Case C concerns a custodial sentence for life, without limit of time, of detention at Her Majesty's pleasure, in Northern Ireland, and so on, and, finally, for a term or period of more than four months. I had not realised that children were receiving custodial sentences of life. In any event, it seems that one only requires paragraph (e)—
"for a term or period of more than four months".
Once that is laid down, one does not need all the rather esoteric qualifications which existed previously.
As I said, the Minister dealt at some length with the 30-hour element and, again, that was a matter of subsequent discussion. However, I want to raise a point in connection with seasonal workers which partly reflects the matter raised earlier by my noble friend Lord Freeman. Does the qualifications side of the issue have to cope with the fact that some people may work during certain periods of the year and not at all during other periods?
I turn to my final point. I said earlier that these two orders relate very much to work and pensions, whereas the two previous ones were clearly Inland Revenue-inspired. Their terminology is very much that of the Inland Revenue. In Schedule 1 to the working tax credit order, which we are debating, there is a huge list of disabilities which place a person at a disadvantage in obtaining a job. I do not recall that happening previously. It seems to me that there is a danger that a list of that kind, which clearly seeks to be exhaustive, may exclude some perfectly good reason for a person being at a disadvantage in obtaining a job. Such a person should, therefore, qualify for a benefit. It appears that at present, if that reason is not included in the list, he will not qualify.
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From my former constituency experience, I know only too well the extent to which people who are disallowed benefits under medical conditions become very upset if an attempt is made to define matters too precisely. I wonder whether the Minister will say a word about that. Other than that, the orders appear to implement what the Government intend, and I have no further points to make.
Earl Russell: My Lords, I offer a general welcome to the orders. I enjoyed the voice of experience which came across in Regulation 4. That regulation states that the work will be done for payment or in expectation of payment. I enjoyed that, first, because that will be of real help to people whose employers suffer bankruptcy and, secondly, simply because I like that note. It goes right back to Magna Carta. One could levy a feudal aid when the king married his eldest daughter, but Magna Carta specified that it could be done when he married his eldest daughter "once". There is a wealth of suspicion in that.
I also offer a very warm welcome to the 50-plus element in the tax credit order. The number of people between the ages of 50 and 65 who are not working represent a fearsome potential burden on the pension system, which, God knows, is carrying enough burdens already. Therefore, anything that may increase the appetite and opportunity to work for people between the ages of 50 and 65 is to be welcomed, and I am happy to do so.
I am also happy to welcome the provision for maternity leave. I am a little disappointed not to see in the wording of that regulation any provision for paternity leave. I thought for a moment that I heard the Minister speak the words "paternity allowance" but I could not find them in the regulation. I believe that, as we move towards gender equality, men will become more and more involved in childcare. Getting them involved in the very first few weeks is vital in setting habits. I say that only with the reservation expressed in the Committee stage of the Adoption and Children Bill by the noble Baronesses, Lady Gould and Lady Thornton, and by myself in cases where there is danger in contact with a violent or abusive father. With that reservation only, I believe that paternity leave might be included.
I welcome warmly Regulation 6 concerning the continuation of the tax credit during periods of statutory sick pay. For many people, such periods represent an abrupt journey. Occasionally, in moments when one thinks one is dying but is better two days later, I have wondered what it would be like to go suddenly on to statutory sick pay. It is not an attractive prospect.
Regulation 7 provides for school holidays and vacations. I accept the principle and the fact of what is done. But I wish that it had not contained the words—the Minister knows as well as I do that it is wrong—
"school holidays or…vacations during which he does not work".

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Any serious sixth-form teacher who does not work during the holidays is not doing his job. I wish it were possible to persuade those inside sanctuary buildings that that is not an accurate way of describing what is done.
In relation to that matter, another interface problem arises which needs to be addressed. The substance has been addressed but the thinking behind it has not. As I am sure the noble Baroness knows very well, the vacation is the time when one begins to do some work because one's teaching is over.
I am happy with the provisions relating to childcare in Regulation 14. I am also happy with the allowance in primary legislation for future progress towards shared care. But I am sorry that at present there is still the idea that one person always has overall responsibility for a child. That does not accord with practice, and it causes trouble when one tries to apply what is not in accord with practice.
I am very pleased with the extension of tax credit to children up to the age of 19 who are still in education. However, I should like to repeat a point first made with great eloquence in this Chamber by the noble Baroness, Lady David. Some people—one of my sons who is dyslexic is such an example, and therefore I should declare an interest—remain at school beyond the age of 19. I wonder whether it would have cost very much now or in future regulations to make the measure read,
"Up to the age of 19 or school leaving, whichever is the later".
To cut off the credit half-way through a school term, possibly with exams coming up, could be a very grave shock and one which I do not believe this Government want to inflict.
I believe that the rates are generous and welcome and will do a great deal of good. I want to congratulate the Minister and her advisers on a job of work which has been well done and which, I believe, will do a great deal more good than the measure we discussed earlier this afternoon. I thank the Minister.
Baroness Hollis of Heigham: My Lords, I am very pleased that the final two sets of regulations have been so warmly welcomed. I shall be as quick as I can be in responding to the points raised. The first question raised by the noble Lord, Lord Higgins, concerned slippage. That simply means that the slip rule allows printing errors to be corrected when they are finally printed, but it does not in any way touch on the substance of the regulations. In other words, it allows for typos to be eradicated.
With regard to the issue of custodial sentences, I suspect that the matter is mentioned because one is dealing with children. One can think of cases such as this where the children could otherwise be in a hospital or detained until it is thought appropriate for them to be released. I suspect that, in some cases, that could be in less than four months. That is the reason that different categories are set out.
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With regard to seasonal workers, which the noble Lord, Lord Higgins, asked me about—
Lord Higgins: My Lords, if the period is to be less than four months, that raises a separate issue. Other than that, if the period is a minimum of four months, then all the earlier qualifications in that paragraph seem to be completely unnecessary. If it is less than four months, perhaps one should consider that point.
Baroness Hollis of Heigham: My Lords, I am advised that the measure is included for the purpose of clarity and to ensure that, even though no period is specified so far as concerns the example that I gave to the noble Lord, it is made clear to claimants that certain types of custodial sentence which are handed down are still included as custody, which prevents the continuation of support. I believe that we both had in mind certain cases where youngsters have been under care and control or in custody for considerable periods and, while that is the case, their parents are not entitled to support, even though they may not come within the formal language of imprisonment. The intention of the measure is to specify that there are other ways to detain young people, which may not be classified as imprisonment, but which would deny their parents the ability to receive child tax credits. A hospital may be one such place.
On seasonal workers, notes accompanying the claim form—a point raised by the noble Earl. Lord Russell—will give clear guidance on this matter. People will be asked to state the number of hours per week that they normally work at the time that they claim tax credits. They will not be expected to work out their average working hours over a year. As a result, I believe we should be able to respond to their situation more helpfully.
The noble Earl also asked about disability tests. In the new tax credits we are continuing the existing arrangements for DPTC and WFTC. The main difference is that they are not disaggregated as they are at present, thus reducing any possibility of stigma in terms of payment to the disabled person.
The noble Earl, Lord Russell, welcomed the 50-plus element and asked about young people who stay on at school receiving benefit until their nineteenth birthday or until the end of the academic year. He will understand that that would bring about huge implications relating to child benefit and the like, but I take on board his comments and his criticism. We shall reflect on those but I do not believe that I can offer him any help.
However, where the noble Earl and the noble Lord, Lord Higgins, may rejoice is on the pertinent issue of paternity leave and adoption. We intend to extend Regulation 5 to cover statutory paternity pay and statutory adoption pay. At the time that the working tax credit regulations were drafted the Employment Bill had not received Royal Assent. Now that it has, we intend to amend the working tax credit regulations. I hope that your Lordships will find those regulations acceptable.
On Question, Motion agreed to.

Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002
Baroness Hollis of Heigham: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committed].—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.

Child Tax Credit Regulations 2002
Baroness Hollis of Heigham: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 9th July be approved [35th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.

Enterprise Bill
8.32 p.m.
House again in Committee
Schedule 15 agreed to.
Clause 237 [Criminal proceedings]:
[Amendment No. 256 not moved.]
Clause 237 agreed to.
Clause 238 [Overseas disclosures]:
[Amendments Nos. 257 and 258 not moved.]
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 259:
Page 168, line 44, leave out from "must" to end of line and insert "have regard in particular to the following considerations—

(a) whether the matter in respect of which the disclosure is sought is sufficiently serious to justify making the disclosure;

(b) whether the law of the country or territory to whose authority the disclosure would be made provides appropriate protection against self-incrimination in criminal proceedings;

(c) whether the law of that country or territory provides appropriate protection in relation to the storage and disclosure of personal data;

(d) whether there are arrangements in place for the provision of mutual assistance as between the United Kingdom and that country or territory in relation to the disclosure of information of the kind to which section 232 applies.

(6A) Protection is appropriate if it provides protection in relation to the matter in question which corresponds to that so provided in any part of the United Kingdom.
(6B) The Secretary of State may by order—

(a) modify the list of considerations in subsection (6);

(b) add to those considerations;

(c) remove any of those considerations.

(6C) An order under subsection (6B) must be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament."
On Question, amendment agreed to.
[Amendment No. 260 not moved.]
Clause 238, as amended, agreed to.
Clause 239 [Overseas disclosures: criteria]:
On Question, Whether Clause 239 shall stand part of the Bill?
Lord Sainsbury of Turville: Clause 239 requires the OFT to publish criteria to be applied by a public authority in deciding whether to disclose information in pursuance of Section 238. However, in light of the previous government Amendment No. 259, which adds to the considerations to which a public authority must have regard before disclosing information to an overseas authority, this clause is now obsolete. Therefore, I oppose the Question that Clause 239 shall stand part.
Clause 239 negatived.
Clauses 240 to 244 agreed to.
Schedule 16 [Schedule B1 to Insolvency Act 1986]:
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 261:
Page 253, line 30, leave out "rescuing" and insert "preserving the whole or part of the business of"
The noble Lord said: In moving Amendment No. 261 I shall speak also to Amendment No. 262. Part 10 of the Bill deals with insolvency. We are here concerned with some significant reforms of the existing law which did not receive sufficient scrutiny in the House of Commons from all sides of the House, and once again it falls to this House to consider them carefully. I hope that the Minister will accept that the amendments that we have tabled are designed to make the changes work in practice. I hope that they will give rise to some interesting discussions.
Schedule 16 contains the detailed provisions relating to the administration of a company. It involves the appointment of a person to manage the company's affairs, business and property in the interests of the creditors of the company. The person appointed to manage the company's affairs, business and property is called an administrator.
Paragraph 3 of Schedule 16 provides that the administrator must perform his or her functions with the objective of rescuing the company, achieving a better result for the company's creditors as a whole than would be likely if the company were wound up or realising property in order to make a distribution to one or more secured or preferential creditors.
However, I am concerned with the objective of rescuing the company. As the Minister, with his experience of business, will know, often the greatest asset of a company is the people whom it employs. It is possible to envisage under the Bill as presently drafted—paragraph 3 of Schedule 16—that, it would be possible to keep and to preserve the company as a shell while the people, the company's most important asset, walk out through the door. Therefore, here we are dealing with the urgent necessity not only of the administrator being able to move to preserve and to rescue the company, but also the business itself.
I believe that rescuing the company on its own is a pointless objective. I have sought to demonstrate that by looking at a possible end result. Perhaps I can give an example. Suppose a company has gone into administration; the administrator of the company has performed his functions with the objective of rescuing the company and has been completely successful so that he is left as the administrator of a company with no debts or liabilities and no assets or business. That is perfectly possible under the present wording. It would mean that he was the administrator of a company that was rescued but the result is entirely worthless. A company that has nothing, does nothing and has no purpose is of no use.
By contrast the objective of preserving all or part of the company's business would be beneficial to the employees of the business, creditors of the company who may be paid out of the proceeds of the sale of the business or from future profits, and of course it would be beneficial to the economy as a whole.
Amendment No. 261 has been put forward by the reconstruction experts R3, the Association of Business Recovery Professionals. I suppose that it is slightly curious that I should be asking the Minister to prefer Amendment No. 262. The noble Lord sits there with such a benign countenance; indeed, Hansard should record that I have just had the benefit of a Cheshire cat smile, which greatly uplifted me in the belief that perhaps he agrees with me that Amendment No. 262 might be the better of the two amendments. But I await hearing from him.
The Government should support the aim of these amendments. I was a little mystified as to why they were unable to do so in the other place. I therefore propose an amendment—Amendment No. 262 is preferred but Amendment No. 261 as an alternative—to focus attention on preserving all or part of the existing business rather than just the company. I beg to move.
Lord Sharman: The name of my noble friend Lord Razzall stands to two amendments in the group. I rise to support the underlying principle behind the group of amendments. Current practice in administration is normally to effect a rescue by the sale of a business or the undertaking, not necessarily by preserving the company. The Bill would impose a primary duty to rescue the company. In that sense I think that it needs revision.
I shall not delay the Committee long. If the Bill passes into law in its current form, administrators will be more cautious about selling businesses in the future than they have been in the past, with the related adverse effect on the economy and on employment as the noble Lord, Lord Hunt, has already said. I support the amendment.
Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Hunt, for giving me notice that he intended to separate out Amendments Nos. 261 and 262 from the group. It gives me a certain amount of
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difficulty because I proposed to be sympathetic to one of the two amendments in this group and to several of the amendments in the next group. The arguments for my sympathy are much the same. This group deals with the issue of company and business rescue. The next group deals with a mixture of that and of who is responsible for deciding whether or not certain objectives are reasonably practicable.
I shall confine myself to the first issue of company and business rescue. I have listened carefully to what has been said. Company rescue is at the heart of the revised administration procedure. We want to make sure that viable companies do not go to the wall unnecessarily. That is why we are restricting administrative receivership and revising administration to focus on rescue and to make it more accessible to companies as well as their creditors. That is not just good for the companies themselves; it is also good for their suppliers, customers and employees.
The emphasis on company rescue will create more incentive for company management to take action promptly and use the administration procedure before the situation becomes terminal. That is why the purpose directs the administrator first to perform his or her functions "with the objective of rescuing the company". But if noble Lords will look at paragraph 630 of the Explanatory Notes, they will see that rescuing the company is qualified by,
"i.e. the company and as much of its business as possible".
The amendment has drawn attention correctly to the importance of preserving a business activity in the company and not just rescuing what the noble Lord, Lord Hunt, calls "empty shells". That is our clear policy intention.
The first priority is to rescue the company as a going concern with much of its business intact. We would not want the administrator to rescue the company if it is to the detriment of creditor value. We must be quite clear on that, both for practitioners who need to act on it and for the courts which need to interpret it. So we intend to table an amendment on Report to make clear that the first objective of administration will be to rescue the company as a going concern. I do not have the exact wording. We intend to table an amendment to make clear that the administrator will not be required to pursue the first objective of rescuing the company if the second objective would provide a better result for the creditors of the company as a whole.
By contrast, I am not so sympathetic to Amendment No. 261. It would remove the concept of rescuing the company entirely in favour of preserving the whole or merely a part of the business of the company. The noble Lord, Lord Hunt, will remember the city fathers of Limerick who resolved that the existing city gaol should be replaced, that it should remain in use until the new gaol was ready but that it should be built from the same stones as the existing gaol. I think that we would be unwise to follow that example. But I hope that, with my expression of sympathy for Amendment No. 262, Amendment No. 261 will be withdrawn.
8.45 p.m.
Lord Hunt of Wirral: I am grateful to the Minister. I have already indicated my preference for Amendment No. 262. I am interested in his idea of introducing a phrase similar to "a going concern". I shall want to study the words that he comes forward with if he does not adopt Amendment No. 262, which I would still hope that he might consider. But this is a time to reflect and to return to the matter later. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 262 not moved.]
Lord Freeman Lord Freeman moved Amendment No. 263:
Page 253, line 30, after "company" insert "and the whole or any part of its undertaking—
(aa) where in his opinion it is not reasonably practicable to achieve the result mentioned in paragraph (a), with the objective of rescuing the whole or any part of the company's undertaking."
The noble Lord said: In moving Amendment No. 263 I shall speak also to Amendments Nos. 265 and 267 which were previously grouped with Amendments Nos. 261 and 262 but which have now been separated. I shall be brief because a large part of what I would have said has been much more eloquently said by my noble friend Lord Hunt and by the noble Lord, Lord Sharman.
However, I have one additional point. The sequence of objectives which administrators in my judgment should face lacks an intermediate objective—the first one the Minister has indicated that he is minded to accept an amendment on. The prime objective is to save the company and all or a substantial part of the undertaking. I believe that a second objective should be inserted after that, which is that if the administrator cannot save both the company and the undertaking then he should try to save the whole or part of the undertaking. Then third and fourth priorities are as set out in the Bill—a better result for the creditors than in a winding-up and to realise property for one or more secured creditors or preferential creditors.
The proposed amendment is a refinement—an additional minor but important point—to the amendment that the Minister has indicated that he might accept.
I remind the Minister that most administrators end up by saving part of all of the undertaking and not the company. That is the reality of the situation today. My amendment addresses that. I beg to move.
Lord McIntosh of Haringey: We are now into quite a large group which includes the issues that I referred to briefly in passing about who is responsible for deciding whether particular objectives are reasonably practicable or not.
I deal with the amendments in this group in turn. Amendment No. 263, which the noble Lord, Lord Freeman, has just moved, would insert a new objective so that if rescuing the company was not reasonably practicable, next down the hierarchy would be to
768
rescue the whole or part of any of its undertaking. Rescuing businesses is exactly the kind of outcome that the second objective is already intended to recover. If it is not reasonably practicable to rescue the company, selling the constituent businesses as going concerns will almost always be the next best thing. I hope that that will reassure the noble Lord, Lord Freeman, that the effect of the provision as drafted will be to cover and give priority to business rescues, as he intends.
I should like to take away for consideration Amendments Nos. 264 to 268. The new purpose for administration has a hierarchy of objectives, as the noble Lord, Lord Freeman said, and choices within that hierarchy are governed by the test of what is "reasonably practicable". The amendments would make it clear that it is for the administrator to decide whether or not a particular objective is reasonably practicable. I agree that that is what should happen in practice. The administrator is the person on the ground who is best placed to judge whether or not a particular objective is reasonably practicable, in the light of his experience and professional judgment.
We think that, as it stands, that is how the provision would work. It is not the practice of the courts to second-guess the commercial judgment of administrators in such cases, and we would not expect the provisions to be interpreted in that way. But I have listened to the concerns expressed, and I think that it would be helpful if we reconsidered the Bill's drafting to make our intentions clear. I intend to table an amendment on Report to make it clear that the test for moving from one objective to the next will be whether or not the administrator thinks it is reasonably practicable—that is, it will be for the administrator to reach a conclusion as to whether or not the objectives are reasonably practicable, taking into account all the circumstances of the particular case of which he or she is aware at the time.
Amendments Nos. 329A, 329B, 329C, 329D, 331A, 331B, 331C and 358A would make decisions by the office-holder subject to the test of what he "reasonably believes" rather than what he "thinks". That is a part of parliamentary counsel's drafting that we should be wary of questioning. The present wording would mean that if the administrator's view were then to be tested, it would be subject to a "rationality" test—that is, his decisions would be subject to successful challenge if it could be shown that no reasonable administrator would have acted in such a way in the particular circumstances of a case.
As I said, we do not think that the courts should or will second-guess the administrator's professional or commercial judgment in exercising his or her dudes. The administrator is best placed to determine what is appropriate. Again, that is without prejudice to the rights under paragraph 74 of creditors or members to challenge the administrator's decision where that decision has unfairly prejudiced his or her interests. That is why we prefer our wording to that proposed in the amendments.

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Having expressed my sympathy for Amendments Nos. 264 to 268, I hope that Amendment No. 263 will not be pressed.
Lord Hunt of Wirral: I am grateful to my noble friend Lord Freeman for having moved Amendment No. 263 and spoken to this group of amendments. I am equally pleased that the Minister has agreed to reconsider. It is so important not to allow scope for vexatious actions by parties who with hindsight take a view that the administrator ought to have taken a different course of action.
However, I hope that the Minister will reconsider the draftsman's wording of "thinks" rather than "reasonably believes". I leave him with the thought that an objective rather than a subjective test is a better way forward. He has agreed to ponder, although he is still reluctant to change the present wording. However, I thank him very much for the manner in which he has approached this group of amendments, which I am sure will result in a better outcome than would otherwise have been the case.
Lord Sharman: I add my commendations to the Minister on the way in which he has approached the matter. It is wholly right that we should consider the matter. I endorse what the noble Lord, Lord Hunt, said about changing the word "thinks", to "reasonably believes". I, too, believe that a positive rather than a negative construction is required.
Lord Freeman: I am also grateful to the Minister and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 264 to 268 not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 269:
Page 255, line 8, after "debts" insert "(within the meaning given to that expression by section 123)"
The noble Lord said: I should have thought that it is necessary to try to keep to a clear statutory definition, but it will be interesting to hear from the Minister why he believes that the provision needs to be as wide as drafted. I beg to move.
Lord Sharman: We support the amendment. The important thing is that we maintain both the balance sheet and cash flow aspects of the definition of debt. All that the amendment would do is bring the provision into line with the relevant sections of the Insolvency Act 1986.
Lord McIntosh of Haringey: I agree entirely with those arguments, but the amendment is unnecessary because on page 287, paragraph 111(1) of Schedule 16 already provides:
"'unable to pay its debts' has the meaning given by section 123"—
of the Insolvency Act 1986.
Lord Hunt of Wirral: I am grateful to the Minister for pointing out that I was trying to remove any doubt
770
that that was the case. I should now like to ponder his emphatic and robust response and, in the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 270:
Page 255, line 20, at end insert—
"() An administration application shall give the name of the person the applicant proposes to be appointed administrator and shall be accompanied by a statement by that person—

(a) that he consents to act if appointed;

(b) that in his opinion the purpose of administration is reasonably likely to be achieved; and

(c) giving such other information and opinions as may be prescribed;

and for the purposes of a statement under this sub-paragraph, that person may rely on information supplied by the directors of the company (unless he has reason to doubt it accuracy)."
The noble Lord said: I rise to move Amendment No. 270, with which are grouped Amendments Nos. 276 and 287. Amendment No. 270 was suggested by the Law Society. It would require applications for administration made through the court to be accompanied by the proposed administrator's consent to act and a statement from the proposed administrator that, in his opinion, the purposes of the administration were reasonably likely to be achieved.
What I am really seeking to discover from the Minister is where we are with the rules to deal with such matters. In the other place, it was said that the rules were being prepared and it would be helpful to know the exact present position and whether we may see the rules before Report.
Amendment No. 276 would insert, at the end of line 31,
"A statement under sub-paragraph (3) must be signed by the administrator".
The requirements set out in paragraphs 13 to 20 of Schedule 16 contain provisions relating to the appointment of an administrator by the holder of a floating charge. Paragraph 13 gives the holder of a floating charge power to appoint an administrator; and paragraph 17 sets out the requirements for his appointment. The person who appoints an administrator must file a notice of appointment and such other documents as may be prescribed by the court. The notice of appointment must include a statutory declaration and be accompanied by a statement by the administrator, inter alia, that he consents to the appointment. Paragraph 18 provides that the appointment of the administrator takes effect when the requirements of paragraph 17 are satisfied.
Those requirements will be satisfied only when the person who appoints the administrator of the company has filed the notice of appointment—and such other documents as may be prescribed—with the court. It is only upon filing with the court that the appointment becomes effective.
We should consider the problem that would be caused if an administrator were appointed at 4.30 p.m. on a Friday. Such an appointment may be urgently

771
necessary for commercial reasons, as it would give the administrator the entire weekend to get himself into a position to manage the company's affairs, business and property by Monday morning. That frequently happens at present, when the holder of a floating charge appoints an administrative receiver. It will now be impossible. If a decision is made to appoint an administrative receiver at 4.30 p.m. on a Friday, it will be impossible to file the notice of appointment and such other documents as may be prescribed in court because the court will be closed. The administrator will, therefore, be unable to start taking over the management of the company's affairs, business and property until the court opens on the Monday morning. During the weekend, goods not paid for will be repossessed; landlords will exercise their rights of forfeiture by peaceable re-entry; and various items of equipment might go missing. The entire business could be lost. It may prove difficult or impossible to save the business by the following Monday.
It is essential, therefore, that the appointment of an administrator should take immediate effect without the necessity to file documents with the court. The amendment would achieve that by inserting a new sub-paragraph in paragraph 17 requiring the statement by the administrator that accompanies the notice of appointment to be signed by the administrator. The amendment to paragraph 18 would provide that the appointment of the administrator would take effect when the statement was signed by the administrator.
Amendment No. 287 would also insert the words,
"A statement…must be signed by the administrator".
It is similar. The present provision should be amended to provide that the appointment takes effect when the statement accompanying the notice of appointment is signed by the administrator. The appointment could then take place at the weekend.
I hope that the Minister understands the way in which I approach the amendments. If there is another way in which he can satisfy me, I look forward to hearing it. With the Bill in its present form, we have a difficult potential problem. I beg to move.
9 p.m.
Lord Sharman: I shall speak to Amendment No. 270, which deals with the consent of the person who is to be the administrator to his appointment. At this stage, I shall not address the issue of timing; it is covered by other amendments.
My principal purpose in supporting the amendment is to ensure that the administrator knows that he is being appointed and is appointed with his consent. As the Bill stands, it is feasible that an administrator could be appointed without knowing it. That would be wholly unwise.
Lord McIntosh of Haringey: I have no difficulty with much of what has been said. However, the matters raised by the amendments are really matters for the insolvency rules, rather than primary legislation. The noble Lord, Lord Hunt of Wirral, recognised that when he asked where we were with the insolvency
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rules. The difficulty is that they cannot be finalised until the Bill is in its final form. In other words, we cannot produce something to put out for consultation until we have a Bill.
I appreciate the desirability of offering draft insolvency rules to the Opposition while the Bill is progressing, but I do not want to prejudice the necessary consultation with the experts. If the noble Lords, Lord Hunt of Wirral and Lord Sharman, will forgive me, I will say simply that I recognise the importance of consent and signatures. We will amend the insolvency rules to effect those changes. It is probably a step too far to say whether the insolvency rules will then behave exactly as the amendments propose.
The amendments do not deal with the interesting and important issue of the Friday night application, raised by the noble Lord, Lord Hunt of Wirral. That is dealt with by the amendments in the group led by Amendment No. 275. I do not mind jumping the gun, if other noble Lords do not mind my doing so. The appointment of an administrator must take effect at the point at which the notice is filed in court. One of the effects for a company entering administration is that it becomes subject to a moratorium on legal and other proceedings. The court must be made aware of the point at which the administrator's appointment takes effect. That is the starting point.
It is also important that the court should underpin the administrative procedure, including cases in which the administrator is appointed by one of the out-of-court routes. We have provided that all administrators will be officers of the court, and that will give the court supervisory jurisdiction over them. It is right that the filing of the notice should be the trigger for their appointment.
The Friday night issue is valid. We want to make sure that administrators can act quickly and effectively. We must make sure that the arrangements for appointing administrators reflect practical realities and take account of cases in which time is of the essence, as the noble Lord, Lord Hunt of Wirral, said. Officials are working with colleagues in the Lord Chancellor's Department, the Court Service and the devolved Administrations to develop options for making court filing quick and accessible, including provision for filing documents outside normal court opening hours, when that is necessary.
I hope that that is a suitable response, not just to this amendment but to the later amendments.
Lord Freeman: I anticipate that I will not speak later to an amendment to which the Minister referred. I welcome what he said. Will he comment on the proposal that has been circulating for some kind of fax-back arrangement? That would be a recognition by officers of the court that proper notice has been given, so that an administrator can proceed, if necessary, over the weekend.
Lord McIntosh of Haringey: That is one of the options that Department of Trade and Industry

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Insolvency Service officials and officials from the Lord's Chancellor Department and the Court Service can consider. It makes good sense to me.
Lord Sharman: I had intended to speak to the issue when we came to the group led by Amendment No. 275. As it has been raised now, I must say that the practical experience is that those who seek to avail themselves of the assets of insolvent companies do not always pay attention to the niceties of the law. It is critically important that the administrator should be able to secure premises and the like. To do so, he needs the force of the law behind him. I hope that the Minister will, as he says, consider seriously this "weekend problem", as we might graphically describe it.
Lord McIntosh of Haringey: I agree entirely.
Lord Hunt of Wirral: We might have a way forward in looking at rules. As the Minister rightly said, the Bill is not yet in its final form. The rules to which he refers are almost certainly in draft form at the present time and are therefore not in their final form. Surely it is appropriate that the draft rules should be circulated to the Opposition Benches, and, indeed, to the Government Benches, so that we have an opportunity to look at them and to see the extent to which our fears are met by the detail of the rules. I do not expect the Minister to respond now, but perhaps he might think about my suggestion.
We respect that the rules would be in draft form and we agree that in no circumstances must the consultation he prejudiced in any way. The Minister has been forthcoming in responding so positively to this debate, which is linked with the later debate on Amendment No. 275. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 271 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 272:
Page 256, line 37, leave out "two" and insert "five"
The noble Lord said: In moving the amendment I shall speak also to Amendment No. 273. Amendment No. 272 is about timing. The extra days' notice to floating chargeholders would make the time limit more manageable. Amendment No. 273 is also about timing. Its purpose is to ensure that no delay should occur in urgent cases where all the competing secure creditors agree. I beg to move.
Lord McIntosh of Haringey: The reason we have a two-day notice period for the holders of prior floating charges is to make it compatible with the notice requirements for companies or their directors appointing administrators by the out-of-court route. A company has to give five days' notice to floating chargeholders before appointing an administrator. That allows the floating chargeholder the opportunity to appoint his own choice of administrator if he so
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decides. Before appointing, the floating chargeholder will have to give notice to the holder of any prior charges. To give those prior chargeholders five days' notice would take them beyond the date that the company or its directors could appoint their own choice of administrator. That is why we want a shorter period.
The issue behind Amendment No. 273 was raised in the Commons. We tabled an amendment on Report to make sure that a prior floating chargeholder was able to consent in writing, in which case the full two-day period would not be necessary. That government amendment is now paragraph 14(1)(b).
Lord Kingsland: It sounds as though the Minister has some good answers. I shall reflect on them, and meanwhile beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 273 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 274:
Page 257, line 11, after "appointed" insert "on a winding-up petition presented by a creditor"
The noble Lord said: In moving the amendment I shall speak also to Amendments Nos. 284 and 285.
Lord McIntosh of Haringey Lord McIntosh of Haringey: Not to Amendment No. 286?
Lord Kingsland: I am not sure that I shall speak to Amendment No. 286, unless the Minister has a major concession to make on it. He is shaking his head, so I shall leave him to reflect on it over the summer.
The purpose of the provisions is to permit secured creditors, whose loan is in default, to proceed quickly and cheaply to appoint an administrator of their choosing. Where a provisional liquidator has been appointed on a creditor's winding-up petition, it is fair to require that the secured creditor should apply to the court for the appointment of an administrator, who will, in effect, replace the provisional liquidator.
However, it would be wrong, in principle, to have such a requirement where the provisional liquidator is appointed on the company's own petition. It is acutely undesirable that the company should be given a further opportunity to compete with the secured creditor over the choice of the insolvency office holder.
I have two observations on Amendments Nos. 284, 285 and 286—if I may draw Amendment No. 286 into the family. First, in a so-called rescue culture there is much to be said for not limiting the remedies available to all stakeholders in any way. Regardless of history, the board of a company might, legitimately, take the view that, in the circumstances currently facing the company, the appropriate course of action would be to take the company into administration. Serial protection seekers will get into quite enough trouble without needing this provision as well.

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Moreover, if paragraph 23 remains, we should prevent directors circumventing the clause by lending the company a nominal amount secured by fixed and floating charges over the whole of the assets and then appointing an administrator under paragraph 13. I beg to move.
9.15 p.m.
Lord Sharman: I support Amendment No. 274, to which my noble friend Lord Razzall has added his name. I will add nothing to what was said by the noble Lord. Lord Kingsland; he said it far more eloquently than I could.
Lord McIntosh of Haringey: I appreciate the concern expressed by the noble Lord, Lord Kingsland, that the floating chargeholders should not be prevented from using the new quick out-of-court route for putting a company into administration if a provisional liquidator has been appointed following a petition by the company. But under the proposals in the Bill the provisional liquidator will not have been appointed by the company but by the court, which will have decided that it was right to do so. Therefore, given that the provisional liquidator is a court appointee, it would not be right for a floating charge holder to be able to displace him or her without a court hearing. In those circumstances, it would be open for the floating chargeholder to apply for administration through the court, but not in the way that Amendment No. 274 would provide.
As regards Amendment No. 284, I share the aim of making administration as accessible as possible to companies which get into financial difficulties. However, we believe that the prohibition we have included—that is, against using the out-of-court route in the 12 months following the end of an unsuccessful attempt to put in place the company's voluntary arrangements—is a necessary protection to prevent a small minority of unscrupulous companies and directors from making serial use of moratorium procedures to the detriment of their creditors.
If there are genuinely good reasons for the company to go into administration during this period, it can apply through the courts, but it should not be using the out-of-court route here. That strikes the right balance between protecting the interests of creditors and ensuring that administration is accessible to companies and their directors.
Amendments Nos. 285 and 286 are different versions of the same thing. I fully support the principle behind them but they are not necessary. The matter has been dealt with elsewhere. Section 245 of the Insolvency Act 1986 deals with situations where a company gives connected parties floating charges. Where a charge is granted to a connected party in the two years before an administration, Section 245 provides that it is invalid except for the value of moneys lent to the company at the time when the charge was created.
If only a nominal sum was lent for the purpose of establishing a floating charge, the floating charge would be valid for that nominal sum. However, it
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would be unlikely to relate to the whole, or substantially the whole, of the company's property, so it would not entitle the holder to appoint an administrator by the out-of-court route.
Lord Kingsland: I am grateful to the noble Lord who is, however, proving uncharacteristically obdurate today. It seems to me that, under Amendment No. 274, there is an important distinction to be made between the situation where a secured creditor applies to the court for the appointment of an administrator and that where the provisional liquidator is appointed under the company's own petition. That distinction is not made under the Bill and I hope that, over the summer adjournment, the Minister will think again about its importance. Meanwhile, beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 275:
Page 257, line 16, leave out "with the court" and insert "on the next day the court office is open"
The noble Lord said: As the Minister has pointed out, we dealt with a substantial part of this group of amendments in an earlier debate. The previous amendment was withdrawn on the clear understanding from the Minister that arrangements for filing need to follow practical realities, particularly where timing is of the essence.
Perhaps I may deal with the other amendments in the group, particularly Amendments Nos. 281, 282 and 283. They are technical amendments designed to ensure that the administrator's appointment does not come into effect before he is aware of it. With those provisos, and referring hack to the previous issue, I beg to move.
Lord Sharman: We debated these amendments earlier. I want simply to reiterate what I said then. The weekend problem is a very real one, as is the issue of an administrator acting without knowing that he has been appointed. I hope that the Minister will take these matters on board.
Lord McIntosh of Haringey: I can certainly give an assurance that ways will be found of ensuring that the administrator knows that he has been appointed. There will be no difficulty about that.
As regards the discussions on taking account of cases where time is of the essence, to which I have already referred, if any progress has been made in the inter-departmental discussions I shall write to noble Lords opposite before we reach the Report stage. I hope that it will be possible to do so.
Lord Hunt of Wirral: In the light of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 276 to 291 not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 292:
Page 262, line 20, at end insert "or stay any voluntary winding-up of the company"
The noble Lord said: This is a technical amendment to ensure that paragraph 37 applies equally to compulsory and voluntary liquidations. I look forward to the Minister's response. I beg to move.
Lord McIntosh of Haringey: I believe that this point was answered in the debate in the other place. If a company is in liquidation, a court may make an administration order only on the application of the liquidator. Paragraph 37(2)(c) then allows the court to make any other consequential provision as may be necessary. That could include an order to stay a voluntary winding-up.
Lord Hunt of Wirral: In the light of that explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 293 and 294 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 295:
Page 267, line 35, after "proposals" insert ", a copy of the statement of affairs and a list of the creditors of the company of whose claim he is aware giving the name and address of and the amount of the claim by every such creditor"
The noble Lord said: Under paragraph 48 of Schedule 16, the administrator of a company is obliged to send a statement of his proposals for achieving the purpose of the administration to every creditor of the company of whose name and address he is aware. This is an important document because it will be considered by the creditors at a meeting and may be approved by them, either without or with modification, provided that the administrator consents to the modification. The administrator then manages the company's affairs, business and property in accordance with those proposals. They form, in effect, the basis of the future conduct of the administration.
We believe that it is essential for the creditors to be sent a statement of the company's affairs prepared pursuant to paragraph 46 so that they can make a proper decision as to whether to approve the administrator's proposals. The statement of the company's affairs should contain a comprehensive account of the company's financial position. Furthermore, it is essential that that should be made available to the creditors before the creditors' meeting. The creditors cannot make a reasonable decision on the administrator's proposals without such financial information. We therefore believe that the statement of affairs should be sent out with the administrator's proposals.
We also feel that it would be appropriate for creditors to be sent a list of names and addresses of all the other creditors and the amounts of their claims. We think that this is also an important document and one to be sent at an early stage so that creditors can identify other creditors with a view to summoning a creditors' meeting.
Under paragraph 51, the administrator need not call an initial creditors' meeting to consider his proposals if, for example, he forms the view that the company has insufficient property to enable a distribution to be made to unsecured creditors. However, paragraph 51(2) provides that the administrator shall summon an initial creditors' meeting if it is requested by creditors of the company whose debts amount to at least 10 per cent of its total debts. A creditor who wants the administrator to summon an initial creditors' meeting must be able to contact other creditors with a view to joining with them so that their debts amount to at least 10 per cent of the total debts of the company. Creditors will also need to know what the total debts of the company are, and that should also be apparent from the statement of affairs and from the list of creditors.
In short, we believe that it is essential that the creditors are sent a list so that they can take steps to request an administrator to summon a creditors' meeting for the purpose of approving the administrator's proposals. I beg to move.
Lord McIntosh of Haringey: Although the noble Lord, Lord Kingsland, has moved only Amendment No. 295, I shall have to respond also to Amendment No. 294 because the two are linked.
I can now do a little better than saying, "This is a matter for the insolvency rules, copies of which we shall get to noble Lords as soon as possible", because this issue is already covered by the insolvency rules. Rule 2.16 requires an administrator to send a copy or a summary of the statement of affairs along with his or her proposals.
As to the list of creditors, the administrator will need details of the company's creditors in order to notify them of his or her appointment and, in due course, to send them copies of his or her proposals and to invite them to a creditors' meeting if one is to be held. This information may not be held by the company in the form of the list required by the amendment, but once it has been assembled and given to the administrator it will constitute a list for the purposes of the provision. It will, after all, have been drawn principally from the company's own records. So I can give an even firmer assurance that the insolvency rules will cover both of these points.
Lord Kingsland: That is a most refreshing response. I thank the Minister, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 296:
Page 267, line 36, leave out "28 days" and insert "three months"
The noble Lord said: We move now to some very important amendments dealing with time-scales. In moving Amendment No. 296, I shall speak also to Amendment No. 297.
Paragraph 48(4) provides that the administrator is under an obligation to send a copy of the statement of his proposals for achieving the purpose of the

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administration to the registrar of companies, to every creditor of the company and to every member of the company within a relatively short period of 28 days. I believe that to be an unrealistic period for the following reasons.
We are referring to a very important document because, if approved by the creditors' meeting, the administrator must manage the company's affairs, business and property in accordance with the proposals in the document. The statement of his proposals will have to be a detailed document setting out the history of the company, its present financial position and the future plans during the administration and give sufficient financial information to enable the creditors to form a view as to whether or not they should approve the proposals.
Gathering the factual information for this statement of proposals will of course take some considerable time if it is done properly. The facts will need to be considered once the information has been gathered and decisions will have to be taken as to how to manage the company's affairs, business and property. Once those decisions have been taken, the relevant factors and the grounds for the decision will have to be put together in the statement. It then has to be printed, and sent out to all the creditors.
Therefore, we are talking about an extremely important exercise. On reflection, I believe that the Minister will conclude that it is unrealistic to expect an administrator to be able to prepare such a document within the relatively short period of 28 days. Of course, if he manages to do so, the doctrine of "more haste, less speed" may well come into operation. Although the administrator may well have complied with the time limit in this paragraph, the quality of the statement of his proposals will surely have suffered as a consequence. Indeed, in the more complex cases, or where there are thousands of creditors, the time limit of 28 days is, I believe, completely unrealistic.
The Minister may tell me and the Committee that the time limits can be extended under paragraphs 107 and 108 of the schedule either by the court, or with the consent of each secured creditor of the company or a majority of the creditors by value. However, I believe that it would be unrealistic to expect to obtain the informed consent of the creditors of the company before the time limit has expired, especially if there are thousands of creditors. Therefore, under the present provisions, it will surely become common practice for administrators to apply to the court for an extension of the 28-day time limit.
I can envisage circumstances in which the application would have to be made in almost every administration. Of course, if that application is to be made properly, the court will have to be put fully in the picture by being given all the relevant facts so that it can make up its mind as to whether or not to grant the extension of time. I suspect that such an application will need as much detail as is presently required for a petition for an administration order. Anything less than that sort of detail would be mere rubber-stamping, which would increase costs for no
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conceivable effect, or benefit. If the court then refuses the extension of time, as no doubt it should if insufficient evidence is put before it, the position would then become even more impossible because the application to the court will have wasted several days.
Although I understand the wish to produce a package of reforms that will speed up the whole process—and, indeed, sympathise with it—I hope that the Minister will accept that the present period for the approval of an administrator's proposals when an administration order is made is three months. That is a much more sensible period. As far as I am aware, there has been no criticism of that period. Therefore, in the absence of any criticism, I wonder why we should seek to change so dramatically to a period of 28 days.
Paragraph 50 of the schedule provides that the initial creditors' meeting,
"must not be after the end of the period of six weeks beginning with the date on which the company enters administration".
If we extend the period for sending out the statement of the administrator's proposals to creditors, it will be necessary to hold the initial creditors' meeting at a later date. In Amendment No. 297, I have suggested that the period of four months to hold that initial creditors' meeting ought to be sufficient, given the fact that the administrator will have had three months within which to prepare a statement of his proposals. That will allow the creditors a month to consider those proposals and form a view for the purposes of the initial creditors' meeting.
In conclusion, those who have any experience of administration will know that the first few weeks of the process place enormous demands upon the administrator. As we discussed earlier, his first priority will be the stabilisation of the business. I hope t hat the Minister will look favourably on these amendments, which I believe will considerably improve the proposed legislation. I beg to move.
Lord Sharman: I rise to speak briefly to Amendments Nos. 296 and 323 in this group.
The noble Lord, Lord Hunt, has spoken eloquently about the need for balance in this approach. I believe, based on some considerable experience of these matters, that the time-scales are unrealistically short. In my view, they will lead to significant numbers of applications being made to the court for extensions. That will give rise to more costs and will take up more time for insolvency practitioners and creditors. It will inevitably mean a return to the kind of time-scales that we have now. The noble Lord, Lord Hunt, did not use the expression but, "If it ain't broke, why fix it?" That is the message that I leave with the Minister.
Lord Mitchell: I should like to speak to my Amendment No. 321, which is in this group. In doing so, I declare several interests. First, I am chairman of Syscap plc, which leases, rents and hire purchases high-technology equipment, as is set out in my declaration of interests. My company is also a member

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of the Finance & Leasing Association, and I have been working closely with the association, which is very interested in the Bill.
The Bill states that the appointment of an administrator shall finish at the end of three months. I welcome the sentiment behind this time limit, which means that the administrator will no longer be able to enjoy an unlimited period for the completion of administration. But there is no evidence that the majority of administrations are completed within three months. There are often legitimate reasons why cases cannot be completed within this time-scale. We do not have to look too far. We have seen what has happened recently with Railtrack and Ondigital.
In the vast majority of administrations, the administrator would need to apply for a time extension. The Bill currently proposes that this will be for only a further three months. I believe that this would be a wholly unsatisfactory and impractical arrangement. Its consequences are best illustrated by a simple example. If we consider a 10-year administration under the Bill's current proposal, the administrator would need to apply to the courts for time extensions no fewer than 39 times. I am confident that the Minister will agree that this would place unreasonable pressure both on the courts and on the administrator.
This amendment leaves the three-month limit in place; but it offers a more realistic and flexible working alternative. Indeed, it is far more realistic than the present arrangement. The court would need to carry out a rigorous review of applications for a 12-month extension, and grant them only where absolutely necessary. In contrast, as the Bill currently stands, a three-month extension period is likely to become a "rubber-stamping" exercise.
Lord Freeman: I find myself in sympathy with the arguments of the noble Lord, Lord Mitchell. As the Bill stands, we have moved from a situation which was probably too loose—in the sense that it was largely up to the administrator to determine when to bring an administration to an end, subject to the overall powers of the court—to the proposal in Bill, which seems too inflexible. The CBI, among other bodies, has voiced its concern, as has the noble Lord, Lord Mitchell.
Amendments Nos. 317 to 319, standing in my name and in the names of my noble friends, offer a menu to the Minister and might provide an opportunity for the noble Lord to comment. Amendment No. 318 is the first alternative to a return to the present position—that is, giving the administrator maximum leeway—by providing that the administrator must provide reports to the court if it is not possible to end the administration within three months. Despite what the noble Lord, Lord Sharman, says from great experience, we 'have the example of Railtrack, and there are many other complicated administrations which require much longer. I believe that the three-month provision the Bill is too restrictive. Amendment No. 319 replaces the initial three-month period, when the administration must come to an end unless it is
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extended with the consent of the court for a further three months, to 12 months. I am sure that the Committee will welcome the Minister's comments.
Lord McIntosh of Haringey: There are two issues in this group of amendments—a minor one and a major one. The minor one is the frequency of reporting. I take the point that the noble Lord, Lord Freeman, makes about the reporting obligations in Amendments Nos. 318 and 316. Under the current rules, the administrator must send a report to creditors every six months. I sympathise with the proposal that when the new time limits are extended he should be subject to some form of regular reporting. We need to consult further on the frequency, content and recipience of these reports, but we would make provision for these and other detailed matters by amending the insolvency rules through secondary legislation.
The major issue is time-scales—not just the 28 days, but the six weeks and the three months. We have introduced the timetables because of the criticism that administration is too long drawn-out and cumbersome. There has been general recognition that we have to have a time limit, not just for creditors, who rightly want certainty about when they might be paid, but also for small firms, for whom the costs of an open-ended and potentially lengthy administration are a significant barrier to entering administration. My experience is that when I have had customers who were in difficulties and went into administration, the last thing I wanted was for that administration to continue beyond the end of my financial year so that I had to take the whole of the bad debt into my accounts, even though there was a possibility of some percentage coming back afterwards. There is a great argument against lengthy time-scales from the point of view of creditors.
We have looked at experience in other countries. Similar or more stringent time limits have been adopted in Australia, where they seem to work satisfactorily. The time-scales in the Bill are stringent, although, as the noble Lord, Lord Hunt, recognised, there has been some flexibility to allow them to be extended when necessary, on a case-by-case basis. We are taking powers to extend time-scales generally.
There is a conflict of interest between the insolvency profession on the one hand and creditors and small companies on the other. I have listened carefully to what has been said all round the House. The noble Lord, Lord Sharman, put the issue very well on Second Reading, saying that it is hoped that many cases will be completed sooner than the limit, but a sensible and viable limit is needed. There will be cases in which the administration period, whenever it is fixed, is not long enough, but we do not want a law that is honoured more in the breach than in the observance. We must set time-scales that reflect the day-to-day practicalities of administration and in which all those with an interest in administration can have confidence.
We have had amendments to extend the time-scales for the administrator to send proposals to creditors and the time-scale for the administration procedure. Differing views have been expressed this evening about

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whether both limits need extension and how far. I am not able to support the amendments before us, but I am willing to take the matter away and give it urgent consideration in consultation with interested parties, including the insolvency profession, but also representatives of lenders and business. In the light of those discussions, I would be prepared to table government amendments on Report to provide for limits that command a wider consensus.
Lord Hunt of Wirral: The Minister has announced a significant concession. He is aware that concern about the time limits is expressed not only by the experts, such as R3, but also by the CBI and a number of other organisations. He has offered to look at the issue further and perhaps have wider consultation during the Recess to ensure that whatever proposals he comes hack with on Report command as wide a range of support as possible. I readily accept that generous offer and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 297 not moved.]
9.45 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 298:
Page 268, line 27, leave out "Paragraph 50(1) shall not apply"
The noble Lord said: Under paragraph 50, the administrator must call an initial creditors' meeting for the purposes of approving his proposals with or without modification. As currently drafted, that initial meeting must be held within six weeks of the company entering into administration. However, the administrator need not call an initial creditors' meeting where the statement of his proposals says that he thinks that,
"the company has sufficient property to enable each creditor of the company to be paid in full…that the company has insufficient property to enable a distribution to be made to unsecured creditors…or…that neither of the objectives specified in paragraph 3(1)(a) and (b) can be achieved"—
they being the objectives of rescuing the company or obtaining a better result from the company's creditors as a whole than would be likely if the company were to be wound up.
We feel that even in those circumstances there should be an initial creditors' meeting to consider the administrator's proposals. The administrator is given extensive powers to manage the company's affairs, business and property without interference from anyone. We feel that at the very least he should report to the creditors at one meeting what he proposes to do. Creditors must be given a chance to voice their concern and they should not be denied that right, particularly where the administrator thinks the company has insufficient property to enable a distribution to be made to unsecured creditors. These creditors will recover nothing, and at the very least they must be satisfied that nothing can be done for them and be able to test that at the meeting.
Accordingly, we propose that paragraph 50(1) be omitted from the Bill. The Minister may well respond on this matter as he did to me on Amendment No. 295—that all this will be dealt with by regulation.
In relation to Amendment No. 327, under paragraph 76, the appointment of an administrator ceases to have effect after three months. That period can be extended by the court or with the consent of the creditors. Paragraph 78(2) provides that the consent of each of the secured creditors of the company, and a majority of the preferential creditors if the administrator thinks that a distribution may be made to them, is sufficient for the purposes of an extension if, but only if, the administrator has stated in his statement of proposals that he thinks the company has insufficient property to enable a distribution to be made to unsecured creditors.
The effect is that unsecured creditors are in reality disenfranchised when the administrator thinks, perhaps wrongly, that he will not be able to make a distribution to them. We think that that is unfair. We do not believe that unsecured creditors should be disenfranchised simply because the administrator thinks that there will be no distribution to them. Indeed, since the unsecured creditors are losing more than any other class of creditor, they must be treated more sympathetically than others and have a right to be heard. I beg to move.
Lord McIntosh of Haringey: There are a number of amendments in this group, and I shall try to deal with all of them. I refer first to Amendments Nos. 298, 299, 300, 327 and 333A.
Paragraph 50(1) provides that an administrator does not need to hold an initial creditors' meeting in certain circumstances if he or she thinks that the company has sufficient property to enable creditors to be paid in full or that the company has insufficient property to enable the distribution to be made to unsecured creditors other than the prescribed part, or that the first two objectives of administration cannot be achieved. The amendments would require the administrator to hold an initial creditors' meeting in all of those cases or seek the permission of the court not to do so.
I certainly agree with the spirit behind the amendments, which is that creditors have the right to be involved in the process of administration. Incidentally, I shall not rely on regulation at all in this answer. However, it is right and proper that creditors' involvement should be focused on cases where their financial interest is at stake. That is why the Bill provides that in the specified cases where this is not the case, the administrator does not need to hold a creditors' meeting or seek all creditors' consent or approval for his actions because that would add unnecessarily to costs, burden the courts and reduce the returns for those creditors who did have a financial interest.
In addition, paragraph 51(2), which would be deleted by Amendment No. 300, provides that in cases where the administrator is not required to hold a meeting, he or she must do so if requested by creditors whose debts amount to at least 10 per cent of the total debts of the company. That is a low threshold. Having been a creditor many times, I would never have dreamed of attending a creditors' meeting. I would not

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have known what to do in order to get my views expressed. I believe that the virtues of creditors' meetings are grossly exaggerated. It costs a lot of money for the boss of a small company to attend a creditors' meeting, possibly more than he is owed.
Creditors also have ways in which they can challenge the conduct or actions of the administrator, for example, if they believe that he or she is unfairly harming their interests or is guilty of malfeasance. In our view the provision should provide sufficient protection to unsecured creditors even where they have no financial interest.
Amendments Nos. 301 and 302 provide that the administrator must report the decision of an initial creditors' meeting within seven days rather than as soon as is reasonably practical. Our view is that the administrator should make such a report as soon as he reasonably can. That is what the Bill provides. We do not think that there is any room for uncertainty here.
Amendment No. 303 narrows the scope of the provision in the case of the failure to approve a revision so that the courts' powers can be used only where the administrator considers that the original proposals are not reasonably likely to be achieved. We do not think that that is necessary. Paragraph 54 allows the court the power to make such provision as it deems necessary. It will not prevent an administrator from pursuing proposals that have been approved by creditors if the court is persuaded by the administrator that that is the right way to proceed.
Finally, Amendment No. 304 would remove the facility to conduct creditors' meetings through correspondence. But the provision to do that was made in response to suggestions by people rather like me that that would avoid the cost and bureaucracy of a meeting of creditors when business can be conducted just as effectively via correspondence. As the paragraph says, the details of how an administrator should deal with such correspondence will be set out in the rules—to that extent I am relying on regulation—and will ensure that the business could not be conducted in such a way as to disadvantage a particular creditor or group of creditors. However, we believe that being able to conduct business by correspondence will save creditors the time and expense of attending meetings when it is not really justified.
Lord Kingsland: I am glad that the Minister at least agrees with the principle lying behind these amendments although he may not feel quite so comfortable with the detail. The Minister appeals to his own experience as a creditor and draws certain conclusions from that about the attitude the Government should take to the amendments. Perhaps over the summer break the Minister might try to think what it is like to be a different sort of creditor in different circumstances from himself and then come back and look again at these amendments and see whether his mind changes.
Lord McIntosh of Haringey: I believe that I should imagine myself as a floating charge holder—as a
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banker. In either role, I should be glad about the abolition of Crown preference. That is what I should be thinking about.
Lord Kingsland: The Minister seems to be an admirable example of the unsecured creditor. Having said that, I swiftly beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 299 to 304 not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 304A:
Page 271, line 5, at end insert—
"FINANCING ADMINISTRATIONS
Powers of court to approve financing of companies in administration
57A (1) The administrator of a company may at any time following his appointment apply to the court for approval of the provision of super-priority financing to the company.
(2) In this section "super-priority financing" means finance provided to a company in administration which shall rank as an expense in the administration with priority over the claims of existing secured and unsecured creditors.
(3) The court shall not make an order granting an application for super-priority financing under this section unless it is satisfied that—

(a) the monies to be provided will be used for expenditure necessary to—

(i) continue the operation of the business of the company in order to meet the administrator's objectives; or

(ii) otherwise to protect and preserve the business and assets of the company during the administration; and

(b) the secured creditors are not prejudiced by the provision of super-priority financing; and

(c) it is appropriate to make the order in the overall interests of the administration."

The noble Lord said: I hope that the Minister will not take me too much to task for the point in the Bill at which I seek to place the amendment. I wanted an opportunity to discuss the important need for super-priority financing, which does not appear to be mentioned in the Bill as it is currently drafted.
It is now some time since a review was set up by agreement between the Chancellor of the Exchequer and the Secretary of State for Trade and Industry, with the following terms of reference:
"To review aspects of company insolvency law and practice in the United Kingdom and elsewhere relating to the opportunities for, and the means by which, businesses can resolve short to medium term financial difficulties, so as to preserve maximum economic value; and to make recommendations".
That was a very timely review. One of the principal areas of focus given to the review was:
"The further development of the rescue culture".
That was clearly set out as one of the review's objectives.
I have had an opportunity to examine the report of the review group, which is entitled, A Review of Company Rescue and Business Reconstruction Mechanisms. The report, which comes from the Insolvency Service, is a most interesting document.

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I refer in particular to page 33, which is headed, "Financing Company or Business Rescues". The review group states its belief that the issue of financing,
"is central to any discussion of a rescue culture in the UK".
It goes on:
"Continued trading is essential for some form of going concern to emerge at the end of the process",
just as it is essential,
"for a company to continue trading through an insolvency procedure",
but often only if it receives access to some form of external finance.
The review group states:
"Unless that finance is available the rescue will fail, the assets will have to be sold piece-meal and the company will usually be forced into liquidation".
The review group rightly centred on the need for a special form of financing if a company was to continue as a going concern. In broad terms,
"new secured finance is only available to support a rescue procedure in the UK to the extent that existing secured creditors agree, and/or if the company has uncharged assets (or charged assets with sufficient equity)".
We have previously been referred to the position in the United States, where, in recognition of the critical nature of post-petition funding, Chapter 11 of the US bankruptcy code creates a framework in which new lenders can be afforded an advantageous position as regards other creditors of the company.
The review group concluded that it would be wholly inappropriate to attempt to replicate Chapter 11 in the United Kingdom, where the business culture and the economic environment are quite different. But it went on to say:
"we nonetheless thought that the basic principles underlying US practice were the most important aspect for our purposes".
The review group continued:
"We would summarise these basic principles as follows:
The provision of additional finance to businesses in distress can be 'value-enhancing' for the business, provided it is part of a properly considered plan for financial recovery".
I could not agree more. The issue of finance and, in particular, super-priority finance in company and business rescues was, indeed, recognised as a key issue in that original report, which, I understand, was produced in May 2000.
What I cannot understand is what has happened since. The working group strongly recommended detailed consideration and wide consultation on the issue. It concluded:
"The review group believes that there is a case for a more radical approach to company rescues giving the courts (or supporting tribunals) discretion to agree to superpriority finance within tight criteria. This would be a major change, and there would need to be detailed consideration and wide consultation. Key issues would include the development of institutions and a legal framework to support it".
The review group concluded:
"We recommend that a debate on this proposal should begin as soon as possible".
That was in May 2000. So far as I can see, the idea has been dropped. The Bill does not provide for it anywhere, and, I say to the Minister, surely there needs
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to be some kind of explanation as to exactly what has happened. If an enhanced form of administration is to be used successfully as a rescue tool, I believe it is necessary to tackle the issue of funding. In future, under these changes in the Bill, funding will not necessarily be forthcoming from the party who seeks the appointment of an administrator. Therefore, it is important to have a mechanism which provides for companies having access to ongoing finance during a rescue.
I believe that we heard a declaration of interest earlier. I should ensure that the Committee is aware that I am the senior partner of a law firm called Beachcroft Wansbroughs. We have some very bright young lawyers in our insolvency department. They warned the Minister's Bill team that I was going to raise these issues and refer to this report, and rightly so. I believe that those who served on the working party deserve an explanation.
The clause that I propose provides for super-priority financing where priority is given to a lender who is prepared to put cash into a business in order to keep it going while a rescue is worked out. I believe that failure to provide for that financing during an administration under the new regime proposed by the Bill will undermine the ability of administration to operate as an effective rescue tool.
Therefore, this is not an attempt to introduce a Chapter 11-type system—far from it. Rather, I believe that the amendment provides for a key component currently missing from the Bill to facilitate properly business rescues and to give the aims which the Bill seeks to achieve a real chance of working. I beg to move.
10 p.m.
Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Hunt, for having given the notice that he did about the background to the amendment. Of course, we are familiar with the review of company rescue and business reconstruction mechanisms. However, I hope that the noble Lord will agree that the conclusion of the review was a good deal more tentative than one might suppose by listening to what he said. He said that they called for debate. Indeed, they did but they did not actually recommend anything. They discussed the whole issue of super-priorities, but they did not reach a concluded view. In the absence of a concluded view, we have taken a view. I agree that we have not gone for an extended debate. Perhaps we could be at fault on that, although I assure the noble Lord, Lord Hunt, that if there is to be a debate we would happily take part. I want to explain our position, which can be our contribution to the debate for the time being.
We have taken the view that the issue of whether to lend to a company that is in administration should be a commercial one, best left to the commercial judgment of the lending market. If the proposed rescue would constitute a commercially viable proposition, or if there are free assets which can be offered as collateral, then it is for a lender to decide whether or

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not to lend. It is not an issue, as the amendment says, for the courts to make an order granting an application for super-priority financing. We do not consider it an issue with which the courts should be equipped to deal. Perhaps the suggestion is that there are uncharged assets, which certainly is the case in the United States, but it is much more rare in corporate insolvencies in this country, where we have so many floating charges.
If the suggestion behind the amendment is that there is little or no funding available during a rescue, that is clearly not the case. In company rescues, a company's existing bankers are the most likely source of continued funding, but alternative sources of finance for companies and businesses have emerged. There is the growth of asset financing, factoring and discounting where funders may be more oriented towards the rescue environment and prepared to advance funding to companies in administration and subject to company voluntary arrangements.
We shall certainly keep the matter under review and we shall certainly participate in any debate that takes place. There will need to be a continuous review as the new provisions in the Bill take effect because they will need to be monitored. However, our present position is that the matters of funding should be left to the commercial judgment of the lending market.
Lord Hunt of Wirral: I am interested in the Minister's response. I am grateful to him for conceding that perhaps there could have been a debate on some of these approaches. I quoted extensively from the report so as not to disguise the position in any way. The group called for a debate, but they also said, as I believe was recommended by the review group, that one approach would be:
"to build into our law provision for the authorities supervising an insolvency procedure to have regard to similar basic considerations to the US in considering proposals for 'superpriority' finance".
Having heard the Minister say that he and his colleagues in the department considered the report, perhaps he could let me know whether there has been any considered response to the working party. I shall not press him now, but it would be helpful to know whether the members of the review group were contacted to tell them the result of the deliberations within the department. It may be that the department held a review that reached certain conclusions, but I am not aware that such a document was ever published.
Lord McIntosh of Haringey: No, neither am I and I should be aware. I shall write to the noble Lord, Lord Hunt, about that. If it appears that there should be a further meeting between the members of the review group and officials, that should take place before Report stage.
Lord Hunt of Wirral: I am very grateful to the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Skelmersdale): In calling Amendment No. 305, I have to advise the Committee that if it is agreed to I cannot call Amendments Nos. 306 or 307.
[Amendment No. 305 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 306:
Page 271, line 39, at beginning insert "Subject to paragraph 99 of this Schedule and paragraph 13 of Schedule 1 and the payment of the charges and liabilities and the payments referred to in those paragraphs during the course of the administration."
The noble Lord said: Paragraph 64 allows an administrator of a company to make a payment to preferential and secured creditors. This is an improvement on the old law because, under the Insolvency Act 1986, administrators were not entitled to pay any dividends to creditors and it was necessary to go into liquidation before creditors could be paid.
However, paragraph 65 provides that the administrator can make a payment to an unsecured creditor only with the permission of the court or if the administrator thinks that the payment is likely to assist achievement of the purpose of administration.
We think that that provision should be clarified by making it plain that the administrator can pay all charges and liabilities arising during the course of the administration, regardless of whether or not the payment is likely to assist the achievement of the purpose of administration. These creditors are all new creditors arising during the course of the administration and should be paid during the course of administration. Given the prohibition on paying what seems to be all unsecured non-preferential creditors, including those arising during the administration in paragraph 65, the ability to pay creditors whose debts or liabilities have arisen during the course of administration should be made clear. I beg to move.
Lord McIntosh of Haringey: Just to show that I am not obdurate, I am sorry that the noble Lord, Lord Kingsland, did not move Amendment No. 305 because I was going to be quite sympathetic to all the amendments in the group. It is not that we think these particular amendments are necessary, but they have allowed us to look again at the distribution and payment provisions in the Bill. We now think that they do not work as we intended. Our aim is, first, to allow the administrator to make distributions to secured and preferential creditors; secondly, to make distributions to unsecured creditors with the permission of the court; and, thirdly, to allow the administrators to make any other form of payment to a creditor when the administrator thinks that the payment is likely to assist achievement of the purposes of administration.
The Bill presently provides that if the payment is part of a distribution to creditors generally, the standard order of priority for such payments should be followed. The Bill also needs to provide—here we think that the provisions may be lacking at the moment—that if the administrator proposes to pay a creditor who will not supply further goods without payment for previous goods, the standard order for

791
priority of payment should not apply. We intend to look further at the provisions and, if necessary, return with amendments on Report.
The noble Lord, Lord Kingsland, may think that I have not addressed the text of his amendment in sufficient detail, but I hope that he will feel that there is sufficient movement in this area.
Lord Kingsland: The noble Lord seems to be gaining suppleness as the evening wears on. I am most gratified to hear what he has had to say. I know that he will be thinking about this matter over the Summer Recess. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 307 to 309 not moved.]
Lord Mitchell Lord Mitchell moved Amendment No. 310:
Page 273, line 23, at end insert—
"() Where the goods are used by the administrator to continue running the business, the administrator must make payment to the owner of the goods under the terms of the hire-purchase agreement."
The noble Lord said: In moving Amendment No. 310, I shall speak also to Amendment No. 312. Under the terms of a hire purchase or lease agreement, the owner of the goods should continue to receive payment where these goods are still being used. The amendment means that the administrator cannot delay disposing of the goods when they are not in use and payments are not being made.
In most cases where goods are subject to an asset finance agreement, the value of the goods reduces significantly over the time that they are being retained by the administrator. As I operate in the computer information technology area, I know that to my painful cost, at times. In theory, the lender could go to court to obtain the goods, but in practice the low cost of many goods, such as photocopiers or cars, makes that recourse unviable.
The amendment is intended to bring clarity to the situation and to ensure that the administrator makes a speedy decision to protect the lender's interest. I understand that several court cases have highlighted the need to bring certainty to lessors' rights. I beg to move.
10.15 p.m.
Lord McIntosh of Haringey: Clearly, there is a real difficulty here; there is a balancing act to be performed. On the one hand, it is desirable that hire purchase companies should not suffer a loss through lack of payment during administration; on the other, the purpose behind administration is to give companies a breathing space in which to put together rescue proposals or proposals to improve the outcome for creditors. It would be undesirable if such proposals failed, when a breathing space in payments to a hire-purchase company could have helped them to succeed.
We have replicated existing provisions, under which it falls ultimately to the courts to resolve that difficult balancing act on a case-by-case basis. Where rental
792
payments were not being made, paragraph 42(3) would enable the owner of hire-purchase goods to ask the administrator for their return. If the administrator did not consent to repossession, the owner of the goods would be able to seek the permission of the court to repossess the goods.
The leading case on the existing provisions sets out clearly that administration for the benefit of unsecured creditors should not be conducted at the expense of those who have proprietary rights over goods—I think that that is my noble friend's concern. The case law will remain fully relevant to a court's consideration of the hire-purchase provision in the revised administration procedure. For that reason, I fear that I cannot accept Amendment No. 310.
For the record, I should respond to Amendments Nos. 311, 312 and 313, which are in the same group.
Lord Hunt of Wirral: It would help if the Minister could confirm that he is referring to the. Atlantic Computer Systems case when he refers to the leading case. I should have thought that the amendment would bring clarity in the Bill for both administrators and lenders in line with that case.
If I may, I should also like to say a word about Amendments Nos. 311 and 312. "Hire-purchase" is, of course, a term of art that covers many different agreements, from a finance lease to a retention of title clause in a sale of goods contract. Paragraph 7(3)(b) is intended to ensure that the owner of relevant goods is compensated properly in the event that goods are sold contrary to his wishes. In particular, it will ensure that the owner receives full market value on the sale.
However, that measure of protection does not fit all cases. For example, where relevant goods are owned by a lessor who makes them available under the terms of an operating lease, as has been said, the market sale value of the relevant goods may not approach the true commercial value to be derived by the lessor from his agreement if he could continue the operating lease with the company, or if necessary with a different lessee, indefinitely. In those circumstances, the lessor may be seriously prejudiced by an order of the type envisaged under paragraph 72(3)(b).
That is why my noble friends and I tabled those amendments, which provide flexibility. They rely on the discretion of the court when ordering sale to decide what should be the compensation level for the owner. The court ought to be free to take into account all circumstances and should not be limited to compensation solely by reference to the open market sale value. I hope that those comments will assist the Minister, as he responds to Amendments Nos. 311 and 312.
Lord McIntosh of Haringey: They will indeed. The leading case is, of course, the case of Atlantic Computer Systems. Our difficulty with Amendment No. 310 is not that it clarifies the Atlantic Computers case; it would change the law. In other words, the law would come down on one side, whereas, as things stand, there is scope for such matters to be considered by the courts on a case-by-case basis.

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Amendments Nos. 311 and 312 are drafting points. The provisions as drafted work as intended. The reference to "any additional money" in paragraph 72(3)(b) has the same meaning as,
"any additional sum of money",
as proposed by the amendment. Similarly, it will be understood that the requirement referred to is one imposed by the court. Amendment No. 313 would require additional money to be paid to the owner of hire purchase goods, over and above their market value. The reasoning behind the requirement to pay the owner the market value of the goods is to enable him or her to replace them. If the owner believes that some value attaches to the goods as a result of their capacity to be hired, it is up to him to persuade the court that that should be reflected in its estimation of their market value.
Lord Mitchell: I am sorry that my noble friend the Minister does not agree with Amendment No. 310. Perhaps he would consider some of the points again. However, time is pressing, and we must get through the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 311 to 313 not moved.]
Lord Sharman Lord Sharman moved Amendment No. 314:
Page 274, line 28, at end insert "unless the court is satisfied that the administrator acted reasonably in all the circumstances"
The noble Lord said: The amendment deals with the issue of a challenge to the administrator's conduct. Paragraph 74 allows any creditor or member of a company to apply to the court on the grounds that the administrator's actions are prejudicial to their interests. In our judgment, there is scope for vexatious actions.
We also find it odd that, under that paragraph, the court can make an order, even if the action complained of was taken in reliance on a court order under paragraphs 71 or 72, which deal with the powers of the court to dispose of property. We would like to see a provision that, at least, allowed the court to decline to make an order, if it were satisfied that the action of the administrator was, in all the circumstances, reasonable. That is provided by paragraph 27(3) of Schedule A1 to the Insolvency Act 1986, which is incorporated into Schedule 1 to the Insolvency Act 2000. I beg to move.
Lord Kingsland: There is scope for vexatious conduct, and we support the amendment proposed by the noble Lord, Lord Sharman.
Lord McIntosh of Haringey: I agree with what the noble Lord, Lord Sharman, said, rather than with the amendment. I agree that, as long as an administrator acts reasonably, he or she should be free to conduct the administration in accordance with the provisions of the Bill. In revising the administration procedure, we
794
have been keen to ensure that court resources are focused on where they are most necessary. In other words, we must avoid using them wherever we can.
It does not seem right to introduce, as the amendment would do, a further threshold beyond the need to establish the fact that harm had been caused and that that harm was unfair. The courts will examine closely the facts of any case, and they are used to taking decisions after weighing the different interests. Administrators who act using their commercial and professional judgment have nothing to fear from the provision. The amendment is unnecessary.
Lord Sharman: I am grateful to the Minister for his reply. I shall reflect on it over the recess. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 315:
Page 275, line 31, leave out "discharged" and insert "released"
The noble Lord said: I want to probe why the Minister has moved away from the traditional wording and brought in a new verb. Under existing terminology it is the normal procedure for the administrator to seek "release" rather than "discharge". I am slightly confused as to why the terminology has been changed; no doubt the Minister will explain. I beg to move.
Lord McIntosh of Haringey: I am slightly puzzled, because I am advised otherwise. My understanding is that the term "discharged" reflects the language used in current legislation, which provides that when an administrator ceases to be the administrator, he has his release and the effect of the release is that he is discharged from any liability. They are slightly different things, with certain exceptions. However, I do not want to get into a semantic debate with the noble Lord, Lord Hunt. I had better write to him with examples of current legislation.
Lord Hunt of Wirral: I recognise that the Minister is a distinguished philologist. I am but a tautologist, and therefore I shall await his letter with great expectations. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 316 to 323 not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 324:
Page 276, line 10, leave out paragraph (a) and insert—
"(a) secured creditors whose debts amount to 75% or more of the company's secured debts."
The noble Lord said: In moving the amendment I shall speak also to Amendments Nos. 325, 328, 329, 335 and 336. Amendment No. 325 seeks to leave out "each secured creditor" and insert,
"a majority in value of the secured creditors".
The amendments deal with the obtaining of consent by secured creditors. The Bill currently requires the consent of every secured creditor in these clauses, but I submit to the Minister that companies increasingly

795
have a wide variety of secured creditors. I hope he will recognise that this batch of amendments seeks to implement a system where it may often not be timely or practical to obtain the consent of every one.
Amendments Nos. 328, 329, 335 and 336 are similar to the amendment moved, so I look forward to the Minister's response. I beg to move.
The Deputy Chairman of Committees: I should point out to the Committee that if this amendment is agreed to, I cannot call Amendment No. 325.
10.30 p.m.
Lord McIntosh of Haringey: I am afraid that this is another case in which there is potential for conflict of interest. There is probably no one single perfect solution for all circumstances. It may appear unfair that one secured creditor, whose debt may be relatively small, could frustrate an extension—it is, after all, about an extension of administration—supported by the majority of creditors.
It should be recognised that extending the administration, and with it the moratorium on action against the company, affects the rights of each secured creditor to enforce his proprietary rights. The amendment would effectively give the big secured creditors—for example, the bank—the power to override the wishes and interests of the smaller ones, whose only remedy would then be to apply to the court under paragraph 74.
If there is no consensus among the secured creditors, the administrator is always able to apply to the court for an extension of the time limit. It would be up to the court to weigh up the potential benefits of the extension against the needs of the secured creditors. However, a change of this kind, which could disenfranchise a minority of secured creditors, does not appear to be desirable.
Lord Hunt of Wirral: I would like to reflect on what the Minister has said. It is a difficult balance which undoubtedly he is seeking and I would like to think carefully about the points he has made. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 325 not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 326:
Page 276, line 11, leave out paragraph (b) and insert—
"(b) either—

(i) a meeting of creditors; or

(ii) creditors of the company whose debts amount to at least 50% of the total unsecured debts of the company (if any)"

The noble Lord said: The amendment would leave out paragraph (b), which states:
"if the company has unsecured debts, creditors whose debts amount to more than 50% of the company's unsecured debts, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent",
and would insert a new paragraph (b), stating,
796
"(b) either—

(i) a meeting of creditors; or

(ii) creditors of the company whose debts amount to at least 50% of the total unsecured debts of the company (if any)".

The amendment would allow an administrator to obtain the required consent at a creditors' meeting where consent cannot be obtained from 50 per cent of all creditors by value because one or more large creditors are apathetic or cannot be contacted within the time-scale.
I hope that the Minister will have had an opportunity of reflecting on the amendment, which was moved in Committee in another place. The ministerial response was that the Government would want to reflect on the matter further and I hope that they have had the opportunity of doing so. I look forward to hearing the Minister's response, and I beg to move.
Lord Sharman: I endorse what the noble Lord, Lord Hunt, has said. In practical cases of administration and insolvency, it is sometimes difficult to obtain consent as envisaged in this part of the Bill. I believe that the proposed amendment is an eminently sensible way of enabling the administration to proceed with speed, which is what we are seeking to do in the Bill, and I commend it to the Committee.
Lord McIntosh of Haringey: We certainly have reflected on the issue and the noble Lord, Lord Hunt, is right in saying that it was raised in the Commons. We return to what I was saying earlier about creditors' meetings. The consent of creditors does not have to be achieved by a physical meeting. The Bill provides that 50 per cent in value of unsecured creditors who have responded to the request will have to consent to the extension of the administration. That 50 per cent could be reached by voting by correspondence or by voting at a creditors' meeting. I hope that what I said previously about the desirability of voting by correspondence will allay some of the fears that have been expressed.
Lord Hunt of Wirral: I am grateful to the noble Lord, Lord Sharman, for his support. Both he and I want to reflect further because we are a little disappointed in the Minister's response. Perhaps this is a matter to which we shall want to return at a later stage, but in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 327 to 329D not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 330:
Page 277, line 26, after "copy" insert "to the person or persons who appointed him, to the company and"
The noble Lord said: With the words I seek to add, sub-paragraph (4) would then read:
"Where the administrator files a notice he shall within the prescribed period send a copy to the person or persons who appointed him, to the company, and to every creditor of the company of whose claim and address he is aware".
Thus the amendment would require notice of cessation to be given to the appointer and the company to enable them to take whatever action they consider appropriate. I commend the amendment and I beg to move.
Lord Sharman: Once again I rise to support the amendment, which appears eminently sensible; that is, those who have to take action as a result of the notice of cessation should be in receipt of a notice.
Lord McIntosh of Haringey: Certainly it is desirable that the administrator should notify his or her appointer and the company itself if the administration ceases because its purpose has been achieved. As a general point, the persons to be given notice of various matters in administration will be dealt with in the new insolvency rules. Those rules will be required to accompany the revised administration procedure. We do not think that this is a matter which needs to be set out on the face of the Bill. We shall consult with interested parties on the revisions to the insolvency rules.
The noble Lord, Lord Hunt, was good enough to challenge me by asking whether we can do any more, without prejudice to the consultation, in the direction of transparency as regards the insolvency rules before we reach Report stage. I did not respond to that because he did not ask me to, but I shall respond now by saying that I will see what I can do.
Lord Hunt of Wirral: That is a very welcome response at this late hour. I warmly applaud the Minister for agreeing to consider this further. It would greatly reassure those who have expressed concerns about a number of provisions in the Bill if it could be shown that the matters in question are being dealt with properly and in accordance with revisions to the rules.
In those circumstances, I hope that it will be possible to see the draft during the course of the Recess so that, if necessary, we can return to the point at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 331:
Page 278, line 24, at end insert—
"(5) If the liquidator, provisional liquidator or administrator of a company becomes aware that this paragraph applies but that the court has not made an order under sub-paragraph (3) he shall apply to the court for directions."
The noble Lord said: Amendment No. 331 would insert on page 278 a new sub-paragraph (5) to be worded as follows:
"If the liquidator, provisional liquidator or administrator of a company becomes aware that this paragraph applies but that the court has not made an order under sub-paragraph (3) he shall apply to the court for directions".
I believe that the amendment is self-explanatory. It would simply allow for a liquidator, a provisional liquidator or an administrator to seek directions in the case of a public interest winding up. I beg to move.
Lord McIntosh of Haringey: I hope that I shall be able to persuade the noble Lord, Lord Hunt, that we have covered this point. The Minister in another place pointed out that the provisions allowing an office holder to apply to the courts for directions in these circumstances already exist in the Insolvency Act 1986 or are provided for in Schedule 16 to the Bill.
For example, Section 168(3) of the 1986 Act gives a broad power to a liquidator, which includes a provisional liquidator, to go to court for directions in relation to a particular matter arising in the course of a winding up, and paragraph 16 of this schedule enables the administrator to apply to the court for directions regarding his functions. I believe that those two provisions cover the points made by the noble Lord.
Lord Hunt of Wirral: I am grateful to the Minister for that explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 331A to 331C not moved.]
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 332:
Page 282, line 19, leave out "A creditors'" and insert "The initial creditors' meeting, or any creditors' meeting held before that"
The noble Lord said: Where paragraph 97(3) presently reads
"A creditors' meeting may act",
the amendment seeks to substitute the words
"The initial creditors' meeting, or any creditors' meeting held before that".
The amendment is self-explanatory and I look forward to the Minister's response. I beg to move.
Lord McIntosh of Haringey: Paragraph 97 of Schedule 16 concerns the replacement of administrators who are appointed by the company or its directors under the out-of-court route where there are no floating charge holders to veto the appointment. The amendment would restrict the creditors' opportunity to replace an administrator appointed in this way to the period up to and including the initial creditors' meeting.
We expect that the occasions on which creditors will want to replace the administrator will be rare, but if it is restricted to only that period leading up to and including the initial creditors' meeting, they would have little opportunity to assess the administrator in his or her performance. It is likely that the first opportunity for creditors to interact with the appointed administrator will be at the initial creditors'

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meeting and it does not seem sensible that it should also be their last opportunity to veto the company's or directors' choice of administrator.
Lord Hunt of Wirral: I am grateful to the Minister for that explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 333 to 336 not moved.]
Schedule 16 agreed to.
The Deputy Chairman of Committees (Lord Geddes): I should advise the Committee that Amendment No. 337 has been misplaced. It will be called after Clause 246 stand part.
Schedule 17 agreed to.
Clause 245 [Special administration regimes]:
Lord Borrie Lord Borrie moved Amendment No. 338:
Page 171, line 30, at end insert", or
(f) an energy network company within the meaning of section (Meaning and effect of special administration order) of this Act (a company authorised to transmit or distribute electricity under section 6(1)(b) or (c) of the Electricity Act 1989 (c. 29) or as a gas transporter under section 7 of the Gas Act 1986 (c. 44)."
The noble Lord said: In moving Amendment No. 338, I shall speak also to the following amendments up to and including Amendment No. 346, which stand in my name and the names of my noble friends Lord Currie of Marylebone and Lord Peston. I apologise profoundly—especially at this hour—for the length of the amendments. Fortunately, it will take me less time to explain their purpose than it would to read them out.
In legislation for both the railways and the water industry, governments have promoted legislation to cover the unfortunate situation where a network goes into insolvency, it is no longer possible to operate the network and there is then a public safety risk. Existing legislation in those fields enables the appointment of a special administrator who can keep the network operational.
Prior to the Utilities Act 2000, the present Government's White Paper proposed that the Act should contain similar provisions for the appointment of a special administrator in the case of a network failure in the gas or electricity industries. In their White Paper, the Government said that the chances of a major regulated energy network business getting into serious financial difficulties was small, but the document went on to say:
"However small the risk, electricity and gas are so important to life that it would be provident to have in place arrangements to deal with the consequences of such an occurrence".
Sadly, these government plans were abandoned, apparently for lack of parliamentary time, and, initially, the DTI appeared to support the idea that such provisions be inserted into this Enterprise Bill.
The risk of insolvency is probably more than the Government admitted, because companies holding network licences may be involved in other, more risky, ventures and have highly-leveraged financial
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structures. The energy regulator—still commonly known as "Ofgem", though possibly it should be called GEMA (the "Gas and Electricity Markets Authority")—is keen to make up for what it sees as a flaw in the regulatory network for energy network licensees and has briefed me on these amendments.
I declare an interest as a former member of Ofgem's management board. If my noble friend Lord Currie of Marylebone, in whose name these amendments also stand, were here, he would do the same. The amendments draw heavily on equivalent provisions in the Water Industry Act 1991 and the Railways Act 1993. They are meant to provide that the Government and Ofgem can act to ensure that gas and electricity continues to flow to end-users in the event of the insolvency, or potential insolvency, of a network business; and to avoid the nightmare scenario of, for example, air entering pipes when gas pressure drops thus creating a potential explosive mix of gas and air.
Under these amendments the Secretary of State, or the regulating authority, may petition the court for a special administrator. He would be charged with making a scheme for the transfer of the licensee's assets and undertaking to a new licensee appointed by the Secretary of State, or the authority, and, in the mean time, with ensuring that the licensee continues to trade. Amendment No. 343 would enable the Secretary of State to make available funds to enable the licensee to continue to trade.
Since I raised the matter on Second Reading at the beginning of the month, my noble friend Lord McIntosh of Haringey kindly wrote to me expressing broad sympathy with what these amendments seek to achieve. He also expressed the need for consultation, as well as an examination of the implications and consequences for all concerned. Now, as we go into the Summer Recess tomorrow, it is clear that there is a considerable gap between the Committee stage and the Report stage of this Bill. Therefore, I ask my noble friend the Minister whether he will consider that, by the Report stage, in, let us say, October of this year, there could be adequate time for consultation. In those circumstances, it would be most valuable if the Government could produce amendments of this kind in order to ensure the public safety objectives that. I have outlined. I beg to move.
Lord McIntosh of Haringey: These are very serious matters. The potential circumstances which these amendments seek to address deserve careful consideration.
At present, there are no problems in the electricity and gas sector, but it is important to cater for the most serious eventualities which might not be readily foreseen. That is the essence of the amendments. I recognise where they come from.
The amendments follow the special administration regimes which have been put in place in other sectors. The noble Lord, Lord Borrie, mentioned water and railways. These are substantial pieces of legislation. They are legislation about water and railways, rather than about insolvency. That is as it should be, given the importance and complexity of the subject matter.

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I know that Ofgem wants to see such legislation developed in the electricity and gas network area. But we have also received representations from other interested parties that such legislation should not be developed in a rush and without proper consultation with all interested parties. I am concerned that, without advance consultation, one consequence of the amendments may be that they would have an unintended impact—potentially an adverse impact—on the ability of energy network companies to raise finance in the future.
I can assure the noble Lord, Lord Borrie, that the Government fully recognise the crucial service provided by the gas and electricity network operators and the broad sense of what the amendments seek to achieve. However, we need to take account of the particular circumstances of the gas and electricity networks and the interests of all of the parties involved.
So we should not launch into new provisions without a full understanding of the implications and consequences for all of the parties. That could be achieved only by careful development of proposals, and consultation to refine those proposals. That has not been undertaken, and I have to say that I do not believe that it should be undertaken in the context of this Bill. I was asked specifically whether it could he carried out in the two-month interval before Report. My answer has to be that I cannot imagine how it could be, particularly given that the two months are August and September.
But the points have been well made and the department will examine them thoroughly with all the interested parties. Depending on the results of that examination, we shall proceed to consult on them in the interests of future, appropriate, legislation.
Lord Borrie: I am bound to express some disappointment with my noble friend's comments. As I indicated, the Government were quite firm two or three years ago that this kind of provision should be introduced. From what my noble friend has said, it appears that nothing has been done within government departments. In the meantime, it is clear, as he said, that consultation is needed to ensure that we introduce the right statutory provisions. But it is disappointing that he suggests that there is not enough time to deal with the matter before Report. I shall consult with my advisers at Ofgem. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 245 agreed to.
[Amendments Nos. 339 to 346 not moved.]
Clause 246 [Prohibition of appointment of administrative receiver]:
Lord Hunt of Wirral Lord Hunt of Wirral moved Amendment No. 347:
Page 172, line 25, after "instrument" insert "and the date so appointed shall be a date after the date of such order"
The noble Lord said: I am grateful to have an opportunity to speak to this amendment, and link with it the previously misplaced Amendment No. 337 and also Amendment No. 353.
We are dealing here with capital markets. As we are aware, structured capital markets transactions can take many forms. It is essential, if these markets are not to be disrupted, that within the spirit and purpose of the capital markets exemption, that appropriate transactions are exempt from the prohibition on appointment of an administrative receiver.
The current wording of paragraph 1(1)(a) of Schedule 2A, relating to the definition of a capital market arrangement for the purpose of the exception to the appointment of an administrative receiver, focuses on the security structure in relation to such arrangement. Unfortunately, only one type of security structure is included. There are a number of other types which are frequently used in the structured finance markets which should also be exempt to ensure that transactions with that type of security structure are also exempt.
I could go into much greater detail, but it may be helpful if I reverse roles and say that I shall write in more detail to the Minister. I recognise that this is an important issue. A number of structures come within the exemption, but the Bill currently covers only one of them. It would be unfortunate if the Bill provided for some types of finance techniques dealing with special purpose vehicles—SPVs—but not others when there appear to be no sound policy or political reasons for the distinction. I shall give the Minister every opportunity to respond now or, if he wishes, when I have let him have much greater detail on the amendments with diagrams to illustrate my point. I beg to move.
Lord McIntosh of Haringey: I could save the noble Lord trouble by offering that he can e-mail me instead of writing and can include the diagrams as attachments if he likes. I shall forward them to the relevant officials for response. That would be helpful to have.
I shall respond to the amendments to see whether that helps. When Amendment No. 347 came up in the Commons, Melanie Johnson, the Minister for Competition, Consumers and Markets, gave an unequivocal assurance that the power will not be exercised in such a way that it applies to any floating charge created before new Section 72A comes into force. I can confirm that and give an unequivocal assurance that we shall not legislate retrospectively, which is what the amendment is about.
The issue covered by Amendment No. 337 has been raised in many meetings between officials and the City of London Law Society. I have heard everything that has been said about the fact that paragraph 1(1)(a) of Schedule 18 does not cover this or that type of arrangement. It was never our intention to make that sub-paragraph the entirety of the exception provision. That is why sub-paragraphs (1)(b), (1)(c) and (1)(d) exist. The exception provisions in paragraph 1 are for all sorts of different structures within the capital

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markets. We see no reason to believe that it will not be possible to ensure that an arrangement falls within its provisions.
We spent considerable time and thought ensuring that the exceptions are not drafted so broadly as to encourage avoidance by lending agreements that they were not intended to cover, but they are very flexible. We have no doubt that City advisers will be able to structure arrangements that should rightly be within the exceptions to take advantage of them.
Finally, we do not object to the wording used in Amendment No. 353, we just do not believe that it is necessary. We think that the amendment is striving to ensure that an investment that falls within the exemption provisions is a capital market investment, whether it is traded on a UK or a foreign market. We do not think the amendment is necessary because the paragraph also includes the term "traded". As used in this paragraph, "traded" is defined as "admitted to trading", which has a wider meaning than "listed" and is relevant not just to EU markets but to those outside the EU. We have confined "listed" to its use in the Financial Services and Markets Act 2000—listed on the London Stock Exchange. "Admitted to trading" is a generic term that simply means that the securities may be traded on whatever market is specified.
11 p.m.
Lord Hunt of Wirral: My e-mail will now be even longer. I also look forward to e-mailing the Minister with diagrams. We shall no doubt return to this matter at a later stage. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 348:
Page 172, line 34, leave out "72F" and insert "72FA"
The noble Lord said: In moving Amendment No. 348, I shall also speak to Amendments Nos. 349, 350, 351, 352 and 361. These amendments are on an issue that was raised very eloquently on Second Reading by the noble Lords, Lord Best and Lord Joffe, and the noble Baroness, Lady Maddock, among others. The issue has also been raised with the department by various interested parties which are concerned with the protection and survival of registered social landlords, as are we.
We are grateful for the helpful and informative meetings that have taken place between officials and representatives from all parts of the social housing sector. Following those discussions, we recognised that both the Housing Act 1996, which covers England and Wales, and the Housing (Scotland) Act 2001 provide for a moratorium period which provides an alternative means to facilitate rescues, and a stay on unilateral action by lenders when registered social landlords are in financial difficulty. These provisions reply to housing associations which are registered social landlords within the meaning of the Act. These amendments exclude such organisations from both the prohibition on appointment of administrative receiver
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of companies and the enabling power extending administration to industrial and provident societies. They cover England, Wales and Scotland, and I hope that it will be agreed that they cover the points raised on Second Reading. I beg to move.
Lord Sharman: As the Minister quite rightly said, my noble friend Lady Maddock spoke to this issue on Second Reading. Unfortunately she cannot be with us this evening, but she has advised me that in her view the amendments as tabled do exactly what she was looking for. She has asked me to express her thanks to the Minister for addressing the issue.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 349 to 352:
Page 174, line 18, at end insert—
"72FA SIXTH EXCEPTION: REGISTERED SOCIAL LANDLORD
Section 72A does not prevent the appointment of an administrative receiver of a company which is registered as a social landlord under Part I of the Housing Act 1996 (c. 52) or under Part 3 of the Housing (Scotland) Act 2001 (asp 10)."
Page 174, line 19, leave out "72F" and insert "72FA"
Page 174, line 20, leave out "72F" and insert "72FA"
Page 174, line 28, leave out "72F" and insert "72FA"
On Question, amendments agreed to.
Clause 246, as amended, agreed to.
Schedule 18 [Schedule 2A to Insolvency Act 1986]:
[Amendment No. 353 not moved.]
Schedule 18 agreed to.
Clause 247 [Abolition of Crown preference]:
[Amendments Nos. 354 end 355 not moved.]
Clause 247 agreed to.
Clause 248 [Unsecured creditors]:
[Amendments Nos. 356 to 360 not moved.]
On Question, Whether Clause 248 shall stand part of the Bill?
Lord Hunt of Wirral: Clause 248 inserts a new Section 176A after Section 176 of the Insolvency Act 1986. New Section 176A provides for a percentage share of the company's assets to go to unsecured creditors although the percentage will be set by statutory instrument and will be subject to consultation. I think that in its current form this clause is most unsatisfactory. It concerns a vital issue which is the share of floating charge assets that will be given to unsecured creditors. I feel strongly that this is a radical proposal that will have an inevitable effect on lending to businesses.
In the circumstances, I really do not believe that it is good enough that a point as fundamental as this does not appear yet to have been thought through by the Government. We shall have to await consultation later in the year followed by a statutory instrument and therefore there will be no real debate. My purpose in initiating a brief debate on Clause 248 is for the Minister to have the opportunity to reassure me, to

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give some detail about the extent and timing of the consultation and to respond to the points that I have made. I look forward to hearing the Minister's response.
Lord McIntosh of Haringey: I hope that I can do a little more than that. I shall try to respond to the consultation point. Perhaps it would be helpful if I said a little more about the effect of Clause 248 and the way it will work.
We announced in the White Paper, Insolvency: A Second Chance, that we would make provisions to ensure that the benefit of the abolition of the Crown's preferential status will go to unsecured creditors. It is, after all, they who are at the end of the queue and for whom there is often nothing left after costs and secured creditors have been paid. It is estimated that an additional £70 million per year will become available to unsecured creditors as a result of the Crown giving up its preferential status. It is only right that unsecured creditors—including those in cases in which a floating charge has been given—receive the benefit of this money. This clause achieves that promise.
Therefore, in company insolvency cases where a floating charge has been given, this clause instructs the office-holder to set aside—or "ring-fence"—a proportion of the money that he has available for the floating charge holder and to hold it for distribution to unsecured creditors.
While exact figures are not available to show what the Crown gets as a result of its preferential status as a proportion of all distributions made in insolvencies, we estimate—from figures held by the Insolvency Service—that, preferentially, the Crown gets
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somewhere in the region of 10 per cent of all distributions—it is certainly not less than that and nor do we believe that it is as much as 20 per cent.
But, we would not want the costs of distribution to the unsecured creditors to outweigh the benefits of the additional money and so we propose to set the ring fence on a sliding scale with a de minims level. We shall prescribe by secondary legislation exact figures in the light of consultation with interested parties. I believe that that was the matter about which the noble Lord, Lord Hunt, was concerned. But, for example, we might provide that the ring fence is 50 per cent of the first £10,000 available for distribution to the floating charge holder; then 10 per cent until the net property reaches the value of £1,000,000; and thereafter the figure should be reduced to 5 per cent. I give that as an example, but consultation will take place. This section will apply to property subject to a floating charge of any company over which a liquidator—or provisional liquidator—has been appointed, or which is in administration or receivership. But it allows for creditors agreeing to a voluntary arrangement to set the ring fence aside.
As I say, consultation will take place with all interested parties. In other words, it will not be restricted. We shall carry it out as soon as we can. We shall start immediately after Royal Assent. We intend to bring it to a close in the New Year.
Clause 248 agreed to.
Lord Grocott: I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at ten minutes past eleven o'clock.