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House of Lords

Thursday, 16 June 2011.

11 am

Prayers-read by the Lord Bishop of Chester.

Telephone Hacking


11.06 am

Asked By Lord Fowler

Baroness Rawlings: My Lords, phone hacking is unacceptable and against the law. The police must be allowed to probe into all the evidence. The CPS will then assess whether any prosecutions should be brought in accordance with the tests laid down by the Code for Crown Prosecutors. Should Her Majesty's Government launch another phone-hacking inquiry now, it would risk obstructing these investigations. We shall, in the circumstances, monitor closely all the results and consider whether any further action will be necessary.

Lord Fowler: My Lords, I thank my noble friend for that reply. There was a time when there was an attempt to write off phone hacking as the work of one rogue reporter. Does my noble friend recognise that in the last two weeks alone, News Corporation has paid out damages of £100,000 to the actress Sienna Miller and admitted misuse of private information, breach of confidence and harassment? News International has now set up what it calls a £15 million compensation fund for the victims of phone hacking, and evidence has emerged that the News of the World is not the only newspaper involved. Does she agree that all this represents a massive conspiracy against the public which the police and the Press Complaints Commission have been powerless to prevent, and will she give an assurance that once the criminal proceedings are complete-I emphasise, once they are complete-the Government will set up an independent inquiry to find out where the responsibility lies?

Baroness Rawlings: My noble friend Lord Fowler is extremely knowledgeable and experienced on this subject. I have read the details that he mentioned, but I need to make it clear from the start that my answers will cover only press regulations and not the criminal aspects. I know that your Lordships are well aware that the criminal aspects of hacking are covered by the Home Office. We do, however, fully understand my noble friend's request for a further inquiry to be set up after the present cases are resolved. We are witnessing a revolution in the information and communications world, as in technology in general, of such galloping

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speed that I can only agree with my noble friend that constant monitoring is essential in case further action is needed.

Lord Soley: With regard to the comments made by the noble Lord, Lord Fowler, I agree and understand the Minister's case that she cannot do anything while court proceedings are possible. However, News International, and Rupert Murdoch particularly, have a history of avoiding publicity when there have been bad cases. There was another case of a former editor of the Sun-a very serious sexual assault case in the office. The editor was finally dismissed and large sums of money were paid, but nothing was public because it was hushed up by a conditional agreement in court by News International. There is a major problem about the way in which that group operates. I accept entirely that it has to be after the court case, but there really has to be some sort of inquiry.

Baroness Rawlings: The noble Lord, Lord Soley, makes an important point about BSkyB and News Corporation. The Secretary of State has to make a quasi-judicial decision about the impact of the proposed merger on media plurality. Going back to his pinpointing regarding one newspaper, it was interesting that in February 2010 the Culture, Media and Sport Select Committee published a report on press reporting that included the examination of the phone-hacking episode. It was critical of the News of the World and the police and stated that it did not find it credible that such an activity was limited to just one rogue reporter. However, according to recent press interviews, the noble Lord, Lord Mandelson, said:

"It really isn't acceptable to keep pointing the finger at one newspaper when, clearly, the use of unlawful means of investigating was, or is, widespread".

Lord Elton: My Lords, this question is adjacent to a concern about super-injunctions. Is there not now a need to establish some means of deciding what the proper balance is between public interest, freedom of the press and personal privacy?

Baroness Rawlings: My noble friend Lord Elton hits right at the centre of this whole argument. The Attorney-General has announced a Joint Committee to look at all aspects of privacy and the use of anonymity injunctions and super-injunctions. We are currently looking at the terms of reference for the committee. To clarify, general injunctions stop the press reporting. With super-injunctions, the press are not allowed to say that they have been gagged, which is very rare.

Lord Ryder of Wensum: My Lords, should a committee of inquiry be established, will my noble friend please take on board the need to ensure that it investigates the very close links between senior police officers and senior executives of newspapers? Indeed, it is alleged that during the initial inquiries into the main case that we are discussing today, police officers were entertained by the executives of that newspaper.

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Baroness Rawlings: My noble friend Lord Ryder brings up a very delicate point about the inquiries. A number of investigations by the police are already under way. There are also several ongoing court cases, two parliamentary committees, and reviews by the Crown Prosecution Service and the Press Complaints Commission. At this stage it is hard to see whether another inquiry would be of any use, but the situation is constantly being monitored.

Lord Sugar: Does the noble Baroness agree that it is ludicrous to suggest that an editor of a national newspaper was not aware of where the information came from? In the past, as I believe one of my noble friends has mentioned, a journalist was given a custodial sentence for phone tapping. Is not the editor responsible for what goes in the newspaper, and therefore should he not also be given a custodial sentence, as well as, indeed, the proprietor and the board of directors?

Baroness Rawlings: I mentioned at the beginning that I was answering for the DCMS, which strays into the Home Office. When it comes to editors, I am afraid that I am unaware of what is happening.

Lord Marks of Henley-on-Thames: Can my noble friend the Minister indicate why it took five years, from 2006 to 2011, with Rebekah Brooks of Sky having only just been notified, to inform the victims of hacking that they were on Glenn Mulcaire's list of names and numbers? Can she assure the House that all known victims have now been notified and that in future such victims will be notified as soon as possible?

Baroness Rawlings: My Lords, the merger is being investigated on the basis of the effect that it could have on media plurality. As I said, phone-hacking allegations are very serious, but they are a matter for the criminal courts and may take a very long time. It would be impractical and quite wrong to delay a decision for such a long time.

Armenia: Genocide


11.14 am

Asked By Baroness Flather

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, there is no doubt that the treatment of the Armenians was horrific and caused the deaths of hundreds of thousands by force of arms, starvation or disease. They should not be forgotten, but we believe that it is for the Turkish and Armenian people to work together to address their common history. We encourage any process which helps them do so in an open, honest and constructive manner, but it would not be helpful for us to pre-empt their conclusions.

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Baroness Flather: My Lords, France has already recognised the genocide. One and a half million people were massacred in 1915. I have just come back from Armenia where I visited the genocide museum. I am sure that many of your Lordships have visited the Holocaust museum. This is no less upsetting, shocking and dreadful than the Holocaust museum. There is so much evidence and it was known at the time that this was happening. Every newspaper from every country had headlines about this massacre. It is out of the question for Turkey and Armenia to decide. Nobody thinks of Armenia as a country worth thinking about. It is for us to recognise-

Noble Lords: Question!

Baroness Boothroyd: Is it not for us to recognise?

Baroness Flather: Thank you very much everybody. You are all helping me, which is very kind. Is it not for us to recognise this crime against humanity? It is time that we did that. Turkey has ambitions-I have the Turkish Review.

Noble Lords: Too long!

Baroness Flather: Too long. Thank you.

Lord Howell of Guildford: We all appreciate the noble Baroness's feelings about what was clearly an horrific event in the distant past and one that arouses exactly the feelings of shock and horror that the noble Baroness has demonstrated. The Turkish and Armenian people are trying their best through a protocol procedure to normalise their relations and establish the right nomenclature and attitudes between each other so that these two countries can live in peace with a common border and continue to work for their joint prosperity. Now that protocols have been initialled and now that other Governments-the United States, France and other key countries-all take the same view as we do, this is the right way forward. Behind this is the other worry about Nagorno-Karabakh, and all that, which is being handled by the Minsk process of Russia, the United States and France. These two things together provide hope for the future and it would not be useful or constructive for us to take an issue and raise the heat of the matter by intervening in the way suggested by the noble Baroness.

Lord Avebury: Does my noble friend agree that after a century of taboo and silence Turkish journalists and historians are at last beginning to discuss the evidence of murder, enslavement, deportation and forcible transfer, rape, persecution and other inhumane acts of a similar character directed against the Armenian population of Turkey in 1915-16? Would it not help Turkey's application to join the European Union if Turkish politicians acknowledged the crimes of their ancestors?

Lord Howell of Guildford: I repeat that the best way forward is for Turkey and Armenia, which have initialled detailed protocols, to work to sort this out. I believe that Turkey, which is a very dynamic and an increasingly

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key country in both the Middle East and in European affairs, is fully aware of this and is determined to push forward with an understanding. There are many people on the Armenian side who, while fully recognising the horrors to which my noble friend has referred, also believe that this is the right way forward.

The Lord Bishop of Chester: My Lords, given that, as the Minister said, there is no doubt that genocide took place and that those who were killed should not be forgotten, can he say what is the official guidance on representation at the Armenian Genocide Memorial Day? I understand that there has been some reluctance of Ministers and others to attend the commemoration.

Lord Howell of Guildford: I will write to the right reverend Prelate on the precise wording of guidance on that. Behind it, there is always the concern that it is a matter to be settled between Turkey and Armenia. They are trying their best to do so and we must be very responsible and careful about any moves or acts of recognition or acceptance that would upset a delicate but very important process. I know that it is a natural impulse to feel, as the noble Baroness, Lady Flather, indicated, that we want to express our outrage at what occurred, but the best way forward is between these two countries.

Lord Tomlinson: Does the Minister recognise that Armenia and Turkey, as well as Azerbaijan, all work together very constructively in the Council of Europe and, at a political level, in the Parliamentary Assembly of the Council of Europe? That body, which serves such useful purposes on so many disputes that still exist in the wider Europe, is currently being starved of money by having much less generous settlements of its already meagre budget by comparison with the settlements that are being made for the European Union budget. Will the Minister look at that and make sure that the Parliamentary Assembly of the Council of Europe and the Council of Europe, with their roles in relation to the European Court of Human Rights, are getting adequate resources to do their valuable work?

Lord Howell of Guildford: Of course I will look at that. We recognise that at this time everyone is having to trim back on the availability of resources, but I am absolutely at one with the noble Lord on this matter. The Council of Europe is a very valuable forum in which the very long-standing and difficult disputes of the area can begin to be effectively resolved.

Baroness Cox: Is the Minister aware that there is a serious risk in Turkey of prosecution for journalists and writers who use the term "Armenian genocide"-some have been prosecuted-and that much educational material for schools has been produced by the Turkish Government denying the Armenian genocide? Does the Minister agree that such censorship in public discussion and education is unacceptable for a nation that hopes to join the European Union?

Lord Howell of Guildford: I do not want to comment on the detailed internal affairs of the Turkish Republic, but of course the values of freedom of expression are

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very important to us. We will continue to uphold our values and assert them wherever we can-and we do. The precise internal handling of the issue that Turkey and Armenia are now proceeding to handle is one that we have to leave to them.

East Jerusalem


11.22 am

Asked By Lord Hylton

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, we remain concerned about a number of Israel's continuing policies in east Jerusalem, which the UK considers occupied under international law. These include ongoing settlements expansion, the demolition of houses and the eviction of Palestinian residents, the route of the barrier wall and restrictions on residency rights. In his public statement of 5 April, my right honourable friend the Foreign Secretary condemned plans to build 500 new Israeli settlements in occupied east Jerusalem as illegal and an obstacle to peace.

Lord Hylton: My Lords, I thank the Minister for his reply. He listed many of the points of deep concern. Does he agree that these harm the welfare and even the citizenship of Palestinians living in east Jerusalem? What is more, they prejudice, do they not, final status negotiations in a very damaging way.

Lord Howell of Guildford: Very many people would agree with the noble Lord's sentiments. Of course, this area has been occupied since 1967 when-to get history right-Israel was attacked, broke through the Mandelbaum Gate and occupied east Jerusalem and many other areas as well. Ever since then, the handling of the occupation by the Israeli authorities has given rise to criticism. It is the clear view of Her Majesty's Government that the more heavy-handed and inappropriate the operations in the administration of east Jerusalem, with the kind of things that I described, the more we postpone the goal that we all want to achieve of proper peace negotiations to bring the two-state solution that will bring peace and harmony to the area.

Lord Dubs: I welcome what the Minister said about the Government's policy. Do not all the criticisms that he made, which I believe are valid, add up to the fact that it will be extremely difficult for east Jerusalem to become the capital of a Palestinian state?

Lord Howell of Guildford: Everyone recognises the whole Jerusalem issue, and the east Jerusalem issue is an enormously complex part of any future negotiations.

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We are talking about the goal of both Palestine and Israel recognising east Jerusalem as a joint capital. It is the capital of both countries and of many religions throughout the world. A degree of understanding is needed and is still missing between the Israeli authorities-although not among many highly enlightened and intelligent members of the Israeli community-the Palestinian people and the Palestinian Government, who are led in a very positive way at the moment, so that the very difficult concept of Jerusalem as the capital of both countries can be worked out and they can live together.

Baroness Falkner of Margravine: My Lords, may I, through my noble friend, congratulate our ambassador in Israel, Mr Matthew Gould, on the excellent practical work he is doing on the ground in east Jerusalem? Will my noble friend tell us whether the Foreign Office and DfID are jointly minded to implement some of the recommendations of the OCHA report, including prioritising zoning for Palestinians and building schools so that half the Palestinian children living in east Jerusalem who currently do not get free schooling are able at least to get an education so that they can move away from radicalisation? Will they please impress on the Israelis not to try to disfranchise the Palestinian population in this manner, or peace will never come?

Lord Howell of Guildford: I certainly agree with the last comment. As for the United Nations Office for the Coordination of Humanitarian Affairs' report, which is a very long document-I think it is 118 pages-there are very positive ideas in it, which we are studying very closely with our colleagues in DfID. Where we can make a contribution and see these ideas carried forward, we will certainly do so.

Lord Hannay of Chiswick: What is the Government's support for President Obama's initiative? How do they see the issue of Jerusalem fitting into any follow-up process? How is that process being organised now, given the very negative reaction of the Israeli Prime Minister?

Lord Howell of Guildford: The answer to the question is in the noble Lord's last comments. The reaction has been very negative indeed. The process we want to see remains the key to the future. There are elements in the jigsaw. One is whether, in joining with Fatah, Hamas can come forward with and deliver a responsible negotiating Government who renounce violence, accept the quartet principles and can go forward in good talks with Israel. Another is that the Israeli authorities recognise that there is no alternative to going forward in a positive away. Another is that they recognise that it is now when they should move, whereas the attitude in Jerusalem and Tel Aviv appears to be to wait and do nothing. We do not agree with that. We think this is a golden opportunity. All these matters must be fed into the process that President Obama tried to set in motion the other day but, so far, with not much success.

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Baroness Tonge: My Lords, the Minister will know the story of the three MPs, legitimately elected to represent areas of east Jerusalem, who were imprisoned by the Israelis because they had been elected. On release from prison nearly a year ago, they were told they were to be deported from east Jerusalem and would have to leave their homes and families behind. They have now been in an upper room in the Red Cross building in east Jerusalem for nearly one year. What are our Government going to do about it?

Lord Howell of Guildford: We are doing as much as we can, which is constantly to raise this matter with the Israelis. We do not at all approve of what has happened. We believe this is a wrong pattern. My noble friend has traced this evolution and development very closely indeed, probably as closely as anyone else in this House. Our pressure will continue. We are not the sovereign power, but we can explain our views and put them forward very strongly on a matter that is totally unsatisfactory.



11.29 am

Asked By Lord Lee of Trafford

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): Defence Secretary Gates' speech was a warning that Europe cannot take for granted the security blanket provided by NATO and historically resourced primarily by the United States. It also says something about the changing position of the United States itself. To deliver the capabilities that ensure our security, many European countries, especially NATO allies that fail to meet the 2 per cent of the GDP target, which was reconfirmed as recently as March 2011, need to increase levels of defence spending and work together more efficiently and effectively, as demonstrated by the UK-France defence treaty. We also need to remember that effective security involves hard and soft power elements-in fact, smart power.

Lord Lee of Trafford: I am very grateful to my noble friend for that very comprehensive reply. Perhaps I may remind the House precisely what Secretary Gates said. He said:

"The blunt reality is that there will be dwindling appetite and patience in the US Congress-and in the American body politic writ large-to expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defence".

While we are very grateful for all that the United States does, does not its lack of complete commitment on the Libyan operation send a clear message to us? Is not American increasingly looking to the East?

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Lord Howell of Guildford: Behind my noble friend's question is of course the truth that the world is changing, the balance of power is changing, and the unipolar moment, as it is called, for the United States has passed. Nevertheless, it remains an immensely powerful and close ally that is playing quite a detailed and substantial part in the overall operation against Colonel Gaddafi's Libya and against the hideous divisions of that country. The US case, and our case, that other countries in NATO could do more is widely accepted by everyone. Clearly, there is a great need for a fairer distribution of the burden of meeting the Libyan situation and many other situations that are bound to arise.

I do not think that we should be too gloomy about that adjustment. America remains our very close friend and one of the greatest countries in the world. We will work very closely with it on security, and the softer aspects of security, in trying to achieve global peace and stability.

Lord Martin of Springburn: Is the Minister as concerned as I am that some Ministers in the Scottish Parliament are publicly saying that they want to withdraw from NATO? This would be harmful to the Scottish people and to the whole of the United Kingdom.

Lord Howell of Guildford: Perhaps I should be but I am not as concerned as he is because I did not know that they were doing this. If Ministers in the Scottish Parliament think that they can somehow opt out of the collective security on which we all depend, and if any country thinks that it can have a free ride, they will need to think again because in this new world most of the operations in which we will be involved will now be completely interdependent, operating closely with a whole range of allies in different combinations. I am sure that the skills, the fighting spirit and the long traditions of Scotland will be just as much needed in global security as everything else. Perhaps these Ministers should think again.

Lord Hunt of Kings Heath: My Lords, while I am sure that the noble Lord is right to point to the contribution of other European countries and the need for them to contribute more, does he not think that we have to look at our own capability? Last year, the Government undertook a very hurried defence review. In the light of the current commitments of our Armed Forces, does not the noble Lord think that another review is required?

Lord Howell of Guildford: No, I do not. After 2015 our budget will start expanding again. We are much the largest contributor in the European end of NATO. We are fulfilling our commitments. The operations in which we are involved are completely sustainable, contrary to some remarks we have all read about in the press. We believe that we have the dispositions, the patterns and the plans to meet as far as we can individually the crises of the future. The answer to the noble Lord's question is no, but these are certainly fluid matters and anything could be coming around the corner. Great events could hit us and we always have to be ready to review the situation.

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Lord King of Bridgwater: My Lords, this statement has come from the United States on many occasions before, but it has been expressed with exceptional candour and frankness in what I believe could have been the valedictory message of Secretary Robert Gates, who may shortly be retiring. It has done the credit of telling people quite frankly what the feeling is in the United States. Contrary to the suggestion that might have come from the opposition Front Bench, the United Kingdom is certainly not the laggard in this matter. A number of other countries in NATO have for years failed completely to make a reasonable contribution, which very much threatens the willingness of the United States to continue to make the effort it wants. In a very dangerous and uncertain world, would my noble friend recognise that while NATO can take on a certain amount of responsibility, when considering issues such as piracy in Somalia, we should welcome the opportunity for Russian, Chinese, Indian and other forces to get involved in what are in fact issues of universal concern?

Lord Howell of Guildford: My Lords, the first of my noble friend's comments is based on his considerable experience and expertise in this area, and I totally agree with him. I agree even more strongly with his second point. These are becoming global issues on which all the responsible powers, or powers that wish to be responsible-that certainly includes great nations such as China, India, Russia and countries like Brazil-all have a responsibility, and they can no longer either enjoy a free ride while the western world tries to carry the burdens or stand aside, as we sometimes hear from Beijing, and say, "We are not going to interfere in anything. It is nothing to do with us". They are going to find that this is something to do with them, and already we are seeing welcome signs that some Chinese diplomatic voices are raising that point and involving themselves in trying to resolve various ugly crises, such as that in southern Sudan.

Arrangement of Business

Announcement of Recess Dates

11.36 am

Baroness Anelay of St Johns: My Lords, we have reached 30 minutes, but I know that that Question was one in which many noble Lords wished to take part.

I should like to make a Statement on two matters. First, it may be for the convenience of the House to know that the usual channels have agreed that the speakers' list for the debate on House of Lords reform next Tuesday and Wednesday will close at 6 pm on Monday evening, which is a little earlier than usual. In addition, the House will meet early on Wednesday, at 11 o'clock, in order to help accommodate the number of speakers currently on the list. However, Oral Questions on Wednesday will be taken at the usual time of 3 o'clock. We will start the day by resuming the debate, then break for Oral Questions, and return to the debate afterwards.

Perhaps it would be helpful if I remind noble Lords that paragraph 4.32 of the Companion provides that Members speaking in a debate should be present for

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the opening speeches and the winding speeches at the very end, as well as for the greater part of the debate. That does mean, of course, on both days.

I turn now to the Recess. I hear calls of "Hear, hear", but we shall see how long that lasts. When I announced the long-term Recess dates on 21 October last year, I made it clear at that stage that the dates were subject to the progress of business. We have not made as much progress as is necessary, and I know that noble Lords around the House are well aware of that. I am now in a position to inform the House that we will return one week earlier in October. The House will return from the Summer Recess on Monday 3 October, not on Monday 10 October. That is a limited adjustment and I look to all sides of the House to achieve reasonable progress both before and after the summer to enable us to hold to the other dates already announced. Subject to the progress of business, we will still rise for the Summer Recess at the end of business on Wednesday, 20 July.

Lord Bassam of Brighton: My Lords, I am grateful to the noble Baroness for the two Statements she has made, in particular the first one, which has been agreed through the usual channels and will, I think, be convenient to your Lordships' House. I am grateful to her for confirming the arrangements.

I also thank the noble Baroness for telling the House about the Government's plan to bring noble Lords back early for an additional week during the Conservative Party conference, which no doubt will be a relief to many, to deal with what I consider to be a chaotic logjam of government Bills. This is almost entirely without precedent. When we were in Government, it is true that we brought in September sittings, but that was done by agreement across the parties. Indeed, when we introduced the change back in 2002, we tabled a Motion on the matter for the House to discuss and determine. We have not been consulted about this and there is no Motion for the House to debate. When I advised Labour Members yesterday evening of the likely announcement, there was genuine anger. It disrupts long-planned appointments and arrangements, and treats the House with contempt. It says that the House is the plaything of the Government-a Government who have lost control of their legislative programme.

The truth is-in saying this I apportion no blame to the noble Baroness, Lady Anelay-that the Government are trying to force through a programme that is overlong, overprogrammed and overblown. In short, it is too long and they know it, and the House and the process of scrutiny are the sufferers. This is a crisis of timetabling, caused not by your Lordships' rightful desire to scrutinise Bills but by political mismanagement, emanating from No. 10. This House has already had the farce of badly drafted Bills, such as the Public Bodies Bill, and still to come are the Armed Forces Bill, the Scotland Bill and the Office for Budget Responsibility Bill. We have been waiting for a health Bill that was promised to the House in May but will not be here until October or November at the earliest. We also have such complex Bills as the Welfare Reform Bill and the Protection of Freedoms Bill to come.

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What assurances can the House have that, even with this extra week, we will complete our work without further incursions into Recess dates, longer nights and earlier starts? I also ask the noble Baroness to reconfirm all existing Recess dates, including those in February, and to do so with certainty. Will she also tell the House when it is intended that we shall have another Queen's Speech, and when this Session-the longest any of us can remember-will end? How many more Bills do the Government expect to force through this House before the Session concludes? At my last count, we still had 16 in progress and another 12 or 13 to come, and had done only 16 so far. Just how many more Bills do the Government expect to bring?

May I perhaps give the Government a little advice before they embark on their next political programme? Will they ensure that, next time around, they have coherent, well worked-out Bills, and do not have more Bills in their programme than both Houses of Parliament can realistically manage and effectively scrutinise?

This a programme of legislation that has been poorly thought through, badly managed from the centre and forced on an increasingly reluctant Parliament in a timeframe that is wholly unrealistic. I urge the Government to think again about their programme, and to consult the House properly about their timetable and what they put in for the rest of the Session.

Baroness Anelay of St Johns: Well, my Lords, as my dear old Aunt Rose would say, the noble Lord has a bit of a brass neck. However, I will of course address each of those points. Perhaps noble Lords should not read everything on politicshome.com before they bring information to the House. For example, the noble Lord referred to my having apparently announced the dates of the February half-term. The noble Lord will know that I never have. I know that politicshome.com has said so and that it has been tweeted, but it has never been the case in this House. I do not refer to any Recess dates after we return in January; I never have. Like the noble Lord, I do not refer to the date of the end of the Session. That is not something that happens; it is up to noble Lords to make their own calculations. When we know the progress of business, we will make a Statement, as the noble Lord did when the Labour Party was in government.

This is a self-regulating House, with the implication that scrutiny of legislation cannot be curtailed except by the House itself. That is only right; it is one of the aspects of our work of which we have every reason to be proud. The corollary is that when the House chooses to dwell on a particular Bill, as it did on the Parliamentary Voting System and Constituencies Bill-on which we spent 17 days in Committee, which is more than double the usual maximum for the largest Bills-more time must then be found elsewhere if the scrutiny of the other Bills in a Government's legislative programme is not to suffer as a consequence.

I should also make it clear that we have been used, over the past decade, to agreements by the usual channels to take a good number of the Committee stages of Bills in Grand Committee, off the Floor of the House. That kind of agreement has not been achievable this Session. This Session will have the

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lowest percentage of Bills in Grand Committee for nearly 10 years-since the Session of 2001-02. I know that because I was on the other side taking part in it all. As a result, pressure for time on the Floor of the House is acute and something has to give.

The Opposition Chief Whip will recall that the Opposition refused to put into Grand Committee a Bill that was eminently suitable for that place. I refer to the Postal Services Bill on which the Opposition spokesperson performed a very valuable role. The noble Lord, Lord Young of Norwood Green, steered the Opposition through that Bill with great skill and Labour Party Back-Benchers also acted with great skill and scrutinised it carefully. But it was not an appropriate Bill for the Floor of the House. The Opposition insisted that it should take time on the Floor away from other Bills.

There was consultation about business. Over the past five weeks, there has been consultation with the Opposition Chief Whip to seek certainty about how the Government could deliver their business without extending the sitting period and taking away a week from the summer Session. It is not normal process in this House to consult formally more widely, but I made sure that soundings were taken around the House. It was made very clear to me that, while noble Lords would not wish to extend the period beyond July, for some reason that I find quite difficult to understand, noble Lords on all sides of the House felt that it was quite appropriate for this place to be sitting during the Conservative Party conference, when my colleagues might wish to be elsewhere. That is indeed the final decision that was taken. The decision is not taken lightly. It is one to deal with ordinary business in an ordinary way. Scrutiny in this House, when it is done well, is a model for the world to follow.

Baroness Farrington of Ribbleton: Before the noble Baroness sits down-

Lord Tebbit: My Lords, while my noble friend must have taken a great deal of effort to avoid using the words pot, kettle and black, during the noble Lord's remarks, she should take it on board that it is a great pity that this Administration appear to be following the example of the previous Government by introducing too much legislation that has not been adequately thought through. It is a bad habit that was formed over the previous 10 years or so and we should be resisting it, not continuing it.

Baroness Anelay of St Johns: My Lords, it might be appropriate for me to be permitted to answer the questions as they are put. That might be helpful. I know that the noble Baroness, Lady Farrington, will of course have the opportunity to ask a question.

My noble friend has long experience in government. He will know that all Governments have to listen and learn and I will certainly do that.

Baroness Farrington of Ribbleton: My Lords, will the Government Chief Whip say what advice both she and the Leader of the House have given to the

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Government on the suitability of legislation for pre-legislative scrutiny? The Government have failed to use that procedure to the full. The Government are, as the noble Lord, Lord Tebbit, said, trying to achieve too much too quickly, often with proposals that are later withdrawn because they are unworkable.

Baroness Anelay of St Johns: My Lords, the Government have made it clear that they are very much in favour of extending pre-legislative scrutiny. That will happen. The Opposition will also be aware that in the first year of a new Government, as when I was sitting on the other side in 1997, it is not necessarily possible for a new Government to go through pre-legislative scrutiny without having a long hiatus. But it is the better model to follow and it is one that will be put within Government plans. I know that that will be welcomed by the House.

Lord Touhig: My Lords, how much will it cost to bring the House back for an extra week in October? If the noble Baroness is not able to tell us now, could she put that information in the Library?

Baroness Anelay of St Johns: My Lords, as I said earlier on, this should not have been necessary. I was perhaps not quite as blunt as my noble friend Lord Tebbit would have liked. For once, I will be a little more like my noble friend. Had we had a more appropriate approach to scrutiny of other Bills then we would not be sitting an extra week. If Members of the Labour party wish to know how much they have cost the House, I am happy to tell them.

Lord Ryder of Wensum: My Lords, further to the comments made by my noble friend Lord Tebbit, will the noble Baroness undertake to use her best endeavours to ensure that her colleagues in the other place change or reform the introduction of the automatic guillotine for every piece of legislation that comes to your Lordships' House? That places an extra burden on your Lordships' House and clearly also on the Government Chief Whip. In the interests of democracy, the changes brought in by the Blair Government at the turn of the century are undemocratic and exceedingly harmful to British democratic traditions.

Baroness Anelay of St Johns: My Lords, my noble friend says what I hear from all sides of the House. There is a real anxiety, not just from those who have been Members of another place but also from those who have seen what happens there, that proper scrutiny is curtailed by a Government having control of the knife, as others opposite did in a Labour Government, or a guillotine. That is not the best way to run business. It is not the way that we choose to run business here. We came close to having to seek assistance from the House earlier this year. The House took a decision of which we can be proud that we want to move ahead without having guillotines in the House. As I said at the beginning, the corollary to that is that the House has to be self-regulating in the way that it carries through business. I feel, as I am sure does every Member of the House here, that that is the right way

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to go ahead; to have proper scrutiny but within a timeframe that is reasonable to deliver government business.

Lord Low of Dalston: My Lords, all noble Lords will know the difficulties that are caused every time that one has to absent oneself from this place to attend to other business. There is such a continuous current of affairs going on in the House that every time one absents oneself as a matter of necessity one is apt to miss something important that one would have wished to participate in. When this happens in the middle of a term it is obviously one's own responsibility, but when time is taken out of a recess in the way that has just been announced, the Chief Whip should be in no doubt as to the great difficulty that it causes.

As far as one is able, one arranges one's other business to take place in the Recess. I arranged a major international conference for which I am responsible in the week before we were scheduled to return on 10 October. There is no way that I can cancel this conference. I shall have to miss the business in that week. I do not know at this stage how far the business will be business in which I wanted to take a major interest. It causes great difficulty when one is forced to miss business in the House because of other arrangements that one has made in the reasonable expectation that the dates will be free from House business. I do not know what soundings the Chief Whip took but she did not take soundings from me. I want her to be in no doubt as to the difficulty that these changes of arrangement can cause.

Baroness Anelay of St Johns: My Lords, I am perfectly in sympathy with the noble Lord Low. He is a hardworking Member of this House and certainly makes every best effort to be here for business. This is not like the stories that appeared in the press overnight-I do not know where they came from, as I certainly did not give any information to the press, and I state that very clearly for those who are tweeting this; I hope they will carry the rebuttal. This is not a matter of Peers being fed up-I shall not use the word that they used on the websites-with having to come back a week early because they were going to miss holidays or going skiing. That is the allegation being made.

Peers take their work here very seriously, and I understand what the noble Lord, Lord Low, said. That is why I was making every best effort to avoid doing this. It is why I sought to come to agreements with the Opposition to avoid coming back a week early, but the Opposition found it impossible to agree to put other business in Grand Committee, which would have meant that we did not have to take another week. In fact, on one Bill that was offered to us in February to go into Grand Committee, before Whitsun the Opposition said that they had to change their mind. I do not blame them for that-I appreciate that political imperatives from the Leader of the Opposition can change things-but that is now public and not a matter for the usual channels. Certainly, every best effort was made by the Government to avoid this step but, regrettably, it is necessary to come back early October.

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Baroness Falkner of Margravine: Of course, we appreciate the difficulties caused by this backlog building up-and the noble Baroness has been very clear as to where the responsibility for that lies-but I wonder whether, for the benefit of those Peers who have other pressing engagements and who will find it very difficult to come back in that first week of October, she would consider consulting and timetabling business that does not involve critical legislation. Perhaps it could involve reducing the backlog of other business that does not require the attendance of all noble Lords in the manner that we attend regularly when we scrutinise legislation.

Baroness Anelay of St Johns: My Lords, I assure my noble friend that we will consult the Opposition in the usual way to schedule business that is to the greatest convenience to the House but that, of course, takes into account the availability of the opposition Front Bench. We will make every best effort to achieve an amicable resolution.

Lord Grocott: All Oppositions always accuse all Governments of introducing too many Bills, and too many bad Bills, so let us take that as read and as common ground between the Government and the Opposition. What is fundamentally different about the present situation in at least two respects is, first, that the Government have legislated to provide for a five-year Parliament. They did so, as anyone can see if they care to read the Committee and Report proceedings, to enable them to plan their programme over a five-year predictable period. Therefore, they can know exactly how many Bills they need to introduce in each of the five years.

The second thing that has changed as a result of a decision by this Government, despite strong opposition, is that this will be a two-year Session. I would think that is unique; it certainly has not happened for 40 years, and I doubt very much that it has happened since the Second World War, but perhaps the noble Baroness can tell us whether the period is any longer than that. In other words, were this a normal one-year Session, we would only just have had the Queen's Speech; it would have been in May, and we would be starting the new Session now that would complete next April or May. Those are unique advantages that the Government have had.

I make no criticism of the noble Baroness, as she has a phenomenally difficult job-I know that very well indeed-so I offer her some very simple solutions to this problem. The Government know that they have five years, so why does not the Leader of the House and the noble Baroness, the Government Chief Whip, go to one of their friends in the Cabinet and do what she knows has to be done to explain the situation to one of the Secretaries of State who has a Bill about to be brought to this or to the other place-a Bill that will no doubt solve, as they all profess to, many of the problems facing mankind. She might suggest that it would not really be a disaster if that Bill, instead of being introduced in November or December this year, were introduced in May next year. That would not be a huge delay. The world will wait, and it would give her space in her programme. Alternatively, she can ask

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this House to carry over one or two Bills if the programme is in the kind of condition that she has described. I am sure the House would agree.

I suggest one very simple way in which the noble Baroness could save us quite a lot of time. We are about to embark on a two-day debate on the abolition of the House of Lords. I advise her that my judgment of public opinion is that should she announce that the Government have decided not to proceed with this in the immediate future, the nation would remain calm.

Baroness Anelay of St Johns: My Lords, the advice of the noble Lord, Lord Grocott, is always something that I listen to even if I do not agree with it. He always delivers it in a very urbane manner. As a government Chief Whip, he was always one to be highly respected and indeed it was he who helped the House by starting to give notice of government business way in advance. On the other side, when we got into a position when the noble Lord, Lord Bassam, wanted to come back a week early, we then made sure that we curtailed business so that we did not have to. We assisted the then Government.

The noble Lord, Lord Grocott, refers to unique circumstances. At the beginning of this Session the Government planned their business on the expectation of two things: first, that this House would carry out its normal procedure of scrutiny and would not take the 17 days in Committee that the Opposition decided were necessary on one Bill; and, secondly, that this House would accept the normal split of Bills between the Chamber and the Grand Committee in the usual way, which simply has not happened. That is why we have to return at the beginning of October. I am afraid that the House is going to have to observe the results of those two matters. We have tried for over five weeks now to reach an agreement with the Opposition. I have said three times that they have failed to come to that agreement and therefore we are in this position, which is regrettable for all of us.

I know that this debate has now gone on for some time and that the Benches behind me were emptying. I ought to say in defence of my noble friends, since I have noticed some comments opposite about this, sotto voce, that they are interested in business but it is, at this very minute, the memorial service for Lord Pilkington across the road. That is where they are.

Welfare Reform Bill

First Reading

12.02 pm

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

Sports Grounds Safety Authority Bill

Third Reading

12.03 pm

Bill passed.

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Police Reform and Social Responsibility Bill

Committee (6th Day)

12.03 pm

Amendment 240M

Moved by Baroness Coussins

240M: After Clause 119, insert the following new Clause-

"Purchase of alcohol on behalf of children

(1) In section 149(7)(b) of the Licensing Act 2003, for "level 5 on the standard scale" substitute "£10,000".

(2) The amendment made by this section applies in relation to offences that are committed on or after the commencement of this section."

Baroness Coussins: My Lords, this amendment, supported by my noble friend Lady Finlay of Llandaff, would insert a new clause in the section of the Bill that deals with selling alcohol to children. I first place on record my gratitude to the Minister for meeting me to discuss my concerns and for writing to me in detail about them. Nevertheless, I hope still that I might persuade her that my amendment merits further consideration and that she might agree to come back with something on Report.

I should declare various interests. I am a former chief executive of the Portman Group and a former member of the Alcohol Education and Research Council. I currently work as a paid adviser on corporate responsibility to two drinks companies whose names are listed in the register. I emphasise that I provide them with non-parliamentary advice, and I have had no discussion about the Bill with either company.

The Bill already proposes to double the maximum fine for persistently selling alcohol directly to children from £10,000 to £20,000. My amendment applies the same principle to the offence of purchasing alcohol on behalf of children, an offence that is often overlooked but which is regarded by many local police forces and local authorities as the more serious in terms of its prevalence. The offence of purchasing alcohol on behalf of children is commonly known as "proxy purchase" and occurs when someone over 18 agrees to go into licensed premises to buy alcohol in order to hand it over to a child aged under 18 waiting outside. The current maximum fine is £5,000, or level 5 on the standard scale. I suggest that if the Government believe that a strong message needs to be sent out on underage sales by doubling the fine for that offence by licensees, it follows logically and all the more strongly that a clear message needs also to be conveyed that proxy purchase by unscrupulous members of the public is completely socially unacceptable, immoral and illegal, and should attract rigorous enforcement with harsh penalties.

As I said in the debate at Second Reading, the incidence of prosecution and conviction for this offence of proxy purchase may be low but is nevertheless

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much higher than for illegal sales direct to children. In 2009, the last year for which figures are available, there were only four prosecutions for persistently selling to children, compared to 29 for proxy purchase. It would be a wasted opportunity not to take advantage of the Bill to ramp up the maximum penalty in the same way as is envisaged for direct underage sales.

I know that the Minister is rightly concerned that this legislation should be proportionate and consistent. I agree. I was a member of the Better Regulation Commission when it developed the five principles of better regulation, of which proportionality and consistency are two, and I believe that my amendment ticks exactly those boxes. If the Government think it is right, and therefore proportionate, on the basis of the prosecution figures I have just given, to double the maximum fine for persistent sales to children, then surely it would be consistent, right and proportionate to do the same for proxy purchase when we know that the level of harm and potential harm are at least as great.

We know quite a bit of detail about which children are gaining access to alcohol through proxy purchase. A survey in 2008 of 11 to 15 year-olds for the National Health Service Information Centre revealed that a total of 34 per cent of these young children, some of them not even yet teenagers, got their alcohol from other people buying it for them-in some cases people who were related to them-but 18 per cent of them got it from strangers.

When you look more closely at the figures, you begin to see just how worrying this behaviour is, how potentially vulnerable these children are and how important it is that we do everything we can to deter adults from agreeing to engage in proxy purchase. For example, although 18 per cent of children overall said that they had asked someone else other than a relative to buy alcohol for them, this figure rises to 41 per cent of 15 year-olds. Among the children who are drinking most heavily, defined as over 15 units a week, the figure rises to a staggering 88 per cent who used proxy purchase. When we compare the behaviour of boys and girls there are also significant differences, with 10 per cent of 13 year-old boys relying on proxy purchase but 14 per cent of girls. At age 15, that rises to 38 per cent of boys but 43 per cent of girls.

I am especially concerned about the potential danger in which these very young girls are placing themselves by approaching strangers in the street and asking them to buy alcohol. If an adult is irresponsible enough to agree to do that, what other dangers or risks might these vulnerable girls be exposing themselves to? I emphasise that this survey shows proxy purchasing to be a much more serious issue than under-18s buying alcohol for themselves. Only 6 per cent bought or attempted to buy alcohol from a shop, and only 4 per cent from a pub. The survey shows that the proportion of teenagers who manage to buy for themselves has declined significantly since 1996. I would not want to sweep that problem under the carpet, because it remains a fact that most of those few who do so are successful in achieving their purchase. The fact that some are not and that many more no longer even attempt to buy for themselves shows that the co-operative efforts of licensees, local authorities, the police and dedicated

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community groups promoting more rigorous use of proof of age at point of sale has been paying some dividends.

Even so, the Government have seen fit to include in the Bill the doubling of the maximum fine for licensees who still sell to the under-aged. Fair enough, but why ignore the more pressing issue of proxy purchase when it would be simple to include a similar amendment along the lines that I have suggested? Another piece of research was published only last month by the Drinkaware Trust, this time concentrating on where slightly older teenagers, aged 15 to 17, get their alcohol. Here, too, we see that those who are drinking in the most risky and potentially vulnerable situations-outdoors, rather than at home, at a party or a friend's house-are the ones who most rely on proxy purchase, with 19 per cent-almost one in five-saying that they asked a passer-by to get them their alcohol from a shop.

On the basis of all this evidence-and the Government say that they are committed to evidence-based policy-I urge the Minister to agree that my amendment would be a sensible and justified logical extension to this section of the Bill. As I said at Second Reading, the penalties for these offences are relatively meaningless unless the law is rigorously enforced. I hope that the Government will also be doing something to encourage the police, local authorities, trading standards and the licensed trade to do even more to stamp out illegal sales to children and proxy purchase. It might be a little more complicated than underage sales because it involves indentifying and pursuing members of the public rather than slapping an extra fine on licensees. But if this is the offence which is doing most harm to young drinkers, especially those who are most vulnerable because of their age, sex and consumption patterns, surely we must do whatever we can. I beg to move.

Baroness Finlay of Llandaff: My Lords, I have added my name to this amendment in support of my noble friend Lady Coussins. I am grateful to the Minister for all her interest and concern over alcohol as a problem. I know that she has expressed a view that this is not the direction in which the Government wish to go, but I hope that she may be persuaded to think again. When we pass legislation such as this, we need to send a clear social message to the rest of society.

There is some evidence that if you teach children to drink responsibly and socially at home they will be less likely to abuse alcohol. Sadly, that is now tremendously outweighed by the data of children being initiated into binge-drinking by adults proxy purchasing for them. Some of the statistics have already been alluded to, but there are many more. An interesting study from the Portman Group itself showed that one-third of adults have been asked to buy alcohol on behalf of someone under 18 and one-third of those have admitted to buying it. A quarter did not realise that it was an offence; 30 per cent did so because they felt intimidated by the young person; 30 per cent thought that it would not do any harm; and 70 per cent did not realise that they could be prosecuted for doing so. That demonstrates an enormous ignorance both of the criminality involved and of the harm that they are doing to children. It is also a terrible indictment of young people that their

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behaviour was so intimidating that they pushed someone into buying alcohol for them. As has already been said, the number of prosecutions is horribly light.

What about the impact on these young people in the long term? About 7,600 school-age children are admitted to hospital annually with alcohol-related conditions. These are not just minor conditions; some are admitted in coma with alcohol toxicity, liver failure and vomiting which may be so severe that they become severely dehydrated and need intravenous rehydration. We know that a car is more likely to be involved in an accident when the passengers have had too much to drink-even if the driver is not drunk-as their irresponsible behaviour may result in the driver not being able to concentrate.

These young people also suffer from chronic problems. They have a higher incidence of depression and mental health problems in later life, weight loss and chronic liver damage. It is clear from a study in the British Medical Journal that men who drink more than seven units a week at the age of 16 are one and a half times more likely than light drinkers to binge drink in their 30s and 40s. By not sending out a clear message to society, we are complicit in encouraging youngsters into a binge-drinking habit. We are saying, "It is okay, we will turn a blind eye to it", but the size of the problem means that it cannot be looked at with Nelson's eye. I commend the amendment to the Government and hope that they will take it very seriously.

12.15 pm

Lord Condon: My Lords, I support the amendment for the reasons set out so eloquently by the two noble Baronesses who have spoken to it. I realise that it is not a natural fit with the Bill and that it moves it into territory for which it may not have been originally designed. However, it provides the Government with an opportunity to reinforce the condemnation of the proxy purchasing of alcohol by adults for children. At one end of the scale this proxy purchasing can be due to chance and the stupidity of an adult responding to a request from a child or young person to buy the alcohol, but often it is more sinister. Some adults hang around young people and proxy purchasing of alcohol can be the beginning of grooming children and young people to draw them into inappropriate sexual behaviour, drugs misuse or even into membership of gangs on estates. Proxy purchasing by adults is a way of enabling them to talk to the youngsters and draw them into inappropriate behaviour. It is largely the result of stupidity and indifference but can be more sinister. As I say, although the amendment is not a natural fit with the Bill it provides the Government and the Minister with an opportunity to reinforce the message that we condemn this behaviour on the part of adults. I hope that they will find a way to support the aim of the amendment.

Lord Stevenson of Balmacara: My Lords, we on this side of the Committee support the amendment in the name of the noble Baronesses, Lady Coussins and Lady Findlay. They have given us a very graphic set of reasons why it would fit well with the intentions of the Bill. We have also heard some very scary statistics. In essence, the amendment would close a loophole. The

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Government may, on reflection, agree that that is the case. We understand that proxy purchasing is now regarded by the off trade, the on trade and the trading standards groups as the biggest challenge facing alcohol sales. The amendment would also bring the fine into line with the current level imposed for persistently selling alcohol to children, which is why I think that it is a good way of closing the loophole.

However, we are advised that retailers are often frustrated with the lack of action being taken against those who deliberately buy alcohol to be consumed by those who are under age. Therefore, although we support the amendment and hope that the Government will consider it favourably, there needs to be a commitment to place greater emphasis on identifying these people and seeing through the legislative consequences of the amendment, which is that action must be taken. As we have heard from the previous speaker, that is an important aspect of what we are about. However, the amendment justifies itself in its own terms.

Lord De Mauley: My Lords, we are legislating in Clause 119 to double the maximum fine available to punish the persistent sale of alcohol to persons under 18 from £10,000 to £20,000. The amendment seeks to go further in doubling the maximum fines available for two other offences in the Licensing Act 2003, from their current level of £5,000 to £10,000. The offences relate to where a person buys or attempts to buy alcohol on behalf of a person under 18, or where a person buys or attempts to buy alcohol for consumption on licensed premises by a person under the age of 18.

At a first glance, we can see merit in the proposed new clause. My noble friend and I are absolutely with the noble Baroness in her strong feelings about the proxy purchase of alcohol for minors, and we take this very seriously. I hope that the noble Baroness will recall how we have responded to related amendments in earlier discussions in Committee. However, it is important to maintain consistency in the sentencing framework.

In addition to the two offences that I mentioned, a number of other offences currently exist for offences in the sale of alcohol to those under 18 or the consumption by those under 18 on licensed premises. They include knowingly allowing consumption of alcohol on licensed premises by an individual under 18. For all these other offences, the penalty is a maximum sentence of £5,000-level 5 on the standard scale in the sentencing framework.

In our view, however, the offence of persistently selling alcohol to children is distinct and distinguishable from the other offences in the Licensing Act and merits separate treatment in the Bill. It is far the more serious offence, not simply a one-off sale to or involving a person under the age of 18. This is reflected in the higher fine that the courts can impose for it. The offence of persistent sales to a person under 18 was created specifically to target irresponsible businesses rather than individual offenders. Indeed, there is an alternative to criminal prosecution for such premises-a punitive period of closure.

The fine for the offence of persistent sales, which stands at £10,000, was always intended to be set above the level 5 fine in the sentencing framework.

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The fine was high to reflect the seriousness of the offence and to reflect the intention of targeting irresponsible businesses.

In the Government's view, increasing the maximum fine for the offence of the proxy purchase of alcohol for children, but not for others where individual adults have been responsible for providing or attempting to provide alcohol to children, could blur the existing distinctions in fines under the sentencing framework between offences targeting individuals rather than premises. In summary, we believe that the existing penalty for the proxy purchase of alcohol-a fine not exceeding £5,000-is sufficiently punitive for an offence by an individual. Yes, it is a serious offence, but not one that should be singled out for the provision of a greater fine than those for similar offences in the Licensing Act 2003 relating to the provision of alcohol to minors.

For these reasons, and having thought about it carefully, we believe that the offence of persistent sales of alcohol to children is sufficiently separate and easy to distinguish from the range of other alcohol-related offences in the Licensing Act. We want to send a clear message to irresponsible businesses that the persistent sale of alcohol to children is totally unacceptable. This is why we want to double the fine. All that I have said, however, should not be taken to mean that we will not look at the other alcohol-related criminal offences and consider whether further changes should be made in cases such as those that noble Lords have raised. Indeed, the Government are committed to a full examination of sentencing policy across the board. I can also say that we will look at the points raised by noble Lords in the context of the alcohol strategy that will be published later this year. For the reasons that I have outlined, we ask that the amendment be withdrawn.

Baroness Coussins: My Lords, I am grateful for the support expressed by other noble Lords for the amendment. I cannot say that I accept the logic that proxy purchase is an offence of such a different order from persistent sales to children as the Government suggest. I stress that I am not seeking to make the maximum fine the same, but just to apply the same principle of doubling that fine as a signal that the harm and potential harm behind that offence is recognised.

I do not accept that my amendment would blur the distinction between the offences. However, I am encouraged by the Government's signal that the dangers of proxy purchase will be looked at again in the context of the revised strategy that we are expecting in the autumn and of a more widespread look at sentencing policy in general. Perhaps we can return to the issue, because it will continue to cause harm, and there is a higher incidence of proxy purchase than of persistent sales to children. The issue will not go away but, for the moment, I am content to withdraw my amendment.

Amendment 240M withdrawn.

Amendment 240N not moved.

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Clause 120: Early morning alcohol restriction orders

Amendment 240P not moved.

Amendment 240PA

Moved by Lord Clement-Jones

240PA: Clause 120, page 79, line 15, leave out "and club premises certificates"

Lord Clement-Jones: I shall speak to all the amendments in this group, other than Amendments 240V and 240X, and also touch briefly on clause stand part. I nevertheless support Amendments 240V and 240X, which seem extremely sensible.

All my amendments in the group are designed to mitigate Clause 120, which radically alters the impact of Sections 172A through to 172E of the Licensing Act introduced by the Crime and Security Act last year, in that they can now be imposed from midnight to 6 am instead of from 3 am to 6 am, and on the say-so of the licensing authority, not the full council as before.

First, I take Amendments 240PA and 240PB, which are designed to remove private members' clubs from the scope of the clause. The proposed amendments to the Licensing Act 2003 in the Bill-the late-night levy and the early morning alcohol restriction orders-are designed to tackle issues relating to licensed premises, largely on the high street, that sell alcohol for consumption on the premises to members of the public. In contrast, private members' clubs are not selling to members of the public but are membership-based. They also, by and large, are not positioned on the high street or close to centres of the night-time economy, because their original remit, which has not changed, was to serve and be at the centre of the community in which they were located. They not only provide a valuable service to their members but have responsibility for the conduct of their members in the community. They have a self-regulatory process, which enables censure by the committee of individual members' conduct.

On the basis that there is self-regulation and the recognition that private members' clubs do not contribute to the issues which have prompted the proposed provisions of the levy and restriction orders, the clubs should be exempt from the measures. Not only are they particularly onerous in the extra revenue that will be required to pay for the levy, which we will deal with later, the loss of facilities after midnight under the early morning restriction order provisions will further curtail the revenue stream which is critical for their survival. The membership of clubs is reducing and revenues are decreasing. DCMS statistics show that, as well as all the pubs that have closed, the net reduction in clubs operating with a club premises certificate has reduced by 300 per year from 2008 to 2010.

Younger members of the community in which the private members' club thrived now have a much wider choice of venues, which are on the high street, and have other interests which do not include the traditional club environment. Nevertheless, those clubs and their facilities continue to be important, and we should protect them against changes which will have a significantly detrimental effect on their survival.

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Moving on to Amendments 240Q to 240W, Amendment 240Q makes a modest proposal of a 1 am start time for EMROs, rather than midnight. Midnight is far too early in the circumstances and out of step with today's customer expectations. Frankly, putting the beginning of the EMRO at midnight could be a business-killer for many businesses. Amendment 240R removes the restriction on temporary event notices which an EMRO would impose.

12.30 pm

Amendment 240T provides for personal licence holders to be included in the definition of affected person. A number of pub companies and breweries hold the premises licences for the premises they own and rent or lease out as individual businesses. While all tenants and lessees will be personal licence holders, they will not necessarily be premise licence holders and would therefore be excluded from the local consultation process under the current provisions. This amendment ensures that they will have a voice in any local consultation on the introduction of an EMRO.

Amendment 240W would ensure that the imposition of early morning restriction orders does not apply to New Year's Eve and thus undermine the opportunity for celebration in those areas where they do exist.

Turning to Amendments 240RA and 240RB, there is no mechanism currently for a review to determine whether EMROs remain necessary or appropriate. If EMROs are to provide an opportunity to redress the problems that have arisen, such an opportunity will be lost if they are applied without limit. Without such a provision there will be no incentive for local authorities to undertake a review of an order or to determine whether it is still required. Businesses that suffer loss of income and value as a result of an EMRO, through, as it is admitted, no fault of their own, will be deprived of the opportunity to revisit the circumstances surrounding the placing of an order and will suffer permanent damage as a result.

Two years is a reasonable timeframe within which councils, police and the hospitality trade and others can work together to address the fundamental problems that have led to the imposition of an EMRO. EMROs will impose significant burdens on those businesses upon which they fall and it must be right for those businesses to be able to see an end to the restriction through the need to reapply after two years for a further EMRO which would have to be re-justified. As it stands, there is no incentive for a council to lift an EMRO once it is in place, given that the council will have to repeat the procedures contained under proposed new Sections 172A and 172B. This amendment ensures that the council cannot simply leave an EMRO in place without reconsideration of the need.

Moving on to proposed new Section 172C, trading hours that have been granted form part of the intrinsic value of a business and the permanent removal of later opening could damage the long-term value of a business. Were licences to be changed to reflect the removal of those hours, they could only be restored by a reapplication at the termination of the EMRO, when there would be no guarantee of the permissions previously granted. At the same time, conditions may have been placed on those businesses which reflect the later

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opening hours employed by them. A restriction of those hours would very likely change the nature of that business such that the conditions would no longer be necessary or appropriate. Given that those businesses could already have suffered a significant loss of business and shed employment as a result, a further burden of conditions that relate to the later opening could impose further costs on a business that might already be struggling. These amendments give effect to the suspension of such conditions.

I appreciate that such conditions will not always be readily identifiable as they might be more related to the nature of the business rather than specifically attached to the later hours. A nightclub that has had its hours restricted to midnight might need to reconstruct its business since the closing time makes it unattractive as a nightclub. In such cases the condition for door staff might be dispensed with or reduced without any detriment to the licensing objectives, while allowing the business to reduce part of its costs.

The need for the legislation to take account of the cost burdens imposed on the businesses that are affected, through no particular fault of their own necessarily, reflects the potentially unfair and untargeted nature of the proposed measures. I am not going to steal the thunder of the noble Viscount, Lord Astor, on clause stand part, but the number of amendments I have tabled regarding this particular clause demonstrates the very difficult nature of not only the current amendments but also the original legislation contained in proposed new Section 172A onwards.

The ministerial forwarded and the Government's response to the consultation on the Bill recognise and acknowledge that the majority of premises are well run businesses. The Minister has stated that the measures to be introduced have been designed to be used flexibly by licensing authorities to avoid penalising the majority of premises that sell alcohol responsibly. Unfortunately, the early morning restriction orders do exactly that, in so far as businesses that have applied for and been granted hours beyond midnight, until 1 am or 2 am, for example, will be penalised, through no fault of their own, if such orders are imposed, despite the fact that those businesses have not been the cause of any trouble leading to the consideration of the EMRO. They will be simply swept up in a requirement to cease trading at midnight.

It is not clear that under this current clause, and indeed under the original legislation introduced last year, there will be satisfactory exemptions from EMROs. It is important that exemptions recognise best practice and social responsibility initiatives rather than being based solely on premises type. This would ensure that well run businesses that would not qualify for an exemption according to premises type are not unduly penalised by the provisions. Rather than introducing such a blanket measure, which itself risks large numbers of customers coming out on to the streets at the same time, just like the bad old days, would it not be more practical to tackle the premises that are the source of any problems rather than penalising responsible premises?

In terms of the flaws in the clause and in the original legislation, I very much hope that the Minister will agree to reconsider and come back with something far more satisfactory on Report.

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Viscount Astor: My Lords, I added my name to the amendments moved by my noble friend Lord Clement-Jones and also to the clause stand part. I do not intend to go through the basket of amendments that the noble Lord has moved but will confine my remarks to clause stand part and to one amendment in particular, Amendment 240Q, which relates to proposed new Section 172A(3)(a) in Clause 120(3), where it says "begin no earlier than midnight".

This amendment and this clause are so important because it seems to me that the Government are attempting to change the policy of late-night bars and how they operate. They are in effect saying, "We are going to make it very easy for anybody to close everything at midnight". For operators who have a 3 am licence, it is an incredibly important part of their business, for a number of reasons. In fact, that is often the bit of the business that makes the whole operation profitable. In my experience there has been no great push from the police to bring everything forward to midnight. Indeed, as the noble Lord, Lord Clement-Jones, said, in many areas the police would prefer it to be 3 am because people start leaving from midnight onwards and there is a gradual trickle of people going home, as opposed to the ugly rush there would be at midnight, leading to all kinds of problems of disorder. At 3 am most people have gone, with a few stragglers remaining. Equally, there does not seem to be any evidence that local authorities have been pushing to bring everything back to midnight.

I ask my noble friend the Minister to explain whether this really is a change of government policy by the back door, because that is what it looks like to the industry-if so, the Government should be honest and open and say what it is-or an attempt merely to give more powers to close down operators who are seen to be operating either out of their licence hours or breaking their licence conditions. There is no evidence so far in the industry that local authorities have any problems with operators who should be closed down. It is quite easy for local authorities to close down an operator, although there is concern about the legal costs of doing so. But most operators regard their licence as so important to their business that the last thing they want to do is jeopardise it. We need some explanation from my noble friend of what really is meant by Clause 120, as well as a satisfactory reply to deal with the concerns felt by many operators in the industry-and indeed not forgetting the poor customers.

Lord Brooke of Alverthorpe: My Lords, if the analysis of the noble Viscount, Lord Astor, regarding a change in government policy is correct, I welcome it. It is what the public want and, although some in the business sector will be unhappy about it, I think that overall this set of amendments would undermine the Government's attempt to respond to the clamour which has increasingly grown up among the public at large and has been reflected in some of the work done in the consultation. Therefore, I hope that the Government will not backtrack and that they will dig in firmly and hold to their course on this. The public will certainly support them in that.

Baroness Hamwee: My Lords, I agree with my noble friend-to the extent of New Year's Eve, at any rate. I have Amendment 240V in this group, to which

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the noble Lord, Lord Stevenson, has added his name. It would provide for permitted exemption categories and exempted days, and is part of a continued conversation about how far local variances should be reflected and the extent to which they should be centrally prescribed. Noble Lords will not be surprised that I always find myself at the local end of the spectrum.

This matter was brought to us by the Local Government Association. It seems that licensing authorities should be able to determine the categories of premises to be exempted from EMROs in their local area. This would not be novel, even in the context of the Bill, as it would mirror the late-night levy exemptions that licensing authorities can decide locally. There seems to be no logic for having different systems, particularly as I understand from the LGA that the Home Office has proposed to use the same definitions for categories of possible exempted premises for EMROs as for the late-night levy. The broader point, as I said, is local determination.

Lord Brooke of Sutton Mandeville: My Lords, perhaps I may make a very brief gloss on the speech of my namesake, the noble Lord, Lord Brooke of Alverthorpe. Reflecting back to the debates on the Licensing Bill in 2003, I think it would be fair to say-and I hope that those who were in the Chamber at that time would agree-that the arguments against the then Bill were led very much by those who had a lot of London experience. People who have a lot of London experience endeavour to mobilise opinion through the civic trust across the country, but it took quite a long time for that communication to take place during the passage of the Bill. It would be fair to say that those away from London were disagreeably surprised by some of the consequences of the Bill when they arrived in practice. I cannot sense totally from the speeches of my noble friends Lord Clement-Jones and Lord Astor how far they are centring on London experience in their observations but I think it is necessary to realise that we are dealing with a national issue.

Lord Stevenson of Balmacara: My Lords, I confess at the start that I have a bit of sympathy with my noble friend Lord Brooke of Alverthorpe and his feeling that midnight is a good time to draw a curtain across many outside activities. I certainly always try to be in bed at 10 pm, although perhaps that is a baby-boomer problem. I like to sit in bed with a cup of cocoa looking at "News at Ten", reflecting on the events of the day and preparing well for the events in this House and other places where one has to play one's part.

However, on reflection, I think that we are hearing too much of a puritan strand here. The amendments raise a number of questions on which we need to think hard about what we should be saying to the country in terms of how we reflect on the relationship between the nanny state and those who have to live here. If there is a change of policy, I think it is probably wrongly focused, and the amendments expose that. It is clear that one has to deal with bad operators-a point made by those who have spoken before-but there is a danger here that, due to the way in which the Bill is currently phrased, it will catch everyone, and that will be bad.

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Surely a blanket EMRO running from midnight is not going to be effective. It will severely damage those businesses unfairly caught by the legislation and the consequences could be severe for the night-time economy. I am particularly concerned about small live music venues that operate with a licence past midnight. Capturing them in an EMRO would do enormous harm and could damage the UK's rich cultural diversity, of which we are so proud. At this time, many small venues are struggling to remain economically viable, and for venues that might get caught in such a blanket provision, this extension comes at a very bad time.

12.45 pm

An EMRO applied indiscriminately to all businesses in a given area, as opposed to being imposed on individual premises known to contribute to alcohol-related disorders, would surely unfairly discriminate against responsible pubs and clubs, which is why we are arguing for exemptions. I particularly welcome the amendment concerning New Year's Eve, and not just because of my Scottish background.

Perhaps I may give an example that might highlight the problems. It is an imagined live music venue-a small jazz club. A licensing authority has issued an early-morning restriction order to cover the boundaries of the whole city centre. Around the corner from a few known trouble spots is a small jazz café, whose clientele is characterised by, let us say, a more mature music lover. It is a small venue operating on a very tight margin but is well loved by its regulars, and it is a place where jazz musicians enjoy performing and jazz fans enjoy congregating. The club is busiest between midnight and 2 am. However, let us say that also within the city centre is a hotel with a casino. As a result of an EMRO, the jazz club will be forced to stop serving alcohol at midnight. It will therefore be compelled to reduce the number of musicians that it books and could gradually lose its clients to other venues exempted from the EMRO. If its revenue falls, it will be forced to close. Meanwhile, the hotel with a casino sees a rise in its bar takings well past midnight. Is that what we are trying to achieve? I think not.

Like the noble Viscount, Lord Astor, and the noble Lord, Lord Clement-Jones, I think that the provisions in the Bill are too broad in application, too aggressive in what they are trying to achieve and perhaps too puritan.

Baroness Browning: My Lords, I suspect from what I have heard in this debate that I am going to end up having "nanny" in front of my name. However, I shall be a benign, jazz-loving nanny, so perhaps that will be all right.

An early-morning restriction order is an uncommenced power that already exists under the Licensing Act 2003 and will allow licensing authorities to restrict sales of alcohol in the whole or part of their area for any specified period between 3 am and 6 am. The fact that it is an uncommenced order made us look again at what needed to be improved in the previous legislation.

I was asked whether this was a change in policy on the part of the Government. These orders are a power that local authorities can use to restrict the supply of

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alcohol from licensed premises and clubs and at temporary events for a period of one or more nights beginning at or after midnight and ending at or before 6 am. We are committed to ensuring that licensing authorities and enforcement agencies are given the right tools to address alcohol-related problems, and we see this as a necessary tool to enable them to have more flexibility to deal with specific problems within their areas. At the same time, we need to balance this measure by promoting a healthy night-time economy to benefit businesses and the communities that they serve. I am confident that this proposal will provide the licensing authorities with an additional tool to deliver these aims. It will be up to them to decide whether they use it at all and how they use it.

I want to prevent any concerns that EMROs applied from midnight will unfairly penalise responsible premises that regularly trade between the hours of midnight and one o'clock. Those are not quite the same as the hours that the noble Lord mentioned in respect of his small jazz club but there are premises that go on beyond midnight. I acknowledge that the majority of retailers trade responsibly. However, I say to my noble friend Lord Astor that residents and residents groups have told us that the night-time economy generates a significant amount of alcohol-related anti-social behaviour and that these problems typically surface from midnight onwards. Indeed, not all serious crime is as a result of alcohol but 15 per cent of serious crime is committed after midnight.

There will be exemptions from EMROs set centrally by the Government in secondary legislation. These will ensure that retailers who operate responsibly are not unfairly penalised by the introduction of an EMRO, and we will of course be consulting on this. For that reason, I ask my noble friend not to press that particular amendment.

Viscount Astor: May I ask my noble friend a question before she leaves that subject because I know that she has a huge number of amendments to reply to? She spoke about crime committed after midnight, which is certainly true, but does she accept that the statistics show that the majority of crime is committed much later than that-at two, three or four o'clock in the morning? Therefore, to say that midnight is the cut-off which would help that is not correct or particularly fair to those operators. Does she also accept, which is very important, that if there is a tendency by the Government and local authorities to determine that midnight will be the new relevant hour, the effect will be to put half the operators out of business, which will create a much greater problem of social disruption and crime than there is at the moment?

Baroness Browning: I understand the point that my noble friend is making but I reiterate that this is a flexible option for local authorities. They will know where the hotspots are and whether things happen on a particular night of the week. They will have the flexibility to make sure that if they intend to exercise the option-it will be optional-to introduce an EMRO, they can scale the EMRO according to the problem that presents in their locality. It does not have to start

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at midnight or finish at 6 am but it is between those hours that an EMRO can apply. Just on that point, because I sense that noble Lords feel that this is a draconian measure, it strengthens the licensing authorities' powers in the sense that it gives them an additional tool in the box, but to get that balance right it has the flexibility that I hope will not create the concerns that businesses might feel, as represented today. My noble friend Lord Clement-Jones mentioned that the full council would not decide to make an EMRO. It is the case with the existing legislation, and will still be the case that the decision will be made by the full council. That has not changed at all in the updating of the legislation.

Moving on to Amendments 240PA to 240SA and the question of private clubs, I recognise the intention of noble Lords to remove private club premises certificates from the effect of an EMRO. There are, of course, clubs and clubs. I am sure that in any private club, of which noble Lords are members, propriety is observed in their proceedings, whatever the time of the day or night. I see noble Lords trying not to catch my eye on this, so they may know. It is important to note that antisocial behaviour and crime and disorder are not necessarily attributed to one premises but a cluster of premises in a concentrated area. There is no evidence to suggest that clubs do not contribute to these types of problems in the night-time economy. The Government do not want to penalise those businesses that operate responsibly and as such, if the licensing authority decides to impose an EMRO in the local area, businesses, including all clubs, will be able to make a relevant representation and provide evidence that they do not contribute to late-night crime and disorder and anti-social behaviour.

At this point, I should say to my noble friend Lord Astor, that on many occasions as a Member of Parliament I went out on Friday and Saturday nights with the police in small Devon market towns where they have perhaps one or two clubs and some late-night licences. Although I completely admire the work that the police and other agencies do at that time of night, it has not been my experience as a Member of Parliament that all anti-social behaviour, including things that are well in the frame of criminality occur after 2 am or 3 am. I was prompted to go out with the police on one occasion because between the hours of midnight and one in the morning, small shopkeepers regularly complained that their shop fronts were kicked in. I would say to my noble friend that within the scope of EMROs and the procedure to be followed in a licensing authority introducing an EMRO into the area, there will be plenty of scope for businesses to make their case, if they feel that they have one. None the less we feel that it is an important tool that licensing authorities will welcome.

The Lord Bishop of Chester: From these Benches, I support the Government and the way in which the legislation has been drafted, provided that it is enacted and applied with the flexibility that the Minister is describing. I do not do so in the spirit of being too puritanical, I hope. Living in the middle of the city of Chester and observing the streets in the early hours of

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the morning sometimes, and indeed relating to a whole new movement of what are called street pastors when churches seek to pick up some of the consequences of late-night activities in city centres, and contrasting the average experience in this country from what you find in many continental countries and the lack of civilised behaviour comparatively in this country, the Government are on the right lines provided that there is the flexibility to project the small jazz club, or whatever. Notwithstanding the anxieties expressed elsewhere, the Government can know that from these Benches, without a shred of puritanical spirit, we support them.

Baroness Browning: I am grateful to the right reverend Prelate. I am, of course, familiar with the work of street pastors who give up their time voluntarily, particularly to ensure that people who have consumed too much alcohol are able to get home safely. I commend their work. As a new Minister with a new responsibility for alcohol and drugs policy in my portfolio, it strikes me that I need to dig deeper than looking at the solutions to late-night drinking and look at the causes of why street pastors and others are now required to carry out this valuable work. It seems that we spend a lot of time talking about the consequences. I hope that in my time as a Minister at the Home Office I can try to dig deeper than that to see whether we can do something. It is a long-time ambition, I know. Nothing will happen overnight to change this culture, as I mentioned in a previous debate on the subject. Far too many people-not just teenagers kicking over the traces-believe that they have not had a good time or a good night out unless they get absolutely paralytic. We must try to address the cause as well as deal with the consequences for the rest of the community.

Lord Stevenson of Balmacara: We on this side welcome that statement. Throughout this debate we have been trying to engage with the question that the issues we are addressing in the Bill are but a superficial aspect, important though it may be, relative to the point that she has just made about how the cultural effects are coming forward. Does she intend to take this forward, not in her nanny mode of course-this is much more in her policy advocacy role? Will she take into account the fact that we need to look again and will return later in the Bill to the question of how drugs, alcohol, and tobacco all interact? It is not just an alcohol-only problem.

Baroness Browning: I agree with that statement. We need to look at the combination of drink and drugs. Very often the consequences are exacerbated as a result of the combination of those two substances. I am almost beginning to sound in my own head like a nanny. I do not want to sound like that; I was young in the 1960s so I do not want to sound too prissy about all of this. However it is a serious problem and I welcome the opportunity to address it.

Moving on to Amendment 240R and particularly TENs, which hopes to prevent a situation whereby a temporary event has been organised in advance and has to be cancelled because an EMRO has been imposed.

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I understand those concerns, but I point out that the process of making an EMRO will not take place overnight or without proper consultation. It is also important to remember that EMROs will apply only to a specific area for a set time between midnight and 6 am. Anyone planning a temporary event could therefore choose to hold it in a different part of the local authority area, or restrict their TEN to include the sale of alcohol up to but not after midnight. Therefore, there is flexibility.

1 pm

Amendment 240T concerns affected persons. I acknowledge that the amendment intends to include a personal licence holder as an affected person in respect of the early-morning restriction orders. I realise that this would enable personal licence holders to make relevant representations to the licensing authority on a proposed early-morning restriction order. However, there is already a provision for personal licence holders to make a relevant representation in relation to an early-morning restriction order. Relevant representations can be made by affected persons, responsible authorities and any other person: they would not be excluded. Personal licence holders will be entitled to make a relevant representation, as any other person will, and therefore the amendment is not necessary.

Amendments 240V, 240W and 240X concern exemptions, which several noble Lords mentioned. They are important. Although the exemption categories for EMROs will be set centrally by the Government, licensing authorities will still have discretion in other areas. For example, the licensing authority will be able to decide during which hours the EMRO will apply, whether it will apply on every day or on particular days, whether it will run for a limited or unlimited period and whether it will apply to all or part of the licensing authority area. There is a lot of flexibility there to deal with problems without the regulations being too heavy to apply.

The Government intend to exempt certain notable candidates from EMROs. My noble friends Lord Clement-Jones and Lady Hamwee in particular mentioned New Year's Eve. We are also very conscious that more royal celebrations are coming up next year that might fall into this category. It is also important to note that the Government recently held a series of EMRO working groups with key partners to discuss possible categories of exemption from EMROs. We are considering the feedback from these working groups and intend to hold a public consultation in the coming months on exemption categories and dates. I am very confident that there will be every opportunity to make sure that the nanny state does not intervene too much at times like New Year's Eve and on special national occasions.

Amendment 240RA applies to licensing authorities. They will be able to use their discretion to determine whether an EMRO will apply for a limited or an unlimited period. This will ensure that licensing authorities will be able to consider the situation in their local area. We are trying to give flexibility, but it is not just a question of flexibility: it is about targeting hotspots. If the EMRO is too broad and brings too many people into the catchment area who are not running businesses that are in any way contributing to the problems of the

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night-time economy, the local authority will be best placed to identify this. I am concerned that the proposal to put in the Bill a two-year time limit for an EMRO would take away that flexibility. It is important to note that licensing authorities will be able to vary or revoke an EMRO at any time that they feel it is appropriate. For example, if a licensing authority sets a time limit on an EMRO and the problem is then resolved, there is no reason why it cannot revisit it and decide to lift it. This means that, in revoking an EMRO, a licensing authority can respond very particularly when a situation in its area improves.

Amendment 240RB concerns the requirement that licensing authorities must specify a date when the EMRO will cease. Licensing authorities are required to state the commencement date of the EMRO on the order. I recognise the intention of noble Lords to add a requirement for licensing authorities to state the date on which the order will cease. Of course, the licensing authority can specify whether an EMRO will run for a limited or unlimited period and will already be able to specify the end date of an order if it runs for a limited period. However, if the authority decides to impose an EMRO for an unlimited period, clearly there would be no end date. However, it has that choice, as well as the power of revocation. The amendment would deprive licensing authorities of the flexibility and discretion that we seek to achieve in the Bill.

This has been a useful debate. There is quite a lot of common ground in all parts of the House on some of these measures, and I hope that noble Lords will feel able to withdraw the amendment.

Baroness Hamwee: My Lords, before that happens-and I dare say that it will-perhaps I may ask about exemptions. The Minister talked about working parties: that is all to the good. However, I am not sure that she addressed Amendment 240V, which would allow local authorities to categorise their own exemptions-but I may have missed that.

Baroness Browning: My Lords, local authorities will be allowed to have their own exemptions, but that will be part of the consultation that is taking place.

Lord Clement-Jones: My Lords, I thank the Minister for that very thoughtful and useful response, which helpfully went through the different amendments and added quite a lot to our interpretation of what is before us. I am very grateful to my noble friend Lord Astor for his support on the amendments and on the clause stand part debate. I am also grateful to my noble friend Lady Hamwee for her support at least for the New Year's Eve exemption, and to the noble Lord, Lord Stevenson, for his support on the stand part debate.

We have quite a lot of common ground, which revolves around flexibility. What worries me somewhat is that the flexibility is all one way. I will come to the issue of the consultation process, which will be extremely important. I do not think that there are any puritans in the House. Certainly, I would not regard the right reverend Prelate as a puritan in this regard. Perhaps

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the noble Lord, Lord Brooke, might just qualify on this ground. I do not see where the clamour is coming from-

Lord Brooke of Sutton Mandeville: As there are two Lord Brookes, will the noble Lord make clear about whom he is speaking?

Lord Clement-Jones: My Lords, we have had a useful debate about exemptions and I would certainly exempt my noble friend Lord Brooke of Sutton Mandeville from that description.

I regard this as a very important debate because of the potential impact if these provisions are not applied flexibly. I took quite a lot of comfort from the fact that this provides a range of tools, timings and geography that will be very beneficial. I certainly would not accuse the Minister of being a nanny. However, there is something of a difference in philosophy. The powers of the local authority will be pretty wide. She said that she was not favourably disposed to an amendment-

Baroness Browning: I apologise for interrupting my noble friend and hope that he will forgive me: I wish to put something on the record. I was asked by my noble friend Lady Hamwee about whether EMRO exemptions would be decided locally and I am afraid that I gave her the wrong answer. It is levies that the local licensing authority will have an opportunity to issue locally: EMROs will be a centrally decided package. I apologise for that.

Lord Clement-Jones: My Lords, I worry that there will be no review mechanism for these EMROs unless the local authority decides that there should be. Of course, local businesses will be able to make representations both at the point that the Minister described when the EMRO is being considered, and no doubt during the course of the EMRO in terms of demonstrating that the original problem has gone away or been dealt with or whatever. However, what worries me is that there will be no mechanism that the business can rely on, at the point where the EMRO falls due for review and when the time is up, to ensure that a full and proper debate can take place.

The most important issue here is how that consultation is going to take place. I was very interested in the way in which the Minister described the process; for instance, the consultation on exemptions. I do not know whether it will be statutory guidance or whether an order will come before this House or, indeed, who would be consulted in that process. It would be extremely valuable to get from the Minister an indication, even at this point, about which cohort of people would be consulted because there are strong views about this. The real, deep worry that people have is about the potentially blanket nature of these EMROs.

Baroness Browning: It would be a full public consultation. The review mechanism is judicial review.

Lord Clement-Jones: My Lords, that is deeply reassuring to us lawyers, but I am afraid it is not very reassuring to the owners of businesses because they

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will simply have to place themselves in the hands of my colleagues and myself in challenging these orders on the grounds that no reasonable council would have imposed them. That is a very tall order.

Viscount Astor: Far be it from me to try to deprive my noble friend of business, but does he agree that one of the problems is that almost no operators can afford judicial review unless they are part of a large chain?

Lord Clement-Jones: Absolutely. That is only going to add to the burdens on business. Although I accept that the Minister has gone as far as her brief will allow her, I seriously ask her to give further consideration to this. I was delighted to hear what the noble Lord, Lord Stevenson, had to say about his enthusiasm for live music, but the reason why he was talking about it was the potential impact on small venues and live music in areas where local councils have decided that they do not like what is happening in other places-not necessarily in the small clubs but in the large boozers, so to speak. That is sweeping up everybody into one single pot with one remedy. Although I have heard quite a lot today from the Minister that was reassuring about the ability to deliver flexibility, I do not think we have heard quite enough yet. The least convincing response was on TENs. If you have a TEN, and an EMRO is opposed, you can have a bit of a consultation on it, but actually the remedy is to move your event in time or space. That seems pretty onerous and jolly unfair if you are a local community group and you have to shift yourself in that way after an EMRO has been imposed.

I look forward to further dialogue with the Minister and very much hope that we will continue that, even before Report, on certain areas of these reforms of the Licensing Act. In the mean time, I beg leave to withdraw the amendment.

Amendment 240PA withdrawn.

Amendments 240PB to 240RC not moved.

Amendment 240S had been withdrawn from the Marshalled List.

Amendments 240SA to 240X not moved.

Clause 120 agreed.

1.15 pm

Clause 121 : Suspension of licence or certificate for failing to pay annual fee

Amendment 240Y had been withdrawn from the Marshalled List.

Amendment 240Z

Moved by Baroness Hamwee

240Z: Clause 121, page 82, line 35, leave out from beginning to end of line 2 on page 83

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Baroness Hamwee: My Lords, this takes us to the clause on fees and non-payment. I shall speak also to Amendments 240XB, 240XC, 240XD, 240XE and 240XG. These amendments are anti central prescription and pro local discretion. In many places, the Bill seems not only very prescriptive but unnecessarily prescriptive. For instance, it mandates the issuing of a receipt in a specific format in a set timescale. Is that really necessary? The word "nanny" was used, and rightly denied, but at this point, it would be an appropriate accusation. Other fee-paying regimes work out how to deal with these peripheral matters. We have a lot of legislation. This alone is a big Bill, but did it need to contain all this? At the most, it could be a matter for guidance, although I do not think that that should be required either. The Government are seeking to reduce regulatory burdens. This seems to be adding to them.

I shall be very brief on the detail of the amendments. Amendment 240Z would take out the provision for written acknowledgement of receipt of the fee-I cannot believe that that will not be done because people paying money require receipts-and the time periods to which I referred. Amendments 240XC and 240XD increase the grace period. Again, is this prescription absolutely necessary? The grace period is 21 days in the Bill, but I have suggested eight weeks. It is fairly obvious that I oppose my noble friend's amendment in this group, Amendment 240XH. That follows from what I have just said. I support Amendment 241ZB, to which I think the noble Lord, Lord Stevenson, will speak. I am very glad that the Local Government Association spotted what, coming up to Wimbledon, I can perhaps describe as an unforced error in the legislation. I beg to move.

Lord Stevenson of Balmacara: My Lords, I welcome what the noble Baroness, Lady Hamwee, said and support her amendments. The provisions in the Bill are very detailed and our amendments, taken together, are an attempt to try to tidy up some of that and to reflect on the regulatory burden that is being imposed.

I shall speak to Amendment 241ZB, which has been mentioned. Someone spotted what appears to be a simple error: at present, it does not look as though the costs incurred by some parts of the licensing system can be recovered, particularly in two-tier areas. As is well known, when a licensing application is made, copies of the licence are sent to those parts of the council classified as responsible authorities under the Licensing Act. In unitary authorities, including London boroughs, metropolitan councils and Welsh councils, all those bodies exist within the same council, which is also the licensing authority. Therefore, the costs would be recoverable under Clause 122 as presently drafted. However, in two-tier areas, the licensing authority sits within the district council, whereas social services and trading standards sit at the county level. As a result, in two-tier areas, the costs incurred by social services and trading standards would not be recoverable should the clause remain unchanged. Our amendment is therefore imperative to ensure that all costs are recoverable, regardless of the local government structure in the area, thus fulfilling the commendable approach which has been taken in the Bill to allow full cost recovery through licence fees.

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Lord Clement-Jones: My Lords, I should like to speak to Amendments 240XF, 240XH and 241ZZA, while supporting Amendments 241 and 241Y. These amendments seek to remove the lines of the Bill which give councils the power to charge licensees for more than just cost recovery in the licensing system. Businesses in the sector are concerned about the cost implications of the amendment in the other place on fees. In already difficult economic times, licensees will be facing significantly increased costs, which will be particularly difficult to bear for small businesses.

The wording of the Bill is extremely vague, stating that businesses will not only be liable for costs associated with local authorities discharging the licensing function but also the general costs of the licensing authority and other associated authorities, such as the planning department. These amendments seek to delete the provision that would allow licensing authorities to reclaim not only the cost of carrying out activities relating to licensing but also any other general costs. This wording would effectively give local authorities power to charge licensees for a whole host of alternative activities even if they are not related to the cost of administering the licensing regime.

The legislation does not explain what safeguards will be in place for businesses. There has to be a transparent process where local authorities would need to demonstrate why their chosen fee level is appropriate. Businesses would have to have an opportunity to feed into this process and to appeal the decision if the local authority was looking to set fees at a level that was disproportionate. There should also be a national cap on the level at which fees can be set to avoid local authorities applying disproportionate charges.

While the measure would have a significant impact for all premises, there is the concern that it could disproportionately affect smaller businesses. It could be the case in certain areas of particularly high licensing fees that independent businesses find themselves priced out of the local market and therefore unable to compete with larger chains. That would be to the detriment of the consumer who would find that their choice is limited. With reference to the off-trade, a significant number of licensed premises are grocery retailers, so this decrease in competition locally would impact on far more than just the ability to buy alcohol. Any increase must consider the effect on smaller businesses.

Amendment 240XH is designed to ascertain the Government's intention on the introduction of a cap of the amount that local authorities can charge. Subsection (3) of the new clause to be inserted in the Licensing Act 2003 under Clause 122(2) provides,

Subsection (4) of the new clause allows the regulations to provide a constraint on the amount up to which local authorities can charge but this does not necessarily mean that such a limit must be set. Businesses have a real concern that some councils may charge excessive amounts based on their costs, which will be difficult and expensive to challenge. We know already that the level of enforcement activity varies around the country and such variation is not necessarily driven by need. Not all councils are driven by the Hampton principles

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of good enforcement and over-zealous enforcement can be expensive and unproductive. The wide range of fees collected by councils under the old public entertainment licence regime was one of the drivers of their being subsumed into the Licensing Act 2003. A repeat of the problems, discrepancies and costs to businesses should not be repeated. A national cap, such as that imposed in the Gambling Act 2005, is a not unreasonable request and should be specifically included in the Bill.

Amendment 241ZZA builds on previous amendments to ensure that safeguards are in place in the legislation to prevent businesses facing excessive and unfair licensing fees.

Viscount Astor: Amendment 241, to which my noble friend Lord Clement-Jones referred, is in my name and concerns fees. Subsection (7) of the new clause to be inserted in the Licensing Act under Clause 122(2) states:

"In determining the amount of the fee, the licensing authority must seek to secure that the income from fees of that kind will equate, as nearly as possible, to the aggregate".

Paragraph (a) of subsection (7) states that,

I do not see any problem with that clause, which seems enormously sensible and would collect most of the costs. However, paragraph (b) of subsection (7) refers to,

That seems to be a recipe for confusion because there will be endless arguments about, first, what is a reasonable share and, secondly, what are the licensing authority's general costs. I thought that when local government-there are many noble Lords here who are more expert than I am on it-determined fees and collected them, those fees related to the actual things that it was doing. The idea that this can cover general costs, as my noble friend says, would enable a local authority to say that general costs in many other areas-whether for collecting refuse or whatever-could somehow relate to this and then collect the fees. So there is a concern.

I hope that my noble friend can give me some comfort that this will not allow local authorities, which, as we know, are always short of money, to use this to collect fees, which would mean a greater burden on the industry than there should be. [Interruption.]

Lord Brooke of Sutton Mandeville: My rising is not normally greeted with that amount of drama and my observations will not in any way warrant that dramatic attention. As a footnote to what my noble friend Lord Astor said, it seems that a local authority in assessing its costs in terms of this process will have both fixed costs and marginal costs. Although I totally understand that he is arguing for marginal costs, there presumably has to be some way in which the fixed costs are recovered as well.

Lord Brooke of Alverthorpe: I do not think that the Minister needs to apologise to the House for the line that she is taking. If I could catch her attention, I would congratulate her on being very bold. Perhaps

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I will be accused of being a Puritan today. I will come back to the noble Lord, Lord Clement-Jones, in a moment and try to prove to him that I am not. In Committee, I was invited by the noble Lord, Lord De Mauley, to raise questions I had raised previously about the Government's philosophical approach to licensing and whether we are effecting a change of direction to what we have had during the past 15 years. I will not repeat them all. They are on the record and I do not suppose that at this time we have enough time to go into a philosophical discourse on it.

I hope that the Government are about a subtle change over time that will lead, one hopes, to a cultural change over time. It will not be easy, as the Minister rightly acknowledges. A good change that the Government have effected is that they are now prepared to allow local authorities at least to start recovering some of the costs that they have been incurring and have not been able to recover in recent years because of the failure on the part of government to allow them to update their recovery elements. There are some technical points and I support the amendments in the names of the noble Baroness, Lady Hamwee, and my noble friend Lord Stevenson.

As he might have anticipated, I am opposed to Amendments 240XF, 240XH and 241 in the name of the noble Lord, Lord Clement-Jones, which would move us back to the status quo and not go down the route which the Government are endeavouring to traverse. I can tell the noble Lord that I would be quite happy to support Amendment 241ZZA, which seeks greater openness and transparency in the way in which local authorities are working out and charging their fees. I would hope that, in drawing up a list and in giving guidance to local authorities, we might be prepared to give them the freedom to recover the costs that they might incur in trying to retrain some of their licensing authorities on how they should deal with the thorny issue that the Minister endeavoured to tackle in our previous session on the differences between the words "appropriate" and "necessary".

I have been in touch with the LGA and, as the noble Lord, Lord Clement-Jones, has said, it is unhappy about this-not for political reasons but primarily for technical reasons. There would be a problem for the panels in dealing with the change in language without being given appropriate training in order to be able to handle it, but it fears it could not meet the costs. So I hope that the Minister will give favourable consideration to adopting Amendment 241ZZA and perhaps add to the list the training costs incurred by local authorities in seeking to implement fully the changes the Government are endeavouring to introduce in the legislation relating to fees.

I try to be balanced in my approach. Overall, the direction is correct but perhaps some changes need to be made here and there. I am therefore happy to support the noble Lord, Lord Clement-Jones, in his Amendment 241ZZA.

1.30 pm

Lord De Mauley: My Lords, I start by thanking all noble Lords for their thoughtful and constructive comments in connection with these clauses and amendments.

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Clauses 121 and 122 address problems in the system of fees under the Licensing Act 2003. Local government has been calling for action on both these points ever since the Act was introduced. Clause 121 introduces the suspension of licences or club premises certificates for failure to pay the annual fee. Currently, an authority must pursue unpaid annual fees through the courts, and there is no other sanction for non-payment. The sanction of suspension will provide a considerable added incentive to licence holders to pay the fee on time. Clause 122 introduces locally set licensing fees. The purpose is to ensure that licensing fees properly recover the cost to licensing authorities of discharging their functions under the Act. Although this clause was introduced on Report in another place, it was not a decision taken in haste. We needed time to ensure that the clause achieved full cost recovery for licensing authorities in a way that is fair to fee payers, licensing authorities and council tax payers.

There are a number of amendments in this group, and I hope noble Lords will bear with me as I attempt to give each amendment the response it deserves. Amendments 240Z and 240XC would remove the requirement on local licensing authorities to provide a receipt. Amendment 240XA aims to reduce the burden of the requirement by requiring that the receipt must be provided only if it is requested. I recognise that these amendments aim to reduce what may look like excessive bureaucracy. At the outset, it is worth emphasising that the clause requires the provision of a receipt only in a case in which a licence or certificate has been suspended and is then reinstated when the fee is paid. We do not expect this to be a frequent occurrence, as we expect licence payers to be assiduous in avoiding suspension. It is not unreasonable for the licence holder to expect clarity as to whether the licence has been reinstated because carrying out licensable activities without a licence is a serious offence. The maximum penalty on summary conviction is six months' imprisonment, a fine of up to £20,000, or both. Amendment 240XA is a compromise solution whereby licensing authorities will be required to provide a receipt only on request. Having considered it, I believe that this amendment would actually increase the bureaucratic process in terms of the correspondence relating to whether or not a receipt is required, with, I suggest, only marginal benefit.

Amendments 240XB and 240XD would greatly extend the grace period that applies in cases of dispute or administrative error. The period of 21 days is not set in stone as a matter of principle. However, three weeks seems to us a reasonable length of time in which to resolve a dispute or administrative error. It would allow evidence to be provided that the fee has already been paid or that the supposed due date was not the anniversary of the licence. I cannot yet see a case for extending this period by five more weeks, and I would be concerned that it would considerably weaken the sanction of suspension.

Amendments 240XE and 240XG remove references in Clause 121 to the Secretary of State's powers to prescribe fees. I understand absolutely that the intention is to emphasise the Bill's contribution to the localism agenda. However, the references which the amendments seek to remove are cross-references to the existing

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powers to set fees centrally. They are a necessary part of the mechanism by which Clause 122 introduces a power for the Secretary of State to provide that fees are set locally. So the result of the amendments would actually be that the clause no longer provides for locally set fees.

Amendments 240XF and 241 would remove the reference to the licensing authority's general costs from the description of what fees must cover. I emphasise that there is no intention that locally set licensing fees will fund the general costs of local government in the everyday sense of the phrase, which means that they could raise money from fee payers for something unrelated, such as to help build a new swimming pool or, as my noble friend Lord Astor suggested, to collect refuse. That would mean that licensing fees had become a form of discretionary local taxation. This is certainly not permitted by Clause 122 through the insertion of Section 197B of the Licensing Act, specifically subsection (3), which defines general costs and limits them to costs referable to the discharge of functions under the 2003 Act.

Amendment 241ZA also seeks to reduce the costs that can be recovered by licensing authorities through locally set fees. In this case, it seeks to remove the costs incurred by the licensing authority under the Act, but in a capacity other than that of a licensing authority. The costs referred to are those of the responsible authorities that are part of the licensing authority. These costs were intended to be taken into account by the current centrally set fees. Not to permit these costs to be covered by locally set fees would be to impose a new burden on local government and would therefore be contrary to established government practice and the intention of the clause. Our intention in introducing locally set licensing fees is that they should cover the cost to licensing authorities of discharging their functions under the 2003 Act. The current fees, set centrally, were also intended to cover the general costs as they are defined in this clause, and the defined costs of a licensing authority acting as a responsible authority. To remove these costs would mean that fees did not achieve what they are supposed to do.

Amendments 240XH and 241ZZA seek to ensure that the power to set fees locally is constrained and subject to guidance. I can assure your Lordships that we do indeed intend to make locally set fees subject to constraints. Specifically, we intend to make each fee subject to a nationally set cap, and we will consult on the level of that cap. However, to impose a requirement for the imposition of unspecified constraints would be both excessive and, I suggest, ineffective. A future Secretary of State may, for example, have a legitimate reason to utilise the power to make different provision in respect of different authorities, or not to impose additional constraints on a particular authority. However, it must be remembered that such an authority would still be subject to the limitation that income from fees equates as nearly as possible to costs.

Amendment 241ZZA introduces a duty on the Secretary of State, when providing for locally set fees, to issue detailed guidance. Again, I can assure your Lordships that it is our intention, after consultation, to issue guidance covering all these points. However, I suggest that it is excessive to require all these specifically

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in the clause. Section 182 of the 2003 Act already requires the Secretary of State to issue guidance to licensing authorities on the discharge of their functions under the Act. It also enables her to make such revisions to the guidance as she considers appropriate. The addition of a new duty, that of setting fees, would therefore justify such a revision, and it is our intention to do so.

Amendment 241ZB seeks to ensure that the costs of social services and trading standards, in their roles as responsible authorities, can be taken into account within locally set fees even when they are located in an upper tier authority. Currently, the clause has the effect that these costs are recoverable only in a single tier authority, such as a unitary authority. I thank noble Lords for drawing attention to this. I know that many noble Lords will be concerned about the addition of any further costs that will be recovered by fees.

It should be noted that the amendment specifies that the costs that should be recovered are those of these two public bodies, but only in their roles as responsible authorities: for example, in considering applications and, in rare cases, applying for a review. This is expected to be a very marginal cost in the context of overall fee income. It does not incorporate the wider costs of these public bodies in dealing with licensed premises. We intend that locally set fees should cover costs that are not covered by the current centrally set fee levels. For example, the costs of the environmental health authority in respect of its wider statutory duties connected to licensed premises are not covered; only the marginal costs that arise from the 2003 Act are. Having said all that, I see sense in the intention of Amendment 241ZB and, if I may, I shall reflect on it further.

Amendment 241Y seeks to remove the provision in the Bill for regulations to be made providing that club premises certificate holders can make a free minor variation before a late-night levy is introduced in their area. It is consequential on a number of amendments that have the combined effect of removing members' clubs from the application of the late-night levy. I hope that we will be able to discuss it later, alongside those amendments. For the reasons that I have given, I therefore ask that noble Lords do not press their amendments today.

Lord Clement-Jones: My Lords, briefly, before my noble friend replies on her amendment, I welcome the Minister's useful clarification of the definition of general costs. I shall certainly reflect on that before the next stage. The technical references were extremely helpful. The Minister was also very helpful in talking about the guidance on how fees are calculated and will be dealt with by local authorities.

I welcome the support of the noble Lord, Lord Brooke, for my amendment. It was like the first swallow of summer or something of that sort. On my Amendment 241ZZA, the Minister said that guidance will be published, which is helpful. However, as far as one can see there is no appeal mechanism in the proposed new section that is already incorporated in the Bill. Is it possible for guidance to deal with how that sort of thing should be dealt with as well?

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Baroness Hamwee: My Lords, I am glad to hear that the Government will reflect on Amendment 241ZB. I am grateful to my noble friend for responding to a couple of amendments that I failed to explain. I have been a little distracted by a domestic crisis. One should not use a BlackBerry too much in the Chamber, but it has been jolly useful this morning.

If the receipt is intended as an acknowledgement that the suspension has ended, it seems rather a confusing mechanism. Simply providing that the authority must acknowledge that the suspension has ended would be a great deal clearer.

I shall say just a word about the general costs. There is a reference to a cap. I am puzzled by how a cap can be consistent when the fees must reflect actual costs. Perhaps we can pursue that outside the Chamber.

I shall also put one thought into the Government's mind. The references to general costs seem very wide. I am not surprised that they have attracted amendments. They are justifiable if they are a proper proportion of overheads. I wonder whether some wording such as "directly or indirectly related to the particular application" might be more reassuring and appropriate. Although some of us are approaching this from different points of view, we might be able to share some thoughts before the next stage. I beg leave to withdraw Amendment 240Z.

Amendment 240Z withdrawn.

Amendments 240XA to 240XD not moved.

Clause 121 agreed.

Clause 122 : Power for licensing authorities to set fees

Amendments 240XE to 241ZB not moved.

Clause 122 agreed.

House resumed. Committee to begin again not before 2.46 pm.

EUC Report: Economic Governance

Copy of the Report Vol 1
Copy of the Report Vol 2

Question for Short Debate

1.46 pm

Asked By Lord Harrison

Lord Harrison: The crisis in the euro area has rarely been out of the news over the past year. Therefore, my committee decided to launch an inquiry into EU economic governance, especially after EU member states banded together to provide financial assistance to Greece in early 2009. Since then the crisis has continued to spread. Indeed, while we were taking evidence Ireland received financial support. Since the report was published, yet another euro area country-Portugal-has asked for and received a loan package.

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In the wake of these difficulties, the European Union has pushed ahead with proposals to reform its economic governance. The proposals are likely to be agreed at ECOFIN next week, so I thank the Government for providing an opportunity for this timely debate.

The euro area crisis followed the worldwide banking crisis in 2008. The interconnection between sovereign debt and the banking sectors was one of principal elements that contributed to the current crisis. However, it was not the cause of the current problems in the euro area; it was merely the trigger. Our report details two more fundamental reasons for the euro area crisis. First, there is an endemic flaw in the architecture of the monetary union: while monetary policy is centralised, fiscal policy remains fragmented among member states and is inadequately co-ordinated. Secondly, the past decade has seen a build-up of macroeconomic competitiveness imbalances among euro area member states. Within monetary union, states can no longer devalue their currencies to regain temporary competitiveness or adjust their interest rates to take account of variations between different economies.

These problems have been exacerbated by a failure of the markets, and member states themselves, to understand how the monetary union worked. The markets treated the euro area as a single entity, and did not distinguish carefully or sufficiently between the financial health of individual member states. This has meant that for most of the past decade the interest rate on Greece's sovereign debt has not been much higher than the interest rate on German sovereign debt. It should have been.

Our report focused on a series of six proposals published by the European Commission in autumn 2009, which were designed to address these problems. The proposals would monitor and co-ordinate more closely economic policies among the member states. In parallel with the Commission, the European Council established a task force to consider these issues under the chairmanship of the President of the Council, Herman Van Rompuy. With only minor differences, the task force's recommendations echoed the proposals put forward by the Commission.

The proposals focus on two distinct aspects of member states' economies. First, they aim to improve fiscal discipline among member states. The Commission has proposed amending the stability and growth pact to broaden its surveillance of member states' fiscal policies and, to ensure better compliance, it has suggested strengthening the sanctions regime. In addition, a proposed new directive would incorporate EU-level fiscal rules into domestic fiscal frameworks.

Secondly, the proposals would create new mechanisms to monitor and correct macroeconomic imbalances, such as divergences in current account positions, in competitiveness or in credit and house-price bubbles. In addition to these six proposals, we considered the Council's proposals for a permanent crisis resolution mechanism for euro area member states. The European Council agreed to establish such a mechanism in March this year, although the details of the mechanism are still to be confirmed.

Before I turn to the committee's view of the Commission's proposals, I should briefly say why the UK should be engaged. After all, we are not a member

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of the euro area and many of the proposals related to sanctions or fiscal rules will not be binding on the United Kingdom as a result of its opt-out from the monetary union. Our witnesses, however, were unanimous in stating that the health of the euro area directly impacts on the United Kingdom. In 2009, some 60 per cent of the United Kingdom's trade was with the European Union, the UK financial sector has substantial investment in euro area countries and the Government recognised the UK's substantial interest in Ireland by providing a bilateral loan above and beyond their contribution through the European financial stabilisation mechanism and the IMF.

The Commission's proposals may not all apply to the United Kingdom, but we have a vested interest-a vital interest-in ensuring that they are appropriate and will successfully contribute to the future economic and financial stability of the European Union. In addition to these hard, economic reasons, we believe that the United Kingdom should play an active role for another reason: solidarity. The EU is founded on solidarity and we believe that the United Kingdom should consider and support where possible the interests of other member states. I say to the Minister that it is surprising how often solidarity turns out to be far-sighted self-interest.

I now turn to the Commission's proposals. Taken as a whole, the committee concluded that they are a step in the right direction although they do not go so far as to enact the full fiscal union that some of our witnesses thought was necessary for the future stability of the euro area. Closer economic co-operation is necessary to foster greater economic stability in the European Union, particularly for those countries that have bound themselves together into a single monetary union. The proposals relating to fiscal discipline and co-operation should make it easier for euro area members to arrive at a collective fiscal stance that stands as an equal to a centralised monetary policy. Likewise, the proposals for a new system of macroeconomic surveillance and co-ordination will help to detect and address at an earlier stage excessive imbalances that threaten to destabilise the monetary union.

We also support the establishment of a permanent crisis resolution mechanism. In particular, we concluded that the inclusion of collective action clauses, setting out a formal mechanism for restructuring debt is essential. We felt that these should clearly establish the principle that the private sector should share the burden of any restructuring of sovereign debt. It is only right that, as they share in the rewards, they should share in the risk. The Government's response indicates that private sector involvement will be on a case-by-case basis. I would be interested to hear the Minister say under what circumstances the private sector might be exempted from the restructuring, and a reassurance that this would be the exception not the rule.

While the Government have made it clear that the United Kingdom will not take part in the new permanent crisis mechanism, we believe that there may be times when, as with Ireland, it is clearly in the UK's interest to participate in financial assistance to member states in difficulties. We welcome, therefore, that the current

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proposal will allow member states outside the euro area to contribute to rescue packages on an ad hoc basis if they wish to do so.

Our primary concern with these proposals is the likelihood that they will continue to be adhered to rigorously as time goes on. Previous efforts to enforce fiscal discipline among euro area member states have been regrettably ineffective. Under the proposals, the Council will retain responsibility for enforcing responsible fiscal behaviour through sanctions. We concluded that this was indeed appropriate given the sovereign nature of EU member states. Only time will tell, however, whether the collective will of member states is strong enough to ensure that the sanctions procedure is applied when required and when the crisis is over.

In his evidence, Mark Hoban MP stated that:

"The cost of the crisis in the eurozone is a reminder to us that we must make these processes work much more effectively".

The current crisis must indeed be remembered as a reason why member states should enforce the rules set out in these proposals in good times as well as bad. The ultimate responsibility for this lies with the political authorities of the EU, and the committee, I am sorry to say, remained sceptical that they will have the collective political will to enforce them effectively.

I thank all my fellow members of the committee and Professor Iain Begg-our specialist adviser-Antony Willot and Laura Bonacorsi-Macleod for their sterling work in helping the committee steer its way through a difficult report. I hope that the Minister will come back to this in time because we need constant updates on a very tricky situation that is of huge relevance to the United Kingdom.

Lord Wallace of Saltaire: My Lords, we have a rather tight timetable. I remind noble Lords that when the clock says four they are into the fifth minute and should sit down.

1.56 pm

Lord Hamilton of Epsom: My Lords, the whole question of the economic governance of the EU is, in anybody's business, a very big topic, and our committee had to restrict itself somewhat. But it was a slight pity that we failed completely to address the whole question of the competitiveness of the EU, which is a subject that perhaps we should turn to at some stage. When you talk to people in Europe and in Brussels they rather like to feel that there is no global market out there at all and that the massive competitive forces building up in China and India can be ignored. The EU is incredibly introverted in the way that it looks at things. As it is, our report did look at the proposals produced by the Commission.

The Commission produced the stability and growth pact originally, and we are now armed with proposals for the stability and growth pact part 2. Of course, part 1 was a total, abject failure. The conditions were broken by the French and the Germans very early in its life. Have we really any confidence in this one? I suspect, although I cannot speak for all my fellow members of the committee, that we felt the chances of

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this second go from the Commission producing new stability and growth pact proposals was unlikely to be any more successful than the last lot.

We need to think slightly outside the box. I echo the words of the chairman of the committee, the noble Lord, Lord Harrison, that we should be very concerned about what happens in the eurozone. It would be nice if we could stand back and watch the whole thing implode, but if it did, such is the exposure of British banks and of the whole financial sector in Europe that the effect would be devastating. We would move into a serious banking crisis. We have to look to the success of the eurozone. We cannot stand back and watch Greece collapse either. That would have the effect of the collapse of Lehman Brothers, where the collateral damage was very serious indeed. It would have the effect of spreading all across the eurozone. Contagion is a big problem.

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