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House of Lords

Tuesday, 18 March 2014.

2.30 pm

Prayers—read by the Lord Bishop of Gloucester.

Finance: Interest Rates


2.37 pm

Asked by Lord Barnett

To ask Her Majesty’s Government whom they consider ultimately responsible for United Kingdom interest rates.

Lord Newby (LD): My Lords, the UK’s monetary policy framework, set out in the Bank of England Act 1998, gives operational responsibility for monetary policy to the independent Monetary Policy Committee. Decisions on setting the bank rate and the remuneration rate on reserves are for the judgment of the MPC. It uses its macroeconomic tools to aim to meet the inflation target of 2% in the medium term.

Lord Barnett (Lab): My Lords, the noble Lord did not quite answer my Question, about where the ultimate power rests. The Bank of England Act, which he cited, is worth quoting. Section 19(2), on reserve powers—as he knows, the Treasury never gives away old powers without some reserves—says:

“An order under this section may include such consequential modifications of the provisions of this Part relating to the Monetary Policy Committee as the Treasury think fit”.

In those circumstances, surely the noble Lord must accept that the real power rests with the Chancellor, who has power as he thinks fit. Will he be so kind as to tell us, first, why he normally never answers the question properly and, secondly, whether he now accepts that the Chancellor has the ultimate power, as my Question asked?

Lord Newby: My Lords, interest rates are set by the Monetary Policy Committee. The noble Lord quoted rather selectively from the Act. If he had read Section 19(1) instead of Section 19(2), he would have found that the Treasury’s powers to which he referred are applicable only if they are,

“required in the public interest and by extreme economic circumstances”.

In the absence of “extreme economic circumstances”, the Treasury has no reserve powers.

Lord Vinson (Con): My Lords, whoever is in charge, is it not time we had a monetary policy system that paid due regard to the rate of exchange? A trading nation cannot ignore the rate at which it exchanges its goods. Is it not time our policy embraced the effect of interest rates on the rate of exchange as well as on inflation?

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Lord Newby: No, my Lords, I do not think it is. You cannot control both. One of the interesting things about the large depreciation in the pound is that it did not have the impact on the balance of payments that people expected. The rate of exchange is only one of many variables that determine how competitive and successful exports are. All the evidence is that it is not quite as important a determinant as used to be thought.

Lord Peston (Lab): My Lords, as background to this Question, we should remember that when we were debating the 1998 Act the Minister went to great lengths to emphasise that the activities of the Monetary Policy Committee would be scrutinised not only by other place but also by this House. Certainly, when I was chairman of the Economic Affairs Committee—a committee I invented, as the Minister is well aware—we used to see the Governor of the Bank of England regularly. All that is background to a very simple question: when was the last time that the Governor of the Bank of England went to the Economic Affairs Committee and was scrutinised by it?

Lord Newby: My Lords, I am afraid that I do not read the papers of the Economic Affairs Committee as assiduously as I should, and I cannot quite remember. My recollection from reading them from time to time is that the governor still goes, although not as frequently as when the noble Lord set up the committee. The committee was established specifically to review the workings of the Monetary Policy Committee; it was not an Economic Affairs Committee—I had the honour of sitting on it with the noble Lord. Although the governor does not come to the committee as frequently as he used to, he still does come—but I shall write to the noble Lord to tell him when the last time was.

Lord Razzall (LD): My Lords, does the Minister agree that the powers of the Monetary Policy Committee are even greater than are often thought? Does he further agree that the best example of this—if he were to read the minutes of the last meeting which have been published—is that the governor’s wish to include reference to the output gap in forward guidance was overruled by the Monetary Policy Committee, thereby indicating its power?

Lord Newby: My Lords, one slightly surprising thing about the way in which the MPC has worked is the independence of its members vis-à-vis the governor. When it was established, I think that there was a view that it would be a poodle of the governor, because a significant number of members are other employees of the Bank of England. That has not proved to be the case, and governors have, if not regularly, then on a number of occasions been overruled by the rest of the committee over the years.

Lord Davies of Oldham (Lab): My Lords, I have two questions, the second being short. First, the Government used to say that low interest rates were a sign of the success of their policies. Now that rates are beginning to edge up somewhat, they are saying that it is a further sign of the success of their policies. How

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does the Minister resolve this contradiction? Could he answer a second question: how many women are on the Monetary Policy Committee?

Lord Newby: On the latter question, I am sure that the noble Lord will join me in congratulating the woman who today has been the MPC’s latest appointment as deputy governor. On the first question, the success of the system was that it enabled the Monetary Policy Committee to “look through”—to use the technical phrase—a temporary peak in inflation, when it went up to 5% because of external factors, and keep interest rates low, which helped the recovery. I think that most people would agree that interest rates are at an unusually and historically low level and that, as the economy recovers, we would expect interest rates slowly to rise, although, as the governor said in the recent forward guidance, it is expected that any increase in interest rates will be very gradual and that the new equilibrium is unlikely to be as high as it was in the past.

North Korea


2.44 pm

Asked by Lord Alton of Liverpool

To ask Her Majesty’s Government what assessment they have made of the findings of the United Nations commission of inquiry into human rights in North Korea.

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con): My Lords, the commission of inquiry documented appalling reports of state-sanctioned human rights violations. While this is no surprise to those familiar with the DPRK, the full report, including the finding that there are reasonable grounds to establish that crimes against humanity have been committed, is a powerful indictment of the regime. The UK is working to ensure a strong UN Human Rights Council resolution that makes clear that there can be no impunity for human rights violations.

Lord Alton of Liverpool (CB): My Lords, I thank the Minister for that reply and for the strong statement made by Her Majesty’s Government yesterday in Geneva in response to the launch of the commission of inquiry report. What steps will now be taken, notwithstanding threats of the use of veto, to bring North Korea’s egregious and systematic violations of human rights to the UN Security Council and to seek a referral to the International Criminal Court or another appropriate tribunal? What other measures are we looking at to target those responsible for what the commission says are crimes against humanity without parallel—sui generis—anywhere in the world?

Baroness Warsi: My Lords, I had an opportunity to read the report in some detail and it documents the most appalling human rights record—some of it taken

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from witness testimony. Of course, the noble Lord was involved when the commission visited the United Kingdom to take some of that testimony and speak to parliamentarians. There will be a report at the end of this month, on 28 or 29 March, at the Human Rights Council. We are trying to ensure that the resolution is as strong as possible and a practical one that will have a real impact on the ground, therefore focusing on things like the renewal of the special rapporteur’s mandate and the creation of a testimony collection mechanism. UN Security Council referral is an option, but it must be clear that there is some prospect of success there. Of course, noble Lords will be aware of the challenges of referral to the ICC when North Korea is not a state party.

Lord Bach (Lab): My Lords, it is hard to conceive of a more terrible story than the one that the UN commission tells. I want to ask two practical questions: what is the force of sanctions against North Korea on goods made by forced labour, and what are Her Majesty’s Government doing to stop such goods coming into the United Kingdom?

Baroness Warsi: There is very little trade between the United Kingdom and North Korea in any event and the sanctions are predominantly focused on the situation in relation to the nuclear programme. There has been some recent concern in relation to what could loosely be described as “blood minerals”, given reports of the use of slave labour in mining. We are open to evidence of that. The noble Lord will be aware that this must be an agreed sanctions regime. We always keep the matter under review.

The Lord Bishop of Peterborough: My Lords, can the Minister confirm recent reports of the possible execution of 33 people for allegedly plotting to overthrow the regime by their association with the South Korean missionary, Kim Jung-wook? What efforts are being made to urge the North Korean authorities not to proceed with such executions and to respect freedom of religion?

Baroness Warsi: We are aware of these terrible reports. Of course, this relates to the suspicion that these individuals were involved with the creation of an underground church under the support of Kim Jung-wook, a South Korean who was arrested by the DPRK last year. As noble Lords are aware, freedom of religion and belief is a key priority for the Foreign and Commonwealth Office and we make those views clear to the North Koreans. I am sure that the right reverend Prelate will accept that we have only so many mechanisms with which to make our opinions known on this matter.

Baroness Falkner of Margravine (LD): My Lords, what conversations beyond the Human Rights Council have the Government had with the Government of China? We hear reports of China’s concerns about the ability of North Korea to destabilise the region entirely. It would be helpful if my noble friend told the House about bilateral conversations with China.

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Baroness Warsi: China is an important partner in these discussions. At the UK-China strategic dialogue in February, the Foreign Secretary raised the commission of inquiry report and issues including the forced repatriation of refugees with State Councillor Yang Jiechi. Of course, the Prime Minister in his meeting raised that issue as well. We have discussed the commission’s report with senior Chinese officials in Beijing.

Baroness Berridge (Con): My Lords, those who manage to flee North Korea of course mainly end up in the neighbouring countries of South Korea and China. Outside those countries, the UK, with its long history of providing refuge, has the largest concentration of refugees from North Korea. What engagement do Her Majesty's Government have with those refugees? Not only are they a source of information about the regime, but due to the education and so on that they receive here they are important contributors to change and many wish to return to North Korea, should the regime change.

Baroness Warsi: FCO officials regularly engage with refugees from North Korea. Indeed, those refugees played an important role, when the commission of inquiry was held in the United Kingdom, in providing first-hand testimony and evidence of human rights abuses. We also engage with refugees from North Korea who are settled in South Korea as part of the English for the Future programme. A number of language training sessions, internships and Chevening scholarships are provided, which are another helpful integration mechanism for North Koreans into South Korea.

Baroness Cox (CB): Did the noble Baroness notice in yesterday’s report references to the information blockade and news blackout which engulf North Korea? Given our obligations under Article 19 of the Universal Declaration of Human Rights to promote the free flow of news and information, will she or the Foreign Secretary host a round-table discussion with the BBC World Service, the All-Party Group on North Korea and others who wish to respond to the serious concerns expressed in the report regarding the information blockade?

Baroness Warsi: This question comes up on a number of occasions in relation to North Korea; indeed, it was a question that I answered only last week in relation to the BBC’s role and editorial independence in commissioning services. Article 19 has to be interpreted in the light of Article 2 of the International Covenant on Civil and Political Rights. The covenant gives the UK an obligation in relation to UK nationals, so our obligation is to our nationals, not to North Korean nationals. The BBC question is under review, but it is a question for the BBC.

Lord Spicer (Con): My Lords, does my noble friend accept that there is a strong read across between what the West does over the Ukraine and the leverage it carries in North Korea?

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Baroness Warsi: Noble Lords will have a five-hour debate on the issue of Ukraine starting very shortly, so we will be exploring that issue in some detail. It comes back to the international community’s responsibility and its clear stance on the issue of human rights.

Aviation: Fume Events


2.52 pm

Asked by The Countess of Mar

To ask Her Majesty’s Government how air crew and passengers in commercial airlines without filtration or detection systems are warned, protected and informed in the event of a fume incident from contaminated bleed air.

The Countess of Mar (CB): My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interest as patron of the GCAQE.

The Minister of State, Department for Transport (Baroness Kramer) (LD): My Lords, operators are required to include detailed instructions to crew on procedures to be followed when contamination of cabin air is present or suspected. Any passenger who became unwell would be given first aid by the crew and, if necessary, referred for further medical assessment and care after landing. There is no national or international legislation requiring air crew or passengers to be informed of fume events.

The Countess of Mar: My Lords, it is almost 60 years since the danger of fumes seeping into cabin air was first reported. With the notable exception of the Boeing 787, virtually all passenger jets still have flawed and potentially dangerous bleed air systems, a design that leaks pyrolised oil into the air supply. Does the Minister agree that most shocking of all is the fact that airlines fail to inform passengers that they have been exposed, which—and I have chosen my words very carefully—must be a breach of passengers’ rights and casts a dark reflection on the aviation industry? What solutions does the Minister have?

Baroness Kramer: My Lords, on most commercial aircraft the cabin air supply is provided by engine bleed air, which is drawn from the compressor stage of the engine. Contamination, known as a fume event, may occur when oil or hydraulic fluid is released into the bleed air—for example, as a result of an oil seal failure—resulting in the formation of a fleeting odour or mist in the aircraft cabin. Most fume events last less than a minute or two.

Many investigations have been carried out by the department, of which the noble Countess will be well aware. The committee on toxicity concluded that there was no evidence for pollutants occurring in cabin at levels exceeding available health and safety standards and guidelines and, as most levels observed were comparable to those typically experienced in domestic

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settings, there is appropriately no requirement for passengers to be informed. There are many steps to be taken if there is an assessment that there is any endangerment to any passengers or to the flight.

Lord Tyler (LD): My Lords, is my noble friend aware of the work undertaken by the all-party parliamentary organophosphate group, of which the noble Countess and I were both members? Can she in particular tell us whether there is continuous monitoring of incidents and potential risks, following the Cranfield study some years ago? It is my impression that there is no continuing monitoring—I do not think that there has been any recent report on this—of incidence in a global sense, even if there is one for UK operators.

Baroness Kramer: My Lords, as your Lordships will be aware, for six years the department carried out significant research into these issues, and quite appropriately so. That research led to four studies, the main one of which was the Cranfield study published in May 2011. All four reports were sent to the committee on toxicity, which also peer-reviewed other international data and came to the conclusion that I just discussed: that cabin air at levels exceeding available health and safety standards and guidelines was not evident in any of those studies. Going forward, I think it therefore becomes an international issue and it is a matter for the European Aviation Safety Agency or the International Civil Aviation Organisation to consider whether more research should be done. At this point, I am not aware of any concerns that they have for ongoing monitoring or further research.

Lord Wigley (PC): But does the Minister not accept that there is genuine concern about the lack of information about concentrations of pollutants during major fume events? These have not been adequately collated or analysed and, given the Government’s responsibility in these matters, can she instigate some research that could try to get to the bottom of this?

Baroness Kramer: My Lords, the studies which were carried out over a period of nearly six years—the investigations by the department, including the four independent research studies that I described a few moments ago—and the work of the committee on toxicity have led the department to conclude that there is no further direction to pursue in terms of research on this issue for UK aviation. If there is to be further research, it will be at international levels. As I say, there is no indication of a sufficient concern or basis for research being recognised by those international organisations.

Lord Elton (Con): Could my noble friend complete her answer to my noble friend Lord Tyler by telling us whether there is a requirement on airlines to report incidences when there has been a fume event exceeding the parameters which she has already described?

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Baroness Kramer: Incidents on aircraft flights, including any fume event which in the opinion of the airline, any member thereof or any passenger,

“endangers or which, if not corrected, would endanger an aircraft, its occupants or any other person”,

are required to be reported under the mandatory occurrence reporting scheme, known as MORS, which is run by the UK’s independent aviation regulator, the CAA. An investigation carried out by the operator would then typically follow. If the CAA was not satisfied with that investigation, it could ask for further work to be undertaken. It is a CAA responsibility to monitor for trends and unrecognised safety threats.

Lord Davies of Oldham (Lab): My Lords, I have some sympathy with the Minister as I have on occasions from that Dispatch Box also produced responses that did not satisfy the noble Countess, Lady Mar, nor many other Members of the House. I therefore ask the Minister this question. If she is able to give the degree of reassurance that she has given about the monitoring that we carry out, but if the issue is a great deal wider than that—she made no reference at all to how other countries attack this or to the European position in general—will the Government at least push the authorities into examining this matter further? The consequences of getting it wrong would be quite disastrous.

Baroness Kramer: My Lords, the noble Lord will be very well aware that the CAA, which is responsible for monitoring and safety, keeps not just this issue but many others under review. I feel confident that if the CAA had sufficient concern that it felt that there needed to be urgent research, it would inform the department of that and would be pushing on those issues. As I said, there has been very substantial research in this country and in other countries which has led to firm conclusions. Given that, it is hard to see what direction additional research could possibly go in.

Mental Health: Funding


3 pm

Asked by Baroness Brinton

To ask Her Majesty’s Government what steps they are taking to protect the provision of mental health beds and funding, in the light of their commitment to parity of esteem between physical and mental health.

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, we are clear that acute beds must always be available for people who need them. Providers have a responsibility to listen to patients and to offer care in the community as well as in hospitals, when appropriate. The mandate to NHS England sets its specific objectives, including on mental health. It is for NHS England and clinical commissioning groups locally to determine how best to allocate funding in commissioning services to meet local need.

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Baroness Brinton (LD): I thank my noble friend for that Answer. Before these cuts come in April the reality is that it is already very difficult to find an urgent mental health bed. Ten days ago in Kent, no emergency level 4 mental health beds were available. Given that the cuts in mental health services are 20% more than for hospital trusts and given David Nicholson’s statement last week that NHS England will not review them, what specifically can the Government do to remedy the situation?

Earl Howe: My Lords, my honourable friend Norman Lamb has expressed his concern that the cuts to the mental health tariff have taken the form that they have. I can tell my noble friend that the department will be scrutinising the commissioning plans of clinical commissioning groups and the draft budgets of mental health trusts to make sure that they reflect the central importance, as set out in the Government’s mandate to the NHS, of making measurable progress towards parity of esteem. We know that there are regional differences in access and we are setting up a new national mental health intelligence network to provide comprehensive and up-to-date information about mental health and well-being.

Lord Patel of Bradford (Lab):My Lords, can the Minister confirm that, despite having very clear guidance and legislation in place, we still have an unacceptable number of 16 and 17 year-olds being admitted to psychiatric wards and that, worryingly, many children under the age of 16 are being placed on adult wards many miles from their families and homes? I am sure the Minister will agree that this is totally unacceptable and extremely harmful to the children concerned and their families. What plans do the Government have to put a complete stop to this harmful practice and provide the resources that are clearly needed for appropriate places for young children in mental health services? Does he have an approximation of the number of children we are talking about?

Earl Howe: I do not have a figure to quote to the noble Lord, but our aim, as he says, must be to support children and young people with mental health problems wherever possible in the community in which they live. Admission to hospital should be a last resort for a young person. We have done a great deal to improve mental health services for young people in the community. We also recognise the difficulties for young people and their families if they are treated in hospitals some way from home, but the decision about where they are treated is bound to depend on what is available and what facilities are needed to meet their particular clinical needs.

Baroness Corston (Lab): My Lords, given that there should be parity of esteem not only between mental and physical health services but between people in the community and those in prison, and given that up to 70% of women in our prisons are mentally ill, what provision is now given under the Health and Social Care Act regime for the commissioning of those services for these women?

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Earl Howe: My Lords, the principle of parity of esteem applies in every clinical setting, including prisons. We have made it very clear in our document Closing the Gap that these matters are not only important in the wider community but also in prison. We will be monitoring the situation very closely, not least in women’s prisons.

Lord Elystan-Morgan (CB): My Lords, does the Minister accept that successive Governments have shown a remarkable lack of kindness in giving information concerning the apportionment of funds between physical and mental health matters? Does he accept that what is asked for is not a detailed breakdown under various headings, but a broad, ballpark figure that will allow the public to judge whether or not mental health has been less than equitably dealt with in this situation? The failure to give this information, which clearly must be shared by all departmental Ministers, will only add to that suspicion.

Earl Howe: My Lords, the Government are committed to the principle of transparency in these areas. I can tell the noble Lord that last month NHS England published expenditure data from its programme budgeting data set for 2012-13 which show that expenditure on mental health in that year was £11.28 billion.

Lord Hunt of Kings Heath (Lab): My Lords, the noble Earl cannot escape his own responsibility and that of his ministerial colleagues. He sets the mandate for NHS England. NHS England has specified that for the next financial year mental health trusts are to be discriminated against as compared to acute trusts. Ministers cannot evade their responsibilities. Why do they not intervene?

Earl Howe: My Lords, we have intervened. I have already referred to the action my honourable friend Norman Lamb has taken, making it very clear that not only would there be ministerial oversight of clinical commissioning group plans but that we would ensure that every decision made by a clinical commissioning group with regard to its mental health patients could be justified.

Lord Cotter (LD): My Lords, I welcome the Minister’s repetition of the parity issue but, in practice, many young people nowadays—one in four, perhaps, as has come out in recent surveys—are suffering from mental health problems. I have evidence, which I would be glad to give to the Minister for his intelligence network, that there is no parity when it comes to young people. For example, one GP said that it is a “DIY service”. There are major concerns about mental health across all ages, particularly young people. I would welcome a response from the Minister now but I would also like to give him some evidence to be looked into with regard to specific areas in this country.

Earl Howe: I share my noble friend’s concern about this and would be happy to receive the information to which he refers.

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Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014

Diffuse Mesothelioma Payment Scheme Regulations 2014

Motions to Approve

3.07 pm

Moved by Lord Freud

That the draft regulations laid before the House on 3 and 12 February be approved.

Relevant documents: 21st and 22nd Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 March.

Motions agreed.

Defence Reform Bill

Order of Consideration Motion

3.07 pm

Moved by Baroness Anelay of St Johns

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4, Schedule 1, Clauses 5 to 7, Schedule 2, Clauses 8 to 10, Schedule 3, Clauses 11 to 13, Schedule 4, Clauses 14 to 38, Schedule 5, Clauses 39 to 45, Schedule 6, Clause 46, Schedule 7, Clauses 47 to 51.

Motion agreed.

Deep Sea Mining Bill

Deep Sea Mining Bill

Third Reading

3.08 pm

Bill passed.

Gambling (Licensing and Advertising) Bill

Gambling (Licensing and Advertising) Bill

Third Reading

3.09 pm

Amendment 1

Moved by Lord Gardiner of Kimble

1: After Clause 1, insert the following new Clause—

“Payment of Horserace Betting Levy by holders of remote operating licences

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(1) The Secretary of State may by regulations made by statutory instrument make provision so as to secure that the bookmakers by whom the levy under section 27 of the Betting, Gaming and Lotteries Act 1963 is payable include bookmakers who are required to hold a remote operating licence (within the meaning given by the Gambling Act 2005).

(2) Regulations under subsection (1) may—

(a) confer a discretion on any person;

(b) include provision amending, repealing, revoking or otherwise modifying any provision made by or under an enactment;

(c) make different provision for different purposes;

(d) include incidental, consequential, transitory, transitional or saving provision.

(3) No regulations may be made under subsection (1) unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.

(4) Nothing in this section is to be read as preventing—

(a) the bringing into force of Part 2 of the Horserace Betting and Olympic Lottery Act 2004, or

(b) the exercise of any power under that Part.”

Lord Gardiner of Kimble (Con): My Lords, I thank your Lordships for the helpful and constructive discussions that have taken place on the horserace betting levy. As I said on Report, these discussions have been very valuable and have helped to take us to where we stand today.

This amendment provides the Secretary of State with reserve powers to make regulations to secure extension of the liability to pay the horserace betting levy under Section 27 of the Betting, Gaming and Lotteries Act 1963 to all bookmakers who are required to hold a remote operating licence from the Gambling Commission under the Gambling Act 2005. That will include bookmakers who are based outside Great Britain and who will be required to obtain a remote gambling licence as a result of the Bill.

This amendment is fully in keeping with the context and purpose of this remote gambling Bill, which is about levelling the playing field for bookmakers engaging with British punters. Subsections (1) and (2) of the proposed new clause are broadly drafted to ensure that the Secretary of State has power to make all the changes that may be necessary to secure extension of the levy to offshore bookmakers. This clause ensures, for example, that the Secretary of State has the power to make changes to the levy scheme that may be necessary to secure extension compatible with the UK’s obligations under EU law.

Subsection (3) is essentially the same as the amendment tabled by my noble friend Lord Astor on Report. Secondary legislation brought forward under this amendment will be subject to the affirmative procedure in both Houses of Parliament. Subsection (4) expressly makes clear that existing provisions to abolish the levy once a suitable replacement has been found are unaffected by this amendment. The Government believe that any statutory levy should be fairly applied, but that does not mean that we are abandoning the search for a replacement that more appropriately reflects the modern betting and racing industries. The Government now intend to move forward quickly on two concurrent projects.

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First, on extending the levy, we will seek to complete the necessary work in time for negotiations on the 55th levy scheme in 2015 to take place on the basis of extension. I must add that this timing will, of course, be subject to the outcomes of discussions with the European Commission that will begin this Friday. The timing will also be subject to the outcome of a consultation on the mechanics of implementing levy extension which will begin shortly. At the same time, we will develop wider levy reform options and consult on those later this year. This amendment is about collecting the horserace betting levy in a fair and consistent way. It is a reasonable amendment which I believe commands widespread support. I beg to move.

Viscount Astor (Con): My Lords, I thank my noble friend for bringing forth this amendment instead of the amendment that I moved on Report; this amendment in lieu is better drafted than mine. I am very grateful for the support that both he and the Minister for Sport in another place, Helen Grant, have given on this issue. The amendment has been widely welcomed by the racing industry and by the majority of the betting industry. Of course, the hard work of looking forward to a replacement of the levy now begins, which will require a great deal of movement from all those parties involved in racing to come to a conclusion that will work and is a commercial agreement. In the mean time, I thank my noble friend for bringing forward this amendment.

Lord Lipsey (Lab): My Lords, I am aware that the House is keen to get on to the important debate that we will hold on the Ukraine this afternoon, so I will not detain it longer than I have to.

I start from a position that may not be widely shared in this House—I do not know—which is that I am against the levy, and I have been for years. When I started off being against it I was in a minority of one, but now a large number of people have come round to the view that it is not desirable. The two Members of the House of Commons who have most knowledge of these matters—Mr Philip Davies and Mr Laurence Robertson, who chairs the Racing and Bloodstock Industries All-Party Group—are both anti-levy. On their good days the Government are anti-levy, since they have explained that they want a replacement of the levy. I hope that it will be a commercial replacement that comes along.

I am against the levy for two reasons. First, for my sins I am by training an economist and, like all economists, I believe that subsidies, ceteris paribus, are a bad thing. They distort markets and interfere with the generally beneficial results in industry of free competition. The statutory levy on horseracing betting is an exemplar of this; it means that racing spends much of its time lobbying for more levy instead of putting its house in order and modernising the sport. It leads to bigger prizes, which in turn lead to inflated prices for the best bloodstock and then demands for even bigger prizes, so that that investment in inflated-priced bloodstock pays a dividend. Supernormal profits are made by some participants in the sport, including successful trainers, but I observe that little of that money trickles down to stablehands.

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3.15 pm

Secondly, I am against the levy because, as a socialist— I am sorry if that word shocks some noble Lords—I believe in greater equality. What we have in the levy is a statutory mechanism that redistributes wealth from the less well-off to the rich. The poor punter in the betting shop subsidises the agreeable hobby of the rich racehorse owner. You never meet a poor racehorse owner, unless you meet one who has shown an excessive belief that his pride and joy is going to win the next race and has invested accordingly with the bookmakers.

So I should like to live in a levy-free world. If in such a world the betting industry and horseracing industry decide that it is in both their interests to have a commercial arrangement whereby betting provides money for horseracing, that is all well and good. I have no desire to interfere in a free contract. Indeed, quite a lot of that has been happening, because media rights for covering horseracing have been rising quite rapidly. You do not read that when you hear racing’s pleas for more and more levy. Even more significantly, we have been edging towards a commercial agreement on support from one industry to another, and the last levy settlement reflected that. As Parliament clamps down, as I am sure that it will, on FOBTs in betting shops, so the betting industry will need horseracing more and will have to pay to get the product that it requires. There is nothing wrong with any of that.

As an anti-levy person who is glad to see the signs that it may be fading away, where does that leave me on the amendment? I can see the Minister’s argument that, if you are going to have a levy, it is better to have a fair one than to have an unfair one—so I am not necessarily opposed to doing what the amendment would do to make the levy payable on bets with overseas operators. It is the level playing field argument, and who can be against a level playing field? However, a fairer levy is not at all the same thing as a larger levy. It is a quite different question to how much should be raised in a levy. So I would ask the Minister when he replies for the reassurance that behind this amendment does not lie any intention to signal that the Government believe that the yield of the levy should be in future higher than it is now. That is a position on which the Government should be strictly and studiously neutral.

Will the amendment bring a levy-free world closer or less close? I note that William Hill, the bookmakers, made a comment in the Racing Post, to the effect that altering the levy in this way might mean that the whole scheme was declared illegal as a state aid by the European Union. In reaching this conclusion, it analysed the recent decision of the Commission in the French case, allowing a scheme in some ways analogous to that which the Government propose here. It pointed out, first, that that decision is being appealed by the Remote Gambling Association and its members and, secondly, that an aid that might not be regarded as distorting competition in a market such as that of France, which is essentially non-competitive, might not be allowed in Britain, where the market is highly competitive. So it is a glimmer of hope. The Government might go down that path but, with any luck, the Commission might use it as an opportunity to get rid of the levy anyway.

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William Hill also points out—and I think that this is an even better point to rest on—that, although the Commission may allow the levy not to be state aid, that may depend on how it is spent. If it is spent in deprived areas, supporting racecourses that would otherwise close down, that is one thing, but if it is used just to stack up larger and larger prizes for owners, that is another. Therefore, we may get not only a fairer but a better levy as a result of the unplanned consequences of this amendment and any regulations under it. The Commission took precisely that view of the proceeds from the sale of the Tote. As noble Lords know, some money was retained from those proceeds for racing, but it had to be spent in certain ways, and not necessarily in the ways racing would have preferred.

However, none of these desirable consequences can be relied on, so I want to press the Minister on one absolutely central point. When he announced the bringing forward of this amendment, he argued that the Government were taking these powers without prejudice to their long-lasting, though slow-moving, efforts to find the holy grail—a levy replacement which did not involve government in fixing the flow of funds from one industry to another. I ask the Minister to give those assurances again today in the strongest possible terms and then to go off with his colleagues and betting and horseracing representatives to find a system which does not involve a state-enforced transfer from poor punters to fat-cat owners.

Lord Clement-Jones (LD): My Lords, having spoken at all stages of this Bill in favour of the amendment of my noble friend Lord Astor, I add my thanks to those he gave to the Minister. I certainly wish him and his colleagues well in their discussions with the European Commission. I very much hope that he will avoid the dire consequences predicted by the noble Lord, Lord Lipsey, or, indeed, those whom he cites.

I take this opportunity to thank the Minister, with one exception, for his courtesy and the care that he took over the Bill throughout its proceedings. He gave many assurances, which I am sure we will all follow up in due course. I only hope that his discussions with the casinos are proceeding apace and that that anomaly will be ironed out in due course. Given good will on all sides—I know that the Minister has that good will—I am sure that we will find a suitable solution. It may not be the optimum one but it will be a solution.

Lord Palmer (CB): My Lords, I, too, rise briefly to add my support to this amendment and to pay great tribute to the noble Viscount, Lord Astor, and, indeed, to his noble friend the Minister. I must declare an interest in having a son who trains horses and I have an interest in his yard at Newmarket. I congratulate the Government on taking this on board so very seriously.

Baroness Howe of Idlicote (CB): My Lords, I rise merely to register a sadness in that, in moving Amendment 1, the Minister is abandoning his long-standing opposition to any amendment to the Bill. I am concerned that the one amendment to which he has agreed provides

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regulation-making powers that will help the industry, but he has not introduced a balancing amendment to help with consumer protection and to help the vulnerable.

I was pleased that the noble Baroness, Lady Jolly, said at a meeting with Sky Bet and me that the Government were at least considering backing up their voluntary approach to FTB with regulations, and I am disappointed that the opportunity to insert them in the Bill has now been lost. I very much hope that the Government will put this right in the consumer protection Bill because consumer protection is also very important.

Lord Wade of Chorlton (Con): My Lords, other Members may remember a similar discussion in this House in the early 1990s when the Duke of Devonshire said in terms—I cannot remember exactly what he said—that in his view any well brought up young man should have a mistress, a yacht and a racehorse; and that, if he could not afford any one of them, he jolly well should not have them. I am inclined to agree with him.

Lord Collins of Highbury (Lab): My Lords, I am not sure how I can follow that remark but I shall try my best.

I should like to add my thanks to the Minister for taking on board the principles contained in the amendment tabled by the noble Viscount, Lord Astor, to which I added my name. There is, I think, true cross-party support for this amendment and this move. There may not necessarily be support for it on my own side but that is another matter.

However, this change will undoubtedly lead to a healthier sport, more investment, growth and jobs. Where I certainly share the opinions of my noble friend Lord Lipsey, is my belief that any such extension should lead to the extension of work that the levy supports on training, education and employment. I, too, welcome the Minister’s commitment that the two work streams of levy extension and wider levy reform will run concurrently. I do so because neither process can be used as an excuse to hold up the other—again I share the views of my noble friend. It is really good that the Bill team have given that commitment. I share the view that has been expressed that there is a need for a more modern and commercial framework for the levy. I know that that is supported not only by the racing industry but by everyone who works in it. That is where I should like to add my voice.

Action has long been required. I congratulate the Minister and the Bill team, who have done excellent work on the Bill, on not allowing the opportunity for primary legislation to pass without this action. However, I want to make one point, which reflects my noble friend’s point, too. The Minister should begin consultation on levy reform options as soon as possible, and on this side we would also like this to include the option for a horseracing right.

Baroness Trumpington (Con): My Lords, I am delighted that the Bill is finally going through. I have one question. Does the Minister agree that without the Maktoum family, we would have absolutely no media

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coverage of racing? I, for one, would very much regret that. We should somehow show our gratitude to those who make it possible for a much wider public to enjoy racing. I congratulate again those who have produced the Bill.

Lord Gardiner of Kimble: I thank your Lordships once again for the fascinating contributions to this short debate. We have gone into some interesting country already, and I particularly thank my noble friend Lord Astor, who has assisted so much in reaching a reasonable and fair result. I am mindful of what my noble friend Lord Clement-Jones said. I am sorry that I was unable to satisfy him on all points, but we have endeavoured at every turn in this honest adventure to get things as right as possible. I certainly know that the noble Lord, Lord Palmer, has a strong interest in racing. I am not sure what more could be said about my noble friend Lord Wade’s contribution, other than it was powerful.

I also wanted to say to the noble Baroness, Lady Howe, that we have had some very good discussions. I should like to reassure her and I will say so in the next group. Those discussions have been constructive, and the reason the Government feel that this provision is a natural extension to the Bill is that it is in a natural sequence of what is intended in the Bill as regards remote gambling.

My noble friend Lady Trumpington is a great champion of racing, and I endorse what she said because I do not see racing, or indeed life, as being about divisions of people. Whether one is a stable lad or a racehorse owner, we all enjoy the racing and we love the horses. That is what I see as the unity in the racing crowd and the people involved. I know many of them from all parts of the country and racing is a very important part of our economy.

3.30 pm

I also agree with what the noble Lord, Lord Collins of Highbury, said in support of racing: it is very important that the work of the levy is constructive. The noble Lord outlined some of the levy’s extra work, and I am pleased that the concurrent work on both the extension and the wider reform has been well received. It is something on which we very much want to make progress.

I want to refer to the two questions raised by the noble Lord, Lord Lipsey. I very much hope that my opening remarks provided some of the reassurance that he seeks. We are absolutely not abandoning our efforts to find a suitable alternative to the levy. I reiterate that we believe that any statutory levy should be fairly applied, but it does not mean that we are putting aside the work on the wider levy reform that is expected later this year. I am sure that many of your Lordships will wish to engage in the consultation on that. Obviously there have been pitfalls in the work that has gone on over the years but let us see how we do with this particular activity.

The noble Lord also made a point about future levy yields. I have looked at the amount of money received in the past from the levy and it seems to have gone up and down. First and foremost, this amendment is

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designed to provide a level playing field and a fairer levy, as the noble Lord acknowledged. However, the rates of an extended levy will be a matter for the independent statutory Horserace Betting Levy Board. I underline “independent”—we obviously have independent bodies to work with the betting and racing industries, as is currently the case. I very much hope that this will be a success.

Amendment 1 agreed.

Clause 5: Extent, commencement and short title

Amendment 2

Moved by Lord Browne of Belmont

2: Clause 5, page 3, line 33, at end insert—

“(5A) An order under subsection (5) relating to the commencement of section 2 may not be made until the Secretary of State has reported to Parliament on the outcome of any reviews into advertising of gambling in Britain that they have commissioned in the six months before the day on which this Act is passed.”

Lord Browne of Belmont (DUP): My Lords, I have always been very concerned that the Bill seeks to regulate online gambling providers based outside the United Kingdom through advertising. It proposes that providers across the world should be told that if they obtain a UK Gambling Commission licence, they will be able to advertise in the United Kingdom. I have argued that it is better to secure compliance through proper enforcement—the stick of financial transaction-blocking rather than the carrot of the offer of being able to advertise in the United Kingdom.

To date, I have contended for that primarily on the basis that, for reasons that I will not repeat now, the offer of advertising is not a robust enforcement mechanism, rather than on the basis of the impact of this approach on the scale of gambling advertising. My reason has been that I assumed that increased gambling advertising was something to which the coalition Government were deeply committed because of the nature of this Bill.

The Bill radically changes the law regarding advertising. At present, it is legal for providers based only in the European Economic Area and white-listed jurisdictions to advertise in the United Kingdom. The Gambling Bill, however, changes this radically, proposing that any provider based in any jurisdiction in the world should be able to advertise in the United Kingdom so long as they obtain a UK Gambling Commission licence. This means that we will move from a place where providers in just 31 jurisdictions outside the UK can advertise in the UK to a place where providers in any of the 196 or so jurisdictions in the world can advertise if they obtain a Gambling Commission licence. This widens the jurisdictional scope for advertising online gambling in the UK by more than sixfold. That is a radical change, a change which I thought was as a result of the fact that the coalition Government not only want better regulation, in the sense that they want more companies to get Gambling Commission licences, but also want, or at least are relaxed about getting, much more advertising for online gambling. I thought that they could not have allowed such a Bill to go to Parliament if that was not the case.

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Imagine my shock when on 2 March 2014, I read in the Sunday Times the Secretary of State for Culture, Media and Sport, state:

“I also think we need to look again at the regulation of gambling advertising across the UK. In particular, I ask myself if the seemingly constant gambling adverts on television are appropriate. Ofcom figures show a 600% increase in television gambling advertising between 2006 and 2012. This concerns me and I think many people feel uneasy about the high levels. For this reason I have asked the Advertising Standards Authority to review the codes for gambling advertising to see whether change is needed. The outcome of the review could see significant changes in the way gambling is advertised in Britain, ensuring children and the vulnerable are better protected”.

While I am pleased and delighted by that statement, I am at a loss to know how the Secretary of State can make this assertion on the one hand, yet on the other be taking through Parliament a Bill that widens the scope for online gambling providers to advertise in the United Kingdom from 31 jurisdictions to providers in every jurisdiction in the world, so long as they obtain a UK Gambling Commission licence. The Secretary of State is rightly concerned about a 600% increase in television gambling advertising between 2006 and 2012 but she should also be very concerned about the 600% increase in jurisdictions hosting online gambling providers that she says should be able to advertise in the UK if they get a Gambling Commission licence.

I know that at this point some may be tempted to say, “Don’t worry, all these providers will only get the opportunity to advertise because they also come under our regulation”. The implication is that regulated advertising is okay. However, the scale of advertising to which the Secretary of State referred, like the 600% increase in television advertising, is legal and regulated but that does not make it unproblematic. Britain’s primary problem is not the scale of illegal, unregulated advertising but rather, as the Secretary of State’s comments make plain, the scale of legal, regulated advertising which this Bill proposes further to increase.

Today, as the Secretary of State rightly pointed out, we have a problem about the scale of gambling advertising following the 2005 Act. Yet the truth is that we are about to sanction the 2014 Act, which will, if you are concerned about the scale of advertising, make matters much worse, dramatically widening the scope for regulated gambling advertising. It seems to me that the only logical response to the concerns expressed by the Secretary of State about the scale of regulated gambling advertising in the United Kingdom is to narrow the scope for such advertising, not dramatically widen it as this Bill does. In that context, rather than sanctioning Clause 2, arguably the more sensible thing to do would be to delete it. I have, however, opted for a much more modest approach of delaying its implementation.

My amendment states that an,

“order under subsection (5) relating to the commencement of section 2 may not be made until the Secretary of State has reported to Parliament on the outcome of any reviews into advertising of gambling in Britain that they have commissioned in the six months before the day on which this Act is passed”.

Given the significant contradiction—a kinder phraseology would be tension—in the Government’s position and the scale of public concern about what they are proposing, the very least that the Government should do is to

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delay commencing Section 2 until after the Government have reported to Parliament on the four initiatives that the Minister outlined in his response to Amendment 3 tabled by the noble Baroness, Lady Jones, on Report on 4 March.

In that context, I have two questions for the Minister. First, there seems to be some confusion about the timings of the reports to which the Minister and the Secretary of State committed themselves last week. Will the Minister clarify the timetable? I hope that he can tell us that all reports will be made to Parliament within six months. Secondly, and much more importantly, what assurances can he give Parliament about the future of advertising regulations, especially under the Bill? His response to this question is important.

If we are to be generous to the Government, the only way that they can introduce the Bill and for its advertising implications not to contradict the thrust of what the Secretary of State said about the scale of regulated gambling advertising on 2 March—especially the 600% increase in TV advertising—would be to do the following: first, significantly to tighten up regulation of the gambling advertising that is currently permitted before the Bill takes effect, such that the scale of advertising is significantly reduced; and, secondly, for the regulations governing the operators that will, courtesy of the Bill before us today, be allowed to advertise in the United Kingdom from abroad to be applied very tightly from day one.

If the current level of advertising is significantly reduced, there may be space for a small increase in advertising from online providers from abroad without that increasing the scale of gambling advertising. This strategy of significantly tightening current advertising and then allowing new advertising through the Bill only on a limited basis is the only possible way in which the Secretary of State’s expression of concern about the scale of gambling advertising—I note again the 600% increase in TV advertising—can possibly be reconciled with the Bill.

To that end, I very much hope that the Minister will provide the strongest possible assurance that the Government intend to embrace the amendment. In this regard, I note with great concern that Section 328 of the Gambling Act 2005 allows the Secretary of State to make regulations controlling the advertising of gambling, but the Explanatory Notes to the current Bill say that no regulations have been made under Section 328 to regulate advertising. I suggest that that needs to change. What does the Secretary of State intend to do with her order-making powers?

Mindful of the importance of the Secretary of State’s expression of concern about the scale of regulated gambling advertising and the fact that the Bill dramatically widens the scope for such advertising throughout the United Kingdom, it is only proper that the advertising provisions in the Bill do not come into effect until the advertising review process has been completed and the findings presented to Parliament. I beg to move.

Baroness Howe of Idlicote: My Lords, I fully associate myself with the comments made by the noble Lord, Lord Browne of Belmont. I shall not repeat what he said, but merely underline that he is absolutely right to

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highlight the contradiction between the impact of the Bill on advertising and the statement of the Secretary of State expressing concerns about the current level of advertising, even before this law has taken effect. It is vital that we insist that Parliament should be given time to respond to the gambling advertising review promised on Report—it is, I would stress, a response to the Secretary of State’s concern about the current scope for gambling advertising which this Bill will dramatically widen—before Clause 2 of this Bill is commenced.

The truth is that because of this Bill the Government hope that we will sanction online gambling providers right across the world, including countries such as China, Korea, Brazil and Argentina, which for the first time will be able to advertise in the UK if they get a Gambling Commission licence. This seems, as the noble Lord, Lord Browne, has said, a strange way of responding to the significant and legitimate concerns expressed by the Secretary of State on 2 March. There are other ways of regulating that do not mean that any increase in regulation must result in an increase in advertising, as financial transaction blocking demonstrates so very plainly.

I look forward to what the Minister has to say because, as I failed to point out when I spoke earlier, he has definitely been a listening Minister and has tried his best to meet our concerns. However, I am sad to say it does not look as if this issue has been met.

3.45 pm

Lord Stevenson of Balmacara (Lab): My Lords, we are slightly surprised to be revisiting this issue today. Although it is very important, it was discussed in some detail on Report, so we have to be impressed by the way the noble Lord, Lord Browne of Belmont, has convinced the Public Bill Office that it was right that he should be allowed to do so. He is clearly someone we shall have to listen to in the future if we want to have our evil way. However, as he has just said, there was a fair amount of confusion at the time, with letters from the Minister crossing with interviews and public statements by the Secretary of State. It is obviously important therefore to use this opportunity to try to tease out the issues that are in play here, and in particular what dates we are actually talking about.

The fact that the issue is coming back to the House at this stage says something important about our concerns about the way our “gambling culture” is developing and its potential to impoverish and cause irreparable social damage to the most vulnerable people in the country. The noble Baroness, Lady Howe, raised the question of why the Bill does not deal with the ills caused by gambling in her intervention on the first amendment, and she has just spoken again on the same point. I agree with her that this is something that we might have to look at again when we consider the Consumer Rights Bill, which is due to come to this House in June.

While gambling may not bring down dilettante Dukes, it certainly does affect others. Your Lordships’ House heard in Committee from several noble Lords who had been most grievously affected in this regard. The noble Lord, Lord Browne, sponsored a meeting at

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which ordinary people who had been addicted to gambling spoke movingly about their experiences and the need for the Government to take action in regard to their concerns. As we have heard, there was a report on the specific point about the watershed for gambling advertising and the spread of gambling more generally, including advertising for bingo, mentioned by my noble friend Lady Jones. I understand the position to be as follows, and I would be grateful if the Minister, when he comes to respond, could confirm it.

The relaxation of restrictions on gambling advertising that followed the implementation of the Gambling Act 2005 has led to a significantly greater volume of gambling advertising on TV and in other media. In addition, the gambling industry has been innovative and the existing voluntary codes that govern gambling advertising are now applied across a much changed gambling landscape. These technological developments have led to intense competition in remote gambling advertising which has coincided with an increase in complaints and concerns, as I have already mentioned. On Report, the Minister explained that the Government have been monitoring the impact of these developments and considering whether the current controls remain adequate across remote gambling advertising and other forms of online gaming activity, including online bingo.

The Minister went on to say that the Government have asked four bodies to do further work. First, the Remote Gambling Association will co-ordinate an industry-led review of the voluntary gambling codes and will come forward with any proposed revisions by the summer of this year. Secondly, the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have committed to evaluate the findings of a new report by the Responsible Gambling Trust this month, and will examine the available evidence on gambling advertising and its relationship with problem gambling. We are told that the committees will publish their findings on completion of this work, which could lead to changes in the principal codes controlling gambling advertising, this time by autumn. Thirdly, the Advertising Standards Authority will undertake a review of enforcement action under the gambling rules, taking into account internal intelligence, complaints statistics and trends, to ensure that it is enforcing the rules proportionately and consistently. The ASA, we are told, will communicate the outcome by autumn this year. Finally, the Gambling Commission will consider what revisions might be necessary to the licence conditions and codes of practice to ensure that all gambling advertising continues to comply with the licensing objectives of the Gambling Act. Although this work is principally focused on ensuring that free bets and bonus offers are marketed in a fair and open way in the gambling industry, it will cover a wider range. I note that the last item had no date specified for its completion, and would be grateful if the Minister could specify in his reply when he expects the Gambling Commission to report on its review.

This is a complicated field, with lots of cross-cutting and interesting work going on, and the timings are slightly out of sync. It is therefore right that the noble Lord should press the Minister to come up with a clear statement about where exactly these timings are.

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When the Minister does that, perhaps he can also comment on a point that he made in the previous debate, when he said:

“The terms of reference for the reviews are currently being defined and will be made public by the spring”.

A shaft of sunlight just illuminated our gloomy surroundings here, so I gather that spring is on the way. But when exactly is spring, and could we please have these statements so that we can look at them?

On the question of dates and times, the Minister said:

“Any statutory regulations would be preceded by consultation”,

which is good. He also said that the Government,

“will consider the findings of the review before determining what further action may be necessary”—

I would be surprised if they did not—and,

“will confirm their position by the end of the year”,

which is perhaps another variation on “autumn” and “towards Christmas”. He said that he,

“will arrange for a summary of the findings of the reviews and the Government’s response to be placed in the Libraries of both Houses as soon as they are available but definitely by the end of this year”.—[

Official Report

, 4/3/14; col. 1297.]

The trope that is coming through is “by the end of the year”. We assume that is this year, although it would be helpful if we could have some clarity on that.

The noble Baroness, Lady Jones of Whitchurch, in her response to the debate on Report, welcomed the change in mood and position from the Secretary of State and the Minister over the past couple of months, welcomed the detail that the Minister had spelt out and, with some reservations, welcomed the commitments that the Minister gave in that debate. However, when she withdrew her amendment, she warned the Minister that,

“we will pursue the Government as regards the work that is taking place over the coming months and try to hold them to account for the commitments that they have given”.—[

Official Report

, 4/3/14; col.1298.]

He has been warned. I can sympathise with the wish of the noble Lord, Lord Browne, to see this all tightened up and nailed down. I hope the Minister can repeat the commitments he gave on Report and confirm that his understanding is that we will have action on this troubling issue by the end of this year, 2014, at the latest.

As this is the last time I shall speak on this Bill, I take the opportunity to thank the Minister and the noble Baroness, Lady Jolly, for the constructive and positive way in which we have been able to make improvements to this Bill during its time in your Lordships’ House. We also got a great deal of support from the Bill team. I thank them for their support, which has been of great assistance.

As I said at Second Reading, I suspect that this is not the last time we will need to turn our attention to gambling, not least because the gambling industry is changing so rapidly, but also because of growing concerns about problem gambling, which I have already mentioned. In addition, I think the noble Baroness, Lady Heyhoe Flint, and the noble Lord, Lord Moynihan, who were both in their places a moment ago, made the

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point that we need to get a proper law in this country about match fixing. The Bills that we are talking about are about preventing problems in gambling and do not really go to the heart of one of the issues that is growing in importance across the country. There is evidence that match fixing is going on with a view to gain, which is something that we must act on. The laws that we currently have do not deal with this problem. We were not able to make changes in this rather tightly drawn Bill, but I think and hope that the arguments have been heard. If we do come back to it, it will at least be on the basis of a very much better understanding of the issues, which we have gained in our very good debates in recent months.

Lord Gardiner of Kimble: My Lords, I am grateful to the noble Lord, Lord Browne, for discussing his amendment with me earlier today, which I certainly found helpful. As the noble Lord said, this amendment seeks to delay the commencement of the repeal of Section 331 of the Gambling Act 2005 until the Government have reported to Parliament on the outcome of ongoing reviews into gambling.

First, I will be very clear about this. Clause 2 of the Bill is not about liberalisation of remote gambling advertising. It is a regulatory measure, and I will explain to your Lordships why I believe it is very necessary. The effect of Clause 2 is that, for the first time, remote gambling operators based in EEA or white-list states will be able to advertise and offer remote gambling to British consumers only if they are regulated by the Gambling Commission. At present, remote gambling operators based in EEA or white-list countries may advertise and offer remote gambling to British consumers without the need for a remote operating licence from the Gambling Commission, regardless of the quality of their home regulation.

The noble Lord, Lord Browne, has expressed concern about a potential increase in the overall volume of gambling advertising as a result of the Bill. I reassure noble Lords that the existing television scheduling restrictions will significantly limit the potential for any increase in the volume of advertising. As a consequence of the Bill, all gambling advertising will be subject to the regulatory rigour of the Gambling Commission and the Advertising Standards Authority, ensuring consistent standards across the piece. This is a significant development that will extend regulatory control over the type of advertising that may be shown in Great Britain.

As a result of the Bill, new gambling operators that wish to advertise in Britain will need to comply with the advertising codes of practice. These codes put in place strict controls in relation to gambling advertising and children: for example, advertisements must not appeal to, or include, children and young people and they must not glamorise gambling or suggest it as a solution to financial concerns. Advertisements that breach the code have to be amended or withdrawn. In addition, the Gambling Commission’s code of practice provides that operators must adhere to the advertising codes and ensure that all gambling advertising is undertaken in a socially responsible manner. Failure to take account of this can be used as evidence in

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criminal or civil proceedings, and may be taken into account by the commission in a review of the operator’s licence.

Indeed, earlier this month, the Advertising Standards Authority used powers under the advertising codes to take interim action against an operator following an unprecedented number of complaints. In this case, the Advertising Standards Authority judged that the advertisement may have been seriously prejudicial to the general public on the ground of the likely serious offence it may have caused. However, because the operator concerned is based outside Great Britain, the Advertising Standards Authority could apply its ruling only to national print media and not the operator’s website. Once operators are licensed under the new arrangements, regulatory action could be taken by the Gambling Commission.

To postpone commencement of the Bill until the end of this year, when the Government will be reporting on the outcome of ongoing advertising work, would delay the considerable benefits to consumers that the Bill will bring. It would undermine the achievement of the consumer protection purposes of the Bill, not just in respect of advertising but more widely. The noble Lords, Lord Browne and Lord Stevenson, and the noble Baroness, Lady Howe, raised, quite rightly, the aspect of vulnerable people. The Bill requires operators to comply with Gambling Commission licence conditions specifically protecting children and vulnerable adults; for example, in relation to self-exclusion and other requirements to support consumers who experience problems. Having looked at this very thoroughly since my meeting with the noble Lord this morning, on reflection I believe that delay is simply not in the interests of British-based consumers.

I made it clear on Report, in reply to the amendment in the name of the noble Baroness, Lady Jones, about the Government’s intent, that the review of the existing advertising arrangements is under way. The noble Lord, Lord Stevenson, referred rightly to the changing landscape that we have seen following the Gambling Act 2005. I confirm that the findings will be available in the autumn. This work will be taken forward by the Gambling Commission, the Advertising Standards Authority, the committees of advertising practice and the Remote Gambling Association. Clearly, it would be wrong to prejudge the outcome of the reviews, but I can assure noble Lords that they will be comprehensive and will seek to determine what changes might be necessary to ensure adequate protection.

4 pm

I can also confirm that there will be opportunities for interested parties to make representations as the reviews progress. The Advertising Standards Authority is open to hearing from interested parties about any aspect of its regulatory work and will take into account any relevant representations it receives as it undertakes its review, the full terms of reference for which are being developed and will be published in the spring—I am led to believe that spring in this case means April.

The noble Lords, Lord Browne and Lord Stevenson, spoke about the timing. It is absolutely right that noble Lords should put the fire where it is intended,

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which is on the point that we want progress. The four reports are due in the autumn. The reason for the Government saying that we will confirm our position by the end of the year is that we want to have a thorough look at what the reviews come forward with, so that we can consider the appropriate response to them. That is why there is no ducking and weaving; this is about doing a proper job on this matter, and it is why we will confirm our position by the end of the year. We will deposit in the Libraries the summary of the findings and the Government’s response.

I do not believe that we should delay commencement of this Bill, because there are important benefits for the consumer. As I have said, this Bill is not about liberalisation of remote gambling advertising; it is about making sure that everyone has the due protection that we think they should have. It is for those reasons that I ask the noble Lord to withdraw his amendment.

As we have, I think, reached the final stage of the Bill—I do not think that the officials would like me to say the final fence or the finishing post, but perhaps I can as it is the Year of the Horse—I want to thank your Lordships for the work that we have undertaken together. From all parts of the House, we have had many opportunities to discuss matters of concern and interest relating to gambling. We have covered much ground. I hope that my noble friend Lady Jolly and I have been of assistance to your Lordships. We have listened—I was very grateful for what the noble Baroness, Lady Howe, said about listening—and I hope that we have set out the Government’s response as to the action that we will take to address the concerns that have been raised in this House. My particular thanks, however, must go to the officials, who have guided us both through the intricacies of the Bill and, more generally, on gambling. I have learnt a great deal from them and from your Lordships. The officials’ professionalism has been outstanding and, for that, I am most grateful.

I hope that the noble Lord will withdraw his amendment.

Lord Browne of Belmont: My Lords, I am grateful to all noble Lords who have participated in this debate, and I am pleased that the Public Bill Office gave me the opportunity to raise this amendment.

I have listened carefully to everything that the Minister has had to say. I would first stress that I fully understand that this Bill does not extend the freedom to advertise to all jurisdictions on the basis of the current arrangement with the EEA and white-listed jurisdictions. Under the new proposals, all providers will be required to get a Gambling Commission licence, which I welcome. My point is that, because the Government have selected an approach that uses the offer of advertising to extend regulation, the extension of regulation must also bring an extension of advertising—advertising for a form of gambling with a higher problem-prevalence figure than gambling generally.

I am also slightly concerned by the implication that the Minister does not think the new Bill will necessarily result in an increase in the advertising of online gambling. Of course, I understand that there are not online gambling providers in every jurisdiction in the world

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who want to access the UK market, just as there are not online gambling providers in every EEA jurisdiction that wish to access it under current arrangements. However, given the current realities of the global gambling market, it seems that the only way the Bill could not result in a significant increase in advertising would be on the basis of providers accessing the UK market without a licence. That is frightening and demonstrates very clearly why the noble Baroness, Lady Howe, was absolutely right to press for financial transaction blocking.

I am disappointed that the Minister did not commit to ensure that the regulatory regime with respect to current advertising and new advertising resulting from this Bill will be deployed more actively, in order significantly to reduce the former and to limit the latter, so that the combined effect of both the continuation of advertising in the current context plus the new advertising facilitated by this Bill does not have the effect of introducing a net increase in the amount of gambling. I believe that he should have either undertaken to accept my amendment or committed to tighten the regulatory framework significantly. Without having taken either of those steps, the comments of the Secretary of State on 2 March are at odds with the impact of the Bill.

However, today I sought to put down a marker and possibly highlight a contradiction in the Government’s position. I look forward to the four independent reports and I am sure that I will make submissions to those. I hope that that they will come along with my way of thinking. I beg leave to withdraw my amendment.

Amendment 2 withdrawn.

Bill passed and returned to the Commons with an amendment.


Motion to Take Note

4.06 pm

Moved by Baroness Warsi

That this House takes note of the situation in Ukraine.

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con): My Lords, these are momentous times in Ukraine, where ordinary citizens have made a stand against a corrupt regime that sought to trample on their aspirations for a European future. That future is threatened by the cynical and artificial stimulation of ethnic-based tensions as a cover for an illegal attempt to undermine the sovereignty of Ukraine. Our national interest is clear in Ukraine being able to make its own decisions, the upholding of international law and the UN charter, and the prevention of further violations of the sovereignty of independent European states in this way.

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Noble Lords will recall that massive demonstrations began in Kiev in November in response to the unexpected announcement of the then President, Viktor Yanukovych, that he would not sign the EU association agreement. After various attempts to disperse the demonstrations, Yanukovych resorted to extreme measures in the week beginning 17 February, when more than 80 people were killed and more than 600 injured. In the wake of such bloodshed, the EU brokered a deal between Mr Yanukovych and the opposition to end the violence on 21 February. However, that same night Mr Yanukovych fled Kiev, thus neglecting his very first responsibility under the deal: to sign within 48 hours a law to return to the 2004 constitution. We are clear that under the extraordinary circumstances of a President abandoning his post, the Ukrainian parliament—the Rada—had the right to appoint an interim President and Government, as laid down in Ukrainian constitutional law.

The majority of the international community, including the UK, resolved to put all efforts into helping to quickly stabilise Ukraine, but unfortunately others sought to exploit the situation for their own ends. On 1 March, Russia’s parliament approved President Vladimir Putin’s request to use Russian forces in Ukraine. Within days, Russian troops besieged Ukrainian forces in Crimea. The Government continue to make clear their utter condemnation of Russia’s invasion, the violation of the territorial integrity of Ukraine and the cynical campaign of misinformation Russia conducted as a cover for its illegal actions in Crimea. Two days after Russian forces took control, Crimea’s parliament asked to join Russia and announced that the matter would be put to a referendum just 10 days later.

On Friday, my right honourable friend the Foreign Secretary met US Secretary of State John Kerry and Russian Foreign Minister Lavrov before their bilateral talks in London. Russia was presented with a series of proposals to de-escalate the crisis and to address the situation in Crimea. After six hours of talks, Russia rebuffed those efforts. On Saturday 15 March, the UN Security Council voted on a resolution condemning the referendum as unconstitutional and illegitimate, which was co-sponsored by 42 nations. Russia was completely isolated in vetoing the text, while 13 members of the Security Council voted in favour and China abstained.

The Crimean referendum was indeed held on Sunday 16 March. The UK condemns the fact that the referendum has taken place in breach of the Ukrainian constitution and in defiance of calls by the international community for restraint. In common with the majority of the international community, we recognise neither the referendum nor its outcome. The referendum was clearly illegal under the Ukrainian constitution, which states that the autonomous republic of Crimea is an integral constituent part of Ukraine, that issues related to its authority must be resolved within the provisions of the constitution and that only the Ukrainian parliament has the right to call such a referendum.

Nor can the vote be considered to be free or fair. Crimea is occupied by an estimated 30,000 Russian troops and the meeting of the Crimean parliament that announced the referendum was itself controlled by unidentified armed gunmen and took place behind

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locked doors. The referendum took place at 10 days’ notice without the leaders of Ukraine being able to visit Crimea and without meeting any of the OSCE standards for democratic elections. Furthermore, the ballot paper asks the people of Crimea to decide either to become part of the Russian Federation or to revert to the highly ambiguous 1992 constitution, which would give the Crimean parliament the power to decide to join Russia. There was no option on the ballot paper for those who support the status quo and want Crimea to stay as it is—an autonomous region of Ukraine. The House should be in no doubt that this was a mockery of democratic practice.

The Government have played an active role in seeking a peaceful resolution to the crisis that respects the aspirations of the majority of the Ukrainian people. Along with major partners such as the EU and the US, we have sought to address the political and economic crisis in Ukraine. At the same time, we are working intensively to build international consensus that there must be consequences for Russia if it continues its flagrant disregard for international law.

Lord Campbell-Savours (Lab): I apologise to the noble Baroness for intervening, but perhaps we can clarify something at the beginning of this debate. She keeps referring to breaches of international law, but in the Kosovo case, the president of the International Court of Justice, Hisashi Owada, said that international law contains,

“no prohibition on declarations of independence”.

The court also said that while the declaration may not have been illegal, the issue of recognition was a political one. Why is that case so different from the case that we are examining today?

Baroness Warsi: My Lords, I will have an opportunity to consider that specific question and will make sure that it is answered during this debate if we have that information.

On 6 March, an extraordinary meeting of the European Council in which the Prime Minister played a pivotal role agreed a three-phase approach to stand up to Russia’s illegal behaviour: first, immediate steps to respond to what Russia has done; secondly, urgent work on a set of measures to follow if Russia refuses to enter dialogue with the Ukrainian Government; and, thirdly, a set of further, far-reaching consequences should Russia take further steps to destabilise the situation in Ukraine.

I am sure that your Lordships would appreciate more detail on each of those steps, and I will take them in turn. First, as a response to what Russia has already done, immediate steps have already been taken. We have suspended preparations for the G8 summit in Sochi indefinitely. We have withdrawn royal and ministerial visits to the Sochi Paralympic Games. Work on a comprehensive new agreement on relations between Russia and the European Union has ceased, and the EU has suspended discussions on a more liberal visa regime in the Schengen area—a long-standing goal of Russian policy.

In the second phase, and in company with other allies, we have worked to persuade Russia to negotiate with the Government of Ukraine about their concerns

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rather than resorting to illegal measures. We have pushed for the creation of a contact group, first proposed by the Prime Minister back in January. The European Council agreed that such talks should start within a matter of days or further measures would be adopted—the so-called second phase. Yesterday, on 17 March, the Foreign Affairs Council agreed additional measures including asset freezes and travel bans against 21 individuals responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. These measures are in addition to those already agreed against Yanukovych and his circle.

Lord Davies of Stamford (Lab): Has the Minister noted President Putin’s contemptuous remarks about those sanctions this morning? Did she also note that yesterday the Russian stock market rose by more than 5% in one day with relief that the sanctions were so weak and shallow? In effect, have these sanctions not been so derisory as to ensure that the Russians feel that there is hardly any cost at all to them in taking over Crimea, which has a great psychological as well as a strategic significance for them? It was really cheap at the price that we have set.

Baroness Warsi: My Lords, I did notice the specific comments to which the noble Lord refers. We fundamentally believe that the issue of sanctions will work; indeed, it has worked in a number of scenarios in relation to other foreign policy matters. These sanctions are currently being kept under review and the situation as it develops will be responded to with further measures, including further sanctions.

Thirdly and most significantly, the Council agreed that if further steps were taken by Russia to destabilise Ukraine there would be “additional and far-reaching consequences” for the relationship between Russia and the EU, including,

“in a broad range of economic areas”.

The Prime Minister played a leading role in helping to reach this agreement, including through convening a meeting with fellow leaders from France, Germany, Italy and Poland on the morning of the Council. Such sanctions would have consequences for many EU member states, including Britain, but the Government believe that the costs of not standing up to aggression are far greater.

Finally, the Council sent a clear message of support to Ukraine by agreeing to accelerate the signature of the political part of the EU’s association agreement with Ukraine and by unilaterally lowering trade tariffs. The EU has now frozen the assets of 18 people linked to the former regime, and Britain has deployed a team to Kiev from our National Crime Agency to help the new Ukrainian Government track down misappropriated funds. Ukraine also needs support for its economy. My right honourable friend the Foreign Secretary has been at the forefront of efforts to co-ordinate an international package of support for Ukraine, drawing principally on IMF and EU funds.

The Prime Minister announced last week that we would review all UK bilateral military co-operation with Russia. Today, my right honourable friend the

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Foreign Secretary has announced that we have suspended all such co-operation, including the signing of the military technical co-operation agreement, along with the cancellation of this year’s France-Russia-US-UK naval exercise and the suspension of a proposed Royal Navy ship visit to St Petersburg and of all senior military visits. We believe that under current circumstances, there is a compelling case for EU member states to suspend export licensing for military and dual-use items destined for units of the Russian armed forces or other state agencies which could be, or are being, deployed against Ukraine. The UK has now, with immediate effect, suspended all licence and application processing for licences for direct export to Russia. We will also suspended licences for exports to a third country for incorporation into equipment for export to Russia where there is a clear risk that the end product could and will be used against Ukraine.

A major focus for the interim Government in Ukraine and the international community is to ensure that the pre-term presidential elections called for 25 May are properly conducted, enabling all Ukrainians, including Russian speakers and minorities, to choose their leaders freely. Britain is providing technical assistance to support these elections and to assist with reforms on public finance management, debt management and energy pricing.

Europe is facing a grave challenge to the peace and security that we have worked so hard to build since the end of the Second World War. That security has hinged on respecting the territorial integrity of our neighbours. History has taught us many hard lessons about the dangers of turning a blind eye when the rights of fellow Europeans are being threatened. I am sure noble Lords will agree with the Prime Minister’s recent statement that we must stand up to aggression, uphold international law and support the Ukrainian Government and the Ukrainian people. They surely have the right to make their own choices about their own future. That is right for Europe, right for Ukraine and right for Britain.

The reality on the ground in Ukraine has constantly changed over the past few weeks and, regrettably, will continue to do so. I have sought to keep the House regularly informed through debates and Questions and have benefited from the expertise and knowledge of noble Lords from all sides of the House. Today’s debate is another timely opportunity to update noble Lords and to take note of the interventions, suggestions and views of the House.

4.20 pm

Lord Anderson of Swansea (Lab): My Lords, I thank the Minister for setting out the history of this crisis and the Government’s response so far. In my judgment, the Government have acted thus far in a very sure-footed way in a continuing, fast-moving crisis. I hope that the Minister will recognise the importance of the European Union as an instrument of our policy, and that we will be ready to use that instrument far more than in the past.

We are clearly witnessing the most important and severe crisis in East-West relations since the fall of the Berlin Wall. I shall not go back to 1945, because we

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have had the invasion of Hungary, the Cuban missile crisis and the attack on Czechoslovakia. What is clear is that Russia is about to annex Crimea. It is a fait accompli. Russia is creating another frozen conflict in Europe, joining Abkhazia, South Ossetia and Transnistria in Moldova, which is probably the most vulnerable of all the neighbouring countries. It is uncertain whether Russia will follow a similar course with east Ukraine, and possibly with other neighbouring countries. Perhaps the nearest precedent is that of Sudetenland in 1938, when the Nazis—the Russians will clearly not like this precedent—invaded in response to calls from their compatriots in the then Czechoslovakia. We have to ask: when will President Putin stop? It is also uncertain whether each move by Russia has been planned in advance like a sophisticated game of chess, even over the referendum. Perhaps one could plausibly ask: if there is a referendum in Crimea, why not a referendum in Chechnya, in Dagestan or in other parts of the Caucasus?

This crisis is an opportunity to learn more about Russia and perhaps to shed some of our illusions about contemporary Russia. It is also an opportunity to learn more about ourselves in the democratic West and whether the main priorities of our foreign policy are based on commerce or on wider strategic principles. Of particular interest is the robust response of an awakened Germany. I contrast the response of Chancellor Schroeder, who joined Nord Stream shortly after he left office, with the response of Chancellor Merkel. Germany now seems prepared to give far greater prominence to longer-term strategic interests over short-term commercial considerations. I certainly welcome this new assertiveness of a democratic Germany.

Our starting point is surely recognising that Russia has important interests of history, geography and ethnicity in Ukraine. Thus, the immediate response of Kiev, which was soon rescinded, in relation to the Russian language was most unwise. These clear interests of Russia could, with good will, have been accommodated, for example, through international guarantees for the Russian minority, including on the status of the Russian language, more autonomy and a voluntary renunciation of joining military alliances—that is, neutrality. However, the agenda of President Putin was clearly wider than that.

Since the early 1990s, we in the West have treated Russia on a basis that we now think of as an illusion, in the vain hope that Russia was firmly on the path to democracy. There was some evidence of that during the time of President Yeltsin, however chaotic. We have been prepared to overlook serious failings, ignoring the almost Stalinist monolith of so many Russian parliamentary responses, culminating in the unanimous vote in the Russian Parliament in respect of military intervention in Ukraine. It was unanimous: there was not one dissident in that parliament—no one prepared to say, “Don’t count me in on that”.

We have accepted on the way, after a short-lived process, the Litvinenko affair, Magnitsky, the invasion and continued occupation of 20% of Georgia since 2008, and the Russian failure to comply with the ceasefire agreement over Georgia in that year. Russia has ignored international agreements such as that in

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Budapest, and a guarantor power of the Budapest agreement is now the aggressor, undermining the territorial integrity of the country it purported to guarantee. The fact that Russia was prepared to lie so blatantly—for example, on the presence of Russian troops in Crimea, outside its military bases—is bound to shake confidence in Russia in the short and medium term.

Again, what does the crisis tell us about the firmness of the West so far? The response, I concede, has been weak. “Great things we shall do”, but, as my noble friend has said, we have done very little thus far. Let us accept that a step-by-step process is relevant, important interests are involved and one country should not be expected to bear a disproportionate burden of the pain. President Putin clearly relies on disarray on the western side. Will there be business as usual with Russia after a short interval? No, our illusions should be over. We should have a far more realistic policy towards Russia.

What should be our appropriate response? First, we should assist Ukraine economically, financially and politically, for example, in democracy-building. Secondly, we should recognise that the diplomatic track is unlikely to lead anywhere, seek to contain and isolate Russia at the United Nations and elsewhere, and make clear to Russians privately that there are indeed red lines. We should give reassurances, particularly to our Baltic allies, who are very concerned at the moment. Is it too optimistic to see the beginning of a stronger European foreign policy emerging from this crisis?

We should also consider the position of Russia in those international organisations of which it is a member which deal with human rights. We think, for example, of the OSCE, which came into being after the Helsinki agreements of 1975, and the basket containing human rights that are so massively infringed by Russia. We think of the Council of Europe, the main human rights organisation in Europe, with its 48 countries. I note that the Conservative group has withdrawn from the family group in the parliamentary assembly which contained Russia, the EDG. Is it too much to ask that the Conservatives should consider joining the mainstream right-wing family, the EPP? Or is that a joining too far?

Finally, on sanctions, the travel bans and asset freezes are relatively easy. Economic and financial sanctions must be calibrated and, I accept, further down the track; but they are likely to be the most effective. I think of South Africa in 1986. The real blow to the apartheid regime came when the Chase Manhattan bank refused to roll over certain loans in respect of South Africa.

Russia must be forced to pay a heavy price, but let us also accept that we will have to pay a price, economically and commercially, because of the shock to the world economy. We need to reduce our dependence on Russian oil and gas. The world is now awash with oil. I anticipate that the noble Lord, Lord Howell, may have a few well chosen words to say on that theme later when he comes to speak.

Already, after the failure of the Kerry-Lavrov talks, billions of dollars have been repatriated from the West by Russians, yields on Russian government 10-year bonds have risen sharply, and the rouble has fallen to a

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record low. Yes, there has been a slight upturn in the Russian stock exchange, but I judge that that will be short-lived as further sanctions take place along the road.

Russia is already paying a heavy price, and all this before effective sanctions. The next few weeks will be a clear test for the West: a test of our international credibility. Many friends—those who are currently apprehensive in the world, including many of Russia’s neighbours—will be watching our reaction very closely.

4.31 pm

Lord Chidgey (LD): My Lords, I, too, thank my noble friend for setting out the Government’s action so far on the Ukrainian crisis.

Notwithstanding the fraudulent and bogus events surrounding the illegal referendum in Crimea at the weekend, one event stands out as particularly sinister. On the 13 March, the Times carried reports that two prominent Ukrainian community leaders in Crimea were seized by police. When challenged as to their whereabouts, the newly appointed Crimean Minister for Information declared that they never existed. Dmitri Polonsky said:

“There is no Ukrainian community in the Crimea, and so there are no missing community leaders”,

using the logic of Orwell’s thought police, which I am sure noble Lords will remember. As the Times commented, this Orwellian logic allowed Polonsky an answer for everything, from human rights abuses, to prejudice, to the legality of the referendum. According to Polonsky, accounts of Crimean Tatars having their passports confiscated by bogus election commission teams were a distraction. As the Minister of Information said:

“Yes, we know about these events … The actions were carried out by Tartars against themselves, as provocations against the authorities”.

As for the gunfire from pro-Russian militias to block access from Organisation for Security and Co-operation in Europe—OSCE—observers into Crimea, that was just an,

“expression of disappointment by local people”,

who were irritated by the “interference”. Polonsky had no concerns over the legitimacy of Crimea’s new parliament, or that its leader came from a political party that achieved just 4% in the previous parliamentary elections in Crimea.

The referendum result has, of course, effectively guaranteed Crimea’s secession from Ukraine, despite being conducted in an atmosphere of militarist repression, enforced, as the Minister said, by more than 80,000 Russian troops, some 270 tanks and 140 combat aircraft, and despite being deemed illegal by the OSCE, of which Russia is a member.

President Putin singularly declared that the result of the Crimean referendum was entirely legal and binding and essential to protect the population that is ethnically Russian or had Russian citizenship. He blandly ignored the fact that the UN Security Council, as the Minister mentioned, had decided overwhelmingly that it was not legal—yet another example of Orwellian

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“misinformation”, particularly if it is to be a precursor to justifying an expansionist annexation policy across eastern Europe and Asia.

Should we be surprised? Certainly my own parliamentary interactions with Russian politicians over the past decade would indicate that no, we should not, for a variety of reasons. Meeting the Russian defence committee in Moscow a few years ago, for example, was anything but diplomatic. Their members, all generals in full uniform, faced us across a long table with open hostility. Mind you, that was shortly after NATO had destroyed the government buildings in Belgrade with precision bombing—although as we subsequently discovered when visiting the city, the Serbs viewed that event far more pragmatically than their Russian supporters.

I recall asking the chairman of the committee—mainly in the hope of deflecting the mounting hostility—where they hoped to see Russia in 10 years’ time. The outpouring of emotion was overwhelming, and best summed up as a universal and fervent wish for Russia to be returned to the great power she had been under communism. Thereby, I believe, lies the rub.

A similar meeting with the foreign relations committee of the Duma, which I think that the noble Lord, Lord Anderson, was leading at that time, proved equally hostile, with no attempt to follow the courtesies of diplomacy. Their chairman began by loudly shouting and berating the UK for not supporting Russia in its dispute with Estonia over plans to move a memorial in the centre of Tallinn which commemorated Russian soldiers who died fighting the Nazis in World War II. According to the Russian chairman, this was the most important issue in foreign policy dividing Russia and the west. It gave me a good insight into how politics was conducted in Russia at that time.

At a meeting in Moscow around 2005 with the Russian state economics committee, I believe it was—I did not quite catch the full title—we were lectured by a senior economist who, from his demeanour, appeared to be a survivor from the communist era of centrally planned economics. He pointed out that our North Sea oil and gas reserves were forecast to be exhausted within the next 40 years. In contrast, Russia’s reserves could supply the west indefinitely, with the implication that this was dependent on maintaining friendly and, presumably, agreeable, relations. This was close to a decade ago. There seemed to be no awareness that in the capitalist, democratic, free world, with full flexibility in supply and demand, market forces determined these outcomes rather than political dogma.

If we take Putin’s justification for annexing Crimea—that is, protection of émigré Russians, either by ethnicity or by citizenship, justifies invasion of other sovereign territory—to its logical conclusion, as the noble Lord, Lord Anderson, has already said, we start to move towards the territory of the annexation of Sudetenland in the 1930s. On this basis, we will find a number of smaller countries, previously part of the Soviet empire, at risk—not just in the Balkans but in Central Asia, where the Ukrainian crisis has put a number of leaders in a quandary. For example, while nervous over Moscow’s military show of power in Crimea, they are also anxious

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to downplay that end in the toppling of corrupt leaders of independent states under Russia’s influence. Leaders in Tajikistan and Kyrgyzstan are now more aware of the risks entailed in hosting military facilities that belong to Russia. The largest military land base outside Russia, the 201st Motorised Rifle Division, is in Tajikistan, while Kazakhstan shares a common border of nearly 7,000 kilometres with Russia and has the second largest ethnic Russian population after Ukraine at nearly 25%.

The Baltic states of Estonia, Latvia and Lithuania also present risks of tension between native populations and Russian migrants. Stalin’s brutal policies of the transportation of tens of thousands from the Baltic states to Siberia, leading to mass deaths through starvation and cold and replacement with Russian workers, servicemen and their families, is a well documented part of history. In consequence, in Estonia, 38% of Tallinn’s population is ethnically Russian and 56% speak Russian as their mother tongue. In the north-eastern cities of Estonia, as many as 82% of the population are ethnically Russian. This legacy of Russianisation spreads throughout the old Soviet empire.

There is no credible evidence of threats against Russian citizens, or of an armed attack, or even a planned attack against Russian military assets. Western leaders have repeatedly called for Russia to abide by the terms of the 1994 Budapest memorandum, where Russia, the United Kingdom and America reaffirmed their obligation to,

“refrain from the threat or use of force against the territorial integrity or political independence of Ukraine, and that none of their weapons will ever be used against Ukraine except in self-defence or otherwise in accordance with the Charter of the UN”.

Clearly, such treaties mean little in Putin’s thinking. If the aggressive approach of the Russian Duma’s parliamentary committees in meetings with counterparts is any guide, it seems that positive action is the only sensible response to the invasion of Crimea.

Without delay, our Government should follow the recommendations set out in the letter of 21 February from Transparency International UK to the Chancellor to prevent the transfer of suspicious financial transactions to the UK from Ukraine, placing money laundering officers on alert, and taking proactive action to prevent money laundering from Ukraine. Following the Chancellor’s positive response to that letter and that request from TIUK, the Government should provide regular reports to this House, setting out actions taken and the results achieved.

Ukraine has already lost the equivalent of almost half its GDP to outflows into offshore accounts over the past three years. Some of these funds have been laundered through the UK, or through UK-linked jurisdictions, with the help of UK bankers, accountants and lawyers. These assets must be identified and returned without delay. The Government must take preventive measures to stop this happening again.

Russian participation in the G8 should be cancelled, its OSCE membership should be reviewed and trade negotiations suspended. Russian membership of European institutions, such as the Parliamentary Assembly of the Council of Europe should be revoked and visas and passes issued to Russian participants withdrawn.

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In the medium term, the European Union should consider alternatives to the South Stream pipeline supplying Ukraine. The EU should consult with the Norwegian Government, western companies and liquid natural gas suppliers in the region to move forward with creating strategic gas reserves for Ukraine and east and central European countries. The EU should focus initial assistance to Ukraine on clearing its gas debt to Gazprom to reduce its leverage. The EU’s competition case against Gazprom should be accelerated.

The EU and the UK should begin discussions with the USA on changes to the latter’s domestic law to enable oil, gas, LNG, and shale gas and oil to be freely exported. The UK should review its energy policy as a matter of priority to exploit the opportunities offered by the reserves of shale gas and oil, and should be guided by science, not just opinion.

Finally, we should also be aware that the reaction within Russia is far from totally supportive of Putin. The opposition party, Yabloko, states that the position and actions of the powers that be in Russia in respect of Ukraine are a reckless political adventure and that it is unacceptable even to contemplate using Russian troops in Ukraine, while separation of Crimea from Ukraine and its annexation is an error at the highest level. It is calling for the immediate convening of an international conference on political, legal and military issues related to Ukraine and, in particular, the Crimean issues. The prime aims of the conference should be to restore the underlying legal framework in international relations and security, guarantee the integrity and maintain the viability of the Ukrainian state within the parliamentary framework and restore the rule of law in Crimea, observing the interests of Crimea’s population as a whole, with all its component groups, free from repression by political opponents.

4.42 pm

The Earl of Sandwich (CB): My Lords, the noble Baroness opening the debate rightly condemned Russian aggression in Crimea and MPs expressed similar disapproval earlier this afternoon. However, in the light of history, I am not sure that we could have done much about it.

I am a strong advocate of European enlargement, and it is undeniable that the acceptance of new applicants from eastern Europe and the Balkans has contributed to peace and stability there. However, as the EU nudges further east, we have to be especially careful not to upset and antagonise the Russian minority in Ukraine, or to risk that country becoming further divided. The noble Lord, Lord Chidgey, rightly referred to the innumerable instances of minorities all over Europe. The stealing back of Crimea makes eastern Ukraine the next target of Russian resentment and today’s attack on a Ukrainian garrison is ominous and another gross violation of international law.

The phrase “western allies” can be misleading. The EU cannot make a strong historical case for an alliance with Ukraine. As Kievan Rus, the first Slavic state converted to orthodox Christianity, Ukraine has been closely linked to Russia since its heyday in the 10th and

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11th centuries. The country was subsequently ruled by both Lithuania and Poland, and its borders were never clearly drawn.

Crimea, too, has had a chequered history. The Crimean Tatars were dominant for more than three centuries until they were cruelly deported in large numbers by Stalin, and later unfairly discredited as Nazi sympathisers. Yet it was to prevent Russia from entering the Mediterranean that we fought alongside the Ottoman Empire in the Crimean War, but that policy obviously did not work.

I visited Yalta in 1964 and it never occurred to me then whether it was Russian or Ukrainian. Everything came under the USSR umbrella. I remember standing on the terrace overlooking the Black Sea where, in February 1945, the leaders of the US, UK and Russia had signed a historic agreement to divide Germany into three. Russia broke its promises then and it has broken them again now. The Cold War was still to come and nearly seven decades later we are wondering whether it has yet gone.

I do not expect war to break out over Ukraine. I prefer to think of the present crisis as a bad dream interrupting the course of history. It cannot and should not develop into hostilities. We have done with war in Europe, and I find the references to Sudetenland exaggerated and quite disturbing. All three Yalta powers should be honouring the 1994 Budapest agreement guaranteeing Ukraine’s territorial integrity. Instead, Putin is repeating his performance in Georgia in 2008 by first threatening and then virtually annexing sovereign territories in the name of defending Russian citizens.

What are President Putin’s motives? This has been the subject of great speculation, but it seems that the strongest motive is simply Mother Russia. This could be seen as imperialism and expansion in Crimea and eastern Ukraine but Crimea is inescapably part of Russian influence and naval domination of the Black Sea. Kiev, already central to the Rus legend, became the third city of the Soviet Union after Moscow and Leningrad. So we should not be too surprised that Ukraine is still on the Russian doorstep or that Russians have a great hankering after former glory.

While we, the US and individual states should complain to Russia through warnings and sanctions—as we would in any country where human rights and international law are aggressively violated—the EU should not make too many assumptions about Ukraine’s position as an ally. Ever since the Berlin Wall came down, Europe has faced east, looking beyond the boundaries of enlargement into new member states. It may be that the EU has been looking too enthusiastically at arrangements with countries directly bordering Russia. Since the Orange Revolution in Ukraine there has been a flurry of diplomatic visits to Kiev under the neighbourhood policy, as though Ukraine were already eligible for membership of the EU and NATO. In 2010, as we know, President Yanukovych excluded Euro-Atlantic security and NATO membership from Ukraine’s national security strategy, but the concepts of European integration and co-operation with NATO have remained and it is likely that Yulia Tymoshenko,

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if she is re-elected, will want to return to the previous strategy and risk further Russian hostility, reminiscent of former President Saakashvili in Georgia.

Let us not forget the bigger picture in which Russia has to live up to its international responsibilities. The Syrian uprising this week has entered its fourth year unresolved, and the parties still have to come to the table. The Iran negotiations are still delicate. We need the Russians if we are to make progress in these areas. I do not agree with previous speakers that we should detach them from the G8 altogether. The action in Crimea was illegal but there is little we can do about it now. The question asked by the noble Lord, Lord Campbell-Savours, on Kosovo is pertinent. Although the noble Lord is no longer in his place, I hope the Minister will spend a little time on that. It is of course President Putin’s own argument, and we must be careful in making the comparison, because the situation in Kosovo was, at a time of civil war, completely different.

In the mean time, while the interim Government of Ukraine wait for the May elections, every effort must be made—preferably through the OSCE and the new contact group which is being proposed—to support it and contain both Russian and Ukrainian battalions within their own borders. However, the more effective weapons are economic. Chancellor Merkel has taken a surprisingly tough line, accusing the Kremlin of following the law of the jungle and Mr Putin of living “in another world”. She is strongly insisting on new sanctions in the face of, it seems, at least two-thirds of Germans, who have serious doubts about their effectiveness.

While Germany remains the powerhouse of Europe, German companies will continue to trade with Russia and oligarchs will continue to visit their dachas in Baden Baden. France and Italy, not least as arms suppliers, are likely to make the same argument. Therefore, it is going to be a slow process. Sanctions will be pushed mainly by the United States, but Europe will more likely follow the market and select sanctions, which will only puncture its relationship—at least, that is my prediction. After all, Russia’s trade with Europe is more than 10 times that of the US, and the EU is unlikely to throw that away.

London has already lost a lot of Russian business in the scramble to anticipate sanctions. Would this not be an ideal time to review our dubious reputation as a money-laundering capital, as the noble Lord, Lord Chidgey, has already said, and identify the banks and companies that are living off illegal Russian investments and the laundered billions stashed away by Yanukovych and his family? Can the Minister please explain why this money could not be returned to Ukraine to support much-needed structural reforms alongside the new loans, or can the Government produce any other financial package for this purpose? What can the Government do through legislation to strengthen anti-money-laundering controls through the Financial Conduct Authority and other City watchdogs? Have any suspicious transactions in relation to Ukraine been reported to the FCA hitherto, and how can these be further investigated?

However the political and military crisis develops, what the latest power struggle comes down to in the end is, of course, aid and debt, and whether the EU

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and the IMF can afford to make up loans to Ukraine originally promised by Russia. If Russia turns down the energy tap, Germany and others must consider alternative gas supplies, which may not be immediately available from the US but they will be elsewhere. Ukraine at least has enough reserves of gas to get through to the elections.

Once our frantic diplomatic activity has achieved a stalemate, and perhaps, with luck, OSCE observers are in place, as usual it will be the markets that decide the future.

4.53 pm

The Lord Bishop of St Albans: My Lords, I am grateful to the noble Baroness for this debate and for her helpful setting out of the situation. We have heard some fascinating background regarding the very complex history behind the situation. My comments will focus on the religious dimension, which has not been drawn out very fully so far.

To illustrate that, another aspect of what has been going on this past weekend is that Crimea is of extraordinary significance as a holy place for the Russian nation, for Russian orthodoxy and for the Russian sensibility or psyche. Legend links St Andrew with the place—it was believed that he lived there. The Emperor Trajan sent Pope Clement into exile in Crimea, giving it a direct link with early Christianity. Although Prince Vladimir was converted from paganism to Christianity in 988 and baptised in Kiev, it was actually the Russians—the Moscow Patriarchate—who built a shrine in Chersonesos, claiming it as the site of this very significant baptism. Because of this heritage, the Russian Orthodox Church has been building monasteries in Crimea and has restored many of its holy places. It has been encouraging large numbers of pilgrims to go there, describing it as Russia’s Mount Athos. That is how it sees the place. It has huge significance in many other dimensions as well as the historic ones.

There is no reason why noble Lords will know about the long and painful ecclesiastical history in Ukraine. However, for many years, there has been deep-rooted mistrust and division between the western-facing Ukrainian Orthodox Church of the Kiev Patriarchate and the eastern-facing Ukrainian Orthodox Church of the Moscow Patriarchate. They overlap in their jurisdictions. What perhaps is surprising is the extent to which all Ukraine’s churches have found common purpose in recent months. In September 2013, when President Yanukovych was openly talking about signing an association agreement with the EU, the All-Ukrainian Council of Churches and Religious Organisations supported the move and called on people not to oppose a new trajectory for Ukraine because of their traditional relations with Russia.

As the Maidan uprising turned violent, churches in Kiev, including Christ Church, the Anglican church in the city, acted as field hospitals for people wounded in the uprising. St Michael’s Golden-Domed Monastery became the main field hospital. A team of doctors were aided by priests from the monastery who distributed food and, of course, led prayers. From the very start, Ukraine’s religious communities have been extremely supportive of the political aspirations of the

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demonstrators. Many of Ukraine’s churches are members of the Conference of European Churches, while many Muslim organisations in Ukraine have long and active links with co-religionists in the EU, not least with the Federation of Islamic Organisations in Europe.

From a religious perspective, Maidan was a uniquely ecumenical and interfaith phenomenon. As churches responded to the new political reality, the barriers of mistrust started to erode. Some religious leaders actually started talking to one another. The synod of the Ukrainian Orthodox Church of the Kiev Patriarchate has even gone so far as to suggest to the Ukrainian Orthodox Church of the Moscow Patriarchate that perhaps it is time to reconcile differences and unite in one church.

It is early days but, given that Ukraine is the second-largest orthodox country after Russia, a united Ukrainian church would redraw the map of orthodoxy. The critical distance that has already emerged between the Ukrainian Orthodox Church and the Russian Orthodox Church in Moscow is significant. President Putin, of course, belongs to the Russian Orthodox Church. State and church are extremely closely linked. Indeed, Metropolitan Kirill called on orthodox believers to vote for President Putin in the last election. He also flew to Kiev in 2010 to bless President Yanukovych’s presidency. Metropolitan Kirill has the ear of President Putin but, rather than acting as a brake on him—he is one of the people who probably could do something—it would appear that he is supportive of the Russian state’s ambitions.

If Russia were to manufacture further social unrest to justify moving beyond the Crimean peninsular, and if such a move was legitimised by Metropolitan Kirill, there is a very real danger that the Russian Orthodox Church will alienate Ukraine’s orthodox Christians permanently. Ukrainian churches are already taking steps to secure additional chaplains to help provide for the pastoral care and support of those who serve in the Ukrainian armed forces.

I turn now to the various media reports that have circulated in recent weeks suggesting that the Maidan had a dark, neo-fascist underbelly, and that Ukraine’s Jewish community was subject to attack and harassment. These reports have been dismissed as Russian propaganda by Rabbi Moshe Reuven Azman, the Chabad Chief Rabbi of Kiev and Ukraine, who reported that Maidan self-defence units provided security for the synagogue in Kiev. Ten days ago, the Ukrainian Jewish Congress reported that there had been no reports of anti-Semitism since the uprising.

Sadly, the decision to demonise protesters as fascists has been deliberately used to stoke up deep-rooted and historic fears in Crimea as well as in eastern and southern parts of Ukraine. Priests in Sevastopol have faced harassment and abduction. Many have already evacuated their wives and children to the mainland. Given this climate of fear and intimidation, it is hard not to see the referendum as an exercise in annexation—a divorce at gunpoint rather than self-determination.

The situation in Crimea remains tense and uncertain. His Holiness the Patriarch of Kiev has expressed concern that the Ukrainian Orthodox Church of the Kiev Patriarchate will be outlawed in Crimea for its

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support of the Maidan, while other churches will be subordinated directly to the Most Holy Governing Synod of the Russian Orthodox Church in Moscow.

Similar fears and anxieties face the Crimean Tatars. They, too, were supportive of the uprising and now face an uncertain future. For many in this Sunni Muslim community, Russia is linked indelibly with Stalin’s mass deportation of Tatars to central Asia in 1944. Their communal leaders urged them to boycott the referendum, saying that the idea of holding a vote while Crimea is occupied by Russian troops was a “farce”.

Noble Lords will recall that last August the national minorities unit of the Organisation for Security and Co-operation in Europe published a report warning that:

“Crimea faces a volatile mixture of acrimonious political competition, socioeconomic exclusion, inter- and intra-religious strife and a general atmosphere of increasing intolerance”.

The referendum will have done nothing to have diminished the risk of inter-ethnic violence.

Against this uncertain and volatile background, the Christian churches of Europe, through the Conference of European Churches, have been in contact with the All Ukrainian Council of Churches and Religious Organisations, a body that includes Jewish and Muslim representatives as well as Christian churches. A letter signed by the present CEC president, known to many Members of your Lordships’ House as the recently retired Bishop of Guildford, expresses solidarity and support, urges an end to further polarisation in Ukrainian society and assures them that churches elsewhere in Europe are urging a democratic and diplomatic solution to the problems facing Ukraine. I know that Bishop Christopher Hill will be talking later this week to other European church leaders about how this solidarity and support can be given more tangible shape through the Conference of European Churches.

Even if this crisis has cast a Cold War shadow over Europe, it is important that we remain in dialogue with the Russian Orthodox Church. That is not always an easy task given the Russian orthodox world view. I am encouraged that only last month the right reverend Prelate the Bishop of London met representatives of the Russian Orthodox Church to discuss the theological education of students from the Russian Orthodox Church here in the UK. However this crisis plays out, and I pray as I am sure many of us do for a speedy and peaceful resolution, it is important that we do not sanction measures that put such dialogue at risk.

5.04 pm

Lord Howell of Guildford (Con): My Lords, I feel that in a dangerous situation of this kind the first duty is to escape from hyperbole. This is not a renewal of the Cold War and the 20th-century ideological conflict, which has passed into history. It is certainly not the greatest crisis in Europe since 1945—that is an absurd exaggeration—let alone a repeat of the horrors of Sudetenland. If anything, it is the old 19th-century struggle involving unending tensions in the eternally disputed lands between Russia and Europe and the always unanswered question of where Europe ends, whether Russia is part of it and in whose sphere the regions and the lands in between should lie.

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But there is a huge difference. In the 21st century, conditions internationally have totally changed. The world is now hyper-connected at every level, from schoolchildren in their schools, to universities, to business, to science, to major corporations and every conceivable interest in between. We are wound together in ways that not even some of our policymakers have fully grasped. Even in the past five years there has been a total transformation of the international landscape and huge shifts of power, with which some people in Moscow, and perhaps some even in the West, seem not to have caught up.

Of course there should be no appeasement of rough methods and treaty breaches, but nor should there be any hysteria. I have in mind the primitive outpourings in the New York Times and the ridiculous over-the-top piece in yesterday’s Financial Times saying that this was going to be the end of democracy in our time. Nor should we be driven by demands on the White House to show more machismo—“See off the Russkies”, and so on—and we certainly should not buy into the “weak Obama” story being spread about, although I must say that I think he made a huge mistake yesterday in using the word “never” about Crimea’s changing status. Rule 1 is never to use the word “never”. When I hear speeches of the sabre-rattling kind, I share the view of Bismarck, who said:

“The only thing we learn from history is that we learn nothing”.

He went on to say:

“The secret of politics? Make a good treaty with Russia”.

But of course he was sacked after that.

I believe that we should view the current crisis in two perspectives, which are not totally separate but which comprise two distinct areas. For the medium term, I fully support making Vladimir Putin and the cronies in his circle count the full and very painful cost of trying to use force in the rest of Ukraine, should they be so stupid as to do so. Not only will force not work in an age of street empowerment, as former President Yanukovych found out all too rapidly, but it will ruin Russia even while it certainly will hurt us as well. My noble friend Lady Warsi rightly referred to that.

However, our leverage is far greater in the medium term than many people realise. The financial screws can bring down the weak Russian financial system, while the vital gas and oil revenues, on which the whole of Putin’s Russia and certainly his inner clique float, can be drained away in due course. That is his jugular vein. Russia today is living on the hopes of high gas and oil prices; I believe that the budget can be balanced if the price is $119 a barrel. That can easily be undermined and removed. It could take time, because of course the idea that USA shale gas can come to the immediate rescue is a fantasy. It has been a fantastic story—shale gas provided 3% of US needs four years ago and provides 30% to 35% today—but just at the moment US gas inventories are extremely low and the gas export terminals are not yet completed.

None the less, gradually and in due course Europe can live without Russian gas, or it will acquire the customer power to beat down the price substantially, thus removing Gazprom’s monopoly position in the central European customer countries—as long as it is

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not stopped by misplaced green zealotry, which of course could undermine even that. Piped gas can come from Norway and from Azerbaijan in the Caspian region, while LNG can come from just about everywhere in growing quantities. Eventually, shale gas will indeed change everything, as I kept warning my colleagues in the Foreign and Commonwealth Office during my time there, but it will not be tomorrow. That is the medium term, where we are actually in a very strong position. We should have the confidence to develop it and set it out quite clearly to Mr Putin and his advisers.

It is on the immediate Crimean vote where we really need a sense of proportion and a lot of creative diplomacy. To let the Crimean situation escalate into an East-West military confrontation with total Russian isolation—if that was possible, which in fact it is not—would be to abort world recovery and to create massive worldwide suffering and probably political turmoil all round, on an impossible scale. To say that there should, instead, be a search for a deal is not appeasement; it is common sense. If there is to be a search for a deal, it should include urging Russia to wait until there is a fully elected Government in Kiev—Russia of course completely rejects the current interim Government—before rushing to complete the 100% annexation of Crimea, although it looks very late in the day from Mr Putin’s speech this morning, and to work with and talk to the new Government in Kiev when they are elected.

Ironically, taking Crimea away from Ukraine makes a Europe-inclined Government much more likely. This is a curious twist of the situation, because it would return a majority in favour of those looking west rather than east. In exchange, there could be a lifting of the targeted sanctions that we have now put in place and joint agreement in the proposed contact group, which both sides have agreed on, to work for Ukraine’s economic recovery. That will be extremely expensive, because it is bankrupt, and will only work if both sides co-operate. The final part of any package could be the re-inclusion of Russia in the G8. We should remember that Ukraine is extremely rich in all kinds of resources including, ironically, vast resources of shale gas.

It is not beyond the wit of diplomats to find an interim status for Crimea as an independent entity, as some Crimean leaders themselves have suggested. It would be a superficially independent little nation, like many others that have sprung up in recent years. However, of course, while they talk about independence, they are all in fact completely interdependent in practice, as all small nations have to be nowadays and as Scotland would soon discover if it voted for the independence illusion—it no longer in practice exists.

Lord Davies of Stamford: I am grateful to the noble Lord for giving way. I am listening carefully to the possible package that he is outlining, which might be the basis for some agreement over Crimea. Some solution must of course at some point be achieved. Does he agree that an essential part of such a package is that if we recognise the right of Crimea to exercise self-determination and join Russia if it wishes to do so—if the procedures are democratic and so forth—equally the right of the people of the rest of Ukraine

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to self-determination should also be respected? If they choose in due time to join the European Union and NATO, they should be allowed to do so and that should be recognised by Russia.

Lord Howell of Guildford: I think that those would be the unfolding ideals. It is in the interests of Russia—although I am not sure that it fully understands this—to have a stable Ukraine that is confident and able to resolve its internal differences, with the Russian-speaking part and the Ukrainian-speaking part living together. However, even that is a ridiculous division, because many Ukrainian people speak Russian and many Russian people speak Ukrainian. Until recently—until the tensions rose and there was this polarisation—no one cared a damn what language they spoke in Ukraine. It is possible for these people to live together.

The kind of evolution for Crimea that I am talking about is possible. However, the fact is that the Crimean referendum has happened, with 96% or whatever it was voting in favour, and the previous unstable status quo cannot be magically restored. I agree that there is indeed a generalised separatist movement going on all round the world, which noble Lords have already referred to. It is not just in Russia—Nagorno-Karabakh is stirring again, we hear what they are saying down in Catalonia and we know what is being said on our own island in Scotland. However, this has more to do with local digital empowerment, which is growing everywhere, than specifically with Russian imperialism.

Eventually, if we keep our minds on the true goals and interests of this country, it should be clear that it is completely in our interests to have a prosperous, open, connected and stable Russia. Russia cannot just eventually become a pariah nation, if its rulers want to survive and be part of, for instance, the World Trade Organisation, as they are, and the global economic system.

Finally, some other lessons have emerged from this. First, the European Union collectively—and we can provide some help from London—should rethink the style of its approach to neighbouring states. The EU, as much as Russia, has, I am afraid, helped to polarise a nation that could have lived together and could still live together, with the language issues being put back in the box as being largely irrelevant.

Secondly, with most countries and peoples continuously connected nowadays with an intensity never before experienced in history, with the electronic empowerment of all kinds of groups, official and unofficial, and the consequent fragmentation in the whole pattern of state power in country after country, and with the rising influence and economic weight of the non-western world—the “rise of the rest”—the whole behaviour pattern of international affairs has started to shift. For America, as much as for Europe, and the UK within Europe, if we want to prosper in these new conditions it is time to shift our attitudes as well. Force and coercion alone can no longer settle borders, crush minorities or deliver clear-cut victories, as we have bitterly discovered in many theatres in recent times. Softer and smarter methods have to be deployed, and the sooner that is grasped in Moscow, Washington and, indeed, Brussels, the better.

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5.16 pm

Lord Soley (Lab): I fear I start from a rather more depressing position than many Members of this House. I agree with the concluding remarks of the noble Lord, Lord Howell. There is a lot in what he said and I think that there was mishandling by the European Union and NATO of a number of the east European states.

I start from the position of trying to understand the Russian position. I have spent some time not only reading the speeches and comments of President Putin, which are liberally sent to me by the embassy—for which, many thanks—but I have talked to the Russian ambassador, who is a very civilised and thoughtful man. If you look at what President Putin has been saying and doing, you recognise that there is a pattern to that behaviour which is trying to reassert control over areas of which he has lost control.

I can understand that in historical terms. Russia did lose out when the Soviet Union collapsed. More importantly, although Russia has a proud history in terms of what it has achieved scientifically, culturally and in other ways, it had a truly tragic history in the 20th century: two world wars, a revolution that failed disastrously and led to millions of people dying from famine or being uprooted and deported, and of course the gulags and all that followed from that. It is a tragic history and Russians feel it very strongly. They feel equally strongly that Ukraine not only should be under their influence but needs to be because of the “fascist threat”, as they play that card. President Putin plays it but many Russians believe it, and the reason they believe it is not hard to find: a lot of Ukrainians fought for the Nazis and were particularly brutal. The reverse is also true: many Ukrainians fought for the Communists and Stalin and were also very brutal. The whole of Ukraine was brutalised throughout the Second World War period.

We can understand all that, but the basic line on this is that you do not just throw over international agreements that you have signed—and Russia did sign, as the noble Lord pointed out, the 1994 declaration which removed the nuclear weapons from Ukraine in return for a guarantee of its borders from the five permanent members of the Security Council: Britain, France, China, Russia and the United States. That is what Russia has broken, because it feels passionately that Crimea should be part of Russia. Actually, that could have been achieved. It would not be an unreasonable thing to develop.

Lord Campbell-Savours: Could my noble friend tell me where in the Budapest memorandum it refers to a guarantee?

Lord Soley: I would have to look it up to find the exact place.

Lord Campbell-Savours: It is not there.

Lord Soley: It is a guarantee that force would not be used to change the borders of Ukraine. In return, Ukraine would give up the nuclear weapons on its territory.

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In any event, even if my noble friend were right, which I do not think he is, and even if Putin were right to do what he has done, it would be disastrous, because—and I would put this very high on my list of concerns about President Putin—he plays the nationalist card. If you play the card which says, “The Russians in those territories call for my intervention to protect them”, where does that stop? The reason that people refer to Munich is not because they compare Putin to Hitler, or Russia to Nazi Germany—they do not; there is no similarity—but because there is a recognition, which plays very powerfully in the east European countries, that the Germans played the card of coming in to defend the German population and now Putin is using that argument for the Russian population, and that, once you play that card, it is very difficult to control it.

That is why I find this situation depressing. Even if President Putin says to people, “I do not want you to use the nationalist card in east Ukraine”, he has no guarantee that people will not. If they feel strongly that there is a real chance that Russia will regain the territories that it lost and that they will again come under the Russian state, which many of them would like, then you would lose control of it. We have to say, and everybody else in the world is saying, “Well, if you don’t do something about Crimea, and we didn’t do anything about Georgia and South Ossetia, then where does this stop?”. The problem is that, if you play the nationalist card, there are east European states which have real reason to be fearful, particularly the Baltic states—and they are members of NATO.

Please let us take a very hard look at this. I am not intending today to make any suggestions to the Government about the way forward. I agree that it must be a diplomatic way forward, but when people say, as they have been saying quite recently, “Nobody wants a war about this”, I simply remind them that in 1913 people were also going around saying, “Nobody wants a war”. The real danger of this situation is that someone will lose control of it. It is not controllable particularly when you play that nationalist card, so you get all sorts of unintended consequences. I understand the feelings of my noble friend Lord Campbell-Savours about this, but, frankly, you have to face up to the fact that, if you do not stop it somewhere, you cannot control it and it is right outside your control. We have been round this track before; it is a dangerous track.

The great thing about Russia is, as the noble Lord, Lord Howell, indicated, that many things are happening there that are very encouraging and exciting. You can see it moving back towards the more open and free society that we all want it to be. But I simply say that there have been three or four occasions in the past 100-odd years when Russia was doing that and, each time, it tripped over and failed. That is its tragedy, and none of us should underestimate the strength of feeling in Russia about being surrounded and invaded, and about its own inability to be the top power.

The other thing that stands out, particularly in Putin’s comments and speeches on this, is his anger and frustration that the United States is seen as the dominant power and that he is not seen as its equal, which is why he tries to rubbish some of the west

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European powers such as ourselves and others and why he tries to set himself up on an equal basis with the United States. As the noble Baroness, Lady Warsi, will know, I have been saying for the past two years that you will not get Assad to the table on Syria until President Putin makes him go there. Now that we have just seen the latest military advances of Assad’s armies in Syria, you know that that is right. Putin does not have an interest in settling the Syrian dispute other than under President Assad’s control. That is another one that we have probably lost. We have probably lost Crimea, although, as I have said, you can make a case for that. The tragedy is that it would have been perfectly possible, had Russian diplomacy been up to it, to say, “Look, we want a settlement along that border area that includes Crimea coming back to Russia”. That would have had to be with guarantees for the minorities there, because if I was a Tatar or one of the others in the Crimean peninsula, I would be deeply worried.

I have just a couple of concluding remarks. First, it would be naive in the extreme to think that this will stop here. My worry is that it will continue. We need to face up to that reality. Secondly, and very importantly, the European Union must get real about a foreign policy and a defence policy. One reason we misplayed our hand in east Europe is because we did not have clear policies. I take my hat off to my noble friend Lady Ashton who did a great job on Iran and a range of other things, but we do not have in Europe a foreign policy or a proper defence policy. We still have to rely on the United States. We are in a situation now where there is a leader in Russia determined to assert his authority over the areas formerly controlled by the Soviet Union as it then was. He wants to control those and we have a weak and divided Europe. Where have we heard that before?