Lords Sitting of 16 December 2003

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of St Albans.

The Lord Bishop of Chelmsford
John Warren, Lord Bishop of Chelmsford—Was (in the usual manner) introduced between the Lord Bishop of Southwark and the Lord Bishop of St Albans.

Disabled Children and Child Abuse
2.41 p.m.
Lord Ashley of Stokeasked Her Majesty's Government:
Whether they have considered the National Society for the Prevention of Cruelty to Children's report on disabled children entitled It doesn 't happen to disabled children: child protection and disabled children.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, we welcome the publication of the report and will consider it carefully. We recognise the particular vulnerability of disabled children to abuse, which increases when, as a result of their disability, children are unable to communicate what has happened to them. That is why government guidance on safeguarding children highlights the need to promote a high level of awareness of this vulnerability and sets out measures to be taken to strengthen the capacity of disabled children and their families to communicate abuse.
Lord Ashley of Stoke: My Lords, is my noble friend aware that in view of the seriousness of the situation and the urgency of these problems, I had hoped for a more robust response from the Government? Will my noble friend confirm that the report states that disabled children are more than three times more likely to be abused sexually, physically and emotionally than non-disabled children? Can she confirm that the report also states that central government and local protection societies have failed disabled children? Precisely what steps do the Government intend to take to counter this sorry situation, which should never have arisen? In particular, which recommendations do the Government intend to accept?
Baroness Ashton of Upholland: My Lords, I am sorry to disappoint my noble friend and I hope that my further answer will help him see how seriously we take this NSPCC report. The evidence presented was based largely on American studies which demonstrated that
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disabled children are 3.4 times more likely to suffer from abuse. However, as yet there is no body of evidence. One of the recommendations made in the report is that such a body of evidence should be created, which we are now looking at carefully.
Given the different recommendations made in the report, we are considering the Green Paper, Every Child Matters, and looking at the work of the national service framework in order to take each of the recommendations and come up with what I hope my noble friend will see is a serious plan to do more to safeguard these children.
Lord Campbell of Croy: My Lords, does the noble Baroness agree that children with mental disabilities probably need much more protection than those with physical impairment?
Baroness Ashton of Upholland: My Lords, all noble Lords would agree that every child needs to be protected; the question is how best to provide such protection and to ensure that children who are more vulnerable either as a result of mental disability or an inability to communicate and thus tell others about abuse are recognised in terms of the measures put in place. It is important that we look at the needs of all our children to ensure that those measures are implemented. That will form a central part of the work we undertake on safeguarding children.
Lord Addington: My Lords, in her original response the noble Baroness quite rightly placed great emphasis on the need for communication. Can she also give an assurance that attention is paid not only to the technical processes of communication, but that we also concentrate on what disabled children have to say, rather than repeat the "Does he take sugar?" scenario? Emphasis should be placed on understanding not only what the children say once the communication barrier has been overcome, but also what they mean. Not understanding or paying attention to vulnerable groups probably marks the start of the process of the possibility for all forms of abuse.
Baroness Ashton of Upholland: My Lords, the noble Lord, Lord Addington, has raised a critical point and I could not agree with him more wholeheartedly. It is very important that we listen to children and take seriously what they say. That will form part of the work of the Children's Commissioner, of whom I know the noble Lord has been a strong advocate. I also believe that it must form part of the national service framework and the results of the Every Child Matters consultation process, which has just come to an end. Interestingly, that consultation brought in more replies from children than from any other group.
Baroness Wilkins: My Lords, will the Minister give a commitment that any legislation or guidance which follows from the Green Paper will address specifically the greater vulnerability to abuse of disabled children and safeguard their welfare?
Baroness Ashton of Upholland: My Lords, any legislation that we bring forward will aim to protect all

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children. Within that, I shall look to ensure that the needs of all children are suitably covered. Whether that means providing a separate part in the legislation, I could not say at this point, but it is important to ensure that the measures work for every child. I shall ensure that we bring forward proposals which can do that.
Baroness Finlay of Llandaff: My Lords, does the Minister accept that focusing on children alone is not enough? During adolescence and into early adulthood, many of these young people are particularly vulnerable to sexual abuse.
Baroness Ashton of Upholland: My Lords, I accept that point. Much of the work we are doing within the children and families directives focuses not only on children, but in particular on adolescents and young people who are, as the noble Baroness observed, at risk.
Baroness Masham of Ilton: My Lords, is the Minister aware that, in a school for disabled children situated close to where I live in North Yorkshire, the headmaster abused those very severely disabled children—who were lying on bean bags? The local community was simply appalled, as I hope is the noble Baroness. What vetting procedures are in place for people placed in such positions of trust?
Baroness Ashton of Upholland: My Lords, it is always difficult to comment on the circumstances within particular institutions. However, through the Protection of Children Act 1999 and, of course, List 99, which applies to the Department for Education and Skills, we do have in place safeguards that protect children. However, we are well aware that there are always circumstances which need to be reviewed. We are also well aware that such safeguards can do only as much as is possible within the way that they have been framed. That is why it is so important that we do as the noble Lord, Lord Addington, said: listen to children and put as much as we possibly can into our practices for caring for very vulnerable children to ensure that they are well protected.
Baroness Seccombe: My Lords, is the noble Baroness aware of the recent case concerning a small boy named Lee? Not only was he not allowed to participate in the school nativity play but, much more significantly, the terms of his statement were not honoured by the school or the local education authority. How can she account for this?
Baroness Ashton of Upholland: My Lords, I understand that this case has been through the tribunal process. I understand from press reports that not only was this child not allowed to be in the nativity play, he was not allowed to be included in the school photograph. Indeed, I have today sought to ensure
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that the school does have in place the practices that every noble Lord would wish to see for this child and any other.
The Earl of Listowel: My Lords, does the Minister acknowledge the importance of a high-quality childcare workforce? That is at least as important as having in place the right procedures for the protection of children with disabilities. Will she undertake to examine the impact of the work of the Scottish Institute for Residential Child Care to see whether its free training and consultancy services to residential childcare settings might be copied in this country?
Baroness Ashton of Upholland: My Lords, the noble Earl will be aware that part of the work arising from the Green Paper is to set up a workforce unit within the Department for Education and Skills; that is currently under way. We have done that in order to ensure that the generic training appropriate to all people working with children is undertaken, and that we provide what I have described before to noble Lords as a scaffold of opportunities for people working in childcare settings to develop their skills and move into other areas of work with children. I am not aware of the work of the Scottish Institute for Residential Child Care, but I shall ask officials to look at it.

Radioactive Waste Management
2.49 p.m.
Earl Attleeasked Her Majesty's Government:
Whether the Committee on Radioactive Waste Management will examine the possibility of establishing a deep geological depository for high level waste.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, the Committee on Radioactive Waste Management—CoRWM—will undertake a review of all the options for the long-term management of the UK's higher activity radioactive wastes and will provide recommendations to the UK Government and the devolved administrations. The options that the committee will be assessing will include that of a deep geological repository.
Earl Attlee: My Lords, I thank the Minister for that reply. Can he explain why the committee does not have the benefit of either a geologist or a hydrologist?
Lord Whitty: My Lords, the committee is able to call on expertise throughout industry and government—it does not necessarily need to have members with such qualifications on all aspects of this problem. Clearly, both the geological and, to some extent, the hydrological aspects will be part of any assessment of a geological site. As your Lordships will know, such committees cannot contain all the expertise required.
Lord Lawson of Blaby: My Lords, is the noble Lord aware—I am sure he is—that this matter has been under review, in one shape or form, for decades? It has become abundantly clear that the time has come not to have a further review but to find a solution. Since the key problem always tends to be the transport of nuclear waste, the only rational solution is to have proper storage in the places where the waste is created.
Lord Whitty: My Lords, I am aware that this issue has been discussed for some time. Were I not, various Members of your Lordships' House would remind me of it at regular intervals. Clearly, it is a difficult problem. At our last attempt to do this, when Nirex was looking at sites around the country, one problem was that we failed to look at all the options, and there was a lack of transparency in the system. We therefore do not wish to reach a conclusion before we have assessed all the options. Although aspects of what the noble Lord, Lord Lawson, says may well be correct, it is not necessarily the only option that will be available at the end of that reassessment.
Lord Campbell-Savours: My Lords, is not the lesson we learned from the inquiry into the Nirex proposals for a depository in west Cumberland—an inquiry to which I gave evidence—that we will never find a site on the UK mainland because the public will always object and, ultimately, the public will win? Why cannot we finally see sense, stop squandering money on these UK mainland solutions and go for the offshore option, which is the only realistic option in the longer term?
Lord Whitty: My Lords, that certainly is an option and one which the committee will no doubt assess. But it is not necessarily the best option. While it is clear that there is strong objection to siting any such repository almost anywhere within the country, there are balancing arguments. My noble friend is correct that even in Cumbria, which is quite heavily dependent on the nuclear sector, there are strong objections. Any planning system has to take account of those objections. Even if we never build a single further nuclear facility, we have a legacy problem which the country must ensure is taken care of in the longer term. It is not sensible to rule out options at this stage.
Baroness Miller of Chilthorne Domer: My Lords, does the Minister agree that there is a difference between storage and disposal? With one method, you can retrieve the waste but with the other you cannot. Does he also agree that it would be irresponsible to dispose of it at sea?
Lord Whitty: My Lords, it would depend on the form of disposal. I think the terminology is quite difficult here. Clearly, in the relatively long term, storage is an option. On-surface storage may be an option for most sorts of waste for some considerable time, but in the long run, we have to find a final
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disposal method which will last not just for a few years but for centuries. By the time we adopt that option, it may be offshore or it could be on land.
Lord Jenkin of Roding:My Lords, how long will this committee sit before it reports? We have heard rumours that it may be another three years. Of course, that would be well beyond the next general election, would it not?
Lord Whitty: My Lords, the committee will deliberate for as long as it takes to look at all the options.
Lord Hylton: My Lords, will the committee consider the middle of the Sahara desert?
Lord Whitty: My Lords, it is open to the committee to consider that option. However, I think that a number of international problems would have to be faced if we were to take that suggestion seriously. I suspect it would not be very high on the committee's list of options.
Lord Walton of Detchant: My Lords, the noble Lord is no doubt aware that a few years ago your Lordships Select Committee on Science and Technology had a report on the disposal of nuclear waste from an inquiry chaired by the noble Lord, Lord Tombs. May we take it that the Government are taking account of the very powerful recommendations in that report?
Lord Whitty: My Lords, one recommendation in that report was that we take steps to ensure that public opinion is informed and consulted about these issues. Certainly, it will be part of CoRWM's remit to do just that.
Lord Ezra: My Lords, reference has been made to the length of time we have already spent on this subject and the length of time we may still spend on it. Can the noble Lord indicate whether he thinks that as a result of some slight speeding up, this could be resolved when the proposed Nuclear Decommissioning Authority comes into office?
Lord Whitty: My Lords, the Nuclear Decommissioning Authority will not deal with the kind of waste we are talking about here—it is about cleaning up sites. The timescale envisaged in the Energy Bill, which we debated last week, for the establishment of the NDA would probably be before the committee had completed its work.
Lord Dixon-Smith: My Lords, is it not the case that the very long life of these highly radioactive wastes is a convenient reason for not moving very rapidly towards a conclusion? The conclusion, ultimately, is that they have to be disposed of and not stored. It has already been said that this question has been around for 30 years. Will it be another 30 years before anything is done?
Lord Whitty: My Lords, it will not be another 30 years before we know what we intend to do. Storage is an option for some considerable time, as the noble Lord is aware. The point at which we find a final solution to disposal which will withstand several centuries may well be implemented some way down the line. We hope that the committee's deliberations will indicate the way in which we ought to go.

Teachers: Staffing Levels
2.57 p.m.
Baroness Sharp of Guildfordasked Her Majesty's Government:
Whether they can reconcile the concept of "personalised learning" with the possibility that schools of the future may have fewer qualified teachers.
Baroness Ashton of Upholland: My Lords, teacher numbers are at a 21-year high and support staff numbers at their highest level ever. This means that schools are able increasingly to call on the skills of a team comprising qualified teachers and other specialist staff to meet pupils' individual learning needs. But there are no proposals from the Government or any of their workforce partners to reduce teacher numbers in the school of the future.
Baroness Sharp of Guildford: My Lords, I thank the Minister for that reply. Can she confirm the report in the Times Educational Supplement of 5th December which suggested that in future we may see schools with only one qualified teacher—the head—and other support staff or teaching assistants supplied by an agency on a contract basis? Does she agree that if such ideas are around, they fly completely in the face of the evidence which suggests that the personal relationship between pupil and teacher, particularly among the young, is vital to learning?
Baroness Ashton of Upholland: My Lords, I agree wholeheartedly with the noble Baroness. Indeed, the paper was produced and then presumably leaked to the Times Educational Supplement without Ministers' knowledge. We have said in our statements that we do not agree with this. No work will be done on it, and it was a stupid thing to do.
Lord Tanlaw: My Lords, is the noble Baroness aware that in the hills and uplands of Eskdalemuir in Dumfriesshire there is a shortage of teachers and the local schools are closing, much to the detriment of the small farming economy? Does the noble Baroness not agree that before such time as these schools close, mainly because of the low population, broadband should be introduced into the area so that at least the local people will be able to get their own education via this new medium?
Baroness Ashton of Upholland: My Lords, the noble Lord referred to low population. Where we have
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falling rolls, there is an issue about ensuring that we are using our school estate appropriately. I support him wholeheartedly in wanting to see broadband introduced so that we have the ability to use technology for learning.
Lord Brooke of Sutton Mandeville: My Lords, as an ancillary question, is the Minister aware that the salaries available to staff recruited for her department's Connexions programme for counselling young people is draining experienced staff from the youth service, with the corollary consequence of leaving the youth service, which is also within her department's purview, to try to recruit at lower salaries new substitute staff for the more testing task of leading and supervising larger groups of young people?
Baroness Ashton of Upholland: My Lords, that rather plays back to the previous question that I answered, about the workforce unit. It is very important that the workforce unit is able to look at where our people are recruited from and to ensure that we have appropriate salary levels and career structures to keep people working for children and young people without draining from each other.
Baroness Seccombe: My Lords, may I take it from the Answer that the Minister gave that she can guarantee on behalf of the Government that the use of teaching assistants will never result in their replacing qualified teachers in schools?
Baroness Ashton of Upholland: My Lords, in the regulations debates, we have described the ability of schools to consider the broader workforce. I have made it plain that the reports in the Times Educational Supplement have no bearing on the policy that we pursue. We believe that schools should make good use of qualified teachers. We also believe, as I know that all noble Lords do, that there are some highly qualified and experienced teaching assistants, who should be used appropriately. The regulations give us that appropriateness for the first time.

Postal Services: Liberalisation
3.1 p.m.
Lord Roberts of Conwyasked Her Majesty's Government:
What is their current policy on the liberalisation of postal services.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, under our reforms of the postal services market, we created Postcomm, and gave it a primary duty to maintain the provision of a universal postal service, subject to which it is also responsible for introducing more competition into the postal services market in the interests of consumers. Postcomm has developed a framework for the introduction of competition in three stages that started on 1st January

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2003 and will lead to full market opening in 2007. Postcomm's key policy documents on market opening and licensing of operators can be found on its website.
Lord Roberts of Conwy: My Lords, I am grateful to the noble Lord for that enlightening reply, which is summed up in the phrase that he used, and which the Chancellor also used in a recent speech, when he referred to,
"full market opening of postal services by 2009".
How do the Government reconcile that policy with their manifesto commitment to high quality universal postal services in the UK? Are they taking steps to strengthen the delivery network that is so important to us all at this time of year?
Lord Sainsbury of Turville: My Lords, as part of our Postal Services Act 2000, we created Postcomm and gave it a primary duty to maintain the provision of a universal postal service, with all that that entailed. It is subject to that primary task that Postcomm is responsible for introducing more competition into the postal services market where it benefits consumers.
Lord Clarke of Hampstead: My Lords, is my noble friend aware of the regulatory results report, published in the summer by the Royal Mail? Those results show that, for letters weighing up to 100 grams, which is 75 per cent of the 82 million letters handled each day by Royal Mail, the Royal Mail lost £480 million. Does my noble friend agree that it would be totally unfair if under the Postal Services Act 2000, which requires the Post Office to take in the work of Royal Mail's competitors, the cost passed to the competitors was less than the cost to deliver? That would be terribly unfair and not competitive at all, but a burden on Royal Mail.
Will the Minister ensure that Postcomm, the regulator, is transparent in making its report on the amount that is being charged to competitors, and ensure that Royal Mail is allowed to charge a commercial rate to the competitors that it is likely to be subsidising?
Lord Sainsbury of Turville: My Lords, a final decision has not yet been taken on the question of access pricing, but Postcomm hopes to make an announcement on developments later this week. It published a draft determination on 19th May; unsurprisingly, there are differing views on prices of access. Postcomm proposes a price of 11.46 pence for the cheapest type of access to Royal Mail's network, but Royal Mail wants 20 pence. The aim of Postcomm in those circumstances is to arrive at a price that covers the company's costs and allows Royal Mail to make a modest profit.
Lord Razzall: My Lords, does the Minister not accept that this mini-debate demonstrates the problem—that there is a significant lack of clarity in who is responsible for postal services in the Post Office? Would he not agree that currently the Post Office has all the disadvantages and none of the
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advantages of the old nationalised industries, in that the Government claim the credit when things are going well but say that it is nothing to do with them when things go badly? Is this not a moment at which there should be greater transparency and clarity?
Lord Sainsbury of Turville: My Lords, one advantage of the system is that there is much greater independence and clarity. Postcomm must determine on the issue of access, which is how it should be; it is transparent and very open to the public.
Baroness Miller of Hendon: My Lords, would the Minister agree that the £161 million profit that the Royal Mail made in the last half of the year was mostly due to a penny increase in first and second class mail and an increase in the volume of letter post by 3 per cent over the corresponding period in the previous year? It was not exactly due to productivity. In those circumstances, would the Minister agree that, when the markets are liberalised, the Royal Mail will have to become much more productive to become a truly competitive and profitable company, as everyone in the House wishes?
Lord Sainsbury of Turville: My Lords, I agree, and I suggest that Allan Leighton, the chairman of the Post Office, made that very point in his interim statement, when he said that,
"the increase in profit from our letters operations did not come from cost savings but was largely due to the Royal Mail tariff increase in May, when First and Second Class basic postage prices rose by 1 penny, and increased revenue from economic growth. The Letters business therefore remains the segment where the biggest operational changes have to be made, yet it's the area where we have made the least progress in the Company's overall Renewal Plan".
Clearly, there is still a great deal of work to be done in that area.
Lord Roberts of Conwy: My Lords, will the Government continue to resist the European Commission proposal that there should be VAT on state monopoly postal services?
Lord Sainsbury of Turville: My Lords, I believe that continues to be the Government's position, and that we continue to oppose any move on that front. If that is not the case, I shall write to the noble Lord with the exact situation.

Iraq: Reconstruction Contracts
3.8 p.m.
Lord Lamont of Lerwickasked Her Majesty's Government:
Whether they support the decision by the United States Government and the Coalition Provisional Authority in Iraq to restrict certain contracts for reconstruction in Iraq to countries that supported military action by the United States and the United Kingdom.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the United States is one of a number of countries, including France and Germany, which places restrictions on their spending of taxpayers' money as overseas aid. Her Majesty's Government stopped the practice of tying aid to trade in April 2001. We believe that aid-related contracts should be awarded on the basis of value for money. We shall continue to try to persuade our partners in the European Union and allies elsewhere that that is the fairest and most efficient policy.
Lord Lamont of Lerwick: My Lords, I thank the Minister for that highly interesting reply. I declare an interest as the director of a UK company that could theoretically benefit from the reconstruction of Iraq, although the question that I wish to ask is directly opposed to that interest.
Given that the United States wants other countries to take over some military tasks after next June, that it has asked Germany and Russia to write off large amounts of Iraqi debt and has asked Canada to donate hundreds of millions of dollars to Iraq—as Canada has done—is it not short-sighted and wrong-headed of the United States to impose financial penalties on countries that simply failed to support military action?
After the capture of Saddam Hussein and the hope that that gives rise to, I urge our Government to use their influence to persuade the United States Government in general, and Mr Wolfowitz in particular, to look to the future and to forget about settling old scores.
Baroness Symons of Vernham Dean: My Lords, I wish that the noble Lord could make the contribution that he has just made to a number of countries in regard to how they give aid. I think I have made it clear that the United Kingdom's policy is very different from that of the United States. I also hope that I make it clear that the United States is not alone in being a country that we wish to persuade to operate its aid in a rather different way. The noble Lord says that the policy is short-sighted. It is also putting a very difficult task in the path of James Baker, who is embarking on a series of visits to a number of countries including France, Germany and Russia, in order to persuade them on debt forgiveness. So I think that a lot of what the noble Lord has said is right on the mark.
Lord Wallace of Saltaire: My Lords, could the Minister explain whether this was a decision for the United States Government or for the Coalition Provisional Authority? Could she perhaps say whether there is any distinction between the United States Government and the Coalition Provisional Authority, and whether Her Majesty's Government have any formal part in the process of decision-making within the CPA?
Baroness Symons of Vernham Dean: My Lords, the noble Lord has asked a huge question and I think that we have to make this clear. The decision that the
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United States made is not about the totality of aid to Iraq. It is not about the 33 billion dollars pledged at Madrid. It is about the 18.6 billion dollars of supplemental funding under the US Foreign Assistance Act. It does not apply, of course, to aid from other countries. Moreover, it does not apply to Iraq's own resources from oil. It applies solely to the United States money. Actually, if I may say so, it is something of a liberalisation from the United States' usual policy, which is to grant primary contracts only to United States companies. So what the world is now seeing as a very restrictive practice is in fact in many ways a policy that is liberalised from the norm.
The noble Lord asks about the different ways in which decisions will be taken, which is a complicated question. There is the international reconstruction fund facility, set up at Madrid, and there is also the Development Fund for Iraq, both of which will play a role. I shall write to the noble Lord with the details on that and place a copy of my letter in the Library of the House.
Lord Gilbert: My Lords, is it not the case that a great many countries would like to contribute to the reconstruction of Iraq so long as the United States pays for it, just as they were very happy to be members of NATO under the protection of the American defence umbrella when the American taxpayer was paying for it? Is it not a piece of infernal impudence on the part of the French and German Governments to try to tell the Americans how they should spend their own taxpayers' money?
Baroness Symons of Vernham Dean: My Lords, I am bound to say that I think that the case of our friends in France and Germany would be considerably strengthened if they did not tie their own aid to trade.
Lord Howell of Guildford: My Lords, in a speech last night, and again just now, the noble Baroness referred to the United States' policy of, on the whole, tying its aid to its trade. However, I do not quite see what that has to do with the present discussion. What the United States is doing in this case is discriminating against countries which it believes were trying to stab it in the back over its Iraq policy, which is a very different matter. Even those countries will, of course, have access to some of the subcontracts from the Iraqi contracts that are placed. So are the Government in favour of what the United States is doing—which as she rightly says is wider, less discriminatory and more liberal than its previous policy—or are they against? I am not at all clear from her answers.
Baroness Symons of Vernham Dean: I do not know why not, my Lords; I thought that I was very clear indeed. The noble Lord says that these matters are very different, but they are not very different. This is placing a restriction and tying aid to trade. It is to that which Her Majesty's Government object. I made it very clear to the noble Lord, Lord Lamont, and to my noble friend Lord Gilbert that we do not think that the tying of aid to trade is right. The noble Lord used

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rather pejorative language about the United States stabbing people in the back. I have already made it clear that I agree with the noble Lord, Lord Lamont— who on this occasion was very statesmanlike in the way that he put his question—when he says that it would better serve the interests of what the United States is trying to achieve in other areas if it acted more as the United Kingdom Government do in looking at the needs of countries in terms of aid in its own right and then looking at the awarding of contracts on the best value for money. I would hope to persuade not only our friends in America but also our friends elsewhere in the world that our policy is right.

Statute Law (Repeals) Bill [H.L.]
3.15 p.m.
The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Lord Filkin): My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to introduce a Bill to promote the reform of the statute law by the repeal, in accordance with the recommendations of the Law Commission and the Scottish Law Commission, of certain enactments which, except in so far as their effect is preserved, are no longer of practical utility, and to make other provision in connection with the repeal of those enactments. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Lord Filkin.)
On Question, Bill read a first time, and ordered to be printed.

Business of the House: Standing Order 47
The Lord President of the Council (Baroness Amos): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with to allow the Consolidated Fund Bill to be taken through all its stages today.—(Baroness Amos.)
On Question, Motion agreed to.

Consolidated Fund Bill
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Mclntosh of Haringey): My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.— (Lord McIntosh of Haringey.)
On Question, Bill read a second time; Committee negatived.
Then, Standing Order 47 having been dispensed with (pursuant to Resolution of this day), Bill read a third time, and passed.

Extradition Act 2003 (Designation of Part 2 Territories) Order 2003
3.16 p.m.
The Minister of State, Home Office (Baroness Scotland of Asthal)rose to move, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].
The noble Baroness said: My Lords, this is a large order, encompassing as it does some 108 countries. Nevertheless, I think it fair to say that our arguments on it will come down to the inclusion of one country— the United States—in the list of countries not required to provide prima facie evidence to accompany its extradition requests. Certainly, that is the force of the Motion standing in the name of the Liberal Democrats. I will, if I may, leave that issue to the end of my remarks. First, I should like briefly to say something about the rest of the order.
The Extradition Act 2003 received Royal Assent on the last day of the previous parliamentary Session. It underwent fairly intense scrutiny in both your Lordships' House and another place, so I hope that we can avoid going over the arguments of principle again today.
We are concerned here with the secondary legislation required to bring the Act into force. Our aim is to bring the Act into force for 1st January 2004, which will enable us, inter alia, to comply with our obligations under the framework decision on the European arrest warrant.
This order designates all of the United Kingdom's extradition partners other than those being designated as category 1 countries in order to operate the European arrest warrant. As I mentioned, that amounts to some 108 countries. Seven of those countries are EU member states. If I may, I shall explain when we come to the next order why those countries are not for the time being in Part 1.
As well as those EU member states which are not yet ready to operate the European arrest warrant, this order designates all of our remaining extradition partners as category 2 partners. Every country with which we currently have general extradition relations is being redesignated. No new countries are being added and no countries are being dropped. Paragraph 3 lists the 40 or so countries that are not required to supply prima facie evidence with their extradition requests. For the most part, those are the non-EU parties to the Council of Europe Convention on Extradition and are countries that do not currently have to provide prima facie evidence.
For the avoidance of doubt, I should make it clear that though the European Convention on Extradition operates under the auspices of the Council of Europe, it is not geographically restricted. South Africa is a party to it which is why South Africa appears in the list.
For all of these countries there is no change to the evidential standard which they will have to meet. There are four countries whose inclusion in the list

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represents a change. One of these is the United States which, as I mentioned earlier, I shall come to in a moment.
The other three are Australia, Canada and New Zealand. These countries are all trusted Commonwealth partners. During the parliamentary passage of what became the Extradition Act 2003 we gave notice in both Houses of our intention to remove the prima facie requirement from these three countries, and I am pleased to say that no one appeared to object. Indeed, it is perhaps a little curious that, notwithstanding the lack of reciprocity, no objection was made to their inclusion in the other place by any party, not least the Liberal Democrats, if I may respectfully say so.
Having trailed that I was going to do so, let me now turn to the thorny issue of the United States. If this order is approved, the United States will no longer be required to supply prima facie evidence to accompany extradition requests that it makes to the United Kingdom. This is in line with the new bilateral extradition treaty signed by my right honourable friend the Home Secretary earlier this year.
By contrast, when we make extradition requests to the United States we shall need to submit sufficient evidence to establish "probable cause". That is a lower test than prima facie but a higher threshold than we ask of the United States, and I make no secret of that. The fact is that under the terms of its constitution the United States of America cannot set its evidential standard any lower than "probable cause".
As noble Lords know, the United States is a mature democracy that respects individual rights. We do not demand prima facie evidence of countries such as Albania, Turkey or Romania, and therefore we fail to see why we should impose a more stringent test on the United States of America.
Nor do we see why the absence of complete reciprocity affects this. We have to take an objective decision about what standards we believe incoming extradition requests should meet. We do not see how that is affected by the fact that another country cannot, for very good reasons, reciprocate.
We are in the business of protecting our citizens and those within our jurisdictions. If a non-prima facie requirement would be acceptable if the United States did likewise, we ask rhetorically why is it suddenly unacceptable because its constitution prevents it doing so?
Complete reciprocity has never been a feature of our extradition arrangements. As your Lordships will know, for many years certain other countries have, for constitutional reasons, been unwilling to extradite their own nationals. The United Kingdom has never had any such reservations. Our extradition relations have reflected that. In other words, we have been in the position where the United Kingdom has been willing to extradite even though in corresponding circumstances the other country would not be prepared to extradite.
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We have accepted that situation for over 100 years both because we have realised that complete reciprocity will not always be possible and because we have respected the imperatives of other countries' constitutional arrangements. Exactly the same arguments apply in this instance.
Incidentally, I hope that this point will appeal particularly to noble Lords on the Liberal Democrat Benches as the legislation which allowed for all these lopsided extradition arrangements—the Extradition Act 1870—was enacted by a Liberal government!
There is another important, and more modern, precedent that I should point to. Having extradition relations of this kind with the United States would not be unique in Europe. Exactly the same evidential provision can be found in the bilateral extradition treaty between the United States of America and Ireland which dates from 1984. Perhaps more significantly, exactly the same can be found in the bilateral treaty between France and the United States which is less than 10 years old.
Whatever unjustified suggestions there may be about the United Kingdom, or even Ireland, being more deferential to the United States, I trust that none of your Lordships would seriously imply that France is a nation which is subservient to the United States or automatically does its bidding. The fact is that both Ireland and France have accepted the restraints imposed by the terms of the United States constitution. They see nothing wrong with treaties that impose differential evidential requirements and I believe that we should follow their example. I therefore invite your Lordships to approve this order and to reject the Motion standing in the name of the noble Lord, Lord Goodhart. I beg to move.
Moved, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].—(Baroness Scotland of Asthal.)
Lord Goodhart: My Lords, in speaking to the Motion which has just been moved by the noble Baroness, Lady Scotland, I wish to speak also to my Motion.
I understand that the Clerks have told us that the Government's Motion does not pre-empt mine. Therefore, it may be helpful to say at the beginning that noble Lords on these Benches do not propose to divide your Lordships' House on the Government's Motion but to divide it on mine.
As we have just been told, on 31st March of this year the United Kingdom and the United States of America signed a new extradition treaty. No prior notice of the terms of the treaty was given to Parliament and, so far as I know, no one outside government was aware of the terms of that treaty as they were being negotiated. The treaty was signed by those famous supporters of civil liberties and human rights—the Home Secretary and Attorney General, John Ashcroft.
As we have been told, under the terms of the treaty the American Government can obtain extradition from the United Kingdom without having to produce evidence to show that there is a prima facie case to

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answer against the person whose extradition is sought, but the United Kingdom still has to provide prima facie evidence to get extradition from the USA.
The treaty needs to be ratified by the American Senate before it can come into force. I do not know whether that ratification has yet occurred. To bring the treaty into effect in the United Kingdom it is necessary for the Government to make an order. The order in question—the one that we are now debating—will bring the treaty into effect on 1st January 2004.
Part 1 implements the European arrest warrant. The USA is not, of course, a party to the European arrest warrant and Part 1 is not relevant to this debate. Part 2 of the Extradition Act provides for extradition to other territories designated for that purpose by the Secretary of State. Those territories—there are well over 100 of them—are set out in paragraph 2 of the order, and they include the USA. In itself, we have no objection whatever to paragraph 2. It simply maintains the status quo.
Under Section 84(1) of the Extradition Act, a judge faced with a request for extradition must decide whether there is evidence which would be sufficient to make a case requiring an answer from the subject of the request. However, under subsection (7) of Section 84, the need for that evidence is excluded if the Secretary of State makes a further designation. Paragraph 3 of the order contains the list of states which are designated under subsection (7) of Section 84 in respect of which evidence does not have to be provided. Of course, paragraph 3 also includes the USA.
Paragraph 3 also includes a number of states that are not in the forefront of observance of human rights and high judicial standards. I might refer for example to Albania and Azerbaijan. Of course, I am not suggesting that the legal standards in those countries are equal to or better than those in the USA. Those countries appear in paragraph 3 because, in 1990, the United Kingdom signed up to the European Convention on Extradition. The states party to that convention are required to extradite to each other without the need for prima facie evidence.
As has been explained, that convention is a product of the Council of Europe, not the European Union. It dates back to 1957, although the United Kingdom did not ratify it until 1990. Of course, that was done under a Conservative government who, then and now, were notable for their European enthusiasm. Unlike the agreement between the USA and the UK in the new treaty, the obligations under that convention are reciprocal. It is also true that all members of the Council of Europe are subject to the European Convention on Human Rights. An order giving effect to that convention was made in 1990 under the Extradition Act 1989. It was replaced by an amended order laid by the present Government in 2001.
What we might have done at an earlier date is neither here nor there. As the arrangements have been in operation for 12 years, we feel that it is inappropriate for us to seek to alter the status quo in relation to those states that are parties to the European
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Convention on Extradition. All except four of the states listed in paragraph 3 are party to that convention. Of those four, three are Commonwealth countries—Australia, Canada and New Zealand—as the Minister explained. We have no objection to their inclusion. The remaining country is the United States of America, and we object to its inclusion in the list of countries to which extradition does not need supporting evidence. We objected to that as soon as we became aware of the terms of the treaty, and we have continued to object to it ever since.
We object for three reasons. The first is the fact that there is no reciprocity. We are told that the reason for that is that the USA would need to change its constitution to be able to extradite people without the need for supporting evidence. Of course we are all aware that changes in the American constitution are extremely difficult and take sometimes decades to achieve, if they can be achieved at all. However, reciprocity is an important principle. If the United States believes in the constitutional principle that people cannot be extradited without evidence, it should not expect or ask us to extradite people to it without evidence.
If the order had been in force at the time, the United Kingdom would have been required to extradite the Algerian pilot Lotfi Raissi to the United States, on the basis of blatantly inadequate evidence that resulted in his extradition being refused.
Secondly, the USA has 51 different legal jurisdictions. The standards of the criminal process in the federal courts and in some American states is undoubtedly satisfactory. However, in other states—I mention Texas in particular as one—the standards are far from satisfactory. No doubt they are still better than those in Albania, but the fact that we have dispensed with evidence for extradition to some countries where the criminal process may be poor does not justify extending the same principle to other countries where standards are also poor.
Thirdly, we do not think that we should enter into agreements to lower the barriers for extradition to the United States at a time when the present administration have shown utter contempt for due process for the prisoners at Guantanamo Bay, and the federal courts have so far shown themselves feeble in recognising the claim of those prisoners to due process. It is not we alone who say that. It was the subject three weeks ago of an extremely powerful speech made in a public lecture by the noble and learned Lord, Lord Steyn.
Each of those three reasons would justify the exclusion in itself of the USA from the list of states to which we are required to extradite people without supporting evidence. Taken together, the case for excluding the USA from the list is overwhelming. We call on the Government to withdraw the order and to introduce a new order that will exclude the USA from the list in paragraph 3.
Baroness Anelay of St Johns: My Lords, the Extradition Act was indeed controversial when it made its progress through both Houses, because we on these Benches objected to the European arrest warrant procedures that were put in place in Part 1 of the Act. We believed then and we believe now that it would have been more appropriate to apply the Part 2 procedures to all countries. However, today I agree with the Minister that this is not the time for a rerun of all those old arguments, and I do not propose to give one.
We have before us a series of orders—this is the first, with three more to follow—that put in place the implementation of that Act, and we will consider them in a constructive manner. We have an opportunity to do so by affirmative measures as a result of a government concession in this House to an amendment tabled by my noble friend Lord Hodgson of Astley Abbotts, supported by the noble Lord, Lord Goodhart. Without that, they would have been subject to the negative procedure by Order in Council.
Throughout our debates on the Extradition Act, we made it clear that our objective has been to ensure that our extradition procedures are both effective and fair. We agreed with the Government that it was right to bring them up to date, to make the whole process of extradition swifter while retaining safeguards necessary to ensure that the innocent do not suffer. There must be no hiding place for those who commit crimes and seek to escape a fair trial by skipping from one country to the next.
Now that we have a new Extradition Act, it is right that it should be implemented as quickly and as effectively as possible, while ensuring that the right safeguards are in place first. My approach today is therefore that we do not oppose the making of any of the orders, although serious questions need to be answered. The noble Lord, Lord Goodhart, has already posed a series of those, and I shall not repeat his points.
As some of the questions of which I have thought with regard to this and the other orders are rather detailed, I gave advance notice of them to the Home Office. I was therefore grateful, when I read the proceedings of a Standing Committee in another place, to note that the Government had answered them there in response to my honourable friend Mr Nick Hawkins. That was most helpful. I shall need to invite the noble Baroness to confirm one or two issues on other orders, for clarity.
When we debated the United Kingdom-US treaty in brief on Report of the then Extradition Bill, I made it clear that I was disappointed that the Government had ceded our right to have prima facie evidence produced by the US when it made a request to us for extradition, at the same time as our Government failed to obtain that same right from the US in respect of applications that we make to it for extradition from that country to the UK. My complaint was not about the United States, but about the UK Government. I understand full well that the United States cannot give up its right to demand "probable cause" evidence, because its own
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constitution simply does not allow it to do so. The UK Government knew that, but they went ahead and made a one-sided concession.
Today, the noble Baroness has put forward an interesting and perhaps very forceful argument about why it is not always possible to have complete reciprocity in all agreements. There is validity in that. One might say that there is even more validity in her assertion that the lopsided legislation was put in place by a Liberal government back in the 19th century. Who am I to add to that wonderful analogy? However, the problem is of the Government's own creation. I accept that in some cases it would not be proper to go ahead, but this is not one of them. I recognise that the United States is our closest ally and has been for a century or more. That is a very valuable relationship.
I put my trust in the judicial system of our closest ally, especially because there are other safeguards in Part 2 such as the Secretary of State's backstop power. Therefore, we on these Benches do not support the Motion in the name of the noble Lord, Lord Goodhart.
Lord Stoddart of Swindon: My Lords, I took part in debates on the Bill in Grand Committee and I was most concerned about the arrangements made between this country and the United States. It is entirely proper for the noble Lord, Lord Goodhart, now to move his Motion. If he presses it to a Division, I shall be pleased to support it because there is no doubt that in relation to extradition, citizens of this country are being put in a worse position than citizens of the United States who may be required to face charges in this country. That cannot be right.
No matter what the United States constitution provides, it should not be allowed to overrule the best interests and rights of the people of this country. We have our own constitution and means of protecting our citizens. One of them is to ensure that they are not put in a worse position, particularly on criminal matters, vis-à-vis any other nation. The noble Lord, Lord Goodhart, is right in saying that the order does that.
Furthermore, because of the difficulty of changing the United States constitution, it will not be possible to redress the balance in a short period of time. If that were possible, I and many others would be prepared to see the measure go through today. But it may be decades before the balance can be redressed.
I am sorry that the noble Baroness, Lady Anelay, is unable to support the Motion of the noble Lord, Lord Goodhart. I greatly admired the way in which she and the noble Lord, Lord Goodhart, conducted the proceedings in Grand Committee. It is a great pity that the Conservative Party and the Liberal Democrat Party cannot come together on this, because it is a vital provision.
Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Stoddart, made many of those points during the passage of the legislation. He was most assiduous in his attention to that and we all

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appreciated it. I agree that the problem is the Act. The Government have got themselves into this position vis-à-vis the United States of America. However, we have the Act and, given that fact, the disadvantages of a written constitution are shown by the fact that the United States cannot be flexible on this matter. We must accept that while taking note that written constitutions are not always as good as they may appear at first sight.
The measure must be accepted and there is no way around it. However, I want to reiterate what my noble friend Lady Anelay said. We would not be having this interesting debate had the Government got away with laying the order by negative resolution, which was what they proposed. The Grand Committee did a good job in insisting that the Government make the change.
3.45 p.m.
Earl Russell: My Lords, the noble Baroness, Lady Anelay, said that she is not supporting the amendment because the United States is, in effect, our oldest ally. Technically, I believe that that honour belongs to Portugal, but I do not argue with the spirit of what she said. I am aware of a long-standing and vital friendship to which it is possible that I may owe my life. I was accidentally in America in 1939 and I returned across the Atlantic in 1944 in circumstances in which, without American protection, it is likely I might never have reached these shores.
However, justice is proverbially blind. As soon as you enter a world where in matters of justice you give a respect to people because they are your friends but will not give that to other people because they are not your friends, the very principle of justice itself is at risk. It is blind; it must remain blind. The fact that a country is a friend of ours is no excuse—
Baroness Anelay of St Johns: My Lords, perhaps the noble Earl will allow me to intervene. That was my preamble to saying that I then looked at the judicial system of that country, which I do in each and every case, and took note of how it might interact here. I did so particularly with regard to the Part 2 procedures which, the noble Earl will know because he was present during many of our debates on the Extradition Bill, contain other safeguards.
I entirely agree with the noble Earl that one does not give preferential treatment to someone just because he is a friend. That is not the basis of my political activity.
Earl Russell: My Lords, I am most grateful to the noble Baroness for that correction. If Guantanamo Bay is not the United States system, whose system is it?
Lord Dahrendorf: My Lords, my noble friend Lord Goodhart made a strong case for the Motion standing in his name. Other noble Lords supported his case equally strongly, not least my noble friend Lord Russell. I agree on reciprocity and on the obvious difficulties of resolving the matter within a reasonable
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period. In particular, I agree with the comments made on Guantanamo Bay and what it means for the defence of western values if the country which above all others stands for those values treats human beings as so-called "combatants" without any rights. Your Lordships' House has discussed this matter and has expressed a strong view which I share.
Nevertheless, I believe that the Motion would send a political signal which would put the United States on a level with a number of countries included in the order before us because of their relationship to the Council of Europe. That political signal would be sent when the defence of western values, acting together with the United States, is one of the major issues before us. I, for one, do not want to send that particular political signal and therefore I do not find it possible to support the Motion put forward by my noble friend.
Baroness Scotland of Asthal: My Lords, I thank all noble Lords who have participated in the debate. The noble Baroness, Lady Anelay, was right in saying that as a result of amendments made to the Bill, provision was made for us to have this debate in order to explore the issue. I want to deal with the first point made by the noble Lord, Lord Goodhart. He said that the principle of reciprocity is an important one. I would not disagree with him, save to say that the principle has never applied with total unanimity to all countries. I say to the noble Lord that that is a curious assertion to make when, in relation to New Zealand, Australia and Canada, we have no reciprocity. It is not an argument of principle which is raised in relation to those three countries.
Perhaps I may say a word, too, about the United States. In effect, the noble Lord is saying that if another administration were in being in the United States—that is tantamount to the implication— perhaps there would be another view. These extradition arrangements are made with a country, irrespective of its political complexion. The test that we shall consider is whether the judicial system in that country justifies its inclusion or exclusion from this part of the Bill.
In relation to that issue, I totally understand and accept that there is a difference between the way in which one state operates its law as compared with another. The noble Lord may prefer the way in which it is expressed in one state compared with another, but that does not change the fact that these systems are recognisable within a democratic country and that they deliver an accountable democratic system of justice.
I agree wholeheartedly with the noble Earl, Lord Russell, that there cannot be one rule for one's friends and one rule for others. Justice must prevail and it must be blind. I believe that we have shown our fairness in that regard by including countries such as Albania, Romania and others, along with Canada, America, New Zealand and Australia. Therefore, we are not adopting one approach for our friends and one for others; we are even and open-handed.

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I noted what was said about the way in which the treaty was negotiated. I believe that the noble Lord, Lord Goodhart, asserted that it was negotiated in secret. It was not. The treaty was negotiated in exactly the same fashion as we negotiate all other extradition treaties and, for that matter, all other bilateral international instruments. The text of the treaty was published as a command paper shortly after it was signed. Again, that is the normal procedure, including the Ponsonby rules.
Lord Goodhart: My Lords, that was exactly my point. Of course it was published shortly after it was signed. It was published within a few days of being signed, but there was no possibility of anyone in either House of Parliament having any input into the negotiating process or of trying to put pressure on the British Government not to enter into an agreement which was not reciprocal.
Baroness Scotland of Asthal: My Lords, I hear what the noble Lord says, but he cannot suggest that the negotiation took place in secret; neither can he suggest that it was outwith the usual practice. It may have been a practice with which the noble Lord does not concur, which is a slightly different issue, but it took place in accordance with practice which has been adopted for a very long time. I appreciate that 1870 was a long time ago for a Liberal government, but I hope that if the noble Lord considers what happened thereafter, he will agree that it has been consistent.
The command paper was published and normal procedure, including the Ponsonby rules, was followed. The only unusual aspect was that the gap between signature and publication was shorter than is customary because we were aware of considerable interest in the new treaty. I should have thought that the noble Lord would wish to congratulate the Government on that, but perhaps I ask too much.
The treaty has not been enforced yet because it has not been signed by the US Senate. We anticipate that the treaty will be put before the Senate formally early in the new year and approved shortly thereafter. We do not anticipate that we shall encounter any difficulties in that regard.
I thank the noble Baroness, Lady Anelay, for her very pragmatic approach in relation to these matters. I also thank the noble Baroness, Lady Carnegy. However, I say to both noble Baronesses that what was done in this case was entirely proper. We sought to make an independent, objective assessment of the most appropriate way forward to enhance the opportunity to secure the proper exchange of persons required to go through the criminal procedure in our respective countries. That was the decision made. We took total cognisance of the fact that, as I believe even the noble Lord, Lord Goodhart, accepted, changing the American constitution is an enormous task.
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I know that the noble Lord does not wish us to wait 10 years before the provisions are introduced. It is right to say that the present treaty needed to be changed. I hope that the noble Lord receives great comfort from the support that has clearly been given by the noble Lord, Lord Stoddart, who totally agrees with the noble Lord, Lord Goodhart, on this occasion. If I may respectfully say so, I believe that the noble Lord, Lord Dahrendorf, has the right approach. With his usual sagacity, he summed up the truly liberal position.
We have had a very good debate, and I absolutely understand why the noble Lord wished to air these matters. They are serious and concerns have been voiced. However, it is appropriate to allow the order, as drafted by the Government, to go forward as the most proper and sensible way of dealing with the redesignation of the various countries under Parts 1 and 2.
Lord Mackie of Benshie: My Lords, I have a question before the noble Baroness sits down. I am very ignorant of these matters, but do I understand that if Albania wants to extradite a British citizen, it can do so without explanation?
Baroness Scotland of Asthal: My Lords, Albania will not have to provide prima facie evidence. When we debated these issues during the passage of the Extradition Bill, we went through all the safeguards relating to identity and all the matters that we shall put in place. Indeed, I hope that the noble Lord, Lord Goodhart, will be reassured by the fact that provisions are in place which would enable us not to extradite if the issues relating to human rights and other matters were breached.
Indeed, to comfort the noble Lord, Lord Goodhart, even further, I should say that the noble Lord, Lord Lester of Herne Hill, was very concerned about many issues, including what would happen in respect of the death penalty and how that would operate. At the request of the noble Lord, Lord Lester, the United Kingdom Government approached the United States Government for a definitive statement on the rights guaranteed to those who are extradited there. It may assist noble Lords if I read the response of the United States Government into the record:
"Every person who is extradited to stand trial in the criminal justice system within the United States is entitled to the fundamental right of due process under the United States constitution. All extraditees have the right to a fair trial, before an impartial jury, and enjoy the right to counsel, the right to confront adverse witnesses, and the right to compulsory process to call witnesses favorable to the defense. No extraditee can be convicted except on the basis of proof beyond a reasonable doubt. Every extraditee has the right to appeal a conviction".
Those rights apply irrespective of the nationality of the person or the state or jurisdiction concerned. Avenues of redress exist if those rights are not upheld. Therefore, not only the provisions in relation to prima facie evidence but all the other provisions contained in the Act will bite upon these issues and ensure that the rights are upheld.

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The promises that we have obtained from the Americans in the past, whether in relation to death penalty cases or otherwise, have, I believe without fail, always been adhered to. Therefore, history teaches us that, when dealing with specific cases, the Americans have made promises and can be relied upon to deliver what they say.
Earl Russell: My Lords, before the noble Baroness sits down, at the conclusion of my speech I asked her: if Guantanamo Bay is not an American system, whose is it? That question was not rhetorical; I should be very grateful for an answer.
Baroness Scotland of Asthal: My Lords, of course matters in relation to Guantanamo Bay are still very much in issue between a number of parties who are considering them. That does not cast aspersions upon those who are returned to mainland United States pursuant to the system of law that prevails in the United States of America and in each of the states. We accept, as noble Lords will know, that Guantanamo Bay is still an unresolved issue. It has not been settled in any way. I am afraid that that is about the best answer that I can give the noble Earl today.
On Question, Motion agreed to.
Lord Goodhartrose to move, That this House calls on Her Majesty's Government to withdraw the draft Extradition Act 2003 (Designation of Part 2 Territories) Order 2003 and lay a new draft order deleting the reference to the United States of America in paragraph 3 of the order.
The noble Lord said: My Lords, I have already spoken to this Motion. I beg to move.
Moved, That this House calls on Her Majesty's Government to withdraw the draft Extradition Act 2003 (Designation of Part 2 Territories) Order 2003 and lay a new draft order deleting the reference to the United States of America in paragraph 3 of the order.—(Lord Goodhart.)
4.1 p.m.
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 120.

Division No 1

CONTENTS

Addington, L.

Finlay of Llandaff, B.

Allenby of Megiddo, V.

Geraint, L.

Avebury, L.

Goodhart, L. [Teller]

Beaumont of Whitley, L.

Harris of Richmond, B.

Bridges, L.

Joffe, L.

Clement-Jones, L.

Livsey of Talgarth, L.

Cobbold, L.

Mackie of Benshie, L.

Dholakia, L.

Maclennan of Rogart, L.

Emerton, B.

Maddock, B.

Ezra, L.

Mar and Kellie, E.

Falkland, V.

May of Oxford, L.

Fearn, L.

Miller of Chilthorne Domer, B.

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Monson, L.

Shutt of Greetland, L.

Naseby, L.

Smith of Clifton, L.

Northover, B.

Steel of Aikwood, L.

Phillips of Sudbury, L.

Stoddart of Swindon, L.

Razzall, L.

Thomas of Gresford, L.

Redesdale, L.

Thomas of Walliswood, B

Rennard, L.

Thomson of Monifieth, L.

Rodgers of Quarry Bank, L.

Turner of Camden,B.

Roper, L. [Teller]

Wallace of Saltaire, L.

Russell, E.

Walmsley, B.

Sandberg, L.

Warnock, B.

Scott of Needham Market, B.

Wedderburn of Charlton, L.

Sharp of Guildford, B.

Williams of Crosby, B.

NOT-CONTENTS

Ahmed, L.

Jones, L.

Allen of Abbeydale, L.

King of West Bromwich, L.

Alli,L.

Lea of Crondall,L.

Alton of Liverpool, L.

Levy, L.

Amos, B. (Lord President)

Lipsey, L.

Ampthill, L.

Lockwood, B.

Andrews, B.

Macdonald of Tradeston, L.

Archer of Sandwell, L.

McIntosh of Haringey, L.

Ashton of Upholland, B.

McIntosh of Hudnall, B.

Bach, L.

MacKenzie of Culkein, L.

Barnett, L.

Mackenzie of Framwellgate, L.

Bassam of Brighton, L.

Marlesford, L.

Berkeley, L.

Marsh, L.

Billingham, B.

Masham of IIton, B.

Bledisloe, V.

Mason of Barnsley, L.

Boothroyd, B.

Massey of Darwen, B.

Boston of Faversham, L.

Merlyn-Rees, L.

Bragg, L.

Morris of Manchester, L.

Brett, L.

Nicol, B.

Brooke of Alverthorpe, L.

O'Neill of Bengarve, B.

Brookman, L.

Ouseley, L.

Brooks of Tremorfa, L.

Patel of Blackburn, L.

Campbell-Savours, L.

Paul, L.

Carter, L.

Peston, L.

Chorley, L.

Powell of Bayswater,L

Christopher, L.

Puttnam, L.

Clarke of Hampstead, L.

Radice, L.

Clinton-Davis, L.

Ramsay of Cartvale, B.

Corbett of Castle Vale, L.

Rees-Mogg, L.

Craig of Radley, L.

Rendell of Babergh, B.

Crawley, B.

Richard, L.

Dahrendorf, L.

Rooker, L.

David, B.

Sainsbury of Turville, L.

Davies of Coity, L.

Saltoun of Abernethy, Ly.

Davies of Oldham, L. [Teller]

Sawyer, L.

Dean of Thornton-le-Fylde, B.

Scotland of Asthal, B.

Desai, L.

Sheldon, L.

Dixon, L.

Simon, V.

Dubs, L.

Slim, V.

Evans of Parkside, L.

Smith of Gilmorehill, B

Evans of Temple Guiting, L.

Smith of Leigh, L.

Farrington of Ribbleton, B.

Stone of Blackheath, L.

Faulkner of Worcester, L.

Strange, B.

Filkin, L.

Swinfen, L.

Fitt, L.

Symons of Vemham Dean, B.

Gale, B.

Taylor of Blackburn, L.

Gilbert, L.

Tenby, V.

Golding, B.

Tugendhat, L.v

Gordon of Strathblane, L.

Turnberg, L.

Goudie, B.

Varley, L.

Graham of Edmonton, L.

Warner, L.

Gray of Contin, L.

Warwick of Undercliffe, B.

Grocott, L. [Teller]

Weatherill, L.

Harrison, L.

Whitaker, B.

Hogg of Cumbernauld, L.

Whitty, L.

Hollis of Heigham, B.

Wilkins, B.

Howells of St. Davids, B.

Williams of Elvel, L.

Hunt of Chesterton, L.

Williamson of Horton, L.

Irvine of Lairg, L.

Winston, L.

Jay of Paddington, B.

Woolmer of Leeds, L.

Resolved in the negative, and Motion disagreed to accordingly.

Extradition Act 2003 (Police Powers: Code of Practice) Order 2003
4.12 p.m.
Baroness Scotland of Asthalrose to move, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].
The noble Baroness said: My Lords, I shall speak to this order together with the following two orders. I hope that I can be relatively brief as I believe that, unlike the order that we have just discussed, they do not contain anything very difficult or contentious. However, I shall respond specifically to the questions that have been indicated to me by the noble Baroness, Lady Anelay of St Johns, so I may speak more fully than I would otherwise have done.
As I mentioned, our aim is to bring the Extradition Act into force for 1st January 2004 to enable us to bring in the European arrest warrant on that date. The first of these orders is concerned with the designation of the UK's extradition partners under Part 1 of the Act; that is, those countries that will be operating the European arrest warrant from 1st January 2004.
As your Lordships will see, it contains seven names rather than the 14 that your Lordships might expect. Those seven countries are the countries that have confirmed that they will definitely be able to operate the European arrest warrant from the start of next year.
Your Lordships may find it helpful to know the latest state of play on implementation in the seven countries which will not make the 1st January deadline. France and the Netherlands expect to be ready by the end of January 2004 and Austria, Germany, Greece and Luxembourg expect to be ready by 1st April 2004 at the latest. Italy is also saying the same, although whether it will actually be able to achieve that remains to be seen.
We have put those countries that are able to operate the European arrest warrant from the first day of next year into category 1. The remaining EU countries are designated as category 2 countries in the order that we have just debated and will be moved up into category 1 when they begin operating the European arrest warrant.
The second order brings into force the codes of practice governing the exercise of police powers in extradition cases. The powers are very closely modelled on those in PACE, although with the necessary modifications to reflect the fact that the police are not actually investigating the offence.
As in PACE, there is a requirement to produce codes of practice; and these are they. We put them out for consultation over the summer. We are grateful to all
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those who took the trouble to respond. Your Lordships might find it helpful to have an outline of the changes that have been made as a result of the consultation exercise.
In addition to taking on board many of the detailed and helpful suggestions made by respondents, we have made the following key amendments. At the suggestion of the Metropolitan Police Service, we have restructured the codes to follow the structure and format of the revised PACE codes of practice. We hope that this will make the extradition codes of practice easier for police officers to follow. We also think that this format makes it easier to see where procedures in extradition cases differ from those in domestic cases.
The Law Reform Committee of the General Council of the Bar and the Metropolitan Police Service both suggested that the wording of the new caution was ambiguous and could call into question the admissibility of evidence seized in this country in proceedings abroad. We have therefore amended the wording of the new caution to follow the formulation of the caution in PACE Code C, Annex C, which contains a restriction on drawing adverse inferences from silence.
We believe that this formulation is familiar enough to officers to meet the concerns of those who felt the alternative extradition caution would be difficult to remember. We also believe that this caution is appropriate for use in extradition cases, where we cannot speak for the criminal justice system of the requesting country, and where the police will not question the person about the extradition offence.
At the suggestion of the Information Commissioner, we have made a number of changes to the sections relating to the use, retention, disclosure and destruction of photographs, fingerprints and DNA samples. We have also set out the person's rights in a fair processing notice. This is contained in the written extradition notice—Annex D to Code C—and will be given to every detained person by the custody officer.
At the suggestion of 95 per cent of respondents, including the Magistrates' Association and the Law Reform Committee of the General Council of the Bar, we have revised the section of the codes which prohibits officers using their search powers to investigate the extradition offence on behalf of the requesting country. We considered the alternative formulations proposed by the Metropolitan Police Service, the Bar Council and the Magistrates' Association and have amended the text.
Code B, Paragraph 1.3 now states:
"Searches conducted under powers in the Extradition Act 2003 may only be undertaken for the purpose of obtaining evidence of the extradition offence for use in the prosecution of the person accused of the extradition offence. Officers may not investigate crimes on behalf of the requesting authority or territory, other than to speak to persons for the purpose of assisting establishing ownership or connection to the property. Items relating to a person's identity and offences other than the extradition offence, may, if found, be seized in accordance with the provisions of the Act and this Code".

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We think that this formulation makes clear that officers may not undertake investigation of the extradition offence. We have taken care to ensure that this policy is reflected throughout the codes of practice. Code B contains detailed guidance on the information required before a judge may issue a search warrant, and Code C states explicitly that officers may not interview individuals arrested for extradition.
The final order designates those people who can apply to a UK magistrate for an outgoing European arrest warrant. As well as the police and a procurator fiscal, who are catered for on the face of the Act, we are giving this facility to the Crown Prosecution Service, the Inland Revenue, Her Majesty's Customs and Excise and the Serious Fraud Office. I cannot believe that there can be any serious objection to that.
I apologise for having spoken at some length, but three significant orders are before us, and I was anxious to answer as fully as I could the questions properly put to us by the noble Baroness, Lady Anelay. I hope that I have done that as comprehensively as she would require. With that explanation, I hope that your Lordships will agree to the three orders. I beg to move.
Moved, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].—(Baroness Scotland of Asthal.)
Baroness Anelay of St Johns: My Lords, I am grateful to the noble Baroness for not only dealing with the orders but for expanding on them further than was possible yesterday in another place. I am grateful to her for answering fully the questions of which I gave her advance notice.
I notice that the noble Baroness took the orders in a different order from that on the Order Paper; I shall follow her lead. I understand why she did so; the order of printing has varied overnight from that which we anticipated.
The noble Baroness dealt first with the designation of Part 1 territories where the countries so listed will be able to implement the European arrest warrant. As she knows, that is a controversial matter in our eyes because we were concerned about which countries would be ready to be up and running with what we consider to be an unacceptable procedure in itself. I note that she was diplomatic in her reference to those of our current EU partners that will not be able to be on the list now, but which the Government hope will join the club later.
It must be disappointing for the Government that those EU partners have not all been able to comply. I note that the noble Baroness gave some possible start dates: the end of January for France and the Netherlands; for Austria, Germany, Greece and Luxembourg, 1 st April; for Italy the Government are aiming at 1st April, but that, she says, remains to be seen. That is disappointing for the EU when the presidency has been in Italy's hands for the past few months. Of course, my underlying feeling must be that if those countries are going to get systems right, it is
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better to wait for that to ensure that they operate correctly what can be the draconian procedure of the European arrest warrant.
The noble Baroness was generous in her response to my questions on the next order, which brings into effect the code of practice. When we debated the Bill in Grand Committee and at Report, I had been concerned about possible ambiguity, especially about whether there was a distinction between investigation of the extradition offence and obtaining evidence for the prosecution of the extradition offence. I am grateful to her for pointing out where amendments have been made to that and how. Having read the draft code of practice, I agree that the redrafting is indeed much more acceptable than the original.
I am also grateful to her for explaining which other parts of the codes have been redrafted. I shall not refer to those, because I welcome the redrafts and consider them perfectly proper. My only final remark concerns Part 3 designation, which designates those people who will be able to apply for a Part 3 warrant. We accept that the list is appropriate and we support that order.
Lord Goodhart: My Lords, I am happy to support these three orders. I entirely understand why only seven states are designated under Part 1. The Government have gone the right way about dealing with that. Perhaps I should add that I am sorry that they did not use the same procedure for the United States and defer that order until the treaty had been ratified by the American Senate.
We also have no objection to the designation under Part 3. We are glad that the Government have taken into account the various representations made about the draft code of practice. It has undoubtedly been improved as a result.
I should like to raise one point. When scanning through the code, I came across one paragraph that leaves me completely befogged. I do not suppose that the noble Baroness will be able to provide an immediate answer, but perhaps she could write to me about it, because it is extremely difficult to understand. Paragraph 2.6 of code B states:
"This Code does not apply to the exercise of a statutory power to enter premises or to inspect goods, equipment or procedures if the exercise of that power is not dependent on the existence of grounds for suspecting that an offence may have been committed and the person exercising the power has no reasonable grounds for such suspicion".
I should be interested to know exactly what is the meaning of that paragraph. However, that is not a ground for any fundamental objection to the order; we are therefore happy to agree to the making of the orders.
Baroness Carnegy of Lour: My Lords, from the order itself, noble Lords who have not followed closely the passage of the Bill will probably not realise that the order does not apply to Scotland. In Committee and at Report, we discussed that matter in detail. The Government, with the support of the Lord Advocate in Scotland, were of the view that, although it is a Westminster, United Kingdom Bill—a Great Britain Bill—it was not appropriate for the Westminster Parliament to require the Crown Office in Scotland to produce a code of practice.

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I do not think that the noble Baroness takes the matter as seriously as I do. Having heard her full fleshing out of the contents of the codes of practice, I am anxious that the Scots police, who will be performing precisely the same task as police south of the Border, have the support of a proper code to guide them. The people of Scotland deserve that.
Has the Lord Advocate decided to issue a code of practice? If the noble Baroness does not know, perhaps she could find out and let me know, because this is a Westminster responsibility under a Westminster Act. We should be sure that the people of Scotland are protected in the same way from wrongful action by the police.
Baroness Scotland of Asthal: My Lords, first, I thank the noble Baroness, Lady Anelay, and the noble Lord, Lord Goodhart, for their fulsome support for these orders. I am tempted to give the noble Lord, Lord Goodhart, a full explanation, but he may be teasing me. He will know that paragraph 2.6 has been drawn precisely from the equivalent passage in the main PACE codes. Notwithstanding that, it will be my privilege and pleasure to give him a full written response, so that noble Lords need not be detained overlong with the matter.
I am in a less comfortable position with the noble Baroness, Lady Carnegy. I do not know whether the Lord Advocate has yet made a decision about the code of practice; I shall certainly inquire. I hope that the noble Baroness has noticed that the Procurator Fiscal has been included in the code as one person who can make appropriate orders. I will certainly write to the noble Baroness about the matter.
On Question, Motion agreed to.

Extradition Act 2003 (Part 3 Designation) Order 2003
4.28 p.m.
Baroness Scotland of Asthal: My Lords, I have already spoken to the order. I beg to move.
Moved, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].—(Baroness Scotland of Asthal.)
On Question, Motion agreed to.

Extradition Act 2003 (Designation of Part 1 Territories) Order 2003
Baroness Scotland of Asthal: My Lords, I beg to move.
Moved, That the draft order laid before the House on 3rd December be approved [2nd Report from the Joint Committee].—(Baroness Scotland of Asthal.)
On Question, Motion agreed to.

Export of Goods, Transfer of Technology and Provision of Technical Assistance (Control) Order 2003
4.30 p.m.
Baroness Miller of Hendonrose to move, That an humble Address be presented to Her Majesty praying that the order, laid before the House on 31 st October, be annulled (S.I. 2003/2764).
The noble Baroness said: My Lords, my reasons for taking the unusual step of praying against this order were constitutional objections to it and serious reservations by the academic and scientific communities. Although there has been some consultation with the representatives of Universities UK, the Royal Society and the Foundation for Information and Policy Research, culminating in a meeting with officials at the DTI and the Foreign and Commonwealth Office on 25th November, the outcome of that meeting was not completely satisfactory. The academic representatives sought clarification on certain points, assurances and, more particularly, guidance on how the new rules should be interpreted and applied. However, the officials could give no absolute commitment without reference to the Minister.
I am informed that, as late as last Friday afternoon, the Minister did not wish to indicate to me in writing how he would deal with those points raised with his officials. I thought that the Minister might like to know that, as a result, I spent the whole weekend in consultation with my advisers and in discussions with the academic community and their advisers and Members of different sides of your Lordships' House, to say nothing of writing a 2,500-word speech in support of my Prayer. All that could have been avoided had the Minister found it possible to be a little more forthcoming earlier.
As it is, I received a message from the Minister's office yesterday at 3.15 p.m. that he wished to speak to me. He kindly faxed to me a draft of his speech at 6.11 p.m. yesterday whereupon another round of consultation and late-night speech-writing had to take place. However, I am most grateful to the Minister for letting me know in advance, however belatedly, his explanation of the order and the extent to which he believes that he is already meeting, and will meet in future, the serious concerns of academia. I owe it to noble Lords to explain what those concerns are because to some extent they have not been entirely met, and because of my own constitutional point, which I shall leave until the end.
In view of the explanations and assurances that the Minister tells me he is about to give noble Lords, I can be briefer than I would otherwise have been. In summary, academia's reservations are: first, that the new end-use controls that the order introduces are ambiguously drafted and, as a result, unreasonable in their extent; and, secondly, that the controls on dual-use technology in intangible form, which has been in use since 2000, and which the order re-states and re-enacts, are at serious risk of proving unworkable.

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Identical ambiguities are found in Regulations 8,9 and 10, but for simplicity's sake and to save time I shall refer only to Regulation 8.
Regulation 8 imposes a prohibition on the transfer of technology if each of two conditions is satisfied. The first is that the transferor is aware that the technology is intended for weapons of mass destruction programmes. What is not clear is who must hold that intention. Obviously, the condition is fulfilled if the transferor or the transferee holds the intention. But what if the intention is held only by third parties? Sadly, many governments seek to establish such weapons systems. Who is to delve into the motivation of such a foreign government who sponsors a student to study particular subjects in the United Kingdom, including, say, biology or chemistry? The regulation should require that the intention is that of the transferee of the technology or of some other person to whom the transferor is aware that the technology is likely to be transferred. When I refer to the transferor being "aware", I mean positively aware, not that he ought to be aware.
The second condition to make the prohibition effective is that the transferor has reason to believe that the technology may be used outside the United Kingdom. It is hard to think of a single case where the transferor could be sure that it was impossible for the technology to be used outside the EU. On the contrary, with the Prime Minister boasting as he did recently that Britain was becoming the destination of choice for international postgraduate students, it is inevitable that dual-use technology will be exported.
In my submission, prohibitions that apply unsatisfactory and ambiguous conditions and obligations, as contained in the proposed order, are unreasonable. As such, they will or may face rejection by the courts as ultra vires the powers of the Act. In the mean time, the academic community fears that the vagueness and ambiguity of the controls would have major adverse effects on them. First, they fear that the controls would severely inhibit the normal exchange of information between academics working in the same field. Next, they were worried that they would impose intolerable obligations on universities on accepting foreign students. Last but by no means least, they believe that they will inflict on academics and their publishers injurious uncertainty about the risks of prosecution or the need for a licence.
Having just discussed the new end-use controls, I shall now deal with the consolidation of the existing dual-use controls that have been in operation since 2000. The new consolidating regulation gives us the opportunity to revisit the actual contents of the previous order in the light of more than three years' experience of their operation. The existing regulations extend control from the export of goods and equipment to transfers of technology in intangible form. That has an immense prospective effect on many fields of scientific research involving international collaboration. The extensive scope of the controls is ameliorated by many open licences, but those licences are available only to those who comply with their general conditions. Those conditions require
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notification to the DTI and the keeping of extensive and detailed records of transfers of technology, however ephemeral the form of the transfer and however trivial the content. I believe that very few academics have made such notifications.
There is very widespread ignorance in the academic community of the stringent requirements of the available licensing schemes and the need to obtain their benefit. Unless the volume of international electronic mail passing through academic parts of the Internet and via text messaging has diminished since 2000—that is highly improbable—it seems likely that there is widespread contravention of the controls imposed in 2000.
The impact of export controls on the academic world is vastly different from that on the worlds of commerce and industry, which transfer technology and goods for money. Every item sold leaves a paper trail open to inspection and investigation in the form of invoice. By contrast, the academic world is dedicated to enlarging the stock of information, including technology available to everyone. The only trail of it is to be found in published papers and books or on the hard drives of computers. If, as I assume they do, the Government wish to see compliance with necessary controls—by necessary, I mean those that do not impose a shotgun approach—the DTI must devote substantial intellectual resources to developing constructive guidance, which must be tailored to the practical needs of the academic world. That is essential.
I have just mentioned the bureaucratic requirements of record-keeping. A particular problem affects information security projects, including, for example, the protection of bank customers' PIN numbers or prevention of computer fraud, hacking and spamming. Those are covered by the dual-use controls, and such projects come within the licensing regime, because they come under an EU instrument called the Community General Export Authorisation (CGEA). The problem is that, to take advantage of that licence, academics must comply with record-keeping obligations to be imposed by the order that are both onerous and impractical. They are set out in Part II of Schedule 4 of the order. I believe that the Government will claim that that mirrors what is set out in the CGEA itself.
In a modern information security project, very large numbers of exchanges of technology may take place by e-mail. That often consists of computer software that may never form part of the final product but is required for testing or design purposes. If a record under the CGEA must be entered for each e-mail and reply, the burden of record creation would make most projects unfeasible. In fact, article 6 of the EU dual-use regulation licenses most dual-use items, including information security, although it does not do so if it includes what are called cryptanalytic functions.
The conditions of the EC regulation do not contain anything resembling the burdensome ones set out in Part II of Schedule 4 to this order. This is despite the fact that the EC order specifically says that it is up to

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individual states to decide what registration and reporting requirements to apply. In other words—and not for the first time—the Government are guilty of gold-plating EC regulations. In this case, the Government are not under the constraints that I understand the Minister may claim they are.
I seek from the Minister a cast-iron assurance that ways will be found—either through detailed guidance on record-keeping requirements, or through the grant of open licences, or through the grant of individual licences containing more practical and less onerous conditions, or a combination of all three—to ensure that information security projects are not burdened in this most unreasonable way.
Before I make my concluding remarks I should like to add something else to my wish list at the request of Universities UK. The existing controls have been in force for three years. These should be reviewed in 12 months from now, when they will have been in place for four years and the new ones, if the order is passed, for one year. I understand that the Minister will confirm a review of the legislation after the controls have been in force for three years. I ask him to confirm that when that review takes place it will actively seek and take into account the views of the academic community.
Furthermore, as the delegation explained to the officials, there is a need for clear and adequate guidance, preferably tailored for academics, explaining what the regulations require within the boundaries of Section 8 of the Export Control Act. The representatives of Universities UK and the Royal Society have offered total co-operation with the Government in helping to draft the necessary guidance as well as in disseminating it to the academic community in exchange for clear statements from the Minister about the possible interpretation of Articles 8 and 9 of the order, which deal with the electronic and non-electronic transfer of information and general licences for certain academics in place of the Community general export authorisation. I hope to hear from the Minister that he will accept that offer.
Finally, I come to my third reason for objecting to the order, to which I shall refer in the fewest words possible. The simple fact is that because of the unnecessarily wide scope and impractical requirements of the order it is, according to the advice I have received, ultra vires the Secretary of State's powers as it contravenes the clear wording of Section 8 of the Export Control Act 2002—I ask the Minister to note this—which states:
"The Secretary of State may not make a control order which has the effect of prohibiting or regulating … the communication of information in the ordinary course of scientific research".
This provision is intended to deal with dual-use information used, for example, during legitimate academic presentation or research, but which has a potential strategic use. It may be that the clarification the Minister will give your Lordships, and the guidance that he may give on the operation of the
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order, will avoid any law suit in the future that may wish to test this point. For the moment, therefore, I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the order laid before the House on 31st October be annulled (S.I. 2003/2764).— (Baroness Miller of Hendon.)
4.45 p.m.
Baroness Sharp of Guildford: My Lords, we on these Benches share many of the reservations spelt out by the noble Baroness, Lady Miller, about the order as it stands. Some of these reservations are shared by Universities UK and the Royal Society.
We feel that there is considerable ambiguity in the wording of Articles 8, 9 and 10. In particular we have concerns about the dual-use controls in Article 13 and the detail set out in Part II of Schedule 4. I did not spend the weekend trying to write a speech but I did spend it trying to read the order. I have to confess that I am not very much wiser as a result. The detail is considerable.
We are worried about the degree to which it is implied that the detail necessary under Part II of Schedule 4 arises as a result of the Community general export authorisation. I am given to understand that that authorisation does not require the detailed record keeping imposed under Schedule 4. We understand that it is for individual countries to specify precisely what they require under the authorisation. In this case, it is our own authorities which require the level of detail specified. Once again we are gold-plating European regulations to the detriment of our own people. The order imposes unnecessary burdens on them which they should not have to bear.
That said, thanks to the noble Baroness, Lady Miller, I have had the benefit of seeing a draft of the Minister's speech. I believe that I am right in saying that many of our reservations will be allayed as a result of his speech. I look forward to hearing it.
Lord May of Oxford: My Lords, I share many of the reservations that have been expressed. In my case, I have a vivid personal acquaintance with the problems created by legislation such as this if it is not carefully drafted. In my 11 years of experience at Princeton University as Vice-President for Research in the late 1970s and early 1980s, one dealt with several court cases that arose from forbidding mathematicians to present work. There was, in general, a history in the United States—until the whole matter was cleaned up about 15 years ago—of misapplication of such regulations in ways which inhibited research. Cases were always resolved happily, but only after much fuss and bother.
As your Lordships will recall, the original Export Control Bill was amended in this House and sent back to the other place, where the amendments were swept away. It then came back here for a happy resolution, led by the noble Lord, Lord Sainsbury, which satisfied my fact-based—although from another country— worries.

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We were reassured in the earlier discussions that, even if the amendments had not stood, the orders would clear up any ambiguities. Unhappily, far from doing so, they have recreated some of the original obfuscations, although not with intent. Through the generosity of the noble Lord, Lord Sainsbury, in sharing with me his preliminary thoughts, I am under the impression that he will lay all my worries to rest.
I have two minor points that I would like put even more formally to rest. The noble Baroness, Lady Miller, also referred to them. First, I trust that we shall hear that the Government are committed to consulting with representatives of the academic community to provide further and clearer guidance, where appropriate, specifically tailored to the academic context. Why do I say that? The helpful notes and guidance prepared by my erstwhile colleagues in the DTI from my brief sojourn as Chief Scientific Adviser, well-intentioned though they are, clearly reflect the fact that most of the dialogue in the context of export control—it is an evocation of Scott and so on—is not between academics and officials in the Department of Trade and Industry but between rather different people. In short, there is what might generously be called a certain degree of mutual incomprehension between the academic culture and that of the people who drafted this document. The thought that it could come happily together is not reassured by the fact that the Royal Society and Universities UK's efforts to get together with officials before the order came to the House was, despite much polite exchange of promises, not effective. I am left with the harsh view that the guarantee of such dialogue must rest on ministerial assurance that officials will be told what to do. That is a crude thing to say, but it is best said openly.
Finally, I also hope — and this fleshes out something said by the noble Baroness, Lady Miller, and what the noble Baroness, Lady Warwick, may be about to say—that there will be an undertaking that there will be a formal review of how the bits that relate to the academic world are going 12 months from the order coming into being, rather than three years.
Baroness Warwick of Undercliffe: My Lords, I am grateful for the opportunity to debate the regulations currently before the House, and pay tribute to the efforts of the noble Baroness, Lady Miller of Hendon, in pursuing the issues that she raised this afternoon. I also declare an interest as chief executive of Universities UK.
I broadly welcome the regulations and I wholeheartedly welcome the spirit of co-operation with which officials in the Export Control Organisation of the DTI have approached the concerns raised by academics and by the Royal Society and ourselves. Indeed, it is only a shame that we did not manage, as the noble Lord, Lord May, said, to get a meeting with them. In calling for clear, adequate and tailored guidance, I hope that the same spirit of co-operation can be maintained and built on to ensure that the regulations now before us are capable of being clearly understood by those in the academic community.
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As noble Lords have already made clear, however, there are a few areas of outstanding concern that I hope the Minister will be able to clear up. My own reaction in reading the regulations and the accompanying draft guidance was similar to that of the noble Baroness, Lady Sharp—that they were hopelessly opaque and difficult to understand. The draft guidance in particular failed to clarify the obligations that the new controls will place upon academics and others, or to make clear the difference between existing controls and new ones. If we are not to produce a situation in which academics simply scratch their heads and give up on international collaboration in certain fields, it is incumbent upon the Government to make efforts to explain the scope of the existing and new legislation. I therefore join others in calling for clear, transparent and tailored guidelines for the academic community that make absolutely clear what they must do and how they must do it.
I also believe that the Government should keep the regulations now before us under review, as others have said. I believe that the impact of the regulations should initially be reviewed 12 months after their implementation, with full and active consultation with the academic community. I hope that the Minister will be able to offer a full clarification on those points.
I conclude with one final point, which relates to the requirements imposed by Schedule 4 Part II of the regulations. There has been some discussion of this already, but I would like to reiterate the concerns expressed by the noble Baroness, Lady Miller of Hendon, about the record keeping and reporting requirements imposed by Schedule 4 Part II, which are utterly unrealistic for collaborating academics. The easiest solution to this problem would be for the Minister to provide some reassurance that the Export Control Organisation will look favourably on applications by information security academics for individual licences. I understand that the normal practice is to discourage applications for individual licences when existing licences are applicable. My view is that the reporting and record-keeping requirements of Schedule 4 Part II make the Community general export authorisation inappropriate for collaborating academics. I look forward to the Minister's reply.
5 p.m.
Lord Sainsbury of Turville: My Lords, I apologise to the noble Baroness, Lady Miller, for wasting her weekend. The thought of negotiating my speech line by line and word by word with her led to a moment of weakness on Friday evening that should not have taken place. I apologise to her for that.
As Minister with responsibility for science and innovation, I believe that the UK must have strong international relationships if it is to remain at the leading edge of world science. I am proud of the fact that we carry out 4.5 per cent of all the world's science, bur. that means that 95 per cent is done elsewhere. If we are to stay at the leading edge, we need strong relationships with the science being done elsewhere in the world. However, I believe that there is nothing in the Export of Goods, Transfer of Technology and Provision of Technical

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Assistance (Control) Order 2003 that in any way prevents that happening. I want to reply in detail to the specific points raised by the noble Baroness, Lady Miller. First, however, I should put things in a wider context.
The order is one of two made under the Export Control Act 2002, which will come into force, together with a third order now in preparation, on 1st May next year. The order consolidates the extensive export controls that already apply under current legislation to the export of controlled military and dual-use goods and technology, and also to non-controlled goods that are to be used in connection with a programme of weapons of mass destruction. However, there are certain gaps in the present controls that this order will remedy. First, it will impose a control on the export of military technology by electronic means, to complement the existing controls on the export of dual-use technology by electronic means. Secondly—and this is the point which I believe to be of concern to the noble Baroness—it will impose controls on the transfer by any means within the UK of non-controlled technology and software intended for use in a weapons of mass destruction programme outside the EU. It will also impose controls on the provision of technical assistance to WMD programmes. The second order, with which I do not intend to deal today, introduces new controls on the trafficking and brokering of military goods between countries outside the UK.
At present, it is possible for those engaged in the production of WMD to obtain relevant technology and software or technical assistance within the UK or from a UK person outside the UK without the need for the transferor to obtain approval from Her Majesty's Government under export control legislation. Clearly, this is an area in which we must have adequate regulations. The new controls on the transfer of technology relevant to weapons of mass destruction do not represent a radical change in direction; they build on the existing dual-use regulations that have been in force since 2000. The new controls on technical assistance implement an EU joint action.
Equally, I accept that the controls must be proportionate, practicable and well understood by those subject to them. We have therefore engaged in extensive consultation before they were finalised. That started with a White Paper and we also published draft secondary legislation when the Bill was introduced into Parliament. We then had a final round of consultation of the draft orders starting in January this year.
Copies of that consultation document on the secondary legislation were sent to, among others, the Royal Society and Universities UK, and the Government have also discussed the operation of the new controls with them. Officials from the DTI's Export Control Organisation will continue to work with them during the implementation period and beyond to help their members become aware of, understand and operate the new controls. I have asked that a meeting take place early in the new year, and we will work with the academics to provide appropriate guidance for academics. I hope that that allays any fears that the noble Lord, Lord May, or the noble
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Baroness, Lady Warwick, have about the matter. We will produce appropriate guidance, working with academics.
Detailed user guidance on the new controls has been published on the Export Control Organisation website, including frequently asked questions tailored for academics. The Export Control Organisation provides a helpline and free ratings inquiry service, which further helps academics understand and operate the new controls. Additional advice is provided by compliance officers during their regular audits of open licence holders, including suggestions to help open licence holders understand and comply with the terms and conditions of their licences. In addition to this ongoing communication effort, the Government will consider what further guidance may be necessary in collaboration with representatives of academia.
The Government are already committed to a systematic review of the new controls three years after their coming into force. We have also undertaken to work with representatives of institutions of higher education to monitor current preparations for the new controls and their operation during the first year after coming into force. I am more than happy to give a cast-iron assurance that, in both reviews, we will consult representatives of higher education institutes.
The Government accept that institutes of higher education and the research community do not have wide experience of export controls, and we are committed to helping them to comply with strategic export controls, both under the new controls introduced by the order and under the existing dual-use regulations.
Some concern has been expressed about the ability of academics dealing with information security to comply with the existing EC dual-use regulation. The main concern seems to be the record-keeping requirements of the Community General Export Authorisation—the CGEA—a form of open licence that permits anyone to transfer encryption software or technology controlled in annex 1 to the EC regulation within the Community and to 10 of our close allies, including the United States. The Government have met representatives of higher education institutes to discuss the issue and are willing to continue working with academics dealing with information security to help them meet their obligations under the existing controls. However, I stress that the controls have been in force for the past three years, and, although we are making every effort to be as flexible and understanding as possible, we are constrained by the record-keeping requirements of the EC regulation with regard to the CGEA.
The noble Baroness, Lady Miller of Hendon, raised the question of the extent to which the record-keeping requirements were necessary under the EC dual-use regulation. The regulation allows member states to attach national export control restrictions to the use of the CGEA in their territory. The Government have exercised the UK's right to attach further reporting requirements through national legislation on physical exports and electronic transfer of cryptographic items, software and technology to the 10 non-EC countries

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permitted as destinations under the CGEA. It is important to note that the further reporting requirements apply only to exports of cryptographic goods, software or technology specified in annex 1 to the EC regulations beyond the EC. The export of encryption beyond the EC raises national security issues, which the further reporting requirements address in a proportionate and workable way.
The noble Baroness also raised a point about record keeping and compliance for electronic transfers of military technology. I stress that we are not requiring records to be kept of every e-mail to an end-user, if a transfer takes place over a prolonged period. It is sufficient to identify the technology transferred, the dates between which it was transferred and the identity of the end-user. The detailed user guidance developed with industry representatives will make clear the practical record-keeping requirements under the new controls.
The belief has grown up in some quarters that no researcher will be able to collaborate or communicate with anyone in a sensitive area without first seeking a licence from the DTI. That is not the case. Section 8 of the Export Control Act 2002 specifically acknowledges that an order prohibiting or regulating the communication of information in the ordinary course of scientific research may not be made, unless the interference by the order is necessary and no more than necessary.
The new end-use controls apply only in specific circumstances, which I shall explain, relating to weapons of mass destruction programmes and missiles capable of their delivery. Even here, there will be an exemption for information in the public domain. We believe that the vast majority of scientists would, in any case, wish to avoid having their work contribute to such programmes. I do not believe therefore that those specific circumstances will arise frequently.
I will now give the House a clear explanation of the Government's position in answer to questions about the drafting of Articles 8 and 9 of the order. Article 8(1) contains the prohibition on the electronic transfer of software or technology. The article prohibits the transfer without licence of software or technology to a person or place in the United Kingdom, if the transferor has been informed by the Secretary of State that such software or technology is or may be intended, in its entirety or in part, for a relevant use; or if he is aware that it is intended for a relevant use, and he has reason to believe that it may be used outside the European Community. The phrase "any relevant use" is defined in Article 2. The definition follows the definition in the EC dual-use regulation and broadly covers usage in connection with weapons of mass destruction programmes.
For the test in Article 8(1) to be satisfied, the transferor must first either be informed by the Secretary of State or be aware that the software or technology is intended for a relevant use. For the "aware" part of the test to be met, there must be a realistic prospect that the person who has the intention to use the software or technology for a relevant
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purpose will be in receipt of the software or technology. The possible intention of an entirely unconnected person is not relevant. That, however, is not the end of the story. The transferor must also have reason to believe that a relevant use will take place, outside the EC. That does not mean that there is a theoretical possibility that it may be used outside the EC, a condition which, of course, may logically be satisfied in every case. Rather, there must be a positive reason for the belief on the part of the transferor. Article 8(5) confirms that by stating that, for the purposes of Article 8(1), a person has reason to believe that software or technology may be used outside the EC, if he knows that it may be, or is intended to be, so used, or if he has been informed by the Secretary of State that it is intended to be so used. If the constituent parts of that test are met, the transferor must apply for a licence before the transfer is made.
Article 9(3) contains the mirror provision to Article 8(1) in respect of the non-electronic transfer of software and technology. For the avoidance of doubt, the comments that I made about the interpretation of Article 8(1) apply equally to the interpretation of Article 9(3).
The wording of Article 10 is deliberately different from that in Articles 8 and 9, but the "is aware" test is the same as for those articles. A person may be "aware" only if he knows that he has goods intended for a relevant use.
The noble Baroness also raised a constitutional point. The new controls have been carefully framed to respect activities that fall under certain protected freedoms described in Section 8 of the Export Control Act 2002; namely, communicating or making information generally available to the public and communicating information in the ordinary course of scientific research. The Secretary of State may regulate such activity, if interference is necessary and no more than necessary, as determined by her in accordance with Section 8(2), and she considers that the new controls imposed by Articles 8 and 9 of the order are necessary.
I hope that what I have said for the record today will reassure the House and the academic community. As Parliamentary Under-Secretary of State for Science and Innovation, I am determined that nothing should stand in the way of productive international scientific relationships. Equally, I do not think that any scientist would want to see his or her work misused in a way that threatened the security of the country.
Baroness Miller of Hendon: My Lords, I thank the Minister for his statement. I tried to note carefully what he said. I noted particularly what he said at the beginning: he did not speak to me on Friday because he did not think that he could face me going through the Bill line by line at the beginning of the weekend. I hope that that does not mean that, in letting me have the Bill last night, he expected me to go through it line by line. That could not have been his intention, or he would have tried to hide something from me, and I am not suggesting that he did. On the other hand. I do not think that, if I had suggested that we go through some

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of the lines on Friday, it would have made the Minister's weekend as difficult as he made mine. Having said that, I am sure that it will not happen again.
I am not 100 per cent sure that all of our concerns have been met. In particular, it was interesting to hear that the Secretary of State would prevent people having licences only if she thought that it was necessary. I looked again as he was saying that. The question is: what is necessary? I have reread Section 8 of the Export Control Act 2002, which we passed together. Section 8(2) probably covers everything when it states,
"by reference to the circumstances prevailing at the time the order is made and having considered the reasons for seeking to control the activity in question and the need to respect the freedom to carry on that activity".
I made the point that, ultimately, if any part was contravened, it could be ultra vires. I feel content to leave the matter at that because it probably would cover the position.
Therefore, for the moment, I am prepared to accept the assurances that the Minister has given, and the promise of co-operation with and guidance to be given to the academic community. I am very grateful to other noble Lords who supported me in what I said. I refer in particular to what the noble Lord, Lord May, said from his experience at Princeton. Nothing can take the place of experience when one is trying to make sense of what is in front of one, especially in the light of the three-year review of the operation of the Act, which is not too far in the future. I hope that makes it quite easy for the noble Baroness and Universities UK to accept. I therefore beg leave to withdraw my Motion.
Motion, by leave, withdrawn.

Justice (Northern Ireland) Bill [H.L.]
5.11 p.m.
Baroness Amos: My Lords, I beg to move that this Bill be now read a second time. When we introduced the first justice Bill for Northern Ireland two years ago, we knew that we were starting out on a journey of reform and modernisation of the criminal justice system there. That Bill did not, and could not, represent the closing chapter on criminal justice reform in Northern Ireland when it received Royal Assent in July 2002.
All justice systems must continue to evolve. They cannot be allowed to sit still and to ossify or they will cease to meet the needs of modern society. As well as being effective, efficient and fair, they must reflect the community they serve and be prepared to change as society changes. This Bill therefore represents a continuation of the journey towards a better, more modern justice system for Northern Ireland. Such a justice system will benefit all the people of Northern Ireland in equal part and will create even higher levels of trust and confidence in the justice system.
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This justice Bill continues the themes of openness, transparency and accountability which run through the Justice (Northern Ireland) Act 2002. By further enhancing those characteristics we hope to instil even greater confidence in the justice system. The key elements on which this Bill makes provision are judicial appointments, the prosecution, human rights in the criminal justice system and bail. I will speak on each of its main provisions in turn.
First, the Bill provides for the establishment of a Judicial Appointments Commission prior to the devolution of responsibility for criminal justice matters. The 2002 Act provides for the commission to be established post-devolution, as the Criminal Justice Review recommended. But we see merit in bringing forward the establishment of the commission to ensure that the appointment processes for the judiciary are more transparent and encourage a wider range of applicants than ever before. That should make an important contribution towards enhancing public confidence in the Northern Ireland justice system. The Justice (Northern Ireland) Act 2002 enshrines the principle of continuing judicial independence. The Government remain firmly committed to that.
The Secretary of State for Constitutional Affairs will have ministerial responsibility for the Judicial Appointments Commission prior to devolution of justice functions. Noble Lords are aware that a Bill on constitutional reform will be brought before the House this Session. We are, of course, mindful of the need to ensure that the Justice (Northern Ireland) Bill sits comfortably with any wider constitutional reforms that might be carried in the other Bill. We do not anticipate any difficulties. However, noble Lords have my assurance that we will make any consequential adjustments to the Justice (Northern Ireland) Bill by way of government amendment if it is necessary to do so.
Turning to the other judicial appointments provisions, the 2002 Act stipulates that the lay members of the commission should be representative of the community. The Bill now provides that the composition of the commission taken as a whole will, as far as possible, be reflective of the community in Northern Ireland. I know that the noble Lord, Lord Smith of Clifton, who played a very important part in this, will claim credit for it; I acknowledge the role of the noble Lord. We think that it is right, in principle, to make this change in the interests of enhancing public confidence.
Merit has been and will continue to be the overriding principle for judicial appointments. That is non-negotiable. A key objective of the commission will be to engage in a programme of action to secure a judiciary that is reflective of Northern Ireland society. I want to make it clear that we are not in the business of appointing applicants on the basis of political opinion. Also, reflectiveness applies not just to religious background. There is a strong need for more applications from women and those from an ethnic minority background. Again, this change will help to promote confidence in the judiciary among all the people of Northern Ireland. The duty set out in the 2002 Act—to ensure that a range of

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applicants reflective of the community is available for consideration by the commission—is retained alongside this key objective.
It is envisaged that the programme of action will focus on any equal opportunity issues that could have implications for the judicial appointments process, as well as how to stimulate interest from a broader range of applicants suitable for judicial office. It is intended to establish an outreach consultative forum which will include representatives of the judiciary, the Bar, the Law Society and the Equality Commission. The forum's terms of reference will be to consult on what measures may be taken to secure a judiciary in Northern Ireland that is reflective of society, consistent with the requirement of appointment on merit. The matters likely to emerge from the forum will include consideration of the scope for part-time working, use of deputies, the present eligibility requirements and the judicial career path.
The 2002 Act placed time limits on lay membership of the commission. We think that it is right that judicial members of the commission should have the same time limits applied to their membership as currently apply to the non-judicial members, and the Bill provides for that.
When appointing the Lord Chief Justice and Lords Justices of Appeal after devolution, the First Minister and Deputy First Minister, acting jointly, will make recommendations to the Prime Minister. The Lord Chief Justice, as the head of the judiciary in Northern Ireland, will be consulted and his views will be made known to the Prime Minister. The Prime Minister will then make a recommendation to Her Majesty the Queen. That improves upon the formulation used in the 2002 Act by bringing it closer to the original recommendation of the Criminal Justice Review.
The 2002 Act provided for the establishment of judicial tribunals to consider the removal or suspension of judges after the devolution of justice matters. This Bill provides that if a tribunal recommends that a judge be removed or suspended from office, the Lord Chief Justice will be consulted. His agreement to the removal or suspension is no longer required.
Again, building on the 2002 Act, a duly is placed on the Director of Public Prosecutions to refer all cases of suspected police malpractice to the Police Ombudsman. That duty places the onus on the Police Ombudsman to make decisions about suspected police malpractice. Again, it more closely reflects the original review recommendation. The 2002 Act asserted the independence of the Director of Public Prosecutions in Northern Ireland. That is another principle that is non-negotiable.
Creating an offence of seeking to influence the prosecution decision-making process will ensure that those who attempt to impinge on the independence of the prosecution will be brought to account. The offence is linked to the idea of perverting the course of justice to ensure that innocent approaches, such as a doctor passing medical information to the director or a person writing in defence of a relative, are not
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criminalised. It is activities with malicious intent that we are targeting with this offence. An example of that malicious intent might be if someone were to attempt deliberately to mislead the director in making a decision about whether or not to prosecute.
The Criminal Justice Review concluded that human rights and dignity should be a core value of the criminal justice system in all its aspects. The Government fully endorse this view. In order to integrate human rights awareness into the criminal justice system still further, a requirement is placed on criminal justice organisations to have due regard to guidance on relevant international human rights standards in carrying out their functions.
A right of appeal for the prosecution against the grant of bail by a magistrate's court is introduced. The police are keen for this right of appeal to be introduced, bringing Northern Ireland into line with Great Britain. It is also supported by the Director of Public Prosecutions.
The Bill brings arrangements for breach of bail in scheduled cases into line with current practice in non-scheduled cases and makes some minor amendments in relation to the treatment of those on bail in non-scheduled cases.
The independent review of security in Maghaberry Prison conducted by John Steele concluded that republican and loyalist paramilitary prisoners should, on a voluntary basis, be accommodated separately from each other and from other prisoners. That recommendation has been accepted and work to implement it is on-going. The review also recommended that these new separated arrangements should be backed by a range of measures to prevent deterioration into segregation as it operated in the Maze.
The Bill introduces as one such measure a new power allowing the transfer of a prisoner from Northern Ireland to another prison in England or Wales in the interests of maintaining security and good order in prisons. Northern Ireland has only one high security prison and the dispersal of troublesome prisoners within the Northern Ireland Prison Service estate is not therefore possible. The need for the prisoner to remain in England and Wales will be reviewed on a regular basis and he or she will be returned to Northern Ireland as soon as it is assessed that his or her transfer is no longer necessary. Arrangements will be made to ensure that the prisoner will not be disadvantaged as regards family visits or, in the case of remand prisoners, access to legal advice.
The Bill will amend Section 103(2)(e) of the Terrorism Act 2000. The Northern Ireland (Emergency Provisions) (Amendment) Act 1975 criminalised intelligence gathering against those working in the prison service in Northern Ireland. The Terrorism Act 2000 makes it an offence to collect information relating to,
"a full-time employee of the prison service".
This does not offer the same degree of protection to all classes of prison staff. Part-time workers are now protected in line with the recommendations of the noble Lord, Lord Carlile of Berriew, in his independent review of the Terrorism Act 2000.

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I turn to arrest without warrant for the offence of driving while disqualified. The Chief Constable of the Police Service of Northern Ireland is anxious to have this power, which exists in the rest of Great Britain. Taking firmer action against the serious problem of disqualified driving is something I hope noble Lords will be able fully to support.
The powers of court security officers, as set out in the 2002 Act, are built on to ensure that all relevant buildings have adequate protection.
Finally, the Bill deals with the fact that, at present, barristers in Northern Ireland cannot enter into contracts for the provision of their services, whereas in England and Wales they can do so. The Bill brings the situation in Northern Ireland into line with that in England and Wales.
The Government look forward to the day when decisions on the local justice issues that matter to local people will be placed in the hands of local Ministers. We are confident that that will happen when the time is right—when we have a stable Assembly and executive, when there is an enabling security environment and when the local parties are ready to make the devolution of justice a reality. In the mean time, we have a responsibility to prepare the way by improving and modernising the criminal justice system in Northern Ireland in a way that maximises public confidence and political support.
I believe the provisions contained in this Bill mark an important further step in the reform and modernisation of the justice system in Northern Ireland. The Bill will help to provide for an even fairer, more efficient and more effective justice system. The Bill will provide for a justice system that is more transparent, open and accountable; a justice system that will instil even greater levels of confidence in all parts of the community. I commend the Bill to the House.
Moved, That the Bill be now read a second time.— (Baroness Amos.)
5.24 p.m.
Lord Glentoran: My Lords, I thank the noble Baroness for setting out so clearly the details of the Bill before your Lordships' this afternoon. I also thank her for giving me the courtesy of a short discussion about it, and her officials for their considerable help in briefing noble Lords on this side of the House who are interested in this legislation.
It was clear from the opening speech of the noble Baroness that the origins of the Bill owe very little to the merits or otherwise of the individual measures it proposes. The Bill has not been brought forward as a result of any issue of great principle.
As a result of the Belfast agreement we had a major review of the criminal justice system which reported to the Government in the spring of 2000. The Government then spent more than a year considering that review and discussing its contents with all the relevant parties. The results of those deliberations
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appeared in the Justice (Northern Ireland) Bill which was introduced in the other place in December 2001, almost two years ago to the day. It received Royal Assent on 24th July last year. That was the conclusion of a process that, despite our disagreement with some elements of the final outcome, had evolved over a period of roughly three years.
So, what fundamental flaw in that process, and what error of judgment, has caused the Government to have to return to Parliament with a second justice Bill in the space of a little over a year? Why is it that the Government believe that now is the right time to bring forward such a Bill?
The answer is quite straightforward. The reality is that the primary motivation for the Bill is not the justice system, although it does make some important changes on which I shall comment and support later. The real motivation for this measure is politics; it is about maintaining the momentum in the peace process and trying to induce republicans into supporting the Northern Ireland criminal justice system as a precursor to the hoped-for devolution of justice during the lifetime of the current Northern Ireland Assembly, a matter just referred to by the Minister.
As noble Lords will be aware, the real origins of this Bill lie in the negotiations that took place at Hillsborough on 3rd and 4th March this year and which culminated in the Joint Declaration by the British and Irish Governments. The declaration also made clear that the Government would bring forward,
"a second criminal justice Bill which will bring forward the creation of a judicial appointments commission and make further provision to promote a human rights culture in the criminal justice system in Northern Ireland".
The Joint Declaration was intended to establish a basis on which the Assembly and the executive could be reconstituted following elections in May 2003. As we all know, those elections had to be postponed. In October the Government tried again to piece together a deal, but that too failed. Eventually, elections were held on 26th November this year.
The DUP and Sinn Fein emerged as the largest parties within their respective communities; the moderates had lost. We wish the Government well in their talks this week with the parties, but the sombre reality is that the task of restoring the Assembly and the reforming of an executive looks even more difficult than ever.
I say that much more in sorrow than anger because this is a direct and predictable consequence of the tactics that Her Majesty's Government have used over the past five-and-a-half years. The strategy of appeasement began with the release of prisoners with no quid pro quo undertaking, and I am afraid that that strategy is not yet finished. This process has caused Her Majesty's Government to lose the support of the majority of the Unionist population, which it had at the time of the referendum. Sinn Fein is seen among nationalists as the party that delivers and the Unionists see a process of one-sided concessions and side-deals that undermine their confidence in the political process.

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We also question the timing in the context of the Government's proposed constitutional reforms, including a Judicial Appointments Commission for England and Wales and the planned abolition of the Lord Chancellor. I thank the Minister for giving the undertaking, as she assured me she would, in relation to changes that might be needed for Northern Ireland as a result of legislation for England and Wales.
Turning to the details of the Bill, Clause 1 proposes to give the Secretary of State the power to establish a Judicial Appointments Commission for Northern Ireland, rather than the First and Deputy First Minister, following devolution, as contained in the current Act. The Secretary of State is not specified, although we are told it means the Secretary of State for Constitutional Affairs. The noble Baroness made that clear this afternoon. That is fine as things stand, as the Secretary of State for Constitutional Affairs is currently the Lord Chancellor and he, by convention, is a legal figure of some standing who has taken the judicial oath. Yet what happens if the Government get their way and abolish the Lord Chancellor? The Secretary of State for Constitutional Affairs will not be the Lord Chancellor but simply another party politician. He need not even be a lawyer, or have any legal background at all. As such, it is difficult to see how political influence in the judicial appointments process is reduced. Would it not be sensible, therefore, to delay the Bill until the role of the Lord Chancellor is clarified?
The Government insist that appointments to the judiciary will be made solely on merit, and that is explicitly set out in Clause 3. Yet the same clause also states that,
"the Commission must engage in a programme of action designed to secure, so far as it is reasonably practicable to do so, that appointments to listed judicial offices are such that those holding such offices are reflective of the community in Northern Ireland".
What is meant by a programme of action? How will it operate in practice? And how can placing such a duty on the commission be squared with the principle of appointment solely on merit? There is clearly a contradiction here. The merit principle must be absolute. As the noble Lord, Lord Hutton, a distinguished former Lord Chief Justice of Northern Ireland, said on Second Reading of the 2002 Act:
"It is clearly vital that a judge should be appointed on merit alone and that appointments should not be influenced by political considerations. That is all the more important in the highly charged political atmosphere of Northern Ireland. If judges are not appointed on merit the administration of justice will suffer, as will public confidence in that administration".—[Official Report, 3/5/02; col. 969.]
It appears to us that the Government are weakening the merit principle at the same time as strengthening the political influence in appointments that the noble Lord, Lord Hutton, rightly warns us against.
What is meant by,
"reflective of the community in Northern Ireland"?
Does it refer to Protestants and Catholics? As the Minister is aware, Catholics have always been very well represented among the senior judiciary in Northern Ireland. Or is it Unionist and nationalist?
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Moreover, judicial appointments will never strictly be reflective of the community, due to the nature of those who become solicitors or barristers. Northern Ireland, like other parts of the United Kingdom, has a criminal community, as well as communities of both persuasions still mainly under the influence of paramilitaries. Surely the Minister is not suggesting that they be reflected among the judiciary. However well intentioned, the aim is simply unachievable and could result in endless judicial reviews over appointments.
Clauses 4 and 5 increase the political influence in the appointment of the Lord Chief Justice and the Lord Justices of Appeal and in the removal or suspension from judicial offices. In the appointment of the Lord Chief Justice and the Lord Justices of Appeal, the First and Deputy First Minister are no longer to be merely consulted, but henceforth will "make a recommendation" to the Prime Minister. I note that the noble Baroness spoke of recommendations—however, the Bill refers to "a recommendation". In other words, before an appointment can be made, the First and Deputy First Minister must agree on a candidate to recommend to the Prime Minister who, in turn, makes a recommendation to the Queen. If this does not increase the potential for political influence, I do not know what does.
"A recommendation" obviously implies a single candidate. But what happens if the First and Deputy First Minister fail to agree, which is, I suggest, not beyond the bounds of possibility if the DUP and Sinn Fein hold those offices? And what if the Prime Minister rejects that recommendation? What happens then? The clear perception will be that the process is politically influenced. The "my turn now, your turn next time" syndrome comes into play.
Clause 5 weakens the power of the Lord Chief Justice in relation to the suspension from listed judicial offices at the expense of the executive. In the 2002 Act, the Lord Chief Justice has to agree before the First and Deputy First Minister can suspend a person. In this. Bill, he merely has to be consulted. I suggest that the independence of the judiciary is undermined; the influence of politicians is clearly enhanced.
These are the Opposition's criticisms of the Bill, and naturally we hope that the Government will reflect on them and agree to amend the Bill as it makes progress through the House. We do not object to the remainder of the Bill and can support some parts of it. We strongly welcome the fact that the Government have listened to some of the recommendations put forward by the Chief Constable of the Police Service of Northern Ireland, Hugh Orde, particularly on bail. There is also the power to arrest disqualified drivers, another concern of the Chief Constable.
It is a shame, however, that the Government could not have included other changes to the law that the Chief Constable believes are essential to tackling Northern Ireland's public order problem. For example, he has asked for the Crime and Disorder Act 1998 to be extended to Northern Ireland. Why can this not happen? If it is not possible to have the Act in full, he has set out

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certain measures that would be beneficial, such as anti-social behaviour orders, parenting orders, local curfew schemes, racially aggravated offences and the removal of truants to designated places.
We appreciate that there are some administrative difficulties in that the functions of local authorities in Northern Ireland are quite different from those in England and Wales. Yet these difficulties should not be insurmountable—and surely what is good law for England and Wales ought to be good law for Northern Ireland. I believe that, in this respect, Her Majesty's Government have missed an opportunity.
This is our approach to the Bill. We look forward to working with the Government to improve it when we return in the new year.
5.37 p.m.
Lord Smith of Clifton: My Lords, I, too, thank the noble Baroness the Lord President of the Council for introducing the Bill with clarity. We on these Benches were critical of one of its predecessors, the Justice (Northern Ireland) Act 2002, in that it created an extraordinarily complex judicial infrastructure for the size of the population it serves of some 1.5 million. It mimicked that of England and Wales in every way and every detail. An opportunity was missed to produce a system commensurate with the size of Northern Ireland which would have been more streamlined, efficient and cost-effective.
This side of the pearly gates—and even, dare I say, the other side of those gates—Northern Ireland is a lawyers' paradise. It will be interesting to see whether the provisions of Clause 17, allowing barristers to enter into contracts for the provision of their professional services, will be seen as adding further enhancement to that paradise.
I accept the analysis of the noble Lord, Lord Glentoran, of the timing of the Bill, although I put a different construction on it. I hope that it will encourage Sinn Fein to join fully in Northern Ireland's legal and judicial system, and I believe it will, with goodwill, help to maintain the momentum of progress for the Belfast agreement.
While we broadly accept and welcome the Bill, we have some concerns. With regard to Clause 1, we welcome the decision to press ahead with the establishment of the Judicial Appointments Commission before devolving responsibility for criminal justice matters to the Assembly. It is good to have a transparent process as soon as possible. However, we stress again the importance of lay members not being seen as political appointees. We asked a series of questions during the passage of the 2002 Act, which could be raised again. We believe that Assembly Members and Members of Parliament should be excluded—but should lay members be councillors or members of a political party? Should they be members of the security forces or of the police? Should they be on a district policing partnership? Should they be involved in community safety organisations? How will the Secretary of State ensure that the lay members do not suffer from a clash of
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interests? How will he or she ensure that the lay members of the Judicial Appointments Commission are representative in terms of gender, as the report of the Criminal Justice Review suggested, or of other ethnic minorities?
On Clause 2, I thank the Minister for generously acknowledging our contribution to the lexicon of Northern Ireland by talking about reflectiveness rather than representativeness. I note that the noble Lord, Lord Glentoran, sees the matter in a different light, but we believe that it is not merely an attempt to dilute things. In fact, it gives a greater precision in the sense that the word "representative" does not easily translate across the Irish Sea. In Northern Ireland, it tends in our view to mean something more like a delegate. We believe that "reflective" is a better way in which to describe the sort of balance that one would want to achieve between both communities, and gender and, if necessary, disability. I am glad that the Northern Ireland Office has taken our concerns on board.
Clause 4 deals with the appointment of the Lord Chief Justice and Lord Justices of Appeal. I tend to agree with the noble Lord, Lord Glentoran, in that the Bill somewhat dilutes the roles of the First Minister and Deputy First Minister in the appointment of those posts, but I differ in the interpretation. The Prime Minister must consider their recommendations, whereas previously the Prime Minister was to make appointments on the basis of their recommendations. Why has that change come about?
Clause 6 deals with the duty of the Director of Public Prosecutions to refer certain matters to the Police Ombudsman. The review states:
"We recommend that a duty be placed on the prosecutor to ensure that any allegations of malpractice by the police are fully investigated, [para. 4.133]".
Any member of the public may report allegations of police malpractice to the Police Ombudsman. It would then be for the ombudsman to decide whether or not it would be appropriate for an investigation to take place. The Act added the head of the prosecution service to the list of those statutory office holders able to refer such matters to the ombudsman. The Government have given a commitment to introduce fresh legislation to place a requirement on the director to refer to the Police Ombudsman all cases in which a member of the police force may have committed an offence or behaved in a manner which would justify disciplinary proceedings. The timescale for that will coincide with the commencement of the phased implementation of the new Public Prosecution Service, following the pilot projects.
The Criminal Justice Review said:
"The early involvement of the prosecutor in a case raises the question of his or her role if he or she were to suspect malpractice on the part of the police investigators. We recommend that a duty be placed on the prosecutor to ensure that any allegations of malpractice by the police are fully investigated. This would be consistent with human rights guidelines and is in line with present practice. As for whether evidence secured in such circumstances should be deployed in court, that is a matter for the prosecutor

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who would take account of the human rights imperative of a fair trial and the need to avoid abuse of process. It would not necessarily be in the interests of justice for all such evidence to be excluded in all circumstances. The prosecutor, in deciding whether to use evidence obtained through malpractice or unlawful means, would make a judgment on whether it was likely to be regarded as admissible in court and on whether it would be proper in all the circumstances to use it".
Clause 7 relates to influencing a prosecutor. We welcome the clause, which is an essential ingredient of the Bill.
Clause 8 deals with the criminal justice organisations on human rights standards. We have always been committed to upholding the highest standards of human rights, so will want to see some of the questions that the CAJ raised answered. The area of concern relates to the Bill's failure to reflect sufficiently the review and the guarantees in the updated plan in relation to the role of international human rights standards in the reform process. The updated plan stated that all criminal justice agencies would be under a duty to have due regard to international human rights standards. However, that has translated rather differently in the published Bill.
The Bill proposes a curious and convoluted formulation whereby it will be for the Attorney General for Northern Ireland to issue guidance, as and when he or she thinks fit, to the listed criminal justice agencies, on the exercise of their functions, in light of relevant international standards. It is concerning that the provision has been drafted in terms of the Attorney General for Northern Ireland, since that office is not yet operational and will come into effect only on the devolution of justice powers to Northern Ireland.
Given the huge degree of uncertainty over when justice powers will be devolved, it seems highly inappropriate that the section of the Bill on the role of international human rights standards should be made dependent on the creation of the local Attorney General. That raises doubts over the genuine commitment of the Government to find a greater role for the application of international human rights standards in the criminal justice system in Northern Ireland, and, possibly, hints at some sort of delaying tactics in that regard.
It is also worth commenting that Section 8(8) exempts the Prosecution Service from having any regard to human rights guidance issued by the Attorney General for Northern Ireland where that guidance would be inconsistent with a code of practice issued under Section 37 of the 2002 Act. It is difficult to foresee how the new and first ever code of practice for the Prosecution Service, which is due to be published in draft form this month, long before the operation of this new Bill, would be inconsistent with international human rights standards.
It is important that those three clauses are amended during the passage of the Bill in order fully to reflect the Criminal Justice Review and meet the promises made by the Government in the updated plan.
I was heartened to have the Minister's assurance on Clause 13 and the transfer of prisoners. We trust that transfer will be a last resort. It is desperately important to maintain security in prisons in Northern Ireland
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and to ensure safety of staff and other prisoners. However, we are concerned at the difficulties that will be placed on families being able to visit prisoners, and for their ability to have adequate legal representation. However, I am very reassured by the Minister's comments.
On my final point, I endorse the remarks of the noble Lord, Lord Glentoran. I am at a loss to understand why there has not been some attempt to apply the Crime and Disorder Act 1998 to Northern Ireland, as the Chief Constable requested. He made a very convincing case for the transfer of that Act, so that it would apply to Northern Ireland. Perhaps the Minister could explain why the opportunity has not been taken to incorporate it on this occasion.
5.49 p.m.
Lord Laird: My Lords, as you are aware, Ulster Unionists are wholly committed to the removal of anomalies from and improving the effectiveness of our criminal justice and justice systems both in Northern Ireland and indeed throughout the United Kingdom. We share such commitment with right-minded thinking people in Northern Ireland and indeed many in this House.
What we do not share, however, is this Government's persistent green agenda in the field of criminal justice. We have witnessed the introduction of three Police Acts in the space of six years and now are confronted with a second justice Act in only two years. Only two explanations are possible for repetitive legislating. Either there is negligent or incompetent translation of policy into the draft legislation—and so it follows that we, in the system of checks and balances, have failed to pick up on these failures, or indeed have been unable to halt their introduction—or the goals are continually shifting. Perhaps the truth in relation to this continuous legislating for criminal justice in Northern Ireland must be a bit of both.
Provisions on bail in Clause 10 regarding the right of appeal for the Crown where a defendant is granted bail in the magistrates' courts are welcome. However, I look forward to pressing the noble Baroness the Lord President of the Council on why the proposed appeal system should differ from that provided for England and Wales by the Bail (Amendment) Act 1993.
Equally welcome are provisions contained in Clause 15 which remove a rather peculiar anomaly in relation to the offence of driving while disqualified—one of the most serious of road traffic offences, certainly in terms of punishment.
However, there is no reason whatsoever why either Clause 10 or Clause 15 could not have been contained in the original justice Bill published and enacted last year. These are certainly not new matters which have arisen in the space of the past few months, and their inclusion here gives this Bill the strong whiff of a mopping up exercise in curing omissions. I do not expect that the Government will be bringing forth, for example, a new Criminal Justice Bill for England and

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Wales next year to cure incompetent or negligent omissions from the Bill passed in the last Session, with which your Lordships are well familiar. The reason for that is simple, and I say this irrespective of the merits of aspects of that Bill: in the mind of the Government at least, they got it right first time. Surely, Northern Ireland and the people there deserve the same level of competence and care first time too.
Indeed, for that very reason I supported devolution in Northern Ireland, and in the right circumstances I would endorse devolution of criminal justice too. However, I do not in any way support the devolution of judicial appointments, whether or not we have effective devolved government. Devolution in Northern Ireland places it in a similar position to our other regions—Scotland and Wales. Devolution of appointments does not happen there. Furthermore, one does not go hand in hand with the other, and the noble Baroness the Lord President of the Council may be aware of that strongly held view from when we last debated these issues two years ago.
Indeed, questions were posed on that occasion, in this House and in another place, as to what would happen to these proposals if devolution was not effective. The Government's stock answer was that they do not plan for failure. Of course, it is failure that has brought the Government to have to legislate for appointments during suspension: failure of the republicans to desist from paramilitary activity; their failure to disarm; and failure of republicans to disband, standing down their paramilitary machine once and for all.
Indeed, given the current climate, even if those obligations were to be fulfilled, it may well be that devolution would still not be viable. Yet this Government continue to pursue the green agenda that has brought us to such a position. Clause 8, for example, covers issues that the SDLP fought and lost in the debate on the Police (Northern Ireland) Act 2000. Yet the Government continue to seek to indulge Northern Ireland's fourth party.
To me—though I will defer to the greater knowledge of your Lordships with legal expertise—Clause 7 adds nothing whatever to the offence of attempting to pervert the course of justice. If my instinct is correct, why is this clause here? What is its source? Is it another SDLP request? I hope that the noble Baroness the Lord President of the Council is able to reassure us in that respect. If not, I fear that we have reached a position where the quality of the law is secondary to whoever requested it.
Clause 6 further undermines protection from retrospective investigating by the office of the ombudsman. Time and again the SDLP has called for increased powers of the police ombudsman, and time and again the Government have assured us that her office cannot act retrospectively. That is clearly not the case here. I hope that the Government do not intend to introduce such a provision now.
Ulster Unionists, as I have indicated, do not support this devolution of judicial appointments, and we do not support this Judicial Appointments Commission. It sets
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us apart in a manner in which we do not wish to be set apart and it puts into legislation the shackles of phrases such as "reflective" and "taken as a whole". Given the broad composition of the judiciary, such provisions will actually guarantee that the lay membership will be anything but reflective.
We will not acquiesce in any attempt to politicise judicial appointments. Nor do we accept that judicial appointments should be based on anything other than merit.
It is time for the Government to ditch the continuous pandering to the agenda of the SDLP and Sinn Fein with regard to criminal justice. The noble Baroness the Lord President of the Council knows that this agenda will never satisfy the insatiable appetite of republicans, and they now represent the majority of nationalists. Have the Government learnt nothing from the results of the Assembly election last month?
It is, albeit late in the day, time for the Government to makes moves to restore Unionist confidence in devolution and restore Unionist confidence in the Belfast agreement. This Bill must change in order to reverse the Unionist drift away from the agreement. Otherwise I fear that in its current form the Bill will not only continue the drift but accelerate it.
5.57 p.m.
Viscount Brookeborough: My Lords, I do not see much harm in the Bill; in fact there is much good. On balance, however, I would not give it my wholehearted support at this time as it is yet more concessions in certain areas for no reciprocation from the hardliners. I do not wish to repeat everything that previous speakers have said about the critical issues, but I should like to make a few points, which noble Lords will be glad to hear are short ones. I shall leave the more technical aspects to subsequent speakers who will deal with them much better than I.
Clause 1 creates a Judicial Appointments Commission. This clause in particular should not be here at this stage. I believe that, 16 months ago, the then Minister in another place—without quoting him word for word—said that, in line with the recommendation of the Criminal Justice Review, the creation of this commission would not take place prior to the reinstatement of devolution. It was to be one of the carrots, if you like, for the hardliners to come on board for decommissioning and for support of the police and so on. We know what has happened since then.
I would add just one point to the comments of the noble Lord, Lord Glentoran, about appointing judges on merit and the matter of reflecting the make-up of the community—and at this point I must declare an interest as a member of the policing board. The one area where that has actually been practised is in the appointment of police trainees. The only way that the Government can satisfy both those demands—and one of them they will not satisfy completely—is by creating a merit pool. However, the number of judges is not so great that the merit pool will be very great anyway. However, they will have to say that those

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people have reached a standard. What standard is that, when we are talking of having the best of the best, at the top of that peak of experts?
That is all that I would say on that point. It has been practised before. The Government cannot reply to this and say, "We will find a way; don't worry". There is only one way, and that is by creating a level at which different people from the different communities in Northern Ireland who are judges or are going to be judges can attain a level above a certain line. It is impossible to work that entirely on merit. We have seen that, and in policing we accept it. However, as regards the judiciary, I hesitate to say that most people do not accept it.
Clause 6 seems to fall into the same category— eternally tweaking the law ahead of the planned timescale in order to appease hardliners who do not reciprocate. The position at present is that whenever there is a complaint against any member of the police, it goes directly to the Police Ombudsman. Whenever a member of the police is involved in a situation where there is no complaint but where someone has died, it is automatically referred to the Police Ombudsman. The DPP has always had the right to refer such matters. Therefore, this clause is not as important as it might seem. It ensures only that less serious matters—when there is no complaint or death and when the DPP does not wish to refer them, which he readily does—will have to be referred to the Police Ombudsman. The measure is of little consequence except for the timing, but it is clearly a concession to those who do not reciprocate.
The Government will no doubt say that they, as always, know what they are doing. I wonder whether they are right. I do not deny that all the communities in the Province are not in some way responsible to a great extent for what has happened in the past 33 years. However, the Prime Minister and the NIO were surprised and shocked by the failure of the system that they put in place finally to resolve decommissioning and to restore devolution. That has led to a complete polarisation, the election result and stalemate. The Government must realise that that is the single most damaging miscalculation that has occurred within the process over the past few years. Hindsight is, of course, a great thing, but I believe that I know what happened. When General de Chastelain first approached the IRA, it agreed to co-operate provided that it held the veto on transparency. I suspect that General de Chastelain reported back to the two governments, who agreed without realising that when the end game—the last move—came about, the IRA would still hold the veto on transparency.
In my case it is normal hindsight, or lack of foresight, but we have the right to expect that our Government will have the ability to outwit the terrorists and not the other way round.
Just over two months later, they are at it again— concessions for no gain from the hardliners. For those reasons I cannot give full support to the Bill. It is a question of the timing, not the content.
6.3 p.m.
Lord Hylton: My Lords, the noble Lord, Lord Glentoran, was at his gloomy best in criticising the timing and some of the content of the Bill. Perhaps I can give him just a crumb of comfort by asking the noble Baroness the Lord President of the Council the following question. In future will the Secretary of State for Constitutional Affairs, who will have a responsibility under this Bill, also have a duty to serve the interests of justice? That is something which has gone on for generations when these kind of duties have been in the hands of successive Lord Chancellors. That, I suggest, should be clearly spelt out in the future legislation that is still to come. There should also be a guarantee that the Secretary of State for Constitutional Affairs will always have a seat in the Cabinet, and can thus make representations at the highest level.
I turn now to the Bill that is before us. There are just two points to which I wish to draw attention. They concern Clauses 6 and 13, and we shall certainly have to return to them in Committee. Clause 6 requires the Director of Public Prosecutions to refer to the Police Ombudsman anything indicating that a police officer may have committed a criminal offence. Surely the independent DPP should have discretion to decide whether he has sufficient evidence to bring a prosecution. If he has, the prosecution should go ahead, thus avoiding further delays caused by proceeding through the ombudsman.
The Government may argue that the Joint Declaration and the implementation plan call for this particular procedure, and there may be merit in some cases in investigations conducted independently of the police service. Her Majesty's Government may like to reflect whether the word "may" would be preferable to "shall" at line 33 of page three of the Bill.
As to Clause 13, I spent about seven years campaigning, eventually successfully, to enable prisoners to be transferred voluntarily between England, Northern Ireland and the Republic. I do not now want to see prisoners transferred compulsorily between jurisdictions. I believe that one has to consider the interests of their families and their own prospects of rehabilitation.
Of course I realise that problems of discipline and internal safety can still be very acute inside prisons in Northern Ireland, as the noble Baroness, Lady Amos, indicated in her opening remarks. There may well be cases when a strong sanction is needed. As the noble Lord, Lord Smith of Clifton, put it, this should, however, be used only as a last resort. I therefore suggest to the Government the inclusion of words in Clause 13(2) such as,
"because of his serious misconduct, or, with his consent, for his own protection".
I should also like to ask, what kind of order is intended at line one of page nine? Will it be subject to parliamentary scrutiny? Further, why is there no mention of transfer to Scotland? That might well be more satisfactory and more appropriate for many of

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the families. Finally, will the consent of the receiving jurisdiction always have to be obtained before a transfer is made?
I conclude by saying that many provisions of the Bill will be welcomed in Northern Ireland, not least, as has already been mentioned, that dealing with the arrest of disqualified drivers.
6.8 p.m.
Lord Mayhew of Twysden: My Lords, the most far-reaching provisions in the Bill are those that relate to the judiciary in Clauses 1 to 5. Although it pains me to say so, as everyone who has held responsibility for Northern Ireland looks with sympathy upon those who succeed them, I believe that these provisions will lead us into a surreal world. In one respect they will lead us into a more dangerous one.
I preface what I want to say with the remark that security of tenure for senior judges is one of the most important safeguards for their independence and for the rule of law. Only last year the Government thought that it was a proper protection that the Lord Chief Justice's agreement would have to be obtained for the removal of a senior judge. Now it is to be sufficient only that he be consulted. He may disagree with the proposed removal but he can still be overridden. I hope that the noble Baroness the Lord President of the Council—I know that she has many responsibilities—will find it possible to answer the following questions. Why has that change been brought about after so short an interval? Who prompted it and in what circumstances? What was the attitude to the change of the Lord Chief Justice of Northern Ireland, Sir Robert Carswell, before he announced his retirement this week?
The Explanatory Notes suggest that the Criminal Justice Review's recommendation will be more closely matched, but the Criminal Justice Review was published two years before the 2002 Act, which is now proposed to be changed. There must be more to it than that. Whatever it is ought to be made known. It really is not enough for the noble Baroness the Lord President to say in introducing the Bill—I think that I accurately recall her saying—that every legal system has to evolve and cannot be allowed to ossify. That is a bit much. The ink is hardly dry on the statute of 2002. There is not much ossification going on; it is not even jelly. We would like the answers to those questions.
The driving force behind the remaining provisions in that part is said to be the objective of enhancing public confidence in the judicial appointments system and the judiciary. I want to examine that, but I would like first to pause. In five years as Secretary of State for Northern Ireland and four years before that as the Attorney-General for Northern Ireland, I do not recall any serious lack of public confidence in the judiciary ever manifesting itself. I suggest that there was a very good reason for that. Throughout the past 30 years, the judiciary of Northern Ireland, appointed as it has been by the Lord Chancellor, has earned a superb reputation for its fairness and impartiality, to say nothing of its courage and dedication to the rule of
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law. I am glad to say that I responded more constitutionally and less petulantly than Mr Blunkett when, as Secretary of State, I found myself on the wrong end of a judicial review.
Nor could anyone point to any significant or telling imbalance in the staffing of the High Court or the Court of Appeal in Northern Ireland. Their members were appointed by the Lord Chancellor, solely on merit and I am sure always consulting the Lord Chief Justice of the day. In my experience it so happens that, if anything, marginally more appointments were made from those with Catholic backgrounds than a strict reflection of the demography of Northern Ireland at that time would have warranted.
It is true that, at county court level, the picture was different, and probably still is, with Catholic backgrounds significantly under-represented. But that was principally, I believe, because county court judges could be required to take their turn sitting as Diplock judges in the High Court trying terrorist cases. Those with Catholic backgrounds, understandably perhaps, found that less attractive, as it was rewarded with neither status nor salary.
I believe that true public confidence in the judiciary has been deservedly very high. That surely has a bearing on whether we ought to change the way in which it is now appointed.
All the same, the Criminal Justice Review of 2000 recommended the establishment of a Judicial Appointments Commission when, but only when, devolution was in place, including devolution of justice matters. That derived in turn from the Belfast agreement, whose purpose was to secure devolution on a fair foundation underpinned by consent, something to which we all wholeheartedly adhere. It made some sense, although it wrongly discriminated against High Court judges, for instead of a Westminster Minister going on appointing judges at High Court level and below, they would be appointed by the First Minister and Deputy First Minister, acting jointly with other specified office holders. I can see the bones of a public confidence argument there, although I for one would have preferred the Lord Chancellor to have kept the responsibility, even after devolution.
What is proposed in the Bill is the institution of the appointments commission here and now, notwithstanding that devolution is suspended and looks like going on being suspended, unfortunately. There is and will be no First Minister or Deputy First Minister, so their places among those responsible for making nominations to the commission are to be taken by the Secretary of State. That will go on until devolution is restored and justice matters devolved within it. It is very hard to see how a recipe for enhancing public confidence can be found there.
The matter does not end there; in fact, that is only the beginning. Look at what the commission is charged with doing. It must make,
"arrangements in connection with the exercise of their functions … as will, so far as is practicable, secure that the membership of the Commission is reflective of the community in Northern Ireland".

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That applies to all the members, note—the judicial ones as well as the lay ones. The 2002 Act—only a year old—stipulated a qualification for only the lay members, who were required to be representative of the community. Why the change? Why are the judicial members now to have that qualification brought in? Why is the change proposed so soon? The commission itself, once in place, would have to do likewise to secure that the judiciary reflected the community similarly, consistently—it is true—with appointment being on merit.
But how, your Lordships may ask, after the recent elections do we define the "community in Northern Ireland"? Sinn Fein is now the majority party in the nationalist community, yet it is still inexorably and inextricably linked with the Provisional IRA, whose failure to decommission and to renounce so-called punishments like banishments and maimings was the cause of devolution being suspended. The Unionist parties were unable to go on working with Sinn Fein and still are.
The Criminal Justice Review was right to recommend an appointments commission, if at all, only once full devolution was in place. So long as devolution is suspended, and for the reason that it remains suspended, I am afraid that it is surreal to suppose that public confidence in the judiciary will somehow be enhanced by such a method of trying to make it reflective of the fractured community within Northern Ireland. I cannot dismiss the suspicion that the real reason for the proposals lies in the unplanned and feckless decision to abolish overnight the office of Lord Chancellor, which is where the responsibility for the time being should remain.
6.18 p.m.
Baroness Goudie: My Lords, I wish to declare an interest as the patron of the Northern Ireland Community Foundation, supporting people, strengthening communities and building peace.
I generally welcome the publication of the new Bill, which will undoubtedly advance the implementation of aspects of the Criminal Justice Review. I am particularly supportive of the fulfilment of the Government's commitment, in the Joint Declaration of April 2003, to bring forward the introduction of the Judicial Appointments Commission in advance of devolution of justice powers to Northern Ireland, as provided for in the Bill. I feel it important that the Government should be clearly seen to be proceeding with the implementation of essential aspects of the peace process in Northern Ireland. Confidence-building in the process requires no less.
There are a few points that I wish to make and comment on. The first is with regard to Clause 4 and concerns the appointment of the Lord Chief Justice and Lords Justices of Appeal. In the event of effective devolution in Northern Ireland, the role of the First Minister and Deputy First Minister—acting jointly— in the appointment of the Lord Chief Justice and Lords Justices of Appeal should be strengthened
1110
rather than minimised. It is crucial that a devolved Assembly should have a sense of commitment to, and ownership of, the judicial system.
Clause 4, as published, arguably fails to meet expectations raised by the Government in their updated implementation plan, when they held that the Prime Minister would appoint persons to those positions,
"based on the recommendations of the First and Deputy First Minister".
Instead, the Bill before us today requires the Prime Minister only to "consider" any recommendation for appointment made by the First and Deputy First Minister.
I would argue that where there is agreement between the power-sharing First Minister and Deputy First Minister on the issue, the Prime Minister should then make the appointments based on this recommendation. However, where such an agreement cannot be reached, it might be feasible to empower the Prime Minister to consider the names put forward by both the First Minister and the Deputy First Minister. This, however, should be a position of the last resort.
I also welcome the provision under Clause 6 concerning the duty of the Director of Public Prosecutions to refer matters to the Police Ombudsman. I have had considerable personal contact with the office of the Police Ombudsman for Northern Ireland and I am constantly impressed with her work. However, I am concerned that the wording of Clause 6(3) confers an excessive degree of discretion on the Director of Public Prosecutions to decide whether a matter of alleged police malpractice should be referred to the ombudsman. I would welcome further clarification as to the objective test on what might "appear" to the director as grounds for warranting reference to the ombudsman.
The other part of the Bill about which I must express certain concerns is Clause 8, with regard to the guidance for criminal justice organisations on human rights standards. The updated implementation plan stated that all criminal justice agencies would be under a duty to have due regard to international human rights standards. I support this approach, as I regard human rights standards as a protection for all— irrespective of their community background or political perspective. This, I feel, is particularly important in such a divided and contested society that Northern Ireland still remains.
The Bill as it stands, however, is less clear cut about the implementation of this provision. It proposes a rather curious formulation whereby it would be.for the Attorney-General for Northern Ireland to issue guidance, as or when he or she thinks fit, to the list of criminal justice organisations on the exercise of their functions in the light of relevant international standards.
However, there seem to be a number of difficulties with this provision. First, the office of the Attorney-General for Northern Ireland is not in existence and will come into existence only on the devolution of justice powers to Northern Ireland. Secondly, given the current uncertainties over the time-scale of any

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such devolution of justice powers, it is extremely problematic that this important section of the Bill on the role of international human rights standards should be made dependent on the creation of the local Northern Irish Attorney-General. Provision should be made for the effective application of these standards prior to the establishment of the local office of the Attorney-General for Northern Ireland.
Finally, I want to comment on Clause 13 concerning the transfer of prisoners. While I accept the thinking that gave rise to this provision, I would draw attention to the inevitable human cost of transferring prisoners from Northern Ireland to serve a term of imprisonment in England or Wales. The human cost of such transfer will most likely be borne by the family of the individual involved. I believe that any such course of action should be taken only in the most extreme circumstances, and I worry that the current stated conditions, which state,
"in the interests of maintaining security or good order in any prison in Northern Ireland",
are drawn too widely and may not take account of the disproportionate cost to the families involved. And we all know only too well the starkly adverse political influence of a disturbed prison situation in Northern Ireland. I commend the Bill to the House.
6.24 p.m.
Lord Fitt: My Lords, as ever with legislation concerning Northern Ireland, it is obvious that even with today's small attendance in the House the Bill is not uncontroversial. Some people in Northern Ireland believe that the production of the Bill, which emanated from Hillsborough, is the result of serious political pressures placed on the Government. The cement which holds together a society or a community in the democracies of these islands is respect for the police and law and order. It is obvious, even from what I have heard today, that consent is not readily available.
It appears that too many concessions have been made to one section of the community in Northern Ireland and that will bring a reaction from another section. We see that reflected in the results of the elections which were held a fortnight ago. There is no great support—not 100 or 90 per cent—from the population for the Bill.
On appointments, I have listened to the lawyers speak here today. I want merely to indicate that the subject of the appointments commission will arise in the Committee. I remember discussing an issue in Committee some years ago and I believe that the noble Lord, Lord Glentoran, was also present. I shall have to obtain Hansard for that occasion but I want to repeat what I then said. Between 1966 and 1970—I recall the years better than the people involved—a vacancy occurred for a Lord Chief Justice in Northern Ireland. One of the applicants for the position was a man who had given loyal service during the war years, receiving military commendations for the part he played. It seemed to everyone that he was the ideal candidate for the promotion. Then someone told me of
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rumours that there was no way in which he would get the promotion because he did not support the Unionist community.
I made recommendations to the then Lord Chancellor and the Attorney-General. I had a great deal of paperwork relating to the identity of the judge and they agreed with me that he appeared to be a good candidate for the post. They came back to me a fortnight later and said that there was no way that the Northern Ireland Government would agree to the appointment.
The argument went on for weeks, and eventually they came to me and said, "There's only one way out of this; we will appoint two judges". The Northern Ireland Government had to get their judge and another one was also appointed. That is an indication of what was happening at that time and it is why I believe that an appointments commission may now be essential. I shall say much more about that in Committee.
My final point relates to the transfer of prisoners. Why can prisoners be transferred only to England and Wales but not to Scotland? Is it because of the devolution? Scotland would be a more appropriate place because it also has its religious and sectarian differences. I put that down merely as a marker because we shall debate the issue in Committee.
6.28 p.m.
Baroness Harris of Richmond: My Lords, a number of views have been expressed about improvements to the criminal justice system in Northern Ireland. As my noble friend Lord Smith of Clifton said at the outset, we broadly welcome the measures.
It is not a large Bill, but its content is important for the people of Northern Ireland to be able to see clearly how their judicial system is working. My noble friend Lord Smith asked a question on the importance of lay members, which I want to reiterate. Who might be excluded from taking part in the process of the Judicial Appointments Commission so as not to be seen as political appointees? Would they be people such as Assembly Members or Members of Parliament, and what about members of the police or the security forces? On the other hand, who might be included? Would they be those involved in community safety organisations or members of a district policing partnership? How will the Secretary of State ensure that the lay members do not suffer from a clash of interests? Finally, how will he ensure that the lay members of the Judicial Appointments Commission are reflective of the community in terms of gender or ethnicity?
The noble and learned Lord, Lord Mayhew, expressed concerns about the tenure of judges. Like the noble Lord, Lord Glentoran, he would prefer the Lord Chancellor to have responsibility for choosing members of the judiciary. It is a matter of regret that devolution of responsibility has not yet been achieved. However, we look forward to the day when it will be. Until then, the Secretary of State must take responsibility for ensuring that the Judicial Appointments Commission is set up. I

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hope that he will do it speedily and with full consultation with the various bodies which need to be involved in its formulation.
The noble Lord, Lord Glentoran, expressed disappointment that the Lord Chancellor will not take responsibility for judicial appointments. However, in other jurisdictions, ministers of justice are not necessarily lawyers, and non-lawyers can certainly bring a fresh perspective to issues. I hope that that might be considered.
I agree with the noble Baroness, Lady Goudie, that the roles of the First and Deputy First Ministers are strengthened. Together, they will be able to give the people of Northern Ireland confidence that the highest judicial posts in the land have been agreed across political divides. That is important and will certainly be a challenge to all the leaders in Stormont.
I move on to the changes in the Bill which alter responsibility for dealing with a police officer who may have committed a criminal offence or who, in the course of a criminal investigation, may be subject to disciplinary proceedings. The noble Lord, Lord Hylton, referred to that issue. I stress that it is better for the Police Ombudsman than the Director of Public Prosecutions for Northern Ireland to deal with those matters. However, a number of noble Lords reiterated that the Bill is not entirely clear about the way in which that is to be undertaken. Perhaps the Minister can clarify the position—particularly in relation to when the DPP has discretion on whether or not to refer a matter to the Police Ombudsman. My noble friend Lord Smith of Clifton referred to that point, as did a number of other noble Lords.
I turn to the subject of human rights. The ability of the police to be guided by one document on the implementation of human rights should be brought into effect now and not left for any revision of their code of ethics. Can the Minister give us reassurance on that point? As we have already heard, human rights guidance will not come into effect until the office of Attorney-General for Northern Ireland has been created and justice powers have been devolved. My noble friend spoke of the convoluted way in which that is being handled. Again, can we be reassured that the Government do not intend to delay the introduction of human rights standards through the criminal justice system? The noble Baroness, Lady Goudie, also raised concerns on this issue. She was not clear about the implementation of the standards, and we on these Benches share that concern.
I repeat a question asked by my noble friend Lord Smith of Clifton. Can we have further clarification on why the prosecution service appears to be exempt from having regard to human rights guidance, which will be issued by the Attorney-General for Northern Ireland, where that guidance would be inconsistent with a code of practice issued under Section 37 of the justice Act? As we heard, the new code of practice for the prosecution service is due to be published very shortly, but it seems strange that there could be any inconsistency with international human rights standards.
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With regard to the transfer of prisoners—again, an issue referred to by my noble friend Lord Smith—we certainly want reassurance from the Minister that such transfers would be undertaken only as a last resort rather than as a first reaction. The noble Lord, Lord Hylton, reminded us of the work that he has done on prisoners' voluntary transfers. He asked us not to take on compulsory transfers as a first reaction. It is desperately important to maintain security in prisons in Northern Ireland—we all believe that—and to ensure the safety of staff and other prisoners. However, we believe that it is still important to consider the rights of the prisoners' families. It should be as easy as possible for them to see their relatives in England and Wales. In that, I share the view of the noble Baroness, Lady Goudie.
The noble Lord, Lord Laird, welcomed Clause 15, which deals with arrest without warrant for the offence of driving while disqualified. I did not detect any other enthusiasm for the Bill. No doubt as we go through its various stages, we shall examine the concerns that he expressed. I was pleased to hear the noble Viscount, Lord Brookeborough, cautiously welcome the Bill, but he also voiced the same concerns about its timing rather than its content.
The noble and learned Lord, Lord Mayhew, was concerned about the tenure of judges and gave us a very detailed run-through of how he sees that aspect being improved. The noble Lord, Lord Fitt, said that the Bill was not uncontroversial. He also echoed other noble Lords who spoke about the political aspect of the Bill, and he felt that too many concessions had been given.
We shall examine all those concerns in the Committee. We shall carefully consider any amendments tabled in Committee and later stages. However, generally, we feel that the Bill is a necessary step forward in Northern Ireland's justice provision and one which, as I said at the beginning, these Benches will support.
6.37 p.m.
Lord Kingsland: My Lords, the Bill seeks to make additions and amendments to the Justice (Northern Ireland) Act 2002. My noble friend outlined the areas that give us cause for particular concern: the definition of the Secretary of State; the extent to which merit, as an exclusive criterion for appointment, is being undermined by the addition of other criteria; the changes in the rules for the appointment of the Lord Chief Justice and the Lord Justices of Appeal; and the weakening in the power of the Lord Chief Justice in respect of the removal of listed judges, who include, as a category, newly appointed High Court judges.
Although much will be said on the first three of those issues in Committee and on Report, I wish to limit my Second Reading observations to the fourth—the dismissal of listed judges. In doing so, I have had, as have all your Lordships, the benefit of the characteristically perspicacious observations of the noble and learned Lord, Lord Mayhew of Twysden.

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I make no apologies for repeating the words of the noble and learned Lord, Lord Hutton, expressed in the debate on the Second Reading of the Justice (Northern Ireland) Bill last year and already cited by my noble friend:
"It is clearly vital that a judge should be appointed on merit alone and that appointments should not be influenced by political considerations. That is all the more important in the highly charged political atmosphere of Northern Ireland. If judges are not appointed on merit, the administration of justice will suffer, as will public confidence in that administration".—[Official Report, 3/5/02; col. 969.]
What the noble and learned Lord said about the influence of political considerations on appointment applies, in my submission, a fortiori to the influence of political considerations on dismissals.
Until that Bill became law later in 2002, High Court judges in Northern Ireland could be dismissed, like High Court judges in England and Wales, only on an Address to Her Majesty by both Houses of Parliament. For reasons that were deplored by many of your Lordships in the course of Committee and Report stage debates, the Bill removed that protection, a protection that has existed since the Act of Settlement of 1701; that is to say, for over 400 years.
Following the implementation of the Justice (Northern Ireland) Act, all subsequently appointed High Court judges will be dismissable by the First Minister and Deputy First Minister jointly, following a tribunal recommendation that they be so removed on grounds of misbehaviour. However, the First Minister and Deputy First Minister could not so act,
"without the agreement of the Lord Chief Justice",
a person who himself remains removable only on an Address presented to Her Majesty by both Houses of Parliament.
Even with the blocking power of the Lord Chief Justice, I remain at a loss to understand why the Government wished to make the changes in the rules for the dismissal of High Court judges that they made in the 2002 Act. The High Court judges are the cornerstone of criminal justice in Northern Ireland and their reputation for courage and independence has never been questioned by this or any previous Government. Yet now it appears that the Government wish to go even further than the 2002 Act by replacing the expression,
"without the agreement of the Lord Chief Justice",
in the existing law, with the Clause 5 proposal, "except after consultation with" the Lord Chief Justice. In other words, the safeguard of the Lord Chief Justice's consent to dismissal is to be removed.
What conceivable reason can the Government have for making that further revision so soon after the previous legislation had found its way on to the statute book? The noble Baroness said in her opening remarks that the justice systems should not be allowed to ossify; but as the noble and learned Lord, Lord Mayhew of Twysden, has already observed, as yet we have no experience at all as to how the 2002 Act will operate. Moreover, the proposed clause seems to move away
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from one of the cardinal principles of the Convention on Human Rights, the independence of the judiciary; a principle which, together with other principles contained in the convention, is purported to be the whole basis for these further changes.
6.42 p.m.
Baroness Amos: My Lords, I thank noble Lords who have spoken in this debate. We have had a very good debate, covering some very important issues of principle: the independence of the judiciary and the prosecution and the need to ensure that respect for human rights is at the heart of the justice system.
I shall start by dealing with the wider political context, which was raised by the noble Lords, Lord Glentoran and Lord Laird. We are clear that the agreements remain the only viable political framework that is capable of securing the support of both communities in Northern Ireland. A clear majority of the people who voted in the election—70 per cent— voted for pro-agreement parties. The vast majority of the people of Northern Ireland want to see devolved government.
A number of noble Lords including the noble Lords, Lord Glentoran, Lord Smith of Clifton and Lord Laird, raised the issue of the timing and asked why a second justice Bill is necessary. As I said in my opening speech, the Bill represents a continuation of the journey towards a better and a more modern justice system for Northern Ireland. It stands on its own merits and I would contend that it will bring forward changes that should be to the benefit of all in Northern Ireland. We have already embarked on a massive programme of criminal justice reform backed by widespread public support and we want to sustain that momentum and promote a culture of continued improvement.
The noble Lord, Lord Glentoran, pressed me about the relationship between this Bill and the Bill that will be brought forward by the noble and learned Lord the Lord Chancellor with respect to changes in the constitutional reform Bill. We are mindful of the interrelationship between those two pieces of legislation. I have listened carefully to the concerns of the noble Lord and we shall ensure that there are no unjustified inconsistencies between the Bills provisions for a Judicial Appointments Commission in Northern Ireland and any wider constitutional reforms.
We shall also be mindful of the Government's decision on a Judicial Appointments Commission for England and Wales and the future role of the Secretary of State for Constitutional Affairs. We remain committed to the principle of an independent judiciary. I must underline that to all noble Lords.
With respect to the appointment of the Lord Chief Justice and Lords Justices of Appeal, which was raised by the noble Lords, Lord Glentoran and Lord Smith of Clifton, and the noble Baroness, Lady Goudie, the Criminal Justice Review recommended that the responsibility for making recommendations to Her Majesty the Queen would lie with the Prime Minister, as now, but on the basis of recommendations from the First Minister and the Deputy First Minister. That is what is being put in place.

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The noble Lord, Lord Glentoran, asked what would happen if there were a disagreement between the First Minister and the Deputy First Minister. We cannot plan for failure. Justice will be devolved only when it is clear that the local parties are able to work together. That is part of the process in which we are engaged now.
The noble and learned Lord, Lord Mayhew, and the noble Lord, Lord Kingsland, pressed me particularly on the issue of security of tenure. The noble Lord, Lord Kingsland, devoted his speech to that one issue. The 2002 Act provides a robust system to safeguard the independence of the judiciary. The provisions on removal are a part of that. A member of the judiciary cannot be removed without the recommendation of an independent tribunal which will include members of the judiciary. I underline that because I heard the concerns that were expressed around the House. Of course, I share the admiration of the noble and learned Lord, Lord Mayhew, of the judiciary in Northern Ireland and the way in which it has served the community, sometimes in very difficult circumstances. The words used by the noble Lord were that public confidence in the judiciary in Northern Ireland is high.
The noble Lords, Lord Glentoran, Lord Laird and Lord Fitt, the noble Viscount, LordBrookeborough, and the noble and learned Lord, Lord Mayhew, all raised questions about the issue of merit. Section 5(8) of the 2002 Act, as amended by this Bill, continues to make very clear that appointments must be made,
"solely on the basis of merit".
It could hardly be more plain. As I made clear in my opening remarks, we are not in the business of appointing applicants on the basis of political opinion. I say to the noble Baroness, Lady Harris of Richmond, that in seeking to ensure reflectiveness, we are trying to encourage a wider range of people to put themselves forward for consideration.
The noble Lord, Lord Smith of Clifton, and the noble Baroness, Lady Harris, pressed me on the issue of lay members and possible conflicts of interest. I fully expect that the commission will command the respect of all sections of the Northern Ireland community. The reason why we are talking about "reflective" rather than "representative", which was pushed by the noble Lord, Lord Smith of Clifton, is that we do not see members of the commission as representing any particular interest. I underline that.
The noble Viscount, Lord Brookeborough, raised the issue of the establishment of the Judicial Appointments Commission before devolution. Recommendation 77 of the Criminal Justice Review envisages the establishment of a Judicial Appointments Commission post-devolution of justice. However, it is not against the early establishment of such a commission. We seek to put this in place because we feel that things have moved on.
On bail, a matter raised by the noble Lord, Lord Laird, it is inevitable that there are some differences between provision in Northern Ireland and the corresponding legislation for England and Wales. For example, an appeal of a magistrate's decision lies to the Crown Court in this jurisdiction but would fall
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to the High Court in Northern Ireland. The provisions we have included on bail have been developed at the request of the Chief Constable and supported by the Director of Public Prosecutions.
Similarly, the power of arrest for driving while disqualified was brought forward at the request of the Chief Constable. It is the first legislative opportunity to resolve this anomaly.
The noble Lord, Lord Laird, asked why we have created a new offence of seeking to influence a prosecutor in Clause 7. We have linked the offence with the idea of perverting the course of justice so as to be clear about what would constitute criminal behaviour and avoiding criminalising apparently innocent behaviour.
The noble Viscount, Lord Brookeborough, my noble friend Lady Goudie and the noble Lord, Lord Laird, asked questions about the duty to be placed on the Director of Public Prosecutions to refer all cases of suspected police malpractice to the police ombudsman. The review recommended that a duty be placed on the prosecutor to ensure that any allegations of malpractice by the police are fully investigated. The onus is now placed on the police ombudsman—and I was pressed on this point by the noble Baroness, Lady Harris of Richmond—rather than on the director to apply discretion on how to deal with a police officer who may have behaved in a manner which would justify disciplinary proceedings or who may have committed a criminal offence.
The noble Lord, Lord Laird, pressed me on that duty. We do not intend it to apply retrospectively. We are creating this duty by amending Section 55 of the Police (Northern Ireland) Act 1998.
The noble Lord, Lord Hylton, was concerned that the duty to refer should not delay prosecutions. We do not envisage Clause 6 delaying the prosecution process. We simply want to ensure that any police behaviour which the ombudsman has an interest in investigating is drawn to her attention. It is right that any such necessary investigation is conducted by the ombudsman, who is independent of the police. The DPP has no power to conduct investigations.
The noble Lord, Lord Hylton, pressed me on whether the Secretary of State for Constitutional Affairs would have a duty to serve the interests of justice. Section 1 of the Justice (Northern Ireland) Act 2002 provides:
"Those with responsibility for the administration of justice must uphold the continued independence of the judiciary".
That, as I have stressed many times, continues to be our position.
With respect to other concerns raised by the Chief Constable, which were mentioned by the noble Lords, Lord Glentoran and Lord Smith of Clifton, discussions are continuing with the Chief Constable on his request. We are looking specifically at anti-social behaviour orders in Northern Ireland. We are also looking at racially aggravated offence legislation, which will be brought forward separately by order in council. We continue to work closely with the Chief

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Constable, in the same way as we have on bail provisions, to ensure that he has the tools he needs to tackle crime.
The noble Lord, Lord Smith of Clifton, my noble friend Lady Goudie and the noble Baroness, Lady Harris of Richmond, raised the issue of the commitment given to human rights. The Criminal Justice Review stated that listing human rights treaties and agreements on the face of a Bill would lead to confusion and unproductive litigation. Before devolution my noble and learned friend Lord Goldsmith will be responsible for producing guidance to draw attention to the correct provisions in treaties or agreements. After devolution this role will be passed to the Attorney-General of Northern Ireland. I can say to my noble friend Lady Goudie that the clause on human rights guidance is not dependent on devolution. The post of Attorney-General of Northern Ireland does exist: the office is currently filled by my noble and learned friend Lord Goldsmith.
A number of noble Lords asked why the human rights guidance does not apply to the DPP. The guidance will apply to the DPP's office.
I turn to the issue of the transfer of prisoners, which was raised by a number of noble Lords. I was pressed to say that this would happen only as a last resort. It will not be used if the particular prisoner could be dealt with in another way. The noble Lord, Lord Hylton, my noble friend Lady Goudie and the noble Baroness, Lady Harris of Richmond, spoke of the human cost involved. Prison rules already require that special attention should be paid to the maintenance of relationships between the prisoner and his family. The Northern Ireland Prison Service attaches great importance to the maintenance of family links and will meet the reasonable travelling expenses of those going to England, for example, to visit a transferred prisoner.
I turn to the issue of why the power does not include Scotland, a matter raised in particular by the noble Lords, Lord Hylton and Lord Fitt. If the power were to include Scotland, a Sewel Motion in the Scottish Parliament would be required. We would not want to presume the outcome for such a Motion, so the Bill does not at present make provision for transfer of prisoners to Scotland.
I should be very happy to arrange further briefings before we move into Committee to address specific points raised by noble Lords. I am confident that the programme of change set out in the Bill will help us to achieve our aim of enhancing public confidence by creating an even fairer, more efficient and more effective justice system in Northern Ireland.
Lord Smith of Clifton: My Lords, before the Lord President of the Council sits down, does she agree that now would be an appropriate time to welcome the
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appointment of Sir Brian Kerr as Lord Chief Justice of Northern Ireland and his immediate predecessor on his appointment as a Law Lord in this House?
Baroness Amos: My Lords, I totally endorse the comments of the noble Lord, Lord Smith of Clifton. I thank him very much for drawing the matter to the attention of the House.
Lord Mayhew of Twysden: My Lords, before the noble Baroness sits down, she will recall that a number of noble Lords have raised anxious questions about the change in the role of the Lord Chief Justice in the context of the removal of senior judges. Perhaps she will recall that I asked her some specific questions. Just now she said that the Bill stands upon its own merits. Why were those merits not perceived as recently as the legislation of last year and the Act of 2002? The noble Baroness will recall that I asked her some questions and I have not heard any answers as yet.
Baroness Amos: My Lords, I had hoped that I had made the position clear in my comments on our continuing commitment to the independence of the judiciary; the fact that there would be an independent tribunal which would look at the issue of the removal of judges. I apologise to the noble and learned Lord that I did not make it clear that—and this is partly in response to the noble and learned Lord's questions— we have continued to look at these issues since the 2002 Act. We see this very much as a dynamic process. I shall be very happy to write to the noble and learned Lord to give him some further detail on the specific questions he has raised and to meet him to talk about these questions in a little more detail before we get to Committee.
On Question, Bill read a second time and committed to a Committee of the Whole House.

Financial Statement and Budget Report
6.59 p.m.
Lord Mclntosh of Haringeyrose to move, That this House takes note with approval of Her Majesty's Government's assessment as set out in the Pre-Budget Report 2003 for the purposes of Section 5 of the European Communities (Amendment) Act 1993.
The noble Lord said: My Lords, each year, the Government report information to the Commission on our main economic policy measures. The procedure is set out in Articles 99 and 104 of the European Communities treaty, which relate to the broad economic policy guidelines, convergence and stability programmes and the excessive deficits procedure.
The objective is to ensure that member states' economic policies are consistent with the goals of the treaty, including non-inflationary economic growth, a high level of employment and social protection and better living standards for citizens across both the UK and the EU. Those goals are consistent with the

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Government's own approach to economic policy. The Government's strategy for economic policy is set out in the 2003 Pre-Budget Report, published last week.
Sharing the information in the Pre-Budget Report with our European partners allows us to influence the development of the European Union, bringing enhanced employment and growth to Britain and other member states. It is subject to the usual parliamentary scrutiny and approval under Section 5 of the European Communities (Amendment) Act 1993.
Following the sharpest deceleration in both world growth and world trade growth for 30 years in 2001, world recovery began to pick up in early 2002, but lost momentum in late 2002. At the beginning of 2003, significant global uncertainties continued to weigh heavily on short-term prospects for the world economy with confidence and demand dampened by: geopolitical tensions, including the Iraq conflict; volatility on financial and exchange rate markets; and uncertainty regarding growth prospects—in particular in the euro-area.
However, the Pre-Budget Report presents a positive outlook for the UK economy, with British inflation at its lowest for 30 years, averaging 2.4 per cent since 1997; interest rates at their lowest since 1955, at 3.75 per cent; more people in work this Christmas in Britain than at any time in our history; and economic growth that is now strengthening.
So the UK is well placed to benefit from the strengthening global recovery. Gross domestic product is forecast to grow by 2.1 per cent in 2003— within the Budget forecast range—and by 3 per cent to 3.5 per cent in both 2004 and 2005. External forecasters continue to expect the UK economy, together with that of the United States, to continue leading the major economies this year and next. The Treasury growth forecasts for 2003 and 2004 are within the range of independent forecasts.
I now turn to public finances. Sound economic fundamentals, coupled with the Government's cautious approach, mean that the Government remain on track to meet the fiscal rules over the economic cycle and that public finances are sustainable in the long term. The average surplus on the current budget is projected to be positive over the cycle, meeting the golden rule. Net debt is set to stabilise at 35½ per cent of GDP—well below 40 per cent, to meet the sustainable investment rule. The UK now has the lowest level of net debt to GDP ratio in the G7.
When the economy was especially strong, we took tough decisions in 1997 to put money aside and reduce public debt when many of our critics were saying that we should spend it. It was that prudence during the years of strong global growth, building a safety margin through cautious assumptions and reducing debt when other countries were spending, that means that Britain is in a position to borrow to invest in our schools, hospitals and transport; successfully to support monetary policy to smooth the path of the economy during a period of global uncertainty; and fully to meet our international commitments.
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Our commitment to meeting our fiscal rules is, moreover, for the long term, so we have also published a report—the 2003 long-term sustainability report— which examines the sustainability of Britain's fiscal position decade by decade and compares our position with that of other countries. It shows that, taking account of population changes and the cost of ageing on public spending, the British fiscal position in this period is sustainable and in a strong long-term position compared to other countries.
The key pre-Budget announcements also included: setting out reforms that will promote business and enterprise across the UK by improving access to finance for small business, reducing red tape and promoting a culture of enterprise; taking further steps to extend employment opportunity for all, through measures which focus help on disadvantaged groups and deprived areas; tackling child and pensioner poverty, raising the child tax credit by £180 per year and providing further help with childcare and ensuring security in retirement; promoting fairness in the tax system by ensuring that everyone who can do so contributes to the extra investment in public services; and introducing further measures to improve the environment, including proposals to tackle climate change, reduce waste and protect Britain's natural resources.
On the basis of this Pre-Budget Report, we have a success story to report to the European Union. I beg to move.
Moved, That this House takes note with approval of Her Majesty's Government's assessment as set out in the Pre-Budget Report 2003 for the purposes of Section 5 of the European Communities (Amendment) Act 1993.—(Lord Mclntosh of Haringey.)
7.6 p.m.
Baroness Noakes: My Lords, I draw attention to the entries in my name in the Register of Members' Interests. I thank the Minister for moving the Motion. It is right that the House takes the opportunity offered by it to have a proper debate on the Pre-Budget Report. The Motion might be regarded by some as something of a formality, but we certainly welcome the fuller consideration that your Lordships can give to the Pre-Budget Report in a debate such as this.
Lord Mclntosh of Haringey: My Lords, I rather teased the Opposition last week for not asking for a repeat of the Statement on the Pre-Budget Report. I did so in ignorance of the fact that it was to be debated today; I apologise to those whom I teased.
Baroness Noakes: My Lords, it is courteous of the noble Lord to say so; I was not going to mention it.
I look forward especially to the speeches from my noble friends Lord Higgins, Lord Northbrook and, of course, Lady Wilcox, who will wind up for those of us on these Benches.

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As the Minister explained, the context of our debate is not the Pre-Budget Report itself but the report under Section 5 of the European Communities (Amendment) Act 1993. The Minister explained what that report is about. It is appropriate to pause here to ascertain the relevance of the report to the European Community to our affairs.
It is clear that the Government have no current intention to take us into economic and monetary union—this side of a general election, at least; and the Chancellor's body language would suggest that some time beyond that would be an appropriate time scale. Doubtless, much will depend on the fight to the death going on between Nos. 10 and 11 Downing Street. We are promised a referendum Bill on the euro this Session, but we all know that that is simply to appease the Europhiles in the Cabinet and has no immediate importance.
The stability and growth pact is now in tatters. Only a few weeks ago, France and Germany collectively confined that pact to history. It does not apply to them; they will manage their economies as they choose without regard to treaty obligations.
It is a mystery why we bother to send a letter to Brussels about our economy. Will the Chancellor listen to what Brussels says, or will he join the Franco-German camp and tell Brussels to get its tanks off his economic lawn? I put my money on the latter. Indeed, the letter of 10th December that the Chancellor sent to Mr Pedro Solbes Mira at the Commission owned up to a deficit next year of 3.3 per cent—which is above the 3 per cent limit. But in the next breath, the Chancellor stated that that was within a prudent interpretation of the stability and growth pact. That is, Mr Brown is making up his own European compliance rules, just like the French and the Germans.
However, let us put aside that European irrelevance and concentrate on the Pre-Budget Report. The Chancellor inherited an extremely strong economy in 1997. I shall not argue that the economy is now weak, as it is not, but it has the seeds of weakness firmly sown within it. We now fear for the economy, or rather we fear for the citizens of our country, who will have to pay the price in higher taxes.
The Chancellor may well make it to the next election without an explicit tax hike, but he will have to continue with his relentless programme of stealth taxes. This Pre-Budget Report is no exception to the Chancellor's practice of hiding stealth taxes in the small print. One example is the freezing of the working tax credit and child tax credit limits, which will impose an extra burden of around £240 million, according to the Institute for Fiscal Studies. We can see in the aggregate figures that the fiscal burden will steadily increase, with the tax-to-GDP ratio reaching over 38 per cent and still rising by 2008—the highest level since 1984–85. With 60 tax rises since 1997, taxes are just short of £400 billion this year, already nearly 50 per cent higher than when Mr Brown became Chancellor.
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Let us now examine whether the Pre-Budget Report really shows that the Chancellor has a firm grip on the economy or whether it is starting to slide away from him. Mr Brown invented some golden rules as part of creating the aura of the prudent and trustworthy Chancellor. Those rules are under severe pressure, and, when we strip away some smoke and mirrors, we will find that the Chancellor may indeed be breaking his own rules.
Rule number one is that over the economic cycle the Government will borrow only to invest and not to fund current spending. Today I shall not get into the issue of the flexibility, which the Chancellor created, of defining when the cycle begins and ends. I shall take as read the Chancellor's interpretation that the cycle began in 1999 and will end in 2005–06. Mr Brown calculates that that will mean that he will have an average annual budgetary surplus over the cycle of 0.2 per cent, which, according to him, translates as headroom of £14 billion. But not only is that £14 billion down from £46 billion only eight months ago, it is calculated in a new way intended to deceive. It focuses on an average rate of surplus and thus, in effect, uprates the surpluses in the early years by inflation. The Institute for Fiscal Studies calculates the headroom on a correct basis as only £4 billion.
But the story does not end there. If one looks at the other assumptions affecting the calculations, the only conclusion that can be drawn is that the Chancellor must be crossing his fingers very tightly. I shall give just a couple of examples of the heroic assumptions lying behind those figures. First, there is a GDP growth rate of 3 to 3.5 per cent for the next two years— above trend, above independent consensus forecasts and heavily dependent on a recovery in business investment. Secondly, the figures include a bounce-back in tax revenues next year, after £5 billion of extra income tax and national insurance failed to materialise this year.
There are some unanswered questions. The rail regulator has just announced his determination of access charges, which will add another £1.5 billion or so a year to the Strategic Rail Authority's costs. I do not believe that allowance has been made in the Chancellor's calculations for those costs, which must be met under the terms of the franchise agreements. Will the Minister confirm the budgetary impact?
A detailed examination of the explanatory forecast shows that the totals are flattered by a staggering £14 billion turnaround in pension costs—from a cost in the 2003 Budget to a credit in the Pre-Budget Report—over the period 2002–03 to 2005–06. Can the Minister explain what is happening here?
There are strong grounds for believing that the first of the golden rules may well be bust over the next couple of years. But there is also another golden rule: borrowing must not exceed 40 per cent of GDP. We already know that the Chancellor's forecasting record on borrowing is tarnished. At the last election he told us that he would borrow £10 billion this year. That figure has been revised upwards at every opportunity, and last week the Chancellor admitted that it would be over £37 billion.

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In the Chancellor's figures, the percentage of GDP rises to 35 per cent by around 2005–06. Superficially, that looks okay, but we know that his figures exclude Network Rail's borrowing, as that day of reckoning has been deliberately deferred until 2007. We know that they exclude most PFI liabilities; we know that they exclude liabilities attached to meeting public sector pension obligations; and we know that they exclude the effect of all eligible people claiming means-tested benefits, including the one-third who the Government estimate will not claim their pension credit entitlement. We know that if we included all those figures, the borrowing percentage would be well over 35 per cent and, more importantly, we would see a much stronger rising trend.
All that glistens is not gold. The rules invented by the Chancellor seem to glisten and seem to be gold, but when we get close to them they look less bright, less consistent and less durable. Perhaps they are not gold after all. Perhaps they are no more than the alchemist's dream.
This Pre-Budget Report does nothing to reverse the continuing decline of manufacturing industry. It does nothing to raise activity rates, especially among work-less households. It does nothing to restore the rate of productivity growth to the levels in 1997. It does nothing to stop the dangerously high level of growth in household debt. Instead, we have rising public sector employment in unreformed and non-delivering public services.
We do not believe that the Chancellor will break his not-so-golden rules in the short term, but there will come a time when his optimistic assumptions catch up with him and he runs out of ways of fiddling the books. He will then have to raise taxes. He will eventually run out of ways to do that in a stealthy way and will have to raise income tax, or national insurance rates. If he is to avoid that outcome, he will need a miracle. I believe in miracles, but I do not believe that they are a sound basis for planning the finances of this country.
7.18 p.m.
Lord Higgins: My Lords, this is a traditional annual occasion, and the Minister, in his opening remarks, was traditionally optimistic—not as optimistic as the Chancellor in his Statement, which went way over the top. It seems that the Chancellor was more optimistic than the Bank of England Monetary Policy Committee. He forecasts for next year an increase in growth from 2 per cent to 3 or 3.5 per cent, a very substantial increase. But the Bank of England raised interest rates in November, which suggests that it is not as optimistic as the Chancellor. I ask the Minister whether the assumptions that the Bank of England Monetary Policy Committee uses in making its decisions are the same ones as the Chancellor uses— the so-called audited assumptions? If so, how do we account for the apparent difference in approach between the Bank of England Monetary Policy Committee and the Government?
The Chancellor sought to justify his optimism by two kinds of comparison—historic and geographic. In his research he might well have gone back to 1066,
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when perhaps a slight blip caused inflation, due, no doubt, to a Conservative government at the time. The Minister went further today. He said that on the population side of things it would be higher than at any time in our history.
But while it is absolutely right, as my noble friend said, that the present Government inherited a very benign situation—which has generally been taken to mean at the stage in the economic cycle that had been reached when the Government changed—that was fairly unusual. The reality is, as Mr Anatol Kaletsky has pointed out, that the improvements for which the Chancellor is taking so much credit started 10 years ago and reflect the improvements in the structure of our economy brought into operation by successive reforms under Mrs Thatcher. I was not a member of her government; I was chairman of the Treasury Committee at the time and responsible for holding her to account. But there is no doubt that the longer-term benefits of those changes are something from which the Chancellor and the entire economy are gaining. So one needs to take that into account as far as the historic comparisons are concerned.
As to geographic comparisons, the Chancellor referred to a number of comparisons with Germany, France and other countries. Of course this was justified because those countries have not carried out the kind of structural reforms introduced here under the previous government. More specifically, they have been suffering very much indeed from the fact that euro-land is now very much in an interest rate straitjacket. We are told that they have an interest rate where "one size fits all".
But it is blatantly obvious that the one size does not fit all. In fact, apart from three countries, the Netherlands, Portugal and Finland, which are more or less in line with the European Union's interest rate, for countries such as Germany, Austria, France and Belgium the 2 per cent rate is clearly too low; for Spain, Greece, Italy, Ireland and so on it is too high. These differences, as a UBS study using the well-known Taylor rule to calculate them has pointed out, are very substantial and countries in the euro-zone are suffering greatly as a result of the fact that the interest rate imposed on them—the straitjacket in which they are suffering—is under strain. This is an important reason for the Chancellor being able to point out that our performance in this country has been significantly better than in other European countries.
Following the break-down of the European summit, there has been some talk in the press during the past few days that we are moving towards a two-tier Europe. My personal view is that, while I am strongly in favour of our being a member of the European Union, there is a strong case for having a two-tier Europe in the sense that there will be countries in the euro-zone and countries outside it. For the reasons I have mentioned, the one-size-fits-all problem will become bigger and bigger as the size of the area covered by that policy widens.
This will be so, to some extent, with the new accession countries. Although the total of their economies, in economic terms, is probably only about the size of that

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of Belgium, nevertheless they will have difficulties. We would certainly have them. Indeed, I believe that, were we to join, the unbalancing effect—given the problems with interest rates and monetary policy generally— would put the system under such strain that it might well break down, despite the immense problems once one has got a single physical currency in operation.
For those reasons I believe that this is a relevant consideration in the context of the report that we are making to the European Union related to Section 5 of the European Communities (Amendment) Act 1993, the side heading of which refers to convergence, excess deficit and so on.
I leave on one side the fiasco over the stability pact and the fact that what is supposed to be a binding agreement has been broken completely by both Germany and France, and turn to the question of the Government's borrowing. The figures can be put in a more dramatic context than they were by my noble friend on the Front Bench a moment or two ago. At the time of the general election the Chancellor was anticipating that this year he would borrow £10 billion. In fact, the increase over the past eight months has been £10 billion, the size of borrowing that the Chancellor expected previously to be the total. This raises very serious questions.
When he first became Chancellor, he was anxious to stress that the burden of national debt imposed a considerable cost in terms of interest rate payments by the Treasury. Can the Minister tell the House how much extra will be paid in interest rates by the Government as a result of the increase in borrowing from the originally expected £10 billion to the now expected £37 billion or more?
There are real problems as far as financing the debt is concerned. You cannot borrow £37 billion at the same interest rate at which you can borrow £ 10 billion. While the Chancellor has given the Monetary Policy Committee control over short-term interest rates, at the time he did so he clawed back to the Treasury the responsibility for long-term interest rates in the sense that the Treasury would be responsible for funding, which in turn determines long-term interest rates. Can the Minister tell the House—I hope he can give a very clear answer—whether it is the Government's intention to fully fund the £37 billion deficit or whether they will not do so? Whether or not they do so is extremely important in terms of future inflation.
Although it is true, as Keynes often pointed out, that fashions in economics change, we used to be obsessed by the money supply. That of course is determined to a large extent by how the Government deficit is funded. I have searched in vain through this enormous tome to find any reference whatever to the money supply. But it is still not unimportant. It may be that I have missed it and the Minister can point me to the appropriate page, but certainly it is not exactly a headline in the way that it used to be.
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I fear the prospect for interest rates as a result of the Government having to fund or attempting to fund this enormous deficit. It will have a serious effect on those who have borrowed money. One only has to look at the mass of headlines which refer to,
"Spending on credit cards to go up 38%",
and,
"Christmas debt crisis",
to realise how important this is. The combination of these two things—the immense borrowing by the Chancellor, on the one hand, and the extent to which borrowing has been extended in the private sector, on the other—is potentially a very serious time-bomb indeed. I do not think that the conjunction of those two things can be ignored. To a large extent, it undermines the confidence with which the Chancellor put forward the proposals in the pre-Budget speech.
One could speak about many other issues. It is always helpful to have this debate. I merely say that, in many respects, the Chancellor's obsession with the five tests on the euro on the one hand and the golden rules on the other, combined with the absolute obsession about multiple tax credit schemes of one type or another is not a helpful way of managing the economy.
Finally, I pick up a phrase that the Minister used in his speech. He said that they were "ensuring security in retirement". That is profoundly untrue. I fear that the generation of pensioners about to retire will be significantly worse off as a result of the Government's policies than those who are retired at the moment. That is a tragic situation and reflects the way in which the Government have managed the economy.
7.31 p.m.
Lord Northbrook: My Lords, I declare an interest as an investment fund manager. I will concentrate on examining the detail of the Pre-Budget Report, and will try to demonstrate how this is not, in several ways, helping the economy. I will then examine the broader economic picture.
As usual, there were some positive details in the 2003 Pre-Budget Report, but this year I had to look a lot harder to find them. The Chancellor said that he would look at ways of widening existing tax breaks on research spending by businesses and would enhance tax relief on North Sea oil exploration, which I welcome. He also announced moves to make it easier for small and medium-sized businesses to claim tax relief on investment in new facilities and machinery. The Chancellor said that that would provide a £400 million boost to small firms over the next three years, which is welcome.
I also welcome the additional encouragement to the venture capital industry by proposing to raise the annual limit for trust and enterprise schemes to £200,000 and the increasing, for two years, of income reliefs for VCT investments to 40 per cent. I also welcome the launch of enterprise capital funds that are designed to bridge the gap for smaller businesses seeking capital in the £250,000 to £2 million range and

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the Government's decision to contribute up to two thirds of the capital of funds established to target this segment.
Plans to simplify the audit requirements for smaller companies are also welcome. The initial reaction of the head of the CBI, Digby Jones, was similar to my own. He said:
"This was a positive pre-budget report for business … but we remain concerned about the outlook for the public finances".
However, as usual, the small print of the speech needs subsequent examination. I have unearthed an interesting example of the Chancellor seeking to take back with the other hand what he gives to smaller businesses with the one hand. In its Pre-Budget coverage on 11 th December, the Financial Times states on page 10:
"Gordon Brown unveiled plans to crack down next year on owner-managers of smaller businesses avoiding tax. The Treasury said. The Government will bring forward specific proposals for action in Budget 2004 to ensure that the right amount of tax is paid by owner-managers of small incorporated businesses on the profits extracted from their company'".
The article continued:
"The Government is concerned by the scale of individuals who have taken advantage of big tax cuts in corporation tax rates for small businesses and exploited different tax rates on dividends and earnings".
But hold on, who introduced all those measures? Yes, it was the Government. In 2000, the Government introduced a 10 per cent corporation tax rate for small businesses, cutting it to zero in 2002, both of which I applaud. As the Financial Times continues, not surprisingly:
"This encouraged thousands of self-employed owners of small businesses to incorporate their businesses and",
quite legally,
"roll up their profits without paying tax and pay themselves in the form of low tax or tax-free dividends".
The Government are intent on closing the loophole which they created. How helpful is that to a small business? How can small businesses plan ahead when the Chancellor offers them incentives that he removes only a year or so later?
Is the Treasury statement true? Will the Chancellor make a national insurance charge on dividends withdrawn from those companies? That would come as a nasty sting in the tail for those small businesses that decided to incorporate.
In another area—company regulation—the Chancellor trumpets how the Cabinet Office is planning to scrap 147 regulations under its regulatory reform action plan. How does that square with the huge extra administrative burden that will be inflicted on businesses by changes affecting two very technical areas—transfer pricing and thin capitalisation? That may seem esoteric, but firms of accountants are getting very excited about the proposals in the Budget. According to the Financial Times on 1lth December,
"Grant Thornton the accountants have warned that the moves represented a stealth tax as they would restrict the ability of businesses to take advantage of some £70 billion of historical losses within UK group companies".
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PricewaterhouseCoopers director, Lyn Young, stated:
"The Government has ignored pleas for more time by businesses to adjust to what is going to be a significantly increased administration burden".
David Nixon, tax partner at Ernst and Young, stated:
"There will be a significant increase in red tape with little apparent benefit for the UK economy. UK business is footing the bill for the incompatibility of— tax law with the rest of Europe".
Will the Minister persuade the Chancellor to consult closely on this issue before the deadline of 10th February?
On the whole issue of red tape, I echo the comments of the shadow Chancellor, who said that repealing 147 regulations would not compensate for a big increase in red tape since the Government came to power. He said that:
"At his present rate, it would take [the Chancellor] 10 days to add that many regulations to the burden on business".
I now turn to the economy as a whole and to the Chancellor's forecast for GDP growth and borrowing. As has been stated, GDP growth for 2003 is predicted at 2.1 per cent. Although that is within the Budget forecast of 2 to 2.5 per cent, it is well below the forecast made at the time of the previous 2002 Budget of 3 to 3.5 per cent. How much of that 2.1 per cent growth figure will come from the public sector?
I repeat my caution expressed in July for the 3 to
3.5 per cent growth targets made for 2004 and 2005. The Minister said that the 2004 forecast was within the range. Actually, it is at the top of the range, because the average forecast quoted in the Pre-Budget Report is 2.6 per cent for 2004. I continue to be concerned about the rate of increase in the Budget deficit. In reply to my Question on 5th February 2002 about the importance of the stability and growth pact as a discipline for the UK economy, the Minister stated:
"The stability and growth pact is an additional criterion to which we pay considerable attention".—[Official Report, 5/2/02; col. 502.]
Does the Minister retain that view now that the upper limit of 3 per cent of GDP will be broken?
The Chancellor now expects the Government to borrow £37 billion in the financial year ending next March—up from a forecast of £27 billion in April and £13 billion in his 2002 Budget. The Treasury forecasts that annual borrowing will be about £30 billion in each of the next two financial years, until spring 2006, although the respected economic team at DrKW forecasts £41 billion and £40 billion for 2004–05 and 2005–06.
The Chancellor justifies his increased borrowing by saying that the Government are still on target to meet his two fiscal rules. The first is the golden rule that the Government will borrow only to invest, not to fund current spending. The second is that net public debt will be held at prudent and stable levels, which, as has been said, the Treasury has defined as being less than 40 per cent of GDP. Crucially, both are assessed over the economic cycle.

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The golden rules turn slippery under inspection. Although the Government are spending £19 billion more on current outlays than they will receive this financial year, the rule says that that is all right, as the conditions must be met only over the economic cycle. I shall not go into detail, but it seems rather arbitrary for the Treasury to have decreed that that started in 1999 and will end in 2005. Conveniently, that allows the Chancellor to count the big surpluses amassed when revenues were buoyant in the dotcom boom against the deficits now being run.
The interpretation of the rule is shaky on two fronts. First, it is far from obvious when the present economic cycle started, let alone ended. Secondly, the procedure of adjusting for the cycle is legitimate only if it strips out the impact of temporary shocks. It simply becomes an excuse for inaction when there is a permanent deterioration in the public finances, as seems to have occurred in the UK. Many independent commentators believe that the Chancellor will have to raise £10 billion in taxes but that such a move will be conveniently postponed until after the next general election.
Fiscal rules that have that level of expediency are not worth having. Voters would benefit from an independent watchdog like America's Congressional Budget Office to assess the health of the public finances. That would protect taxpayers more than the fiscal rules set by the Chancellor—the very person whom they are supposed to constrain.
The final area that I will comment on is the way in which public money is spent and whether it is spent effectively. Extra money spent on health and education is welcome but only if not wasted. The headline in the Financial Times on 12th December suggested the opposite. The paper revealed that Britain's army of regulators was costing the taxpayer £12 billion a year. It went on:
"The level of spending is likely to lead to accusations of excessive bureaucracy and waste".
It is no wonder that a Populus opinion poll last week showed clearly that a majority of voters believed that higher taxes were making no improvement to the public services, particularly to the health sector. Government statistics also prove the point. They show that, from 1999–2000 to 2001–02, health spending increased by no less than 37.5 per cent but that activity in hospitals was up only 5 per cent.
That conveniently brings me to my conclusion. Although I have no objection to increased government spending on health and education, I believe that, more and more, the general perception is that a great deal of the extra spending is unproductive. How will the Minister ensure that spending in those areas is more carefully monitored, so that it can be reported to Europe next year?
7.43 p.m.
Lord Taverne: My Lords, I was going to say something about macro-economic management, but quite a lot of it has been said and I do not want to repeat it. I start by saying that the Chancellor has been
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successful in his macro-economic management. However, I sometimes think that he should pay a little more generous regard to the foundations that were laid beforehand. The fact is that much of our steady progress was due to the actions of Chancellor Lamont, who curbed consumption at a time when that was an unpopular policy. That policy was also followed by Chancellor Clarke. Nevertheless, he has been a successful Chancellor.
I too was going to ask questions about the golden rule. There were some pertinent questions and criticisms in this week's Economist, but, as they have been put effectively by the noble Lord, Lord Northbrook, I will leave them aside. Forecasts are always uncertain. I have no idea whether the situation will improve next year. I see no particular reason why the deficit should disappear. It may be that, in due course, the Chancellor will face the uncomfortable choice between cutting spending and raising taxes. I shall say no more about macro-economic management, as it has all been said.
It seems to me that the weak spot in the Government's economic record has been their disappointing record on productivity. We must remember that, although we boast about how much more successfully we manage the economy than the wretched French or Germans, our productivity is 23 per cent below productivity per hour in Germany and, for that matter, the United States and 25 per cent per hour less than that of France. Incidentally, those figures show that the sclerotic European model of enterprise is not that sclerotic, when compared to the United States. The only reason why productivity per man is higher in the United States is that they are uncivilised about holidays and working hours. They work much longer hours and have ridiculously short holidays. The Europeans are far more civilised about hours and holidays, and their productivity is just as high—in many cases, it is higher. We fall behind it.
The Chancellor has sought to improve our productivity through a large number of tax incentives. The Government have also provided subsidies. They have not worked. The whole philosophy and approach is mistaken. One may be able to justify a particular measure by saying that it works. However, the Government's approach has made the tax system more complex—it has been distorted by the subsidies—and the overall result has been not beneficial but adverse. The Chancellor would have done better to concentrate on simplifying the tax system, instead of immensely complicating it.
That is only part of a general disease. We are the most over-regulated advanced industrial country. We have developed a mania for regulation in any number of spheres. The targets set by the Chancellor are part of the reason for that. Doctors, teachers and—most certainly—small businesses will say that there is no question but that we are grossly over-regulated. I have come across the problem running a charity concerned with drug treatment. The rules for residential care have been ridiculous. Nobody benefits from that. It is part of the no-risk society, with civil servants seeking to

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justify themselves and protect themselves against criticism. It is done by Ministers trying to protect themselves against criticism and avoid blame.
The Chancellor claims that he has made the tax system fairer. I am not sure that he can claim such a marvellous outcome, when the richest 20 per cent pay 34 per cent of their income in tax and the poorest 20 per cent pay 42 per cent of their income in tax. Apparently, there is a general revolt against taxation. I am not sure how deep it goes. Probably one of the most unpopular taxes is the council tax. I must say that I applaud the Liberal Democrats' approach to the matter.
Baroness Harris of Richmond: Good.
Lord Taverne: My Lords, I do not always necessarily agree with the Liberal Democrats. I am speaking from the Front Bench now, so I have to.
The Liberal Democrats propose that the council tax should be replaced with a local income tax. Ever since the Layfield report, I have been strongly in favour of a local income tax. That is not because it will be more popular. If the Liberal Democrats think that a local income tax will be more popular than the council tax, they may be mistaken: any new tax is unpopular. However, the great advantage of a local income tax is that it gives more independence to the local council to make a reality of local government and removes some of that centralised control, of which we have an excess in this country. In fact, one could put the same argument in favour of top-up fees, if they lessen, to some extent, the dependence of universities on centralised control. However, I would not dream of advancing that argument in my present position, speaking temporarily as a member of the Front Bench team.
There is no doubt that in this country we are over-centralised. It is a weakness of the Chancellor that he has tried to control too much. He has not achieved his goal of increasing productivity by his various efforts at target setting. He has not increased them by complicating the tax system. If we decentralised by, for example, abolishing council tax, we would do a great deal more for effectiveness and productivity in this country.
7.50 p.m.
Baroness Wilcox: My Lords, I am pleased to participate on one of the few occasions that we have in this House to debate money matters. It is a great shame that the huge wealth of experience and expertise to be found down this end is not mined more often. Whenever it is, the ensuing discussion is, without exception, of the highest quality. Tonight is no exception. We have covered a broad range of issues. I shall neither manage to mention them all nor delve too deeply into the detail of the proposals set out last week. Suffice to say that I am delighted to follow the noble Lord, Lord Taverne, who spoke interestingly and eloquently on simplifying the tax system. I am sure that we agree with him on much of that.
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My noble friend Lord Higgins asked some important questions, to which we will be interested to hear the Minister respond; in particular, the questions about the Bank of England and the monetary committee. My noble friend Lord Northbrook asked questions about small businesses and growth in the public sector, which I shall not cover, but to which I shall be interested to hear answers.
Perhaps I may outline some of the issues that are most important to us in the debate. The Chancellor painted a very rosy picture in his Pre-Budget Report. But I would suggest that he should take a closer look at the situation on the ground. The Government's record of "tax, spend and fail" is one of the most depressing truths of our present time. One could perhaps forgive—or at least see some justice in relation to—a government who taxed aggressively, but spent money wisely to the benefit of high-performing schools, hospitals or transport systems of which we could be proud. Equally, we may feel more sympathetic to a government who rigorously pursued a low tax policy and, as a consequence, had less tax revenue to inject into public services. But it seems that with this Government we are caught with the worst of both worlds.
As my noble friend Lady Noakes said, there has been 60 per cent tax rises under Labour, but what has been achieved? There are more National Health Service hospital administrators than there are beds. There are endless bureaucrats generating targets and more bureaucrats, as my noble friend Lord Northbrook outlined so well.
My noble friend Lady Noakes gave an excellent and full account of the Chancellor's "golden"—or, as we have learnt, not so "golden"—rules, to which he referred in his Pre- Budget Report. The first rule of borrowing—only to invest and not to fund current spending—is met only when dubious assumptions are made. As we have heard tonight, independent forecasts suggest that Gordon Brown's £14 billion annual surplus figure is out by a significant margin. As my noble friend Lord Northbrook rightly said, those golden rules have turned awfully slippery under inspection.
The Pre-Budget Report included an announcement that the measure of inflation will change from the old RPIX to the harmonised consumer prices index. It is claimed that that will give a better indication of spending patterns. That seems to be yet another attempt at creative accountancy by the Chancellor, given the fact that the harmonised consumer prices index fails to take account of housing costs, such as council tax. I was very interested to share with the noble Lord, Lord Taverne, what were, I think, his party's views on the subject, as well as his own, which I hope are coincidental.
Surely, it is not coincidental that in the same year as some people have experienced council tax rises well into double figures—such as the Telford and Wrekin council rises of 25 per cent—the Treasury tweaks its measure of inflation to ensure that those hikes are not included in the calculation.

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As other noble Lords have mentioned, the occasion for our debate today is Section 5 of the European Communities (Amendment) Act 1993. This calls on Parliament to assess the extent to which we are meeting the convergence criteria, especially those set out in Article 2. It states:
"The Community shall have as its task, by establishing a common market, an economic and monetary union and by implementing the common policies … the promotion, throughout the Community … a high degree of convergence of economic performance".
All the while—as has been aptly brought to the attention of the House by my noble friend Lady Noakes—the growth and stability pact is being made a mockery of by France and Germany. How are we expected to endorse ever-closer integration while an agreement at the very heart of it is being so openly flouted? It certainly does not help to boost confidence in the system that we are being asked to put our faith in.
The Pre-Budget Report that we heard last week drew a picture of the British economy that few of the listening public would recognise. The Chancellor seems to be over-optimistic in his forecasts, in denial about failures of the Government's public sector policy and oblivious to the dangers ahead that are being consolidated with every new stealth tax rise. He would do well to be more cautious or we all shall be paying the price for years to come.
7.56 p.m.
Lord Mclntosh of Haringey: My Lords, this certainly has been a wide-ranging debate, which is quite remarkable and admirable considering how few noble Lords have taken part. I congratulate the Official Opposition Benches on the way in which they have clearly considered their speeches, avoided duplication and covered the waterfront in a very effective manner. That has not always been the case, but it was tonight. I am not saying that in anything other than admiration for a professional Opposition. It was excellent. I was also glad to hear the intervention made by the noble Lord, Lord Taverne.
There are three major sections of the debate to which I must reply: first, the issues about the economy; secondly, the issues about our public finances; and, finally, the issues which relate to the stability and growth pact. I made a note that the noble Baroness, Lady Noakes, made almost no reference to the wider economy, except to say that there were seeds of weakness in the wider economy. I must say that the Opposition and Liberal Democrat Front Benches have been saying that for six-and-a-half years. They have been proved wrong on every occasion. I wish that I had political researchers available to me who could show that from Hansard and I could expound it in some detail. But I do not. However, if anyone looks back he will see that it has always grudgingly been said, "Yes,
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the Chancellor's doing quite a reasonable job now, but it's all going to come to grief in the next 12 months". It has not.
Lord Taverne: My Lords, I have not said that.
Lord Mclntosh of Haringey: My Lords, the noble Lord has not done so from the Front Bench, but the noble Lords, Lord Newby and Lord Oakeshott, have done it on many occasions.
Baroness Noakes: My Lords, with respect, I said that in the short term I did not think that there would be a problem. I was referring to more than 12 months.
Lord Mclntosh of Haringey: My Lords, that is a fair comment. The other argument that I always hear—I have heard it again from the noble Lords, Lord Higgins and Lord Taverne—is that, "It really is no credit to Gordon Brown because it was all the wonderful Thatcher government that put us in such a good position".
If anyone refers back to my closing remarks on the Queen's Speech debate on 27th November, in response to the noble Lord, Lord Marlesford, they will see how far that is from my views, but, more importantly, from the truth. Yes, I have always acknowledged that after the debacle of the fall from ERM in 1992, Chancellor Clarke, in particular, pursued policies which were continued by Gordon Brown. I acknowledge that there has been a continuity of success over a period of about 10 years.
At the same time, when one looks back at the record of the Thatcher government as a whole, all the economic indicators on which we pride ourselves now are particularly different from the failures of the Thatcher government on almost every economic indicator. Of course, we are still paying the price for under-investment in our public services over a considerable period, which is notably the period of the Thatcher government.
Nevertheless, it is the case that the United Kingdom has had 45 consecutive quarters of unbroken economic growth, which is a period of 11 years—and that is what I acknowledge. UK growth has been above that in the euro area for nine of the past 11 quarters.
We have low inflation, averaging 2.3 per cent on RPIX criteria since 1997, which is the lowest level for 30 years. Our interest rates are close to their lowest level since 1955. Unemployment is close to its lowest level for a generation at 5 per cent, while employment, as I said in my opening remarks, is at record levels. So I do believe that we are well placed to benefit from the strengthening global economy
The noble Lord, Lord Higgins, and the noble Baroness, Lady Wilcox, both made the accusation that the change to a CPI-based target for inflation was somehow suspicious. That was my impression, but if I am wrong then I apologise. However, the change to a CPI-based target is not only a precursor to joining EMU, but is worth while even outside EMU. It is a better measure of inflation for monetary policy

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purposes and we have always made it clear that it would not apply to other matters such as pensions. It allows us to compare the economic performance of the United Kingdom with that of the euro area and we believe that that is the right thing to do. Indeed, Mervyn King, the Governor of the Bank of England, also believes that.
I want to refer to the issue of the convergence programme, which is in a sense a slightly, if not a very, popular summary of the PBR. That is the document which was sent to the European Commission at the time of the PBR, subject of course, as the Chancellor always made clear, to the usual parliamentary scrutiny and approval. The noble Lords, Lord Northbrook and Lord Higgins, both accused the Chancellor of ignoring the 3 per cent obligation for the stability and growth pact. The forecast for the United Kingdom economy and public finances set out in the updated programme shows that the UK's public finances remain robust and sustainable. Net debt is set to rise from 32.8 per cent in 2003 and is forecast to stabilise at 35.5 per cent in 2008–09. Since the general government gross debt is forecast to stabilise at 41.4 per cent, one of the lowest levels in the European Union, the Government are demonstrating their continued commitment to long-term sustainability.
In keeping with the 2003 broad economic policy guidelines, the programme also demonstrates the Government's commitment to address the historic under-investment in public services in the United Kingdom, to which I referred. We have given figures for the rise in public investment in cyclically adjusted terms, with the result that both public sector net borrowing and general government net borrowing will be 2.4 per cent in 2003–04, falling in the following years.
General government net borrowing will be 3.3 per cent in 2004, falling to 2.6 per cent in 2004–05 and to 1.8 per cent by the end of the projection period. What I say, and what we have always said, about the stability and growth pact is that the United Kingdom continues to meet a prudent interpretation of the pact that reflects low-debt, long-term fiscal sustainability more generally, the need for public investment in the United Kingdom and takes into account the economic cycle.
Baroness Noakes: My Lords, I thank the noble Lord for giving way. Does he agree that the figure of 3.3 per cent does exceed the 3 per cent obligation under the Maastricht Treaty?
Lord Mclntosh of Haringey: My Lords, strictly speaking, we are not in EMU and so we do not have an obligation, but I do not seek to make anything other than a debating point. No, I do not agree with the noble Baroness. While I agree that if you take the imprudent interpretation of the stability and growth pact and if you ignore what we have always said to be the important considerations, which are the need for public investment,
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long-term fiscal sustainability and the economic cycle, then we have met the prudent interpretation, which is the only interpretation we accept.
What I add today is that we have been told by the noble Baroness, Lady Noakes, among other noble Lords that the stability and growth pact is in tatters. It is not in tatters; what has happened is that others have recognised that our prudent interpretation is right and that the rigid interpretation of the European Central Bank is wrong.
I turn now to the issues relating to public finances. I want to answer first the accusations that our public finance projections are based on unrealistic assumptions and that our forecasting has deteriorated. In fact, as noble Lords will know, at the time of the publication of the Pre-Budget Report we published, as we always do, the assessment made by the National Audit Office of the assumptions made in the report. The NAO has been asked to audit and report on the conventions and key assumptions underlying the Treasury's projections, which are submitted to the Comptroller and Auditor-General by the Treasury to ensure that they are reasonable and cautious.
The three-year rolling review of assumptions established in Budget 2000 means that the NAO can provide a check both that the assumptions remain reasonable and cautious and whether they have proved to be reasonable and cautious since they were last audited. Those who read the NAO report will see that that has been achieved.
Baroness Noakes: My Lords, I am sorry to intervene once more and I am grateful to the Minister for giving way. Does he believe that a three-year rolling review can provide in any one year a comprehensive so-called "audit" of those assumptions? In any one year, the National Audit Office reviews only some of the assumptions, not all of them.
Lord Mclntosh of Haringey: My Lords, the noble Baroness, Lady Noakes, knows far more about accountancy than I ever will. I think that is a technical question, and I will have to write to her about it. It sounds like an interesting point.
The noble Lord, Lord Northbrook, made the accusation that public finances forecasting has deteriorated. In fact—
Lord Higgins: My Lords, before the noble Lord leaves the other point, may I say that I was not querying the assumption, although the idea that the NAO audits these assumptions, in any accountancy sense, is, of course, absurd? It is not an accountancy exercise at all. My question was whether the Bank of England and the Monetary Policy Committee are using the same assumptions as the Chancellor. If so, given the Chancellor's expectation of growth, why did the Bank of England put up interest rates in November?
Lord Mclntosh of Haringey: My Lords, I had not attempted to answer that question but I was going to. The Bank of England Monetary Policy Committee is independent of government, and it is not up to me to query the assumptions it makes. We make the assumptions that we have to make and we submit to the Comptroller and Auditor-General for the purpose of the Pre-Budget Report. The Bank of England Monetary Policy Committee makes its own assumptions, and I would not dream of criticising it. I am certainly not saying that they are necessarily the same assumptions.
Lord Higgins: My Lords, I am sorry to come back on this point, but it would be really too silly if the Monetary Policy Committee and the Government were making different assumptions. This is supposed to be a unified economic policy.
Lord Mclntosh of Haringey: My Lords, the only point I am making is that I am not answering for the Monetary Policy Committee. I will not go any further than that.
The end of the year fiscal report which we have published makes it clear that our performance compares well internationally, with the United Kingdom forecast being consistently more cautious than other countries over the period 1998 to 2002. We published this report alongside the Pre-Budget Report, as noble Lords will know. The absolute average difference between forecast and outturn for 2001 and 2002 was 1.5 per cent of GDP for the OECD and 1.6 per cent of GDP for the European Commission, compared with 0.9 per cent of GDP for the Treasury. So I rebut the accusation that our forecasting is in any way deficient.
I repeat that we are on track to meet our own strict fiscal rules over the economic cycle on the basis of our cautious assumptions, with the public finances remaining sound and sustainable in the long term. The average annual surplus on the current budget over the whole cycle to 2005–06—in case I forget to say so, we have declared this to be the economic cycle for a number of years now; there is no sleight of hand there—is around 0.2 per cent of GDP. The Government are therefore on track to meet the golden rule. Public sector net debt is projected to stabilise at 35.5 per cent, which is £64 billion below the 40 per cent level and, again, comfortably meets the sustainable investment rule. We have been able to allow fiscal policy to support monetary policy to meet our fiscal rules and to safeguard the increase in investment in priority public services.
I was asked in particular about borrowing. Yes, public sector net borrowing has increased over earlier estimates, but as a share of GDP, it is only 3.4 per cent in 2003℃04, compared with 4.8 per cent in 1995–96 and 8 per cent in 1993–94, in the golden age of Chancellor Clarke.
The noble Lord, Lord Higgins, asked me how our finances compared with the euro-zone. I rather think that he was not particularly praising the euro-zone. He
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was right—our finances compare favourably not only with the euro-zone but with other G7 countries. Our deficit is below the G7 average this year and next year, and the net debt is the lowest in the G7. We are well placed to meet the challenges of a long-term ageing population, to which the noble Lord referred, and which, of course, is universal.
The question arises of whether our fiscal policy is sustainable. I referred to that in my opening speech. It is clear that our prudence during the period of strong global growth, building a safety margin through cautious assumptions and reducing debt when other countries were spending, means that Britain can now borrow to invest in schools, hospitals and transport, support monetary policy during a period of global uncertainty and meet our international commitments while still meeting our fiscal rules and maintaining a sound long-term fiscal position. That is what Keynes would have said. It makes sense to borrow in difficult times if one has already put money aside, as we have, to pay off debt in the good times. As the economy gathers pace, the public finances are forecast to improve. As the economy returns to trend, fiscal policy will need to do less to support monetary policy. As I said, the UK is forecast to have lower borrowing than the majority of major economies in 2003–04.
I shall try to deal with as many detailed points about public finances as I can, but I know that I am straining the tolerance of the House. I have dealt with the question of the economic cycle. The noble Baroness, Lady Noakes, queried our forecast of borrowing and gave figures for the increase of borrowing. Of course, those were cumulative borrowing figures over a period of time; we have sometimes been guilty of using such figures, but they can be very misleading.
Lord Northbrook: My Lords, does the Minister agree that the forecasts for Treasury borrowing have been a bit inaccurate? Could measures be put in place to improve them?
Lord Mclntosh of Haringey: My Lords, I have already made the more general point that our forecasting has been better than anyone else's. I agree that in general terms—although I shall not go further than that—forecasting borrowing is particularly difficult to do, because borrowing is the difference between two very large numbers, in receipts and expenditure. That is inherent in the issue of forecasting borrowing.
Before I leave the issue of borrowing, it is important to recognise that the short-term widening of borrowing represents our commitment to address historic under-investment in our national infrastructure and public services and to meet our international obligations, while allowing automatic stabilisers to smooth the path of the economy.
Accusations were made about taxes, and the usual accusations were made about stealth taxes. I am afraid that I shall have to repeat what I have always said; that is, that OECD figures show that the United Kingdom is a relatively lightly taxed economy. We have one of the

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lowest tax burdens in the European Union, far below the EU average and lower than France, Germany and Italy, for example. Those are OECD figures.
The noble Lord, Lord Northbrook, made a number of interesting but detailed points about small businesses. He referred to increased taxes on small businesses; however, business taxes in this country have been at a historic low in recent years. I was interested in his comments on transfer prices and capitalisation, but I have come to expect those comments from the tax partners whom he quotes. For the Treasury and the Inland Revenue, they are the
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opposition—they are the ones that we have to beat to maintain public accounts and to protect public services.
I am sure that there are other matters to which I could have responded. However, I have spoken for 21 minutes. I hope that the House will allow me to write to noble Lords about any issues that I have not covered. I shall be happy to do that. It is simply a matter of time and not, I assure noble Lords, a matter of resources that constrains me.
On Question, Motion agreed to.
House adjourned at eighteen minutes past eight o'clock.