Sitting of 14 March 2005

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

Congestion Charging
Viscount Astor Viscount Astor asked Her Majesty's Government:
What is their latest assessment of the effect of the congestion charge on businesses in London and of the effect of a substantial increase in that charge.
Lord Davies of Oldham: My Lords, the London congestion charge scheme is the responsibility of the Mayor of London and Transport for London. It is for them to assess the full range of impacts of the scheme, both for business and the wider community. We have not sought to duplicate the monitoring regime that the Mayor has put in place, but we continue to follow the scheme's progress. Any decision to increase the charge is a matter for the Mayor.
Viscount Astor: My Lords, I thank the Minister for that response. Does he agree that since London is a capital city, the Government should look at the effects of the congestion charge, particularly on businesses in the city, both inside and outside the charging area, particularly as the Mayor's consultation has not really included businesses, which are, after all, the most badly affected?
Lord Davies of Oldham: My Lords, as I indicated, it is for the Mayor to carry out the evaluation and consultation on any future changes. Of course. the department monitors the development of the scheme. The House will recognise that in certain crucial areas the department has some general responsibility. The Department for Transport states that there is an 80 per cent reduction in traffic entering the zone, a 15 per cent reduction in traffic within the zone, and there is clearly an improvement in bus reliability, which is important to many Londoners. The congestion charge has cut by 30 per cent on average the amount of traffic inside the zone, so we consider it to be a success.
Lord Bradshaw: My Lords, is the Minister aware that the John Lewis Partnership has conducted a vigorous campaign against the congestion charge, both in London and Edinburgh, through the medium of the local press? If the Government's congestion charging policy is to have any chance of success, it is essential that people really understand the impact on business. Is the Minister aware that at the same time as the John Lewis Partnership was complaining, the
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Underground was in turmoil, Americans were staying away from London, and the terrorist threat was very high? Will he make sure that some independent assessment is made of these facts, so that rumours are not the basis on which people make decisions?
Lord Davies of Oldham: My Lords, the John Lewis Partnership is an important business, but in carrying out that survey it was vulnerable to exactly the points that the noble Lord indicated. It was not able to, and did not, discount the wider factors involved. As noble Lords will recall, the catastrophic problems with the Central Line during that period had a direct impact on Oxford Street, for an obvious reason, and international factors affected foreign tourists. I agree with the noble Lord on that. It is for the Mayor of London to carry out an evaluation of the scheme. No doubt he is taking wider factors into account, which perhaps it was in the interests of the John Lewis Partnership to consider.
Lord Berkeley: My Lords, given the Government's clear statement of the benefits of the congestion charge, as my noble friend has just set out, what are the Government doing to ensure that those benefits are known more widely among other local authorities in the UK? In particular, are the Government giving some incentive within the local transport plan settlement to encourage local authorities to go for congestion charging?
Lord Davies of Oldham: My Lords, we have indicated that there are funds for initiatives that involve innovation with regard to traffic management. The whole House will recognise that road congestion is one of the greatest single factors that affects us all, but it affects cities particularly acutely. That is why cities must take their own decisions on this matter. We respect that the citizens of Edinburgh decided that the congestion charge was not in their interests. We have no doubt that other conurbations will take a rather different perspective on this, probably sooner rather than later, given that at present traffic in our city centres is controlled by bringing it to a standstill through congestion.
Baroness Gardner of Parkes: My Lords, is the Minister aware that there are quite different findings of satisfaction or dissatisfaction between the Greater London Authority and Westminster City Council, which has done its own survey? It found that 47 per cent of visitors say that the existing scheme has a negative impact and 69 per cent say that an increase in the charge from £5 to £8 would be very negative. Some 70 per cent would like the hours to be altered. Will he remind the House what power the Greater London Authority has on this? Does the Mayor have an absolute decision and can do what he likes irrespective of whether the councils affected have views on it? Or must he take their views into consideration and reconcile those differences in findings?
Lord Davies of Oldham: My Lords, of course the Mayor must take into account such important representations from any inner London local authority.

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The Westminster authority is important in those terms, although again it will be realised that many of the benefits of the congestion charge are emerging over time. Some instinctive responses in the first instance were belied by developments. I recall dreadful anxiety about the future of London theatres when the charge came in, and yet London theatres do not seem to be going through a trough in ticket sales. Of course, the Mayor must consult, but the powers and the decision are his, and he must take responsibility for any decision that he reaches.
Baroness Billingham: My Lords, my noble friend has already indicated the benefits as far as traffic congestion is concerned. What are the benefits to air quality, because that will surely be of great importance, not only for the people who visit London, but for those people who work in the businesses to which we are referring?
Lord Davies of Oldham: My Lords, I do not have figures on that, because, as my noble friend will, I think, appreciate, the congestion charge area is limited in its range and therefore in its ability to tackle pollution. The charge makes a contribution to that by reducing traffic, although part of the scheme is to increase the use of buses, which have enormous benefits and move more people, but which, nevertheless, also contribute to air pollution problems. We would need to examine the benefits of a wider area than the limited area currently covered by the congestion charge before we could evaluate effectively the environmental improvements.

Schools: Exclusions
2.44 p.m.
Lord Hanningfield Lord Hanningfield asked Her Majesty's Government:
Whether they support the decision of the independent appeal panel to reinstate a pupil at Hurst Community College, Tadley, Hampshire previously expelled for assaulting a member of staff.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Filkin): My Lords, we are committed to backing head teachers' authority when pupils' behaviour warrants exclusion. Our guidance says that we do not normally expect appeal panels to reinstate pupils excluded for serious violence. The panel must have regard to the guidance and take account of the individual circumstances of the case, all the evidence available and exercise its own judgment in reaching a decision.
Lord Hanningfield: My Lords, I thank the Minister for that Answer. His comments reinforce what we on these Benches have been thinking. In 2003, 71 per cent of appeals led to reinstatement in those schools. Given that we have just spent days discussing an education Bill that is trying to raise standards in schools, does he agree that reinstatement of those pupils who were
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excluded for violence does nothing to increase standards in our education system? It only decreases the morale and so on of everyone in the school.
Lord Filkin: My Lords, the noble Lord. Lord Hanningfield, is in danger of conflating various statistics and making two plus two equal five. In 2002–03, which is the last year for which we have statistics, there were 9,290 permanent exclusions. Of those, about 10 per cent appealed and only 149 were reinstated. Those 149 do not, of course, equate to cases of serious violence, because those would be only a small proportion of all the cases that were excluded. Only 21 per cent of appeals were found in favour of parents, which does not indicate that the system is collapsing, nor is it right that parents are deprived of their right, if their child is excluded, at least to have the case put as to why they think that their child should not be excluded.
Having said that, only 1.6 per cent of permanently excluded pupils were reinstated—I repeat, 1.6 per cent—and a very small proportion of those would have been involved in violence, real or threatened.
Baroness Walmsley: My Lords, what type of training do the members of the independent appeals panels receive? What are the Government doing to look at the root causes of the type of ill discipline that sometimes leads to those serious situations, such as family problems requiring family support services, the need for mental health services for teenagers and, in some cases, inappropriate curriculum?
Lord Filkin: My Lords, the noble Baroness, Lady Walmsley, is right that the training of independent appeals panels is crucial. We changed the process in 2003, so that there are now three-member panels, comprising a head or recently retired head teacher, a governor or recently retired governor and an independent chairman. There is training and advice provided by the department on how they should conduct their work. Training and advice is also provided to clerks to ensure that they approach their work fairly and objectively in looking at the evidence.
The noble Baroness is also right that one must look behind the immediate behaviour as well, to see how one can shift the behaviour of pupils or what parents can do themselves to try to make it less likely that pupils will seriously misbehave and, therefore, be at risk of exclusion. I strongly support the thrust implied in her question.
Viscount Tenby: My Lords, does the Minister's department keep annual statistics of the number of serious attacks made on teachers, as is the case in Scotland? If not, why not? I declare an interest, as my daughter is a teacher.
Lord Filkin: My Lords, we certainly keep statistics on all the attacks on teachers that lead to disciplinary action and either temporary or permanent exclusion. I shall double-check whether, in the rare cases when serious

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attacks did not lead to temporary or permanent exclusions, we also have data. But I would expect so, because I agree with the noble Viscount; it is extremely serious when a member of teaching staff or any other member of the school workforce is attacked by a pupil.
Lord Elton: My Lords, the return of a pupil to a school which has declared that that pupil is unwelcome and should leave it for good creates an extraordinary situation in the school and an extraordinarily difficult relationship between the excluded child and the unwelcoming school. What training is given on how to handle the situation and what relations are there between the school and the panel which would enable the panel in some way to make this an easier transition back?
Lord Filkin: My Lords, first, we changed the guidance to independent appeals panels so that they could find in favour of a parent—in other words, they could find that the exclusion was not justified—but at the same time decide not to reinstate the pupil into that school. One can well see that there would be circumstances when that was a healthy piece of flexibility.
Over and above that, the panel is entitled to make a judgment, weighing up the interests of the pupil and the interests of the wider school community. That could bear directly on the issue raised by the noble Lord, because the question is not simply whether that child should he put back. There are, of course, many other routes for either temporarily or permanently excluded pupils. Clearly, those include time in pupil referral units—we have nearly doubled the number of places over recent years—and learning support units. Therefore, we do not think that there is a crude necessity simply to force pupils back into a specific school when it might not be in the interests of the wider school community, even though there might be an arguable case for doing so in relation to the pupil.
Baroness Trumpington: My Lords, from the pupil's point of view, what are the mechanics of putting the case for him to be sent back to a school where no doubt he has seriously misbehaved and, if he does go back, he will meet a great deal of antagonism from various parts of the school? Who will represent his case before this panel?
Lord Filkin: My Lords, in part, the figures bear out what the noble Baroness is implying. Of the 9,000 or so permanent exclusions that I referred to earlier, only 10 per cent of those involved appeal. There are very many reasons why the 90 per cent do not appeal but undoubtedly one would be whether it was thought by the parents or the child to be in their interests to push for a return to that school. Of course, the child still has a right to education but that responsibility falls back on the local education authority.
Going further, in terms of rights, clearly it is the parents who put forward the case. As part of the Education Bill, we discussed whether one should go
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further and also allow pupils a right of hearing as part of the processes, and we have been reflecting on that.

National Lottery: Tickets
2.51 p.m.
Lord Clement-Jones Lord Clement-Jones asked Her Majesty's Government:
Whether they have any plans to abolish the duty payable on lottery tickets.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, the taxation of the lottery is a principle that has been accepted by Parliament since the lottery was established in 1994. The lottery is a mainstream gambling activity and., like other gambling activities, should make a contribution to revenues for the funding of essential public services.
Lord Clement-Jones: My Lords, I thank the Minister for that rather disappointing reply. Out of a £1 National Lottery ticket, 50p goes on prizes, 28p goes to good causes and 12p goes on lottery duty. Something of the order of £10 billion has gone to the Treasury over the past 10 years, or £500 million each year. Is it not time that the Government reconsidered the recommendation made at almost exactly this time last year by the Culture, Media and Sport Select Committee so that that sum is available for good causes, especially with the creation of the big lottery fund, which means that the Government will control just that much more lottery spending?
Lord McIntosh of Haringey: My Lords, the basis on which the 12p in the pound calculation was made in 1994—by the previous administration, I hasten to say—was that it would replace the loss to the Revenue of taxation on other forms of gambling or, indeed, other forms of charitable giving. I agree that that is more than 10 years ago and it is certainly true that the matter should be, and is being, kept under review. The Treasury evidence to the Commons Select Committee gives credence to that point.
Lord Tomlinson: My Lords, can my noble friend give us any advice and guidance on how far the Exchequer would become dependent on the revenue from the lottery in making up the shortfall following the Liberal Democrats' proposed 50 per cent taxation rate on those earning a salary off £100,000? Is my noble friend of the opinion that there would be enough money from that source to fund all the promises made by the Liberal Democrats?
Lord McIntosh of Haringey: My Lords, this is Starred Questions. I do not have time to list the spending commitments of the Liberal Democrat Party. I would

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keep your Lordships here all night and that would be quite unreasonable. But certainly the lottery duty brings in £559 million a year, and that should be added to the long list of Liberal Democrat commitments.
Lord Roberts of Conwy: My Lords, can the noble Lord, in his omniscience, tell us whether the original justification for the 12p—as compensation to the Exchequer for other duties lost—has in fact proved to be correct?
Lord McIntosh of Haringey: Yes, my Lords. To be precise, research was carried out after the lottery came into force in 1994. Clearly the question of how much other revenue is lost is not a matter of official statistics; it is a matter which has to be examined by research, and that was certainly true at the time or in the years immediately after the lottery came into being. I cannot say whether calculations have been carried out more recently.
The Lord Bishop of Worcester: My Lords, given the figures that the Minister gave us and given the current proposals in the Gambling Bill, does the Minister occasionally think that there might be a risk that the Government will acquire such a vested interest in people gambling that it will make it very difficult for them to address the many social evils which follow when gambling increases to the extent that it has?
Lord McIntosh of Haringey: My Lords, that is an interesting extension of the original Question, although I acknowledge that the right reverend Prelate has succeeded in basing it on the answers that I have given to the Question. Revenues from any kind of gambling, including from the lottery, are a very small part of the revenues of this country—something less than 1 per cent. Therefore, I find it difficult to believe that policy could be dictated, or even influenced, by that degree of contribution to revenues.
Lord Renton: My Lords, having never asked for one of these lottery applications to be sent to me, I find that they now come to me in ever-increasing numbers—the total has reached more than 60 a week—but I have never become rich as a result. Is the state benefiting from this ever-increasing number?
Lord McIntosh of Haringey: My Lords, I am afraid that I do not really follow the question from the noble Lord, Lord Renton. The National Lottery, which we are talking about, requires people to buy National Lottery tickets. I do not know to which applications the noble Lord is referring.
Lord Brooke of Sutton Mandeville: My Lords, as the beneficiaries of the lottery in 1994 were agreeably surprised that the figure was struck as low as 12 per cent, does that suggest to the Minister that, as in so many other things, Ministers at that time got it about right?
Lord McIntosh of Haringey: My Lords, I should have looked at Dod's or Who's Who before answering this Question.

Council Tax
2.58 p.m.
Baroness Hanham Baroness Hanham asked Her Majesty's Government:
Whether they intend to reduce or review the level of council tax paid by households consisting of persons over 65.
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, the policy of the Government is to provide council tax benefit for people on low incomes, whether or not they are aged 65 or over. The independent inquiry into local government funding headed by Sir Michael Lyons is due to report by the end of 2005 and is considering how best to reform council tax to make it fairer and more sustainable.
Baroness Hanham: My Lords, I thank the Minister for that reply. Is he aware that since 1997, when this Government came to power, council tax has risen by more than 76 per cent? Does he agree that the effect on pensioners is that 25 per cent of their state pension is now absorbed by the council tax, and is he not aggrieved that they have been particularly badly hit by this disastrous increase? Will the Minister say whether the Government intend to adopt or, indeed, purloin the Conservative Party's promise to provide a discount of up to £500 to all households consisting of persons over the age of 65?
Lord Rooker: My Lords, this is a very political Question, if I might say so. It is typical of the Conservatives—the very poorest pensioners in the country, who have received tremendous benefits from the Government, would not gain a penny piece from this Conservative Party plan. They would not receive a penny piece because they do not pay council tax. Let us make that clear. Of course, the one thing that we must do is ensure that more pensioners claim council tax benefit. We accept that there is an issue of people missing out, but pensioners are much better off than they were eight years ago. I accept that council tax has increased, but so has government grant to councils. I can say with the full authority of the Treasury that large council tax increases are a thing of the past.
Baroness Thomas of Walliswood: My Lords, does the Minister agree that one of the other disadvantages of the proposal advanced by the noble Baroness, Lady Hanham, is that poor people of different ages, young poor people, would still be paying the full level of tax? Can he assure us that when the inquiry comes to report, the question of fairness of taxation and the association of the level of taxes with the income of the householder will have been thoroughly considered?
Lord Rooker: My Lords, I can tell the noble Baroness that Sir Michael Lyons's inquiry is open-ended in that respect; it will consider all aspects of council tax and other possible revenue sources for

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local government that could be more related to income than council tax. We fully accept that that is an issue but, as I said, we have done other things for pensioners, including providing the lump sum of £150 for the past two years to assist with council tax, although it can be spent on other things, and the winter fuel allowance. We are not even certain whether those would be abolished by an incoming Tory government, if there was one.
Lord Maxton: My Lords, will my noble friend take the opportunity to remind the House who introduced the council tax in the first place, in replacement of the poll tax? Secondly, does he agree that it would be totally immoral for the vast majority of Members of this House to receive £500 as a subsidy from any government?
Lord Rooker: My Lords, I was not going so to upset the House as to request that it might be a good idea for most Members to declare an interest in this Question. I do not have one myself at present. Grey power is important. as everyone found out last week, as exercised by your Lordships' House. But the fact is that we must find ways to raise local revenue. We all understood why the rates were unpopular. The poll tax was even more unpopular. The interaction of the council tax is now such that it justifies a good look from a clean sheet and that is what Sir Michael Lyons is doing.
Baroness Gardner of Parkes: My Lords, is the Minister aware that many of us feel that the nice handouts to councils this year to keep council tax at a reasonable level have a certain relationship with the forthcoming general election? I know that the noble Lord can never speak for the Treasury and says that it is impossible to deal with, but I would like him at least to pass on to the Treasury the feeling that it is all very well to be helping the poorest people now but, after the general election, if council taxes have to go up quite a lot, middle-class people will be very adversely affected. Will the Government then change the criteria for determining who would be helped if Labour is in government?
Lord Rooker: My Lords, let us be clear. Since 1997, spending on pensioners has risen by £10 billion, £7 billion of which is more than if the basic state pension had increased in line with earnings. So we are way ahead in what we have done. We have concentrated a lot on poorer pensioners. As for doing things and then claiming credit at the general election, I fully accept that I think that the winter fuel payment was a good idea and I have no doubt that we may claim some credit for that at the general election. Reducing value added tax on fuel from 8 per cent to 5 per cent was a good idea. Free eye tests for the over-60s was a good idea and I think we might claim some credit for that at the general election. Free TV licences for the over-75s was a good idea and we may well claim credit for it at the general election.

Business
Lord Davies of Oldham: My Lords, with the leave of the House, following the speech of the noble Baroness, Lady Harris of Richmond, my noble friend Lord Triesman will repeat a Statement that is being made in another place on the Commission for Africa report.
As the House will know, the Second Reading debate has attracted 38 Back-Bench speakers. If each contribution were to last about seven minutes, the House should rise at around eleven o'clock; eight minutes and the House should rise by half-past eleven.

Business of the House: Standing Orders 41 and 47
3.3 p.m.
Lord Davies of Oldham: My Lords, I beg to move the first Motion standing in the name of my noble friend the Lord President on the Order Paper.
Moved, That Standing Orders 41 (Arrangement of the Order Paper) and 47 (No two stages of a Bill to be taken on one day) be dispensed with on 16 March to allow the Consolidated Fund (Appropriation) Bill to be taken through its remaining stages that day before the Motion in the name of the Baroness Sharp of Guildford.—(Lord Davies of Oldham.)
On Question, Motion agreed to.

Business of the House: Standing Order 47
Lord Davies of Oldham: My Lords, on behalf of my noble friend the Lord President, I beg to move the second Motion standing in her 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 on 23 March to allow the Income Tax (Trading and Other Income) Bill to be taken through its remaining stages that day.—(Lord Davies of Oldham.)
On Question, Motion agreed to.

Business of the House: Unstarred Question
Lord Davies of Oldham: My Lords, on behalf of my noble friend the Lord President, I beg to move the third Motion standing in her name on the Order Paper.
Moved, That the following Unstarred Question be referred to a Grand Committee—
The Baroness Gould of Potternewton—To ask Her Majesty's Government what progress has been made on the plan of action agreed at the United Nations World Conference on Women held in Beijing in 1995.—(Lord Davies of Oldham.)
On Question, Motion agreed to.

Electoral Law Act (Northern Ireland) 1962 (Amendment No. 3) Order 2005
Lord Davies of Oldham: My Lords, on behalf of my noble friend the Lord President, I beg to move the fourth Motion standing in her name on the Order Paper.
Moved, That the draft order be referred to a Grand Committee.—(Lord Davies of Oldham.)
On Question, Motion agreed to.

Serious Organised Crime and Police Bill
3.5 p.m.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, I beg to move that this Bill be now read a second time.
I would be the first to acknowledge that this is a wide-ranging Bill. It is concerned with a number of diverse issues, but there is a common thread running through each and every one of them; namely, to make our communities safer. The Bill will strengthen our ability to tackle criminality at all levels, from the international drug barons and people traffickers to low-level crime and anti-social behaviour.
I am gratified by the wide measure of cross-party support for the large majority of the provisions in the bill, I am sure that that support will be echoed during our proceedings and that the constructive dialogue that started in the other place will be completed in your Lordships' House during the debates that we are no doubt to enjoy.
That is not to say that there are not differences of opinion on some of the key issues, nor that we should not properly discharge our responsibility to scrutinise carefully the legislation that comes before this House. As its Short Title suggests, at its core the Bill is about tackling serious organised crime. There is nothing glamorous about organised crime, as some film-makers would have us believe. Its devastating effects can be seen across the length and breadth of the country. Organised criminal gangs supply the drugs that feed much of the
crime at local level and ruin individual lives ravaged by addiction. They supply the illegal migrants who are exploited as modern-day slave labour or as sex workers. And they supply the guns that can cut down innocent victims caught in the cross fire between rival street gangs.
Organised crime costs this country a minimum of £20 billion a year. That is by any reckoning a significant sum. The challenge that we have set ourselves is to make the United Kingdom the most hostile climate for organised criminals to operate in. The White Paper, One Step Ahead, published this time last year, set out our strategy for meeting that challenge and defeating organised crime. We have already achieved significant successes. I pay tribute to the National Crime Squad, the National Criminal Intelligence Service, Customs and Excise and the Immigration Service for their considerable achievements in helping to put organised criminal gangs out of business.
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In the 18 months to the end of 2003, we have disrupted or confiscated 11 tonnes of heroin and 26 tonnes of cocaine. Last year, 2003–04. the joint National Crime Squad and Immigration Service Immigration Crime Team disrupted or dismantled 46 organised immigration crime enterprises and made 115 arrests. In the same year the police, Customs and other agencies recovered £54.5 million in criminal assets.
We must not, however, underestimate the challenges ahead. To stay one step ahead of organised crime we need to ensure that we have the right structures in place and the necessary, but proportionate, powers at the disposal of law enforcement agencies. There is wide acceptance that, if we are to make the necessary step change in the quality of our effort against organised crime, we need to remove existing organisational barriers which are an impediment to success.
It makes no sense for there to be an organisational divide between the gathering and dissemination of intelligence and the operational uses to which such intelligence is put. Nor does it make sense for much of the national effort against serious drug trafficking to be split between Customs and the National Crime Squad.
The establishment of the Serious Organised Crime Agency (SOCA) will lead to a sea change in our response to organised crime. I should emphasise that in setting up SOCA we are not simply bolting together the whole or part of four existing organisations and putting a new name-plate on the door. If that was the result of Part 1 it would be to miss an opportunity.
SOCA will be more than the sum of its parts. It will need to be if it is successfully to bring together some 1,200 Customs officers, 1,000 police officers, 70 immigration officers and 2,300 other staff from existing agencies. The status of those staff has been one of the running issues of contention in relation to Part 1. Clearly, if we were creating a new national police force it would be appropriate to staff it with police officers. But that is emphatically not what we seek to create. Indeed, we have always shied away from creating a national police force in this country, but that—perhaps I may respectfully say—is the natural consequence of the approach of Her Majesty's loyal Opposition. I can anticipate that that may not be the intention, but it is what we say would be the effect.
In reducing the harm caused by serious organised crime, SOCA will not restrict itself to the traditional investigation and prosecution methods of the police service. Of course, such methods will have a legitimate place in SOCA's armoury, but the agency will want to use all the methods at its disposal to disrupt and defeat organised criminal networks. Such methods will include international action to disrupt the supply of drugs, the confiscation of criminal assets, regulatory action against accountants and others who support criminal enterprises, and preventive action to strengthen the defences of, for example, the financial services industry, against serious fraud. These are not activities which inherently must be undertaken by police officers.

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What is important is that SOCA staff have the necessary skills and training to undertake their duties in accordance with the high professional standards set by the agency. It is for this reason that we have now included in the Bill a requirement on the director general to satisfy himself that a member of staff has the necessary training before any police, Customs or immigration powers are conferred on that individual. We should value the professionalism and dedication of all the staff who are to join SOCA, whatever their background, not just the status of a minority of staff who currently hold the office of constable.
Some concerns have also been expressed about the powers of the Home Secretary in relation to SOCA. We firmly believe that such concerns are misplaced. Part I confers on the Home Secretary no greater powers than those currently vested in him in relation to the National Crime Squad and the National Criminal Intelligence Service. Indeed, the reverse is the case as we are forgoing existing powers to make regulations governing, for example, the terms and conditions of staff.
The Bill provides for the Home Secretary to appoint the majority of members of the SOCA board. However, four out of 11 will be ex officio members, appointed by the director general without reference to Ministers. Typically, for other non-departmental public bodies all board appointments are made by Ministers.
The Bill also provides for the Home Secretary to set the strategic priorities of the agency. As Sir Stephen Lander, the chairman designate of SOCA, has made clear, determining the overarching priorities for a law enforcement agency, such as SOCA, is essentially a political judgment which properly falls to Ministers to make. My right honourable friend the Home Secretary sets the national policing priorities and the objectives for NCS and NCIS. So, again, we are not breaking any new ground.
As I have made clear, the changes provided for in Part 1 are only one aspect of our wider strategy to defeat organised crime. We need also to equip SOCA and other law enforcement agencies with new, appropriate powers so that they can more effectively target organised criminal enterprises and those that help to sustain them.
The provisions in Part 2 are directed to that end. We have provided for the extended use of the existing powers available to the Serious Fraud Office and others to compel people to co-operate with investigations by producing documents or answering questions. We suggest to the House that if such powers are available in complex fraud cases or for the investigation of offences under the Companies Act, there can be no objection, in principle, to making such powers available to SOCA and to the police for use in the investigation of other serious and organised crimes.
The Government fully accept that any extension of such powers must be subject to the appropriate safeguards. Accordingly, we have provided that the powers will be exercisable only by prosecutors and may be used only in the investigation of a limited number of serious offences that are listed in the Bill.
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We have also incorporated appropriate safeguards against self-incrimination and to protect privileged information.
Elsewhere in Part 2, we seek to place Queen's evidence on a statutory footing. It is already well established in case law that offenders who plead guilty and co-operate with the prosecution should be eligible to receive some reduction in their sentence. But we want to encourage greater use of Queen's evidence. We believe that by providing for a system of binding agreements between defendants and prosecutors, all those involved will have greater confidence in the process. That will not only help persuade more members of organised criminal gangs to co-operate, but will also strengthen the credibility of the testimony that they provide.
We recognise that informants will want to be satisfied about their own safety before turning Queen's evidence. Accordingly, we have also provided in Part 2 for the existing arrangements for witness protection to be placed on a statutory footing. Chapter 3 of Part 2 provides for the imposition of financial reporting orders as one part of a sentence. Such orders will act as a deterrent to reoffending, but could also provide a valuable source of intelligence where an offender returns to crime.
Finally, this part of the Bill also makes a number of timely amendments to the Proceeds of Crime Act 2002. The amendments have two purposes. First, they would enable the faster and more efficient execution of the Assets Recovery Agency's business, particularly in civil recovery cases. Secondly, the changes to the 2002 Act will reduce the regulatory burden on financial and other institutions in making suspicious activity reports to NCIS, and in future to SOCA, where these are of limited intelligence value.
Part 3 concerns the powers of police officers set out in the Police and Criminal Evidence Act 1984 and of designated staff set out in the Police Reform Act 2002. I want to focus on three elements of that part of the Bill.
The new framework of arrest powers provided for in Clause 106 has attracted considerable comment. I must say that much of that has been based on what we believe to be a misunderstanding of the current law. It is often not appreciated that under the existing provisions in Section 25 of PACE, a police constable may already make an arrest for any offence where one of the general arrest conditions is satisfied. In providing for any offence to be arrestable, subject to a necessity test, we are not therefore breaking wholly new ground. That there is confusion is perhaps not surprising given the complexity of the current law on arrest powers. This reinforces the case for a reform which brings greater clarity and transparency to the law from the perspective of both the police officer and the citizen.
Clauses 116 and 117 provide for the appointment of staff custody officers as an alternative to custody sergeants. I should emphasise that there is nothing in these clauses that would require forces to appoint staff custody officers. The decision will be entirely in the hands of the individual chief officers. That said, a

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number of forces are keen to go down this path, not least because chief officers have found it difficult to find police sergeants willing to take on this role.
It has been suggested that the position of custody officer is such that only an experienced police sergeant can fulfil the role. I make it plain that we do not accept that argument. The arguments tend to have a familiar ring to them. We have heard them on a number of occasions when a whole host of other specialist functions, previously undertaken by police officers, were passed over to civilians. In those other cases it has been clear that civilians have been able to discharge their duty with propriety and care in a sound way.
I acknowledge the concerns that have been expressed. particularly about the ability of police staff to be in a position to make effective decisions about a person's detention. That is why we are prepared to pilot these provisions. We will discuss the format of the pilots with stakeholders and place particular focus on the practical application at the police station and the decision-making process.
Furthermore, we will ensure that the pilots are independently evaluated and consult on the results of that evaluation before any decision is taken to roll out these provisions across the country as a whole.
Finally, Schedules 8 and 9 extend the powers of community support officers and other designated and accredited staff. The new powers of CSOs include those to search persons for alcohol and tobacco; powers to deal with the night-time economy and alcohol-related anti-social behaviour, and powers to deter begging and to enforce by-laws. These new powers are entirely in keeping with the existing role of the CSOs in tackling anti-social behaviour and a range of other low-level problems which can impact adversely on the quality of life in our communities.
Evidence from local forces shows that CSOs are already making a real difference to public confidence and police effectiveness. For example, the interim report of the national evaluation of CSOs, published in December 2004, showed that in Northumbria public satisfaction with the police has risen by 32 per cent in areas where CSOs patrol. We want further to increase their effectiveness.
Nothing can be more frustrating for community support officers than to be faced with a problem which they know is within their capabilities to address, but which they are powerless to do anything about. This is not about mission creep. but giving CSOs the practical powers they need to deal with low-level anti-social behaviour. CSOs are an additional, complementary resource; they are not a substitute for fully trained police officers. The record number of police officers—up by 13,000 since 1997—is a testament to that.
Part 4 of the Bill and Clauses 142 to 146 in Part 5 raise important issues around the balance between the rights of society as a whole and individual liberties. In a democratic society. everyone has the right to protest and to voice their opinions. But such rights are not absolute, particularly where they infringe the rights of others.
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I would like first to accept that there will be those who are passionate in their opposition to any form of animal experimentation. They should be able to campaign vigorously on this issue and seek to persuade others of their point of view. But what they are emphatically not entitled to do is to use campaigns of harassment, intimidation and violence to prevent others going about their lawful business.
Such illegal behaviour cannot be tolerated and we are determined to do all we can to protect the bioscience industry and its suppliers from the vicious campaigns by animal rights extremists. The work of this industry is critical to improving the health of the nation. If we are to make further advances in medical science—for example, a cure for Alzheimer's—it will continue to be necessary for the foreseeable future to use animals in research. We will not permit the extremist element to deflect the Government from their proper and vital work in this area.
The Bill strengthens the protection afforded to the bioscience industry, and those who work in it, in a number of respects. Clauses 121 to 123 tighten the law on harassment including by making it an offence to protest outside a person's home in a way that causes harassment, alarm or distress to the residents of that home.
Clauses 142 to 146 seek to extend greater protection to animal research organisations, including breeding establishments supplying animals for use in animal research. In particular, these clauses will make it an offence to interfere with contractual relationships with the intention of harming an animal research organisation or to intimidate persons connected with such an organisation. These offences will attract a sentence of up to five years' imprisonment.
We have seen that animal rights extremists now commonly target the immediate suppliers of animal research organisations or even the suppliers of those suppliers. These new offences will send a clear message to the extremists that their tactics will not be allowed to succeed.
I come now to what is undoubtedly the most hotly debated of the provisions in the Bill; namely, the offence of inciting hatred against persons on religious grounds. Let me begin by acknowledging the common ground between the parties. All sides of this House will share the Government's abhorrence of those who seek to whip up community tensions by inciting hatred against those who hold a particular religious faith. Today, Muslims are often the target. In the past it has been Jews, but tomorrow it could be Christians, Hindus or indeed those of no faith.
In utterly rejecting the language and activities of far right groups and extremists from within faith communities, there is a broad acceptance of the need for some greater protection for faith groups. The argument is no longer about whether a strengthening of the law is needed, but rather about the form it should take. It is a question with which this House has grappled for some time. It is certainly one that the members of the Select Committee on Religious Offences. chaired by the noble

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Viscount, Lord Colville of Culross, considered at length, but on which they could not reach consensus on the way forward.
For our part, we have looked at a number of options, including those put forward by the parties opposite. We have concluded that the most effective means of affording greater protection to faith groups is by extending the existing offences of incitement of hatred against persons on racial grounds so that they also capture incitement of hatred on religious grounds.
As this Bill has progressed it has been interesting to see how the arguments against this provision have shifted. At first, the debate was about whether the offence would have the effect of gagging comedians. As we have explained the nature of the offence, that argument has subsided.
I acknowledge that there are still concerns about the impact of the offence on freedom of speech. There is no denying that there will be some impact: after all, we are seeking to curb the use of vitriolic language designed to incite hatred. But this provision of the Bill will categorically not restrict the ability of any person to proselytise their religious faith or to comment on or criticise the teaching of any faith or the religious practices of any faith group.
There are no fewer than six safeguards to protect religious discussion and debate before a case even reaches court. First, for an offence to be committed a person must use threatening, abusive or insulting words or behaviour. Secondly, there must either be an intention to stir up religious hatred or a likelihood that the words or conduct will do so. Thirdly, the offence is directed at the incitement of hatred; this is a strong emotion which goes beyond contempt or ridicule. Fourthly, the offence is not concerned with hatred of religion. but with hatred of a group of persons defined by their faith or lack of it. Fifthly, the offence does not bite in relation to words uttered by a person in his own home. Sixthly, any prosecution must be sanctioned by the Attorney-General. Taken together, these tests set a high threshold against inappropriate or unwarranted prosecutions and in so doing ensure that freedom of expression is properly protected.
The argument that has now come to the fore is that the new offence would raise expectations among faith groups that cannot and will not be realised. We find this a difficult argument. There must be many instances where this House has passed legislation in the knowledge that at least some of the proponents of the legislation have ill-founded expectations about what it will achieve or is designed to achieve. That should never be an argument against passing new laws, if those new laws are merited. But it is an argument in favour of properly explaining the purpose and effect of any new laws.
Perhaps I may contribute to that process by dispelling the myth that the Muslim Council of Britain believes that the new offence would put a stop to people being rude or insulting about Islam. Iqbal Sacranie has made it perfectly clear that the new law offers no protection for the Muslim faith, but does seek to protect persons who hold that faith.
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We suggest that the time for this new offence has come. We have already discussed it at great length in the context of the Government's Anti-terrorism, Crime and Security Act 2001 and again in 2002 in the context of the Religious Offences Bill introduced by the noble Lord, Lord Avebury. We also note that in 2001 there was strong support from a number of noble Lords on the Benches opposite, notably from the noble Lord, Lord Dholakia, who said:
"The Minister would have our full support if legislation that was separate from the anti-terrorism Bill was involved".—[Official Report, 27/11/01; col. 211.]
As recently as last November, during the debate on the Queen's Speech, the noble Lord said:
"Legislation to outlaw incitement to religious hatred is welcome".—[Official Report, 29/11/04; col. 279.]
In the light of that endorsement, I hope that noble Lords will feel able to support the legislation. We understand how difficult this issue is, but we believe that the time has come.
I want to touch briefly on the other provisions in the Bill; namely, the clauses dealing with demonstrations in the vicinity of Parliament Square. This is an issue on which all Members of the House will have a view, although I am conscious that the noble Viscount, Lord Tenby, and the noble Baroness, Lady Knight of Collingtree, have taken a particular interest in the matter.
Let me make it clear that Clauses 129 to 135 are not about denying the right of protest. These clauses would require protesters to give prior notice of their protest to the Metropolitan Police Commissioner, but he is then obliged—I emphasise the word "obliged"—to authorise the demonstration. It will, however, be open to the commissioner to attach conditions to the authorisation where it is necessary, for example, to safeguard the operation of Parliament or to prevent a security risk in the area.
I am conscious that concerns have been expressed about the requirement to give at least six days' notice of any demonstration. The Government are sympathetic to the view that there should be provision for a shorter notice period in exceptional circumstances and I intend to bring forward appropriate amendments in Committee to provide for this.
Baroness Williams of Crosby: My Lords, I thank the Minister for giving way. Will she say a little more about the vicinity? If it is up to one kilometre, it will include Trafalgar Square as well as Parliament Square, which is the classical, traditional place for spontaneous demonstration. In the light of the praise which many of us heaped upon Ukraine, for example, for demonstrating about the dubiously elected government, it is a little worrying to see a spontaneous demonstration effectively ruled out in Trafalgar Square.
Baroness Scotland of Asthal: My Lords, we are conscious that this issue has been raised and we continue to look at it openly. However, the current view is that that distance is the most appropriate, bearing in mind that it does not rule out demonstrations but that it will allow the commissioner to attach conditions as may be

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appropriate. Noble Lords will know that what one would allow at the outer rim of that one kilometre may be different from the anxieties we may have closer in. All those issues are bound to be prayed in aid when the commissioner considers them. We will be able to talk about them and I hope that in Committee, or that in my reply today, I shall be able to elaborate on how we believe it can be done. The importance rests on the nature and the conditions of the demonstration, how they will be phrased, and the ability to ensure that the conditions are appropriate for the nature of the demonstration.
Finally, I want to give your Lordships notice of one other amendment I propose to table in Committee. Our latest estimate is that there were 176 British victims of the tsunami tragedy on Boxing Day. Officers from the Metropolitan Police are leading the painstaking work correctly to identify the bodies of the victims. It would assist that task if DNA samples and fingerprints taken from the victims could be crosschecked against the national DNA and fingerprint databases.
As the law stands, such searches may be conducted only for the purposes of the prevention and detection of crime. The proposed amendment would also allow searches against these databases for the purposes of the identification of a body. I am sure that the House will agree with me that we should do all we can to bring closure of this horrendous tragedy for the victims' relatives. I hope therefore that the amendment will be welcomed by all sides of the House.
This Government have a strong record of success in tackling crime. Crime has fallen by 30 per cent since 1997. The risk of being a victim of crime is at a 25 year low. There are record numbers in the police service, including more than 140,000 police officers and 4,600 community support officers. Furthermore, the Government's investment in policing has increased by 39 per cent over the past five years. While much has been achieved, there is still more to do.
The Bill will better equip the law enforcement community to defeat serious organised crime and to tackle the myriad of challenges posed by animal rights extremists through to uninsured drivers and vagrants. I really do commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Scotland of Asthal.)
3.39 p.m.
Baroness Anelay of St Johns: My Lords, this promises to be an action-packed Bill in what may be the dying days of this Parliament. We support the establishment of the Serious Organised Crime Agency. We have indeed long advocated the creation of an effective agency that should be fundamental to Britain's ability to fight serious and organised crime. I join with the Minister today in paying tribute to the dedication of all those who work in the police, intelligence, immigration and revenue services day after day, seeking to extricate the evil of organised crime groups from our society.
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I can understand why the Government want to set up SOCA. It has the potential to perform a valuable service in the detection and prevention of serious crime and arrest of serious criminals who are engaged in profitable and detestable crimes such as trafficking in human beings and drugs. The chair of SOCA, Sir Stephen Lander, calls Part I of this Bill:
"one of the biggest changes in UK law enforcement since the 1960s".
He is right. It is therefore vital that we should properly scrutinise these proposals to ensure that the legislation puts in place an effective and appropriate organisation.
I believe that it is now accepted that SOCA will not be the British FBI that some had at first feared. but we must all be concerned about the rights and powers of those who will work for it. Civilians will be given police, Customs and immigration powers. Traditionally, Parliament has given police, Customs and immigration officers specific, albeit often very intrusive, powers that are required for specific tasks. Now they will he under the direction of one person—the director-general—and, in theory, under his control, any agent can exercise any one of a wide range of powers.
I heard what the Minister said today when she was attempting to be constructive in setting out the Government's proposals and their intentions. She said that this should not be a new national police force. The danger we have to consider is that the Government are creating not an agency but a parallel police force for specific law enforcement purposes.
We share the Police Federation's concerns that SOCA might be considered an elite unit that creams off all the best officers. There is a large number of extremely dedicated and talented people in conventional policing, and portraying them as somehow second class would be damaging to morale. None of us in this House would seek to do that.
We have serious concerns about the provisions of Clause 44(1). Any member of the staff of SOCA can be designated as having the powers of a police constable. At the same time, the Bill is silent on the question of whether or not the designated person will be subject to the duties and obligations of a constable as well as having the powers and privileges. I note that the Select Committee on the Constitution concludes in its third report that it doubts,
"whether a court would willingly hold that the conferment of a power on an officer of SOCA had the indirect effect of removing limits on that power".
Police officers from England and Wales who transfer and become SOCA officers will lose their status as officers of the Crown. As the Police Federation points out in its briefing:
"This is an issue that goes beyond semantics. It is about irrevocably changing the unique characteristics that have defined a British police officer for over 175 years: political impartiality. proper accountability, a duty to act and report both on and off duty, and a bar on industrial action".
Independence and accountability have been the foundation of policing in this country.

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In Committee, we shall ask the House to look carefully at these provisions. We shall table amendments that would create a category of front-line officers of SOCA classed as police members. They would have the powers that police officers. Revenue officers, Customs officers and immigration officers currently exercise. The amendments would, we hope, remove the confusion that the mix-and-match designations in Chapter 2 of Part 1 anticipate.
We shall look in detail at the way in which SOCA coordinates its work with the police. In particular, we will look at the impact of the new agency on the autonomy of chief constables, which is vital to the independence of our police forces.
We shall want to explore the relationship that SOCA will have with the counter-intelligence agencies and we will need to be clear about the adequacy of funding. We will need to be satisfied that the drive towards localism—local performance and accountability—will not be damaged by the new structure and that it will not cause any unintended consequences.
As ever throughout this Bill, I will adopt the Bassingthwaighte principle; that is, when scrutinising the parts of the Bill where it seems that we agree very closely with the Government, we must be even more aware to ensure that proposals do not slip through that neither of us intended to happen. The problem with the Bill as a whole is that it goes far wider than its simple title implies. I sympathise with organisations such as the Ramblers' Association which became aware that the trespass provisions might be of relevance to it only after the Bill had left another place. Neither the short nor the long title triggered that realisation. In Committee we will need to seek assurances from the Government on the concerns of those organisations.
The Bill is packed with a vast range of proposals. Some of them are acceptable; others, as the Minister recognised today, are controversial. It gives more power to community support officers. It outsources anti-social behaviour orders. It attempts to stop the breaching of anti-social behaviour orders. It expands police powers; introduces new traffic and insurance offences; provides powers to stop and search for fireworks; introduces an offence of hatred against persons on religious grounds; creates a new criminal offence of trespass on a site designated by the Home Secretary; and clamps down severely on demonstrations in the vicinity of Parliament. On and on it goes.
As the Minister mentioned, the Bill proposes an overhaul of police powers. It moves away from consent-based policing towards policing by discretion. We are concerned about the provisions that extend the power of arrest to all offences, subject to the necessity test to which the Minister has referred. We will need to examine whether this is a proportionate and effective solution to the Home Office's perceived problem that there is currently a complex and often bewildering array of powers and procedures on arrest.
To use the necessity test correctly, the police officer will need to consider whether his interference with the person's rights is legitimate, necessary and proportionate. Essentially, this is a Human Rights Act
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assessment of the use of powers in each case and whether the interference with the individual's rights under Article 5—the right to freedom from arbitrary detention—and Article 8—the right to privacy—is justified. Expecting officers to make that kind of judgment on the spot is hardly making life easier for them.
One consequence of making all offences arrestable, which is not immediately apparent from the Bill, is the trigger that arrest will have for the use of ancillary powers. As those who suffered through the long days on the Criminal Justice Act 2003 will recall, an extension of powers was made there to take fingerprints without consent on arrest.
The Bill proposes a considerable extension of the role of community supports officers in search, seizure, entry and detention. We recognise the value of CSOs in providing a second pair of eyes for trained police constables, but we do not favour the extension of their powers into realms that are more properly left to the police. Those proposals will need careful examination in Committee.
We welcome the proposals to protect citizens against illegal harassment by animal rights activists. I pay tribute to the work done on this issue over the past four years by my honourable friend Mr Jonathan Djanogly. A good deal of progress was made on this matter in another place. The Government responded constructively and positively to the debates there on this issue. We welcome the government amendments on economic damage that were made at Report. In Committee, the probing that we need to do will be but very gentle—the Minister looks relieved; but it is the only gentle hit as regards this Bill—just to make sure that there are not any remaining loopholes. I believe that there may not be, but I need to be sure.
I now turn to the clauses restricting behaviour in the vicinity of Parliament. On the Conservative Benches we will have a free vote on these matters. I am grateful to Global Women's Strike for its briefing, in which it reminds us all how vital it is for legitimate protest to be available to members of the public in Parliament Square. My desk is at the front of the Palace. I have never yet objected to hearing the voice of the people, be it ever so loud or quiet.
Some progress was made at Report in another place. However, even if the measures find favour with the House, we remain concerned on the following points which we think must be addressed as a bare minimum. I am encouraged by the Minister's response today.
The first is the requirement to give six days' notice. That is too stringent and would prevent the organisation of a demonstration to respond to emerging political events. I look forward to seeing the government amendments, which sound promising.
The second matter has been raised by the noble Baroness, Lady Williams; that is, that the cordon sanitaire of one kilometre is too blunt and extensive an instrument. That is an issue that we really do need to address.

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I come now to the most contentious issue in the Bill—the new offence of hatred of persons on religious grounds. I shall outline our concerns now, but my noble friend Lord Hunt of Wirral will lead on this matter for us during all other stages of the Bill.
We understand and have considerable sympathy with the Government's aims in trying to prevent religious hatred. I deplore incitement to hatred of people on religious grounds, especially as it is so often used as a proxy for incitement to racial hatred as a way of getting round our existing laws. However, we disagree with the Government about the implications of the proposals in the Bill. What appears at first sight to be a simple change to previous legislation will have profound, wide-reaching consequences that could be the opposite of what we all intend.
We are determined to maintain the balance between religious tolerance and freedom of speech, in which our citizens have the right to engage in extremely robust religious disputation. Freedom of speech is simultaneously one of the great virtues and one of the great strengths of our society. The danger is that the Bill will curb that freedom of speech without any benefit being realised from the legislation.
The drafting is so ill defined that it is not even clear what is meant by "religion". The provision is drafted so widely that any sect or cult could be covered by it. Indeed, it even covers those who lack religious belief. The clause and schedule are confusing, will make bad law and will not, at the moment, work.
I therefore agree with the conclusion of the third report of the Select Committee on the Constitution that these sensitive matters merit careful, unhurried and discrete deliberation by both Houses. I am aware that my noble and learned friend Lord Mackay of Clashfern and the noble Lord, Lord Lester of Herne Hill, have done considerable work on this issue. I am delighted to see their names on the list of speakers and I look forward to their contributions.
For an action-packed Bill, it is extraordinary that the Government have omitted one important provision that should be here to assist the effective prosecution of crime: measures to make telephone intercept evidence admissible in court proceedings. It is a missed opportunity. I recognise, of course, the authoritative work that has been done on this by the noble and learned Lord, Lord Lloyd of Berwick. I look forward to hearing from him on these issues, I hope today and certainly during the remainder of the Bill.
I pay tribute to the work of my right honourable and honourable friends in another place, who worked so assiduously to ensure that the Bill could complete its passage there within the tight timetable and guillotines imposed by the Government. Most of the major issues were addressed to some extent, but some were necessarily given very scant attention. Indeed, more than 40 per cent of the clauses were not debated at all. I accept that a few of them were not debated because they were repetitious or very much non-contentious. However, many of them should have been debated and will require effective attention in this House; for example. the provisions of
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Part 2, especially those that put protections from prosecution and sentence reduction on a statutory footing. My noble friend Lord Kingsland will lead for us on those matters in Committee.
I intend to table as many of my amendments as possible this week in order to assist the consideration of the Bill. We should not allow contentious matters to slip onto the statute book without proper consideration and giving the Government the opportunity to think again. That would be a disservice to the House and the country.
3.54 p.m.
Baroness Harris of Richmond: My Lords, there is much to support in the Bill, although I cannot help feeling that it would have been preferable to restrict it to setting up the Serious Organised Crime Agency rather than tagging on a whole multitude of other measures. I shall today specifically exclude Part 4 of the Bill, which deals with public orders and conduct in public places. My noble friend Lord Lester of Herne Hill has done much work on equality and human rights legislation, as we have heard, and he will set out our position on this part of the Bill, with particular reference to the provision on incitement to religious hatred.
It is important to have a dedicated organisation fighting the most serious criminal gangs. Our local forces have a very difficult job anyway in fighting crime in our communities and responding to local demands, which are often at variance with national directives, without having to stretch their resources to cope with the very worst of criminal activity.
At the outset, I ought to declare my interest in the Bill. I am the former chair of a police authority and a former deputy chair of the Association of Police Authorities; I was a founding member of the National Crime Squad Service Authority and my regional crime squad committee before that; and I have been involved in policing matters, locally and nationally, for more than 20 years.
Having said that it is a good idea to have the Serious Organised Crime Agency, I enter a word of caution. It is evident from discussions—and I am grateful to the director general and the chairman designate of the new organisation as well as to the senior civil servants dealing with the Bill for their help in its interpretation—that it is still very important that there should be good and close working relationships with those local forces. After all, it is in their communities that these criminals live and work— often they are known to the local police—and I would hate to see a heavy-handed SOCA bearing down and making demands on an already overstretched service. It is absolutely vital that there should be good and close working relationships with local police.
In particular, I should like to know how, practically and precisely, the new agency will help hard-pressed police forces such as Nottinghamshire—which is in the national headlines today—which have to deal with shocking crimes and with seemingly few detectives. My concern is that detectives from most forces might

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want to join the SOCA, leaving local forces denuded of trained officers. The Bill is silent on the detail of how the new agency would actually assist forces. I hope that the Minister will be able to reassure me on that point.
The National Criminal Intelligence Service and the National Crime Squad both become subsumed by the Bill but maintain most of their responsibilities, with additions from both Customs and Excise and the immigration crime side of the Home Office. We are told that this is to be a new organisation, with a new culture, and it is to those areas of policing that I now turn.
I believe that some areas of policing are inviolable. I suggest that one of the most important areas is that of the political direction of the agency. It is proposed that officers who transfer to the SOCA will no longer be politically independent as they will become employees of the agency and thus will lose their officers of the Crown status. I find this a particularly difficult proposal to accept. They will surely want to be in a position to arrest criminals and will thus need police powers.
It is worth repeating what the Police Federation say in its briefing paper. It states:
"This Bill will change forever the unique characteristics that have defined British policing for over 175 years; political impartiality, proper accountability. a duty to act and report both on and off duty and a bar on industrial action.
In a leaflet on the Bill, the Police Federation refers to the issue of officers transferring to SOCA. It states:
"They will lose political independence and be directly accountable to the Home Secretary, who can dictate policing priorities on the ground. This sets a dangerous precedent for the future of policing in England and Wales and destroys the strength of the current balanced tripartite system".
I have been contacted also by the Scottish Police Federation, which is equally concerned on this point. In a letter to me it makes clear its views on the uniqueness of the Scottish situation. It states:
"in relation to Scotland, the directive powers proposed for the Home Secretary in the Bill have been replaced with similar powers for Scottish Ministers. In effect, this would permit Scottish Ministers to direct that an Agency rather than a police force deal with a serious or organised crime".
The letter quotes Lord Denning as follows:
"No Minister of the Crown can tell him that he must, or must not, keep observation on this place or that; or that he must, or must not, prosecute this man or that one. Nor can any Police Authority tell him so. The responsibility of law enforcement lies on him".
They have further comments on the unique position of Scotland. There is no evidence that the performance of the Scottish Drugs Enforcement Agency(SDEA), responsible for serious and organised crime in Scotland, or its linkages with other police organisations at home or abroad, are deficient in any way that would justify the proposed changes. The Scottish Police Federation is satisfied that the present arrangements should continue, where the SDEA is operationally accountable and responsible to the Standing Committee of Chief Constables, comprising all chief constables in Scotland, and accountable to Scottish Ministers for the financial resources allocated to it. That arrangement maintains the
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constitutionally sound separation of powers between the legislature, the Scottish executive and operational policing.
There is also concern about the training of agency employees not versed in the different Scottish legal system. Perhaps the Minister can again reassure me about those concerns. No doubt we will examine these issues further as we go through the stages of the Bill.
One of the other areas about which I share the concern of the Conservative Benches is the extension of powers to community support officers. When we were debating the Police Reform Bill, I argued that the powers given to CSOs should be minimal. They were intended to be a resource for the hard-pressed police officer, and to give comfort to communities who were complaining that they did not see enough police officers around their areas. They have been a great success, and I am glad of it.
Schedule 8, however, certainly increases their powers. I have serious misgivings about this part of the Bill, not least about the power to be given for a CSO to detain someone who has controlled drugs on their person. I do not believe that a CSO should perform such duties without being given the proper training, skills or equipment. Their lives could be put at risk, and they are nowhere near able, under their present definition, to undertake such tasks. Nor is it the role that the Government envisaged for them, or that we voted for. I am sure we will be looking closely at these powers as we go through the Bill.
The same concerns apply to having custody officers who are not police officers. This is a core policing function, undertaken at present by custody sergeants. They have a wealth of experience in deciding the proper process of a detained person, and to put someone unversed in policing in its generality into a position of such accountability and responsibility is plainly wrong.
There also appears to be some confusion around the exact designation of these officers. In a recent editorial article in Police Review, it was stated that the Home Office had sent out a response suggesting that there were currently no changes proposed in respect of the role played by the custody sergeant, as set out under the Police and Criminal Evidence Act 1984, better known as PACE.
Evidently—I have not seen the actual letter from the Home Office, I have only been advised of it—the Home Office concedes that changes are proposed so that chief constables should be able to develop a more flexible approach to the staffing of their custody suites by making use of police staff. Can the Minister explain that to me? I have no problem at all with a chief constable having flexibility in deploying staff, but I do have difficulty with designating staff with police powers if they have not undertaken full police training.
Custody sergeants, I am reliably informed by a friend who is at present toiling away in that role, have to make incredibly important decisions about authorising someone's detention, and deciding whether or not that person should be granted bail. They also have to ensure the safety and welfare of their charges. If they get that

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wrong, they face full police disciplinary procedures, and rightly so. In a busy custody suite, it is therefore essential to have sufficient numbers of properly trained custody sergeants when the going gets tough.
It was explained to me that, on one day recently, four custody sergeants were needed to deal with the responsibilities of writing and justifying why various unruly people were being detained, while the others were dealing with someone trying to commit suicide; the possibility of a second suicide attempt; and ensuring that the police officers were handling the other prisoners appropriately. Anything could have happened, and everything had to be dealt with within the law. At any time, things could have gone badly wrong.
The custody sergeant is a vitally important role, and must be maintained in its present form. Police staff could certainly take away some of the routine clerical roles that a custody sergeant undertakes, but not the two important roles: that of deciding detention, and that of deciding whether someone should be granted bail.
Some of my noble friends will be examining other areas of the Bill: transfers of staff; protection of witnesses, which we fully support; proceeds of crime and police powers, and so on, not to mention incitement to religious hatred. Many of the add-ons to the Bill could, and perhaps should, have been brought in different places at different times. We on these Benches look forward to being constructive where we can, and helpfully critical where we think the Government should pause and reflect. We will discuss these issues as we move to the next stage of the Bill.

Commission for Africa
4.6 p.m.
Lord Triesman: My Lords, I would like to repeat a Statement made in another place by my right honourable friend the Secretary of State for International Development. The Statement is as follows.
"With permission, Mr Speaker, I wish to make a Statement about the Commission for Africa.
"'African poverty and stagnation is the greatest tragedy of our time'. This is the conclusion of the report of the Commission for Africa, which was published on 11 March. Seventeen commissioners, appointed by my right honourable friend the Prime Minister, a majority of whom are Africans, spent the last year assessing evidence and reaching out to the continent of Africa. We talked and listened to ordinary Africans, politicians, leaders of regional institutions, business people, trade unionists, academics and religious and civil leaders. We were supported by an outstanding secretariat, to whom I pay tribute, as I also do to the many honourable Members on all sides of the House who took such an interest in the commission's work. The report is the richer for all these contributions.
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"We live in a world of increasing prosperity in which, every year, more people around the world share. But one continent, Africa, has been left behind. This year 4 million African children will die before their fifth birthday. Millions more who do survive will not go to school, and will grow up to lead lives of abject poverty and frequent hunger. As the Prime Minister said on Friday, this is the fundamental moral challenge of our generation.
"The report is painfully honest. It tells the truth about the corrosive effects of corruption and conflict in Africa. It tells the truth about the things that Africa needs to change, and it is equally honest about the past broken promises of rich countries and about the things we must now do. It also recognises, however, signs of hope. There is more democracy in Africa than before. There are more governments trying to do the right thing by their people. There are fewer conflicts and, in some countries, economies are now growing strongly for the first time in years, and poor people are being lifted out of poverty. Best of all, Africans are taking responsibility for Africa, with the African Union and NePAD having set out the continent's vision of its own future.
"The report is clear that more ad hoc initiatives are not the answer. It sets out a comprehensive plan of action for implementation by Africa and by the rest of the world. It shows that Africa can absorb much more aid, and can put it to good use to rebuild basic healthcare and education; to help countries scrap user fees that stop poor children from going to school, or poor families from getting medical care; to assist in the fight against HIV and AIDS; and to reverse the decline in investment in water and sanitation.
"Aid to Africa should be doubled and made more reliable. The international finance facility should be launched immediately. For poor countries in sub-Saharan African which need it, there should be 100 per cent debt cancellation as soon as possible. The future of Africa lies, rightly, in the hands of its people and governments. And while Africa acts—as it must—to improve governance and tackle corruption, rich countries need to stop holding it back. We must make the international trade system fairer and end the damage that export subsidies are doing, while Africa increases its own capacity to trade.
"To do this, and to increase economic growth. Africa needs major investment in infrastructure. Leaving it to the private sector alone has not worked. So the report recommends a new $10 billion a year infrastructure fund, alongside proposals to improve the investment climate in Africa and boost agriculture.
"Finally, the report recommends support for the African Union's new leadership in peace and security, and for Africa's increasingly important regional institutions. It proposes a new monitoring mechanism to hold the world to account for implementing what the report tells us needs to be done.

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"The Government are committed to playing their part in responding to the report. We have already set out a timetable to reach the UN 0.7 per cent aid target. We are leading the world with the proposals of my right honourable friend the Chancellor on the IFF and on multilateral debt relief. We are on course to double aid to Africa by 2010. And we will need to do more to support good governance and tackle corruption.
"But this is not a report to the United Kingdom alone. It is a report to all of us. My right honourable friend the Prime Minister is committed to put the commission's recommendations before our G8 colleagues and to do so with determination. To succeed, we will need to harness the energy of all those who share the report's vision.
"Most important of all, this report shows us that something can be done. It tells us how, and what it will cost. We—this generation—can no longer claim that we did not know about the condition of Africa or what to do to help it change its future. Our challenge now is to do it.
"If we fail to act, as Africans or as the rest of the world, then those who come after us will ask how it was that people, so aware of the suffering and so capable of responding, chose to look away. If, however, we do act, then we will help to build a safer, more secure and more just world. The choice is ours, and it is by the decisions we make that we will be judged".
My Lords, that concludes the Statement.
4.13 p.m.
Baroness Rawlings: My Lords, I thank the noble Lord for repeating the Statement made in another place by Mr Hilary Benn. After a busy and sleepless few days, the Africa Commission report has given us extensive weekend reading. We welcome it, and thank its authors. It provides a thorough, detailed and perceptive analysis of the problems which confront Africa. Although, in total, there are more people in Asia and South America who subsist on less than a dollar a day, only in Africa is poverty increasing and life expectancy falling, caused by disease, poor governance and conflict. This report has covered the ground comprehensively. Its analysis is excellent, but I fear that it risks being more of an academic work than a programme for action.
Both sides of the House share the common objective of wanting to tackle global poverty. Both major parties would spend the same amount on international development. In as much as we differ, it is about how we spend that money on poverty reduction, not on how much we spend on poverty reduction.
We on these Benches unreservedly endorse many of the commission's recommendations. As we have said in our manifesto, we want a radical reform of the CAP and an end to protection by developed countries which denies poor countries access to our markets and thereby the means to increase their own prosperity. Our proposals for an advocacy fund to help poor
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countries fight their corner in trade negotiations are. I believe, very close to the commissioners' own on the issue.
The report's analysis is excellent. However, as a blueprint for the effective change and progress we all want to see in Africa, it has serious shortcomings. It describes, and meticulously costs, the measures developed countries should take to help Africa, many of which we support. But there is no implementation plan to show in comparable detail how the additional £13 billion in aid by 2013 would be disbursed; how this disbursement would be monitored to ensure accountability and transparency: and what measures would be taken against errant governments. The fundamental question I therefore ask the noble Lord is: what mechanism will there be to monitor and secure the quality of good governance that Africa so desperately needs?
For such a lengthy and detailed report, the coverage given to African governments' obligation to match the commitment to their people demanded of the developed governments is disappointingly thin. For example, the chapter on governance states that,
"corruption is a systemic challenge facing many African leaders"
and that the process of fighting it will be assisted by "increased transparency" by African governments, but it offers no methodology for achieving this. Instead, blame for corruption is transferred to those who offer bribes rather than those who solicit them.
African governments have had 30 to 40 years of independence to "increase transparency". This is more than a generation and, indeed, longer than the life expectancy of many of their citizens. In the early years of independence, corruption may indeed have been fuelled by east-west rivalry, post-colonial influence or commercial competition. But today, it is almost exclusively home grown, and it is characterised by a total indifference by the corrupt to the welfare of their fellow citizens.
Reference is of course made to the NePAD African Peer Review Mechanism as a way to address the problems of governance and corruption. But the portents are not good. On 24 February, the second phase of the NePAD review of Kenya was launched. It was formally welcomed by the Kenyan Government as the,
"commencement of intensive work on a process central to Kenya's search for greater democracy arid economic growth".
The Kenyan Government,
"was aware that corruption could undermine its commitment to the process, but was working to stem the vice".
That statement was made only 11 days after Kenya's anti-corruption chief, John Githongo, was forced out of his job and out of the country, following threats to his life from Ministers whose corruption he was investigating.
Can we be confident that the peer review mechanism will bring the Kenyan Government to book and put pressure on them to reform? Unlikely. According to the NePAD secretariat, the peer review mechanism

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does not rate governments according to a score card for governance, transparency and suitability for donor support:
"It is a voluntary process based on self assessment".
That would suggest that neither Kenya, nor Uganda, which is also to embark on the process, will be subject to much peer pressure at all.
Does the noble Lord agree with what we have been saying for months—that this entire project will work only if all participant countries subscribe to a collective commitment to govern well? And if so, by what effective mechanism will the likes of Robert Mugabe be certain to reach the high standards of government that we seek?
Another disappointment is the report's recommendation that the majority of the funds to build or restore Africa's infrastructure should be channelled directly to governments. Commissioner Anna Tibaijuka made a telling comment in this respect when she described how the promise offered by Tanzania's independence was squandered. How was it squandered? By donor governments transferring huge sums of money to the Tanzanian Government for use on infrastructure projects which were either not completed because the money was stolen or a waste because they were irrelevant to the country's needs.
Does the noble Lord believe that the recommendation in our manifesto to channel aid through NGOs and civic organisations, as well as governments, would produce both greater accountability and more cost effective use of available funds? As I understand it, the noble Lord believes that he is doing things well already. What will he do differently in the light of the report?
I noticed that on other subjects the report was very coy. Let us take, for example. military expenditure. It is true, as claimed, that by international standards African defence expenditure is low. But if it is to be measured as a percentage of GDP then a very different, more worrying picture emerges, as several governments, including those of Rwanda and Ethiopia, will be seen to be spending more on defence than on education and health.
It is also regrettable that the nettle of land reform and land registration was not fully grasped. The report recommends that land tenure systems should continue to be grounded in "local, social and political legitimacy" and that disputes should he settled according to local culture. That is essentially an endorsement of traditional procedures which usually discriminate against women and orphans and restrict the use of land as collateral for small enterprise development which, rightly, is regarded as a key to economic growth. In the absence of land reform, what steps will be taken to improve the climate for both domestic and inward investment?
A short response today can hardly begin to address all the issues covered in the report so I hope that we might yet have a full debate in this House, which is long overdue, on international development. That said, I reiterate my welcome to the report and admiration for its authors. It could indeed help to transform Africa. This weighty tome needs to be converted from words into
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action. We need to he reassured that African governments genuinely share our determination to create a better future for their people; otherwise it will be yet another opportunity missed and this, by any measure. is the best opportunity we are ever going to have.
4.22 p.m.
Baroness Northover: My Lords, I, too, thank the Minister for repeating the Statement made in the other place. I wish also to commend Bob Geldof for driving this forward. He has not allowed the 20th anniversary of LiveAid to be marked by how little has been achieved, but by what we must do now.
The Africa Commission Report is a most impressive analysis and the authors are indeed to be commended on it. However, there is some feeling, perhaps summed up by Save the Children, of occasionally "pulling punches"—an incisive analysis which is held back in terms of the recommendations which are allowed to flow from these analyses. Did the commission suffer from politicians worrying about what they could deliver and how it would serve as a challenge to them?
At the heart of things must be the question: what difference will this remarkable report make? How will this be taken forward? In the long term, I note that two members of this commission will be responsible for annual monitoring of what has been achieved. Does the Minister think that that will be satisfactory and what else will underpin it? Meanwhile, this document is to be used this year to encourage members of the G8 in particular to take action. How do the Government intend to secure agreement on the proposals?
As the press has noted, the report points very honestly to the problem of corruption. Yet it also reveals that no G8 nation has signed the UN anticorruption convention committing the West to repatriate stolen funds. Will the UK at least now do that? Does the Minister think that having one civil servant in DTI to monitor the actions of large multinationals accused of corruption in the DRC is adequate to the task? My noble friend Lord Avebury has been pursuing that issue for some time.
The UK's Export Credits Guarantee Department's rules on bribery were watered down only three months ago as a result of pressure from companies such as BAe Systems; and the UK is one of only four OECD countries to have failed to prosecute any firms accused of corruption aboard. Does the Minister see that changing now? Should we expect more joined-up government?
The report calls for greater corporate transparency but is vague as to how that is to be achieved. It fails to call for effective regulation of money laundering, tax avoidance and evasion. It relies heavily on corporate voluntarism. Does the Minister think that this will work?
ActionAid notes that the report fails to demand support for the UN human rights norms for businesses and to make company directors legally accountable for the social and environmental impacts of their company's activities overseas.

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On trade, the commission argues that the liberalisation of poor countries' markets can damage those countries. It also argues for the removal of trade destroying subsidies. What will the UK now take forward within the EU to address those questions?
The report argues that aid should be doubled. Will the Government review when they intend to reach 0.7 per cent of GNP? Why does the report not put a target on this for all developed countries? What will the UK do to persuade other countries to untie their aid? We welcome the fact that the UK has untied its aid.
The proposal on debt is "up to" 100 per cent debt forgiveness "as soon as possible". Can the Minister say what is meant by those qualifications?
The report is very critical of past privatisation policies: that the privatisation of water, transport and agricultural markets has been a serious policy mistake. Will the UK now back away from the privatisation backed by DfID and promoted by its consultants, the Adam Smith Institute, and others?
The commission notes that violent conflict has been stoked by the sale of small arms. Can the Minister say what action the Government intend to take here? Some encouraging reports are coining through.
On AIDS, the report argues for an extra $10 billion a year. What will the UK do this year to mobilise US efforts for an internationally agreed strategy or will the US be allowed to continue benefiting its own drugs companies and pandering to those who will not allow the use of condoms to play a part in combating the spread of AIDS? The report fails to call for the full funding of WHO's target of 3 million people into treatment by the end of 2005. That is extremely puzzling since that was a somewhat limited aim. Can the Minister comment on that?
The report is clear about problems with capacity. Africa is desperately short of health workers and teachers. More than a million children are not in school. The commission wants that to improve right up to tertiary level and has a particular focus on science; and that is surely welcome. It will take a huge amount to stop the brain drain to developed countries. One in two nurses in London is from overseas. Will the Government further address the issue?
Overall, the report should be warmly welcomed. It could be a major step forward but only if it is implemented. For Africa's people, and for those who wrote the report. we have to be sure that the commission's analyses and recommendations are not applauded and then quietly shelved. Africa needs sustained assistance and concerted action over the long term. I welcome what the Government are saying about their commitment to providing that.
4.28 p.m.
Lord Triesman: My Lords, I have a little over four minutes for about 20 questions. I am grateful to both noble Baronesses for welcoming the report so warmly even with such great circumspection.
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Perhaps I may deal first with the big issues raised. On governance, combating corruption and peer review—many of the other questions are tangled up with those issues—it is fair to say that we have been consistent in arguing that we wish to see political systems which provide opportunities for people, including the poor and disadvantaged, to influence government policy and practice. No macro-economic stability, sound public expenditure mechanisms, overseas investment or any of the other elements will be likely to succeed unless there is a further and sustained movement towards democracy. There is no question that in relation to the heavily indebted countries, the countries of the G8 as well as all those that have taken part in the commission are insistent that we should see continued progress, but not continued progress that means that under no circumstances in countries where there is not enough progress are we content to see people simply starve or go to the wall because we feel that they have not reached a standard that we would wish to assert.
It is true that the peer review for good governance is helping us to make that forward progress without cutting off hope to those countries that have not seen that progress. The African peer review mechanism has begun; 24 countries have voluntarily signed up—and it is voluntary—to the four reviews that are under way. The goals are to increase the number of reviews and to make sure that people well able to undertake those reviews are leading them, with assistance but with ownership within the African countries—because finally they must own these things if they are to succeed. At no stage will we be able to judge our success or otherwise by whether we persuade Robert Mugabe to take part in the process. I have no expectation that he will and nobody in this House has any expectation that he will. But that is at the most negative end of the spectrum in relation to those countries that are trying to make the progress that we seek.
We ourselves must ensure that we deal with corruption in the form of bribery and export licences. If a licence has been issued arid the company acts illegally, the DTI will take steps to revoke the licence. If the goods have already been sold and there is a case for prosecution, that will be pursued by Customs and Excise. It is also taken into account when considering application for future licences. There will he no condoning of criminality. The absence of prosecutions—and indeed there have been relatively few prosecutions anywhere—will not be pleaded in aid of the necessity to take the steps that I have described.
We shall channel money directly to governments in many cases, but the noble Baroness, Lady Rawlings, also knows from the debates that we have had in this House on HIV/AIDS that money has been channelled through the NGOs, which can put it to very good. and effective use, rather than through governments. In many cases, it is important to ensure that governments assume their full range of responsibilities. But it must be the case that when we can see a possibility of better practice, we engage with it.
Military expenditure is an issue, but the report is gratifying in showing that the African Union is now much more willing to intervene in cases of war and that

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it is not standing off from the most difficult problems. There are a number of multilateral developments taking place which should help. I have no doubt that I shall need to write to both the noble Baronesses to deal with all the questions, but I am warm towards the idea of a full debate on these issues.
The anti-corruption convention will have to be part of the process. I have referred to credit guarantees. I do not believe that there is a change at the moment in the general date to reach the 0.7 per cent, but the IFF proposal would radically foreshorten that process for us and for other countries.
In the light of the time, I must give way to other questions. 1 shall write to both the noble Baronesses.
4.32 p.m.
The Lord Bishop of Chelmsford: My Lords, I, too, thank the Government for encouraging the report and warmly welcome it. I must declare an interest as I chair the board of Christian Aid.
I wish to make three points. First, we are not going to make any progress on issues that are deeply complex and deeply embedded in African politics and economics unless the Government are persistently committed to pursuing them. It is easy for politicians to declare a priority for Africa and then for other things to take its place on the agenda and for there to be no structures in place for pursuing those goals. Now we have another report. It would be a disaster if this report was widely welcomed and actually nothing happened, so I am interested in the mechanisms in government for pursuing the goals.
Secondly, the Statement refers to fair trade. Certainly, the removal of subsidies is part of that, but does the Minister accept that the terms of trade are also part of the issue? The idea that one size fits all and that somehow a general globalised and liberalised economy will meet everyone's needs without any nuancing will not work. At the G8. will we work in a focused way to see what emerging nations' economies need in terms of international systems that defend their capacity to build up their capacity?
Thirdly, I hugely welcome the commitment to improve levels of aid, but can we press the Government to consider the quality of aid and how it is used? There might be some questions if we simply increased the levels of aid and it was all government to government aid. If aid and development is to work for communities in Africa, it must work with the substructure of what helps those communities to build their lives. Those of us in the development agencies will be really interested in pursuing that conversation and seeing ways in which government and the agencies can work in partnership to work from the bottom up in these communities, working with the networks that build the life of those communities for the future.
I, too, warmly welcome the opportunity in this House for a major debate on these issues. I thank the Minister for his Statement and the commission for its report.
Lord Triesman: My Lords, I thank the right reverend Prelate for his questions. I assure him and other noble
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Lords that the Government will persist and act very vigorously. The work on the G8 agenda is an example of that, as it is going ahead with a great deal of energy, as is the work of the EU presidency, which we debated in this House very recently. A great deal of that work at the moment focuses on the IFF because of the rate at which it will leverage funds into the poorest countries. That gives us the possibility of doubling the amount of aid in a very short space of time.
I understand very well the point about terms of trade. The Africa element of the WTO has been looking at that issue, and there is acceptance from the Government that as markets liberalise—and it is almost impossible to conceive of people operating wholly outside the WTO—there is no question that some things should be kept outside it. Free schools and health services are two areas that I mentioned in the Statement; other areas will require what I described in your Lordships' House as asymmetry. There will be really quite different timetables, because many small farmers, let alone countries, will not be in a position to act unless they are given the opportunity to do that.
I agree 100 per cent, as does my right honourable friend the Secretary of State, about the need for networks to develop on a bottom-up basis. A big part of the report that I found hugely encouraging was the notion that it is the development of small agribusinesses and at seed-corn level which will be fundamental to success. Those are areas in which much of the aid and development capacity building is intended to take place.
Lord Hannay of Chiswick: My Lords, I warmly congratulate the Minister on the report and thank the right honourable gentleman the Prime Minister for the leadership that he has given in shining a sharp light on Africa's problems. Would he not agree that the commission report has very little in it for one group of countries that is all too large in Africa—that is to say, states that have already failed or are failing, for which no amount of aid, investment or trade is going to be any good until the questions of peace and security are properly addressed? Would he agree that it is important to find responses to that. too? There is not an awful lot in the commission report on that subject, which involves some 15 African countries.
Secondly, does he agree that, while it is admirable and excellent that the African Union and its sub-regional organisations are now beginning to address problems of peace and security and governance, the problem is not so much that Africans stood back while others dealt with the problems of the continent. but that non-Africans are now starting to stand back and encourage the Africans to do the lot when they cannot? The Africans have no heavy lift to get troops in position and they have no money to support troops in peacekeeping operations. They need a great deal of help.
Does the Minister agree that, in order to get a comprehensive set of prescriptions for Africa, it will be necessary to fit together the prescriptions of this commission and those of the high-level panel that reported to the Secretary-General? That dealt fully with a 10-year capacity-building system for African peacekeeping, the need for the international community

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to provide financial support for African peacekeeping and other matters that are not dealt with in great detail in this report.
Lord Triesman: My Lords, I agree with the noble Lord, Lord Hannay, that there will need to be the closest fit between the report of the Economic Commission for Africa and the high-level United Nations report. It is very largely true that, whatever forces the African Union can assemble, it will need a good deal more logistic help in order to make sure that they can be deployed rapidly and appropriately. That is not a matter that most African nations can take on with their current financial difficulties. I have no difficulty in giving the assurance that the noble Lord seeks.
There are some signs of an overall reduction in the number of places in which wars are being fought. That is not a complacent view and does not mean that the situation could not again become more difficult. But there is willingness to open negotiations on an international arms trade treaty no later than 2006 and Africa is very much in view in that. There is a new United Nations peace-building commission, and flexible resources for the AU's role in conflict prevention and resolution—the point raised by the noble Lord, Lord Hannay. Ensuring that corporate activities and the exploitation of natural resources do not fuel conflicts is, in my view, ethically just as important—maybe even crucial—because it is in our hands. It has so often been the case that prosperous countries have fuelled the very conflicts that we look at with such dismay. We must be clear that we are not going along that path.
Baroness Whitaker: My Lords, this well written report is a new way of looking at Africa that focuses on being just to Africa. In that connection, we need to crack down on our part in corruption. I remind your Lordships of my interest in Transparency International. When is the UK's new law on corruption likely to appear?
Lord Triesman: My Lords, in advance of the general election that is rumoured to be happening very soon, I find the question about what would be in the immediate legislative programme—on the assumption that this party wins the election—very hard to answer.
We have done a good deal. I shall emphasise it very briefly, because I know that other noble Lords have questions to ask. The Anti-terrorism, Crime and Security Act 2001 made it clear that bribery beyond these shores is a criminal activity that can, and will, be prosecuted. The UN Convention Against Corruption was signed in December 2003. The ratification of it is pending and depends on the passage of the Serious Organised Crime and Police Bill, which has just come before your Lordships' House. The Proceeds of Crime Act is having an important effect. An international consensus about the return of assets that have been stolen and secreted away by ruthless dictators and others needs to be built and acted upon. In this country, we probably have among the most scrupulous and rigorous banking systems to deal with money laundering. Looking into the future, we intend to
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make sure that EU procurement directives introduce the mandatory disbarment from further trade of bidders convicted of corruption. These measures taken together as a battery are very important. But, we may, as the noble Baroness, said, need more.
The Earl of Caithness: My Lords, when the Minister introduced the Statement he said that the point was to hold the world to account. Can he say more about who is going to hold Africa to account? In the debate on Zimbabwe last Wednesday, the noble Baroness, Lady Crawley, said that every time the British Government raised the question of Zimbabwe in UN committee discussions, it was blocked by the African countries. It is not just Mugabe, all the other leaders are blocking progress in Africa. What will happen on that?
Lord Triesman: My Lords, I recall that in a recent sequence of Questions in your Lordships' House my noble friend Lady Symons made the point that more political will is needed. Were it in our gift, we would do so. But the critical point made by the Economic Commission on Africa is that African nations should take greater responsibility for determining the outcome of matters in their own continent, with all the forms of assistance that the commission report quite rightly refers to.
We will continue to press on the issue of Zimbabwe. That is without question. But it is plain that we have a new platform for trying to achieve a consensus for action, which is based on a systematic and sustained view of aid over a long period with fewer ad hoc arrangements, as I said in the Statement. We believe that we are seeing signs of change. It is not a wholly pessimistic view although., in some areas, it is still a very difficult one.
Lord Avebury: My Lords, what happened to the proposal—which I think was advanced by Mr Gordon Brown when he was on his tour of Africa—that the debts that are to be forgiven should be paid into a virtual fund and only used to make the increases in health and education that are necessary to help African countries attain their Millennium Development Goals? Secondly, will the UK play any role in the increased investment needed to develop treatments and vaccines for AIDS, TB, malaria and parasitic diseases, which the report talks about eliminating?
Lord Triesman: My Lords, the proposals made by my right honourable friend the Chancellor of the Exchequer during his tour of Africa will be among the centrepieces of the EU presidency and the G8 discussions. Right at the heart of them is the concept of a new fund that would be leveraged so as to assist in the forgiving of debt—if I may use that expression—on the understanding that moneys raised would be invested in health and education and would certainly assist in making sure that they are both free, rather than charged to those who use them.
On the second question, I am glad to say that the United Kingdom is at the forefront and a great deal of research work is going on here. There is a big research

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budget: £16 million for the development of microbicides, in which the Medical Research Council and the London medical schools are involved; £18 million for the international AIDS vaccine initiative; and £35 million for the Global Alliance for Vaccines and Immunization initiative, on which Liverpool and London universities are working. For AIDS, a great deal of experimental research work is being done at the London School of Hygiene and Tropical Medicine. Work is being done by Jonathan Webber at Imperial College, and development work on HIV/AIDS is being done at St George's Hospital. Vaccine development work is being done at Oxford University. Malaria work is being done at the London School of Hygiene and Tropical Medicine, and vital work on TB is also being done there and in Liverpool. I mention this work because it is first class, alpha-rated, United Kingdom science. If we can drive it forward, it will give a huge amount of hope for cures for those diseases.
Lord Elton: My Lords, so that we can get the scale in focus, can the Minister tell us whether the correct figure is £25 billion, as stated in the resources paragraph in the executive summary on page 16, or £75 billion as in the exemplification of it on page 353? What proportion of that figure would be produced by 0.7 per cent of GDP as proposed? Does he recognise that if the corresponding benefits to us do not immediately flow from the output payment, the effect on our economy will be negative? Is a concordat therefore required between all political parties on what the quantum should be so that it does not get eroded in election after election?
Lord Triesman: My Lords, I can answer the first question; the second is in some ways much more difficult. We have pledged ourselves to the £25 billion in an immediate sense. We believe that the figure needs to be doubled; we need more than that to accomplish the whole programme. The point about the IFF proposal is that it would get us closer to the £50 billion by almost halving the time to get to our 0.7 per cent commitment. It would concentrate that period of time by leveraging money through the international bonds that would be issued.
So, those sets of figures are to do with the timetables. The difficulty in answering the question about the 0.7 per cent is that with another mechanism we can do it even faster by, as I said, halving the time. It is always possible that if we do not tie the aid that we give to, for example, contracts for the United Kingdom's own companies, some of them may lose out. However, I emphasise that the process of tying aid to contracts is discredited in the international arena. We have to ask what our ethical obligations are and make sure that we work on them. That is the first thing that we need to do.
I hope that in the EU and G8 discussions under our presidency we will persuade other countries—as I believe we will—that they should not tie aid to their own national advantage. If they do so, the processes
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will be slower; the millennium development goals will be more difficult to achieve—and goodness knows, we know that they are difficult to achieve in Africa on anything like a human timescale.
Lord Mackie of Benshie: My Lords, will the Minister tell us which African countries are making satisfactory progress and what are the conditions under which they are doing so?
Lord Triesman: My Lords, satisfactory progress is being made in different respects. I am not sure how best to answer the question. In economic terms—rather than going through a list—a number of countries now have economic growth rates of above 7 per cent. A big batch of countries have growth rates in the 5 per cent to 6 per cent region. Some countries are doing far worse than that, and some, we believe, are going backwards.
We have seen movements away from wars and civil wars in Angola and other countries; I could mention a number of countries. We know that in countries such as Sudan and the Democratic Republic of Congo progress is still desperately needed. Progress on health and education is far more complex, but the data that the noble Lord seeks are in the commission report. Those cover different issues and different rates of progress.
Baroness Flather: My Lords, as we all know, the poorest of the poor in Africa—
Baroness Crawley: My Lords, I apologise to the noble Baroness, but the time is up for Questions.

Serious Organised Crime and Police Bill
4.54 p.m.
Second Reading debate resumed.
The Lord Bishop of Portsmouth: My Lords. I want to concentrate on the offence of incitement to religious hatred, which is once again before us. I do so partly because I had the privilege of serving on the Select Committee on Religious Offences set up following the removal of the clause on religious hatred from the Anti-terrorism, Crime and Security Bill of 2001 and the subsequent production of the Religious Offences Bill by the noble Lord, Lord Avebury.
Although our committee agreed that,
"there is a gap in the law as it stands",
we were unable to recommend how that gap could be filled. I suggest that disagreement arises because people have very different perceptions, for obvious reasons. Some believe that equal protection should be given to the cherished beliefs and practices of all religious groups—I shall return to that point later. The gap that the Bill addresses in Clause 119 and Schedule 10 is narrower, but the Bill is to be commended in its implications for the protection of religious as well as non-religious groups.

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The Bill proscribes actions which, by inciting hatred on grounds of religion, constitute a threat to the safety and wellbeing of those who find themselves the object of hatred. We are dealing here not with religious argument, which causes controversy or offence—and perhaps requires what is sometimes called a theological sense of humour, with which some of us are better endowed than others—but with words, behaviour and material that generate acute feelings of fear, insecurity and humiliation and which damage the fabric of society. That threshold is not always easy to define.
There is a sense of injustice at the legal anomaly that while Jews and Sikhs are afforded protection from incitement to hatred by their status as racial groups for the purposes of race relations legislation, members of other religions are not. It is important for the justice and cohesion of our society that protection against incitement to hatred should extend not only to adherents of religions but to people of all beliefs. That is offered by the definition of religious hatred in Schedule 10.
Some believe that the measure is unnecessary because existing public order legislation, including provision for religious motives to be taken into account as aggravating factors in various offences, already prohibit religious hate crimes. I confess to some perplexity about the apparent ineffectiveness of this battery of laws. However, experience shows that many minority groups, particularly in our cities and especially, though not exclusively, in Muslim communities, suffer intimidation and feel vulnerable because of a persistent stream of vicious verbal attacks on their religion—a point made to me in conversation by the Roman Catholic Archbishop of Birmingham, Vincent Nichols, reflecting the minds of his local faith leaders' forum.
According to the Association of Chief Police Officers, religious identity is often being used as a cover for attacks on racial grounds that would be illegal if mounted in those terms. I am aware that an amendment to the schedule devised by the noble Lord, Lord Lester of Herne Hill, attempts to meet that point by introducing the notion of religion as a pretext for racial hatred. On balance, although I am prepared to lock horns with his silver tongue—if that is not mixing metaphors—I am not sure that the amendment covers
all the cases with which we should be concerned. Incitement to hatred on grounds of religion is always wrong, whether or not religion is functioning as a proxy for racial antagonism.
Some people, both inside and outside the Churches, believe that the provision will seriously inhibit freedom of speech and induce self-censorship on the subject of religion. That is an understandable concern which has received recent press comment. It is for the health of society, and for the health of religions themselves, that religious beliefs and practices should he subject to criticism, debate, humour and satire, even where that is deemed unfair or even offensive whether by the religious adherents in question or in a changing climate of public opinion—they are not always the same thing.
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I am encouraged by the recent conclusion of the eighth report from the Joint Committee on Human Rights that the measures proposed in the Bill are unlikely to give rise to any violation of the right to freedom of expression under Article 10 of the European Convention, partly because Article 17 denies the right to engage in acts destructive of the rights and freedoms of others.
The committee also noted that the definition of the offence in the Bill sets a higher threshold than the equivalent Danish legislation. I add that the threshold is also higher than that in the Racial and Religious Toleration Act of the state of Victoria, which has caused anxiety as a result of the conviction of Christian pastors for anti-Islamic statements. That law proscribes words or conduct with the effect of inciting not merely hatred but,
"severe contempt, revulsion or severe ridicule".
That threshold is dangerously low, and I am relieved that the proposal as drafted takes us well beyond that, though it could do with being higher.
There is one further matter on which I must touch in conclusion. The existence of the laws on blasphemy, which apply only to Christianity, and in particular to the Church of England, is a product of history that has become an anomaly in today's society. The notion that the blasphemy laws should be extended to protect all faiths is incoherent, because blasphemy has meaning only within the context of a particular religion, or a society with a single religion, and it is inappropriate, because it is not beliefs and practices that should be protected from attack, but people. That is a distinction cogently argued by the British Humanist Association, which I am delighted to quote on this particular occasion.
Repealing the laws of blasphemy and blasphemous libel at the same time as we pass this measure, suitably amended—I made my position on this clear in a helpful conversation with the Home Secretary—would send a clear signal that incitement to religious hatred is not about shielding religion from criticism, vilification or mockery, but defending people from real harm done in the name of religion. That is why I regard this part of the Bill as meriting our attention and scrutiny, rather than being dismissed out of hand.
5.1 p.m.
Baroness Ramsay of Cartvale: My Lords, this Bill is an attempt to give everyone in the community the right to live in a safe and secure environment free from the fear of crime. I can deal in the time allowed with only a few points, but as a general comment, I should like to say that in a democratic society everyone has the right to voice their opinion and to demonstrate, but human rights and freedom of speech and assembly must be balanced by citizens' responsibilities to others. No one has the right to incite hatred against religious groups, to intimidate or harass others going about their lawful business, or indeed to disrupt the working of Parliament. All faith communities and those working in the bioscience industry deserve the full protection of the criminal law when their human rights are threatened.

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I know from mail received that many Christians are concerned that in some way the provision on incitement to religious hatred will adversely affect them. I am sorry that they are so concerned, but I believe that when they look at this provision closely, as it has emerged from another place, they might be reassured that their fears are unfounded. This provision is about protecting people, not about protecting the religion itself. Because of the contents of the letters that I have received, I think it is important to emphasise what these provisions do not do. They do not prevent criticising the beliefs, teachings or practices of a religion or its followers; proselytising one's own religion or urging the followers of another religion to stop practising theirs; telling jokes about religions; expressing dislike of one particular religion or its followers.
This provision is needed to curb the activity of extremist organisations. ACPO has said that the hatred stirred up by extremists such as the BNP contributed to the Bradford and Burnley riots in 2001. It is also intended to have a deterrent effect. The Board of Deputies of British Jews believes that having the offence of incitement to racial hatred has reduced the amount of anti-Semitic literature. It removes a loophole where mono-ethnic faith groups, such as Sikhs and the Jewish community, are protected under the incitement to racial hatred provision; whereas multi-ethnic groups, such as Muslims and Christians among others, are not protected, as the right reverend Prelate has just explained.
It will also, it is to be hoped, reassure Muslim communities in this period when many feel vulnerable that they do have protection in law from acts of racial hatred against them. Much was said during our discussions on the Prevention of Terrorism Act about signals being sent to our Muslim communities. Well, this is surely a very positive signal, as well as being the right thing to do. Support for this provision has come from ACPO, the CRE, Justice and the Law Society. If time had permitted, I would have quoted from the excellent statement of last January from the Churches' Commission on Inter Faith Relations in support of this provision. That statement, signed by the noble Baroness, Lady Richardson of Calow, and by representatives of many other faith communities, which time prevents me mentioning, is an excellent statement of the case for such a provision, and I commend it to your Lordships.
The Minister will be aware that the Scottish Police Federation has various concerns about this Bill, as the noble Baroness, Lady Harris of Richmond, has already enumerated, and it does not support SOCA operatives being given the powers of a constable in Scotland. The Law Society of Scotland seeks confirmation that those so designated to operate in Scotland will have knowledge and training in Scots criminal law and procedure. I would be very grateful for the Minister's comments on that.
I now turn to a subject that is not in this Bill, but which was debated during its passage in another place and in the media. The noble Baroness, Lady Anelay, raised it today. It is the question of the use of intercept
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evidence in court. As I said in the debates on the Prevention of Terrorism Act, I am extremely worried about the growing clamour for intercept material to be produced in court. The whole area of intercept is much more complex and sensitive than most people, including fortunately the targets, ever imagine. The slightest exposure of intercept product risks blowing for good that particular operation with its techniques, as well as in some cases putting at risk human agents. It is often said, "other countries use intercepts in evidence; why can't we?". Well, there are actually many reasons, but I will just be able to touch on three.
Our sophisticated expertise in this field is quite considerable, and in fact I would venture to say outstanding, which of course means that we have much more to lose. A national police force operating on its home ground in a straightforward telephone tap really would usually have little to lose in terms of giving away techniques or endangering sensitive sources. Our legal system, with its adversarial roles for counsel, means that the defence counsel can range far and wide on evidence or with someone in a witness box. In other countries, where there is an investigating judge or magistrate, things can be different, and sensitive material can be used without the risks involved in using it in a British court. In this country we have a very close relationship between our security and intelligence services and our law enforcement agencies; a relationship which, if not unique, is very rare when you look at other countries. To use material from the services, which have to take more risks and use sophisticated techniques sometimes involving agents, is to endanger much more than most people realise.
As I have said before, I have rarely come across a lawyer who did not want intercept material in court, but they almost all believe that there is nothing a court cannot and should not deal with. It is perhaps understandable that the legal profession should think so, but from my own different professional experience, my judgment is different, and I am extremely disturbed at the idea of sensitive intercept material going into court proceedings.
This is a Bill, of course, in which we will hear much legal opinion, and we have in the House many representatives of the legal profession, some of them extremely distinguished. Speaking from experience of some nine years in this House, and especially from recent debates on Iraq and on the Prevention of Terrorism Act still painfully fresh in all our memories, I should like to submit, with respect, that lawyers are not the only people in our society who care deeply about justice and liberty and civil rights. They have chosen a profession that means that they know the detail of the law and the rules and practice of its procedures, but it does not give them a monopoly of wisdom about what is justice and what are human rights. The world does not begin and end at the door of a courtroom. It would well become lawyers if just occasionally they acknowledged that. Just as war is too important to leave to generals, I believe that in a democracy, justice is too important to leave to lawyers and judges. My Lords, I support the Bill.
5.9 p.m.
Lord Mackay of Clashfern: My Lords, it is obviously a superb opportunity to follow the noble Baroness, Lady Ramsay of Cartvale, and I am the first to acknowledge that lawyers have no monopoly of wisdom in this area. It is therefore important that this House is made up of a number of groupings—and lawyers are but a small, although quite an important, part.
I wish to address only the part of the Bill that deals with incitement to religious hatred. I should declare an interest as patron of the Lawyers' Christian Fellowship, as president of the Scottish Bible Society and as one who seeks to practise the Christian religion—although I do not succeed as much as I would like.
My impression is that much of the difficulty that has arisen in this area relates to confusing what one group within a faith wants or does with the whole faith. For example, I have always felt uneasy when a particular outrage is described as the work of "Islamic extremists" or "Islamic terrorists". It might be interesting to look at a description given by the Prime Minister in a speech to his constituency about this matter when he described how he was galvanised into the war on terror. He said that the actions which killed 3,000 were the work of religious fanatics. He said that they were pleased that they killed 3,000, they would have been more pleased if they had killed 30,000 and they would be still more pleased if they had killed 300,000.
I ask myself, if this provision in this Bill had been the law at the time, would the Prime Minister have been transgressing it? I have looked carefully at the words of the provision and I would find it difficult to mount a defence. That does not tell me that what the Prime Minister said was wrong, because most of us, probably all of us—certainly I for my part—would strongly agree with what he said. But it indicates to me that the words chosen to describe this particular offence in this provision are not adequate for the purpose.
There is already a good deal of law in relation to this matter. I simply mention the prosecution of Norwood for putting in his window a notice suggesting that Islam should be banished from the United Kingdom and associating Islam with the 9/11 outrage. He was successfully prosecuted. ACPO has indicated that there might be difficulties, but there was a successful prosecution in that case and it seems to me that the principle in that case covers a great deal of what is found offensive at present.
It is said that there is a loophole in the law because Sikhs and Jews are protected as races whereas other religions are not protected. But of course the Jews and Sikhs are protected as races because they are races. It does not follow that because a person is a Jew by race, he is a Jew by religion. We may have an example of that quite soon. It does not follow that because a person is a Sikh by race, he is a Sikh by religion. Hatred based on race is an issue there—and race is not chosen, but is determined by one's antecedents. For example, it may well he a term of racial abuse to describe someone as a "person of mixed race" or "a mongrel".
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The situation of religion is quite different. Religion is chosen. A person can change his religion, can embrace a new religion and can, as far as he is concerned, modify the views that he expresses.
Lord Avebury: My Lords, that argument is constantly repeated and I have never heard it pursued. In other words, people make an ex cathedra assertion, if people do not choose their race, that that is a legitimate subject for a law on incitement, whereas if they do choose their religion, it is not. Can the noble and learned Lord say what the difference is, from the point of view of a victim of incitement who is harassed, intimidated or has acts of violence against him on the street, whether he happens to be a Jew, a Sikh or a Muslim?
Lord Mackay of Clashfern: My Lords, it does not matter whether you are a Jew, a Sikh, a Muslim or have no faith at all. Violence against you in the street is an offence under the present law and it may be aggravated if it is done on religious grounds. in view of the law that has recently been introduced. So I do think that there is a valid point of distinction between race on the one hand and religion on the other. I would not engage in a conversation with someone seeking to change his race, but one might well do so with someone seeking to change his religion. The noble Baroness, Lady Ramsay, pointed out that the Bill attacks not only the people but religious practices. Practices are carried out by people and if you are criticising, and are entitled to criticise, religious practices, that would involve the people who practised them. The attempt to distinguish between practice and people is a thin distinction indeed.
This is an issue of great importance and, as far as I am concerned, it is a threat to free speech, particularly in the investigations that might precede any attempt to obtain the consent of the Attorney-General to a prosecution. The Attorney-General does not determine the scope of the law; his discretion relates only to whether or not, if a breach of the law has occurred, it should be prosecuted. I should like to see Clause 124 deleted from the Bill.
5.16 p.m.
Lord Lester of Herne Hill: My Lords, it is a great privilege to follow the noble and learned Lord, Lord Mackay of Clashfern, with whose speech I agree in its entirety. Unfortunately, I cannot sit down, because there are one or two other things that I need to say. I also very much agree with the thrust of the remarks of the right reverend Prelate the Bishop of Portsmouth, especially in relation to the pressing need to repeal the common law offences of blasphemy. In view of the remarks made by the noble Baroness, Lady Ramsay, perhaps I should declare that I am, indeed, a lawyer, a secular Jew and I have worked in race relations for some 40 years. I am not sure whether I am speaking more as a lawyer, as a campaigner for equality or all those things, but I agree with her that no one has a monopoly, whether as a former member of the Security Service or as a former or practising member of the Bar in all these difficult questions.

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I am grateful to the Minister and her team and to the Attorney-General and his team for having discussed with me my concerns about the proposed new offences of stirring up religious hatred. I have also benefited from discussions with representatives of the Muslim community and other faith and secular groups with very different points of view.
I draw the attention of the House to the important article by Rahila Gupta, in Saturday's Guardian, which illustrates some of the unintended adverse consequences if these offences were to become law. Ms Gupta wrote that, if the Government mean to extend a hand of friendship to embattled Muslim communities, they would surely do better to tackle the poverty that so many suffer, or the low level of educational attainment among their children, or to ensure that the Government's antiterrorist legislation respects the human rights of those people—mainly Muslims—who are subject to its operation.
In Ms Gupta's well-informed view, the very presence of the proposed law would strengthen the voices of religious intolerance and choke off women's right to dissent in male-dominated religious groups. All the groups that I have met have been dominated almost exclusively by males. In his wise article in today's Times, the noble and learned Lord, Lord Mackay, explained why the new law would be likely to stir up disharmony, rather than to resolve it. I agree with that, too.
On these Benches, we regret that the Government have decided to include in an important Bill, designed to tackle serious organised crime, provisions which are sweepingly broad and ambiguous in their reach and divisive in their effect.
The Colville Select Committee, which did such valuable work, drew attention in its report to the observations of the distinguished Attorney-General of India, Soli Sorabjee, which I shall, with the leave of the House, briefly quote. He stated that,
"experience shows that criminal laws prohibiting hate speech and expression will encourage intolerance, divisiveness and unreasonable interference with freedom of expression. Fundamentalist Christians, religious Muslims and devout Hindus would then seek to invoke the criminal machinery against each other's religion, tenets or practices. That is what is increasingly happening today in India. We need not more repressive laws but more free speech to combat bigotry and to promote tolerance".
The Divisional Court in this country came to the same conclusion in Choudhury's case when rejecting an attempt to extend the offence of blasphemy to religions other than Christianity. I acted as counsel for Viking Penguin, the publishers of Salman Rushdie's novel, The Satanic Verses. As the noble Baroness, Lady D'Souza, will recall, it was a painful experience. It illustrated the danger of keeping blasphemy as a criminal offence because it encourages followers of other faiths to seek a blasphemy law to protect their faith against gross insult at the expense of free speech. One religion's faith is another's blasphemy.
The law of blasphemy is discriminatory. It prevents a Muslim speaking about the sacred entities of Christianity in ways that would not be criminal if a Christian were to speak in similar terms about Islam.
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The Colville committee rightly found that hard to justify, as did the Law Commission. I was surprised and very disappointed by the DCA's recent Written Answer on 3 March suggesting that it might be appropriate to prosecute and convict someone whose material or conduct was, in its words, "gratuitously offensive to Christians". That can only encourage a body such as Christian Voice in its ignorant campaign against the BBC over "Jerry Springer—The Opera" or Sikh militants objecting to Gurpreet Kaur Bhatti's play. Our approach is significantly influenced in this debate by the Government's unwillingness to abolish the offence of blasphemy.
The Government wish to extend the existing offences of stirring up racial hatred, as has been explained. I accept, of course, that the stirring up of hatred—especially ethnic hatred—against groups of Muslims or Hindus is as offensive as stirring up hatred against groups of Sikhs or Jews. But if the hatred is ethnic, that is largely covered by the existing offence of inciting racial hatred and the pretext cases could be covered by a narrow amendment.
Because we on these Benches strongly believe in the equal protection of the law, we have long campaigned for comprehensive equality legislation to tackle religious and other forms of invidious discrimination and harassment, including discrimination and harassment against gay and lesbian people, who are not to be protected by this new offence.
Although the Government say that the proposed offences are designed to protect people, the definition links people with their religious belief or lack of religious belief. "Religious belief" plainly includes belief in the teachings or practices of a religion or its followers. "Religious" means concerned with religion, and religion may include a multitude of belief systems, old and new, and not only the theistic but also the non-theistic religions, as well as sects within religions and cults—for example, scientology and the Moonies.
"Religious hatred" means hatred against a group of persons defined by reference to religious belief or lack of religious belief. "Hatred" is not defined. The proposed offences are not confined to hate crimes akin to violence; nor do they deal, for example, with stirring up hatred against people because of their sexuality, even though that is a serious social evil.
Hatred is not an activity; it is an emotion or a state or mind. The deliberate stirring up of hatred—that is, the intense dislike—of members of a racial group is an offence, even though it creates no immediate risk of stirring up violence. That is an acceptable use of the criminal law because criminalising incitement to racial hatred does not normally threaten the right to free speech. A verbal attack on members of a racial group is an attack on their common humanity and ethnicity.
However, in answer to my noble friend Lord Avebury, a verbal attack on members of a religious group, expressing intemperate criticism of, or hostility to, the beliefs, teachings or practices of their religion, is not an attack on their common humanity unless, in reality, it involves an attack on their ethnicity, origin and biology—for example, when it uses a religious attack to

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stir up racial hatred against Jews, Sikhs, Hindus or Muslims of Asian descent. A verbal attack on the followers of a religion involves an attack on religious beliefs, ideas and practices in the exercise of the right to free speech. Subject to narrow exceptions, the right to free speech applies not only to information and ideas favourably received or inoffensive but those that offend, shock or disturb.
The proposed offences are sweepingly broad in their reach. The Bill would make it an offence to stir up religious hatred by using threatening, abusive or insulting words or behaviour, or by displaying or publishing written material which is threatening, abusive or insulting, or by publicly performing a play or distributing, showing or playing a recording, or broadcasting a programme involving the use of such words of behaviour. It would also make it an offence to be in possession of religiously inflammatory material intended for publication.
Those offences would be committed not only if the defendant deliberately intended to stir up religious hatred but also where religious hatred was likely in all the circumstances to be stirred up. The offences could be committed in a public or a private place. They would be punishable on conviction on indictment by up to seven years' imprisonment or a fine, or both.
As the noble and learned Lord, Lord Mackay, has already indicated, a wide range of offences incur higher penalties if they are motivated or aggravated by religious hostility. One is the offence in Section 4A of the Public Order Act 1986, which involves using threatening, abusive or insulting words or behaviour or disorderly behaviour, or displaying any writing, sign or other representation which is threatening, abusive or insulting, with the intention and effect of causing harassment, alarm or distress. Section 5 covers similar conduct within the sight or hearing of a person likely to be caused harassment, alarm or distress.
Those offences cover all forms of harassment—not only racial or religious harassment but any harassment. The Protection from Harassment Act 1997 also creates a criminal offence, as well as providing civil remedies for the victims of harassment, including alarming a person or causing distress to that person. The Norwood case, which one can read about in the JCHR report, illustrates the very broad reach of the existing Public Order Act.
In the light of this wide armoury of offences and the existing robust case law, what exactly is the gap in the criminal law which needs to be filled by further criminal offences, and where is the evidence of a serious social problem which cannot be dealt with under the existing law?
I asked the Home Office to answer that question. It explained, first, the gap whereby Jews and Sikhs are covered by ethnic discrimination but not Muslims. It also stated that if the conduct is not likely to cause anyone present harassment, alarm or distress, then Section 5 of the Public Order Act will not apply. The Home Office gave me the following hypothetical examples of the only gap that it has been able to identify. The first is of a leader of a far-right group who gives a speech in the back room of a pub that encourages his followers to hate Muslims.
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The second example is of a radical Islamist preacher who circulates tapes to his followers encouraging hatred of Christians. In both situations, religious hatred is likely to be stirred up but not covered by the law. Those narrow examples could, if necessary, be dealt with by narrow and carefully tailored exceptions, but the Government have rejected that proportionate response.
The other vice is lack of legal certainty—not over breadth, but lack of legal certainty. The former Home Secretary, David Blunkett, wrote an article in the Observer on 12 December under the title "Why we'll outlaw the persecution of belief". He asked:
"Can it be right that hatred based on deliberate and provocative untruths jabout a person's religion remains unchallenged?"
So David Blunkett, the original Home Office architect, apparently believes that the offences are designed to protect beliefs against what he terms "untruths". In similar vein, Mr Khalid Mahmood MP apparently thought that Salman Rushdie could be prosecuted for his novel under these provisions. I am sorry to take—
Lord Evans of Temple Guiting: My Lords, perhaps I may respectfully say to the noble Lord, Lord Lester, that every Back-Bencher so far has kept within the eight minutes proposed by my noble friend the Chief Whip, which would enable us to leave the Chamber at 11.30 p.m.
Lord Lester of Herne Hill: My Lords, I apologise. I was encouraged by other Members of the House to make a single speech dealing with these matters, which is why it took slightly longer. If I may make one last point, I shall then sit down.
Faith in the Attorney-General's discretion is in my view misplaced because, in law as elsewhere, context is everything. Expectations will be raised by extremists on both sides. When the Attorney-General refuses to consent to prosecutions, that will be a recipe not for more tolerance and harmony but for the opposite. I apologise for having taken so long.
5.30 p.m.
Baroness D'Souza: My Lords, I, too, want to speak briefly about the amendments set out in Schedule 10. Words are powerful; they cause injury, often as hurtful as physical attack. Equally, they form the best defence against ignorance, bigotry and intolerance. In those countries where hate speech laws, whether directed at religious or racist hate speech, prevail, the underlying conditions of discrimination and hatred do not seem to have improved.
The noble Lord, Lord Lester of Herne Hill, has, with his customary clarity, exposed the confusions in the Bill as it stands, in particular pointing out the anomalies in the current blasphemy laws. I should like to refer briefly to the wider experience of such laws and the real dangers to freedom of expression that they pose.
Schedule 10 rests on at least three assumptions: that offence and even insult are measurable forms of expression; that the suppression of ideas and communication, however outlandish and/or

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unacceptable to others, will make for greater peace and harmony—in other words, that laws alone will make for a more gentle and humane society—and that broadly defined laws will not adversely affect the expression of difficult and controversial views inherent in democratic society. I believe those assumptions to be wrong. Offence and feelings of insult are subjective states of mind and feeling. What is offensive to me may not be at all offensive to you, so why should I be able to prevent you from seeing or hearing what is not offensive to you?
Of course, there are conditions to that kind of freedom, the most important being that we are able to avoid offence. That introduces the whole question of context. We must be free not to see the play or film, not to buy or read the book or not to turn on or hear the broadcast. If we are unable to avoid seeing, hearing or reading insulting material, as has already been pointed out by several speakers, existing laws on the statute book, such as the Protection from Harassment Act 1997 and the 1986 Act, provide protection.
There is no attempt to define religion precisely, but, instead to regard a group sharing common beliefs to be legitimate targets of insult. There is here the opportunity for mischievous cases to be brought and for some disreputable cult groups to claim the status of religion and for extreme factions to speak in its name. The phrase in the Bill,
"material is likely to be heard or seen by any person in whom … it is … likely to stir up racial or religious hatred",
is chilling. For example, who is qualified to define culturally sensitive notions of threat, abuse or insult? When does dislike or antipathy become hatred, and who defines that turning point?
Unwitting denigration of a particular religious belief or practice on, let us say, a public broadcast system, could well fall foul of the law. The lack of clarity will undoubtedly increase self-censorship, which is already practised by journalists and in the arts.
Although the Home Office Minister, Fiona Mactaggart, considers it unlikely that many prosecutions would occur, that is not good enough. We cannot rely on the view of one Minister in a letter to safeguard fundamental freedoms. Broadly defined and restrictive laws, once on the statute book, have a tendency to be used by authority to maintain power, to stifle criticism and to dampen undercurrents of discontent. An exhaustive study, admittedly carried out in the 1990s, demonstrated how hate speech laws, where enacted, have had a chilling effect on freedom of expression and, even more seriously, have in some cases been a barrier to public debate on how best to resolve tensions within society.
For example, hate speech laws in Canada, Denmark, France, Germany and the Netherlands are based on the premise that human dignity, quite apart from any question of safeguarding public order, must be protected. It cannot be argued that those laws have resulted in a decrease in insult directed towards Jews, Muslims, Turkish workers, immigrants from the Maghreb and the rest of Africa or other minorities. In
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fact, there has been a growth in support for extreme Right-wing parties in those countries. In France, it has been suggested that Monsieur Le Pen, who was convicted of hate speech under the 1972 Act, was forced to temper his message. Recruitment to his party increased significantly in subsequent years—some say because he was prevented from preaching his real aims and policies and came across as less extreme than he actually was and is.
Also, in Schedule 10, there is an unhelpful blurring of the distinction between advocacy and incitement. The latter is generally taken to imply both the intention and means to commit a criminal act such as race hatred. Advocacy, on the other hand, is a tool for persuading others—even with the use of hostile language—of a cause, religious or ethnic, and as such is a vital aspect of free speech.
A society that has a more civil tone to its discourse is pleasant and welcome, but some of the issues in society are unpleasant and difficult. We cannot afford to ignore those tensions. I shall cite a distinguished Sri Lankan lawyer, whose country has been torn by racist violence for decades, but who still argues:
"Dissent and indeed hate will eventually be expressed; sadly in Sri Lanka, we have witnessed far too much evidence that censoring hate from public discourse only banishes it to more deadly fora".
Liberty is better protected by less legislation. A focus on laws to curtail expression surely distracts attention from the vital need to invest in education and debate to address the root causes of religious discrimination. In my view, the Bill should proceed without the existing Schedule 10 which, if it ever reached the statute book, would constitute a serious hostage to fortune for many years to come.
5.37 p.m.
Lord Turnberg: My Lords, this is a large and important Bill but, having listened carefully to the debate so far, I shall not chance my arm by speaking about the parts of it that deal with religion; and I shall certainly not take on the lawyers. I hope that your Lordships do not think that I am lowering the tone if I focus on just one topic, which is the part of the Bill that deals with the protection of those who undertake research using animals—a part of the Bill that I strongly endorse.
In doing so, I shall declare a number of interests. I am chairman of the organisation called NC3Rs, which is the National Centre for the Replacement, Reduction and Refinement of Animals in Research, and which is an arm's-length body set up by the Office of Science and Technology to promote those aims. I am also a scientific adviser for the Association of Medical Research Charities and, in a previous existence, I was an academic physician.
NC3Rs is very conscious of the existing tight regulatory controls that we have in the UK over animal research—probably the most stringent in the world. Nevertheless, we are keen to encourage research into new ways to achieve some of the aims of science either without animals, with fewer animals,

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with better animal welfare, or all three. In all that, we try to work closely with animal welfare organisations, such as the Royal Society for the Prevention of Cruelty to Animals and the Fund for the Replacement of Animals in Medical Experiments, as well as the research community.
I must say that the animal rights extremists go far outside the interests not only of NC3Rs but the animal welfare organisations with which we co-operate. Furthermore, not only are the extremists, who are really quite close to terrorists in the way in which they go about their business, a danger to society, they are a danger to the very animals for whom they purport to be acting. I am here talking not about straightforward protest, which is the accepted right of everyone, but that behaviour which threatens the health, well-being and lives of others.
In NC3Rs, although we are keen to explore ways to replace and reduce animal use in research where possible, we are well aware of the vital role that animal research plays in investigating the nature of disease; the development of new treatments; and in the testing for safety of new drugs before they can be given to man. Those are all essential if we are to be able to conquer disease, and they are likely to be needed for some time to come.
For all of those reasons, I strongly endorse the provisions in the Bill, which offer reasonable protection from animal rights extremists. That protection is provided to most of the relevant groups which require it; that is, researchers in academic institutions, and in industry, animal breeders and their families and so on. One group that should be included, but is not, is the large number of medical research funders—namely, charities such as the Wellcome Trust, Cancer Research UK, the British Heart Foundation, the Arthritis and Rheumatism Council and the research councils.
I hope that it will be possible to include research funders during the passage of the Bill. Apart from that omission, I should like to reiterate how much I endorse this very important—indeed, essential—provision.
5.40 p.m.
Lord Baker of Dorking: My Lords, there are several things in this Bill that I support. I strongly support the creation of the Serious Organised Crime Agency where police, immigration and Customs officers and the National Crime Squad will come together. When we set out on this path a long time ago there were a lot of turf wars. It took a long time to get to that stage. The time was then not ripe, but it is ripe now. I congratulate the Government on that.
However, I do not congratulate the Government on their proposals for religious hatred. I agree entirely with the comments made by my noble and learned friend Lord Mackay of Clashfern. It is not often that a former Home Secretary and a former Lord Chancellor agree if they come from the same party. Certainly, as regards the Labour Party, I do not think that Mr Blunkett and the noble and learned Lord, Lord Irvine of Lairg, would find much to agree about. But I agree with my noble and learned friend, and I
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liked his article in the Times today which reminded me of the difference between Pharisees and Sadducees. It is a distinction that, sometimes, I miss on a Monday morning. I was glad to be reminded of it.
First, as regards the argument that racial hatred and religious hatred are different sides of the same coin—they are not. Incitement to racial hatred is rightly a crime because race depends on habits and customs, and, perhaps, colour, habits of dress and eating. If you are born into a race, you cannot abandon it and change it: you have it for life.
That is not the case with religion, which is a set of ideas that, in some cases, are reinforced by faith. Like any set of ideas, it can be challenged, criticised, vilified, satirised and mocked. It is capable of being changed—there is a choice. That is the important and vital distinction, which, 1 believe, is supported by the Select Committee, chaired by the noble Viscount, Lord Colville.
So why are the Government doing this? The noble Lord, Lord Lester of Herne Hill, has teased out of the Home Office two extraordinary examples, which are so extraordinary that to have legislation to meet them is ridiculous. I am drawn unfortunately to the conclusion that the real reason why we are having this debate is because there will be an election in about eight weeks' time. Very clearly, the Bill will not make progress in this House. Therefore, the Labour Party in its manifesto will be able to say, "We intend to bring in a law to change the law on incitement to religious hatred".
That will go down very well in those constituencies where they are trying to regain the Muslim vote. The noble Baroness sighs and signals her disagreement, but she has never stood for elective office. Some of us have done that repeatedly and we know perfectly well the importance of an election address that appeals directly to an important group in one's constituency. I am quite sure that that is the main reason.
I have many objections to this legislation. As the noble Lord, Lord Lester of Herne Hill, said, the phraseology is extraordinary. The Bill states that an offence will be created,
"having regard to all the circumstances the words, behaviour or material are … likely to be heard or seen by any person in whom they are … likely to stir up religious hatred".
As the right reverend Prelate the Bishop of Portsmouth said, there is no definition of religious hatred. Religious hatred will be in the eye of the beholder. It is the beholder who will say, "I consider that to be an act of religious hatred".
To the Front Bench opposite, I say that any group of people who are passionate and devout about a religion, who have been brought up in the framework of that religion, who have been taught to respect the leaders of that religion, who worship the leaders of that religion and who accept every word from the holy books of that religion will believe that any attack on their faith is an attack on that group. Many members of such a group will define their personalities and shape their lives in relation to that religion. So I do not believe that a distinction can be drawn by an attack on a faith and an attack on a group of people who follow

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that faith. The courts will not be able to do that. Many Muslims, in particular, will see it that way and their hopes will be dashed. That is the sort of trouble you can get into when trying to criminalise a state of mind.
The other problem is that expectations will be raised. In all fairness to the Minister, she touched on that in her speech and recognised that it was a possibility. But those expectations will be dashed because the Director of Public Prosecutions, in evidence to a Select Committee in the other House, said that this Bill will keep the freedom to insult Islam. Many people who observe Islam in this country, particularly the fundamentalist Islamists, will not accept that.
The Minister referred to a leading member of the Muslim Council who said that he does not think that he has changed his view on that. But he is on the record as saying,
"Defamations of the character of the Prophet Mohammad is a direct insult and an abuse of the Muslim community".
Whether he is resiled on that, I do not know, but I know that many Muslims feel that. Their expectations will not be met. This is a measure that will create tension, dissention and frustration, and will leave a belief that the Government who bring it in are deceiving the country.
This is a bad law in the same sense that the law against pornography was a bad law. Your Lordships might remember that the definition of the word "pornography" under the old legislation was that a matter was pornographic if it depraved and corrupted. No one could decide what that meant, because everyone had a different view of depravity and corruption. As the Home Secretary, I had to pick up the last remnants of that Bill, which proved totally and utterly unworkable because depravity and corruption are in the eye of the beholder. Religious hatred is also in the eye of the beholder. So the same confusion and dissatisfaction will arise.
The Bill will encourage extremists because they will believe that they now have what they want. Perhaps I may say something about the way in which Christianity has treated this issue over the centuries. I am a mild, middle-of-the road Anglican—not too enthusiastic, but there on the important days. Over the centuries, Christ has been described as a paedophile and a homosexual. In The Da Vinci Code, the very basic concept of Christianity—that Christ did rise from the dead—is denied. In fact, it suggests that he kept on living and married a harlot.
Last year, there was an exhibition at the Tate where there was a picture of the Crucifixion made out of discarded Marlboro Lights cigarettes. Perhaps I may remind noble Lords what Nietzsche said:
"I call Christianity the one great curse, the one great innermost corruption, the one great instinct of revenge, for which no means is poisonous, stealthy, subterranean, small enough—I call it the one immortal blemish of mankind".
I shall not ask the Minister whether Nietzsche would be arraigned before the court, because she may say, "Of course, no. He is just attacking a faith. Of course, he would not be. No, no, no".
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But if the word "Islam", instead of the word "Christianity", was inserted today, would the Minister be quite so sure? I do not think so. I regret to say that this is an erosion of the free speech of our country. We should be free to say things that cause offence and that many people find distasteful. That has been the tradition over the past 300 years in our country. More than three centuries ago we stopped torturing and burning people for their heresies against the Christian faith. We have moved on. Voltaire came to live in this country in the 18th century to escape persecution for scepticism in France. We have a very long tradition. This law will create a straitjacket on the freedom of expression. It will make people very anxious about saying what they intend to say. Will they be arraigned before a court?
Censorship is on the march. I deplored what happened in Birmingham when certain Sikhs stopped a play being performed earlier this year. I thought that it was an absolute outrage. I was amazed that no Minister of the Crown stood up to condemn it—not one Minister did that. It was an outrage against free speech. Under this law, performance is specifically mentioned in Schedule 10. I am quite sure that some of the more resolute, determined or extreme Sikhs would certainly use this law to try to stop such a performance being put on again. My remedy for such Sikhs would be to make them sit through several performances of "Murder in the Cathedral" to realise—
Lord Avebury: My Lords, Sikhs are a racial group and if they had wanted to, they could have sought to invoke the incitement against racial hatred provisions, but they did not do that.
Lord Baker of Dorking: My Lords, it is very difficult to prove racial hatred when a Sikh playwright writes a play about a Sikh community and performs it in a Sikh community. I would have thought that rather astonishing.
I conclude by saying that western liberal society has to accommodate itself to Islam and it is doing that slowly over Europe and in our own country with scarves, turbans and all the other issues. But at the same time Islam has to accommodate itself to western liberal societies. The acceptance of criticism and of things which may sound very repugnant, is all part and parcel of living in our country.
I believe that over the past 300 years we have built up a general tolerance in our country. I remember Matthew Arnold's phrase,
"We half believers of our casual truths".
That has been one of the things which have made us less extreme in this country. Many immigrants come to this country because they like our religious toleration, the way in which we treat women equally, our rule of law and our freedom of speech. Let us not lose the last.
5.51 p.m.
Lord Alli: My Lords, this is an important Bill. Like many others, I would like to focus on the clauses dealing with incitement to religious hatred contained in Schedule 10.

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This debate can be characterised by a conflict of freedom: the freedom to say what you like in a fair and democratic society, and the freedom to live your life without the violence that flows from what a person says about the colour of your skin, your religious beliefs or your sexual orientation. Like the noble Baroness, Lady Ramsay of Cartvale, I believe that society has to balance the rights that we have as citizens with the responsibilities to exercise those rights in a way which protects and cherishes other people's rights and freedoms.
This House has often been instrumental in resolving difficult questions on a conflict of rights. For my part, coming from the Muslim community, I find it hard to understand the logic of those who say that freedom of speech will be under threat if we extend the provisions already in place for race to religion. How is it that the protection of the Sikh community or the Jewish community does not infringe freedom of speech, but the extension of those protections to the Muslim community or other vulnerable groups does?
It is patently absurd to assert that freedom of speech is somehow impaired in a different way when applied to Muslims as opposed to Sikhs. Those who oppose these measures on the basis of freedom of speech will need to work much harder to convince me, and many people from the Muslim community and other religious faiths, that this is not a question of, "Do as I say and not as I do". I look forward to seeing the narrow amendment of the noble Lord, Lord Lester of Herne Hill, when it is published.
Having dealt with the points of principle in these provisions, I feel rather like Oliver Twist. I want more. I hear the noble Beadle on the Front Bench from the workhouse saying, "More! You want more?". Yes, I want more. I would like the Government to go further. I have written to the Minister asking her to give consideration to the extension of the provisions to cover gay men and lesbians through a new offence of incitement to homophobic hatred. I have given her notice that, in Committee, I shall be bringing forward amendments to that effect.
If the law is extended as currently intended, it will be able to tackle hatred against me because of my religious beliefs. It is already able to tackle hatred against me on the basis of the colour of my skin. But it will be unable to tackle hatred against me on the basis of my sexuality.
Perhaps I may give some practical examples of what I mean in three extracts of homophobic lyrics in popular, contemporary rap music. I have no idea who Beenie Man is, but he sings,
"Hang lesbians with a long piece of rope".
In another song he sings,
"I'm dreaming of a new Jamaica, come to execute all the gays".
Another current popular rap song states,
"Step up to the front line, burn the men who have sex with men from behind. Shoot queers".
With rights come responsibilities. Advocating through popular song hatred of the kind expressed in those lyrics is unacceptable in a civilised society.
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I conclude with lines which I am sure will be familiar to noble Lords:
"First they came for the Jews
and I did not speak out
Because I was not a Jew
Then they came for the communists
And I did not speak out
Because I was not a communist
Then they came for the trade unionists
and I did not speak out
Because I was not a trade unionist
Then they came for me-
and there was no one left
To speak out for me".
So to my Christian colleagues and all the Church groups who filled our postage bags, and to my Jewish and Sikh friends, I say that it is time to speak out for us. I will be looking to my Muslim brothers and sisters, too, and hoping that they will support my extension of the Bill to cover homophobic hatred. In the end, we all have to speak out for each other.
5.56 p.m.
The Earl of Rosslyn: My Lords, I begin by declaring an interest as a serving officer in the Metropolitan Police and as someone who has worked operationally with both the National Crime Squad and Customs and Excise, two constituent parts of the proposed Serious Organised Crime Agency.
The new agency will, I believe, deliver a more co-ordinated and creative approach to tackling organised crime, building on the strengths Or the existing agencies and significantly enhancing operational and intelligence capability.
The increasing domination of organised crime groups in criminality most threatening to our national interest provided a compelling imperative for action. Operating across force boundaries, often at a national or international level, such groups are sophisticated and well resourced. The scope of their criminality is wide ranging, such as drug trafficking, organised immigration crime, fraud, counterfeiting and intellectual property theft, while the links between organised crime and terrorism are well established.
But if the pattern of their offending is diffuse, they share at least two common features: an inclination to corrupt and intimidate, including the intimidation of witnesses and victims, and a capacity for extreme violence. They increasingly demonstrate a growing understanding of law enforcement methods, using themselves elaborate counter-surveillance techniques and highly complex money laundering arrangements.
The economic and social costs of their crimes may be as great as £40 billion a year, approximating the GDP of New Zealand. Few markets are more profitable to them than drug trafficking and people smuggling, with the UK heroin and crack cocaine markets estimated to be worth £3 billion a year, while the global profits from people smuggling are estimated at £5 billion annually. Europol believes that 70 per cent of illegal migrants are facilitated by organised crime groups. Such groups are in effect businesses that exist to make money and do so by creating markets for their

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trade, which in turn create victims of crime. They base their activities on the twin priorities of maximising profit and minimising risk, the most sophisticated operating across commodities to do so.
It would be right to acknowledge the achievements of existing law enforcement agencies in addressing these challenges. The links between them have improved. They are widely respected abroad, generally effective operationally and the co-operation between them and the intelligence agencies is almost unique internationally. Nevertheless, institutional responsibilities are not always clearly defined. The collation, assessment and sharing of intelligence is not consistently achieved and ill-conceived perceptions of each other's role still remain.
At its worst, such an arrangement leads to operational compromise. At best, the national law enforcement effort is less cohesive than it might be. The capability of these agencies has not, in short, kept pace with the sophistication and flexibility of organised crime groups.
A response predicated on nothing more than an amalgamation of the existing agencies would, in my view, have been a lost opportunity, less likely to lead to fundamental improvements, more likely to prolong existing inefficiencies. I therefore welcome the more radical proposal outlined in the Bill, where the new agency really does have the opportunity to be much more than the sum of its parts by linking intelligence, investigation and intervention and by providing a single point of contact for international partners.
However, to be effective, the agency requires a radical new strategy, one in which law enforcement, though important, is just one of a wider range of integrated measures aimed at reducing harm with equal attention given to reducing profit opportunities, hardening targets, disrupting businesses and their markets and preventing new enterprises from gaining a foothold in a market thus destabilised.
To measure the success of such an approach, an entirely new performance management framework will be required which focuses less on numbers and more on how effectively the agency is disabling career criminals, using whatever technique is most effective.
However, the national response to organised crime cannot be considered in isolation from other aspects of law enforcement and must link effectively with local policing. Organised criminality has both national and local dimensions and to overlook the relationship between criminals and levels of criminality is to ignore those loose structures that exist between those operating in the criminal environment.
Serious organised crime at a national level is the mirror image of criminal enterprises to be found in many urban communities. National and international crime often has its roots in local crime, with criminals learning their trades in local communities through dysfunctional role models. Even when operating at a national or international level, they are still based in local communities, so any strategy for tackling serious and organised crime should recognise those interdependencies.
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The new agency will need to rely on the infrastructure of local forces to support it and to be a productive source of criminal intelligence. The agency may wish to engage its assets at a local level and then work its way up the supply chain. Local forces in their turn need the agency's intelligence products to tackle organised crime at force level and its specialist support for complex operations.
The management of these relationships will, I believe, be a key determinant of the agency's success and I wonder whether the Minister agrees that more needs to be done to give local forces and police authorities a stake in the new agency, something which goes beyond the somewhat passive provision in Clauses 6 and 7 to provide them with copies of the agency's annual plan and report.
Finally, any national strategy must recognise the importance of community engagement. The nature of urban communities is changing and with those changes come vulnerabilities that can be exploited by organised criminals.
The public are unlikely to distinguish the actions of one law enforcement agency from another and if the new agency gives insufficient consideration to neighbourhood engagement, that will in turn degrade the ability of local police to operate effectively in key vulnerable communities.
Perhaps I may end by commenting briefly on Clause 125 which proposes an offence of trespassing on designated sites. I currently command the Metropolitan Police Royalty and Diplomatic Protection Department and am very proud to do so. Apart form the responsibilities self evident in its title, we also provide policing for the Palace of Westminster and Downing Street, sites all susceptible to designation under the Bill.
Mine is a predominantly armed command with officers, male and female, accepting the profound additional responsibility which attaches to those carrying a firearm. They know that the armed engagement of any suspect will lead to the meticulous and often prolonged scrutiny of their actions whether through an independently supervised internal inquiry, a coroner's inquest or in some cases with the officer a defendant in a criminal trial.
However sincere their beliefs, those who seek to exploit iconic protected sites by using trespass as a campaign tactic do so at immense and wholly unnecessary risk to themselves and to my officers, not to mention the significant diversion of other operational resources. I believe that the proposal in the Bill would provide a degree of deterrence similar to that which has existed in respect of diplomatic premises since 1977 and I hope that this measure will enjoy the support of the House in due course.
6.4 p.m.
Lord Mackenzie of Framwellgate: My Lords, I start by welcoming the Bill in principle. Crime and policing are second only to anti-terrorism in the important work being done by the Government to protect the public. I declare an interest as one who joined the police more than 40 years ago. The 1960s were a

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different era from the one we inhabit today. Indeed, when I joined we had a police force and a postal service, whereas now we have a police service and a Parcel Force. 1 suppose that that must tell us something.
To be more serious, we live in a world which is becoming smaller. A criminal act can be committed in one country and the perpetrators can be at the other side of the world within hours. Identity theft is becoming more and more prevalent and the public have a right to demand a response by the authorities.
It is absolutely crucial therefore that the police and other law enforcement agencies are organised to operate in modern times with all the powers and technology that is available. This Bill sets out to achieve that by establishing the Serious Organised Crime Agency which will bring together officers of the National Crime Squad and the National Criminal Intelligence Service, which includes the investigative arms of Customs and Excise and the Immigration Service.
My noble friend the Minister is aware that there are serious concerns about the terms and conditions of the police staff transferring to SOCA to such an extent that the Police Federation has recommended to its members that they do not join the new organisation until they are satisfied with the terms and conditions of employment. It is absolutely essential that this new important organisation gets off on the right footing. Can the Minister reassure the House that agreement is being actively pursued because co-operation between the new agency and the police is critical?
I am satisfied that the Minister has answered the point about the agents not being police officers. The police are proud of the office of constable, which, as your Lordships know, is independent of the Executive and answerable only to the law. A chief constable cannot be ordered to do this or that and cannot be removed on a political whim, as can happen in the United States, where I spent some time training with the FBI.
Another advantage of using sworn police officers is that they cannot take industrial action. That point has been touched on already. It last occurred in 1919, after which it was outlawed. What safeguards are there in relation to the new agents? Will they be allowed to join a trade union, as is being suggested with the new civilian custody officers? If so, will there be a no-strike clause in the agreement? Will they have police powers or greater special powers such as those which are presently held by Customs and Excise?
Another issue is the question of complaints against the new agents. The police service is overseen by the new independent Police Complaints Commission. Can my noble friend assure the House that similar arrangements will be put in place with regard to these investigators who, like the police, will come into conflict with the public by the very nature of their job? Will there be a discipline code similar to that of police officers? These are not inconsequential issues.
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Going back to the central purpose of the Bill, it makes eminent sense to bring the national bodies dealing in criminal intelligence and national and international crime under one roof. I recall the problems in the United States with the different agencies competing with each other. On the ground, there was a myriad of law enforcement bodies vying for jurisdiction. Small village police departments competed with the county sheriff or the state troopers, challenged by the specialist departments in transport, universities, housing complexes and the like. There are literally thousands of different agencies with overlapping jurisdiction in the United States. In my view, this is a mess and leads to inefficiency. Thank God, we do not have that problem in the United Kingdom.
In the United States, we saw the competing interests at federal level following the 9/11 incident, with the Federal Bureau of Investigation working to the Department of Justice; the Alcohol, Tobacco and Firearms Agency working to the Revenue; and of course the overarching Central Intelligence Agency—all failing to share and act on critical information that may have prevented the tragedy that occurred.
I recall President Bush recently being asked whether he intended to oversee all these different intelligence organisations by the appointment of an intelligence tsar. There is no truth in the suggestion that he replied in his own inimitable way, "No, it's far too important a job to be left to a Russian". I jest of course, and it is an important co-ordination job which has now been filled.
In conclusion, I address the civilianisation of the custody sergeant, which has resulted in a powerful campaign waged by the Police Federation against the loss of this important post. It is an important role and one that police sergeants do not always welcome. It requires the courage to take on senior officers, at times, to conform to the codes of the Police and Criminal Evidence Act 1984.
My noble friend the Minister mentioned that it would be a matter for chief constables to appoint civilians to this role. She said that some chief constables were in favour of such appointments. The Police Review notified me that it had telephoned the various forces alleged to be in favour and all had denied that. I should be grateful if my noble friend could give me the names of those forces that agreed.
I have for many years been concerned that a regular police sergeant had to be taken from the streets to perform the task of custody officer. When it was introduced, it led to a considerable diminution of supervision on the streets. However, whether a civilian can fulfil that role with the same authority is arguable.
Perhaps I may make a constructive suggestion to the Minister. The Metropolitan Police used to have a separate rank of station sergeant. It was a rank between sergeant and inspector and was a well respected figure, exemplified by George Dixon, who many of your Lordships will remember on the television from his days in Dock Green. He must have been the only serving octogenarian police officer in the Met. He was the epitome of wisdom and experience—dare I say it, rather like Members of your Lordships' House.

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My point is that bringing back this rank of "station sergeant" or "custody sergeant" would solve the problem. Ordinary sergeants could be back out supervising on the streets, whereas the new rank of station sergeant could fulfil the important role required by the PACE Act, and he or she would still be a sworn officer. I ask the Minister to consider my proposal, which I am sure would find favour with the Police Federation.
In conclusion, I would emphasise the importance of taking the police service with you in implementing the provisions of this important and necessary Bill. I commend the Bill to the House.
6.13 p.m.
Lord Soulsby of Swaffham Prior: My Lords, in concert with the noble Lord, Lord Turnberg, I wish to address the part of the Bill concerned with animal research organisations. I declare an interest as a patron of the Fund for the Replacement of Animals in Medical Experiments—often referred to as FRAME.
This country has some of the most rigorous regulations concerning the use of animals in research. Recently, the Science and Technology Committee of this House examined in detail the use of animals for experimental purposes and concluded that such use was ethical. It also made a number of recommendations to enhance the public understanding of animal experimentation, including the setting up of a committee to promote further use of the alternatives to experimentation, generally called the three "Rs"— reduction, refinement and replacement. As the noble Lord, Lord Turnberg, mentioned, he is the chair of this committee referred to as NC3Rs.
All experimentation using animals in this country is performed under the Animals (Scientific Procedures) Act 1986. It is administered by the Home Office. It is a legal activity and as such must be protected against the unlawful activities of animal rights extremists. It is, to my mind and that of many others, extremely important that this Bill reaches the statute book, for the following reasons.
The Bill would ensure the progress of biomedical research in the search for and development of medicines and vaccines for the control and prevention of disease in man and his animals. So much of this requires the use of animals in research.
The Bill would protect the welfare of animals used in research. Regulation is far less rigorous overseas, which is where the activities of animal rights extremists could drive animal-based research. The direct action of extremists includes the so-called "liberation" of animals from animal holdings into environments that are completely foreign to them where they would have difficulty surviving, and the intimidation of veterinary practitioners who provide veterinary help and care to animal breeding establishments. Those practitioners may then not be available when animals fall ill.
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The passage of the Bill would protect the UK science base, which is world class and ranks in the highest echelons of scientific endeavours globally. It is necessary to protect that too. That research is worth more than £3 billion per year.
Those who would oppose the Bill will claim that adequate legislation already exists to deal with animal rights extremists. That is not the case. Intense harassment and intimidation can and does occur. directed against personnel working in research establishments, supply companies servicing such establishments, the banks that provide the financing, the children of employees as they go to school, and the wives of employees as they go to supermarkets. Indirect harassment occurs in telephone calls, e-mails and abusive letters.
As has been pointed out, while Clause 143 seeks to protect a broad spectrum of persons connected with animal research, it fails to make provision for charitable institutions that fund animal research. There are many such institutions, from large ones such as the Wellcome Trust, to small charities that are interested in forwarding animal research. My hope and expectation is that Clause 143 will be amended to include those charitable institutions.
Many will be aware of the continuing activity against organisations such as the Huntingdon research laboratory, Huntingdon Life Sciences, by the organisation known as SHAC—Stop Huntingdon Animal Cruelty. Huntingdon Life Sciences has been able to carry on despite the withdrawal of funding by certain banks. It has an animal facility in the United States to which SHAC has extended its activities. it is interesting to note that seven of SHAC's personnel face US domestic terrorism charges.
SPEAC—Stop Primate Experiments At Cambridge—has provided a further example of the cumulative effect of harassment and intimidation. Its activities have resulted in the decision of the University of Cambridge not to proceed with a primate laboratory facility that would have worked on some of the most disastrous neurological disorders of man—such as Alzheimer's disease, Parkinson's disorder, motor neurone disease and others.
The University of Oxford has now obtained an injunction against several of the animal rights organisations opposing its plan to build a research facility. That facility would involve experimentation on living animals. It was opposed by organisations such as SPEAC, SHAC and the Animal Liberation Front, all of which plead that they do not support violence or illegal acts on the part of their members. The record of these organisations totally belies that claim.
Extremists have been ruining the lives and livelihoods of people and local communities where animal experimentation takes place. They have hindered the progress of biomedical research and compromised the welfare of the very animals they purport to safeguard. There are very many people concerned with biomedical research who very much welcome this Bill.
6.20 p.m.
Baroness Henig: My Lords, I should start by declaring an interest as chair of both my own local police authority in Lancashire and of the national Association of Police Authorities, which represents all police authorities in England, Wales and Northern Ireland.
This is an important and substantial Bill which contains many far-reaching changes. I want to focus mainly on the proposals for the new Serious Organised Crime Agency but then speak briefly on certain other aspects of the Bill.
We have heard already that there is strong support within the policing community for the proposed new Serious Organised Crime Agency. It is not that long ago—1997—since the National Crime Squad and the National Criminal Intelligence Service were set up. Both will now make way for the new agency. I could not let this opportunity pass without paying tribute to the excellent work done by NCS and NCIS, and to the valuable contribution made by my police authority colleagues on the service authorities overseeing those squads, including in a former life, as we have already heard, the noble Baroness, Lady Harris of Richmond, who I am delighted to see in her place on the Liberal Democrat Front Bench.
However, despite the good work done by NCS and NCIS, a step change is now needed to tackle the substantial challenges posed by international organised crime. SOCA is rightly not a re-badging or merging of existing national bodies; it is about creating a new body with the capacity and capability to tackle the highly sophisticated and professional criminals who trade globally in human misery such as drugs and people trafficking.
I know that many in the service, including the Police Federation, have argued strongly and passionately that police officers transferring to SOCA should retain their status as constables. The office of constable is rightly highly valued but I am not convinced that that is the way forward. SOCA needs to be able to bring together a wide range of expertise and specialist skills into a cohesive whole. It needs to be a modern 21st century body with a new culture able to work across traditional roles and boundaries.
But in removing horizontal barriers to defeating serious crime we must take care not to create vertical ones instead. There is no doubt that the formation of NCS and NCIS led to what is known as the "level 2" gap which has opened up in tackling crime that crosses command unit and force boundaries. It is important that the creation of SOCA does not exacerbate that. Much as it would be convenient for us if they did so, criminals do not organise their activities into neat compartments.
Last week, I welcomed on behalf of all police authorities the Government's commitment to revitalising neighbourhood policing. It is in our neighbourhoods that the impact and effects of serious organised crime are most acutely felt. If SOCA is to
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succeed in reducing that harm, it will need to work hand in glove with local police forces, as the noble Baroness, Lady Harris, rightly emphasised.
There needs to be a seamless approach to tackling criminality at local, force and national level. As we have seen from the hard lessons learned in the United States, community intelligence is often key and will be crucial to SOCA's effectiveness. We need to be sure that SOCA goes about its business in a way which supports local efforts to build cohesion and confidence within our diverse communities in policing and law enforcement.
Unfortunately, police authorities are not persuaded at present that the proposed governance arrangements for SOCA will secure the connectivity needed. There is no provision for local policing to have a direct voice on the SOCA board. Instead, we understand that the non-executive directors will be appointed on a personal basis. There would be much greater confidence about this among police authorities and forces if there was credible and current representation from local policing interests on the SOCA board.
Disappointingly, the Bill does not even make explicit provision for SOCA to consult police authorities and forces in setting its annual priorities or plans, as a previous speaker has already pointed out. The chairman designate is on record as saying that SOCA needs to take account of the public's concerns in developing its priorities. But rather than, as has been suggested, using media column inches as a proxy for this, why not seek the views of police authorities who represent those communities and know the impact of serious crime locally? We are assured by the Government that such consultation will take place, but in that case, why not say so on the face of the Bill?
These are constructive criticisms intended to improve the Bill. The Association of Police Authorities will, whatever the outcome, work closely with Ministers and the chairman and director general designate to ensure a smooth transition and to get SOCA off to the best possible start.
I now want briefly to mention a couple of issues which have caused some controversy in policing circles, the first being the provision in Part 3 of the Bill to enable the functions of custody sergeants to be carried out by police staff. Civilianisation is not new to the police service, but it was given impetus by the Police Reform Act 2002. The most visible embodiment of this, in every way, has been the introduction of police community support officers. There is no doubt that community support officers are enormously popular with our communities, providing as they do a visible and accessible presence on the streets.
A key plank of the police reform agenda, in which government, police authorities and forces are jointly engaged, is workforce modernisation. This is about making the most effective use of the skills and expertise of the whole workforce in a more holistic and unified way.
I absolutely agree that the custody role is an extremely important one, encompassing as it does the need to protect the welfare and the civil liberties of

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detainees, to challenge the decisions of investigating officers and to secure the integrity of evidence. I know that the proposals have provoked strong opposition from the Police Federation and many serving officers—and the concerns of practitioners should not be dismissed lightly—but I am still not convinced that there is any reason why a suitably trained and skilled member of staff could not take on this role and exercise the same independence and integrity as a police officer.
Certainly in relation to the need to work more effectively in bringing offenders to justice, my experience as a magistrate indicates that what matters is that those who take on this role are able to ensure that the right charge is laid and that there is proper liaison with the CPS.
The key point here is that the clause is an enabling one. It would allow this approach to be piloted, as my noble friend the Minister has already pointed out, and would give police authorities and chief officers who wish to do so the flexibility to move in this direction. I believe that gradually that is what will happen.
Secondly, the Bill makes provision to extend the powers available to PCSOs. As I said earlier, they are a great success and the recent additional resources for more of them have been welcomed by all my police authority colleagues. However, there are mixed views about giving PCSOs more powers, prompted by concerns that we risk losing their distinctive value—their capacity to be out and about on the streets and accessible to our communities. As has been said already, this aspect of the Bill will need careful examination.
I want quickly to welcome Clause 152 and the proposed new duty on police authorities to give local people information about policing in their area. Indeed, this simply codifies good practice already happening around the country. While there may be a need to discuss the detail of the provisions to ensure that they support authorities' efforts to reach as widely as possible into our communities. the principle has strong support.
I shall not touch on any other aspects of the Bill. There is much to be commended in the Bill, but there is also much that will benefit from your Lordships' usual rigorous and careful scrutiny in its subsequent stages.
6.29 p.m.
Lord Sutherland of Houndwood: My Lords, I agree with much of the core business of the Bill. However, I should add that I agree with the main range of points made in the speeches of the noble and learned Lord, Lord Mackay, the noble Lords, Lord Lester and Lord Baker, and the noble Baroness, Lady D'Souza.,lb/>
I begin by asking for the indulgence—and possibly the forgiveness—of the right reverend Prelates who are normally in their places on the Benches designated for them. It is not sufficient to plead that some of my best friends are bishops—true though that be, perhaps. There is a story told of a bishop who rose to preach in a very distinguished city church and, almost before he could utter the opening words of incantation, a voice cried out—not from the wilderness, this was a city
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church, but from the right-hand aisle—"All bishops are charlatans and conmen". Before he could think of a witty and, of course, humble rebuff, a voice called out from the left aisle: "That is an insult and lie." His relief and gratitude spilled over. To the voice from the left he called, "I didn't know you were a bishop!". To which the reply came: "I'm not. I'm a charlatan and a conman".
The point of the story is that offence perceived is not always the same as offence given or intended. That lies at the centre of some of the problems I have with aspects of the Bill. Criticism is easily perceived as enmity, and remarks made by way of criticism are as easily perceived as attacks against the holder of those beliefs as against the beliefs in question.
It is argued that the Bill distinguishes between the person and the beliefs. I look, not as a bishop, a politician or a lawyer, but as a simple philosopher of religion, at the Explanatory Notes to the Bill, and I am encouraged when I read that the offences are designated to include hatred against a group where hatred is not directed against the religious belief. That almost reassures me.
I turn to Schedule 10 to the Bill, however, and read:
"In this Part 'religious hatred' means hatred against a group of persons defined by reference to religious belief".
The Bill specifies that the persons in question are defined by reference to religious beliefs. I submit that these are not separated in ways that are clear and manageable under law. For example, if you criticise my belief that one day Scotland will win the Grand Slam, I can live with that, because such a belief does not define me in any essential way. However, if you criticise my belief in democratic processes, in the importance of education and in the essential distinction between truth and falsehood, then it is I who begin to feel criticised and indeed threatened, not my system of beliefs alone. Mutatis mutandis, the same applies to religious believers, be they Christians, Muslims, Sikhs or Jews.
The Bill depends upon a clear distinction between the beliefs and the believer, and yet, at the heart of the Bill, the believer is defined with reference to the religious beliefs they hold. It is not conceivable that one can mount a reasonable analysis and perhaps criticism of the beliefs of specific religions and not run the temptation that many will take these to be criticisms of the believers in question. That is because—rightly, the Bill implies—the two are intimately bound up. Religious belief is such that the character of the belief defines the individual in a way that many other peripheral beliefs do not and thus can be cast aside, chosen or rejected.
The same is true of religious beliefs. Once adopted, the character of the individual is defined in very deep ways, which this Bill runs the risk of pulling to the surface in a possibly disruptive fashion.
The conclusion of my argument runs thus: insult and offence can be taken when not intended, and, as a consequence, will often be assumed to have been intended. Furthermore—this is a point in the Bill that I have not gone into, but it may well come up in Committee—someone's religious hatred may be

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stirred up by reading or hearing of opinions that are not sourced in religious hatred. Who, in terms of the Bill, can predict when that is likely—not least in the days of the Internet and the worldwide web?
Criticisms of the beliefs of someone whose dominant group is defined by those beliefs is ipso facto implied criticism of that group, and will be read as such by both believers and, perhaps worse, by those whose motives and intentions are seriously unworthy. I submit to your Lordships that the composite of issues surrounding this proposed legislation will inhibit the reasonable, constructive and free expression of criticisms of religious belief, and, in so doing, will impoverish our culture and our community.
6.34 p.m.
Lord Harris of Haringey: First, my Lords, I declare an interest as a member of the Metropolitan Police Authority, and of the executive of the Association of Police Authorities.
This is a Home Office portmanteau Bill. It deals with the important issue of establishing the Serious Organised Crime Agency, and then a whole series of other issues only tangentially related, if at all, to the main purpose. I suspect that the other issues will command more time in today's debate than the core material of the Bill. That is not surprising, as among them are some significant and, in a number of cases, controversial proposals.
Clauses 121 to 123, together with Clauses 142 to 146, are intended to deal with the problems posed by animal rights extremists. The context of these provisions is that this country has some of the strictest rules in the world governing the use of animals in medical research, only permitted when there is no non-animal alternative, and with clear guidelines on the welfare of animals involved. In these circumstances, the behaviour of some extremists, which goes way beyond the right to legitimate and lawful protest, cannot be tolerated. These clauses are therefore welcome and proportionate.
In particular, I support Clause 122, which deals with demonstrations at private residences with the intention of causing alarm and distress, having been subjected to these on a number of occasions—not because of my involvement in animal research, but because of my then leadership of a local authority. While I, as a politician, may be used to abuse and aggressive demonstrating—I can certainly dish it out in return—it is not reasonable for the families of those against whom the demonstrations are targeted, or those who simply happen to live in the same house, or are neighbours, to be at the receiving end of early-morning chanting, late- night visitations, the dumping of ordure, or whatever else it might be.
Incidentally, I hope that my noble friend the Minister will be able to confirm that Clauses 142 to 146 will also apply to charitable research institutions.
Clause 124 and Schedule 10 create the offence of "incitement to religious hatred". I have long supported this, and participated in the debate initiated by my noble friend Lord Ahmed on this subject in October
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1999. It is inequitable that, while the offence against inciting racial hatred has been extended to Sikhs and Jews, the protection does not apply to other faith groups. Islamophobia has become more overt, with the demonisation in some quarters of all Muslims following 9/11.
Such demonisation, however, is not new. I remember from my childhood storybooks glorifying the Crusades, and depicting the infidel in the most unflattering terms. It has reached a new pitch in recent years, though, and this provision is long overdue.
There has been a vigorous campaign against the proposal on the grounds that it will inhibit free speech, and even stop comedians poking fun at religion. Like many of your Lordships, I enjoyed the monologues of Dave Allen, who sadly died a few days ago, but what he said about the Catholic Church could not be said to stir up hatred. Similarly, Alan Bennett's vicar in "Beyond the Fringe" may have punctured the pomposity of the Church of England—fortunately the Bishops' Bench is empty—but it did not bring about the religious hatred of Anglicans.
Like other of your Lordships, I too have received representations from the Police Federation about Clauses 116 and 117 and the creation of staff custody officers. I am in favour of using police officers to carry out those functions for which their training equips them, and I see nothing wrong in some tasks, which have historically been clone by police officers, being carried out by police staff if that police training and background are not needed. In bringing forward these clauses, however, it is important that my noble friend the Minister is able to convince the House, and those outside it, that the disappearance of custody sergeants will not lead to a diminution of performance as far as the number of cracked trials and the number of offenders brought to justice are concerned.
I am conscious that I am rapidly using up my time, and I have not spoken about the new agency. That is the consequence of portmanteau Bills. Indeed, so wide is the canvas of this Bill that, should we have any time to consider it in Committee, 1 will be sorely tempted to put forward amendments on a number of other topics, which would clearly be encompassed within the long title.
I would like, for example, to strengthen further the laws on airguns and imitation firearms. The death of Andrew Morton, the two year-old from Easterhouse, Glasgow, who was shot in the head with an airgun pellet, has once again shown in the most tragic way possible that airguns are lethal weapons. Airguns are not toys. They are dangerous weapons that have become increasingly sophisticated over the years. Legislation must take that into account. Despite a recent increase in the minimum age for purchasing an airgun, they are still too easily available, and too many are already owned and used by those who have no good reason to keep them.
Similarly, imitation guns are too easily available and, despite the recent changes in the law, too many crimes still involve their use, and armed police officers

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too often have to be deployed in response before it is known whether the guns are imitation or not, with potentially lethal consequences.
Finally—and, I fear, fairly briefly—I shall refer to the new Serious Organised Crime Agency. It is right and proper to bring together the different agencies that are intended to impact on serious organised crime. A fragmented approach is not sufficient for modern criminal gangs whose ruthlessness should not be underestimated. Nor should we lose sight of the corrosive effect that such gangs can have on communities: the drugs they deal in and import; the people-smuggling; extortion, and so on. Moreover, the money, resources and technology they can command require a much better and more co-ordinated response from the state.
The new agency is a critical part of that response. However, it cannot be created and expected to operate in a vacuum. It must work closely with the police service around the country. Local forces, after all, will have the local information and intelligence, and they will also have to police the communities before, during and after a SOCA operation.
For that reason, I believe it is important that the terms and conditions of those who work for the agency should be sufficiently flexible to enable a proper interchange of staffing between the agency and the police service. Indeed, I hope that anyone aspiring to be a senior detective in a police force will see it as an essential part of their CV to have done a spell at SOCA—and vice versa. And it is for those reasons also that the new agency must not be constructed to denude the police service of its most able and experienced detectives.
There is also a risk that the new agency will behave and have more in common with the security and intelligence services than with policing and law enforcement bodies. If this is to be avoided, governance issues will be crucial. The agency must be seen to be accountable, and it must be seen to consult—with the police service, police authorities and the communities most affected by serious organised crime.
The principle of policing by consent must apply to this new agency, and for that to happen, good governance must be a priority. But if this is properly addressed, then I am sure that all of your Lordships will want to see the new agency achieve its promise and deliver what the public want to see: an effective fight against the most dangerous criminal elements in our society.
6.43 p.m.
Lord Campbell of Alloway: My Lords, it is a pleasure to follow the noble Lord, Lord Harris of Haringey, if only to be able to put the case against the offence of religious hatred.
The amendments proposed by Clause 124 and Schedule 10, which amends Sections 18 to 23 of the Public Order Act 1986, are concerned with various types of conduct. Words or written material likely to be seen or heard by any person in whom it is likely to stir up religious hatred are all opposed. Without amendment, these sections are concerned with racial
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hatred and impose limits upon freedom of speech—and rightly so—to avoid insult to the common humanity.
In this context, when this offence was first rejected by your Lordships, Earl Russell said of the "reach across"—I use his concept and his words—from racial to religious hatred that dealing with both in a single statutory framework was dangerous and ill conceived because religion is a matter of belief and choice, and our racial characteristics are not. I refer to cols. 240 and 241 of the Official Report of that debate.
Earl Russell also said that the "reach across" would also compromise both freedom of expression and freedom of belief. Indeed, the Joint Committee on Human Rights has already advised that on the facts and circumstances of any particular case, certain articles of the ECHR could well be engaged—a matter on which the trial judge would have to direct the jury, as this is a matter of law.
As faith has ever been an emotive subject of potentially combustible proportions, it is the intention to stand by the wholly objective analysis of Earl Russell.
I declare myself as a wayward Anglican who respects the faith—or the absence of faith—of others. A trial under these provisions would not be welcome in any private interest or in the public interest. The proceedings in any court of law, irrespective of conviction or acquittal, could themselves but stir up— there is no question of likelihood—religious hatred and religious contention. The instigators of these proceedings would be the zealots who control the moderates by various forms of threat, intimidation and reprisals.
The consent of Mr Attorney to the institution of these proceedings affords absolutely no safeguard whatever. His involvement in such affairs is wholly unacceptable. He is in a totally hopeless situation either way; his administrative decision would be challenged on judicial review by the zealots.
On receiving a complaint, the police have to open investigations. They seize files and documents and take a series of statements. No doubt there will be some leaked media coverage. On this material, depositions are prepared for trial, but the statements will not have been tested by cross-examination, albeit that in these circumstances, there is a high propensity for error.
The police, on the advice of counsel, conclude on this information that it is proper to proceed if there is more than a 50 per cent chance of success. Then they seek the consent of Mr Attorney. Then Mr Attorney makes an administrative decision one way or the other for which he cannot give reasons. Obviously he cannot, pre-trial. So what happens on judicial review when the court wants to know why he did what he did? There is absolutely no way in which Clause 124 and Schedule 10 could be amended to enable a trial such as this to ensue without doing the very thing that is contrary to the intendment of these provisions: that is,

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stirring up religious hatred. It would be wholly contrary to the public interest in our multi-religious society.
Lord Avebury: My Lords, does the noble Lord acknowledge that the Select Committee on Religious Offences found that the Attorney-General was not subject to judicial review if he refused a consent to prosecution?
Lord Campbell of Alloway: My Lords, I am much obliged to the noble Lord. Look at the clock. I cannot claim injury time. I cannot answer the noble Lord. Perhaps I may be allowed to finish with one sentence and sit down.
Such assuredly is the opinion of the Muslim Parliament of Great Britain, the Islamic Council (Human Rights) and Amir Butler, the executive director of the Australian Muslim Public Affairs Committee who was concerned with the case under the vilification law in the state of Victoria.
My time is up. I apologise for not being able to answer the noble Lord.
6.51 p.m.
Lord Plant of Highfield: My Lords, there are many things to welcome in the Bill. I broadly support Parts 1, 2 and 3 and certainly the animal aspects of Part 4. However, a couple of issues give me concern.
First, I refer to the restrictions on the right to demonstrate and protest in the environs of Parliament. I shall need some convincing on that. In an age when we all decry disengagement from politics, this is the wrong time to discourage deeply felt protest—which would be the effect of the legislation. In these two Houses of Parliament, we make awesome and, in some cases, awful decisions which affect the lives of millions of people at home and abroad. I see nothing wrong with those who feel strongly about these issues making their views known in a consistent and even relentless way in the environs of Parliament. It may be that there are ways of meeting these points in relation to Parliament Square by treating the frontage of Parliament Square—I mean no disrespect—as being like a parking meter. Individuals could mount their protest there for a limited time to be followed by others; but no individual should be able to feed the meter. I have to say that I owe this ingenious proposal to my close friend the noble Lord, Lord Smith of Clifton.
However, I want to speak mainly about the part of the Bill dealing with incitement to religious hatred. In general, I take a liberal view of issues to do with civil liberties and religious freedom. As with most aspects of living in a liberal society, there is always a balance to be struck between freedom and equality. As the Minister said in her opening remarks, the Bill does not protect religions against ridicule, lampooning and so forth. Nevertheless the blasphemy laws do in relation to the doctrines of Christianity as understood by the Church of England. Therefore, if there is an argument in favour of extending the protection of the law to other
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religions without repealing the blasphemy laws, we are creating another inequality. I think that that would fuel problems about religious resentment because there would be two forms of protection for the Church of England and only one form of protection for every other form of belief. That is an important issue. It has been argued that there is an egalitarian case for protecting in particular the Islamic community on the analogy with racial identity which provides protection to Jews among others. I believe this analogy to be wrong.
What might be a liberal view of freedom of expression? The core idea surely is that I should be free to say what I want so long as I do not harm others. The crucial question is: what is harm to others? Reasons have already been mentioned by other noble Lords. It cannot be offence to the sensibilities of others. If we sought to criminalise what offends the sensibilities of others we would be issuing a wholesale charter for interference with individual freedom. It would be an entirely subjective test. I am the only person who can say that my sensibilities have been offended.
Harm has, I believe, to be something much stronger and more definite and objective than offended sensibility. I think there are two more objective accounts of harm: first, harm to physical security; and, secondly, harm in the sense of preventing someone else living their own life in their own way, or, putting it another way, exercising their own liberty. Those are more palpable and objective examples of harm than offended sensibility. So part of the liberal view is that the state can interfere with someone's freedom of expression when it causes harm in one or both of these senses.
There is a further condition; namely, that the harm to others cannot be avoided by the person claiming to be harmed. Hence, to utter extremely disparaging things about a religion from a church pulpit is private to those who attend. To write disparaging things about religion in a book which others do not have to read is not sufficient to cause harm. Saying disparaging things in a play does not expose to harm those who do not go to it. So the preaching of evangelicals from their pulpits about the wrongness of other religions, the publishing of The Satanic Verses and the performance of the play which exercised Sikhs in Birmingham do not cause direct harm. The harm can be avoided by members of these communities by not going to such churches, reading such books or attending such plays.
The fact that someone or some group finds what he or it understands to be going on in a pulpit, book or play as being deplorably offensive to his religion, even though he is not directly confronted with it, is not a good reason for seeking to ban this material. To seek to criminalise something to which you object without needing to witness it seems to me to be a form of moral egotism: assuming that everyone has to conform to your view of what is good. I can see no justification for that.
It is sometimes argued, as it was this morning by my honourable friend Fiona Mactaggart—I have very great respect for her—that there is an analogy with

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race in that for many people religion is constitutive of their identity and is not a matter of free choice. I do not deny—it is true of myself—that for many people their religion is, or perhaps in my case has been, the most important thing in their lives, as perhaps being a member of the Jewish race is to a Jew. However, it seems to me that there is always a choice. For some religious groups, exercising the choice to exit the group for those who belong to it may be very painful and the exit costs are high. There is, however, still the choice and if these groups themselves became more liberalised and less authoritarian through education and the accommodation of the virtues of a liberal society, mentioned by the noble Lord, Lord Baker of Dorking, the exit costs would be a good deal lower.
In addition, it has to be said, it seems to me, that religions themselves, at least implicitly, put choice into a central role in their faiths. They all have forms of encouragement and they have forms of prohibition on behaviour. There would be no sense in encouraging the adherence of a religion to do X and to abstain from Y unless people had the capacity to choose X or Y. If they have the capacity to choose X or Y then they can also choose whether or not to belong to the religion. Therefore, in my view it would be reasonable to regard some form of expression which could affect the physical security of individuals and which could prevent the freedom of those individuals to practise their own beliefs in their own way and to which exposure could not be avoided as falling within the criminal law, in principle, on a liberal point of view.
Those circumstances exactly match the case mentioned this morning in the Times by the noble and learned Lord, Lord Mackay of Clashfern. As he points out, where a banner was displayed saying "Islam out of Britain" the case was prosecuted under existing criminal law. So I think that the Minister will have to explain why the sort of case mentioned by the noble and learned Lord, Lord Mackay, which can be criminalised under liberal assumptions about freedom of expression is not adequately dealt with under existing legislation. But I plead with my noble friend to go forward on the issue of repealing the blasphemy laws on which my own position follows from what I said about offended sensibility. I agree with the ancient expression, which I shall not try to quote in Latin, that offences to the gods are the concern of the gods.
6.59 p.m.
Lord Bhatia: My Lords, I begin by declaring my interest as the chairman of the British Muslim Research Centre.
I should like to make a few comments on Clause 119 of and Schedule 10 to the Bill, which deal with racial and religious hatred. I believe that the clause is all about protecting vulnerable religious communities. I have at least two main reasons why I wish to speak on this subject. First, I was one of the Select Committee members considering the Religious Offences Bill, chaired by the noble Viscount, Lord Colville. Secondly, I am a Muslim and am part of the community, which at the present feels very vulnerable and is constantly under
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attack in all kinds of ways. I will refer to the present conditions a little later. I wish to remind the House that we must never forget that today the Muslim community is under attack, but tomorrow it could be any other faith. Therefore our approach should be that of protecting all faith communities in this country.
The crucial issue in this Bill is about incitement. It is about dealing with people who are prepared verbally, communicating through writing or the Internet, to incite others to hate because of someone's faith. It is about ensuring that people out there who feel threatened are protected. The subject has come up for debate a number of times over the past four years. When the matter came up for debate under the Antiterrorism, Crime and Security Bill in 2001, I recall hearing from all sides of the House that there was acceptance that such a protection was necessary but that it should be brought to Parliament not under an anti-terrorism label, but under a more specific one.
In 2002, the noble Lord, Lord Avebury, introduced a Private Member's Bill that led to the appointment of the Select Committee whose report was debated the following year. As a member of the Select Committee, I heard the evidence of a lot of people of different faiths, a lot of institutions and faith community leaders, and above all the law-enforcing agencies such as the police, the CPS, the Attorney-General and Home Office officials. From all law-enforcing agencies the message was clear—that there was a gap in the law and it would make their job much easier if Parliament legislated to that effect.
A few other important facts came out of the report. First, that two faith communities were already protected—the Sikh and the Jewish communities. Secondly, that by extending similar protection to all other faith communities, we may not be infringing on the freedom of speech of anyone, that legislation on freedom of speech was not absolute and that it carried responsibilities with it. In the evidence given by Muslim community leaders, it was clear that they did not wish to propose that the blasphemy law should be removed or that the Sikh and Jewish communities which had protection should lose it. All that the Muslim community was asking was to be treated equally with other faiths under the law.
There are some 1.6 million Muslims, forming 3 per cent of the population of this country. It is the second largest faith community, a young community with problems relating to low education attainment, a high level of unemployment and a large percentage of the community living in some of the most deprived boroughs of this country. There is considerable evidence that such people in such communities feel vulnerable in a whole range of ways, but here is the double whammy: it is bad enough to be unemployed and suffering from deprivation, but to be victims of hate because of their faith becomes very difficult to cope with.
Since 9/11, the Muslim community has been under attack both verbally and physically at times. Our women and our children have been attacked, spat on and abused in the streets and in public. It is no longer safe for many

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to walk on the streets without fear. I cannot believe what I hear from some of my community members; I cannot believe that in 21st-century Britain, a section of the population have fear for their safety simply because of their faith. Does it not remind us of the terrible days of the Holocaust during the Second World War? Does it not remind us of tragedies of the former Yugoslavia in recent years? Are we all waiting for a large number of Muslims to die or be maimed or damaged before we wake up?
Let me be a little more specific. We all hear about the possibilities of a terrorist attack on our country. Our security services are warning us about this possibility. If that was to happen, God forbid, the first faith community to be attacked within this country will be the Muslim community. Our police will, as always, have to defend the community and will also be in the front line of such attacks. Out there, there are people who are waiting to incite others to hate the Muslims, and the scenario that I have just described will be the best opportunity for them to do so. The current gap in the law will permit them to do so.
I must pay tribute to the Prime Minister and the Government in wishing to protect the Muslim community in this country. Immediately after 9/11 it was the Prime Minister who forcefully and clearly said that it was just a handful of Muslim extremists who had carried out the atrocities of 9/11, and that the vast majority of Muslims in this country were law-abiding British citizens who needed to be protected, and protected properly, against any attacks. The police and the law-enforcement agencies were advised to ensure that appropriate protection was given. Since 2001, the Government have made various efforts to bring in provisions to fill the gap in the legislation, and I hope that this House will support the passage of Clause 119 of this Bill.
Let us please find the reasons, the mechanism and the will to support this clause. Freedom of speech is not at risk. The Muslim community wants freedom of speech as much as any other citizens and communities in this country. The legislation as presented to us for debate complies with human rights legislation; in fact, the gap in the law currently breaches human rights legislation, because the state currently protects some faiths and not all the faiths in the same manner.
Lastly, I remind your Lordships how this proposed legislation will work in practice, if we support it. Whenever there is an offence of incitement to hate, the victims will have to go to police to report it and the following steps will be taken before a case is brought to the court. First, the police will have to be satisfied that there is a clear incitement to hate; secondly, the police will then have to convince the CPS that there is incitement to hate; thirdly, the Attorney-General will then have to exercise his fiat that this is definitely a case to incite people to hate a group or a community or a faith group. Only then could the case be sent to the court for prosecution. Fourthly, a jury will decide whether the charge is proven and whether there is clear evidence that incitement to hate a group of people has been carried out. Finally, the court itself has to see all the evidence before the judgment is given.
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These are the hoops through which any case under this legislation, if we support it, will have to go. My own assessment is that very few cases will even reach the courts and those that do go to the courts will have to pass the stringent tests I have described. But what this legislation will do is to draw a clear line and send a message to those who wish to incite people to hate groups of people, that society, the state and the people of this country will not allow such trouble makers, hate merchants and bigots to damage vulnerable communities in this country.
7.8 p.m.
Baroness Gibson of Market Rasen: My Lords, I begin by congratulating the noble Lord, Lord Bhatia, on an important and thoughtful speech.
The establishment of the Serious Organised Crime Agency is a major step forward in combating crime. It seems a logical reorganisation. I have for more than three years served on European Union Sub-Committee F, which has undertaken a number of reports covering organised crime at a European level. During our deliberations, committee members met representatives and heard presentations from the NCS, the NCIS and other relevant organisations. I have been impressed by their diligence, expertise and dedication, and I am sure that under this new agency, their efforts will be even more effective.
I turn now to the harassment of those who work in biomedical research and veterinary research centres in this country. I recognise the heated arguments surrounding the issues of animal rights and animal research. I am a member of LAWS, the Labour Animal Welfare Society, and would be among the first to protest about unnecessary cruelty to animals. But I recognise the work carried out in research establishments which helps to overcome serious illnesses such as AIDS and Alzheimer's. As someone whose mother suffered from Alzheimer's, I know at first hand the pain that that illness can cause to the sufferer and his or her relatives and the need for research into it.
My trade union, Amicus, has many members who work in animal research and I know them as caring and sensitive beings. The homes of some of them have been attacked and their families and livelihoods threatened as a consequence of their work. I therefore welcome the Bill's proposals for the protection of those who work in the animal research field. Under the remit of other Bills, the Government have already taken positive steps to protect such workers against animal rights extremists who use violence and intimidation as tactics to prevent experimentation. Such violence and intimidation does nothing for the cause of animal welfare. It is irrational and counterproductive.
I particularly welcome the extension of protection to individuals who are targeted and harassed and who feel isolated and vulnerable during such harassment. Being picked upon and bullied is always a nerve-wracking experience, especially when it is part of an organised campaign. The victims suffer, and fear and unease spreads to the families and friends of those who are targeted usually by a small but vociferous group of extremists.

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Peaceful leafleting against animal experimentation is one thing; threats and violence are another. I am pleased that the UK already has some of the strictest licensing in the world for the use of animals in medical research. Long may that last, and long may the search to find alternatives to animal research continue. But until animal research can be abolished, workers in research establishments need the legal protection that the Bill provides.
I have listened very carefully to all the contributions on the incitement to religious hatred. I was interested to see the positive response to the Government's proposals from the Commission for Racial Equality. It states that,
"these are necessary legislative measures to ensure that all are treated equally before the law",
and that,
"these provisions will protect the believer not the belief".
That is a strong and unequivocal statement.
The CRE points out that its response is informed by more than 40 years' experience of monitoring and using the existing laws against incitement to racial hatred and discrimination. With that in mind, the CRE believes that the proposed law would have a powerful deterrent effect and would set down an important societal marker to make clear that such behaviour is unacceptable in a free and democratic society. Obviously, debate will continue around these proposals.
The question of abolishing the law of blasphemy, which has already been mentioned in the Chamber tonight, has exercised the mind of the CRE. It believes that abolition would send a clear message to those who fear that a wish to curtail their freedom to criticise or make fun of religion is behind the proposed legislation. I know that the Government are aware of the anxieties expressed about the blasphemy law. I hope that my noble friend will reassure the House that the Government will give careful consideration—possibly not in immediate legislation, but for future reckoning—to any proposals on blasphemy when amendments are tabled, as I know they will be.
Last week, I received an interesting letter from the Open Spaces Society. Its members are worried about the effects of Clauses 125 to 128, which cover trespass on designated sites. The society was founded in 1865 and is Britain's oldest national conservation body. The society's main concern is that these clauses appear to make simple trespass—currently a civil offence—a criminal offence on certain sites. It believes that, as worded, the clauses are far too wide-ranging, especially in relation to land owned by the Crown, and that innocent people who want to enjoy freedom to roam over an area may far too easily be made into criminals. I welcome my noble friend's comments on those genuine worries.
Finally, 1 wish to raise issues on behalf of my noble friend Lady Thornton, who is unable to be here this evening because of family commitments. Because of the new arrangements for SOCA, the future of the National Hi-Tech Crime Unit is bound to be profoundly affected.
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I understand that a decision has not yet been made about whether the investigation of online crimes against children will be part of SOCA's remit. Currently, a significant part of the resources of all the agencies involved are deployed in fighting online crimes against children. To be clear, I am referring principally to child pornography and to grooming in chat rooms. It is essential that the funds currently devoted to this work and the expertise that has been developed are not lost.
The Virtual Global Taskforce, led by the UK's National Crime Squad, has recently been established. It brings together the national police services of the UK, Canada, Australia and the USA. Other countries are soon to join. In its embryonic form, the VGTF is the beginning of a new and reassuring police presence on the Internet. As such, it has been widely welcomed and supported by the Internet industry, children's charities and others. In these days when the Internet makes national boundaries irrelevant, it seems clear that we must maintain a clear national focus for all the work in this area, and I hope that my noble friend will be able to comment on these issues.
7.18 p.m.
Baroness Flather: My Lords, I intend to speak entirely about the new offence of incitement to religious hatred. I came to this country more than 50 years ago. I was very fortunate because I joined UCL. I did not know its history at that time but noble Lords will know that it is not affiliated to any Christian church. It was the only college not affiliated to any Christian church and it was the first to take in women. It had a profound effect on me. The whole atmosphere was inclusive and liberal. It was a very long time ago, more than 50 years, but in my entire university career, I never felt that I was an outsider, a woman or that I had a different religion. I just felt part of the college.
That feeling and that ethos has remained with me since then. My vision of society in this country is different from the one that we are talking about today. I do not foresee divisions that focus on someone's religion or race. I hope that one day we will not need the crime of inciting racial hatred. We should be moving towards not needing it. I fear that we will need equal opportunities legislation, whether for race, gender or disability. We will always need that because, unfortunately, we are weak and sometimes we do not treat people as we should. But I hope the time will come when public order offences will cover all different forms of incitement to hatred, as they should.
I have been impressed by the speeches of my noble and learned friend Lord Mackay of Clashfern, the noble Lord, Lord Lester, the noble Baroness, Lady D'Souza, and my noble friend Lord Baker. They have all made extremely good points and very clearly—far better than I could ever do—to say why we do not need this new offence to protect the Muslims.
I am well aware that there is a feeling that the Muslims are at the receiving end of a lot of unfortunate treatment, but we also have to find the best way of

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making them part of this society rather than creating yet another offence of religious hatred and separating them from ourselves.
I am sure that your Lordships are well aware that of all the groups that have come to this country, the one that has remained more separate than the others is the Muslims. We have heard about race in terms of Sikhs. I cannot understand why they are supposed to be a different racial group. Every Sikh was a Hindu like me and was converted to Sikhism: there is no difference. In fact, all Pakistani and Bangladeshi Muslims were also Hindus and were converted to Islam. It becomes nonsense: it is a by-product of something like distinctive headgear or wearing turbans and so on, but that was not the intended effect. They are protected in the same way as the rest of us are under the racial hatred legislation.
Some 20 years ago I nailed my colours to the mast in the Swann report, which is about the education of children from ethnic minorities. If your Lordships ever get to read the second chapter, entitled the "Nature of Society", bear in mind that at that time I had a vision of Britain as a society in which we do not have separateness and separate groups practising culture and religion separately. We are all together, with the mainstream British culture undergoing a change to include us. I never thought that it would happen as quickly as it has.
We have only to look around us to see how much the mainstream British culture has changed and how much the influence of people who have come to this country has made it more vibrant, interesting and fun. Long may that continue. I do not want to see separate groups developing separately in this country.
I have chosen to live here and I would like to think that every other person who has come from another country has chosen this country. No one forced us to come here; no one is forcing us to live here. If there is such a big problem in this country, could I just—this might be incitement—say to people, this is not a prison. There are many other countries that we can all go to. If we do not like it, we can all leave.
I know of certain countries that have a religion of their own where one cannot practise any other religion at all: one must have no overt sign of any other religion. I cannot understand why we have so much talk about blasphemy. It is a dead law. Last time there was a trial was in the case of Oz, such a long time ago. That was a fiasco. It is not being used at all, so why do we worry?
I would like to ask the right reverend Prelate why the Anglican Church is so much in retreat all the time. This is an Anglican country. I am willing to accept it.
The Lord Bishop of Portsmouth: My Lords, I would not say that the Church of England or the Anglican Church is in retreat. What I said earlier was carefully balanced in a productive way. If we have this law for religious hatred, our specific protection needs to be
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unravelled. If we do not pass this law, let us leave the blasphemy law to gather dust generously, if that is the mind of the House.
Baroness Flather: My Lords, gather dust it certainly will, or we can lose it—I do not think that it will matter at all. I do not want to see separate schools in this country. I do not want to see women treated worse than women in the mainstream. I want this country to remain the country I came to, and to improve: to be more cohesive and to have a central ethos that binds us all to which we owe our allegiance.
7.25 p.m.
Lord Lloyd of Berwick: My Lords, it is a great privilege to follow the marvellous speech of the noble Baroness. I am afraid that what I have to say will be regarded as a dull interlude in a fascinating debate.
When the Bill was going through the House of Commons, an amendment was tabled by Andrew Mitchell to repeal Section 17 of the Regulation of Investigatory Powers Act, commonly known as RIPA. That is the section that prohibits the use of intercept material in legal proceedings. In the short time that Andrew Mitchell was allowed—I may say to the noble Baroness, Lady Ramsay, 'whom I am not sure is in her place, that he is not a lawyer, but he seemed to show a mastery of the subject of interception—he made a very convincing case.
I shall be tabling a similar amendment in Committee, as I did five years ago when RIPA was being enacted. I will say a word or two about why that amendment should be agreed to. At the outset, I wish to pay the warmest possible tribute to the noble Baroness, Lady Ramsay, from whom I learnt all that I ever knew about the sophisticated techniques employed in interception. She was a marvellous teacher and I must have proved a slow-witted pupil: probably even more slow-witted when she sees the terms of my proposed amendment.
The noble Baroness made an important point this afternoon and a few days ago that interception is about more than telephone tapping, of which we have all heard. It is always important to remember that. On 26 January, as the Bill was going through the House of Commons, the Government published a Written Statement on interception, for which we had all been waiting a long time. I shall return to it in a moment.
I remind the House—I am sure the House has riot forgotten—that we are the only country in the world apart from Ireland that does not use intercept material to convict serious criminals. When I was preparing my report on terrorism in 1995 I visited the United States of America, Canada, France and Germany and talked to the intelligence agencies in all those countries. They were astonished that we did not use intercept for evidential purposes: for convicting as well as catching criminals.
Of course it would not make a difference in every case, but it would make a difference in perhaps a large number of cases and in some cases it would prove crucial. In Australia it has been found that when defendants are faced with the transcript of an incriminating telephone

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conversation they are more likely than not to plead guilty straight away. Why cannot we use the same technique here?
I will not dwell on the many absurdities that arise in practice in the law as it now stands, but I can give just one example. Suppose there are two drug dealers engaged in a telephone conversation in England. If that conversation is intercepted in Holland—and these were the facts of a case that reached the House of Lords not very long ago—that intercept could be given in evidence in English proceedings to convict one, other or both of the defendants; but not if that conversation had been intercepted in England. That seems to me to be a crazy result that we have reached.
I come back to the Written Statement. The first thing to notice about it is that the review team could not reach an agreed conclusion, which might explain why it took so long. It was left instead to the Ministers to make the decision. It is important that it did find that evidential use of intercept material would be "likely" to convict some serious criminals who would not otherwise be convicted. Surely, that tilts the balance in favour of admitting the evidence, unless there are very strong evidence the other way.
What are those arguments? The report refers to the unique relationship that exists between the intelligence agencies and the police. It hints that that relationship might be prejudiced, and the noble Baroness, Lady Ramsay, made the same point earlier this afternoon. I know that the relationship is indeed very close, but is it unique? In Australia, intercept material is used both for evidential and intelligence purposes, and there has been no difficulty.
Then it is said that sophisticated techniques now in use might be compromised. That is an important point, which weighed heavily with the noble Baroness, Lady Ramsay, as was clear from her speech. There is now a well established procedure in the courts—I wish I could assure the noble Baroness, Lady Ramsay, of this—whereby such techniques would be protected from the public gaze. It is known as the public interest immunity certificate. It was explained by the noble Lord. Lord Thomas of Gresford, a day or so ago in the debate on the Prevention of Terrorism Act, and it is working well currently in the courts. The sophisticated techniques of which the noble Baroness spoke would not be at risk, and the more ordinary techniques of telephone tapping could be used to convict criminals.
I have one last point. As I said, I shall be tabling an amendment in Committee. I wonder whether it would be possible for me to see the report before the Committee stage. I am aware that the report is classified, but I wrote to the Home Secretary on 4 February asking whether I might, as a former chairman of the Security Commission, see the report. I wrote again on 16 February, pointing out that I still have the security safe in which my top secret documents used to be kept. I am afraid to say that I have not yet had a reply, although I do not complain about that, because the Home Secretary has clearly had other things on his mind in recent days. I wonder whether it might be possible for me
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together with the noble Baroness, Lady Ramsay, to be allowed to see the report. It may be that if we did. we might be able to resolve some of our differences.
Lord Lester of Herne Hill: My Lords, I am grateful to the noble and learned Lord. Before he concludes, I am sure that he is aware that in other countries, such as Germany, this problem is well catered for by specially vetted judges who sit in camera and who do not have to show sensitive material at all to the accused or his lawyers. Could not those rather stringent conditions be imposed as the quid pro quo for ensuring that the judge sees everything?
Lord Lloyd of Berwick: My Lords, I am not sure that I was aware of that, but Germany was certainly one of the countries that I visited some 10 years ago, and there seemed to be no difficulty then.
7.35 p.m.
Baroness Whitaker: My Lords, I particularly welcome Clause 92 of this excellent Bill, which, in enabling mutual assistance, does away with what I hope is the last obstacle to the UK's ratification of the UN Conventions against Transnational Organised Crime and against Corruption. I remind your Lordships of my interest in Transparency International. Can my noble friend assure the House that the UK will now be able to ratify the Convention against Corruption? It is important that a number of OECD countries are among the first 30 countries to ratify, as these will determine the implementation systems; none of the 19 which have ratified so far is from the OECD. We shall lose out if there is not a balance and, also, surely the UK should be seen among the leaders in combating international corruption.
To turn to SOCA, which is a big step forward, I have one concern; that likely to focus on drugs and people trafficking, as it should, and created as it is from the absorption of other elements, it may take the lion's share of precisely those skills and resources which are used on economic and financial crimes. Corruption and other economic and financial crimes tend to be left out of policing targets, because the view persists that there are no victims. The report of the Africa Commission testifies otherwise, to the millions of victims among the poor of the world, and to our obligation to reduce this scourge of their economic growth and democracy, as well as of our reputation.
We lack a single, well resourced body, charged with investigating and prosecuting these crimes. The Serious Fraud Office has too few resources to be able to handle other than very serious or high-profile cases. So. I ask my noble friend, what will be the consequences for the SFO and local forces of this reorganisation? Will the SFO have less recourse to the criminal intelligence work at present undertaken by NCIS, or the covert policing undertaken by the NCS, after these have been absorbed into SOCA? I also hope that my noble friend will consider extending the list of offences to which the investigatory powers of the DPP will apply to include corruption offences.

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I want to welcome the new offence of stirring up hatred against people because of their religion. Much eloquence has been deployed to say that this provision harms freedom of speech. I fear I may not be let back into Hampstead tonight, but I do think that my friends are confusing two things. We need to ensure that the wording is tight enough to allow books, plays, films, programmes to attack, challenge, ridicule and make jokes about beliefs safely. The Bill needs some work on that. To send that signal clearly, I agree with all those who say that it would now be right to do away with the offence of blasphemy.
But we should not forget that it is a common occurrence in this country for people to experience the incitement of hatred because of their religion or belief. Very telling evidence from your Lordships' Committee on Religious Offences of actual incidents, and the personal accounts that I have had from senior police officers, speak of the inability to prosecute serious incitement to religious hatred, which threatens community cohesiveness, corrodes values and puts people in fear and embittered isolation.
I do not think that religious hatred can quite be regarded as a proxy for race either, because it is white British Muslims who have testified to by far the most discrimination, as a survey of over 1,000 British Muslims carried out by the Islamic Human Rights Commission shows.
This provision should encourage us to put ourselves in the place of others. I was a child when my grandfather's relatives were killed in Auschwitz and in my old age I have seen the slaughter at Sarajevo only on television. I have very rarely experienced personal hatred on the grounds of my presumed religion, still less for my humanist beliefs. And I think few of your Lordships may have experienced that kind of hatred. But it happened extensively in Bradford and Burnley and there is evidence that the propagation of hatred is increasing.
We need to make it clear that free debate through all the vehicles of art and humour, to be valued, is a different matter from intimidating, public hatred of the people who hold ideas we may repudiate. Twenty-first century world history should remind us of the difference.
7.40 p.m.
The Duke of Montrose: My Lords, it is a great privilege to follow the noble Baroness, whose speech ranged over such wide and meaningful issues.
I should like first to express sympathy with the Minister in her complaint about the after-effects of the Prevention of Terrorism Bill. I almost feel as though I have to pinch myself to be sure that it is not still Thursday and the clocks have not been restarted. Once again we are groping with the problems thrown up by an underworld tired up by shady deals and modern technology and frequently operating on an international scale.
Noble Lords seem to agree that the Bills currently before Parliament or promised by the Government for the next Session represent a major new construct for
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policing, crime detection and justice. If these Bills represent the only way that we have to deal with these issues, it will be a major task for all of us to get it right.
I notice from a briefing supplied by the Police Federation, and referred to by my noble friend Lady Anelay, that the Bill will change for ever the unique characteristics that have defined policing for over 175 years. The noble Baroness, Lady Harris of Richmond, gave a fairly full description of the concerns voiced by the Scottish Police Federation about the Bill's proposal to remove the total independence of the authority of chief constables.
The Bill talks of the drive for consistency of approach, but that could so easily be frustrated if the relationship between the new agency and the existing police forces is not satisfactorily thought through and defined.
It would appear that one of the ideas in the Bill is that politicians should be architecting and driving the programme, rather than mainly supervising the activities of the various police forces. Does that not mean that if you are on the receiving end of some law officer's activities, in the final analysis it will not be much use hoping that you can appeal to the Secretary of State for a review should you think that you have suffered some injustice? Does this not represent a further erosion of the separation of powers which has been such a feature of our freedoms but which has appeared to be a rather low priority for this Government?
As we progress through the Bill, I hope that it will become a little clearer, for the Scottish context, what the relationship is to be between the Lord Advocate and the Scottish Ministers. The Lord Advocate currently has the responsibility for the prosecution of crime, the direction of prosecuting authorities and the investigation of sudden and suspicious deaths. Under Clause 23, he is to have responsibility for the direction of SOCA in Scotland. But then we have the Scottish Ministers, who are to be involved in the annual plan, in how SOCA intends to exercise its functions, and in determining the strategic priorities, the performance targets and the codes of practice. Finally, there is the Secretary of State, who will have chatted to the Ministers, but will have power to impose "a requirement" relating to any of the functions or activities of SOCA. It seems to me that there could be quite some grounds for considerable confusion among all those directors.
If there is to be any discretion over the powers and the circumstances in which they are exercised, one has to ask whether there should not be a role for the Scottish Parliament. Given the propensity of the Scottish Parliament to stop and discuss almost any subject, I am sure that it will take the chance to look at the matter, anyway.
I thank the Minister for her assurance that the training of officers who will find themselves operating in different spheres is in the forefront of the Government's thinking. It is important, as was voiced earlier, that those who have to come from other parts of the UK to operate in Scotland will have to know how to operate under a different system of law.

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The Law Society of Scotland has expressed some concern on a number of these issues and no doubt will wish to see amendments brought forward in Committee. In particular, it has a worry about the different duration of sentencing powers in the Bill—in Clause 49, in relation to assaults, obstruction or deception—as opposed to those that are available for the protection of police officers in similar circumstances under the Police (Scotland) Act 1967. Can the Minister tell us whether there will be any provision to bring measures in other Acts which are analogous into line with what is proposed in the Bill, or is the agency to have special protection as well as special power?
There is a sense of approval for the proposal to extend the Private Security Industry Act 2001 to Scotland, but there is a need to clarify whether the Security Industry Authority will act as the designated body to receive and deal with complaints about the abuse of powers by precognition agents?
The advantages of such a body as we are being asked to consider were most usefully elaborated particularly by those Members of your Lordships' House who have had intimate police experience. I was most interested in the improvements suggested by the noble Baroness, Lady Henig, in her most interesting speech. There are aspects that will need close attention, but I am prepared to welcome the Bill.
7.46 p.m.
Lord Avebury: My Lords, I welcome the proposals on the incitement to religious hatred, which go back a long way—much earlier than the 2002 Act, which has been mentioned, and at least to 1981, when the Law Commission examined religious offences and observed that the concepts of a "racial group" under the Race Relations Act 1976 and membership of a group which is distinguished by a common religion were "closely linked". It said that if, in future, there appeared to be a substantial problem relating to material which was in substance an attack on those holding particular beliefs. it would be a relatively simple matter to amend the Public Order Act accordingly. It was not a proximate matter for consideration at that time, because there were no attempts at that time to incite hatred against groups belonging to any religion, which was not also a racial group in law.
That situation has changed, unfortunately, since the extreme right has now targeted the Muslim community. That was amply demonstrated by the evidence given to the Select Committee on Religious Offences by the Home Office, the Attorney-General, the DPP, the Metropolitan Police and the West Yorkshire Police. Nick Griffin, the BNP leader, acknowledges that he can make statements about Muslims that would be illegal if he said them about black people. Nevertheless, it is argued, and has been repeated several times today, that there is no need to grant the same protection to Muslims or Christians as we have for years to Sikhs or Jews, because, they say, race is determined from birth, while religion is a matter of choice, as if that justified the distinction.
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Yet in Northern Ireland the law treats race and religion identically in the law on incitement; and in Great Britain a range of offences attract higher sentences if they are racially or religiously aggravated. To make a distinction that allows incitement to hatred of some religious groups and not others is not only absurd, as the noble Lord, Lord Alli, said, but is manifestly irrational and callous. We would be saying that incitement to hatred of Jews or Sikhs should be a criminal offence, but incitement to hatred of Christians or Muslims is okay. as a result of hatred being incited against Muslims, individual Muslims are attacked in the street or in their mosques, will you then say that it is of no consequence, because they chose to be Muslim? The effect on the victims is the same, as I sought to argue in my intervention in the speech of the noble and learned Lord, Lord Mackay of Clashfern.
Noble Lords will remember the case of Abdullah el-Feisal, who was sentenced to seven years' imprisonment in March 2003 for incitement to murder under the Offences Against the Person Act 1861. The offence was that he urged his listeners to kill non-believers, Americans, Hindus and Jews. He got an extra two years for incitement to racial hatred because three out of the four groups he wanted people to murder were protected by the existing law. It is okay to incite hatred against non-believers and, if he confined himself to that group, he would have received a sentence two years less than he was given.
As the Minister said at the beginning of this debate, when these proposals first appeared, the main thrust of the criticism was that they would stifle free speech. Evangelical Christians said that they would be unable to attack other people's religious beliefs; comedians said that they would be prevented from making jokes about religion; and Nicholas Hytner, the head of the National Theatre, said that certain plays would become illegal. He claims the right to he as offensive as he pleases about what other people think and implies that plays challenging people's religious beliefs, such as one by Howard Brenton to be presented at the National later this year, are at risk.
As the noble Baroness, Lady Whitaker, said, I believe that it would have helped to clarify the law if the Government had agreed to abolish blasphemy at the same time, as was proposed in the Religious Offences Bill in 2002. I shall be tabling an amendment for that purpose, which I am sure the right reverend Prelate the Bishop of Portsmouth and perhaps also the noble Baroness, Lady Whitaker, will agree to support.
We are not about protecting beliefs but believers, as has been said. If we get rid of the remnants of blasphemy, that will underline the "right to offend", as Rowan Atkinson has called it, which is protected by the Human Rights Act. Subject to the law on blasphemy, which is better left for discussion in Committee, you can say whatever you like about another person's beliefs or sacred objects, the only limits being those of taste.
The opposition now appears to centre on the opposite assertion that expectations have been aroused, when the area of conduct dealt with here is

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very narrow. One or two speeches today, including, I think, that of the noble Lord, Lord Baker, have somehow managed to combine the two criticisms—that is, on the one hand, that we are going to stifle freedom of expression and, on the other, that expectations have been aroused by the magnitude of the coverage of this Bill, which is unjustified. The new offence is bounded on one side by the Human Rights Act, although none of those who spoke against Schedule 10 even mentioned that Act and nor did any of those who spoke at Second Reading in the Commons, and it is bounded on the other side by the common law offence of incitement to commit any other crime.
In between is the use of language which does not call on people to commit a specific offence but which is threatening, abusive or insulting and intended to incite religious hatred or is likely to do so. The tests are identical for incitement to both religious and racial hatred. We would create enormous difficulties for the police, the CPS and the courts if we decided to enact different tests according to whether or not the group being targeted consisted of Jews or Sikhs on the one hand or Muslims or Christians on the other.
I agree that some people had an inflated idea of what was proposed on religious incitement, as shown by the evidence to our Select Committee. We obviously did not manage to dispel the misunderstandings, but there were years of discussion—not only here but in Europe, where a Council framework decision on racism and xenophobia would have required comprehensive legislation against incitement to hatred against groups,
"defined by reference to race, colour, religion, descent or national or ethnic origin".
I agree with the noble Lord, Lord Alli, that we should extend that to groups defined by their sexual orientation. It would be useful to know whether the Government are considering the resuscitation of that proposal during the UK's presidency after June.
The magnitude of what we are proposing here is indicated by the fact that only 10 prosecutions for incitement to racial hatred were commenced in the past five years. The problems of bringing offenders to justice would be the same for religious hatred. But, as the Select Committee pointed out, the law may have been successful in deterring far more offences than have been prosecuted. That surely is the point of this provision.
Turning to another matter which has been discussed, from the debates that we had on the Anti-social Behaviour Bill, it was clear that the existing powers of the police to deal with harassment and intimidation of persons in some way connected with lawful animal research organisations, which, as has been said, operate under one of the strictest licensing regimes in the world, are being targeted by well coordinated groups of extremists who set out to damage and, if possible, bring to an end their legitimate activities. They threaten people's lives and make them a misery and, in 2004, the extremists persuaded 100 suppliers to sever their connections with Huntingdon Life Sciences Company.
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The UK has so far led the world in the development of therapies for diseases such as cancer, Alzheimer's and AIDS, and only last week the Commission for Africa focused on the need to increase spending on combating AIDS, which killed 2 million people in sub-Saharan Africa in 2004 alone, to $10 billion a year. Earlier this afternoon, the noble Lord, Lord Triesman, gave details of the universities and laboratories in the UK which are working on the commission's priorities, including the development of microbicides, TB drugs, AIDS and malaria vaccines, paediatric ARV and malaria drugs, and drugs for paediatric diseases. If the United Kingdom is to play a significant role in implementing the commission's report, our scientists need the protection that they would get from this legislation.
7.56 p.m.
Lord Imbert: My Lords, I shall not keep your Lordships long with my contribution to this most important debate, but I hope that what I do say may have desirable and useful effects and give us pause for thought on the future hierarchical structure of a national Serious Organised Crime Agency and on its methods of working, selection of targets and processing of suspects and persons arrested for crime.
If it is necessary for me to establish my credentials in respect of this subject, I point out to your Lordships that it is now some 16 years since the then Commissioner of the Metropolitan Police—a chap called Imbert—in the annual police research foundation lecture in London's Guildhall called for the establishment of a countrywide organisation responsible for the investigation and resolution of serious cross-border national and international organised crime. Inevitably, on the following day the press headlined it as:
"Commissioner's Call for a British FBI".
That was not what had been called for, but neither was a call made for a major law enforcement agency that could effectively be directed by a politician—both now or at any time in the future.
I still fully support the creation of a national, single coordinated investigative agency, which would undoubtedly enhance this country's ability significantly to reduce serious and organised crime. But I will briefly outline the concerns that I hold about some provisions in the Bill. I reiterate my concern that a politician who will appoint both the chairman and the director-general of the agency will, or may have, influence—indeed, amounting almost to direction—over the selection of targets and the use of agency personnel.
The first chairman of the agency is to be the former head of the Security Service, MI5. Although I hold this man in very high regard, one can but wonder whether the selection of targets may lean towards those whom that service might wish to investigate by agents, who, under the provisions of the Bill, are invested with the power of constables. Of course, at this time of grave terrorist threat, that may be both sensible and desirable, but such fundamental changes must surely be done with our eyes wide open. It is also worth asking whether this hierarchical structure is in fact the first political chipping

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away of the dictum of Lord Denning, when he spoke of chief constables and, by extension, of the power of constables. I shall not weary noble Lords with the whole dictum because the noble Baroness, Lady Harris of Richmond, has already touched upon it, but the important part was:
"No Minister of the Crown can tell him"—
that is, the constable—
"that he must or must not keep observation on this place or that … The responsibility of law enforcement lies on him. He is answerable to the law alone".
The first director general of the agency is to be Mr William Hughes, a senior police officer of wisdom, professional ability, experience and integrity, but we are surely bound to reflect that, under the Bill, a future Home Secretary could select whomever he wishes. That is nothing less than the political appointment of a person who will have the vast resources of the agency at his disposal to be used as he, the chairman of the agency and/or the Home Secretary may decide.
I will conclude on one other point, which has already been referred to by the noble Lord, Lord Mackenzie. It relates to Clauses 116 and 117, which make provision for the post of custody sergeant to be held by a person with no police experience whatever. I note what the noble Baroness, Lady Scotland, said in opening the debate: that that is not compulsory on chief constables but a matter for them; the Bill them the opportunity to do that if they so wish. But the reality is that police authorities will seize on that and, erroneously, think that that will save them money or get more supervisors out on the streets.
The noble Lord, Lord Mackenzie of Framwellgate, suggested the rank of station sergeant as senior sergeant, and I support the return of that, having held that rank in the Metropolitan Police about 150 years ago. He is the person who has responsibility for those under his command in an operational situation. That should be carefully considered.
If we are to civilianise that post, we must remember that police have a duty of care towards those who have been arrested and it is the custody officer's responsibility to decide whether the arrested person should be detained or released—in fact, to make decisions affecting an arrested person's human rights. Theoretically, a person with legal training and well-versed in the provisions of the Police and Criminal Evidence Act 1984 with full knowledge of the rules and regulations relating to the detention. care of, access to and questioning of detained persons could pass a paper examination to qualify them for that post.
That is not enough. The rank of sergeant was not selected by accident. He or she has passed the necessary exams to show knowledge of police and criminal law and procedures, but the real qualification for such a responsible job is learnt at the college of hard knocks, where officers, in their careers, have dealt with violence, drunken louts, domestic disputes and abuse and vicious criminality. Intellectual ability and academic qualifications are no substitute for experience.
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Should that provision be implemented, the safety and well-being of detainees will be placed in jeopardy if the role of custody sergeant is given to an undoubtedly intelligent but grossly inexperienced member of civil staff. I am aware that those clauses were opportunistically inserted in the Bill following comments by the previous Chief Inspector of Constabulary about the civilianisatian of police posts. Both he and the present chief inspector, Sir Ronnie Flanagan, are fine fellows. But I would wager that if they were still chief constables, they would treat the provision warily and find other, more suitable posts to civilianise.
I am pleased to support the creation of the Serious and Organised Crime Agency. I fully support that, but I hope that the Government will take note of the points made by me and other noble Lords. I only wish that I was young enough and bright enough to compete for one of the senior detective posts in that agency.
8.4 p.m.
Lord Desai: My Lords, my all-too-brief career as a government loyalist is about to come to an end. Although I shall come to that, let me first say that, along with my noble friend Lord Turnberg and the noble Lord, Lord Soulsby of Swaffham Prior, I support the animal rights clauses in the Bill.
I very much dislike Clauses 129 to 135, which will restrict protest in Parliament Square. I am by nature a protester and I do not like my right to protest being circumscribed. Also, the fact that some people have been demonstrating against the Iraq war—I supported it—may give people offence, but so what? If people feel deeply about something, they have every right to demonstrate. One problem with the Bill is that people have to give notice about how long a demonstration will last. It may last for ever. What is wrong with that? It is extremely dangerous for parliamentarians to say, "You can protest elsewhere, but not in my neighbourhood, thank you very much". Free speech is circumscribed in the neighbourhood of Parliament.
I want to get on to my pet hate, which is Clause 124 and Schedule 10. All that can be said on the legal side has been said by the noble and learned Lord, Lord Mackay, the noble Lord, Lord Lester, and various other noble Lords. I shall echo what my noble friend Lord Alli said. He said that he wanted more; I want less. I shall of course support his amendment about gay and lesbian harassment. I have no problem with that whatever. I do not how many of his fellow Peers will follow him, but I will follow him.
Why has the anomaly arisen whereby Jews and Sikhs are considered both mono-ethnic religions and a race? The Jewish case is gilding the lily. There is perfectly good protection for Jews as a race, because, for most Jews, race and religion coincide. The two exceptions are Karl Marx and Liz Taylor. Karl Marx was born a Jew. His father got him baptised, but for all of his life he was considered a Jew. If you are born a Jew, you are for ever a Jew. Miss Elizabeth Taylor became a Jew when she married Mike Todd. But absolutely no one thinks that she is a Jew, whatever her

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religion may be. It is really gilding the lily to say that Jews are both a race and a religion—there is not much to be got out of that.
As to Sikhs being a mono-ethnic group, I am absolutely astonished. Footnote 12 on page 8 of the Select Committee report cites the case of Mandla v Dowell Lee, which is about wearing turbans. Only Sikh men wear turbans; Sikh women do not. So I presume that Sikh women do not have protection under this law and that only Sikh men will. Sikh men also have a right to wear a dagger. Is that allowed? I doubt it very much.
But Sikhs are not a mono-ethnic group. The noble Baroness, Lady Flather, already has said something about that. But worse than that, a number of Canadians have converted to Sikhism. Are they—good, strong, white, tall, blonde people—covered by this? Sikhism is a religion: it is not a race.
Perhaps I may even accuse the Law Lords of being ignorant—maybe I will get it for contempt of court. People get intimidated when judging other races and religion. They say, "Oh dear, my God, if I don't say this I will be looked on as racist" or something like that. Only profound ignorance, in the face of another religion and another culture, could have allowed this to get into our law books. If I was smart enough, I would like to move an amendment to remove the protection for Sikhs and Jews on the grounds of religion.
That is an anomaly in our law. It is not that all the other faiths in the country need a protection under this law. If those two things were removed, life would become so much simpler. Faith communities would not be regarded as deserving special protection. As many noble Lords have already said, protection is available against harassment, against violence and even against a lot of incitement. But by putting religion in the Act, we will do two things. First, quite a few faith communities will get uppity about their being insulted. If that is done, I guarantee that the complications of the south Asian subcontinent—the tension between Hindus and Muslims—will be revisited with much greater violence. I am telling noble Lords that.
Secondly—the noble Lord, Lord Sutherland, referred to this point—I do not intend to cause offence, but someone may take offence. That has happened to me. About four years ago, just after the Act of 2001 had removed the religious hatred clause, I was invited to a festival of comedy. There was one serious session about comedy and religious hatred, or something like that. Unfortunately, the comedians did not turn up and those that turned up were very serious. So I thought that I could say something mildly amusing. I said, "I know lots of jokes about Christians, a number of jokes about Jesus Christ, and quite a lot of rabbi and priest jokes. I do not know a single joke about Islam. There must be something funny in the Koran, after all. Why has nobody found it?"
I was accused of having said that the Koran is a funny book. There was a lot of agitation in Muslim newspapers in this country. My noble friend Lord Ahmed told me
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that I would have to apologise for saying what I said. I said, "I will not apologise. I will cite exactly what I said. There ought to be something funny in the Koran". The fact that there is not is my loss. But if that was that serious then, now, I could be taken to be inciting religious hatred.
Lord Lester of Herne Hill: My Lords, before the noble Lord sits down, he referred to taking religion out of the equation of our law. But is he aware that religion is out of the equation? Currently, Jews are protected only against racist incitement. I agree with what the noble Lord said, even though it was a bit disrespectful of the Law Lords. Sikhs are protected only on the grounds of their ethnicity. Religion is entirely out of the equation, apart from blasphemy.
8.13 p.m.
The Earl of Selborne: My Lords, I suspect that my intervention will be rather more supportive of the Government than the speech made by the noble Lord, Lord Desai, which I greatly enjoyed. I, like the noble Lord, Lord Turnberg, and my noble friend Lord Soulsby of Swaffham Prior, will confine my remarks to the parts of the Bill that refer to redressing the damage and the dangers caused by animal extremists and the problems that they cause particularly to the biosciences and to those even loosely connected with research using live animals.
I refer to the excellent Select Committee on Scientific Procedures of which my noble friend Lord Soulsby is a member, chaired by the noble Lord, Lord Smith of Clifton, which took place about two or three years ago. It reported on the evolution of regulation of animal experiments.
It has been noted earlier that there was the Animals (Scientific Procedures) Act 1986, which is the bedrock on which the present legislation is based. There has been increasing interest in the need to legislate, which has taken place in this House from time to time, led by advice from the Animal Procedures Committee. That is a body which includes a wide range of interests.
It is greatly to the credit of this country that we have the strongest regulation as regards animal experiments of any country. That is borne out in the Select Committee report. Paragraph 1.15 of the report states,
"Virtually all witnesses agreed that the United Kingdom has the tightest system of regulation in the world".
So it is not surprising that this committee and Parliament and the vast majority of people in this country conclude, according to the report,
"It is morally acceptable for human beings to use other animals, but it is morally wrong to cause them unnecessary or avoidable suffering".
But the problem is that we are a compassionate nation and that those who quite rightly lobby, protest and try to make their views quite legitimately known on animal welfare issues, very often give succour to those who have no intention of doing it legally and who have—as is quite clear from the evidence of what has happened at Oxford and Cambridge universities, the Wycombe Laboratory and many other places—

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flouted the law. If justification is required for the provisions in this Bill it is the failure of the present criminal jurisdiction to deal with these very effective extremist campaigns. It is the fact that in many ways they are setting the agenda, demonstrated by the need to legislate further in this Bill.
I refer to another report of the Select Committee on Science and Technology which appeared about four or five years ago. The committee was chaired by my noble friend Lord Jenkin of Roding. The report was entitled Science and Society. It drew attention to the frequent lack of transparency and the need for a much better understanding of the benefits that society can derive from science, particularly in the pharmaceutical field and biosciences. The fact is that so many extremists appear to get away with harassment and criminal activity without being taken to task by people who would otherwise be expected to give support to upholding the law.
I quote once more from the Select Committee report on animals and scientific procedures. It said,
"We consider that the availability to the public of regularly updated good quality information on what animal experiments are done and why is vital to create an atmosphere in which the issue of animal experimentation can be discussed productively".
Since that committee reported the situation has got worse. Therefore, I wholeheartedly support the Government in bringing forward these measures. It is clearly quite unacceptable that people can be harassed and intimidated not just for being employed by the companies involved in research using live animals, but for supplying them or for being related to employees. The case history is now becoming long and extremely sinister.
The expression "co-ordinated home visits" is very sinister. Groups of people are targeted because of their connections with animal research. This Bill seeks to recognise the reality of what the visits mean. It is a very intimidating experience.
Because the noble Lord, Lord Turnberg, and my noble friend Lord Soulsby have said with much greater authority than I can just how welcome these provisions are, and because every person who has spoken in the debate so far has referred to these clauses and welcomed them, including the spokesmen on the Front Bench, there is nothing more that I need say but to give the Government my wholehearted support.
8.18 p.m.
Viscount Colville of Culross: My Lords, it will not surprise the House to hear that I want to speak about Schedule 10. First, I pay tribute to my noble friend Lord Bhatia to whom I always listen with very great respect when he says that there is a problem in relation to the Muslim community in this country. I believe that we were all persuaded by what he said and by the witnesses who came to the Select Committee to explain further what the problem was.
We have also had a great deal of wisdom from the highest level spoken about the law as regards this matter. I do not want to go over any of that again,
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particularly if we are to have amendments at Committee. But there is one point that has not been dealt with either in another place or here today. That is the workability of the proposed new offences in Schedule 10. The noble Lord, Lord Lester of Herne Hill, made a point about that, as did the noble Lord, Lord Baker of Dorking. I want to explore with the noble Baroness, Lady Scotland, with reference to her experience of sitting as a recorder, how she thinks it will be handled. I do not think that it is at all easy.
In another place, the noble Baroness's honourable friend, Ms Blears, the Minister for Crime Reduction, Policing and Community Safety, explained what Articles 9 and 10 contain. She said:
"The court—if it gets that far after the matter has been considered by the Attorney-General—will have to consider both sets of rights and, where necessary, balance one against the other. The courts have a great deal of experience in carrying out that delicate balancing act and considering the way in which those provisions interact, and they will continue to do so in this area as they do in many others".—[Official Report, Commons Standing Committee D, 20/1/05; col. 400.]
That is all very well if one is operating at the stage where the noble and learned Lord, Lord Lloyd of Berwick, used to operate in the High Court. It is not altogether the same in the Crown Court where these trials are to take place. They are serious offences and carry a maximum penalty of seven years, so I imagine that the Crown Court will he the venue.
Let us assume that there has been a complaint about incitement to religious hatred and let us suppose that the police have decided that the matter falls within the gap described by the noble Lord, Lord Avebury; that is, it is not covered by the common law of incitement and therefore something else must be done. The matter is sent to the Crown Prosecution Service, which considers the ordinary rules; whether it is in the public interest or whether there is more than a 50 per cent chance of obtaining a conviction. Presumably, the CPS must have a potential defendant. As the British National Party, among others, has shown itself acute in how to avoid criminal offences in this area, what would happen if the material that has been complained of came on the Internet from Holland? I doubt whether there would be a defendant within the jurisdiction.
Let us assume that that matter has been overcome and that there is a defendant and that the Attorney-General decides that the matter should go ahead. I am relieved that the noble and learned Lord will be dealing with this, because that will be an answer to the kind of point made by the noble Lord, Lord Desai, on intercept and inter-cult complaints, actions and private prosecutions. That will not happen because the noble and learned Lord will stop it.
The matter will then go to trial. I am not expecting the Minister to answer the case today, but I would like her to think about it. The matter has been placed in front of a jury who will have to decide, among other things, whether the expression that is complained about was within the realms of freedom of speech under Article 10, particularly whether Article 10.2. which allows a restriction of freedom of speech, will be applicable.

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The noble and learned Lord, Lord Mackay of Clashfern, referred to a divisional court case called Norwood. It arose under Section 5 of the Public Order Act 1986 in which there is a defence available that it was reasonable in the circumstances. The district judge took that as a peg on which to hang a discussion about Article 10 and freedom of speech. He was upheld by the divisional court, which decided that he had been correct to convict and had properly taken account of the provisions of Article 10.
When I first saw this Bill as it was introduced into another place, I thought that the original provisions in Part III of the Public Order Act 1986, which talk about taking account of all relevant circumstances, might provide a similar peg on which to hang Articles 9, 10 and possibly 17. It would therefore be possible to direct the jury. I think the Judicial Studies Board might need to produce some assistance about how to do that, but it might be possible to introduce to the jury's mind the concepts in the European Convention. They would then be able to take them into account. What they would make of them is another matter. Nevertheless, it would be properly placed before them.
I agree with the noble Lord, Lord Baker of Dorking, that there is a similar problem when one is dealing with obscene publications. The test there is the tendency to deprave and corrupt. As a judge, one is not allowed to explain any further what that means. Juries look with glazed eyes when the direction is given to them. That is all you are going to be told. You have to decide on that basis. That is what the statute says.
A similar situation is going to arise when they are confronted with Articles 10.1, 10.2 and, possibly, 9 and 17, of the European Convention. I believe that there is a serious technical problem here, which needs to be thought about.
One last thought before I sit down is that we also need to account for the degree of certainty. Article 7 of the European Convention—I think it was the noble Lord, Lord Lester, who mentioned this—requires that people should know what it is they are allowed and not allowed to do. Nobody knows why a jury decides anything. You can get nothing out of it except the facts of the case. This is going to be a very difficult problem for compliance with Article 7. I hope the Minister will think about these matters; perhaps we can return to them later.
8.28 p.m.
Lord Drayson: My Lords, I rise to speak in support of the clauses in the Bill that aim to address the growing threat of animal rights extremism. I declare an interest, in that during my career I have experienced this problem in my past roles as chief executive of a biotechnology company and chairman of the BioIndustry Association. I am no longer active in business, but I remain convinced of the urgent need to tackle this problem.
These extremists are targeting many diverse types of organisation, either those involved directly in animal research or those in a business or support relationship
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to institutes carrying it out. These have included universities, many pharmaceutical and biotechnology companies, contract research businesses and their suppliers. These have included banks, stockbrokers, insurance companies and couriers. Other establishments, which one would not normally ordinarily associate with this problem, have also been targeted and include airports, newspapers, a cinema and even a girls' school.
Bioscience has made an enormous contribution to improving our health and quality of life. The UK bioscience industry is the second most successful in the world, indirectly and directly employing over one-third of a million people. Only the United States has discovered and developed more important drugs. This success is built upon the excellence of the science in our universities, where over 65 per cent of all medical research is carried out. However, animal extremism is undermining this success and casting a dark shadow over this vital work.
I will not repeat the points made by the noble Lords, Lord Turnberg and Lord Soulsby, and by the noble Earl, Lord Selborne, with which I agree. I would like to highlight that a lot of progress is being made by the biotech industry in developing alternatives to animal testing, such as tissue cell cultures and computer modelling. In fact, since 1987 the number of animal procedures has reduced by 22 per cent and in the commercial sector has halved. However, despite this, the elimination of animal testing is, regrettably, not possible and it is unlikely to be so for some time yet.
When I was chairman of the BIA three years ago, animal rights extremism was regarded as the single biggest threat to the bioscience industry and one that was undermining our ability to develop it further. Since then, the problem has got worse. Many scientists, both in the public and private sectors, in business and in academia, live in fear. They are afraid to speak out in case they become targets; many that are targeted often quietly capitulate and resign; and one by one the suppliers to research companies are picked off until there is no one left who will work with the company. Few have the courage and resilience to fight against this level of sustained attack.
Let me give your Lordships some data. In 2002, 113 companies were targeted by extremists in the UK; in 2003, the number had risen to 203 companies; and last year it was 313 companies. In January of this year, the latest month for which figures are available, six companies stopped supplying the industry following threats; there were 20 incidents of damage to private property and vehicles; and on 10 occasions people were harassed at their homes. This is in just one month.
The numbers, depressing though they are, do not fully reflect the horror of what is going on. Harassment at home does not sound too bad until you realise what it involves. I remember a colleague of mine who, as research director of a local biotechnology company, had been frequently targeted at home. The last straw for him was when he received a call late at night from an extremist describing how they had followed his children to school.

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Let me read your Lordships a verbatim description from one of the victims of these harassment campaigns.
"It started with a threatening phone call … It progressed to threats through the post, which got more and more aggressive as time went on.
It culminated … with an explosion outside the house in which both my car and my husband's car were firebombed.
The neighbours have also been targeted and have been told their neighbour is an animal abuser or a child molester.
It did affect us dreadfully. It really is frightening and life-changing. I was off work for some time. For a while I could not go out of the house.
You feel very vulnerable every time you leave the house and worry that someone is following you.
I am doing an ordinary job in a legitimate industry and I am being threatened purely because of this. It should not be allowed".
She is right, it should not.
These extremists are using violence and intimidation to prevent people carrying out activities which are not only essential to the development of life-saving medicines but are required by law. As we have heard, under the Animals (Scientific Procedures) Act the Government require the testing of medicines on animals to ensure their safety. This policy is common to all medicine regulations throughout the world. Given that the law requires animal research to be undertaken, the law must provide sufficient protection to the people we ask to carry it out.
Despite the Government's best efforts, the existing legislation does not provide an adequate framework to address this problem. The extremists are operating in a grey area and it will not be possible to counter this threat without the additional legislation set out in Clauses 121 to 123 and 142 to 146 of the Bill, in particular to address these tactics of harassment at people's homes, interference with contractual relationships and intimidation of people associated with organisations carrying out the research.
It is unlikely that this legislation will provide a definitive solution to the problem of animal rights extremism. I urge the Government to ensure that the police have sufficient resources to counter the threat and to work with the Crown Prosecution Service and the courts to keep the situation under review and to identify new initiatives as the extremists continue to evolve their activities, as I am sure they will.
These extremists are adept at exploiting the freedoms that our democracy provides, to hurt and intimidate others. We must pass legislation that is smart enough to prevent such abuses while allowing lawful protest. I have every confidence that your Lordships, using the skill and good sense that I have witnessed in my short time in this House, will achieve that objective, and I support these clauses in the Bill.
8.35 p.m.
Lord Lyell: What a treat, my Lords, to follow the speech of the noble Lord, Lord Drayson. It is rare that I speak on a matter of law or anything like this, but I hope that when your Lordships come to read the report of our debate on the Bill everyone will note his
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speech, as well as his personal courage and commitment. If there is one additional reason to fight serious and organised crime, which is a wide-ranging area, it is the comments and remarks of the noble Lord—in fact, everything he has said in the course of his speech. It is a privilege to follow him. I, for one, admire and thank him for everything he has done. Also, 28 years ago I was heavily involved in the Patents Act 1977, since when I have had a lifelong commitment to, and admiration for, the pharmaceutical and bioscience industry.
I was first alerted to this Bill by Clause 26. Naturally, as a resident of Scotland, I would love to see directed arrangements there. Subsection (1) gives the power to Ministers to direct various activities. This aspect has been well covered by my noble friend the Duke of Montrose. It gives me mild concern, but I am pretty sure that we could work it out.
I was also interested in Clause 23, which is simply marvellous. It is labelled:
"Activities in Scotland in relation to crime".
Where I live, "crime" could vary, but subsections (1), (2) and (3) are all certainly relevant. We temporarily do not have my noble and learned friend Lord Mackay of Clashfern and other Scotsmen present, but I am sure the Minister could pass this on. I hope she will be able to stress to the relevant Scottish authorities that the agency should work closely with the police forces in Scotland in any of their operational activities. This is to ensure that, whether an offence is committed in or outside Scotland, great care is taken when looking for people, attempting to charge them or bringing them to court. I hope that the fine detail of Scottish law will be closely adhered to.
Chapter 2 was more interesting for me. Various chunks of the chapter are labelled as "special powers", which I began to read up on. Clause 45 deals with the constable. That was fairly clear. Clauses 46 and 47 deal with Customs and immigration officials and the various powers they would have. Perhaps they have them already, but it seems as if these powers will be codified, refined or strengthened. The Bill may even give the officials new powers.
I have never come into contact with officials from the immigration department or Customs in the rural area of Angus where I live. If someone appeared in my area and said to me, "Can you help?", that would be fine. I assume that there would be a policeman, either in an identifiable uniform, or in plain clothes with the relevant identification. Five or six years ago. somebody turned up at our estate office, said he was from the council and asked us to carry out various actions. I asked him whether he could produce identification, and he said to me, "I wouldn't ring if I were you". We discovered that he was in fact from a Scottish-wide agency, but he had no visible identification. And he was a fairly friendly gentleman.
I am sure that the new agency's very wide-ranging powers are necessary. As we have heard from the noble Lord, Lord Drayson, and many others who have spoken tonight, we will need the agency to take action on all aspects of serious crime. But members of the public, such as myself and others, might want to see identification.

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I had a look at Clause 49 on pages 27 and 28. I was curious about subsection (1) which deals with assault on a constable or relevant person. If that person does not produce identification, blocks your car or stops you going into your house, what is assault? Perhaps the noble Baroness will write to me about this; she need not reply tonight, as it is rather a mischievous point.
Subsection (3) deals with wilful obstruction and resistance. That sounds rather like a rugby or a football referee having to decide which is which. The provision becomes a little more relevant when you look at the punishments. Subsections (4) and (5) provide that you may get a gaol sentence. Will the noble Baroness tell me why a sentence would not exceed 51 weeks in England and Wales when it is clearly defined as 12 months in Scotland? Is there some significance in 51 weeks?
You can be liable to a level 5 fine for assault—plus, of course, deception; I enjoyed that—but only a level 3 fine for obstruction or resistance. That might be rather difficult to define, certainly in Scotland. That concludes my mild queries.
I agree with the noble Viscount, Lord Colville, about Schedule 10 and Clause 124. Perhaps the noble Baroness would glance at page 203. Paragraph 5 refers to the amendment of Section 18 on the use of words or behaviour or the display of written material. I am much more worried about the "use of words or behaviour". Subsection (3) says for subsection (1)(b) substitute:
"having regard to all the circumstances the words, behaviour or material are … likely to be heard".
The noble Viscount, Lord Colville, may reprimand me, because 32 or 33 years ago, when I was sitting just behind him on the Benches opposite, I referred to great events that I have attended.
This provision would be very relevant to Scotland. At football events in Scotland, people say and sing things they do not necessarily mean; it is extraordinarily difficult to prove intention. They will say, "I was just singing a hymn". Some of the hymns that we were singing on Sunday about St Patrick were extremely rude and referred to people as the "infidel throng". That would not go down too well with the minority in that particular stadium. People do not intend anything, but how will that work in a court of law if the offence of incitement is to work? That is rather a mischievous question; the noble Baroness may he able to answer it in writing. If she could help with about the relevance of wilful obstruction and the levels of fines, I should be most grateful. I support the Bill and I hope that other noble Lords will as well, especially having heard the notable contribution of the noble Lord, Lord Drayson.
8.44 p.m.
Lord Pendry: My Lords, I am very pleased to speak in this important debate on a Bill which I am sure will lead to added protections for Britain's communities. As my noble friend the Minister has already pointed out, this Government have a very strong record of tackling crime and have introduced several pieces of legislation which collectively have helped to reduce crime levels and target criminals.
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I recognise that the Bill proposes measures which will extend still further protection from crime, from the most serious organised forms to low-level though no less important anti-social behaviour, and I broadly commend the Government's intentions in that regard. However, I should like to discuss one element of the Bill which concerns me.
The Bill proposes to extend the remit of the Security Industry Authority—a body set up by the Private Security Industry Act 2001 ostensibly to tackle wheel clampers, doormen and bouncers—to cover Scotland. There is little wrong with that in principle but the Government must clarify the role of the Security Industry Authority in relation to football stewards to ensure that they do not introduce just as much confusion into Scotland as currently reigns in England.
I am sure I need not remind noble Lords that I am president of the Football Foundation having previously served as chairman of that body and its predecessor the Football Trust, bodies which, following the terrible tragedy at Hillsborough in 1991, played a key role in the evolution in the standards of football safety. After many years of investment through the Football Foundation and the Football Stadium Improvement Trust, football grounds up and down the country are almost unrecognisably improved. Now all Football League, Premiership and international football venues in England are universally better equipped to provide a safe, enjoyable environment in which to watch and support football.
As stadia have improved, rising standards in stewarding at football have added to the level of community protection providing a major safeguard to deal with trouble at grounds. Football clubs have invested a huge amount in the training of stewards and there is now a dedicated football stewarding qualification, the FSQ.
I understand from the Football Association that football has developed further its training package and now offers a certificate in event and matchday stewarding with further plans for specific training in conflict resolution. This qualification has now been submitted to the Qualifications and Curriculum Authority for approval within the national qualifications framework. I pay tribute to the Football Association, the FA Premier League and the Football League for the commitment that they and their clubs have made in this welcome development.
To noble Lords who have not engaged with this issue for a long period of time, I should explain that ground safety arrangements are covered by two specific Acts of Parliament: the Safety of Sports Grounds Act 1975; and the Football Spectators Act 1989. As a result football stewards are licensed by local authorities and the Football Licensing Authority, an executive body of the Department for Culture, Media and Sport. These measures have brought with them tangible signs of success. The latest figures of the Football Licensing Authority show that of some 38 million people going to league and international football only around 1,500 were injured at grounds

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with 90 per cent of those injuries treatable on site. Indeed, the latest government statistics illustrate the point further, showing a 10 per cent year on year reduction in disorder. In answer to a Written Question from the noble Lord, Lord Smith of Leigh, the noble Baroness, Lady Scotland, stated that the multi-agency strategy,
"is working and football stadia in England and Wales are now among the safest and most secure in the world".—[Official Report, 7/03/05; col. WA 68.]
Yet despite that success, football clubs and football authorities have found themselves threatened by an additional and, I would argue, entirely unnecessary regulatory burden in the recent past from the Security Industry Authority which wishes to duplicate the work of other licensing agencies by licensing football stewards. Last October, as chairman of the Cabinet Office's Better Regulation Task Force, David Arculus said:
"Over-zealous interpretation of regulation by Government regulators and industry bodies is one of the factors leading to layers of red tape winding their way around businesses and the public. This regulatory creep is the 'hidden menace' of red tape".
The involvement of the SIA in football is a case in point of that type of regulatory creep, and is therefore not only counter-intuitive but also contrary to the Government's own best practice guidance. It should also be noted that the football industry was never consulted on this matter during the passage of the Private Security Industry Bill through Parliament. Moreover, the then Home Office Minister, the noble Lord, Lord Bassam, commented specifically during debate on the Private Security Industry Bill that if football stewards are,
"provided in house, they will not be subject to regulation because it will be assumed that the company, the football club, will have properly trained them and will be responsible for improving standards and so forth".—[Official Report, 18/12/2002; col. 599.]
I shall be bold and suggest that it was clearly therefore never the Government's intention that the SIA should have a role in football, given that it so clearly duplicates the work of the Football Licensing Authority and the local authorities. This Bill proposes to extend the SIA's remit to Scotland, providing the Government with the opportunity to clarify their position on football stewards and the SIA. Therefore, I call on the Minister to take this opportunity to assure me that they will exempt football from the Private Security Industry Act 2001 on the basis that equivalent protections are already in place with local authorities and the Football Licensing Authority. If she cannot make that declaration today, which I would understand, will she at least agree to meet with me and representatives of the football industry so that we can consider in advance of Committee stage whether we might need to table an amendment on this issue?
8.51 p.m.
Viscount Slim: My Lords, I welcome the creation of the Serious Organised Crime Agency. I should declare that in my past life, I have worked with the police and with Customs and Excise. Funnily enough, when overseas I once tried to put together something rather similar to these provisions.
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I am rather glad that in the agency, the immigration authorities will be represented, because—let us face it—they have let a lot of people in here whom we are now chasing. So it should be a good team effort, I hope. However, like the noble Lord, Lord Imbert. I am concerned about command and control, and the procedures involved. The control of the agency seems purely political at the moment, and I am not sure that that is a particularly good thing. Of course. the agency should be politically accountable, but the actual command and control should not be in hands of a politician for day-to-day and operational matters.
I hope that the Minister will listen carefully to what the noble Lord, Lord Harris of Haringey, and the noble Baroness, Lady Henig, said, because I was going to say much the same. We must pay attention to the composition, the training, how we put it all together. and the problems that it will give the police—because they will have some problems; namely, with the fact that their best people must not be stolen for the agency. We must ask where the police stand in all this—and there does not seem to be police representation on the agency. The noble Lord, Lord Harris of Haringey, made some very telling and down-to-earth points.
I have problems with Clause 124 and Schedule 10. I find that measure oppressive and am not confident that it will do what the Minister says it should. There is definitely a feeling around that it is going to stop us speaking freely, teasing each other about our various religions and in fact being rather uncomplimentary at times. That has always been our way. It does not take away from the Britishness of the whole of our lives. It will bury a lot of the real nastiness underground and, when that is done, there is a chance that it will explode dangerously in the future.
I was interested in the excellent little speech of the noble Baroness, Lady Flather. I was in the opposite position. I went to college in India with 300 Indians of all races and religions and only 30 white men. I too never felt awkward, unloved or different. We had our own mosques, temples, gurdwaras and chapels. When the bell rang, we very often went to the nearest. It seemed to work very well. The right reverend Prelate might think I am hedging my bets for the future, but there are many paths of attainment and no one on Earth knows what happens afterwards. It is a bit of a guessing game.
Like my noble friend Lord Bhatia, I feel that Muslims in our country at the moment have a problem. Somehow, we must integrate them into the British scene and the British way of life, particularly the young. But they must not just cry. They must stand up and be British Muslims. They must denounce terrorism from the treetops. They must come in. We asked them to come, and they have not come. Of course, there are British elements that are being particularly unpleasant to them at the moment, but it is such a tiny element that it is not truly British. So let us all work to do that.
Let us have a look at this clause. I hope that the Government can do so. I cannot support it as it is at the moment and I hope that, as amendments are tabled

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and debated, something is done. The clause is not good at the moment. However, I support the agency and all that it entails and, like the noble Lord, Lord Imbert—who has great experience and thought about this 16 years ago—I wish I were 35 years younger. I would not make a good detective sergeant, but I would not mind having a shot at being the boss.
8.58 p.m.
Viscount Simon: My Lords, it is appropriate that I declare my close association with the police, albeit that that association is almost exclusively confined to the traffic police.
The Bill creates a single organisation that should have as its raison dêtre the capability of fighting serious and organised crime. It is to be supported. However, there are those who believe that in the best interests of the public and the police it should have been presented in two separate Bills. Nevertheless, while I support the Bill in general terms. there are some aspects that need further attention during its passage through your Lordships' House. I acknowledge the detailed briefing that I received from an officer in the Police Federation of England and Wales and thank him for it.
It seems that functional clarity is missing about which crimes SOCA will deal with and where police responsibility lies. The result is that cross-border activity between SOCA and police forces is likely to be confusing and mismanaged. Further, unless clear understandings are agreed, SOCA runs the risk of demarcating itself from the wider police service. There is concern as to the funding commitment for SOCA. While I am sure promises have been made, detail is currently missing.
Your Lordships will have read in the newspapers about the concern that too much power will be placed in the hands of the Secretary of State to control and direct, with the result that SOCA will be politically controlled and go outside the traditional fabric of policing. I feel that the new agency should be politically accountable, like any police force, but not politically controlled, as mentioned by other noble Lords.
As we have heard, the Police Federation has written to its members, currently on secondment to the National Crime Squad, advising them not to take up an offer of direct employment with their present organisation, which would lead to automatic transfer to SOCA where they would cease to be police officers thereby losing their status as Officers of the Crown.
However, the new incumbent of the post of director general of SOCA—who used to hold the rank of Chief Constable—will be given the authority to designate the powers of a constable to his employees on a piecemeal and ad hoc basis. If one follows this through, it means that an official appointed by a politician will decide who exercises the powers of a constable over their fellow citizens. Giving powers of a constable to those who do not hold the office of constable severs the link between office and Crown. It is that crucial link that ensures that police officers act impartially, independently and outside political control. Police
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officers are accountable for their actions both on and off duty but will SOCA employees given the powers of a constable uphold these values? I wonder.
The potential pick and mix powers which can be used to suit the occasion or event of the day might lead to concerns about undermining the office of constable. There is, also, the potential for interaction between SOCA officers and operational police colleagues leading to a muddle, confusion and communication problems which will be of benefit only to the criminal.
Community support officers, who are supposed to be the eyes-and-ears, visible but non-confrontational street presence in support of the police, are having more powers thrust on them by the Bill. This is the third helping of powers piled on their plate since their introduction two years ago. The additional powers proposed by the Bill are without any evidence as to the value of the exercise of their existing powers. I would like to mention my concern that Highways Agency Traffic Officers—HATOs—while welcome for the job they were initially employed to carry out in support of the police, represent a similar threat in the "auctioning off" process of police work.
It is now time to address the position of custody sergeants being civilianised, which has come up regularly in the debate. Perhaps it would be best to remind your Lordships that a police officer. of whatever rank, is a sworn constable and, as such, one constable can correct or give advice to another constable irrespective of rank.
A custody sergeant has to determine whether an arrested person should be detained or go free, making quasi-judicial decisions dictating the individual's liberty. Only police officers, in no less than the substantive rank of sergeant. have the authority and accountability to carry out that role. That is what the law currently says. In that role they provide careful leadership and guidance to operational colleagues and are wholly responsible for the well-being of detained persons.
Those officers have considerable experience which, despite assurances given in the other place, cannot be imparted simply by training a civilian. And if retired police officers are to perform the role of custody sergeant, where is the recruiting to come from when they, too, finally retire? The question that should be asked is not, could the role be civilianised, but should it? There is simply no benefit on either economic or operational grounds for this proposal.
It seems as if most chief constables, including the newly appointed chief executive of Centrex, himself an ex-chief constable of a large force—Merseyside—are uncomfortable at this proposal. Professor Michael Zander QC, the expert on police and criminal evidence issues, has expressed great reservations. He states:
"To entrust the role to civilians would be to downgrade its importance. It would send a message to the force generally that the significance of the role was reduced. That would be a deplorable development".
I was delighted to hear my noble friend Lord Mackenzie and the noble Lord, Lord Imbert, bringing station sergeants to your Lordships'

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attention. These were very well respected officers, respected by those both below and well above their officer status. I remember the officer who occupied that rank when I did my first advanced traffic course. I support the proposal of reintroducing the rank.
Perhaps your Lordships would permit me to mention three new measures for consideration. First, a measure to authorise a constable to secure the hands of an arrested person by handcuffing, until such time as the constable has determined that the arrested person will not present a danger to himself or others, or seek to escape from lawful custody. Secondly, a measure to ensure that CSO and other support staff uniforms are distinctly different to police uniforms, so that a member of the public would not be under a misapprehension that a CSO or other was a police officer. Thirdly, a measure to extend to scope of those persons who may be represented by the Police Federation to other persons employed in the police service as the Secretary of State may determine, subject to the agreement of the Police Federation.
I have said enough. I wish the Bill well.
9.6 p.m.
Lord Selsdon: My Lords, what a wonderful Bill! It reminds me of almost my first Christmas stocking, a rather darned, grey one, which had things in that you fiddled around with in the dark. I found that I did not like Brazil nuts, or oranges really, although they were rare.
I shall speak today about persecution; persecution and prejudice; the persecution of those in medical research and the persecution of those who hold their religion dear. I must be careful after the warning given by the noble Baroness, Lady Ramsay, about lawyers and judges. I shall prefix my speech with the words, "without prejudice", should I fail to cause harm. The words, "without prejudice" do not carry any meaning unless they are written at the top of a letter that you write. So I will leave the medical side alone. I declare an interest as president of the Anglo-Swiss Society. I can tell your Lordships that Swiss companies are no longer investing in the United Kingdom because of fear, and they may well withdraw. That is enough of that, so I shall turn to religion.
I shall go hack to two great debates that were moved by the most reverend Primate the Archbishop of Canterbury, one in October 1999, and the other in April 2003. On that day in 2003, the right reverend Prelate the Bishop of Portsmouth was in charge of Prayers, and he used that classic prayer that says, "setting aside all private interests, prejudices and partial affections". I am going to set aside the first two, but I do have a partial affection for religion. Over my life, I have traded insults, sometimes traded punches, I have been in trade, and I have always held that religion is effectively the word.
My Latin taught me:

"Abstract nouns in 'io' call

Feminina one and all

Masculin can only be

things that you can touch or see".

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But you cannot actually touch or see religion; it is all around. I remember almost crying as a small boy when I told my mother that I could not see God, and I asked what was wrong with my eyes. Then later I learnt; was God masculine, feminine or neuter? When your Lordships listen to the right reverend Prelates, they have got it wrong, because they are ambidextrous. Some of them say, "Our Father, who art in Heaven", and others say, "Our Father, which art in Heaven". They also mix up, "on Earth" and, "in Earth". I was always told that this was because of the original Latin, that it was neuter; and therefore I assumed that God was neuter, but he might be equally friendly to both male and female.
The Lord Bishop of Portsmouth: My Lords, with the greatest of respect, "which art in Heaven" is 16th-century English, and "who art" is 17th-century English. It is a small point, which a historian who loves the prayer book can make.
Lord Selsdon: My Lords, I am most grateful to the right reverend Prelate, but on these temporal Benches I have certain advisors, such as the noble Lord, Lord Pilkington, an ex-canon, who was kind enough to get me text and verse that I could say both in Latin and in English on these subjects.
Be that as it may, my concern is the impact upon religion. I do not believe that it should be in the Bill. I do not believe that we should touch the law of blasphemy, because, after all, even Jesus was accused by the Jewish Sanhedrin of blasphemy. Blasphemy is a dangerous phrase to use, but we are talking about peoples' beliefs and not necessarily treading on their toes.
In the world today, there are around 6.5 billion people and 3.76 billion are monotheist—they believe in one god. But even their ideas of that god may be different, but each of the monotheist religions also have problems with blasphemy. Blasphemy also applies in the other religions—in the Hindu religion, too, and there have been some interesting matters recently where the Hindu religion complained that bikinis in America were blasphemous because they had pictures of Hindu gods upon them. When we move down that road, it is very worrying.
I ask your Lordships, if you want a little further education, go into the Library and search the Internet, as I did an hour or so ago, and tap in, "religious jokes". I did not dare go to
the next phase after the first two simple jokes, but there are Pope jokes, Christian jokes, Jewish jokes and Hindu jokes, all of which would be blasphemous under the Bill. They would be written down, but how do you persecute them?
Surprisingly enough, religion is about love. I look at the knowledge that I have gained in my trading career—when I chaired the Government's Middle East trade committee for 12 years and I was lectured by every branch of Islam; I was also asked if, together with the Crown Agents, I could build the royal Islamic railway between Madinah and Mecca to help develop trade; I followed the Jewish world into trying hard to get people to walk across the Allenby Bridge from the

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Arab world into Israel, which they did—and I have no fear of religion, only a love and respect for the knowledge that it brings.
We should recognise that most knowledge, most education and most training have passed through the religious world. It is not something to be afraid of and the best thing that we can possibly do is to encourage the Churches themselves to spread the word. If you sit down with a mullah, a Catholic, a Jew and a Protestant you will find no differences. Given I have sat in the catacombs in the Ukraine with a patriarch who had a rival patriarch put there by the KGB, or in Belarus or elsewhere, with holy men, I find that I do not know what holiness is. but those who enter the Church have a spirit.
In life, you always need three legs of equal length to be stable. I believe in Father, Son and Holy Ghost. Jesus was the spirit of god in Islam and the Koran, but there are things that disturb me, too. I say my prayers from time to time, but I have never done it in public, because I would be too embarrassed. But I am not embarrassed to see someone at the airport doing press-ups and working hard with his religion, regularly without fear or prejudice. All we are talking about is understanding. We should forget the law and promote understanding.
9.13 p.m.
Lord Chan: My Lords, it is a formidable task for me to follow the eloquence of the noble Lord, Lord Selsdon, but I shall try. There are many aspects of the Bill that I support. Like other noble Lords, I shall confine my remarks to Schedule 10, because I shall approach the issue from the viewpoint of ethnic minority groups who have contacted me. Most of them are Christian and share their faith with their peers who belong to other faith groups or to none. Clause 124 relates to Schedule 10 of the Bill which seeks to replace Part 3 of the Public Order Act 1986, Section 64 dealing with racial hatred offences, with one to cover hatred against persons on racial or religious grounds. I support that aim and it should be extended to protect groups of people who currently are not protected by racial hatred offences, such as followers of faiths, notably Muslims, and those with no belief in religion.
But there are some concerns relating to Schedule 10 on which I want to focus. In this regard, I thank the noble and learned Lord the Attorney-General for meeting me and my noble friend Lady Cox to listen to our concerns about incitement to hatred on grounds of a person's religion.
My first concern relates to responsible free speech. The Government say that this legislation will not affect legitimate criticism, missionary activity or jokes about religion. But nothing is written in the Bill to guarantee that. Such exemptions should be written into the Bill, otherwise, when it becomes law, conscientious believers are likely to interpret legitimate criticism, missionary activity or jokes about their religion as incitement to hatred against them. As a member of the Press Complaints Commission, over the past three years I have seen an increasing number of complaints concerning criticism of, and jokes about, religion.
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The importance of ensuring responsible free speech in this legislation was clearly brought into focus in a letter that I received last week. It came from a minister of religion at a multicultural church in Rochdale. One in four of the congregation there is from a minority ethnic background. I quote from the letter:
"Our church is involved in distributing Christian literature to local households. Muslims in the area also send out Muslim literature. Although our literature is sensitively written for those from a Muslim background, two young policemen attempted to tell us it was a 'serious racial offence' to distribute it. They mentioned that the offence carried a seven year jail term.
One Muslim (not the direct recipient of the literature) had complained to the police. It was clear that the officers felt under pressure to find a way of stopping us. Only after making an official complaint via my solicitors did the police back down and admit the matter was handled insensitively by the junior officers. If we had stopped distributing the literature, as the police seemed to want, our freedom of religious expression would have been taken away.
If that can happen now, under the existing race laws, imagine what a new law on religion could do. Any law which specifically requires the police to consider the legitimacy of religious speech will cause trouble, and will set religious groups against one another".
One letter of this nature provides some proof that the worries of numerous people who have written to noble Lords about Schedule 10 are not theoretical. While the rights of religious groups excluded from the existing laws should be safeguarded, it appears to me that Schedule 10 may he open to misinterpretation.
The noble and learned Lord the Attorney-General has explained the high threshold that would be required before he would consent to a prosecution for hatred against persons on racial or religious grounds, thereby ensuring that the number of cases of vexatious litigation would be very small or non-existent. But complaints to local police would, and could, trigger investigations that could create chaos in the running of religious organisations and, in particular—like the people who have written to me—for those accused under the new legislation who are involved in the running of churches. As in the case of the church in Rochdale that I quoted, legal advice will be needed and expense will be incurred in challenging complaints and bringing about police intervention.
Vexatious complaints would follow any attempt at distributing religious literature to households of another religion. That is the anxiety arising in those in ethnic minority churches who evangelise among people belonging to other faiths—for example, those in south Asian churches who distribute Christian literature to south Asian Muslims and Hindus, and those from Chinese churches who regularly visit non-Christian Chinese people. In that context, I declare that I am an elder of the Liverpool Chinese Gospel Church. There are 200 Chinese Christian churches in the UK.
I venture the view that measures are necessary to ensure that the freedom of speech that we so greatly cherish and value should be protected in the Bill in regard, especially, to Schedule 10.
Finally, I have another concern that received media coverage recently. Some 3,000 Christians in the UK have chosen to convert from Islam. Some are like Mr Nissar Hussain, a Christian from Bradford,

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featured in the Times in February, who has experienced three years of active harassment amounting to persecution from local Muslims in his neighbourhood. His car and his home have been repeatedly vandalised. Mr Hussain and his wife were originally Muslims. Perhaps the Minister would tell us whether the only way of protecting the Hussains would be through Schedule 10. In conclusion, Clause 124 and Schedule 10, on balance, as drafted, will create as many problems as they are expected to solve.
9.21 p.m.
Lord Ahmed: My Lords, I will restrict my remarks to Schedule 10, as have many of your Lordships. This is a very serious Bill covering a lot of areas, but I too shall restrict my comments to the provisions on hatred against persons on racial or religious grounds. First, I thank the Government for having the courage to include this new offence in the Bill. I acknowledge all of the work that the Government have done to address this serious anomaly in our law, both in previous reports, including the University of Derby report, and in Select Committee and other reports.
I realise that many of your Lordships have spoken in opposition to these proposals on the basis that they could suppress our country's great history of freedom of speech, by gagging comedians or restricting legitimate criticism of a religion or particular community. In my opinion, it is none of the above. The provision is about protecting a community from the fascist and racist element of our society who are now targeting the Muslim community. Islamophobia has become a contemporary form of racism. The BNP has openly attacked the Muslim community on its website and racists have delivered leaflets, as in the famous case of Merton. It is naïve to suggest that this new offence is electioneering by the Government. It is a genuine attempt to protect British citizens who have been victims of this heinous crime.
This is not about protecting religious beliefs, as many of your Lordships have said; it is about protecting believers against hatred that often leads to violence. Many reports, including the latest by the Vienna-based International Helsinki Federation for Human Rights, state that there is an increase of violence against Muslims in Europe, particularly since 9/11.
In May 2002, a man was convicted of inciting religious hatred when distributing leaflets which stated that, "The Jewish people must die". At the time of the offences, the police reported attacks on synagogues. However, if such leaflets were directed at Muslims, the current incitement to racial hatred law would not afford them any protection.
There are decades of examples in which things that were once acceptable are now no longer tolerable. When I was a young boy, my uncle took me to a circus where animals performed and entertained. Last week, I took my granddaughter to the circus and not a single animal was used. It is now deemed cruel to use animals
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in the circus. In the 1960s and 1970s, when men praised women's bodies, it was a compliment to do so. Today it would be sexual harassment and offensive.
In the 1970s and 1980s it was fashionable to joke about the Irish and the Asians. Today it would be offensive and grotesque to use that type of language. In the 1980s and 1990s people openly talked about the gay community as "queers", but last weekend the Chief Constable of North Wales apologised for using such language. It proves that society has moved on. I hope that, when this Bill leaves your Lordships' House, inciting hatred against Muslims, Hindus and Christians will become not only unacceptable but also unlawful.
My noble friend Lord Alli spoke earlier with passion about the protection of Muslims and gay people. Let me assure him that I will seek protection for every gay and lesbian member of the community as much as I do for every Muslim, Hindu, Christian and Buddhist.
I am sorry that the noble Baroness, Lady Flather, is not in her place. I heard her speech from my office. I am very sorry that she used very strong language. She said something like, "When people do not feel comfortable in a country, they can leave". I take exception to that type of language. I do not think that that is incitement to hatred. However, people should not have to leave the country simply because they do not agree with laws or because they want to make our system more equal and fair. I am sorry that the noble Baroness is not here. I would have loved to hear her opinion on this issue.
For some reason there is a popular belief among some Christian groups that are campaigning vigorously against Schedule 10 that it could criminalise Christian preachers for expressing opinions such as that salvation can be found only through a relationship with Jesus Christ and that other religions do not lead to God. In my view that is neither offensive nor inciting hatred against any other. To me, that is a religious belief. As a Muslim we do not fear legitimate criticism of our faith or our beliefs. As the noble Lord, Lord Baker, mentioned in his speech, Islam has to accommodate itself to western liberal society. This is not about the accommodation of any religion, but about the acceptance, tolerance and understanding of all in our diverse society today.
Because of our ever increasing Islamophobia, young British Muslims are being isolated and disenfranchised. A small section of our youth even feel disaffected and that they are second class citizens. I accept that no one in this country is a second class citizen. More than that, no one should feel himself to be a second class citizen.
The proposal does not prevent or put a check on the ability to criticise or ridicule or to have fundamental disagreements with the precepts of any religion. We all know that any modern democracy deserves the right to have a robust and healthy debate. I believe that this legislation allows that.
The challenges to this House are these. Can we continue to allow the demonisation of a section of British society? Can we allow the modern form of

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racism which exists in the form of Islamophobia to continue? Can we allow the fascists to attack openly and to create hatred against the community of faith?
9.28 p.m.
Baroness Cox: My Lords, while I support most of this Bill, I, like so many other Members of your Lordships' House, strongly oppose those aspects relating to incitement to religious hatred. My primary concern is the threat to one of our most cherished freedoms, freedom of speech. There is a real danger that this legislation will inhibit criticism of religion, affirmation of religious belief and satirical or comic discussions, despite the Government's assurances to the opposite effect.
Like my noble friend Lord Chan, I am grateful for the time which the Attorney-General kindly gave to explain the Government's position. But in the real world, we are already witnessing symptoms of religious intolerance, intimidation, inhibition of expression, censorship and self-censorship. My examples relate to the Muslim community, so perhaps I may emphasise that I am not Islamophobic—rather the reverse. I have worked with Indonesia's former President Wahid to launch an interfaith organisation to promote post-conflict reconciliation. And just last month, I participated in a conference hosted by the Islamic State University in Jakarta to promote interfaith education.
My examples relate to Islam and to some members of the Muslim community because much of the pressure for this legislation has come from them. I understand their concerns, which were extremely well highlighted by the noble Lords, Lord Avebury and Lord Ahmed. I believe that the proposed legislation may have effects opposite to those intended, a point well made by the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Baker.
Complaints have already been made to the police, instigated by members of the Muslim community, which illustrate problems which could escalate if this law is passed. These complaints reflect certain aspects of Islamic beliefs held passionately by many Muslims: for them, a Christian statement of belief in the divinity of Christ is seen as blasphemous and offensive. In traditional Islamic law, blasphemy is deemed such a serious offence that it may incur the death penalty. as do statements which may be deemed to be critical of Islam and the Prophet.
A number of serious commentators and academics have already been stigmatised as "Islamophobic" by inclusion in a list called the Islamophobes Awards of the Year. They include Polly Toynbee and my noble and right reverend friend Lord Carey of Clifton. Neither of those wrote or spoke irresponsibly or inaccurately, but both have been subjected to this hurtful labelling, with its potentially damaging and intimidating effects.
I also point to examples of attempts to stifle the freedom to preach, as illustrated in the following letter:
"For over 40 years, I have (with others) been preaching the Gospel on the Cornhill in Ipswich … About 18 months ago we were approached by Community Police Officers … my
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companion was called in to the Police Station and, although it was quickly accepted that he had no connection with an incident of alleged racial or religious prejudice which had been reported, he was nevertheless warned that preaching in the street was a delicate matter and if anything we said could be taken as racist the charge would be pursued".
I also refer to a similar experience related by a former policeman in the north of England which has already been mentioned by my noble friend Lord Chan. I would like to give a little more detail and I quote from a report:
"At 7.30 p.m. on Saturday 22 June 2002 two Police Officers called at the home of the member of the church who had opened our Post Office box for the witness we give in our community under the name Rochdale Word of Life.
The officers asked the householder's name and then pulled out a copy of the literature and said they needed to come in and talk about it. The Police Officers stated that this was designated a serious racial incident. They explained that new legislation allowed anybody, (citing a post man or any other member of the public) to claim that a crime was racist, even if the original victim did not make the claim. They mentioned that the offence carried a seven year prison sentence and that if an offence had been committed the church members' names involved would be on the Police records. On leaving they stated that the DCI would be in touch if they were not satisfied with the answers given".
In a subsequent letter, Police Inspector Hall acknowledged:
"There is nothing to suggest any racist behaviour/actions associated with the church as they seek to promote the Christian religion".
Despite this exoneration, responsible citizens had suffered a gratuitous ordeal, illustrating the general point that once a complaint is made, the police need to decide whether and how to act. The police cannot be experts on religion and they will find themselves in difficult situations, often subject to pressure to take action. If they feel obliged to respond, they may require entry into the offending person's home and/or office. They may remove papers, files and computers and subject that person to an array of highly traumatic procedures which harm their work and their reputation. The very thought of being subjected to such initial stages of police investigation is likely to inhibit freedom of expression.
Therefore, I believe that one of the most insidious dangers inherent in this legislation is self-censorship. Academics, journalists, writers, religious leaders—
Lord Vinson: My Lords, I wonder whether the noble Baroness will give way. The Minister is failing to listen to her speech and is just joking with her colleague. I do not think that that is apt at this moment.
Baroness Scotland of Asthal: My Lords, I take objection to that comment. I was merely seeking advice from my noble and learned friend as to whether I should disclose that not only am I associated, as is the noble Lord, with a number of Christian organisations, but I have also, in the past, been a Shabbos-goy. Those factors were important, bearing in mind what the noble Baroness, Lady Cox, was saying. I was listening to the noble Baroness. I have now made my disclosures and the whole House can share in them.
Baroness Cox: My Lords, I am grateful to both the noble Lord and to the Minister, because I was

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disconcerted by the fact that she did not seem to be listening to me. I am grateful for the explanation she has kindly given.
Perhaps I should repeat the sentence that one of the most insidious dangers inherent in this legislation is self-censorship. Academics, journalists, writers, religious leaders and others who wish to speak about religion may be inhibited and intimidated to such an extent that legitimate, critical discussion and debate may be stifled for fear that, however reasonable and important, it might give offence. As the proposed legislation stands, truth is no defence against a charge, nor is lack of intent to cause hatred.
One of the most salutary lessons to be learnt from a similar law in Australia is found in the widely cited Daniel Scot case. I have no time to go into the details, but I conclude by mentioning some of the possibly counterproductive effects of such legislation, highlighted by Amir Butler, who is executive director of the Australian Muslim Public Affairs Committee. In a statement called 'Why I've changed my mind on vilification laws', he claims:
"This legislation is undermining those religious freedoms it is intended to protect".
For example, he is worried by a turning of the tables against Muslims, who themselves advocated the legislation and had used it against Daniel Scot. He describes how Muslims are now being monitored by Christians, presumably intent on demonstrating that what is sauce for the goose is sauce for the gander. He points out that this legislation has not helped relationships between those faith communities. Rather, it has increased tension.
Therefore, in seeking to amend this Bill, I will strongly support those who wish to delete the relevant clause and schedule, including the noble Baroness, Lady O'Cathain, who is sadly prevented by illness from speaking today. If and only if that deletion is not upheld, I will consider supporting fall-back amendments designed to clarify provisions in the Bill for the protection of freedom of speech.
I finish with a statement of commitment to the principle of freedom of speech by Mr Amir Butler, the executive director of the Australian Muslim Public Affairs Committee:
"It is obvious that criticism of one's religion is likely to offend, but just as Muslims should be entitled to aggressively criticise other faiths, likewise those same faiths should be afforded the right to voice their concerns about Islam … Who, after all, would give credence to a religion that appears so fragile it can only exist if protected by a bodyguard of lawyers".
9.34 p.m.
Lord Dholakia: My Lords, we now come to the concluding part of this important debate.
My noble friend Lady Harris of Richmond said that it would have been preferable to limit the Bill to setting up the Serious Organised Crime Agency, rather than tagging on a multitude of other measures. I agree with her. I counted no fewer than 22 other measures included in this Bill. Some, of course, are necessary, but others give an impression that the Home Office, in
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anticipation of an early election, has emptied its criminal justice tray and now has a serious Bill with a rag-bag of issues attached to it.
First, I thank the Minister for introducing and explaining the provisions of the Bill. Issues such as protesting in Parliament Square or searching someone on suspicion of possession of fireworks or power of arrest for dropping a sweet paper cannot be ignored. The danger is that time is not on our side, owing to the intervening general election. This would mean that we either throw out the baby with the bathwater or, alternatively, give serious consideration to setting up the crime agency in preference to other hasty measures. I give warning that this will happen if a wash-up session is found to be necessary. The Minister can therefore conclude that with proper scrutiny the main objective of setting up a dedicated SOCA will receive our support.
Serious crime is on the increase and we must remain one step ahead of organised criminals. It will require new powers and new methods to keep ahead of sophisticated criminals, who see no difference between local, national and international geographical boundaries. No longer can agencies work in isolation; we need to add an international dimension to our investigative work.
Events of the past few weeks have demonstrated how inadequate we are in dealing with serious crime. Let me cite three examples. First, the Chief Constable of the Nottinghamshire Police is on record as saying that he is unable to cope with the demands of investigating 30 murders in his area. Despite the increase in police numbers, it is still the case that paperwork takes much of his officers' time and he may have to invite other forces to take over some of his workload. I draw no political inference, but it is strange that our police forces are still without adequate resources.
We are well aware of the drug dealers and their impact on our community and, in particular, on our young people. Drug dependency results in a substantial number of crimes. Despite the appointment of a drugs tsar—and then sacking him—it is clear that we have made no dent in the drug barons.
The United Nations report makes chilling reading. The amount of opium cultivated in Afghanistan is likely to rise by more than 64 per cent. The expectations after the coalition action there have not materialised. It is a frightening situation that most of the hard drugs will end up on our shores.
Then there are the cases of people trafficking which are appearing at frequent intervals in our courts. The Home Office estimates that there are 6,000 people under the age of 18 in this country who have been trafficked through international borders. It is obvious that people trafficking is more rewarding economically than drugs. We need better intelligence and investigative methods to deal with such vile crimes.
The Bill, in effect, brings different agencies together to improve the results; the powers as well as the intelligence are shared. Some of the powers are not only intrusive but may be seen as oppressive. We need to look carefully at the matter of accountability when at least three agencies—the police, immigration and

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Customs and Excise—are brought together. We want to be absolutely sure that the Secretary of State is accountable but, more importantly, that there is parliamentary scrutiny of the powers vested in the new agency. It would be helpful if the Minister would confirm that not only the code of practice will be laid before Parliament but that there will be an affirmative procedure attached to it.
I was a member of the former Police Complaints Authority and welcome the valuable work being done by the Independent Police Complaints Commission. I am well versed in investigating complaints against the police. This includes the role of the custody officers, which is crucial in matters of serious incidents, including deaths in custody.
During the previous Bills on immigration matters I failed on a number of occasions to bring complaints against immigration officers within the machinery of the IPCC. I did so because they have powers similar to those of a constable. I failed to convince the Minister then but I trust that she will not be surprised if I raise this matter again at a later date. SOCA, which will have enlarged powers encompassing intelligence, police and immigration, must be properly accountable to IPCC if it exceeds or misuses its powers. Can the Minister confirm that that is the intention of the Home Office?
This is even more important now that the Secretary of State is introducing measures to allow civilian support staff to have a role in custody suites. We shall certainly give it a cautious welcome but it is important to recognise that many serious complaints have been lodged about what happens in custody suites when there is no public presence. Again we need to look at the code of practice, powers and training of such staff. We must also ensure that complaints against civilians will be investigated by the IPCC.
This brings me to Part 3 of the Bill, which contains some breathtakingly sweeping extensions of police powers, both in relation to arrest and to the exercise of a wide range of other intrusive powers.
Let me spell this out. The current law governing arrest, with its distinction between arrestable and non-arrestable offences, reflects an attempt to strike a balance between two important considerations: first, the right of citizens not to be deprived of liberty for disproportionate reasons, and, secondly, the need to detain people in some circumstances to protect others and to investigate crimes effectively. The Bill sweeps away this careful balance by abolishing the distinction between arrestable and non-arrestable offences. This opens up the possibility of detaining people suspected of a wide range of minor offences.
The concept of the arrestable offence is also the basis for activating many of the police powers that have significant implications for human rights, such as detention for questioning, obtaining search warrants, taking intimate samples and delaying a suspect's right to obtain legal advice.
It is disturbing that such intrusive powers should become potentially much more widely available, particularly as there is a wide element of discretion
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involved in the original arrest decision. The test of "reasonable suspicion", on which arrest depends, can involve a considerable degree of personal judgment, and will continue to do so even if, as the Bill provides, a code of practice is produced on the use of arrest powers.
The extension of stop and search powers to include a power to stop and search for prohibited fireworks is not in itself an unreasonable provision. Like all extensions of such powers, however, it raises important questions about the potential misuse of stop and search, in particular its racially biased use, which has caused so much damage to relations between minority ethnic groups and the police.
It is disturbing that, since the Stephen Lawrence inquiry report was published, the racial bias in the use of stop and search has become even more extreme. In 2003–04, black people were six and a half times more likely to be stopped and searched than white people, while Asian people were twice as likely.
The same issue of potential racial bias arises in relation to the Bill's provision allowing the police to take an individual's photograph and fingerprints in a place other than a police station. Again, these are intrusive powers that, if carried out on the street, can involve an element of humiliation. Members of minority ethnic communities will need convincing that the police service, which has so far been unable to prevent its members applying stop and search powers in a racially skewed way, will be able to prevent these powers being applied in a similar manner.
It is impossible to overstate the impact of racial disproportion in the use of police powers as an alienating effect on young black and Asian people. If this sweeping extension of powers survives in the final form of the Bill, there must be at the very least a systematic ethnic monitoring of these powers' use.
The Bill's provision that, when juveniles breach anti-social behaviour orders, there should be a presumption in favour of reporting their names in the media, is wholly wrongly conceived. It is the reverse of the normal presumption in the case of juvenile offenders.
The important reason why the law has provided for over 70 years that juvenile offenders should not normally be named in the media is that such reporting can hinder their rehabilitation. Moreover, in some cases, publicity has the reverse effect from what was intended, so that the young people can revel in their notoriety and become determined to live up to the "troublemaker" label given to them by the media. This consideration applies just as strongly to a young person who has breached an ASBO as it does in other cases involving juvenile offenders. Will the Minister confirm that the Youth Justice Board has expressed opposition to this provision?
Any extension of police powers to detain citizens or intrude on their liberties should always be made with great care. We must ensure that these powers go no further than is genuinely necessary to protect the public from crime. This is at least the lesson we learnt

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from last week's marathon debate on the Prevention of Terrorism Bill. Significant parts of the Bill as drafted do not maintain this careful balance.
Part 4 deals with public order and conduct in public places. The Bill's provision to create a new offence of incitement to religious hatred on the same basis as the existing offence of incitement to racial hatred has provided me with the largest mailbag apart from the Hunting Bill.
I made a note, as far as possible, to analyse the views of noble Lords who have spoken in this debate. The breakdown of 39 speakers is as follows: eight supported the Government's provisions, 18 were against the provisions or expressed concern, and 13 have not expressed an opinion. I am sure it will be a relief if I promise not to add to this number.
We have on our Benches my noble friend Lord Lester of Herne Hill. My association with him dates back to the early 1960s, when he was a member of the Campaign Against Racial Discrimination, so notably chaired by the late Lord Pitt of Hampstead. My noble friend was an adviser on equality legislation to the former Home Secretary, Lord Jenkins of Hillhead. I value my noble friend's judgment and experience on race matters. We want to ensure that racial incitement, using religion as a pretext, should be covered by law. There is no dispute that our multi-religious communities have been victims of attacks and harassment, and it is on the increase.
In conclusion, I feel honoured and humbled that the Minister quoted my support on legislation to deal with incitement to religious hatred. That was some three years ago, and I am delighted that someone took the opportunity to read my past contributions. We are not disputing the need for such legislation. As my honourable friend David Heath explained in the other place, we want our laws to be as comprehensive as possible in bearing down on crimes of either racial or religious hatred. If the noble Lord, Lord Alli, were to bring forward an amendment on homophobic hatred, I am sure that he would find support on our Benches.
In essence, I stand by what I said in previous debates. I believe that the Government's proposal is flawed but not of bad intent. We want to support what the Government are doing but we want to find a way that will achieve that intent and not the opposite.
I read the Government's Explanatory Notes with great care. They state that legitimate discussion, criticism or expression of antipathy or dislike of particular religions or their followers will not be caught by the offence. I ask the Minister to note the word "legitimate". How can the Government explain what is illegitimate criticism of ideas and beliefs?
The diverse religious community has suffered much backlash in recent times. We will not be forgiven if the effect, and not the intent, of what is proposed encourages further intolerance and divisiveness.
9.53 p.m.
Lord Hunt of Wirral: My Lords, this has been a fascinating debate, with more than 40 speeches. I pay
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tribute to all noble Lords who have participated for their valuable contributions. We all await the Minister's response.
During the passage of the Bill, both here and in another place, the opposition parties, unusually but heart-warmingly, have spoken virtually as one. Recognising the need for the new agency that lies at the heart of the Bill, we have all done our best to give it a fair wind. As my noble friend Lord Baker of Dorking put it, its time has come.
Criminals are now more sophisticated than ever, and the stakes are higher, as the noble Earl, Lord Rosslyn, pointed out. This demands a robust response. This united front across the Opposition and the Government Benches does, I hope, send a very clear message to those who would transgress.
None the less, in broadly welcoming the Bill on behalf of the Conservative Party, I must put down one or two markers that we regard as non-negotiable. No one will be surprised to hear that the principal one is in relation to the proposed new offence of doing anything that might stir up racial or religious hatred in anyone. I shall return to that issue.
Our other main concern, which has been shared by several noble Lords, is that the title of the Bill should be so misleading. Rather than confining itself to embodying a clearly focused and robust set of proposals which deal with serious organised crime, the Bill seems to bring together a random, gallimaufry of measures that look like the end of term sweepings from the Home Secretary's cupboard. The noble Lord, Lord Harris of Haringey, referred to it as a portmanteau. I prefer the Anglo-Saxon word to the French word, but I recognise that it is a good description. He struck some terror in our hearts by promising more and more measures in Committee, which is possible under this enormously lengthy long title.
The noble Lord. Lord Dholakia, reminded us of the important point made by his noble friend Lady Harris of Richmond when she referred to the Bill as tagging on a whole multitude of other measures. The noble Viscount, Lord Simon, referred to it as being really two separate Bills. My noble friend Lord Selsdon referred to it as his Christmas stocking.
What are we to make of this? It has been a tale of two debates. We have had an extensive debate about the proposed offence of inciting religious hatred; and another debate about the remainder of the Bill which includes the most important part of the Bill, but I shall come to that in a few moments.
At the start of the debate, my noble friend enumerated some of the more bizarre measures. I also have concerns about what has been left out of the Bill which I believe are missed opportunities to strengthen the fight against organised crime. The noble and learned Lord, Lord Lloyd, argued persuasively in favour of one of the most important missed opportunities: that relating to intercept evidence. It would better enable charges to be brought against individuals if all intercept evidence were to be made admissible in court subject to certain caveats. I thought that he was very persuasive on that.

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Might it not also have been encouraging for Ministers to take this legislative opportunity to announce that they will introduce 24-hour fully manned surveillance and embarkation controls? That would deal a real body blow to terrorists and people smugglers. But that, sadly, is another missed opportunity.
To return to the Serious Organised Crime Agency, as has been pointed out by several noble Lords, organised crime predominates in those illegal activities which most disrupt and damage the fabric of our society. If we wish to protect our way of life we have to be ready and willing to take the hard-edged decisions necessary to take on the organised gangs and win. That is why the Conservative Party so strongly supports the creation of the new SOCA. There are, however, serious questions still to be resolved, not least its independence, as the noble Viscount, Lord Slim, pointed out; its need to work closely with local police forces, as the noble Baroness, Lady Henig, pointed out, as did the noble Baroness, Lady Harris of Richmond, with all her experience of police authorities, and others. To all those points must be added parliamentary scrutiny of SOCA, but they are practical matters rather than profound questions of principle. I believe that we all want to see SOCA established as soon as possible and we want to see it succeed in what is a vitally important task.
However, we heed the words of the noble Lord, Lord Imbert, with all his experience, when he points out the need to have true independence and not political control. I must say that he was very persuasive in his job application, in seeking to be part of the agency, which was echoed by the noble Viscount, Lord Slim. The agency has the potential to be highly successful, but we must get its powers and status and officers right, and working for SOCA must become a reasonably attractive proposition. The noble Lord, Lord Mackenzie, was right to remind us of the importance and independence of sworn police officers. Those are vital issues which we shall deal with in Committee.
Another aspect of the Bill which to many fair-minded people may seem disproportionate is the whole question of demonstrating in Parliament Square. The noble Lord, Lord Desai, said that it was virtually like saying, "Demonstrate anywhere but please not here". It is a sort of parliamentary form of nimby. The noble Lord, Lord Plant of Highfield, came forward with a whizzing idea, which he had discussed with the noble Lord, Lord Smith of Clifton, that there ought to be a sort of parking meter system for the right to demonstrate. The only problem with that is that most of those who want to demonstrate would love to be clamped. As that is the ultimate deterrent, I am not sure that the parking meter is a very good idea.
Lord Harris of Haringey: My Lords, surely the ultimate deterrent is to be towed away?
Lord Hunt of Wirral: My Lords, I believe that that applies to property not to people. At least, it does at the moment, although given this Government it may well apply to people too.
Other important points have been raised on the Scottish dimension by my noble friend the Duke of Montrose and the noble Lord. Lord Lyell. The noble
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Lord, Lord Pendry, raised some very interesting issues on the question of regulation and overregulation. I am always reminded that one should keep asking questions of the Security Industry Authority, for example, about who is regulating the regulators. It is a valid question to raise.
The issue of animal rights activists formed a key part of the debate, and we heard important speeches from the noble Baroness, Lady Gibson of Market Rasen, and the noble Lord, Lord Turnberg, about the vital contribution of animal research. My noble friend Lord Soulsby of Swaffham Prior came up with some impressive facts demonstrating the crucial nature of that research, reinforced by the authoritative speech of my noble friend Lord Selbourne and the practical experiences of the noble Lord, Lord Drayson, as they demonstrated that it is just not possible to do without animal testing at this important time. It could be argued that the Bill does too little, too late, but it is none the less a welcome move in the right direction.
We now come to the part of the Bill that relates to religious hatred. This House is right to stand its ground on issues of fundamental importance to civil liberties in this country, and we do so again in respect of Schedule 10 to the Bill. The Government's stated objective of clamping down on religious hatred and those who propagate it admittedly has a meretricious appeal. I should tell the noble Lord, Lord Ahmed, that we stand side by side with him in protecting all communities against extremists. The noble Lord, Lord Alli, made a very important speech, as did the noble Lord, Lord Bhatia, in putting forward a strong case for Clause 124. Other noble Lords, such as the noble Baroness, Lady Whitaker, wanted to send a clear and positive signal to the Muslim community.
I agree with noble Lords that incitement to hatred is indeed generally loathsome and particularly so when innate fears of other races or religions are being manipulated in trying to create a climate of insecurity, intimidation and violence. But as the right reverend Prelate reminded us, it is vitally important to keep a balance in this debate. I was struck by the fact that no one really answered the very persuasive speech made by my noble and learned friend Lord Mackay of Clashfern, who echoed a statement that he made in his article in the Times today, that these provisions are more likely to stir up discord than resolve it. As evidence of the existing protection, he quoted the conviction of Mark Norwood.
The noble Viscount, Lord Colville, raised serious technical problems with the proposed offence and the almost impossible task that it would present for the jury, particularly looking at Articles 9, 10(1), 10(2) and 17 of the Human Rights Act. My noble friend Lord Baker of Dorking reminded us of all the problems of obscene publications. But no one answered my noble and learned friend's points about the existing case in which there was a conviction.
We had a very important contribution from the noble Lord, Lord Lester. I would have liked to hear him speak much longer, because I thought he was expounding a very important point. But I how to the Whips all the

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time; having been one for so many years, I pay tribute to their handling of a very difficult task. I believe that the noble Lord, Lord Lester, was seeking to find a way through the problems. We await his narrow and carefully tailored amendments in Committee that will, no doubt, avoid what he described as "unintended adverse consequences".
Having looked at the proposed offence, I think that it is disproportionate and fundamentally counterproductive. If anything, it is likely to create more resentment and hatred in people's hearts, not less. In saying that, I find myself in a remarkably broad coalition that includes writers, comedians, all the main Opposition parties, many religious bodies and, of course, many speakers in this debate. It is utter sophistry for Ministers to argue that this legislation, once enacted, would not adversely affect freedom of speech and, in particular, freedom of comment and humour. As the noble Baroness, Lady Cox, said, of course it will.
As the noble Lord, Lord Chan, pointed out, there are no safeguards in the Bill. So, if it becomes law, then anyone will have committed an offence if they say, publish or proliferate anything that is,
"likely to be heard or seen by any person in whom it is likely to stir up racial or religious hatred".
The very term "stir up" troubles me, as it does my noble and learned friend Lord Mackay of Clashfern and the noble Lord, Lord Lester. Perhaps it is intended to be demotic—legalese supplanted by a more modern idiom that may be more readily understood. But it is dangerously vague. Does it imply the creation of hatred. the stimulation of latent hatred, merely the aggravation of existing hatred or all three? Such language, open as it is to interpretation and misinterpretation, is wholly inappropriate for an Act of Parliament. As the noble Baroness, Lady D'Souza, stressed, there is the danger of mischievous cases. With all her experience in fighting censorship in so many forms, she would know.
This clause also subtly shifts the burden of proof. There is no need to demonstrate intention on the part of the person accused. It seeks, as my noble friend Lord Baker put it, to criminalise a state of mind. All that has to be proved is that there was someone in the room, library, theatre or wherever, however unbalanced or irrational they may be, who might have these unpleasant sentiments stirred up in them. In effect, performers or orators would be blamed for the prejudices or moral deficiencies of their audiences. I regret to inform, in particular, the noble Baroness, Lady Ramsay, that this is a lawyer's dream and a citizen's nightmare. If this measure becomes law—and my noble friend Lord Campbell of Alloway listed all the procedural problems—it is axiomatic that people will feel constrained to err on the side of curbing their free expression.
As the noble Lord, Lord Sutherland of Houndwood, pointed out, the offence has only to be perceived, and so the police would soon be busy preparing submissions to be considered by the Attorney-General.
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Salman Rushdie needs no one to lecture him about the possible consequences of causing offence on religious grounds. As he so sagely put it, this law would be interpreted by faith groups as,
"championing their right to be offended".
Where there is offence—and can there be a more nebulous concept?—there is every chance of the law being triggered, despite what the noble Lord, Lord Avebury, said about the effect of the Human Rights Act.
There is a better way. I found myself agreeing with almost every word said by my noble friend Lady Flather; in particular, with her vision of an inclusive Britain. I remember the early days of my political life when I was fighting for the right of Ugandan Asians to come and live in our communities: we have been grateful to them for the richness that they have supplied in our society. I have always believed in a multi-racial society, in an inclusive Britain. We have to speak to each other, understand each other and ensure that we can live together in harmony.
Before coming to the debate I attended the Commonwealth Day observance. We heard a number of religious leaders raise the question of education and understanding. I quote a young representative of the Hindu community, Bimal Patel:
"Conflict, physical or verbal, often starts when people of different beliefs do not listen to each other. They talk but there is no conversation".
I regret that if this offence in its present form becomes law, the proposal will inflict a body blow on our right as citizens to have such conversations. We have now to decide whether we wish to live in a free society. It is no exaggeration to say that in confronting this piece of legislation we are having, in the words of Salman Rushdie, to
"fight the battle for the Enlightenment all over again".
This is a battle that we must win.
10.12 p.m.
Baroness Scotland of Asthal: My Lords, this has been a most intriguing and worthwhile debate. I have listened with great care since 3.7 p.m. to all that has been said. I should formally make a declaration of interest, because like the noble and learned Lord, Lord Mackay of Clashfern, I am a member of the Lawyers' Christian Fellowship, the Thomas More Society and various other Christian and ecumenical inter-faith associations, not least for many years being a Shabbas goy in my local synagogue. So I come to the debate with a modicum of understanding of some of the issues.
I thank the noble Lord, Lord Hunt, for his support and that of his party for the creation of the new agency. With some temerity I remind him and the noble Lord, Lord Selsdon, that the majority of us look forward to our Christmas stocking with a sense of delight and gratitude for the gifts that are about to be bestowed on us with such generosity. It is in that spirit that we should look at the Bill because that which is contained in it is all good.

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During the debate we have discussed a number of issues. I shall try to deal with them in order, but I am conscious that we have had a seven-hour debate and slightly over 20 minutes is given to me for doing that. The issues include SOCA; the intimidation of persons connected with animal research; the incitement to religious hatred; trespass on designated sites; airguns; intercept evidence; the UN Convention against Corruption; the Serious Fraud Office; and Parliament Square—to mention only the main issues.
I turn to some of the technical issues raised by the noble Lord, Lord Dholakia. I will not be able to address each and every issue, but 1 shall deal with two of the main points. He mentioned the parliamentary scrutiny of the code of practice in Clause 11. Clause 11 provides for codes of practice to be laid before Parliament. They are not subject to any parliamentary procedure. That really mirrors the position with the codes of practice issued to chief officers under the provisions of the Police Reform Act 2002, and we intend to continue that format.
The noble Lord referred to key statistics on power of arrest. I gently suggest to him that the figures are not quite as sad as he would have us believe. There were 1.33 million arrests in 2003–04; but in 2003, 738,000 persons or vehicles were stopped, 15 per cent down from 2002–03. The 7 per cent of stops and searches in 2003–04 that resulted in arrests was down from 8.7 per cent the previous year.
One of the major issues raised by a number of noble Lords—including the noble Baroness, Lady Harris, my noble friend Lady Henig, the noble Earl, Lord Rosslyn, and the noble Viscount, Lord Slim—was SOCA's relationship with police forces. SOCA is about building and strengthening links with the police service, not weakening them. We fully realise that SOCA's success, for example in deterring and disrupting criminal gangs, depends on effective integration and co-operation between it and the police services. The regular exchange of information and intelligence between SOCA and local police forces in both directions will be an essential component of that success. The new agency will continue to work closely with the police service on intelligence and operations to ensure that there is an effective link between the agency's efforts at the national level and the work being done by police forces at the local level. We should remember that the majority of people migrating to the service will be those already in NCS and NCIS. We do not need to have any great degree of concern about pulling people out of local forces.
The noble Baroness, Lady Anelay, questioned whether a designated person will be subject to the duties and obligations of a constable as well as the powers and privileges. Where any police powers are conferred on a member of SOCA staff, the exercise of any such powers will, subject to only very limited exceptions, be subject to the same limitations that apply to constables. For example, powers of arrest and search under PACE will need to be exercised in accordance with the relevant PACE codes of practice. The only exceptions might be, for example, where certain powers are currently exercisable only by ports police. In such circumstances, there may be an
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operational case for conferring such powers on designated SOCA staff, in which case, the normal limitations would be disapplied.
My noble friend Lord Mackenzie raised the issues of terms and conditions and membership of trades unions. We have made it clear that police officers transferring to SOCA will transfer on a no-detriment basis. I entirely understand that NCS officers will want to know what the SOCA terms and conditions will be, and we intend to provide a detailed package for negotiation with the unions by Easter. Approaches to dispute resolution will need to be part of those discussions. Schedule 2 amends Part 2 of the Police Reform Act 2002, to provide for SOCA to come within the remit of the Independent Police Complaints Commission.
My noble friend Lord Harris asked about exchange of staff between the two services. The great majority of the staff will be employees of the agency, but there will be an opportunity for those outside to be seconded both ways. We could deal with that issue quite happily. The noble Baroness, Lady Henig, together with the noble Earl, Lord Rosslyn, said, "What about the board? Why are we not having more people represented?". Indeed, the noble Baroness, Lady Harris, asked that about police authorities too. We have made it clear that the board will comprise people with the right skills and experience. They will not be representatives of the stakeholders per se, although of course they may be. They will really be identified by virtue of the skills that they bring to the table. Needless to say, SOCA may consult those that it considers appropriate. It would be invidious to put in the Bill the whole list of all those whom it will consult, but personally I would be surprised if police authorities and other chief constables were not on that list.
The noble Lord, Lord Imbert, raised the question of the independence of SOCA. It is suggested that the Home Secretary could determine the operations of SOCA, given his power to appoint the director general. The Bill enshrines the operational independence of the director-general and I should also point out that my right honourable friend the Home Secretary and his predecessors have always appointed the Metropolitan Police Commissioner, but it has never been suggested that that in any way impinges upon the operation of the Metropolitan Police service. The same would continue.
A number of noble Lords—the noble Baroness, Lady Harris, my noble friends Lady Henig, Lord Mackenzie and Lord. Harris of Haringey, the noble Viscount, Lord Slim, and the noble Lord, Lord Dholakia—all raised issues concerning staff custody officers. The provisions in the Bill relating to the appointment of custody officers seek to confer on chief officers the ability to appoint those members of the force—be it police officers or police staff—who are the most competent, skilled and able to take on and effectively discharge the role of custody officer.
Much of the debate has centred on whether only a police sergeant can undertake that role. A number of the respondents to our consultation on police powers

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recognise that a significant element of the job of a custody sergeant is process-driven and civilians could carry out those tests. Of course, I was interested in the comment made by my noble friend about the return of "Dixon of Dock Green" and we shall certainly bear that in mind.
There is also the recognition that the principle of civilian staff performing the role of custody officer was acceptable, provided that suitable training and selection processes were in place. That is an approach with which we very much agree and the pilots will, I hope, help us to do that. My noble friend Lord Mackenzie asked us to name names. I am happy to do that in relation to who supported these powers, because they have already been outed by my noble friend Hazel Blears in another place on 18 January. She said that, in consultation, the Wiltshire, Gloucestershire, Avon and Somerset, Hertfordshire and Hampshire constabularies, as well as North Yorkshire and Surrey police, were all keen to support these changes. Surrey police is one of the forces which is undertaking a major workforce modernisation pilot, redesigning its basic command unit and considering different people doing different jobs in different places with different skills. So there are the names.
I shall quickly deal with the issue raised by my noble friend Lady Gibson, on behalf of another noble friend who is not able to be here, in relation to the work that is currently under way on the issue of paedophiles. Initially the Paedophile Online team, who work on child pornography on the Internet, will transfer into SOCA as part of NCS. We have yet to take a decision on the longer-term future of the work of that team, but we are clear that this is vital work that must continue.
Issues relating to Scotland were raised by my noble friend Lady Ramsay, the noble Baroness, Lady Harris, the noble Lord, Lord Lyell, and the noble Duke, the Duke of Montrose. My noble friend Lady Ramsay asked about SOCA officers operating in Scotland and I am happy to give the assurance that she seeks; namely, that designated SOCA officers operating in Scotland would be expected to have the necessary knowledge of and training in Scots criminal law and procedures. The Bill also, among other things, requires the Home Secretary to consult Scottish Ministers before setting the strategic priorities for SOCA and the agency must agree with Scottish Ministers as to the provision that its annual plan will make for Scotland. On the ground, SOCA will work in close partnership with the Scottish Drug Enforcement Agency.
These arrangements have been agreed with Scottish Ministers and, furthermore, the Scottish Parliament has adopted a Sewel motion in respect of the Bill. A similar set of arrangements will apply in Northern Ireland, where SOCA will work closely with the Police Service of Northern Ireland.
We turn next to the issue raised by my noble friend Lord Pendry, who asked about the impact of Clause 166 on football clubs in Scotland. Scottish law currently prevents football grounds from applying for licences to sell alcohol, therefore in-house stewards who undertake designated activities within football grounds will not be
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required to be licensed by the Security Industry Authority, once its remit is extended north of the Border, as provided for in the Bill. We are continuing to work with the Security Industry Authority and the football authorities to resolve the position in relation to football stewards in England and Wales. I hope that that gives my noble friend a modicum of satisfaction. In answer to the point raised by the noble Duke, the Duke of Montrose, in relation to the SIA, it will not, as such, deal with the disciplinary matters of the pre-cognition agents.
I now turn to an issue where, most unusually, there seems to be total unanimity across the House—that is, in relation to the offence of intimidation of persons connected with animal research organisations. Since being a Minister, I have never had experience of total agreement, and so I wish to celebrate that fact.
My noble friend Lord Turnberg pointed out that the protection afforded to animal research organisations by the new offence in Clause 143 would not extend to grant-giving bodies which help to fund animal research organisations. We are aware of this lacuna and have received representations on the matter from a number of funding bodies. Therefore, I hope that I shall give a degree of pleasure to the noble Lord, Lord Soulsby, my noble friends Lord Harris of Haringey and Lady Gibson of Market Rasen, the noble Earl, Lord Selborne, and my noble friend Lord Drayson when I say that, in the light of those representations and others, we intend to bring forward in Committee an amendment to extend the list of persons in subsection (2) of the clause to cover bodies which provide financial assistance to animal research organisations. So unanimity has its reward.
To take up another point raised by my noble friend Lord Drayson, the Home Office has, and is, providing funding to enable the police service to tackle animal rights extremists effectively. This is very much work in progress, and we are discussing policing requirements with the service. The Home Office has funded the National Extremism Tactical Co-ordinating Unit, which provides a key co-ordinating role between the industry and the police. Extra funding has been agreed for NETCU for the next financial year. That will provide extra staff and secure accommodation and is a 135 per cent increase over this year. I hope that noble Lords will understand why it would not be prudent to provide further details in a public forum.
I now turn, if I may, to the most difficult issue with which we have grappled today—an issue where there is not unanimity. I refer to concerns over the restriction of freedom of speech. Perhaps I may lay to rest straight away a suggestion—made not least by the noble Lord, Lord Baker—that this is some kind of pre-election gambit. If it is, it is one that has been ongoing for four or five years. There was debate in 1999 and the Bill in 2001. A Bill was then introduced by the noble Lord, Lord Avebury, in 2002–03, and we are back here again. Therefore, this is a commitment that this Government have maintained over a long period of time. With the greatest respect to those who suspect otherwise, it has little, if anything, to do with any suggested election. I cannot say anything about that issue because none of us knows when the election will be called before 2006.

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This matter has been debated and there has been much support for it. The import of that support comes from Churches and multi-faith groups, which are engaged in the issue of liberty. Others outwith this Chamber have supported these provisions and have done so very solidly. Voice has been given in this debate to that support by the right reverend Prelate the Bishop of Portsmouth, who made it clear that it is a multi-faith issue and that it is not limited to any individual faith.
We heard very powerful speeches on this issue. The noble Lord, Lord Bhatia, spoke with great passion, as did my noble friends Lord Alli and Lord Ahmed and the noble Lord, Lord Avebury, who has dealt with this matter time and time again, together with many others. Those voices were in support.
Equally cogently and trenchantly, we had speeches from the noble and learned Lord, Lord Mackay of Clashfern, the noble lord, Lord Lester, the colourful and entertaining speech by the noble Baroness, Lady Flather, and my noble friend and short-term loyalist—I use his words, not mine—Lord Desai, all of which gave voice to passionate opposition to the Bill for fear that it will promote restriction of freedom of speech and defeat the very aims that it tries to promote.
I remind the House that similar fears were raised about incitement to racial hatred. The problems enumerated by the noble Viscount, Lord Colville—the problems about how the ECHR would bite and the Bill would operate and how we would get juries to understand this difficult issue—are very similar to debates about incitement to racial hatred. There were those who said that having such a law would simply stir up resentment and bile against those whom the law was intended to protect. Similar arguments were made about why members of the Jewish community, Sikhs and others should not be identified in a way thought to be inappropriate—and, indeed, why people of colour would not benefit from being singled out as different and deserving of some attention.
The noble and learned Lord, Lord Mackay of Clashfern, mentioned Section 5 of the Public Order Act, which was used in the Norwood case, and said that it could provide the protection sought under Clause 122. I make it plain that it applies only where the words or behaviour are used or the material displayed within the hearing or sight of a person likely to be caused harassment, alarm or distress. It would not cover inflammatory statements made at meetings of extreme political or religious groups that stir up hatred, because those against whom the hatred is directed will not be present. That does not happen often, but when it does, it has a very damaging effect on our community, as it did in the northern towns in 2001. We cannot ignore the pain, fear and destruction that flowed from that.
Incitement to homophobic hatred was raised by my noble friend Lord Alli. The Government keep the criminal law under constant review and we are open to considering whether further extensions are needed. Other vulnerable groups are protected from violence and abuse under the criminal law, including the
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Protection from Harassment Act and the relevant provisions in the Criminal Justice Act 2003. We would want carefully to consider any evidence that those provisions are inadequate and, if so, what form additional protection would best take. I very much welcome the commitment made by my noble friend Lord Ahmed that in relation to those rights, he stands with my noble friend Lord Alli.
We talked a little bit about closing the gap. The noble Baroness, Lady D'Souza, raised some very important points. There is an issue about defence. It is a defence that a person who is not shown to have intended to stir up racial or religious hatred is not guilty of an offence if he or she did not know and had no reason to suspect that the offending material was threatening, abusive or insulting. A similar point was raised by the noble Lord, Lord Sutherland, about whether it was relevant for someone to be offended or insulted by a speech. It does not matter whether a Muslim feels insulted by an anti-Muslim speech; what matters is whether others feel stirred up to hate Muslims because of it. I remind the House that this is not an offence for Muslims. It is an offence for all religions. Christians, Hindus, Baha'is and other religions are equally covered by the offence.
In the one or two minutes left over by the noble Lord, Lord Hunt, I shall briefly deal with trespass on designated sites. The new offence of trespass on designated sites is a response to the Armstrong report of July 2003 and the Security Commission inquiry report of May 2004, which both supported the creation of such an offence. I am aware that concern has been expressed that those powers may be used to prevent access to large areas of the countryside, which is an issue that was raised by the noble Baroness, Lady Anelay, and my noble friend Lady Gibson.
Nothing could be further from the truth. In making designations under those powers, the Secretary of State will be mindful of the need to provide a proportionate response to intrusions at sensitive sites. In particular, we will wish to discourage deliberate intrusions into Parliament and elsewhere.
My noble friend Lord Harris raised the issue of airguns. The Government are presently reviewing the law in that area. We will look closely at whatever further needs to be done in relation to that.
The noble and learned Lord, Lord Lloyd of Berwick, raised the issue of information in relation to intercept material. Although we have had a number of discussions on that, intercept material is already being used. The main volume of intercept has always been and continues to be its use in assisting intelligence agencies and law enforcement to use other techniques to safeguard national security or to prevent and/or detect serious crime.
In 2003 alone, interception led to the seizure of 26 tonnes of illicit drugs, the seizure of 10 tonnes of tobacco, the detection of £390 million of financial crime and 1,680 arrests. A sample of those reviewed by the Government showed an impressive result in conviction rate that is comparable to any other country. So we are

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using that information in a dynamic way. I have a full answer which goes to several pages, but I do not think that I am entitled to prey on the time of the House.
My noble friend Lady Whitaker raised the issue of the UN Convention against Corruption and the Serious Fraud Office. First, my noble friend asked whether the provision of Chapter 5 of Part 2 would enable the Government to ratify the UN Convention against Corruption. I can assure her that the Bill will take us closer to ratification by addressing Article 55 of the convention, which relates to the forfeiture of instrumentalities of crime. But there are still certain other legislative requirements that remain to be completed. We will ratify the convention as soon as we are satisfied that the UK can comply with its obligations.
My noble friend also asked about the investigation of international corruption and fraud, and the consequences for the Serious Fraud Office of setting up SOCA. The SFO will continue to lead on the investigation of serious fraud. However, SOCA will continue to offer specialist support and technical assistance to individual SFO investigations, including tackling international corruption as the National Crime Squad and NCIS do at the moment.
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Finally, I turn to parliament Square, because the noble Baroness, Lady Williams, and a number of noble Lords, not least my noble friend Lord Plant of Highfield, raised that very issue. The precise area will be defined in secondary legislation. We intend to consult the Metropolitan Police so that it covers the area where demonstrations disrupt the work of Parliament, hinders access to the House and causes a security risk. In defining the designated area, we will consider carefully what the noble Baroness, Lady Williams, said, as well as what my noble friend Lord Plant said, particularly as regards Trafalgar Square.
I was intrigued with the argument about clamping and meters. Of course, those matters will excite a great deal of care and attention when they come to be further considered.
The only remaining issue is whether these are matters that noble Lords can commend. We have had a very thorough debate of these issues. A huge amount of assent to the majority of the provisions has come out of it. We obviously look forward to the detailed scrutiny of the Bill. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty minutes before eleven o' clock.

Official Report of the Grand Committee on the
  Charities Bill [H.L.]
  (Sixth Day)
  Charities Bill [H.L.]

    The Committee met at half past three of the clock.
    [The Deputy Chairman of Committees (Viscount Allenby of Megiddo) in the Chair.]
    Clause 11 [Changes in exempt charities]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 113:
    Page 13, line 33, leave out subsection (7).
    The noble Lord said: The amendment would reverse a proposal in the Bill to remove the Church Commissioners from the list of exempted institutions. I am not clear why the Government are proposing it, given their willingness to allow universities to remain exempt under the charitable and regulatory control of the Higher Education Funding Council for England, which is itself a funding rather than a regulatory organisation.
    The Minister may argue that there is no regulator in place for the Church Commissioners, although it could equally well be argued that a surfeit of government departments and Secretaries of State are already built into the Church Commissioner structure. Of the 27 Church Commissioners, no fewer than six ex officio office holders represent senior posts in government and Parliament; namely, the Lord Chancellor, the Lord President of the Council, the Secretary of State for the Home Department, the Secretary of State for the Department for Culture, Media and Sport and the Speaker of the House of Commons. Could not one of those become the regulator? If the Government argue that none of the six office holders who are members of the Church Commissioners ex officio can act as the regulator because of a conflict of interest, there are obvious alternatives available, such as the Department for Constitutional Affairs.
    Further, as regards governance, the arrangements within the Church Commissioners for proper governance appear extensive. I understand that there is a properly constituted audit committee to oversee compliance and, no less significant, there is an established procedure whereby, if the audit committee is not satisfied with the response to its reports by the general body of the Church Commissioners, a specific right of appeal is available to one of the six office holders whom I have already mentioned.
    If the Government consider those procedures insufficiently rigorous to ensure compliance with the new Bill, perhaps the Minister could tell the Committee which
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    specific procedures are in place at HEFCE to ensure university compliance with it. Presumably, the Government accept HEFCE's regulatory ability in the charity field, as it is already designated as the regulator for the higher education sector.
    Finally, if the Government are determined to proceed on the basis of the Bill as drafted, it would be helpful if the Minister could let the Committee know what impact he believes the change will have on the nature of the relationship between the Church and state. Some might argue that for the Charity Commission to regulate the Church Commissioners is a subtle but nonetheless significant shift of emphasis in the relationship between the two. I beg to move.
    Lord Bassam of Brighton: We have tried wherever possible to identify suitable main regulators to take on the role of monitoring basic charity law compliance, but for some exempt charities it has not proved possible. The Church Commissioners and the charities that they administer are among those for which it has not been possible to identify a main regulator and which, under the Bill, would have to register with and be regulated by the Charity Commission.
    The noble Lord, Lord Hodgson, asked whether that might have a subtle impact on the relationship between Church and state. I tell him that there is no intention on the part of the Government that this proposition or any ensuing legislation will affect in any way the balance of the establishment of the Church of England in any way, shape or form.
    So far as we are concerned, the amendment would make an already anomalous position even more anomalous. I am sure that the noble Lord would accept that it would be hard to justify to other charities and to the public why the Church Commissioners should be allowed to retain their exempt status when other charities will lose theirs. In the interests of being fair to all, it is only right that we proceed as we envisaged. I hope that the noble Lord will feel able to withdraw his amendment.
    It is worth pointing out that, if we follow the approach put forward by the noble Lord, a member of the Church Commissioners would also be in an anomalous position. I do not see that the amendment follows the general overriding logic of the legislation.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that reply. We wanted to explore the position of the Church Commissioners. I am not sure that their position is as unusual as his remarks suggest, but we want to make progress, so I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 114 not moved.]
    Lord Hodgson of Astley Abbottsmoved Amendment No. 115:
    Page 14, line 15, at end insert "become or"
    The noble Lord said: On Amendments Nos. 110 and 114, we had a fairly long debate about the position of service charities—non-public service funds. For the

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    reasons then explained, we sought to add them to the list of exempt charities. We offered the Government the suggestion of a principal regulator for that group, as defined in the Bill.
    I turn now to the position of other groups that may be considered eligible for addition to the exempt list. First, I want to address the position of foundation and voluntary schools. That group is the subject of recommendation 43 of the scrutiny committee. Paragraph 367 of the committee's report reads:
    "We recommend that the Home Office should consider designating a principal regulator for foundation and voluntary schools so that they can retain exempt charitable status".
    Paragraph 43 of the Government reply rejected that on the grounds that to be put on the exempt list, charities had to be,
    "a 'principal regulator' that would be willing, and have the capacity, to ensure that those charities complied with the basic principles of charity law".
    As no principal regulator could, at present, be found for foundation and voluntary schools, the Government would not accept the scrutiny committee's recommendation.
    We accept the argument that, at present, there is no obvious principal regulator for foundation and voluntary schools but, equally, if they and other similar groups are to be permanently excluded from exempted status, the Government will have failed to think through the consequences for the sector.
    The first two amendments, Amendments Nos. 115 and 116, would alter Clause 11(12) to give the Secretary of State power to add charities or groups of charities to the exempt list—not as, at present drafted, only to delete them. The third amendment, Amendment No. 116A, would enable individual charities to force the Secretary of State to consider their request for addition to the exempt list. He cannot just ignore their requests, so causing a withering on the vine. Accordingly, if in the future a principal regulator can be found, the Secretary of State would have the power to add foundation and voluntary schools to the exempt list.
    Why should the Government worry about that? I shall refer to a briefing note. If I do so rather extensively it is because it is a complex subject and it will affect literally thousands of schools. There are believed to be over 4,000 aided schools; 2,500 controlled schools; and 1,000 foundation schools, a category that I understand the Labour Government wish to expand and increase.
    As I understand it, the good news is that for school trustees the provisions of Section 3A of the 1993 Act, as substituted by Clause 9 of this Bill, will be neutral or beneficial. The new general registration threshold will be any charity whose gross income does not exceed £5,000. Of course, it ceases to be relevant to the threshold whether the charity owns land or has a permanent endowment. Therefore, school trustees will have to register only if their gross income exceeds £5,000 and for most of them it will not. Those receiving a substantial income from the letting out of a teacher's house would have to register, but often the rent from such houses is low. Trustees with small monetary
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    endowments producing a few hundred pounds a year, who were previously required to register, would not now need to do so. So the Bill's proposals do not present any real problem for the Church school trustees. As it is a complex subject, perhaps the Minister will say whether I have been right in my supposition thus far.
    The real problem is with the Church school governing bodies. The bulk of the money handled by most maintained school governing bodies is in their delegated budget, which they manage as agents of the local education authority. That would not count as their income for the purposes of the registration threshold. Governing bodies with voluntary funds where donations to the fund and interest on it exceed £5,000 would have to register; although most will probably be just over the threshold and would therefore be subject to the light-touch regime for accounting and reporting.
    The real losers will be the voluntary-aided school governing bodies. Aided school governing bodies are responsible for meeting the capital cost of work done to school premises. They are entitled to claim grants from the department of up to 90 per cent of the cost of the work, but the grant money that they receive is their money, not delegated budget money. Therefore, in any year when an aided school governing body has a capital building project, not only will its income take it over the registration threshold but it is likely to be of a size that brings it into the most rigorous accounting and reporting regimes. So it will have to produce accrual accounts for that year and have them audited, notwithstanding that the money is for a single project and is closely monitored by the DfES, which is paying a 90 per cent grant for it. That will, therefore, impose a regulatory burden—a spasmodic regulatory burden—on voluntary-aided schools that is not imposed on other schools in the maintained sector.
    There is a further and almost certainly unintended consequence of the loss of exempt status for, principally, foundation school governing bodies. Occasionally, maintained school governing bodies hold land not under some statutory regime under the Education Act but on charitable trusts. It is not unreasonable that dispositions of that land should be subject to the same controls as dispositions of land held by other charities. The problem comes with land that the governing body holds that is also subject to a statutory regime under the Education Acts. That principally affects foundation schools—the category designed to replace grant-maintained schools when the Labour Government abolished them. In such schools, it is normal for the governing body to hold all or part of the school premises.
    In the case of a Church foundation school, the governing body is likely to hold the playing fields that were formerly owned by the local education authority, but, as with other Church schools, the trustees hold the school site. With foundation schools that are not former voluntary schools, the governing body is likely also to hold the whole of the school premises.

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    The land that the governing body holds is subject to strict controls on its disposition because it is publicly funded land acquired from LEAs. The Secretary of State's consent must be given to any disposal of the land, and he can direct that the land or the proceeds of its sale are given back to the LEA or to some other body.
    There will now be a system of dual control. Not only will the governing body have to obtain the Secretary of State's consent, but it will have to comply with the requirements of the Charities Act. Moreover, in some cases, the Education Acts regime envisages that, with the Secretary of State's consent, governing bodies can transfer the land free of charge. They will now require not only the consent of the Secretary of State for that but the consent of the Charity Commission.
    That point emerged in discussions with the DfES about the Education Bill, which has been before the House, and in the light of the Government's wish to encourage an increase in the number of foundation schools. They want to give foundation schools the option of forming links with an existing charitable foundation to be a foundation for the school. The governing body will then be able to transfer its land to the foundation. However, if the governing body ceases to be an exempt charity, it will not be able to do that without the consent of the Charity Commission. It is not clear whether the DfES, in drafting the Education Bill, has considered the implications of the loss of exempt status. Our concern is that the department is unaware of the implications of its proposals.
    To summarise, there is the danger of dual regulation—and complex regulation at that. That would be resolved if a regulator could be found and if the Bill then permitted groups to be added to the exempt list.
    3.45 p.m
    So much for the problem of schools. Lest the Minister tries to argue that this is a one-off, I move to my second example, which concerns the Church of England parishes. Parishes will continue to be outside registration procedures when income is less than £100,000, but, of course, as we heard from the Government during our debate on Amendment No. 109, in the course of time, the intention will be to cause them all to register, down to those with an annual income of probably no more than £5,000 or £10,000.
    Bearing it in mind that there are somewhere between 13,000 and 17,000 Anglican churches, 70 per cent of which are Grade I or Grade II listed buildings and are the responsibility of the parishes, it is hard to conceive that many parishes would have an income of much less than £10,000 if they were responsible for the maintenance of such a building. Therefore, eventually, the vast majority of, if not all, the parishes will have to register. I invite the Committee to think what that will mean for all the parties involved—the Charity Commission and the parishes.
    Bearing it in mind that the Church of England's accounting regulations, which are similar to those of the Charity Commission. stipulate that parishes have
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    to deliver annual accounts to the diocesan hoard of finance, there is an argument that the possibility of adding Church of England parishes to the exempt list would be extremely useful and deregulatory.
    Who could the regulator be? One answer would be for individual diocesan boards to decide whether they could cope with taking a regulatory role as an adjunct to their present role; that is, having collected the accounts from the parishes, seeking to obtain an exemption order from the Secretary of State for the parishes in their diocese.
    Those are merely two, admittedly lengthy, examples of why some flexibility is needed in allowing additions to the exempt list, not merely in permitting deletions. There may be other groups that have not yet focused on what is proposed.
    The summary position is that, unamended, the Bill would land a further 20,000 to 25,000 charities with the burden of regulation and the Charity Commission with the burden of regulating them. Moreover, those charities are local, low-risk and pose no danger to overall public confidence in the charity sector. That consequence would be quite at odds with the policy themes that underlie the proposed legislation. Our amendments would give the Secretary of State the flexibility to sort out the difficulty by encouraging the emergence of a principal regulator, following which he could add appropriate groups to the exempt list. I beg to move.
    Lord Phillips of Sudbury: I have great sympathy with the amendments in the group. The noble Lord, Lord Hodgson of Astley Abbotts, has given an exhaustive—not to say "exhausting"—explanation of why they are meritorious. My only query is whether Amendment No. 116A is fit for the purpose that was advanced by the noble Lord. I do not understand what the impact of that amendment would be, given that it hinges around what is described as,
    "the purpose mentioned in subsection (12)(b)".
    do not see a purpose in subsection (12)(b). Therefore, it could be that the amendment needs revision, but, as I said, I am inclined to be persuaded by what the noble Lord said by way of justification.
    Lord Bassam of Brighton: As I said about colleges and halls of certain universities, the order-making power in Clause 11 would enable the Secretary of State to remove exempt status and currently exempt charities, thus requiring them to register with and be regulated by the Charity Commission. As the noble Lord, Lord Hodgson, has explained, the amendment would extend that order-making power to enable the Secretary of State to create exempt charities.
    Our policy is to secure greater accountability and transparency in exempt charities' compliance with charity law by requiring them either to be regulated by a principal regulator or to register with and be regulated by the commission. The amendment would apply to charities which are already registered with and regulated by the commission and which would not

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    need to improve accountability and transparency, as they would already be properly regulated in respect of charity law.
    It is not the Government's intention to create additional principal regulators for groups of charities that are already properly regulated by the commission. Nevertheless, in some limited circumstances it may be appropriate for the Secretary of State to consider conferring exempt charity status on particular charities. Where a principal regulator is proposed to take on the regulation of a group of currently exempt charities, a small proportion of which are not exempt and are registered with and regulated by the commission, we consider it sensible, if they so desire, to allow them all to be regulated by the principal regulator along with the rest of the group. For example, some 200 higher education institutions are not exempted charities and are registered with and regulated by the commission. Under the Bill, other currently exempt higher education institutions would be regulated by HEFCE as the principal regulator. There is much to be said for allowing the few registered institutions to choose to be regulated by HEFCE rather than by the commission.
    With that very much in mind, we agree to consider the amendment in more detail as it applies to the limited circumstances that I have just described and to return to it on Report. With those words of reassurance, I hope that the noble Lord, Lord Hodgson, will feel able to withdraw Amendment No. 115 and not press Amendment No. 116.
    I turn now to Amendment No. 116A. I have already explained in detail the Government's policy on exempt charities, and I do not particularly want to repeat those words. This amendment would compel the Secretary of State to make, on the request of an exempt institution, an order removing the institution's exempt status by amendment to Schedule 2 to the Charities Act 1993. That would be undesirable because it would create a situationi in which some charities were regulated by the principal regulator and other similar charities registered with and regulated by the Charity Commission. That could lead to confusion about the requirements that the different institutions had to comply with and would make it more difficult for consistent advice and guidance to be provided. It would erode the benefits of the principal regulator approach and could be more costly to administer.
    We do not expect that exempt charities would want to lose the advantages of the principal regulator approach and register with and be regulated by the Charity Commission. However, the Bill enables the Secretary of State to make further amendments to Schedule 2 to the 1993 Act to remove exempt charity status from particular charities or groups of charities. That could be used where, for example, it became apparent that a principal regulator was no longer suitable for that role, and it would be more appropriate for all charities to be monitored to register with and be regulated by the commission.
    I hope that that clarifies our approach. As I said, we feel that the noble Lord has a point with his two earlier amendments, and we may want to come back with a
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    provision that will satisfy his objective. No doubt, we can have an exchange of correspondence to cover the drafting issues.
    Lord Hodgson of Astley Abbotts: I had thought that I was very grateful to the Minister, although I was a little less grateful by the time he had finished his remarks. I had thought that we were to be given the flexibility to add groups, but when he came to Amendment No. 116A—I accept that it may be imperfectly drafted—he said that we would probably not be able to add new principal regulators.
    I shall read carefully what the Minister said. As I say, I am encouraged by his response to Amendments Nos. 115 and 116, but less so by his penultimate remarks.
    Lord Bassam of Brighton: I want to correct something I said. In dealing with the two earlier amendments, I said that I thought there were about 200 higher education institutions that were not exempt. I meant to say that 20 institutions were not exempt. I would not want to be wrong by a factor of 10. Perhaps we may correct that error on my part.
    Lord Hodgson of Astley Abbotts: I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 116 and 116A not moved.]
    Clause 11 agreed to.
    Clause 12 agreed to.
    Schedule 5 agreed to.
    Clause 13 [General duty of principal regulator in relation to exempt charity]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 117:
    Page 14, line 36, after "can" insert ", including consultation with the Charity Commission,"
    The noble Lord said: In moving Amendment No. 117, I shall be a great deal briefer than I was on the last group.
    Clause 13 gives the Secretary of State the power to make regulations prescribing a body or a Minister of the Crown as the principal regulator of an exempt charity. A body or Minister prescribed as a principal regulator of an exempt charity will have, in relation to that charity, the duty in subsection (2) to do all that it or he reasonably can to meet the compliance objective in relation to that charity.
    The details of the compliance objective appear in Clause 7 as the objectives of the Charity Commission. We debated those extensively at a previous Grand Committee sitting. The objective is:
    "to increase compliance by the charity trustees with their legal obligations in exercising control and management of the administration of the charity".
    As the compliance objective is an objective of the Charity Commission, we argue that it would be wrong for a principal regulator not to have to consult the commission in his role of ensuring that the charities met that objective. Knowing the full up-to-date

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    practice of the compliance objective is essential, if the principal regulator is to carry out his task effectively. Under the Bill, a principal regulator does not have to consult the Charity Commission at all, but it is, after all, the Charity Commission that will develop best practice in compliance.
    Amendment No. 117 would ensure that the principal regulator had to consult with the Charity Commission as part of his duty to meet the compliance objective in relation to the charity. For those exempt charities to be properly regulated, interaction with the Charity Commission on such a matter is surely essential. I beg to move.
    Lord Phillips of Sudbury: I am just a wee bit anxious that the amendment may add to the bureaucracy of the charity regime. The noble Lord, Lord Hodgson, and I are at one in believing that the Bill must, as far as possible, not increase bureaucracy and layers of administrative oversight. Unless I have missed some point, it seems to me that a principal regulator should not be a principal regulator, if he does not understand current law and practice—it is on the commission website anyhow. I am afraid that to require a consultation at the Charity Commission end might beget a sense of obligation that could increase what might be considered a rather pointless additional exercise of regulation. I put those points tentatively, and I shall be interested to hear what the Minister says.
    Lord Borrie: I agree with the points made by the noble Lord, Lord Phillips. When moving an amendment some days ago, I expressed concern at the over-regulation of universities and concern about whether more burdensome duties and more requirements for providing information would be imposed on them if it were done by HEFCE rather than by the Charity Commission. There would be duties on the Charity Commission if the amendment were made. The idea that both of them should have those duties and would require information and demand things of universities does not seem to be desirable. Of course there are many other examples; I just pick one. The principal regulator—if that is the person doing the job—must do the job itself and should not have that additional requirement.
    4 p.m.
    Lord Bassam of Brighton: I agree with my noble friend Lord Borrie and the noble Lord, Lord Phillips. It is a nice but unnecessary amendment. Principal regulators will in any event want to consult the Charity Commission to carry out their functions in meeting compliance. It could not be said of a principal regulator that it did all that it reasonably could to meet the compliance objectives if it did not consult with the Charity Commission whenever it was appropriate to do so.
    It was considered that it would be too prescriptive for the details of the relationship between principal regulators and the Charity Commission to be expressly set out on the face of the Bill. It is intended to establish a committee of principal regulators to share best practice and to ensure consistent communication and
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    application of regulatory requirements. We all want to try to keep bureaucracy to a minimum. I am not sure that this amendment fits that bill. I hope that the noble Lord will withdraw it with good grace.
    Lord Hodgson of Astley Abbotts: When I am told that I am increasing the regulatory burden, I am very sensitive to that accusation. The Minister flatters me by saying that the amendment is nice but unnecessary. Therefore, I am happy to beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Bassam of Brightonmoved Amendment No. 118:
    Page 14, line 38, leave out "increase" and insert "promote"
    The noble Lord said: We have already debated this. I beg to move.
    On Question, amendment agreed to.
    [Amendment No. 119 not moved.]
    Lord Hodgson of Astley Abbottsmoved Amendment No. 120:
    Page 15, line 3, at end insert—
    "( ) Such regulations shall be brought into force within 6 months of the coming into force of this section."
    The noble Lord said: The amendment would insert a provision into Clause 13 that regulations concerning the role of the principal regulator must be brought into force within six months of the coming into force of the Act. The purpose of this section of the Bill is to ensure that exempt charities are, so far as is reasonable, subject to proper regulation in relation to the way in which they carry out their obligations from the point of view of charity law.
    The principal basis on which certain exempt institutions are relieved from registering with the Charity Commission is that they can point to another main regulator who can perform the job of regulating for charity law purposes as well. It is only if the principal regulator is identified by order that such charity law regulation will occur. If no order is made under Clause 13(4)(b), the exempt charity will remain unregulated for charity law purposes, which is contrary to the spirit and intention of the Bill. It is therefore important that there should be a time limit for implementation of the principal regulator and in our view six months is a long enough period. I beg to move.
    Lord Bassam of Brighton: It may help if I set out the Government's intentions for the implementation of the provisions relating to exempt charities.
    Clause 13(4)(b) provides the Secretary of State with the power to make regulations prescribing the principal regulators for specific charities or groups of charities. These regulations would be subject to the affirmative resolution procedure. Under Clause 71(1)(a), this regulation-making power would come into force on the day on which the Bill becomes law.
    The Government intend that the other provisions dealing with exempt and excepted charities should come into force in 2007. There are good reasons for

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    this. Exempt charities that are to be regulated by a principal regulator will need time to prepare themselves for changes to their existing monitoring and reporting processes. The same applies to those with an annual income over £100,000 for which we have not been able to identify a principal regulator, which will need to register with and be regulated by the Charity Commission.
    It will take some time properly to establish the principal regulators. One of the first steps will involve reviewing the legislation under which they are established to determine what amendments or modifications are required to enable and equip them to take on the role of principal regulator. We will consult with stakeholders on the draft regulations. The proposed principal regulators will need to consider changes to their monitoring processes which would enable them properly to monitor the exempt charities within their scope. The Charity Commission and the proposed principal regulators will need to develop memoranda of understanding, to formalise the details of the relationship between them, to include, for example, matters such as information sharing.
    The amendment of the noble Lord, Lord Hodgson, would require regulations prescribing principal regulators to be made within six months of the Bill becoming law. If, for whatever reason, regulations could not be made within six months establishing the principal regulator for a particular charity or group of charities, they would continue to be exempt charities, unless or until the Secretary of State exercised his order-making power to remove their exempt status and required them to be registered with and regulated by the Charity Commission, and the additional burden this would involve. We do not think this is practical given the work involved in establishing the principal regulators, and the fact that we want to give exempt charities time to prepare for regulation, be it by a principal regulator or by the Charity Commission. I refer to the short time frame that the noble Lord proposes.
    While I sympathise with the noble Lord's wish for the provisions on exempt charities to be implemented speedily, I hope he understands the reasons why our plan is for implementation of these provisions in 2007, which will allow sufficient time for principal regulators and exempt charities to prepare. It is simply a matter of practicalities and the amount of work that needs to be done in the relevant time frame. That is what motivates our decision to resist this particularly seductive amendment.
    Lord Hodgson of Astley Abbotts: I am particularly grateful to the Minister for laying out the timetable. It is helpful to have that on the record. I am sure that will help members of the sector when they read the record of our proceedings. The concern was that an uneven playing field would exist for a long time and that, in the famous words, tomorrow would never come. However, the Minister has reassured me that will not happen and that tomorrow will arrive, even if it is in 2007. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
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    On Question, Whether Clause 13, as amended, shall stand part of the Bill?
    Lord Hodgson of Astley Abbotts: Clause 13 is entitled,
    "General duty of principal regulator in relation to exempt charity".
    We have tabled this clause stand part debate to tease out from the Government how principal regulators are to be selected and against what criteria their performances are to be judged. Nowhere has this been explained. There is concern in the sector about an even playing field in this regard. Do principal regulators just put themselves forward or are there more complicated reasons for the commission not detailing the selection process? The regulatory impact assessment covers this only very briefly. For example, as I understand it there has been no study published or made publicly available that describes how HEFCE plans to carry out the charity regulation aspects of its work, so how can we know what the regulatory impact will be?
    HEFCE is not respected by all higher education stakeholders—I believe that some higher education bodies have elected to register directly with the Charity Commission—though there is an acceptance that it may have access to the best data. However, to date it has shown few teeth as a regulator and some have suggested there are doubts whether it has any legal power to act in this matter. Therefore, a number of questions arise. How and by whom will principal regulators be judged to be effective? Who do they report to? Will they have to make an annual report to the commission or will they report to their relevant government departments? What about parliamentary scrutiny of these exempt sectors? They are certainly big enough to merit it.
    A key issue identified by the Association of Medical Research Charities (AMRC) is the potential conflict of interest between the roles of major funder and principal regulator. AMRC's interest is to protect the independence of charitable funding for research from the interference of the state. Therefore, it would be helpful to receive an assurance from the Minister that the independence of charitable funds will be assured, even if the principal regulator is a principal funder, a government department or a government agent.
    It is not clear from Clause 13(2), even with the insertion of our Amendment No. 117, that the commission will have any powers over the principal regulators should they fail to promote compliance. This is unknown territory and we should be seeking a much stronger commitment to keep it tested and under review. Our key aim is to secure a commitment from the Minister to review the relationship between the commission and principal regulators to see whether compliance has been achieved and is continuing to be achieved.
    As I say, to whom are the principal regulators responsible regarding compliance with charity law? I believe that in an earlier debate the noble Lord, Lord Phillips, said he was sure that that responsibility

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    fell to the commission, but I cannot find that stated explicitly anywhere. I look forward to hearing the Minister's response to those points.
    Lord Phillips of Sudbury: Pursuant to what the noble Lord, Lord Hodgson, said, I hope there will be a very full consultation before the regulations are laid under this clause. The affirmative procedure is required which is of some consolation but I assume that there will be a very full consultation to ensure that the kind of concerns voiced by the noble Lord, Lord Hodgson, are fully taken into account.
    Lord Bassam of Brighton: On the first point made by the noble Lord, Lord Phillips, of course there will be consultation. I am sure that in keeping with the spirit of the legislation the consultation will, indeed, be full as this is a very important set of relationships.
    I am grateful to the noble Lord, Lord Hodgson, for initiating this clause stand part debate as it provides me with the opportunity to put on record our view of how this part of the Bill will work. The clause provides for the determination of principal regulators and for amendments to be made to their legislative framework to enable them to take on the role of principal regulator. It also provides the objective for a principal regulator, which is to further charity law compliance by the trustees of exempt charities which it monitors.
    We have already had lengthy discussion on that and I have spoken at length about the Government's policy towards exempt charities and the approach of establishing principal regulators to minimise bureaucratic burdens on those charities. Perhaps it would help if I simply restate and reiterate some of the main points. The Government accept the Strategy Unit recommendations that exempt charities should have their monitoring regimes adapted to cover basic charity law requirements and should provide information on their voluntary funds. As I have said on a number of occasions, where possible the Government have identified principal regulators—organisations that already monitor or regulate exempt charities in other ways—which will take on the role of monitoring and promoting charity law compliance.
    Principal regulators are already familiar with the charities they will be regulating as the charities are already monitored by them in other respects. Their knowledge and expertise of the particular sector for which they will be responsible will be a key advantage. We had much discussion on that when we debated HEFCE's role. Principal regulators will be able to adapt existing monitoring mechanisms to capture information required for monitoring charity law compliance. We believe that will keep the burden of regulation to a minimum. Principal regulators will not have powers of investigation and enforcement; only the Charity Commission will be able to intervene at the request of the principal regulator. The Charity Commission's view is that this is likely to be infrequent given that these organisations are already subject to monitoring through their own existing regulatory regimes.
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    The names of the principal regulators that we have identified for individual exempt charities or for classes of exempt charities are listed in chapter 4 of the regulatory impact assessment, which was published with the Bill. The list is too long for me to go through now but I can tell the Committee that all the principal regulators are organisations created by statute or by Secretaries of State or in one case by the Welsh Assembly. Like the Charity Commission, all the principal regulators are ultimately accountable to Parliament or to the Welsh Assembly for the performance of their functions. That accountability will extend to their new functions as principal regulators of exempt charities.
    If this clause were not to stand part of the Bill, there would be no principal regulators and we would be left with a very difficult choice. We would either have to maintain the anomalous position of exempt charities by leaving them unregulated with regard to charity law—which I am sure would draw criticism from registered charities and others—or we would have to force them to register with, and be regulated by, the Charity Commission, thus negating the benefits of reduced bureaucracy that the principal regulator approach provides.
    4.15 p.m.
    The Government believe that appointing principal regulators for exempt charities where it has been possible to do so provides a proportionate solution which will establish greater accountability and transparency while imposing the minimum extra bureaucracy. I expect to provide some further reassurances when we discuss some of the other amendments tabled to this clause. I hope that in the light of what I have said the noble Lord will feel able to reconsider his intention to oppose the Question that the clause stand part.
    The noble Lord, Lord Hodgson, asked about conflicts of interest and whether a body could be both funder and regulator. We have no objection to that in principle. An example is the Housing Corporation, which is widely viewed as a very effective regulator in its own right.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that explanation. However, one point he made slightly surprised me. Did he say that the principal regulator has no powers of investigation and that only the Charity Commission can investigate?
    Lord Bassam of Brighton: Yes, I did say that.
    Lord Hodgson of Astley Abbotts: I find that slightly strange. I should like to think about that because it seems to me that a principal regulator should be able to investigate. As I said, one of our concerns is whether the bodies have the legal teeth to be proper regulators. It seems to me that investigative powers are part of that. To have to pass all investigations back to the Charity Commission seems to make them only second division principal regulators at best.
    Lord Bassam of Brighton: This matter requires clarification. If an investigation were needed, the role

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    of the Charity Commission would be to intervene at the request of the principal regulators. The principal regulators would approach the Charity Commission, explain that a problem needed to be investigated and support the Charity Commission in conducting that exercise.
    Lord Hodgson of Astley Abbotts: I am grateful for those comments and I am glad that they are on the record. I should like to think about them. It seems to me a strange regulatory structure for HEFCE to ask the Charity Commission to look into a problem that may arise with a university. However, as I say, I should like to think about the matter and perhaps return to it.
    Clause 13, as amended, agreed to.
    Clause 14 [Commission to consult principal regulator before exercising powers in relation to exempt charity]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 120A:
    Page 15, line 13, leave out "relevant"
    The noble Lord said: My noble friend Lord Hunt, in whose name this amendment is tabled, will later tonight reply for the Conservative Front Bench on the Serious Organised Crime and Police Bill. Therefore, he has asked me to speak to Amendments Nos. 120A and 120B on his behalf.
    Clause 14 inserts new Section 86A entitled,
    "Consultation by Commission before exercising powers in relation to exempt charity".
    I think that it is common ground among us all—certainly this is common ground between the noble Lord, Lord Phillips, and me—that we want the Bill to be as simple, as unbureaucratic and as readily understandable as possible. That is why we have some problems with this clause as it stands.
    In paragraph 368 of its report, on page 99, the Joint Committee states:
    "The Committee also recommends that the Charity Commission should be given a duty in the Bill to consult with principal regulators before using any of its enforcement powers in respect of exempt charities".
    That seems to me to endorse a simple principle: it is universal and readily understood. For a time it seemed that the Government had accepted the Joint Committee's call for clarity and that the Bill, when published, would include a general obligation to consult. Therefore, it was with disappointment and some foreboding that I saw that the Bill included in Clause 14 only partial implementation of the duty to consult.
    The list of powers in the clause described as "relevant" seems rather arbitrary and I agree with the various representatives of charities who have argued that the concept of "relevant" powers—and, by implication, of irrelevant ones—should be struck from the Bill.
    The subsection that I seek to delete entirely from the Bill includes the rather esoteric powers contained in Sections 73(4) and 73C(4) to (6) of the Charities Act 1993 (orders relating to remuneration paid while a trustee is disqualified). However, it does not include, for example, Sections 14B (power to make cy-près schemes), 26(1)
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    (power to sanction trustees' actions), 31A (power to apply for a warrant to enter and search), 63(2) (power to present a petition to the High Court for the winding up of a charity) or 75A (power to free land from restrictions).
    Frankly, by the time this list is expanded sufficiently to make any sense, it would be simpler to dispense with it altogether—striking out the notion of a "relevant" power in subsection (1) of new Section 86A and deleting entirely subsection (2) of the new section.
    These amendments would simplify considerably the relationship between the Charity Commission and the principal regulators, making life easier for both. They would have the consequential effect of simplifying the memoranda of understanding that will have to be drawn up between the commission and the regulators.
    I wish to say a few words about the requirement to consult itself. The word is well chosen for it explicitly underlines the fact that the final decision in the matters under discussion will rest with the higher authority—the Charity Commission. That is subject to the various provisos that we in this Committee are in the process of discussing, particularly the proportionate use of the Charity Commission's powers.
    My amendments are about good working relationships, about courtesy and about making the system work well. These processes will surely work more smoothly if there is a general presumption in favour of the commission calling upon the accrued expertise of the principal regulator before exercising its powers to intervene. I beg to move.
    Lord Phillips of Sudbury: As a member of the Joint Committee I am obliged to the noble Lord, Lord Hodgson, for reading out our recommendation which was one of several along those lines. We have said it many times before. However, I have a query on this amendment. It is somewhat akin to the one I raised on Amendment No. 117, which required consultation with the Charity Commission. My concern again is that one does not double up consideration. If we delete "relevant" from Clause 14(1), I fear that the Charity Commission would then be required, before doing anything at all, to consult with the charity's principal regulator. If the amendment were accepted, the clause would read:
    "Before exercising any power in relation to an exempt charity, the Commission must consult the charity's principal regulator".
    The Charity Commission must be by definition exercising some power when it does anything in relation to any charity.
    The consequences of the measure might not be as the noble Lord, Lord Hodgson, intends as it would create almost a mirror image of consideration by both the principal regulator and the Charity Commission. That in turn would necessarily increase the bureaucratic overlay. I do not enjoy arguing against amendments proposed by the noble Lord but I believe that this measure may have exactly the reverse effect from that which he intends.
    Lord Bassam of Brighton: I certainly appreciate the point made by the noble Lord, Lord Phillips. However, I also appreciate the point that the noble Lord, Lord

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    Hunt, wished to put forward through the amendment which the noble Lord, Lord Hodgson, ably moved. The point made by the noble Lord, Lord Hunt, in the amendment is that the principal regulator has an interest which goes rather wider than just those powers that might be described as enforcement powers, and that the consultation requirement should apply before the commission exercises any of its statutory powers over an exempt charity. We see some sense in that and we are willing to accept the noble Lord's amendment in principle.
    In doing so, however, we note that requiring the commission to consult a principal regulator does not give a principal regulator the right to veto the commission's exercise of its powers. However, it gives the principal regulator the right to have its views listened to and—this is important—taken seriously by the commission before it acts. We believe that is no bad thing in itself. I see where the noble Lord, Lord Phillips, is coming from but we see some merit in the amendment. I believe that we can come up with something which will work. We would like to take the measure away, consider it and return at Report with an amendment which has the effect that the noble Lord, Lord Hunt, seeks, but also takes into account the point made by the noble Lord, Lord Phillips.
    Lord Phillips of Sudbury: Before the noble Lord, Lord Hodgson, replies, if there were a crisis in relation to a charity, whereby the Charity Commission was having to exercise one or several of its many statutory powers to protect charitable assets, would that mean that every time it did anything it would have to consult the principal regulator? If there were an emergency situation, where swift action or a series of consecutive decisions have to be taken—snap, snap, snap—unless the construction of the phrase "before exercising any power" were to be confined to the initial exercise of the power, I can see a huge problem about doing the job. I hope that in considering the matter the Government will take full account of that. The last thing in the world that we want is to run into a situation in which there is an impediment to effective oversight of charity in extreme situations.
    Lord Bassam of Brighton: I suppose we come back to that word that we often debate in Committee and elsewhere, "proportionately" and using the powers proportionately. Clearly, a judgment call has to be made about what is proportionate in the circumstances.
    Lord Phillips of Sudbury: With respect to the noble Lord, I do not believe that these words will be left as such. There is no issue of proportionality. It says,
    "Before exercising any power … the Commission must consult".
    Lord Bassam of Brighton: Then we need to be clear what we mean by "any power" in those circumstances. We shall have to give that further thought.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister. I am sure that my noble friend Lord Hunt will be grateful to the Minister for his positive response.
    Lord Bassam of Brighton: Positive with qualifications.
    Lord Hodgson of Astley Abbotts: Possibly. I shall turn to the torpedo launched by the noble Lord,
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    Lord Phillips, into my port side. I do not believe that it was ever considered that there should be a veto on the power of the Charity Commission to take action, but there was a requirement for it to be listened to and consulted. I wonder about the urgency issue that the noble Lord, Lord Phillips, raises quite properly and whether that could be covered in some aspect of the memorandum of operational understanding. When there is real urgency, one could dispense with that, and the MOU might cover it.
    Lord Bassam of Brighton: I made the point earlier that there will be a committee of principal regulators, and no doubt that will concern best practice in the circumstances.
    Lord Hodgson of Astley Abbotts: I am sure we can tackle that issue. It is very positive. With that reassurance I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 120B not moved.]
    Clause 14 agreed to.
    Clauses 15 to 17 agreed to.
    Clause 18 [Cy-près schemes]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 121:
    Page 17, line 29, after "applied" insert "with the consent of the trustees"
    The noble Lord said: Amendment No. 121 concerns Clause 18 and the cy-près schemes, which are described in this section of the Bill. The current law on cy-près schemes, set out in the Charities Act 1993 does not, in normal circumstances, allow the Charity Commission to create such schemes on its own initiative. Section 13(5) of the 1993 Act obliges trustees of charitable trusts to apply for a scheme in circumstances where,
    "the case permits and requires the charity's property or some part of it to be applied cy-près".
    In most cases, cy-près schemes are made only when charity trustees apply for one. Section 16(6) of the 1993 Act—it applies to schemes in general, not only to cy-près schemes—allows the commission to make a scheme of its own volition, but only if,
    "the commissioners are satisfied that the charity trustees ought in the interests of the charity to apply for a scheme, but have unreasonably refused or neglected to do so, and the commissioners have given the charity trustees an opportunity to make representations to them".
    4.30 p.m.
    New Section 14B(2), beginning at line 27 on page 17, significantly widens that power, allowing the commission to make a cy-près scheme whenever charitable assets are applicable cy-près, "as it considers appropriate". That would allow the commission to override the wishes of the charity trustees, contrary to the principle stated in new Section 1E(2)(b)—page 7, lines three to four—that the commission should not,
    "be directly involved in the administration of a charity".

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    Amendment No. 121 seeks to rectify that by stipulating that the commission's power in new Section 14B may be exercised only with the consent of the charity trustees. I beg to move.
    Lord Bassam of Brighton: I shall go through the matter carefully, because it affects the way in which we approach the whole area. New Section 14B(1) of the 1993 Act requires the commission and the court to act in accordance with the provisions of that section when exercising their powers to make schemes for applying property cy-près. As this is the first amendment concerned with the application of the cy-près rule, I shall take a little time to work through and explain it and the circumstances under which a scheme can be made to apply a charity's property cy-près in accordance with the rule.
    Section 13 of the 1993 Act sets out the circumstances in which a charity's original purposes can be altered according to that rule. Those circumstances are, to paraphrase, where the original purposes have already been met or can no longer be fully met; where the purposes have ceased to be charitable purposes; or where the purposes no longer provide an effective means of using the charity's property. As a shorthand, the commission normally describes those circumstances as ones in which the charity purposes have failed.
    The cy-près rule is the rule that requires the commission, where a charity's purpose has failed and the commission is making a scheme to alter a charity's purposes, to alter its purposes so that the new purposes are drawn as closely as reasonably possible to the failed purposes while, of course, avoiding the failure that afflicted the original purposes. There are two principles behind the operation of that rule. One is that once assets are held for charitable purposes, they should remain in perpetuity within the domain of charity. The failure of a charity's purposes is therefore met by a device—the cy-près scheme—to ensure that alternative charitable purposes are provided for the use of the assets, rather than allowing them to continue to be used for purposes which have ceased to be charitable.
    The other principle is that the wishes of donors should as far as possible be respected. A donor of assets has given them for a particular purpose. If that purpose fails, the donor's expectation is reckoned to be that the donated assets will be used for something as similar as possible to the purposes for which the assets were given in the first place. To take an example, people who give money to a particular disaster relief fund do not expect, if the fund attracts more money than is required to relieve needs arising from the disaster, their money then to be diverted into, say, animal welfare or amateur sport. They would prefer it, I am sure, to be diverted into something very similar to the purpose that was oversubscribed, perhaps another similar disaster relief fund.
    New Section 14B would slightly alter the way the cy-près rule can be applied. It will allow the commission to take into account not only the need to find a new purpose that is close to the failed purpose
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    but the spirit of the original gift and the need to ensure that the charity can make a significant social or economic impact. In other words, proximity of purpose would not be the overriding imperative; equal consideration would be given to the spirit of the gift and the social or economic impact imperative.
    I turn to the core of the noble Lord's amendment. The commission's power to make a cy-près scheme is contained in Section 16 of the 1993 Act. Subsection (4) of that section provides that the commission shall not exercise its jurisdiction to make a scheme except on the application of the charity or on an order of the court or, for a charity that is not an exempt charity, on the application of the Attorney-General. Subsection (5) allows the commission, in the case of a charity with an income of £500 a year or less, to consider an application from a wider range of people. Subsection (6) allows the commission, in certain specific circumstances, to make a scheme on its own initiative. I understand that it is extremely rare for the court to order a scheme or for the Attorney-General to apply for one, and the majority of schemes made under Section 16 were made because the trustees of the charity applied for one.
    The only other circumstances in which the commission can make a scheme on its own initiative and, perhaps, against the trustees' wishes is if, in the course of a statutory investigation, it has found misconduct and mismanagement and considers that there is a continuing risk to the property of a charity. Such schemes are made under Section 18 of the 1993 Act and, again, are rare.
    The commission normally, of course, gives every consideration to trustees' views on the nature of the purposes to be substituted when a cy-près scheme is made, but it is for the court or the commission, in the public interest, to exercise the discretions conferred by the section. That will not invariably coincide with the wishes of the trustees. It would not be appropriate to give the trustees an effective veto on a scheme of the court or the commission of which they did not approve. They will, of course have the right of appeal against the order that is made.
    I hope that the noble Lord will have come to the conclusion from what I have said that, far from having wide discretion to make schemes out of its own thinking, the action of the commission is already pretty closely circumscribed and that it is only in rare and exceptional cases that a scheme can be made without its being sought and approved by the trustees of the charity concerned. That is how we want to see things work in the future.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that wide and helpful explanation of the cy-près operation in the 1993 Act. The slight inconsistency in what he said was that he said that the powers were rarely used and that we needed to widen them with this Bill. If they have been used rarely since 1993, it is not clear why we have to extend the power, role and influence of the commission in this area.

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    In particular, I did not think that the trustees would have a veto; I rather thought that they would have to be consulted. It seemed to me that, in those circumstances, we were moving the powers of the commission up further in a way that was not desirable, given that their powers under the 1993 Act had not been shown to be deficient in any way.
    I shall read carefully what the Minister said. In the mean time, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Phillips of Sudburymoved Amendment No. 122:
    Page 17, line 40, leave out "make a significant social or economic" and insert "realise its potential charitable"
    The noble Lord said: Clause 18, which relates to cy-près schemes, is, as the noble Lord, Lord Bassam of Brighton, implied, a very important clause. It seeks to make up for some of the inadequacies in the 1993 Act regime.
    The quarrel that I have with the wording of subsection (3)(c) of the proposed new section is that the scope of the cy-près scheme is altogether too narrow. As the noble Lord said, in the making of a scheme, the matters that must be taken into account are, first, the spirit of the original gift—fine—secondly, the desirability of making sure that the charitable assets are used for purposes close to the original purposes—fine—and, thirdly, the need for the relevant charity,
    "to be able to make a significant social or economic impact".
    It does not take a lot of consideration to realise that those two adjectives, "social" and "economic", are too limited in their scope to make this a satisfactory third limb of the matters for consideration. What about cultural, sporting, aesthetic, educational, research matters et cetera? My amendment would replace,
    "make a significant social or economic impact",
    with, "realise its potential". It is as simple as that.
    In proposing the amendment, I am encouraged by the fact that Section 13(5) of the 1993 Act already states that a trustee, in applying a cy-près scheme, must do so,
    "to secure its effective use for charity".
    That would be a better phrase, I suggest, than the one in the Bill. The 1993 Act uses "effective use"; I have suggested "realise its potential", but there are many other phrases that one might use, and I think that the noble Lord, Lord Hodgson, is about to propose another. Whatever phrase we use, it is not at all adequate to be left with those rather narrow words. I beg to move.
    Lord Hodgson of Astley Abbotts: I have proposed Amendment No. 123, as the noble Lord, Lord Phillips, said. He has made all the points that need to be made. I do not like the words in the Bill for the reasons that he has described. We prefer, "an increased impact".
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    We are heading down the same track. We have not chosen quite the same words, but I do not wish to detain the Committee by repeating what he said.
    Lord Shutt of Greetland: Perhaps I may give an example. If a bowling green is a charity and, down the road, a brewery or a local authority has put together a bigger and better bowling green, the trustees of that bowling green ask, "What do we do with our bowling green?". They decide that it is right to make it some sort of environmental area. It is doubtful whether that would fit "social or economic" and it is certainly doubtful whether it would be "significant". "Significant" really is in the eye of the beholder. A place the size of a bowling green becoming an environmental area may be very much the right thing to do, but, in the great pattern of things, it would be hard to suggest that it would be "significant". The words in the Bill are restrictive. The words of the noble Lord, Lord Phillips, would allow the provision to be used in a much wider way.
    Lord Bassam of Brighton: I can see the difficulty here, but I am not sure that I agree that the noble Lord, Lord Phillips, or the noble Lord, Lord Hodgson, have got the answer. "Potential charitable impact" or "increased impact" would, I presume, be the new wording. It is hard to judge what that would achieve. How does one judge the realisation of a potential charitable impact? I am not quite sure what means one would put in place.
    In the end, I am not convinced that the alternative wording broadens the scope of the provision in a way that does not depart too far from the original intent of a charity, any better than "social or economic impact". One can include under "social" and "economic" a number of things. It may well be that there is a social benefit in changing a bowling green to an environmental area. I am sure that there would be because people in the local community would feel that their environment was being greatly enhanced and that it added to sense of community spirit and well-being.
    Given that the cy-près scheme must be as near as possible to the original purpose and that the proposed change should not be so radical as to undermine the confidence of donors, the scheme ought really to relate back to the donor's original wishes and be in the spirit of the original gift. We are making a fine judgment here. What is significant must of course be judged by reference to the amount of resource available to the charity or charities to which the scheme is being made. I am not convinced that the alternatives on offer are any better than what we have already. By having "social or economic impact", we will have a broadening out that works and respects the fact that charities exist in a community context.
    Lord Hodgson of Astley Abbotts: It is not clear why the Minister is hanging hard onto those words, when elsewhere the words "social and economic impact" were removed in accordance with recommendation 13 of the scrutiny committee. We seem to have allowed them to be swept away everywhere else, but suddenly, in this one place, we are grimly hanging on to them.
    4.45 p.m.
    Lord Bassam of Brighton: It depends where it is appropriate. Here it relates to the cy-près scheme and the origins of a charity that has failed—or it might have succeeded—and needs to move on, whichever way one prefers to look at it. That is the reason.
    We take our starting point from the fact that a charity has been set up for a particular purpose and that a donor perhaps wants to encourage a widening of the purpose of the original gift. One can fiddle with the wording endlessly. We believe that our wording is broad enough to respect the original intentions and to provide some flexibility in designing a new scheme, but not so broad as to frustrate or lose completely the original sense of purpose that was behind the original donation.
    Lord Phillips of Sudbury: I am bound to say that the Minister is in need of a cy-près scheme. I think his reasoning has failed. The intervention of the noble Lord, Lord Hodgson, was fairly mortal. To pretend, as the Minister does, that the words "social or economic" embrace the whole sphere of charity will not wash.
    Lord Bassam of Brighton: I was not saying that.
    Lord Phillips of Sudbury: You said as good as that. You said that it was wide enough to cover all circumstances needed. I can see help arriving.
    I urge the Minister to consider the matter again tomorrow or the day after. I do not believe, for example, that the words "social or economic" naturally fit an educational charity at all. One can squeeze in social, educational or aesthetic, or many other things, but many adjectives are used in the Bill. Noble Lords will remember that there was a big argument over the duties of the Charity Commission and the use of the word "economic". If nothing else, let us return to Clause 13(5) of the 1993 Charities Act and talk about securing greater effectiveness, or something like that.
    It is bad legislation to take a word like "economic" or "social" and say that one can squeeze everything from saving lives to animal experimentation to chess into it. That is bad legislation. Let us have a general phrase and not use those particular adjectives. I am an unhappy man, and I shall withdraw the amendment on that basis.
    Lord Bassam of Brighton: I shall try to be helpful. I did not think I was hanging on grimly. I can almost hear a different argument in my head. I can see circumstances in which I would have been attacked for seeking to broaden out, when noble Lords opposite might have wanted us to narrow the matter, so that we did not lose sight of the original purpose.
    I have heard what the noble Lords, Lord Phillips and Lord Hodgson, have said. I shall not fail to consider it further. Having listened to what has been said and bearing in mind that we want a helpful Bill, I shall have another look at the wording. I am not sure that I am happy with the words used by the noble Lord, Lord Phillips, in his amendment. When someone has set
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    up a fund, it is hard to assess where he really intended the potential of the charitable impact to end up. That is a difficulty.
    Lord Phillips of Sudbury: I do not want to prolong the debate, but the Minister referred to the need to stick to the original purposes. It is already there; it is the second limb of three. He does not need to worry about that. All we are talking about under the third head is the need for the relevant charity to be able to realise its potential—the noble Lord, Lord Hodgson of Astley Abbotts, says "increase its potential"—and so on. That is another problem along the lines mentioned by the Minister. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 123 not moved.]
    Clause 18 agreed to.
    Clause 19 agreed to.
    Clause 20 [Power to give specific directions for protection of charity]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 124:
    Page 19, line 14, leave out "considers" and insert "reasonably believes"
    The noble Lord said: We are flying through the clauses this afternoon. Amendment No. 124 relates to Clause 20. Where the commission discovers misconduct in a charity, this clause allows the Charity Commission to order trustees or employees of a charity to take action which the commission considers to be expedient in the interests of the charity. It is therefore a very important clause.
    Amendment No. 124 seeks to remove the word "considers" replacing it with the words "reasonably believes". We believe that the test as to what the commission "considers" to be expedient is not sufficiently high. We argue that the test as to what the commission "reasonably believes" to be expedient is more appropriate. The latter phrase is established in the courts and in statute as a higher test and therefore is the more appropriate wording in this context.
    The Bill as drafted significantly increases the commission's power to issue orders directly to charity trustees and employees. With that increase in commission power and the potential increase in interference with the performance of the duties of charity trustees and employees, it seems only balanced for the commission to be subject to a higher test. The word "considers" is too wide a definition and therefore open to abuse. The test of reasonable belief is well established in law and would be a better test in the circumstances. I beg to move.
    Baroness Howe of Idlicote: I also support the amendment. In the light of the comments made about the use—or some would call it "misuse"—of the commission's powers in the past, and given that these

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    powers are to be increased, it would be valuable to have a slightly more precise test such as the one proposed.
    Lord Bassam of Brighton: My advice is that the amendment will have no effect. The Bill as drafted prevents the commission from ordering that a specified action be taken unless the commission "considers" the action to be expedient in the interests of the charity. Here "expedient" means advantageous or beneficial. So, before ordering an action to be taken, the commission must be in a state of "considering" that the action will advance or benefit the charity's interests.
    In this context there is no material difference between the state of "considering" that an action will do that and the state of "believing" that it will do that. Both require the commission to have reached a positive view that the taking of the action will be of advantage or benefit to the charity's interests, which really means the interests of the charity's beneficiaries.
    Furthermore, as we have said on a number of occasions, the commission is under a permanent duty as a public body to act reasonably in exercising all its functions and powers, whether or not there is an express requirement to act reasonably before exercising any particular function or power. The commission says:
    "In exercising our legal powers, we will seek to act with impartiality, fairness, independence and honesty. We will follow the principles of natural justice, and act proportionately and reasonably".
    Inserting the word "reasonably" here would have no legal effect. The commission has to, and says that it will, act reasonably whether or not the word is present. So, the amendment would not change anything and is unnecessary. In the light of that, I hope that the noble Lord, Lord Hodgson, will feel able to withdraw it.
    Lord Hodgson of Astley Abbotts: The Minister is, as ever, punctilious. He says that "considers" is the same as "reasonably believes". I am no lawyer. It may be that the noble Lord, Lord Phillips, will ride to the Minister's rescue by referring to the charity law about this. I consider that "reasonably believes" in English—perhaps not in legal English—is a much stronger test than "consider". "Consider" is something that I would quite likely enter into. If I "reasonably believe" something, I would have to have a foundation for my belief.
    I do not propose that the Minister and I argue that this afternoon or further discuss the legal wording. However, I shall take advice outside and see whether the briefing note so beautifully prepared for the Minister stands up to external scrutiny. If it does not, I shall be back. In the mean time, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Phillips of Sudburymoved Amendment No. 125:
    Page 19, line 22, at end insert "and shall be without prejudice to the rights of third parties, whether contractural or otherwise"
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    The noble Lord said: Amendment No. 125 and Amendment No. 126, which is grouped with it, relate to Clause 20. It inserts into the 1993 Act a new Section 19A, which relates to the power to give specific directions on the part of the Charity Commission to protect charity. The section to be inserted into the 1993 Act comes after Section 18 of that Act, which relates to the misconduct or mismanagement of a charity or the need to protect its assets to prevent their misuse. So, it is an important clause.
    The point of my amendments is to give protection to third parties. The power given by the clause is very wide and deep. The clause says that, once the commission has directed, for example, a charity trustee or employee of a charity to take certain action, that trustee or employee, if he or she takes that action, is exonerated from the consequences.
    My first amendment would expressly preserve the position of third parties that may have contractual or other rights against or in respect of the charity concerning which the order is made. That is a proper protection that ought to be in the Bill. The Bill might imply, without the amendment, that, if the order impinged on the rights of third parties, they had somehow lost them.
    In passing, I note that subsection (3) of the new section limits the extent of an order that the Charity Commission can give to a charity trustee, employee or whomever. It refers to an action that is not,
    "expressly prohibited by any Act of Parliament".
    That seems to imply that, if the action is only implicitly prohibited by an Act of Parliament, one can carry on. My first amendment would protect the rights of third parties.
    The second amendment, which relates to subsection (4), would ensure that, if a trustee or employee is to shelter under the protection given by the subsection, they must have acted bona fide. Noble Lords may say that that is implied; I would argue that we ought to make it explicit, given the use of the word "expressly" in the previous subsection.
    I also refer the Committee to the provisions of Clause 24. It inserts another new section into the 1993 Act that relates to the power of the Charity Commission to give advice and guidance. That is an important power. Again, the clause exonerates a charity trustee or, I suppose, employee who is acting on the advice of the commission from any adverse consequences of doing so. In subsection (3) of that new section, we see the sort of protection that I seek to draw in by using the two little words "bona fide" in subsection (4) of the new section to be inserted by Clause 20.
    Clause 24 states that you do not always get the protection of having acted on the advice of the Charity Commission. It cites two examples: first, that the trustee,
    "knows or has reasonable cause to suspect that the opinion or advice was given in ignorance of material facts"
    or, secondly, where the trustee acts on that advice, knowing or expecting that a court is about to adjudicate on the matter concerned.

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    By inserting "bona fide" in subsection (4), one achieves the sort of sensible protection against unscrupulous action on the part of a trustee or employee that is imported expressly into Clause 24. It is on that basis that I beg to move.
    5 p.m.
    Lord Brooke of Sutton Mandeville: Mine is a simple question; it relates to Amendment No. 125. Since the adjective "procedural" is derived from the noun "procedure", what does "contracture" mean?
    Lord Phillips of Sudbury: The noble Lord, Lord Brooke, is being beastly. It is a spelling mistake. I was not going to draw that to the Committee's attention, but the eagle eye of the noble Lord has pointed to my embarrassment and I wish to withdraw the letter "r" in the word "contractual".
    Lord Bassam of Brighton: You can never put one over the noble Lord, Lord Brooke.
    Amendment No. 125 would ensure that the commission's orders giving specific directions for the protection of a charity do not infringe the rights of third parties. I think that that is agreed. We propose to address this concern by tabling an amendment to Schedule 4 on Report which would allow a third party to appeal to the tribunal if it believed that the commission had made an order which offended its rights. An order made by the commission under this section would be made only if the exercise of this power was in the best interests of the charity and, in particular, the protection of charitable funds or the prevention of maladministration. The commission would be acting as a protector of charity in those circumstances.
    I understand that Amendment No. 126 has been tabled to make it clear that a person cannot do absolutely anything under the authority of an order made under this section. As the Bill is drafted, subsection (4) only has the effect that a person acting under the authority of an order will be treated as acting within its powers. It does not protect him from any other legal consequences of his actions. Also, the order could not instruct a person to do something which was contrary to an Act of Parliament or which was inconsistent with the charity's purposes. We are considering to what extent it might be possible for an order to instruct a person to act unreasonably, or indeed for a person to act unreasonably in carrying out an order, while relying on new Section 19A(4) for assurance that he had acted properly. We will return with an amendment on Report if we consider it appropriate.
    I thank the noble Lord for tabling the amendments and I hope that he will see my response as helpful and constructive in the circumstances.
    Lord Phillips of Sudbury: I do indeed, and I thank the Minister. I am very content with what he said vis-à-vis Amendment No. 125. I am happy that the issue raised by Amendment No. 126 will be rethought. I
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    have no doubt that regard will be had to what is in the Bill to protect against the same potential evil in Clause 24. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 126 not moved.]
    Lord Phillips of Sudburymoved Amendment No. 127:
    Page 19, line 25, at end insert—
    "(5) The Commission shall give to the charity and the charity trustees copies of any order made under subsection (2) as soon as practicable."
    The noble Lord said: This is a blazingly obvious amendment that does not need much additional justification from me. It relates to Clause 20, which inserts a new section into the 1993 Act. It states that when the commission makes an order that directs charity trustees or employees to do this or not to do that, it shall give to the charity and the charity trustees copies of any orders made by it. I cannot see but that that is common sense. There will be occasions when an order will be directed to a particular trustee. Unless the provision is included, other trustees might not be aware of what was being done. I await the Minister's explanation. I beg to move.
    Lord Hodgson of Astley Abbotts: I support the noble Lord, Lord Phillips. It must be sensible that an explanation be given for such draconian powers. I understand why they exist but, where they are used, the object of their use should be informed about the fact that they are being used.
    Lord Bassam of Brighton: Where the commission makes an order directing the charity trustees, any trustee for the charity, any officer or employee of the charity or, if the charity is a body corporate, the charity itself, the amendment would oblige the commission to give the charity trustees a copy of that order. It would be normal practice for the commission to send a copy of such an order—or any order—to the charity trustees, with the important caveat that it was appropriate and in the interests of effective regulation to do so.
    There are, however, circumstances in which the commission would not want to send an order to charity trustees; for example, when it is sending an order to a third party, such as an employee, or officer or trustee, who may be a property-holding trustee. There is a possibility that charity trustees might take action, which is not in the interests of the charity, to frustrate the order in some way.
    This is an inquiry-based power, so the commission may not operate in a way with which the charity trustees might agree. In such circumstances, the commission might send the order later, after it had been complied with, but that would not be "as soon as practicable", as required by the amendment.
    Similar situations arise under the commission's current powers. It might send an order to someone outside the charity, such as a bank, to ask for information or documents. It might want to seek

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    compliance without the charity trustees intervening, and there may be issues of confidentiality or personal safety for the third party.
    In spite of all those negatives, we are grateful to the noble Lord for his suggestion. We would like to take it away with a view to coming back on Report with an amendment that would require the commission to send a copy of any order as soon as practicable, except where it considered that it was in the interests of the charity to delay doing so. In other words, where the order makes good sense, where it assists the effective running of the charity and where it is outside some of the enforcement powers that might cause some problems in the charity, it of course seems sensible that a copy of that order should be forwarded in the way which the noble Lord seeks, as I am sure that it would be in any event. However, we will examine the amendment and come up with something that works.
    Lord Phillips of Sudbury: I am grateful to the Minister and entirely satisfied by what he said. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 20 agreed to.
    Clause 21 [Power to direct application of charity property]:
    Lord Phillips of Sudburymoved Amendment No. 128:
    Page 20, line 1, leave out "expressly"
    The noble Lord said: This amendment is brief, and I shall try to be brief. It would remove the word "expressly".
    Members of the Committee may recollect that, when I moved Amendment No. 125, I spoke about the use of the word "expressly" in Clause 20. It recurs in Clause 21. Clause 21 gives the Charity Commission power to direct that charity property shall be applied in the way it directs in order to protect that property. The subsection to which the amendment relates states that an order made by the Charity Commission under the section,
    "may not require any action to be taken which is expressly prohibited by any Act of Parliament or by the trusts of the charity".
    As I said earlier, the word "expressly", if left in the Bill, clearly suggests that an implied breach of an Act of Parliament or of the wishes of the trusts of the charity would not be caught by that proviso. That seems to be double Dutch. I beg to move.
    Lord Bassam of Brighton: The noble Lord, Lord Phillips, is horrendously effective in making his point, and I bow to his knowledge here. To speed things along, I say only that I see the force of his argument. We shall take the amendment away and consider whether, on reflection, the noble Lord does not have it absolutely right. We shall then decide whether to instruct parliamentary draftsmen to produce a suitable amendment for a later stage.
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    I simply invite the noble Lord to consider whether, on its face, the same point arises in respect of subsection (3)(b) of new Section 19A, to be inserted by Clause 20. Does the noble Lord think that the use of the word "expressly" is different in that case?
    Lord Phillips of Sudbury: I am again grateful to the Minister. He did not expressly accept my amendment, but he implicitly accepted it. He is correct: the word "expressly" should be taken out of new Section 19A(3)(b). Precisely the same argument applies, but sheer want of energy and a certain natural restraint on my part prevented me tabling amendments to address all uses of the word. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 21 agreed to.
    Clause 22 agreed to.
    Clause 23 [Participation of Scottish and Northern Irish charities in common investment schemes etc.]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 129:
    Page 22, line 16, at end insert—
    "( ) After section 24(1)(b) of the 1993 Act (common investment schemes) insert—
    "(c) for service non-public funds of the armed forces of the Crown irrespective of unit identity or location.""
    The noble Lord said: Amendment No. 129 has been tabled in the name of the noble and gallant Lord, Lord Craig of Radley, who is still away in Egypt. He has asked me to move the amendment on his behalf. It addresses Clause 23, on the ability of Scottish and Northern Irish charities to participate in common investment schemes. The noble and gallant Lord is particularly concerned about its effects on the Armed Forces.
    The concern is that the provision will affect service non-public funds. Unless some special arrangement is made, those funds will be caught by exposure to one or other of three separate charity governance schemes set up by this Parliament and by the devolved Administrations in Scotland and Northern Ireland and, perhaps at some future date, by the National Assembly for Wales. It would seem sensible that a common charity legal system should apply to the three armed services irrespective of unit identity or location in the same way as, say, the Army Act 1992 applies throughout the structure of the Army.
    I understand that the participation of Scottish and Northern Ireland charities in English and Welsh common investment schemes will be permitted. That would allow service units in Scotland or Northern Ireland to invest, for example, in the Army Common Investment Fund. Does it also allow the service central funds to remit funds or make grants to those service non-public funds outside their English or Welsh umbrella? If the service non-public fund of a Gurkha unit were to have to report to the Charity Commission's Armed Forces office in Taunton, why should the SNPFs of Scottish or Northern Irish units not do likewise?

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    The amendment would allow for the common treatment of SNPFs wherever they are to be found geographically. I beg to move.
    Lord Bassam of Brighton: I am grateful in his absence to the noble and gallant Lord, Lord Craig of Radley, for tabling the amendment. It gives me an opportunity to talk about common investment funds, which is not a widely known area of the law.
    Basically, common investment funds are a particular type of collective investment scheme. They are currently open only to charities in England and Wales. They are set up by schemes made by the Charity Commission under Section 24 of the Charities Act 1993. While they operate as investment vehicles, they are also deemed to be charities and are therefore eligible for registration as charities in their own right. Thus the Army Common Investment Fund is a registered charity.
    The benefits of common investment funds are that they provide for a broad range of investments, which helps to minimise risks. They are tax and cost efficient and administratively simple. Of course, as with all investment matters, trustees should take their own professional legal advice before investing in a common investment fund.
    The Bill has already done much to broaden membership of common investment funds. It provides that the trustees of a common investment fund may admit bodies recognised as charities under Northern Ireland law or as a recognised body under Scottish law. This represents a significant widening of the admission of bodies into common investment funds. It has dealt specifically with the concerns put forward by the Armed Forces about devolved legislation preventing service units based in Scotland and Northern Ireland investing in the Army Common Investment Fund.
    This amendment seeks to widen even further the range of charities able to invest in common investment funds, so that it could include any service non-public fund of the Armed Forces no matter where it is based. It could include organisations set up and established outside the UK, which would not be subject to the regulatory oversight of a UK regulator and might not satisfy or comply with charity law in the relevant UK jurisdiction.
    We believe that we have already gone a long way to meeting the concerns of the Armed Forces charities by widening the range of charities able to invest in common investment funds to charities based in Scotland and Northern Ireland. We do not believe that it would be appropriate to extend that even further to include bodies not established as charities under any of the United Kingdom jurisdictions. For that reason, we cannot support the amendment and I invite the noble Lord, on behalf of the noble and gallant Lord, Lord Craig, to withdraw it.
    5.15 p.m.
    Lord Hodgson of Astley Abbotts: With great respect, I think that the Minister is slightly missing the point.
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    This is concerned with investment rather than regulation. It is the ability to participate in a group investment scheme as a means of minimising risk—a point rightly made—for those making the investment. I think that the noble and gallant Lord, Lord Craig, is seeking to ensure that members of the Armed Forces, whether inside or outside the UK, can take advantage of these particular investment opportunities. They are sensible and carry a lower risk, and often the trustees feel that they are appropriate. Thus exactly how the participators—those making the investments in these schemes—are regulated is a secondary consideration.
    I think that the point the noble and gallant Lord seeks to make is that all units of the British Army, wheresoever located, should be able to take advantage of the types of scheme described in Clause 23, whether or not they fall directly under the regulatory structure of the Charity Commission. The fact that they do not should not affect their ability to invest.
    To be frank, I do not think that the Minister has directly answered the point put to him. However, at this point it may be appropriate for me to take further advice from Egypt before I pursue the matter. In the mean time, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 23 agreed to.
    Clause 24 [Power to give advice and guidance]:
    Lord Phillips of Sudburymoved Amendment No. 130:
    Page 23, line 31, after "court" insert "or Tribunal"
    The noble Lord said: Mention has already been made of this clause. It will insert into the 1993 Act a new Section 29 spelling out the power given to the Charity Commission to give advice and guidance. It goes on to state that any charity trustee acting on that advice or guidance is protected against having otherwise committed a breach of trust. However, there are exceptions to that, one of which is,
    "a decision of the court has been obtained on the matter or proceedings are pending to obtain one".
    That indicates that if the decision of the court is contrary to the advice given by the Charity Commission, the charity trustee cannot then rely on it.
    My amendment is simple. It seeks to add the new Charity Appeal Tribunal alongside the court so that a trustee will not be protected if a decision of the court or the tribunal has been obtained, and that decision is contrary to the advice given. That seems a commonsense approach and I hope that the Government will think so too. I beg to move.
    Lord Bassam of Brighton: The Bill provides for a new Section 29 in the 1993 Act. Under the new section, the Charity Commission continues to have the power to give a charity trustee who applies in writing for it, its opinion or advice on any matter affecting the performance of his or her duties as a trustee. If the trustee acts in accordance with the advice or opinion given by the commission, he or she is deemed to have acted in accordance with the trusts of the charity. This protection is withdrawn, however, if the trustee knows

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    or suspects that the commission's opinion was given without it knowing all the material facts of the matter, or where the court has already given a decision on the same matter, or proceedings are under way to obtain the court's decision.
    The purpose of the amendment is to extend the circumstances where that protection does not apply to cases where a decision of the tribunal has been obtained on the same matter, or proceedings are pending to obtain one. We do not think that it is appropriate or necessary for the protection to extend to the decisions of the tribunal. In the case of a court decision, there might be circumstances where the commission would not be aware of a decision on a particular matter, or of a pending case. As far as the tribunal is concerned, however, the commission would always be the respondent and so will necessarily be aware of all proceedings. Thus if the commission was aware that a particular matter had come before or was to come before the tribunal, it would not give its own opinion on the matter. Rather, it would refer the applicant to the tribunal decision, or pending decision.
    I hope that that point of clarification will enable the noble Lord to withdraw his amendment.
    Lord Phillips of Sudbury: I am grateful to the noble Lord for his careful and considered reply. One might be tempted to say thank you and to withdraw the amendment, but I want to put in his mind the thought that if this were a decision of the tribunal which is pending, the Charity Commission is quite a large beast these days. Someone in one part of the jungle may not know what is happening in another part of it. Perhaps I should rephrase that: someone in part of the enterprise may not know what is going on in another part. Given that, I question whether the Minister is correct in his assumption that this would be known throughout the organisation.
    However, in the heat and burden of this Bill, far be it from me to labour to protect the Charity Commission from its powers. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 24 agreed to.
    Clause 25 agreed to.
    Clause 26 [Power to enter premises and seize documents etc.]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 131:
    Page 24, line 22, at end insert—
    "( ) that the premises to be specified in the warrant are premises at which the charity which is the subject of the enquiry in section 8 above carries on its business;"
    The noble Lord said: In moving Amendment No. 131 I shall speak also to Amendment No. 132. The amendments relate to Clause 26, which has the rather forbidding title of,
    "Power to enter premises and seize documents etc.".
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    This clause gives the Charity Commission a new power to enter premises for certain purposes and on certain conditions. These powers could be used in a draconian or even what some might call an oppressive way. Amendments Nos. 131 and 132 attempt to introduce some balancing restrictions on the commission.
    Since 1960 the commissioners have had an enforceable power to call for documents and to search records, but they have never had the power to enter premises to take possession of documents or information. So the power to enter premises is a significant new development. Amendment No. 131 would insert a new condition for the commissioners,
    "that the premises to be specified in the warrant are premises at which the charity which is the subject of the enquiry in section 8 above carries on its business".
    The amendment is simply intended to exclude the commission from entering non-business premises.
    We understand that the commission needs to have its investigatory powers extended, but this should not be extended to give the commission the power to invade the privacy of a trustee's home or private quarters. Without this amendment, the commission would have the power to do just that.
    Amendment No. 132 adjusts subsection (4), which explains that:
    "Entry and search [with] a warrant must be at a reasonable hour".
    The amendment would add that it must also be carried out within seven days of its issue. The power to search should not be open-ended, and giving the time-frame within which the search should take place adds a proper degree of balance. No swords of Damocles, please.
    The right to privacy and the restriction on search time-frames are two points that need to be taken very seriously when we consider this clause. We have discussed many times the dual role of the Charity Commission, which has to balance its duty to regulate clearly and firmly with its duty to encourage the development of the charitable sector. The power to enter premises represents a major increase in the powers of the commission and the boundaries that Amendments Nos. 131 and 132 would enforce help to keep an appropriate balance. I beg to move.
    Lord Phillips of Sudbury: I rise to oppose Amendment No. 31 with, I am afraid, some force.
    Lord Bassam of Brighton: I am sorry. We are considering Amendment No. 131.
    Lord Phillips of Sudbury: I beg the pardon of the Committee. I wish to speak to Amendment No. 131.
    My reason for parting company with the noble Lord, Lord Hodgson, on whose side I normally ride, is very simple. It was interesting to note that the joint scrutiny committee had two or three recurrent bees in its bonnet, one of which was the preservation of the honour and integrity of the charity sector as a

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    whole. It was universally agreed that public trust in charity was priceless and must be maintained. However, I am afraid to say that it is my experience that where there is an occasional rotten apple—you do; it is bound to happen—one of the commonest ways that a rotten trustee tries to secret away his or her dishonesty is by removing to their home or other premises the kind of evidence that would be sufficient to subject them to prosecution.
    If Amendment No. 131 were agreed, it would remove one of the most powerful and important tools that the commission should have in order to get to the root of any abuse of charity assets. I am comforted by the fact that no such search can be undertaken without the issue of a warrant by a justice of the peace. That is a very real safeguard and can be given only after information on oath has been provided to the justice of the peace concerned by a member of the commission's staff. On those grounds, I must oppose the amendment.
    Lord Bassam of Brighton: The noble Lord, Lord Phillips, has made most of my argument for me. Public trust and confidence is of great value and must be highly prized. For that reason, there have to be effective means of carrying out investigations. To be frank, the easiest thing to do with documents which might in some way implicate a person is simply for him to take them away to his home or to another office. Seeking to restrict the application of an entry warrant to the premises of a charity would make it easy for someone to get around it and, if you like, defeat the object of the investigation. Given that, I do not think that we could possibly accept the amendment.
    It is saddening that we need to have such a power at all, but we must be realistic in our approach. As we observed at the outset of our debates, we are not talking about a small enterprise here, rather we are considering a £35 billion a year sector. That is big business indeed. For that reason and for those of practicality, we must reject Amendment No. 131.
    I am conscious that Amendment No. 132 was in the same group as Amendment No. 131, but I am not sure whether the noble Lord, Lord Hodgson, specifically spoke to it.
    5.30 p.m.
    Lord Hodgson of Astley Abbotts: I said that we wanted to extend the restriction—that is to say, the warrant must specify that the search must take place at a reasonable hour and within seven days of its issue—because we did not want it to be left open-ended. There have been cases under other legislation where warrants have been signed on an open-ended basis. As I said, we wanted no swords of Damocles hanging over any potential trustee or potential charity.
    Lord Bassam of Brighton: My response to this amendment is slightly more positive: it is not unreasonable that there should be some limit on the period for which the warrant should have effect. I am
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    not sure that seven days is the right period; there may be good reasons for requiring a slightly longer one. I propose that we look further at this amendment.
    It is perhaps worth pointing out that the code of practice under the Police and Criminal Evidence Act 1984 (PACE) provides that a search warrant should be exercised within a month of its being issued. I should like to consider the point further. As ever, I am grateful to the noble Lord, Lord Hodgson, for raising the issue, because time is an important one. I can understand his desire to pin down the process and ensure that it is effective and timely.
    Lord Phillips of Sudbury: I think that there is an issue. When you get a crook as a trustee, he or she will try to evade execution of the warrant. It is the daily fare of solicitors to try to serve proceedings on recalcitrant defendants. A little leeway is needed.
    Lord Brooke of Sutton Mandeville: I wish to ask an innocent, lay question. I totally followed the arguments of the noble Lord, Lord Phillips, and the Minister. But I assume that there are places other than the man's home to which the documents might have been removed, and that therefore there is a possibility that the warrant will cite a number of premises that should be inspected. Am I right in thinking that the protection against fishing expeditions lies with the justice of the peace examining whether there is justification for choosing particular premises?
    Lord Bassam of Brighton: I am sure that that is right; common sense tells us that it must be. I am sure that no JPs worth their salt would want to give a warrant at large, and that they would want to understand its exact effect.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister. I do not disagree entirely with the points made either by the noble Lord, Lord Phillips, or by the Minister. Obviously, I understand that the crook will secrete his documents wherever he can. In fact, if he were that big a crook he would not take them home; he would have them much better hidden.
    My purpose in tabling the amendment was as follows. We have heard from my noble friend Lord Sainsbury about discouragement. When people say, "If you become a trustee someone may knock on your door with a warrant and ask to search your house", it can discourage people from wishing to serve as trustees. The more weight we put on people, the more they feel that there may be a knock on the door, the more danger there is that men and women of quality will not want to become trustees. That must be a bad development for the sector.
    In this probing amendment I wanted to tease out some of those issues. In the mean time, I am grateful to the Minister for agreeing to look at Amendment No. 132. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 132 not moved.]
    Lord Hodgson of Astley Abbottsmoved Amendment No. 133:
    Page 25, line 43, at end insert—
    "(9) The authorised person must make a written record of—

    (a) the date and time of his entry on the premises;

    (b) the number of persons (if any) who accompanied him into the premises;

    (c) the period for which he (and any such persons) remained on the premises;

    (d) what he (and any such persons) did while on the premises; and

    (e) any document or device of which he took possession while there,

    and must supply a signed copy of that list to the person from whose possession it was taken.""
    The noble Lord said: We are still on the same point: Clause 26 and the power to enter premises. This amendment has been provided by the Law Society. It adds to the clause a further subsection that ensures that the person authorised by the Charity Commission to undertake a search must make a written record when entry is made to premises and documents seized. As we have discussed, Clause 26 confers rights on a member of the commission's staff who is in possession of a justice's warrant, as the noble Lord, Lord Phillips, pointed out, to enter and search premises where it is reasonably believed that there are documents or information that the commission could require to be produced under Section 9 of the 1993 Act.
    The draft Bill included a similar provision to this, but with an important protection for the owner or guardian of the documents and information concerned, which has been omitted from the Bill as now drafted. It was then in subsection (7) and provided that the authorised person must make a written record of certain details of the search.
    This is a serious omission from the Bill, for a number of reasons. First, as Amendment No. 131 has not been accepted, it is possible that the premises entered under such a warrant may not be under the control of the charity but could be the home of a trustee.
    Secondly, if the premises in question were those of an agent of the charity, such as a professional adviser, and documents were removed under the authority of a warrant under this provision, very great difficulty could be imposed on the person whose premises were entered in explaining why the documents had been removed, particularly if that person owed a professional duty to the trustee of the charity to retain them.
    Thirdly, there is the statutory obligation proposed in the Bill that all the documents removed must be returned as soon as is reasonably practicable—I refer Members of the Committee to subsection (7). If no proper record is taken of what is removed, there may be uncertainties and difficulties in causing them properly to be returned under this provision. That is of particular concern where the items removed—for example, computers or computer disks—contain additional information about other organisations or the personal and private business of the owner, which
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    could be of no possible relevance to the commission's concerns but could be of considerable importance to the owner.
    For all those reasons, it is not merely desirable but essential that there should be evidence of the items removed by the commission, so that it will remain properly accountable for its stewardship of property taken by it. Finally, we propose that there should be a provision, which did not appear in the draft Bill. requiring the member of the commission's staff responsible for removing the property to hand a copy of the list to the person in charge of the premises from which they were removed. I beg to move.
    Lord Phillips of Sudbury: My name is attached to the amendment. I declare an interest as a member of the Law Society, to which we are grateful for producing this amendment. Further to my opposition to Amendment No. 131, I feel equally strongly that this provision must be included as a protection for those whose homes are raided—rather, searched.
    Lord Bassam of Brighton: When I read the amendment I was puzzled that this provision had not already been included. While mindful of our codified way of operating, I believe that the amendment seems entirely sensible. We would like to sharpen it up and see what we can come back with. It has been whispered to me that there might be a similar DTI provision, presumably exercised in relation to companies. I am grateful to the noble Lord for this sensible amendment. If he will agree to withdraw it, I am sure that we will come back with one that does the job just as well or perhaps even better.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister. If his Bill team care to look in the Companies (Audit, Investigations and Community Enterprise) Act 2004, they will find that exact provision. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Baroness Howe of Idlicotemoved Amendment No. 134:
    Page 26, line 5, at end insert—
    "( ) When the Commission publishes a report under section 8(6) of the 1993 Act it shall include the dates of appointment and termination of any receiver and manager, the cost of the receiver and manager and any other consultants utilised by the receiver and manager, and which of these costs was borne by the charity and which by the Commission."
    The noble Baroness said: With the permission of the Committee, I shall move the amendments tabled in the name of the noble Lord, Lord Swinfen. Before I address the first amendment on this lengthy list I should offer a preliminary word. I find myself in an overstretched position because, as noble Lords will appreciate, the noble Lord, Lord Swinfen, who follows this subject closely and who has great expertise and experience in it, is today in Kuwait and therefore cannot be with us. More than usual, therefore, I must accept responsibility for some disturbing allegations that go beyond my own immediate experience and have led to these amendments. They are, however,

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    founded upon real situations and detailed advice from responsible sources. On that basis, I very willingly present them. I am sure that Members of the Committee will agree with me that they deserve to be considered.
    The purpose of Amendments Nos. 134 and 136 is to require the Charity Commission to publish data about the use of receivers and managers so that the frequency and cost of their use may be known. Amendments Nos. 134 and 136 would require the Charity Commission to publish with each inquiry report where a receiver and manager (R&M) has been utilised the date of appointment and termination of the R&M and the costs of the R&M and of each subsidiary consultant. The charity, its trustees and any other affected persons would be invited to submit their estimate of the costs of their consultants, lost time, lost assets and income, and any other costs. These, too, would be published by the Charity Commission, alongside the costs of the R&M.
    In addition, and as a result of Amendment No. 136, the Charity Commission would be obliged to publish at least annually the total number of R&M appointments, a list of the charities to which they were appointed and the cost of each appointment, along with such summarising statistical data as it considered fit.
    The commission has very recently revealed, in the March 2005 edition of Charity Finance magazine, that since the passage of the 1993 Act it has made 51 R&M appointments, of which 12 are not yet completed. The Association for Charities report Power Without Accountability documents 13 cases of charities that have apparently been subjected to what they consider injustice at the hands of the commission. Nine of those cases involved R&M appointees—no less than one fifth of all R&M appointments. I submit that that is not an encouraging record.
    Let me cite a current case to illustrate the problem. In the case of the Cancer Care Foundation the costs of the R&M and his consultants, together with the cost of legal advice taken by the charity, are rising towards £1 million. Cancer Care Foundation and its subsidiary trading companies are, in fact, it is stated, well run. Even the commission's watchdogs have been unable to find any shortcoming of significance. On the other hand, the commission's initial press release, which, it is said, so damaged the charity, revealed that the Charity Commission had entirely misunderstood the charity's accounts. The true cost of such regulatory errors would be revealed, I suggest, by these amendments. I beg to move.
    Lord Phillips of Sudbury: I am aware, as I am sure are all Members of the Committee present, of the dissatisfaction felt in some parts of the sector vis-à-vis appointments. There seems little doubt that the concern has its basis in experience. I hope that if the Government feel that these amendments are
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    unsuitable or not fit for purpose, an additional safeguard can be provided against the matters referred to by the noble Baroness, Lady Howe.
    Lord Bassam of Brighton: The Charity Commission has a duty to act for the protection of charity. It takes the steps of opening an inquiry under Section 8 of the Charities Act 1993 and of appointing receiver and managers only when absolutely necessary.
    If the commission finds evidence of misconduct or mismanagement, or that charity assets are at risk, it may intervene and use its statutory powers to protect the charity's property. It is essential that those appointed as receiver and manager in respect of the property and affairs of the charity are sufficiently qualified to act in that capacity and able to rectify the problems that necessitated their appointment as quickly and economically as possible, with the minimum of expense to the charity involved.
    We agree that the public may have an interest in the number of receivers and managers appointed each year, and the costs of such appointments. The Charity Commission has recently formally decided to make publicly available, on an annual basis, information about cases where a receiver and manager has been appointed. That information will include the number of outstanding cases, and for cases concluded in the previous year it will include the name of the charity, the name of the receiver and manager, the dates of appointment and termination of the receiver and manager, the costs of the receiver and manager, and whether the costs were borne by the charity or the commission. The information about closed cases will also include details of additional costs to the charity, if they are directly related to the receiver and manager appointment. There may be various reasons why a charity needs professional advice, including advice to support the day-to-day management of the charity and its activities and accounts and the discharge of the receiver and manager's functions. For each case, it will be necessary to consider what costs are relevant.
    5.45 p.m.
    The commission does not intend to publish information in detail about live cases. In some cases, that would be detrimental to the work and reputation of the charity while the commission's inquiry was in progress. When the commission publishes a report of an inquiry under Section 8(6) of the 1993 Act, it is already able to publish information about the costs of that inquiry, including the costs of a receiver and manager. The commission has decided in future to publish such information in all relevant reports where a receiver and manager has been appointed.
    Legislation is not required to enable the commission to make that information available; it intends to do so. It would be unhelpful to include a legislative requirement that by its nature would be prescriptive and difficult to change in the light of experience. Although we understand the concerns that the noble Baroness has expressed on behalf of the noble Lord, Lord Swinfen, we think that this rather formalistic approach may not fit the purpose. Given that the

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    commission has decided to adopt an approach that goes some way towards meeting the concern, we think that that would be a more effective approach. Its flexibility would enable the commission to vary the way in which it publishes the information and makes it generally available.
    Baroness Howe of Idlicote: I am grateful to the Minister for what he said, and for the extent to which the Government are prepared to take on board some of the points raised. I shall read carefully what the Minister says. I beg leave to withdraw the amendment for the moment.
    Amendment, by leave, withdrawn.
    Baroness Howe of Idlicotemoved Amendment No. 135:
    Page 26, line 5, at end insert—
    "( ) When the Commission publishes a report under section 8(6) of the 1993 Act it shall invite on 28 days' notice the charity, its trustees and all other affected parties to submit for publication with the report an appendix containing those parties' estimates of the costs to those parties of the inquiry, including the cost of consultants, lost time, lost assets, lost income and any other costs."
    The noble Baroness said: This amendment and Amendment No. 139 would prevent, or at least discourage, the commission from publishing what are seen as one-sided reports of inquiries that leave a burning sense of injustice in their subjects. Amendment No. 135 would require the commission to publish the cost to charities of statutory inquiries—a significant cost of regulation that the commission has so far been unwilling to acknowledge.
    Amendment No. 139 would encourage the commission to produce balanced draft reports. In one case, to which I cannot refer because of ongoing activity, neither the charity nor its eminent lawyers could even recognise their own case from the draft report that the commission sent to them. In fact, it was so far from reality that the charity's trustees and lawyers assumed that the commission had sent them a wrong draft, relating to an entirely different charity inquiry. That may or may not be a regular occurrence, but it has caused great concern.
    Amendment No. 139 would also prohibit the commission from taking into account such dissenting appendices when later considering the reinstatement of a banned trustee. Remarkably, it is suggested that in the past improper personal threats have been used against trustees by the commission to force them into silent acquiescence. An example is quoted of the case of the Little Gidding Trust. The Association of Charities can cite examples of how the commission has also frightened charity staff by, for example, summoning the secretary of one charity to its headquarters for questioning. The letter contained a threat to the effect that, if she did not comply, she would be in breach of the law and subject to criminal proceedings. Not surprisingly, the letter rendered the secretary so nervous that she had to be supplied with a lawyer to accompany her to the meeting. That meant yet more expense for the charity and trustee concerned in the case.
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    It is with that sort of situation in mind that I beg to move.
    Lord Phillips of Sudbury: I rise in somewhat the same spirit as I did earlier to offer some support in principle to the purpose as I apprehend it of the two amendments.
    The provisions of Section 8(6) of the Charities Act 1993 seem unsatisfactory. In rare cases, there is no doubt that they have proved to be unfair to those affected. The section provides that where the commission has held an inquiry under its provisions—it is a very wide inquiry clause—the commissioners may either publish the report of the person conducting the inquiry or,
    "publish any such report or statement in some other way which is calculated to bring it to the attention of persons who may wish to make representations to them about the action to be taken".
    I confess that I have not had cause to look at the section much or if at all since it was enacted, but it seems inadequate in the light of the representations made by the noble Baroness.
    I hope that the Minister will at least indicate whether he thinks there is some inadequacy in the present arrangements. Perhaps they could be addressed by an amendment to Section 8(6) of the 1993 Act bringing in, for example, a reference to "fairness" or "balance", rather than by the means adopted by these amendments. As it stands, however, it provides no succour in the rare cases—I emphasise that they are rare—where things go wrong.
    Lord Bassam of Brighton: The noble Lord, Lord Phillips, has put his finger on the point: cases where this arises will be rare. If it were a more general problem, we would be very concerned. Moreover, one has to understand the nature of what the Charity Commission is doing when it undertakes an investigation. It does so only in the belief that there is something wrong with what is being undertaken by the charity concerned.
    As the noble Lord pointed out, the commission has the power and the duty under Section 8(6) of the 1993 Act to publish reports of or statements about any inquiries it carries out under that section. The policy of the commission is to report, where appropriate, the outcome of every formal inquiry by publishing a statement of the results on its website. Occasionally, it may not be appropriate to publish a statement. It may not do so, for example, where there are continuing investigations into a crime or where a prosecution is in the offing. The commission removes statements from its website after a couple of years from the date on which they were first published.
    The normal policy is to make available drafts of the statement to those who are affected, seeking comments before it is finalised. So there is provision for some iterative interaction. There is within that a general opportunity for those affected by an inquiry to tell the commission what they think about it and what should happen as a result of the inquiry.

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    The amendments tabled by the noble Lord, Lord Swinfen, and moved very ably by the noble Baroness, Lady Howe, would go further than that and give those affected rights to have material written by them incorporated into the commission's report as an appendix and published by the commission. That would be somewhat open-ended as a change to current practice.
    We cannot agree with the amendments, and in any event we do not think that they are necessary for the following reasons. First, the commission's practice is to give people affected by an inquiry an opportunity to make representations to the commission on any statement that it makes about that inquiry. The fact is that inquiries can often, and will often, be adversarial and contested. The commission's statement is just that—the statement of the investigating authority that has carried out an inquiry using powers given to it by Parliament in the public interest. The statement does not purport to be consensual as a summary of the inquiry. However, the commission is bound to listen to any representations made to it and to take them into account before deciding how to act.
    Secondly, the commission, as a statutory body, is accountable for and can be challenged on the actions it takes in exercising its powers in any inquiry. Part of the answer to the problem lies in the fact that it will be able to be challenged through the tribunal. It has a duty to make sure that the statements it publishes about its inquiries are factually accurate and not defamatory.
    Thirdly, anyone affected by an inquiry or mentioned in a statement about it is at liberty to publish his or her own account of it. They can publish it in whatever format they wish. The commission cannot and should not be able to insist on appending its own material to someone else's account of an inquiry. Each party involved in the inquiry should be responsible for the material that it puts out.
    For those reasons, we do not believe that it is appropriate to give those affected by an inquiry rights to have material written by them incorporated into the commission's report by way of an appendix and published by the commission. That would be inappropriate and would qualify the commission's inquiry role. That would be unfortunate as in some circumstances it could undermine the effectiveness of the independence of the commission's own inquiry activity. For those reasons, I invite the noble Baroness to withdraw the amendment.
    Baroness Howe of Idlicote: I thank the Minister for what he has said. However, I shall not pretend that I am not disappointed with his reply. I have the impression that, with regard to the new provisions on inspection reports in the Education Act, there was a rather greater willingness to listen and to make certain that there was either agreement or total disagreement on what inspectors said about a school.
    I refer to the number of charities that may be affected by what we are discussing. It may be small, but when the situation arises it is very disturbing for them
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    and for the people who deal with them. The Minister says that they can take their case to a tribunal. That is fine and is without doubt an added plus. However, some time may elapse between the publication of the report—with no answer coming from the charity concerned—and the case being heard before a tribunal, in which case, as we all know, a lot of damage can be done if a misleading impression has been given.
    However, having listened carefully to what the Minister said, I beg leave to withdraw the amendment and perhaps return to it on another occasion.
    6 p.m.
    Lord Phillips of Sudbury: Before the noble Baroness sits down, perhaps I may ask the Minister a question. In answering the argument on this amendment, he said that things will be better in future because the Charity Appeal Tribunal will be able to consider inquiries made under Section 8 of the 1993 Act. I would be grateful if the Minister took advice on that. In the table in Schedule 4, only the decision of the commission to institute an inquiry under Section 8 is appealable. The format of the inquiry is not, as I see it, an appealable matter. If the Minister says, "Don't worry because you are subject to libel laws", I believe I am right in saying that the protection given by defamation law vis-à-vis a report of this kind means that there is absolute privilege in respect of a report that is issued.
    I emphasise the rarity of such an event, but I believe that there is more of a problem here than the Minister may realise. The effect of a Charity Commission report can be quite devastating. The commission is an extraordinary organisation. Inadvertently, it sometimes causes terrific harm to a charity by a report that has not been as well considered as it should be. I do not see that it has a right of appeal to the tribunal. There will be no right of defamation action. I ask the Minister, again, to consider the predicament raised by the noble Baroness, Lady Howe, in her amendments because I am sure that the Minister, no less than those moving the amendment, would want to rectify an inadequacy, if there is one.
    Lord Bassam of Brighton: I am sure that the noble Lord, Lord Phillips, will accept that the commission does not publish statements lightly. It gives very careful thought to them. It certainly would not want to make published comments that were in any way defamatory. The commission is well stocked with very able charity lawyers and is very mindful that there are very able lawyers who are watchful of how it conducts itself.
    I accept that on occasion there may be an example where perhaps it is felt that the commission has overstepped its usual careful approach to such matters. The noble Lord is right that adverse comments on an operational charity can have profound impacts on its ability to fund itself, raise new funds, operate and provide services. Fortunately and thankfully, it is very rare that that happens. I am sure and confident that the commission will reflect long and hard on this important discussion that we have had and on the important comments made by the noble Baroness, Lady Howe, in this regard.

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    The noble Lord, Lord Phillips, may want to read carefully what I said about the commission, the operation of the tribunal and the way in which it works in relation to this issue. I am not sure that I said any more than was entirely accurate in describing how the tribunal might function in regard to the challenges made.
    I can see the potential for damage, but I do not believe that this is the best way to deal with the matter. There needs to be great care on both sides because one does not want to inhibit the commission from carrying out what is a very important job. The role of commentary and investigation is very important to ensure that we have probity in the sector. We all take pleasure in the fact that it exists at the moment and want it to exist in the future.
    Baroness Howe of Idlicote: I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 136 not moved.]
    Baroness Howe of Idlicotemoved Amendment No. 137:
    Page 26, line 5, at end insert—
    "( ) References to "receiver and manager" in section 19 and elsewhere in the 1993 Act and in this Act shall be replaced by the words "interim trustee"."
    The noble Baroness said: The purpose of this amendment is to avoid the use of the term "receiver and manager", which for many people has connotations of a commercial receiver in an insolvency context, and is thus unnecessarily damaging to a charity's reputation.
    I believe that the Charity Commission is not opposed to this change, but it may prefer the term "interim manager" because not all receivers and managers take on the legal functions of trustees. My understanding is that some receivers and managers are given all the powers of trustees. In those circumstances they are the trustees in law and the real trustees have de facto been temporarily suspended from their trustee duties.
    However, I understand that some R&Ms are given very limited duties, perhaps just taking charge of investments or producing accounts. In those circumstances they are temporary managers rather than trustees. I would not be adverse to the use of either term, the one selected in each case being dependent on the duties and the legal standing of the person appointed.
    Notwithstanding the use of "interim manager" in those cases for which it is appropriate, it clearly is important that R&Ms acting as trustees should have this word in their title so that they and others are in no doubt that they can expect a trustee standard of propriety from such office holders. That is necessary because it is alleged that too often R&Ms have acted without much adherence to the standards which one might expect and which the law requires of ordinary
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    charity trustees. That appears to be so in the case of Cancer and Leukaemia in Childhood, the Hedley Roberts Trust, Iran Aid, the RSPCA (Swansea), the Little Gidding Trust and the Voice of Methodism. I beg to move.
    Lord Bassam of Brighton: I am in some difficulty here. I can see the point of wanting to move away from references in the Bill to terms such as "receiver" and "manager". I can see the potential for confusion with the commercial sector, liquidation and bankruptcy and so on, which the term might evoke. However, I am not drawn to the term "interim trustee", as I am not sure what that conjures up. It is not a brilliant substitute. I do not say that with any malice about the tabling of the amendment.
    I would like to consider the amendment further. However, I shall not give a rock-solid, bankable, cast-iron commitment to bring forward alternative terminology because it might be difficult for us to fit it in to all the parts of the Bill where it currently occurs. We might be asking ourselves to do rather more in bringing forward an amendment than we would otherwise want to do and the amendment warrants. I would like to consider the matter further. I recognise the difficulty and I have some sympathy with the point being made.
    Lord Brooke of Sutton Mandeville: Having listened to the noble Baroness and to the Minister, I understand the difficult situation in which the Minister finds himself. One of the cases in the Association for Charities dossier—the noble Baroness quoted a number of cases—was that of PALS, about which I happen to have some knowledge because of local residents. In the case of PALS, at least according to the account given in the dossier, the operations manager and the Charity Commission said that they would oversee the appointment of trustees to take over the charity after its founder had resigned. They could not have been more accurately described as interim trustees in the light of the account given here. Very few of them lasted more than three or four months. As a consequence, the deterioration of the charity was very severe. I have sympathy with the Minister's view that "interim trustee" may not be the right term, but I also have sympathy with the noble Baroness, Lady Howe, in terms of eliciting a response from the Minister.
    Baroness Howe of Idlicote: I am grateful to the Minister for understanding the reasons behind the amendment. Local people may assume the worst because those words are being used, when in fact it is something that can be sorted out fairly quickly. The result can be that the charity suffers very significantly. I am grateful that the Minister understands the dilemma and I hope that he will be able to find a suitable form of words, if that conclusion meets everyone's desires. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Baroness Howe of Idlicotemoved Amendment No. 138:
    Page 26, line 5, at end insert—
    "( ) In section 19(6)(b) for "the income of the charities concerned" substitute "public funds"."
    The noble Baroness said: Noble Lords will be glad to hear that I am nearing the end of my amendments. The purpose of this amendment is to transfer the burden of meeting the cost of receivers and managers from the charities concerned to the Charity Commission. I acknowledge the principle followed, for example, in company law, that it is the organisation that pays the costs of a specialist appointed by the court or regulator to sort out an improperly run organisation. Nevertheless, the performance of the Charity Commission and its receivers and managers has, too often, been so poor, and sometimes so expensive, for the charity involved that justice in my submission cries out for the commission to foot the bill for its own decisions.
    I believe that the amendment would have two desirable consequences. First, it will discourage the commission from too casually appointing an expensive R&M when a little more effort by its own staff would assist existing trustees to sort out their problems. Secondly, it would discourage the commission from being tempted to use R&Ms simply to enable them later to claim to the Public Accounts Committee how much charity assets they have protected. Very often a large part of those charity assets have been under no credible threat—for example, in the current Kingsway International Christian Centre (KICC) and Cancer Care Foundation cases.
    Perhaps the most telling point about the commission's use—one could even say misuse—of R&Ms is that they rarely put them into small charities that do not have the assets to pay them, nor into large charities that have the resources effectively to oppose the commission's use of the power and to which different standards of regulation seem to apply. I beg to move.
    Lord Bassam of Brighton: Section 19(6) of the Charities Act 1993 at present allows regulations made by my right honourable friend the Home Secretary to make provision for receivers and managers to be remunerated out of the income of the charities concerned. The effect of the amendment tabled by the noble Lord, Lord Swinfen, moved very ably by the noble Baroness, Lady Howe, would be to allow those regulations to make provisions for receivers and managers to be remunerated, not from the charities' income, but from public funds.
    Charities enjoy considerable financial privileges because of the status and benefits that they bring to society more generally. The public is entitled to be satisfied that charitable resources are being used in the most effective way possible, especially in view of the financial benefits that charities enjoy. Trusteeship brings with it a responsibility to ensure that that happens. The appointment of a receiver and manager generally happens when trustees are no longer in control of a charity. That can be due to disputes within
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    a charity or perhaps where there is a loss of enthusiasm for a charity or where there is a need to safeguard the assets of a charity. The Government believe in general terms that in most circumstances it would probably be appropriate for receivers and managers to be remunerated from the income of the charities concerned.
    Section 19(6) does not, however, preclude receivers and managers from being remunerated from public funds in appropriate circumstances. For example, when a charity has insufficient funds and the commission decides that the most effective remedy which is in the best interests of the charity is to appoint a receiver and manager, the commission may appoint one at public expense. Although we believe that remuneration from the charity's own funds will be the right course in most cases, we are happy to consider the possibility of tabling an amendment making it clear that remuneration may come from public funds if the commission so decides.
    I am grateful to the noble Baroness for moving the amendment on behalf of the noble Lord, Lord Swinfen. We will reflect on the matter and design an amendment to address it before Report.
    6.15 p.m.
    Baroness Howe of Idlicote: Once again, I am grateful to the Minister for his reply, and for the commitment to consider an appropriate amendment, which I hope will satisfy some of the concerns. Behind all this is the great concern that, despite all the duties and powers of the Charity Commission, the one duty that it does not appear to have is to consider the interest of the beneficiaries of that charity. Sometimes when so much money is spent in that way there is a concern that the interest to beneficiaries should be taken into account much more than it has been in the past. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 139 not moved.]
    Clause 26 agreed to.
    Baroness Howe of Idlicotemoved Amendment No. 139ZA:
    After Clause 26, insert the following new clause—
    "Arbitration
    DUTY TO MAKE ARBITRATION AVAILABLE
    After section 31 of the 1993 Act insert—
    "31B DUTY TO MAKE ARBITRATION AVAILABLE
    (1) The Charity Commission shall promptly submit to arbitration when requested to do so by charities, trustees and other parties concerning matters which affect or may affect them.
    (2) If the Commission and the complainant cannot agree an arbitrator then the Commission shall ask the Centre for Effective Dispute Resolution to appoint an arbitrator and the Commission shall pay any fees for so doing.
    (3) The arbitration will be binding on both parties.
    (4) The arbitrator shall have the power—

    (a) to comment on the Commission's processes and actions, and

    (b) to award the complainant compensation for financial loss.

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    (5) The complainant will not be required to obtain the permission of the Commission to make use of arbitration.
    (6) In appointing an arbitrator the Commission shall seek to incorporate the following principles—

    (a) the arbitrator shall have power to access all charity and Commission records and require the attendance of any employee of the Commission or of a receiver and manager,

    (b) the arbitrator shall be quick to access,

    (c) the arbitrator shall be cheap to access and operate in a simple way which does not necessitate lawyers,

    (d) the Commission must publish the arbitrator's report, normally identifying all parties,

    (e) the arbitrator shall be a person who is skilled in such matters,

    (f) the arbitrator shall seek fairness, justice and equity for all stakeholders involved in the charity in question, whether or not party to the case, including beneficiaries who may not have the knowledge or resources to represent themselves.

    (7) The costs of the arbitrator will be paid by the Commission unless the arbitrator considers that the complainant has acted vexatiously, frivolously or unreasonably, in which case the arbitrator may find that the complainant shall pay all or part of the arbitrator's costs.""

    The noble Baroness said: The purpose of this lengthy proposed new clause is to make available to charities, trustees and others who have suffered real and unnecessary financial loss as a result of what is claimed to be maltreatment by the Charity Commission an accessible mechanism for holding the commission to account and obtaining recompense.
    The range of matters that can be taken to arbitration under subsection (1) may be excessively wide. Obviously, I am ready to listen to what lawyers and others have to say on that. There seems to be some question over whether the Centre for Effective Dispute Resolution, referred to in subsection (2), is the appropriate body for that type of arbitration. The Chartered Institute of Arbitrators or another body may be more appropriate. Again, I shall listen to the responses on that.
    The Bill should be amended to enable any charity, trustee or other party who alleges that he has suffered actual financial loss as a result of the Charity Commission acting disproportionately, unfairly or unreasonably to take the commission to binding arbitration for the purpose of securing a ruling on its behaviour and obtaining financial compensation for actual loss. Without that, it is possible that this Act will deliver technically good law but a serious lack of justice in cases where charities and trustees have been mistreated by the regulator.
    The measure is necessary because there is no other practical route at present for charities, trustees or others to obtain such a ruling elsewhere, nor does this Bill provide one. The commission's internal complaints procedure consists of a review by senior commission employees of the conduct of junior commission employees, and cannot be relied upon to deliver financial compensation for actual losses suffered by charities, trustees or others as a result of incompetence, misconduct, maladministration or abuses of power resulting from commission
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    interventions in the affair of a charity. The Independent Complaints Reviewer is no answer to that point, since he or she is appointed and paid by the Charity Commission, which sets his or her terms of reference. The reviewer is prohibited from awarding compensation for complainants who have suffered financial loss as a result of incompetence, misconduct maladministration or abuse.
    The Parliamentary Ombudsman has routinely refused to consider cases until they have been to the High Court. That occurred in the cases of the Hedley Roberts Trust, the Protection of Animal Life Society and the Little Gidding Trust. In the Little Gidding Trust case the High Court, supported by the Court of Appeal, refused to consider the behaviour of the Charity Commission, even after it identified it as a central issue. As the eminent charity lawyer Jean Dollimore subsequently wrote in Charity Finance magazine, "This is no justice". Furthermore, the technical and financial obstacles peculiar to charity law in taking the commission to the High Court are so severe as to make it a daunting prospect for even a National Lottery jackpot winner. In the Little Giddling Trust case the costs were hundreds of thousands of pounds to the complainant, even though he represented himself.
    Bluntly, none of those options in practice makes available an accessible mechanism of redress for charities, trustees and others who have suffered real loss as a result of mistreatment by the commission. If redress is to be available only to the fabulously rich, which rules out most charities, that is surely justice denied. I do not suggest that the Charity Commission routinely mistreats those whom it regulates—obviously I do not—but there appears to be a culture in that organisation which tolerates, supports and conceals abuse when it occurs, and does its bureaucratic best not to be held accountable when an accusation is made. The new management in the commission may well be intent on reforming that organisation, but they will not be helped by the continuance of a process in which it is perfectly feasible for their organisation to avoid being held to account for staff's misbehaviour and the real financial consequences for the very charities that they are supposed to support.
    In the Gaia Trust case, the charity asked the commission for advice, followed it carefully and, when the commission changed its mind, found itself in the middle of land transactions that could not be completed without lengthy delay while the commission pondered. It is alleged that that incompetence and abuse of process cost the Gaia Trust £600,000. There was no compensation.
    In the current case of the Cancer Care Foundation, the commission has appointed a receiver and manager on evidence that appears highly questionable, to say the least. Over a year later the costs to the charity and its trustees are expected, as I have mentioned, to exceed a million pounds. One might ask, to what purpose? The statutory answer of "protecting charity assets" rings a little hollow. These cases call for a

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    practical, accessible and fair mechanism for swiftly identifying where things went wrong and awarding compensation for real financial loss.
    The Government may oppose this clause because it has cost implications for the public purse. If any private citizen financially harms another he is expected to pay. In my submission, there is no reason why the Government's regulator should be above the law. In practice, I think that this clause will assist the new management at the commission to change the culture there. If the amendment is agreed, we shall see very few claims.
    The courts and the Government support the alternative dispute resolution procedures as a means of levelling the playing field between citizen and state. I argue that without such mechanisms the Bill may deliver law but may well, on occasions, fail to deliver justice. I beg to move.
    Lord Phillips of Sudbury: Perhaps I may—
    Lord Brooke of Sutton Mandeville: Perhaps I may—
    Lord Phillips of Sudbury: The noble Lord, Lord Brooke, is so senior to me in experience and competence that I insist on him speaking first.
    Lord Brooke of Sutton Mandeville: That is an absolutely ill-based reason, but I shall make life easier by speaking. I have no professional background in this area. I certainly do not have the knowledge that the noble Baroness, Lady Howe, has demonstrated in speaking to the amendment. Such knowledge as I have of arbitration is derived from the fact that there is a substantial amount of activity in the City of London, for which for nearly a quarter of a century I was Member of Parliament, and from private conversation with my brother, who now sits in the Court of Appeal, but who was involved in arbitration cases in his earlier legal career.
    As someone who has listened to the debate so far, there appears to be a mildly uneven playing field. I am looking forward to hearing the Minister. If the trustees are permanently liable for their behaviour, and the commission is not as liable for the behaviour of those who represent it and take actions on its behalf, I look forward to hearing what the Minister has to say.
    Lord Phillips of Sudbury: There is an evil that needs addressing on this matter. For the reasons described by the noble Baroness, Lady Howe, one needs to emphasise that it is rare that the Charity Commission acts unfairly or perversely, but it does happen. When that happens, it has a disproportionately adverse impact on the charity concerned. Sometimes those within the commission do not understand the effect of some of its reports and decisions—and some of their non-decisions—on the world beyond. One of the evils with which one has to contend is extremely attenuated consideration of a matter on which it has its eye.
    The remedy of the Independent Complaints Reviewer in some or many circumstances is perfectly adequate. I understand that the Minister referred to a
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    global sum of about £15,000 paid out as compensatory sums last year because of the intervention of the Independent Complaints Reviewer or because the commission decided to make a compensation payment. As has been heard, some of the losses involved in the few cases that go badly wrong are very many times more than that total. This matter needs to be addressed. In my view, it is not enough to continue in the same old way.
    Having said that, I do not believe that Amendment No. 139ZA is fit for the purpose. There is no point in spending a lot of time on it. It does not describe the circumstances in which anyone may initiate an arbitration; it requires that all the costs of arbitration are met by the commission unless,
    "the complainant has acted vexatiously, frivolously or unreasonably".
    I believe that that is inadequate in terms of the Charity Commission's exposure.
    I do not want to get bogged down in the wording of the amendment because I hope the Minister will say that thought will be given to addressing the underlying complaint. For my part, it might be done informally in the sense of not putting something in the Bill. The Charity Commission says that the role of the Independent Complaints Reviewer should be amended in some way, given more teeth and more powers to award compensation so that the confidence that is currently lacking within the sector can be restored.
    6.30 p.m.
    Lord Bassam of Brighton: I am grateful to the noble Baroness for moving the amendment. It has provided us with another opportunity to look at the issue. I am mindful that we have already had one crack at this at an earlier stage, in terms of looking at how complaints are dealt with. In some parts of the sector there is unhappiness about how it is regulated. That said, I am drawn to conclude, like the noble Lord, Lord Phillips, that this is not necessarily the best way to deal with the problem—if problem it be.
    I cannot think of another sector where one seeks mediation between the regulator and the regulated in the way sought by the amendment.
    Lord Phillips of Sudbury: Does it not happen widely in the private sector—in banking, for example? It is a very common device these days.
    Lord Bassam of Brighton: I accept that mediation is a not uncommon route. I have been a party to mediation myself and I understand why it is used. It is an extremely good development, particularly for resolving lower level disputes where there is a need for some form of mediation. I accept that mediation is fine for effective dispute resolution. Certainly, from my experience in local government, there are local mediation services.
    The arbitrator in this instance, as the amendment would provide, would be able to award compensation for financial loss. The commission, as the noble Baroness argued, would have to meet the costs of

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    arbitration except where the arbitrator found that the complainant had acted vexatiously, frivolously or unreasonably. That is a difficult judgment call.
    We discussed an earlier amendment relating to the Charity Appeal Tribunal. If a charity or trustee has a complaint about the Charity Commission's processes or actions in a particular case, it or he should address the complaint in the first instance via the commission's own established internal complaints procedure. If it or he is not satisfied with the outcome of that process, it is open to it or he to complain to the Independent Complaints Reviewer, the Parliamentary Ombudsman, or both.
    As I understand it, the noble Lord, Lord Swinfen, is particularly concerned about the operation of the Independent Complaints Reviewer's remit in recommending compensation for financial loss. I provided figures when we previously debated the issue. I understand that while the reviewer's terms of reference do not enable her to recommend payment of a specific amount in respect of financial loss, it would be open to her in appropriate circumstances to recommend that the commission considers making such a payment.
    It is also worth emphasising that there are no restrictions on the Parliamentary Ombudsman in terms of recommending compensation for financial loss, provided the ombudsman is satisfied that the loss resulted from maladministration on the commission's part. On thinking about this and having heard the noble Baroness, maladministration is probably the largest cause of concern for those affected by how the Charity Commission acts as a regulator.
    The process of arbitration would represent a third avenue—in some ways a fourth avenue—for complainants to pursue complaints against the commission. The Government's overall view is that this would be unnecessary and perhaps undesirable given the options that already exist and which are available in terms of access to the Independent Complaints Reviewer, to the Parliamentary Ombudsman, to the tribunal and beyond that to the High Court. The Government cannot see any added benefit in requiring the commission to submit to arbitration, particularly given that the commission has never refused a recommendation from the Independent Complaints Reviewer to make a consolatory payment.
    The noble Lord, Lord Phillips, asked about the Independent Complaints Reviewer and the possibility of that route being able to award meaningful compensation. We would be prepared to have more discussion, perhaps with stakeholders and those concerned, on the understanding that the ICR's role will continue to be restricted to complaints about administration and standards of service. That is part of the concern. I cannot see that that would be the right forum to challenge the commission's legal decisions. We are prepared to give the suggestion some additional thought as it would seem to be fruitful and helpful in the context of complaints and complaints resolution.
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    I am sure that I have not said what the noble Baroness would like me to say, but given that there is a structure in place—one that works and has a track record—the best course would be to try and see what can be done outside the legislation to improve the effectiveness of the various routes. I am sure the noble Baroness will accept that with the more accessible route to the tribunal open to charities as well, there is an important dimension that has not operated as a brake or check on the activities of the commission in the way the tribunal probably will.
    Baroness Howe of Idlicote: I thank the Minister and other noble Lords who have spoken about their concern on these amendments. I cannot say that I am entirely happy with the answer, but I think that there is some room for looking at the matter again. The Minister has identified the maladministration and standards of service as very relevant to the reasons for the amendments.
    There is a need to look at the matter again to see what the Minister can come up with and whether we need to return to it. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Dubsmoved Amendment No. 139A:
    Before Clause 27, insert the following new clause—
    "GROUP STATEMENTS OF ACCOUNTS FOR CHARITIES CONTROLLING SUBSIDIARY UNDERTAKINGS
    (1) Section 42 of the 1993 Act (annual statements of accounts) is amended as follows.
    (2) After subsection (1) insert—
    "(1A) Where at the end of any financial year a charity has the control of one or more subsidiary undertakings the trustees shall, in addition to the statement of accounts prepared under subsection (1) above, prepare a group statement of accounts consolidating the statement prepared under subsection (1) and the statements of accounts prepared in respect of its subsidiary undertakings.
    (1B) Any such group statement shall comply with such requirements as to its form and contents as may be prescribed by regulations made by the Secretary of State."
    (3) In subsection (2) after the words "generality of subsection (1)" insert "or (1A)".
    (4) After subsection (2)(b) insert—
    "(c) as to any exceptions to the inclusion of subsidiary undertakings in the preparation of a group statement of accounts".
    (5) In subsection (2) after the words "financial years of a charity" insert "and its subsidiary undertakings".
    (6) After subsection (3) insert—
    "This subsection shall not apply to a charity which is preparing a group statement of accounts under subsection (1A) above."
    (7) In subsection (4) for paragraph (a) substitute—
    "(a) any statement of accounts prepared by them under subsection (1) or (1A) above, or"."
    The noble Lord said: In moving Amendment No. 139A, I shall speak also to the five other amendments in the group. I am very grateful to the Charity Finance Directors' Group for its advice and help in preparing the amendments and the arguments connected with them.

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    Charities are becoming increasingly sophisticated in the structures that they adopt to undertake their charitable activities and to generate income. For larger charities we have the charity itself and then a number of subsidiary operations. The difficulty is that the accounts do not reflect in sufficient detail the whole range of activities. including the subsidiary activities of a charity.
    It may well be that activities and assets indirectly controlled through subsidiary undertakings are omitted and simply disclosed in the accounts as investments on the charity's balance sheet. It may well be that the subsidiary activity is much larger than the main activity of the charity, about which there may be more detail.
    There is a need for charities to be able to indicate the size of their trading activities. At the moment they may not be able to give the details of trading activities within the charitable activity because the activities themselves are not fully charitable.
    The proposition is a simple one. I would argue that the Charities Act 1993 is out of line with accounting practice. Indeed, the fact that there is no reference to it in the Bill is also an indication that we are not in line with modern accounting practice. I can only believe that there is a flaw or that there has been an unintended omission in the way the Bill has been put forward.
    The requirement for charities to give fuller details of their activities would more sensibly be subject to a threshold so that smaller charities do not have to do that. Indeed, Amendment No. 140A suggests the two levels at which the threshold would be reached.
    There is also an overall question of public confidence in a charity. Under the existing legislation it would be possible for a charity to put significant income-generating activities into a non-charitable subsidiary. For example, a subsidiary might have an income of £10 million and costs of £9 million but would pass, say, £1 million to the charity. That would give a misleading impression of the scope and scale of the charity and might also make it more difficult for the Charity Commission to oversee how it works.
    I think that there should be a requirement that it cannot fully reflect the activity of the charity and all its subsidiaries. It is a fairly moderate suggestion. Some charities do this automatically, although currently they are under no obligation to do so. I think it might be better if they were. I beg to move.
    Lord Hodgson of Astley Abbotts: I have sympathy with the amendment. We are aiming for clarity and transparency and this provision tries to achieve that. I was much reassured by the remarks of the noble Lord, Lord Dubs, about materiality and the threshold below which you would not be involved so as to avoid the bureaucratic effect.
    I am not clear about what happens when you have charities that are companies and charities that are not companies mixed up together—whether that can be dealt with because they have different thresholds. Also, whether or not under Section 42 of the 1993 Act
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    we could achieve what the noble Lord is seeking to achieve, and which I support in principle, just by the prescribed regulations referred to in Section 42(1) of the 1993 Act. The Secretary of State could presumably decide that he wanted consolidated accounts prepared covering a charity and its subsidiaries and have those regulations prescribed in that way under the 1993 Act. But I must say that there is a great deal in what the noble Lord is driving at.
    Lord Dubs: I am grateful to the noble Lord for his support. I am not an accountant, as the noble Lord will realise. That is now patently obvious. A charity, after all, raises money from the public. The money is raised in the name of the charity even if the fundraising activity is not itself charitable. So I think that it would be helpful if the public were aware of the total scope of what a charity does. If there are other ways of achieving that end, I should be very happy. It is the end I am interested in and not the means of getting there. If the Minister can give us that assurance, that is fine.
    6.45 p.m.
    Lord Phillips of Sudbury: I am reluctant to sound a discordant note, but discordant note I must sound. I have not received the brief from the Charity Finance Directors' Group. Contrary to the suppositions of the noble Lord, Lord Dubs, I think that the provision would give rise to far more confusion than enlightenment. I shall give the reason.
    Let us take the easiest case: a charity that is also a company limited by guarantee. The trading company that is, let us say, wholly owned by that charity is a completely different and separate animal. It is so different that the relationship between the charity and the non-charitable trading company is the subject of a complete arm's-length requirement. A charity cannot make a loan to its wholly owned trading company unless stringent criteria have been met. Nor can the charity mix its funds with those of the trading company at all, at least not if the benefit is flowing from the charity to the trading company, despite the fact that the trading company is wholly owned by the charity and all its profits go to the charity. The reasons for that are fundamental: a charity is a non-commercial entity; it is not an entrepreneurially risk-taking entity, although it is risk taking in its grant making. It is not allowed to trade except to a very limited extent, and that is to protect the assets of the charity from being depleted by an entrepreneurial risk that goes wrong, which would eat up the money given to it, often by the public, in the expectation that it will be used exclusively for charitable purposes.
    If you are considering, as you plainly are, how these accounts will look to somebody looking in at them—that is the only point of making the amendment—they will be much more difficult to unravel if they are shoved together and there is a joint balance sheet. That balance sheet may look extremely bonny and bright in one particular year, because the trading company may

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    be doing well at that time; it may look utterly different in a year's time when some disaster has struck. I perfectly accept—
    Lord Hodgson of Astley Abbotts: What I think the noble Lord, Lord Dubs, is driving at, and what I am certainly driving at, is transparency. It may be a one-way valve—in other words, the money cannot go down from the charity to the trading subsidiary, but it can come the other way—but if you are being asked to give money to the charity and it has an extremely profitable, well run and effective trading subsidiary, do you not want to know about that? You might say, "Well, they're getting on all right, so I want to give my money to something else that is struggling more".
    While I do not want to speak for the noble Lord, Lord Dubs, I think that he is trying to get at the fact that you want to see the overall picture of the charity, including the non-charitable activities which are supporting it as a charity. That consolidated picture might be very variable, and that is exactly what the noble Lord, Lord Dubs, wants to have shown. He wants you to be able to judge how well the charity is doing and whether you want to continue to support it or leave it to get on with its commercial activities and find its money thereby.
    Lord Phillips of Sudbury: I understand the point that the noble Lord has just made so well, but I am bound to say that it would be impossible for somebody looking at the consolidated accounts to know what part of those assets was charitable and what part was not. I perfectly accept that, in an ideal world, one could do that, but I do not think that it is practical to do it and there are more dangers than benefits.
    What a charity can do, and what many of them do, is make a big song and dance in their annual accounts about the state of their trading company. If a charity has a trading company that is doing well and has lots of net assets, it is up to it to make as much of that as it likes. It does not have to have tiny, italicised notes; it can have a separate section which deals with that. I make this point only from what I would call long experience. What is intended as a clarification and transparent improvement would be more likely to lead to confusion than to enlightenment. I regret saying that.
    Lord Dubs: I hope that I am not completely out of my depth, but I agree with the noble Lord, Lord Hodgson. Transparency must be the aim here. Frankly, I do not see why, in addition to consolidated accounts, one should not also indicate separately the accounts of each subsidiary. That is only right and proper, and would enable a judgment to be made. As I said earlier, quite often the problem is that the subsidiary is a larger activity than the parent charity. It is only right that those looking at the charity should be able to see its total activity—even, one has to accept, the activities that are non-charitable. After all, they would normally use the name of the charity.
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    I should have thought that there would be no problem about this in principle, and that there would be many benefits in terms of openness and transparency. Anyone would be able to look at the annual report and accounts to see what is going on.
    Lord Bassam of Brighton: I have listened with interest to that exchange. Having heard the noble Lord, Lord Phillips, I was almost persuaded away from the position to which my speaking notes generally direct me—which is one of sympathy for the amendment. As the noble Lord, Lord Phillips, pointed out, this is already almost accepted practice within the trade, as it were. I want to take the amendment away and ensure that we give it further thought. I say that because finance directors have rightly encouraged us to come up to speed with current accounting practices and thinking across the charitable sector for the very good reasons made plain by my noble friend Lord Dubs and by other noble Lords. We need to get into the spirit of the era of greater transparency and a deeper understanding of how charities work, in particular the larger ones, which are now extremely sophisticated organisations.
    While I cannot accept the amendment as currently drafted, I am minded to take it away and give it further thought. However, it is worth putting on the record that the Charities Statement of Recommended Practice already enables charities to prepare consolidated accounts in the way described and recommends that all charities above the audit threshold with subsidiary undertakings produce consolidated accounts. The preparation of consolidated accounts is already accepted practice in the sector and the Charity Commission accepts the filing of consolidated accounts on a non-statutory basis. I am told that the practice has been accepted by 90 to 95 per cent of the sector already, so in a sense we are legislating for only a small minority that do not conform with recommended good practice.
    One undoubted benefit of the amendment would be to bring the legislation up to speed with accepted sector practice as it is. The question for us in preparing the legislation is whether it is necessary to require the preparation of consolidated accounts through primary legislation, given that the vast majority of relevant charities already prepare consolidated accounts, and given the undoubted complexity of the provisions that would be required to introduce this effectively.
    We need to have regard to two considerations in terms of whether to include a provision relating to group accounts. The first is whether there should be an exemption for small charity groups, for which a requirement to prepare consolidated accounts might prove overly burdensome—here I refer to our earlier arguments about proportionality in terms of regulation. Secondly, at what level should the audit threshold be set for consolidated accounts? The Companies Act already requires the preparation of consolidated accounts, but has a higher audit threshold for consolidated accounts and entity accounts. We shall have to take those issues into consideration.

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    In principle, we have no problem with a practice that is already prevalent across 95 per cent of the sector, but we must have regard to important issues of proportionality and the practicality of introducing such a provision at this late stage in the legislation.
    Lord Hodgson of Astley Abbotts: When the Minister looks at this proposal with his Bill team, I hope that he will note that the accountancy profession places great stress on the concept of materiality. Therefore the issue of materiality could usefully be considered. It means that a trading subsidiary would not be defined in absolute terms, but relative to its parent charity. It is worth looking at the concept of materiality.
    Lord Bassam of Brighton: I accept the point which has been usefully made. As I say, we shall look at this in a very practical light as it needs to be viewed in those terms.
    Lord Dubs: I am very grateful to my noble friend and to other noble Lords who have taken part in this short debate. I am grateful to the Minister for his positive and encouraging response. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 27 [Annual audit or examination of accounts of charities which are not companies]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 140:
    Page 26, line 14, leave out from beginning to "at" in line 15.
    The noble Lord said: In moving Amendment No. 140, I wish to speak also to Amendment No. 141. With this group we come to the first of a series of amendments that we tabled to seek to make clearer and simpler the thresholds at which the need for inspection, auditing and so on kick in.
    Amendments Nos. 140 and 141 relate to Clause 27, which is entitled,
    "Annual audit or examination of accounts of charities which are not companies".
    As drafted, the Bill provides for a somewhat complicated double test for a charity to satisfy before it can determine whether or not it is required by statute to have its accounts audited. This requirement would, as drafted, apply if either,
    "(a) the charity's gross income in that year exceeds £500,000; or
    (b) the charity's gross income in that year exceeds the accounts threshold"—
    currently £100,000—
    "and at the end of the year the aggregate value of its assets (before deduction of liabilities) exceeds £2.8 million".
    The two-pronged nature of this second test seems unduly complicated. It seems sensible that a charity with assets of more than £2.8 million should in any event be required to have an audit, even if those assets are primarily functional assets or for some other
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    reason do not produce high levels of income. Losing £2.8 million worth of assets could have an impact on public confidence. The fact that the charity had an annual income below £100,000 per annum would make no difference to that. Will the Minister explain the value of the concept of "the accounts threshold", which seems to make one fleeting appearance in the Bill at this point? However, the purpose of this amendment is to argue that the second alternative of the test should be simplified by referring simply to the asset value threshold of £2.8 million, and the reference to income levels in this part should be deleted. I beg to move.
    Lord Bassam of Brighton: As ever, I am grateful to the noble Lord for tabling these amendments as it enables me to explain a bit about the Government's policy in relation to audit thresholds.
    As I am sure the noble Lord will be aware, the Strategy Unit considered specifically the matter of the audit threshold for charities and recommended that the threshold should be raised from £250,000 to £1 million annual income per annum. However, the respondents to the Strategy Unit review felt that the rise was too high and would reduce the accountability of medium-sized charities, leading to greater risk of abuse. The Charities Bill, therefore, provides for a rise in the threshold but only to £500,000 per annum. A number of respondents also suggested that an asset threshold should be introduced for unincorporated charities. There is, of course, already an asset threshold for charitable companies.
    We believe that an asset threshold should be introduced for unincorporated charities as a means of enhancing the transparency and accountability of the sector, which we all agree is vital for its success. For that reason the Bill provides for an asset threshold of £2.8 million for unincorporated charities as well as a rise in the asset threshold for charitable companies to £2.8 million.
    In considering how best to introduce the asset threshold for unincorporated charities we were mindful of the concerns in the sector about imposing an audit requirement on charities that were least able to afford it. The introduction of an asset threshold without any qualification would impact most on smaller charities. We agree that we need to ensure that there is an appropriate and lower level of burden on them. For example, there will be some (possibly several thousand) land holding charities that have negligible incomes but whose assets would be valued at more than £2.8 million. They obviously would not have the resources to pay for an audit.
    By introducing an asset threshold, but only for those charities required to prepare more sophisticated accruals accounts, we have sought to ensure that the audit requirement is not imposed on those charities with small incomes but large assets. The gross income threshold for the preparation of more sophisticated accruals accounts is currently £100,000 per annum. I hope that the noble Lord agrees that the introduction of the asset threshold in this way achieves the correct balance.
    7 p.m.
    Lord Phillips of Sudbury: I am most grateful to the noble Lord for giving way momentarily. Why is the £2.8 million taken before deduction of liabilities? That seems very odd, even bizarre, if you have a land charity with £3 million in assets and a mortgage of £2.5 million.
    Lord Bassam of Brighton: Yes, all right. The noble Lord has floored me. Having heard what I have been advised, I want to drop the noble Lord a note about it. I want to understand the point better as well.
    Lord Phillips of Sudbury: I am most obliged.
    Lord Bassam of Brighton: To conclude, we are trying to achieve the right balance, enhancing transparency and accountability without imposing over-mighty audit requirements on charities that do not have the resources for them because, although they may be asset-rich, their resource is light. I was hoping that, because the noble Lord is clearly sympathetic to the point, particularly for smaller charities, he would understand and think further about it.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister. I am sorry to disappoint him, but I do not think that £2.8 million—depending on how we define it; we will come back to that—represents that small a charity. I assume that we are talking about £2.8 million net in hand. That is a major chunk of assets. If that is the case, either that £2.8 million is being underused, in which case the commission should be looking at the whether the charity is using those resources efficiently—if not, it is not worthy of charitable status—or, if the money is supporting some other activity, auditing it will be very simple. In that case, the asset will be locked in some way and the audit will be very cheap and will be the same every year. It does not hold water to say that it will be very expensive to audit. Either the assets are not being well used, in which case the commission ought to encourage their better use, or they are being well used and are simply locked. I am not sure that the Minister has got this one yet. I am happy to withdraw the amendment, but, as we have told him, the thresholds in the Bill are all over the place. We want to simplify it.
    Lord Shutt of Greetland: The noble Lord says that the commission should move in, but in some situations trustees take a view about capital growth rather than income. Also, some charities have it in their objectives that they can spend capital. These things may well not appear to balance in the way the noble Lord indicates.
    Lord Hodgson of Astley Abbotts: I entirely accept that this is a very eclectic and wide-ranging sector with many approaches. However, overall the approaches are relatively simple. If you have £2.8 million of assets there should be a return on it. If there is not, you can afford to have it audited easily. I shall come back to thresholds as we go along, but in the mean time, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
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    [Amendments Nos. 140A to 141B not moved.]
    Lord Hodgson of Astley Abbottsmoved Amendment No. 142:
    Page 26, line 26, leave out "£10,000" and insert "£25,000"
    The noble Lord said: We are hammering on about simplicity, clarity and consistency. We want the charity trustees to find the system user-friendly. As we have mentioned before, 95 per cent of charities have no permanent staff and depend on their trustees' readiness to give up their leisure hours to look after the charity's affairs. We want to reduce the number of thresholds and different levels as far as possible.
    Those who were present will recall that on Amendments Nos. 107 and 108 I argued that the requirement to register should be set at an annual income of £25,000. We argued that that was the level at which a charity becomes sufficiently significant to justify having to appear on the commission's radar.
    For the same reasons, I argued that the requirement for an independent examination should kick in at £25,000, not £10,000. This amendment makes that change for the accounts of a charity that is not a company—we are still on Clause 27.
    I hope that I have made it clear that I want charity trustees to have as few thresholds as possible to juggle with. I wish to do so without putting public confidence at risk. I believe that an annual income of £25,000 strikes the right balance for the uplift in the type of annual examination for the accounts. I beg to move.
    Lord Phillips of Sudbury: I am not sure that the noble Lord is removing any thresholds; he is just changing them.
    Lord Hodgson of Astley Abbotts: I am changing them, but I am getting rid of one, because I am moving them all to £25,000. We currently have £5,000, £10,000, £25,000, £90,000, £100,000, £250,000, £500,000, £1.4 million and £2.8 million. In producing a simple, deregulatory, transparent Bill, surely we can get rid of a few of those.
    Lord Phillips of Sudbury: I admire that ruthlessness. We had this little joustabout on registration. My only question is about public confidence. I shall be interested to hear what the Minister says. I am more sympathetic to this amendment than I was to the noble Lord's proposal of a £25,000 threshold for registration.
    Lord Bassam of Brighton: I shall try to truncate discussion on this. I admire the noble Lord, Lord Hodgson, for his desire to add simplicity to transparency and accountability in all these things. I fear that the objective is not easily achieved. He has to bear in mind the obvious point that those thresholds are for different things. We are looking at different beasts when we look at each threshold.
    Having said that, I think there is a good case for looking again at this threshold. We are happy to take away the gross income threshold for independent examination, with a view to raising it to a level that

    GC 461
    strikes a better balance between proportionate regulation and not impacting negatively on the transparency and accountability of the sector as a whole. There are no easy miracles in collapsing the number of thresholds, but I think there is a good case for raising this one.
    Lord Hodgson of Astley Abbotts: I am grateful to the Minister. I shall quit while I am ahead. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 143 had been withdrawn from the Marshalled List.]
    Lord Hodgson of Astley Abbottsmoved Amendment No. 144:
    Page 26, line 39, at end insert"; or
    (c) the Association of Charity Independent Examiners"
    The noble Lord said: This is a probing amendment. Clause 27(5) lists the bodies whose members are allowed to perform independent examination of charity accounts. As the name suggests, the members of the Association of Charity Independent Examiners specialise in the independent examination of charities. The ACIE is a reputable organisation and it seems appropriate to include it in the list. I am interested in the Minister's view on why it has not been included. I beg to move.
    Lord Phillips of Sudbury: My name is also on the amendment. After the robust performance of the noble Lord, Lord Hodgson of Astley Abbotts, on the previous amendment, I am taken aback by his extraordinary lack of forthrightness in calling this a "probing amendment". It is not a probing amendment; it is a thrusting amendment.
    I can see no reason why this body should not be on the list. As the noble Lord said, it is a professionally run body. I have asked it about its admissions procedures and disciplinary procedures, and it seems to be just the sort of body that ought to be on the list.
    Lord Bassam of Brighton: I think that we are going to be shamed into submission, whether by a probe or a thrust—I am not sure what the difference is. I agree to consider whether we ought to put it on the list of eligible bodies. The noble Lord has made a good point and we will consider it.
    Lord Hodgson of Astley Abbotts: Two in a row is more than I ever anticipated. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 144A not moved.]
    Clause 27 agreed to.
    GC 462
    Clause 28 [Duty of auditor etc. of charity which is not a company to report matters to Commission]:
    Lord Phillips of Sudburymoved Amendment No. 145:
    Page 27, line 21, after "must" insert ", after making such enquiries as he considers appropriate in order to establish such a likelihood,"
    The noble Lord said: This is a probing amendment. I simply want to be sure that given the duty of an auditor who, as subsection (2) of the new section has it, "becomes aware" of one of the matters concerned to report immediately to the commission, there is an interval during which the auditor may make such inquiries as he considers appropriate to establish the likelihood. I want to be certain that we will not see reference to the commission too early, before the accountant, auditor or examiner concerned has made due inquiry into whether there exists one of the matters to which the subsection relates. I beg to move.
    Lord Bassam of Brighton: Subsection (2) of new Section 44A of the 1993 Act gives an auditor a duty to communicate to the commission in writing information or his opinion on any matter of which he has become aware in his capacity as auditor relating to the activities or affairs of the charity or, for that matter, any institution or body corporate connected with the charity that the auditor has reasonable cause to believe is or is likely to be of material significance for the exercise of the commission's functions under Section 8 or Section 18 of the 1993 Act.
    If I understand what the noble Lord, Lord Phillips of Sudbury, has said, the thinking behind the amendment relates to the need to require the auditor to consider the need to make inquiries before he or she decides that there is reasonable cause to believe that a matter is likely to be of material significance to the commission, thereby triggering the duty to make a written report. It is not entirely clear that the amendment would have that effect as it would require the auditor to consider the need to make inquiries to establish the likelihood of the matter being of material significance after he or she has concluded that there is reasonable cause to believe that that is the case.
    We have doubts about the drafting of the amendment and its intended effect, but we certainly have sympathy for the underlying principle behind it. I suggest that we have another look at the quality of the amendment and consider the desirability of making it. It would impose another duty on the auditor with regard to his or her consideration of the need to make inquiries.
    That is about as far as the noble Lord, Lord Phillips of Sudbury, will get on this amendment, but I am grateful to him. There may be something here that we can make good use of.
    Lord Phillips of Sudbury: I am grateful to the Minister. His explanation of my purpose was right. I was struck by the language of the Bill. It refers to an auditor who "becomes aware" and says that he must,
    "immediately make a written report".

    GC 463
    One does not want auditors and others to make reports before they are mature. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    7.15 p.m.
    Lord Bassam of Brightonmoved Amendment No. 146:
    Page 28, line 10, leave out "apply" and insert "shall apply in relation"
    The noble Lord said: This is a government amendment, standing in the name of my noble friend Lady Scotland of Asthal—and my brief does not say "Resist" at the top. This is a drafting amendment. It has no substantive effect. It is designed to improve the way in which the Bill is written and to provide greater clarity and consistency within Section 46. I beg to move.
    On Question, amendment agreed to.
    [Amendment No. 146A not moved.]
    Clause 28, as amended, agreed to.
    Clause 29 agreed to.
    Clause 30 [Annual audit or examination of accounts of charitable companies]:
    Lord Hodgson of Astley Abbottsmoved Amendment No. 147:
    Page 29, line 16, at end insert ""£90,000" substitute "£250,000" and for"
    The noble Lord said: This amendment is a further attempt to simplify the framework for the auditing examination of charitable companies as set out in Clause 30. It parallels the discussion we had on Amendment No. 142 which was in respect of charitable trusts.
    Simply put, the Bill, as presently drafted, maintains yet another set of thresholds. Under the existing legislation, charitable companies can opt for an accountant's report as opposed to a full audit when their gross income is between £90,000 and £250,000. Under the Bill before us this afternoon it is proposed to raise the upper limit to £500,000 but to leave the lower limit unchanged. The logic for that decision does not seem clear on at least two grounds.
    First, uniquely, I think that the £90,000 threshold is the only threshold in the Bill not to have been moved upwards to reflect inflation since 1993. Secondly, it keeps in place yet another level which trustees have to keep in mind when carrying out their duties. Without wishing to sound like a broken record, we have made it clear that we want a Bill that is uncomplicated and as straightforward as possible. That is how we can best encourage the development of philanthropy and how we can best encourage men and women of quality to serve as trustees.x
    We believe that the underlying purpose of the Bill as regards maintaining public confidence can easily be met by a simple threefold set of levels of annual income: £25,000, £250,000 and £500,000. If we can achieve that, or we can persuade the Government to
    GC 464
    accept it, we shall provide a simple system, comprehensible by the trustees of even the smallest charity. I beg to move.
    Lord Bassam of Brighton: Under the Companies Act 1985 a company that is a charity is totally exempted from the audit requirements of that Act, including the requirement to have an accountant's report to accompany its accounts, if its gross income does not exceed £90,000 and its balance sheet total does not exceed £2.8 million. As the noble Lord has explained, the amendment would raise the gross income threshold for total audit exemption from £90,000 to £250,000. So the requirement to have an accountant's report would apply to charitable companies with turnover between £250,000 and £500,000 and with a balance sheet total of not more than £2.8 million. The threshold for audit would remain at gross income of £500,000.
    As I am sure the noble Lord is aware, under the Companies Act a company which is not a charity is exempted from the audit requirements of that Act if its turnover is not more than £5.6 million and its balance sheet total is less than £2.8 million. Clearly, by comparison, the audit requirement is placed at a much lower threshold on companies that are charities.
    Perhaps it will help if I say a little about the purpose of the audit. The statutory audit provides an independent, external, professional opinion that a company's accounts provide a true and fair view. The primary purpose of the audit is for auditors to report on the accounts of a company to the members of that company. It provides an assurance to members as to the stewardship of their funds by the management of the company.
    However, for companies which are charities, the reliability of their accounts is important not only for the members of the company but also for the beneficiaries and donors that are connected and related to it. Tighter controls are important to minimise the opportunity for fraud and as a means of protecting donors. They are also for the benefit of the wider public.
    We believe that the audit requirements for charities should be lower than those for companies generally. That is because the increased accountability and transparency of the charitable sector promotes public trust and confidence. Providing total audit exemption for companies that are charities with incomes below £250,000 would have a negative impact on the transparency and accountability of the sector and would widen even further the disparity between the regimes for unincorporated charities and charitable companies. That would not be desirable. Drawn as I am to simplicity and a system which has perhaps a better internal logic, I think that we have got the threshold point about right in this case and it seems to work pretty well at the moment.
    Lord Hodgson of Astley Abbotts: I am fairly disappointed about this, because the Minister did not answer the question why we have not changed the

    GC 465
    £90,000 threshold since 1993. It is still stuck at the same level it was at 12 years ago. At least on the rate of inflation, the risk is—
    Lord Bassam of Brighton: I think I am right in saying—I have probably given this answer before—that thresholds can be varied by order and are not stuck in statute, so if it seems appropriate in the circumstances, we can introduce an order that varies that threshold.
    Lord Hodgson of Astley Abbotts: I am glad to hear that.
    What I find disappointing is that during our earlier argument about companies with £2.8 million of assets, the Minister said that we should allow coverage to be at the lowest level. When it comes to a company with a £90,000 turnover, we are going to require a much higher level of examination on the grounds of transparency. I do not understand how it can be argued that £2.8 million of assets, on the one hand, is okay, but that £90,000 of income, on the other, is not. The Government do not have the logic of this structure right. I accept that there is a balance to be struck, but we do not have the structure right. We are confusing ourselves and the sector unnecessarily. Nor are we achieving any real, higher degree of public confidence. I shall come back to this amendment, because I would like to have a crack at persuading the Government that there is a structural issue to be tackled. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 30 agreed to.
    Clause 31 agreed to.
    [Amendment No. 147A not moved.]
    Clause 32 agreed to.
    Schedule 6 [Charitable incorporated organisations]:
    Lord Phillips of Sudburymoved Amendment No. 148:
    Page 88, leave out line 16 and insert—
    "(5) A CIO may be established with or without members."
    The noble Lord said: In moving the amendment, I shall speak to Amendment No. 153. In simple terms, it would allow a CIO, a charitable incorporated organisation, to be a unitary structure without members or a dual structure with members. Again, this is a simplifying measure.
    I might as well start my argument in favour of the amendment by addressing the attention of the Committee to Clause 69B(6), which is to be inserted in the 1993 Act by Clause 1 of Schedule 6. Subsection (6) refers to a CIO which has charity trustees who are identical to its members. I am suggesting that where that is the case—that is, members being identical to trustees—why have all the fiddle-faddle of the dual-structure regulation when it is not needed? It exists at the moment. Companies limited by guarantee that are charities very often have Articles of Association which state that the members of the trustee body shall be the
    GC 466
    same as the members and that the members should be the same as the trustee body, thereby making sure that those two groups are identical.
    Unless there is an insuperable technical reason why this amendment is obnoxious, I urge it on the Government. It will make the constitution of a CIO that has no membership very much simpler. There is no issue of the liability of members in winding up because, as we already have it in the same clause:
    "The members may be either—

    (a) not liable to contribute to the assets of the CIO if it is wound up, or

    (b) liable".

    So there is not even that argument against having a unitary structure which simply has a board.
    If it is necessary, and I can see that it might be in circumstances where there are no members, to have a minimum number of trustees—board members—then so be it. But on those grounds, and simply put, I urge the amendment on the Committee and I beg to move.
    Lord Bassam of Brighton: The understanding of the basis on which the CIO provisions have been drafted is that, under the current law, any incorporated body—including a CIO—must legally be comprised of one or more members. The Bill specifically confers on the members of a CIO functions relating to constitutional amendment and corporate reconstruction. The constitution of many CIOs will confer further functions on the members; namely, the appointment of the charity trustees. But the function of managing a CIO will be discharged by its charity trustees.
    All this is in line with other models of corporate organisation, but concerns have been expressed, in the case of those CIOs whose charity trustees will be the same people as its members, that it is unnecessarily burdensome to make them discharge certain functions in the capacity of members and certain functions in the capacity of charity trustees. The possibility that a CIO's charity trustees may also be its members is expressly recognised in the Bill.
    As I understand it, the thought behind the amendments is that the effect of establishing a CIO without members would be that all the functions associated with the operation of the CIO would have to be discharged by the charity trustees in that capacity. Careful consideration was given prior to the introduction of the Bill to ways in which these concerns might be addressed without departing from the basic legal concepts relating to incorporation. If this were to be done by changes to the Bill, the amendments would have to take a different form from those currently proposed by the noble Lord.
    However, we believe that the burden where the same people are to discharge different functions while wearing separate hats has been somewhat overstated. We think that the concerns that have been expressed can be satisfactorily addressed by the Charity Commission through the publication of model governing documents for CIOs under the powers provided in the Bill and through the issue of appropriate guidance. That approach is preferable to

    GC 467
    introducing further complexity in the Bill by the addition of provisions designed specifically to apply only where the members of a CIO are the same as the charity trustees. We think that this is a simpler and easier route to achieving the objective sought by the noble Lord, Lord Phillips, in his efficacious amendment.
    Lord Phillips of Sudbury: The language of the Minister gets more Romanesque as the evening wears on. I think that that was an Alice in Wonderland response: it is precisely the reverse of the reality.
    Lord Bassam of Brighton: With respect, I think that we were given the benefit of a Through the Looking Glass explanation of the amendment.
    Lord Phillips of Sudbury: Well, tit for tat, but I will persist as one who labours in dealing with these corporate entities as compared with the unitary structure of a trust. A trust has a massive operational advantage over any corporate vehicle because it is unitary. All the functions are combined in the personages who comprise the trustee board. Of course, some of the biggest and most famous charities in the land are constructed in that way.
    If the Minister reflects on my first justification for the amendment—Alice-like though it may have been—he will be bound to accept that a unitary structure will be a much simpler and easier entity to run. Again I forgive the Minister for believing his brief.
    GC 468
    But if you are in the business of having to hold members' meetings and board meetings and all the different provisions for both—and they are the same group of people—although it is simple in theory to deal with all that, the truth is that in practice many voluntary bodies make an utter mess of it.
    So this really is a simplifying amendment. I have not heard any point made by the Minister against it, other than ones I have attempted to deal with. I hope that on reflection—not tonight but on reflection—he might be persuaded that this is a worthwhile amendment that will fulfil what we all repeatedly have stated we want, which is something that works better and simpler. Given that the CIO is a new animal, Members of the Committee would be surprised at how many extra charities would convert into that status if they did not have to abandon their unitary structure. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Bassam of Brighton: Given that we have trespassed past the witching hour of 7.30, I think this might be a convenient moment for the Committee to adjourn until Wednesday 16 March at 3.30 p.m.
    The Deputy Chairman of Committees (Viscount Ullswater): The Committee stands adjourned until Wednesday 16 March at 3.30 p.m.
    Committee adjourned at twenty-nine minutes before eight o'clock

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