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Lord Fraser of Carmyllie: My Lords, I am reluctant to engage in a debate with the noble Lord and my noble friend on tax matters. What is being removed is the preferred status of an individual who is presently within an approved scheme. That will fall away. The individual will find himself in exactly the same position as someone who is now a member of an unapproved scheme. What will be lost is the benefit of the delay in making the capital gains payment, the annual allowance and the opportunity to set any CGT indexation against the whole gain. That is the figure that I have been given, and I have no reason to believe it is wrong. It is not simply a forward guess but is based on the position in the past.

One of the important recommendations of the report is that in future remuneration committees should be made up of non-executive directors, with no potential conflict of interest arising from cross-directorships. When the noble Lord manages to get to the Printed Paper Office and look at the code of best practice, he will find that that is the recommendation under A4. I do not suggest that that does not mean that those who are part of a remuneration committee will not have an idea of what may be comparable salaries around the industry. However, what has been regarded as objectionable by some people is the situation where there has been a rather intimate set of cross-directorships. It is now the clear recommendation that that rather cosy arrangement should not continue, certainly with regard to the remuneration committee.

Lord Mayhew: My Lords, will the Minister kindly elucidate further what he has said about exemptions? If, as I understand it, the Chancellor proposes to change the taxation of gains from capital gains tax to income tax, the taxpayer will pay 40 per cent. of the £6,000 exemption on capital gains; that is to say, £2,400. Each person will pay exactly that sum. Someone who has gained £10,000—perhaps an employee—will pay 24 per cent. of his gain, whereas someone who has made £1 million will pay 0.24 per cent. of his gain. Is that the intention of the Government?

Lord Fraser of Carmyllie: My Lords, the present situation is that if the individual is within an approved scheme and makes a gain at the time he exercises his option, no tax is then payable. It is left aside until there is a sale, at which point both the gain made earlier and on the eventual sale is all treated as capital gain. If it is so treated and in that year the £6,000 exemption is not taken up, the individual can take advantage of that. There must be a real value in not having to pay tax immediately. A further feature of that is indexation. The effect of the changes proposed by the Chancellor of the Exchequer with effect from an exercise as of today is that those who are in approved schemes will find themselves in exactly the same position as individuals in unapproved schemes; that is to say, any gain made at the point that the option is exercised will be treated as subject to income tax rather than capital gains tax at an indeterminate point in future.

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Lord Morris: My Lords, many will welcome Her Majesty's Government's early support of what I understand to be the central tenet of the recommendations of the Greenbury Report, namely, that any increase in remuneration should be linked to performance. My question is simply: performance of what or by whom?

Lord Fraser of Carmyllie: My Lords, clearly there are a number of detailed features of performance that one will expect the remuneration committee to consider. What I believe is important is that there should be clearer confidence that, where the remuneration committee exercises its discretion, there should be no hint that there is a cosy relationship between the individual whose remuneration is to be considered and those who have the power to award it. I believe that if the proposals that the Greenbury group has advanced are implemented, much of the concern that has been expressed should fall away.

Lord Eatwell: My Lords, in his early consideration of this matter Sir Richard Greenbury recommended that directors' pay should normally move broadly in step with that of other employees and should not shoot ahead by the massive percentages that we have seen in the case of the utilities. However, that proposition by Sir Richard Greenbury does not appear in the report. Are the Government in agreement with Sir Richard's initial position or not?

Lord Fraser of Carmyllie: My Lords, our view is that pay should be carefully determined by a remuneration committee that can regard the matter objectively, having regard to the performance of the individual and, within that context, the performance of the company. What we do not wish to see introduced is any kind of maximum pay policy which says that because other employees receive such and such a rate it necessarily follows that the chief executive and others must receive remuneration at exactly the same rate. In certain circumstances it would not be difficult to envisage a case where the chief executive, according to some of the more modern arrangements in place, received a cut in pay related to the overall performance of a company, or employees, such as those working on the tills in Marks & Spencer last year got their pay increases while Sir Richard Greenbury did not.

Lord Boardman: My Lords, might not the quickest, most expedient and satisfactory way to deal with the recommendations of the report be to encourage the Stock Exchange—if it needed any encouragement—to include this in their rules of conduct, known as the yellow book? That would be completely binding on all listed companies, including those that had been recently privatised.

Lord Fraser of Carmyllie: My Lords, I have already indicated that it is my understanding that the Stock Exchange welcomes what has been proposed by the Greenbury group and will adopt a two-part approach to implementation by introducing these features into its listing rules: some will be core requirements and others

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recommendations. What is critical about the recommendations is that if they are not followed through there will be a requirement for the disclosure of the reasons for not following them and an explanation.

Privacy and Media Intrusion

4.28 p.m.

The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, with the agreement of the House, it may be convenient if I repeat a Statement made by my right honourable friend the Secretary of State of the Department of National Heritage in another place on privacy and media intrusion. The Statement is as follows:

    "With permission, Madam Speaker, I shall make a statement about the press and privacy.

    "I am today publishing the Government's response to the Report of the National Heritage Select Committee on Privacy and Media Intrusion. Copies are available in the Library and Vote Office.

    "I pay tribute to the Select Committee for their report. The Government very much appreciate the committee's patience in their long wait for this response. The issues in this area go to the heart of our democracy, and the Government have thought about them long and hard. In every democracy there is a balance to be struck between the rights of individuals to personal privacy and the freedom of the press. As the Select Committee recognise, this is not always easy to achieve.

    "It is a proud feature of our free nation that for 300 years, other than as a necessity in times of war, the United Kingdom press has been at liberty to write whatever it chooses, subject to the constraints of the law as it applies equally to all citizens. Such freedoms are jealously guarded by the press itself and by this House. The surest means of protecting these freedoms is to ensure they are used responsibly.

    "Overall, the quality and standards of our local, regional and national press are high. However, some newspapers have ridden roughshod over people's privacy when there was no possible justification for doing so. Cases concern not just those in public life but private citizens who become the subject of media scrutiny through circumstances not of their choosing. People are entitled to privacy for themselves and their families. In response to these concerns the industry has taken a number of steps. An independent, non-statutory Press Complaints Commission was set up at the beginning of 1991. Lord Wakeham was appointed as chairman of the commission at the beginning of this year. He has considerably strengthened it. The majority of its members are now independent of the press and bring robust common sense to the cases before them. Lord Wakeham set out the steps he has taken in a recent letter to my predecessor. It is published today as an annex to the Government's response.

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    "The development of a national code of practice for the press is a significant improvement on what has gone before. The code, and how it is applied, is being shown to have effect. The House will be aware, for example, of a recent instance where the editor of a Sunday tabloid was publicly reprimanded by the newspaper's proprietor for breaching the code. More needs to be done. I am glad to note that, as the Select Committee recommended, increasingly compliance with the code is being written into the employment contracts of editors and journalists.

    "Lord Wakeham is bringing forward proposals for discussion on how both the public and the PCC can contribute to revising and further toughening the code of practice. This is welcome as are his proposals for performance targets against which to measure the commission's efficiency and responsiveness.

    "It is essential that self-regulation is both effective and seen to be effective. There have been improvements to the PCC. Lord Wakeham is committed to doing more.

    "I have written to him setting out further improvements the Government wish to see both in the procedures of the PCC and in the code of practice itself. My letter is published as an annex to the Government's response to the Select Committee.

    "We recommend that the PCC pays out compensation to those who it judges have had their privacy violated by the press. Such awards would be paid from a fund set up by the industry. This would be a collective recognition from the industry that one of its members had wronged a member of the public.

    "We have proposed several ways in which the code of practice might be further tightened up. In particular, there are several points where the language of the code should be more precise, or the emphasis changed, to place greater weight on the protection of individual privacy.

    "We support the Select Committee's call for a direct and rapid line of communication between the chairman of the PCC and newspaper editors. This would be used to warn them where, in the chairman's judgment on the basis of evidence submitted to him, the code was about to be breached. This could be used to head off abuses. It is also important that the public have rapid and direct access to the PCC. This facility should be well publicised in the press so the public are aware of it.

    "The Government have considered carefully whether legislative options should be pursued, rather than the self-regulatory alternative. We have decided for the present to allow Lord Wakeham's commission, and the press, to demonstrate that self-regulation can be made to work. Let me say something though about each of the legislative alternatives.

    "The Heritage Select Committee and Sir David Calcutt's 1993 Report before it both took the view that legislation was needed to prevent abuses by the press. However, there is disagreement about the best remedies to apply. Sir David Calcutt recommended a statutory press complaints tribunal, but this was rejected by the Select Committee.

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    "The Government agree with the committee that a statutory press complaints tribunal would not be right. We believe in a free press. Like the committee, we are reluctant to see statutory controls. A statutory tribunal would be a very significant step on a path we have no wish to travel. For the same reason we cannot accept the committee's recommendation for a statutory ombudsman.

    "I come next to the Heritage committee's recommendation for a protection of privacy Bill with both civil and criminal elements. The criminal elements would be similar to the intrusion offences proposed in the Calcutt Report. However, the Select Committee, unlike Calcutt, would extend the offences to cover intrusion for any purpose and not just for publication.

    "The Government have made it clear that they see attractions in principle in the use of the criminal law to prevent and penalise blatant and unjustified intrusions into the privacy of individuals. Nor could the owners or editors of most newspapers, we believe, legitimately object to sensible laws in this area.

    "The Government have therefore given the most painstaking consideration to how the necessary legislation might be drawn up. In particular, they examined from every angle how the Calcutt offences might work in practice. This work is described in detail in Chapter Three of the Government's response.

    "We have been guided by the principle that the law must be both clear and enforceable. It must have a good chance of catching those who are abusing their powers while not inhibiting legitimate journalistic investigation. Any legislation would have to establish a balance which protects privacy while allowing responsible journalism and without creating defences that were so wide as to render the offences meaningless.

    "We have been forced to conclude that the difficulties of scope and definition of the proposed offences, and the necessary defences, are formidable. The Government would prefer to see a self-regulatory process than to introduce a law which could create more problems than it is designed to solve. The Government therefore have no immediate plans to legislate in this area.

    "The Select Committee also recommended a civil remedy for infringement of privacy. This would give victims of infringements of privacy a right to damages and to seek injunctions. My noble and learned friend the Lord Chancellor and the then Secretary of State for Scotland consulted on a new civil remedy in 1993.

    "The consultation did not generate the clear support which the Government look for when considering major measures of law reform. The Government are not yet persuaded that there is sufficient consensus on which to base statutory intervention in this area. Moreover the Government strongly prefer the principle of self-regulation.

    "On balance therefore the Government have decided not to legislate for a new civil remedy, at least for the present. We do believe however that the

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    right to privacy should be more explicitly spelt out in the industry's code of practice. For this reason we are publishing, as an annex to our response, what a civil remedy might look like with the recommendation that elements of it should be incorporated into the code.

    "The whole House will look to the industry to respond positively to the recommendations set out in my letter to Lord Wakeham. Self-regulation still has a case to prove. Despite the serious practical difficulties, legislative measures should not be ruled out.

    "The fact is however that self-regulation is the most practical way forward. The appointment of Lord Wakeham and the approach he is taking offer the best opportunity for some time that self-regulation will be made to work in a way which commands public confidence. There are signs of a growing recognition among editors, including past miscreants, that the right of individual privacy is not to be casually cast aside.

    "The industry now has to back the PCC and to make self-regulation fully effective. This is an issue which the Government and this House will and should continue to monitor and debate."

My Lords, that concludes the Statement.

3.38 p.m.

Lord Donoughue: My Lords, I thank the Minister for that Statement, such as it is. The House will be aware that the Calcutt Committee first reported on privacy five years ago, on press self-regulation two and half years ago, and the National Heritage Select Committee some time ago. A remarkably long gestation period has been needed to give birth to this little mouse. Rarely can so many have laboured so long to produce so little. There appears to be a strong whiff of appeasement in the air. I am bound to say that at least Stanley Baldwin, although afraid of the Germans, was not afraid of the press.

On the central issue of the tort of privacy, I see the Government's problems, especially where legal aid is not available, though I note that our neighbours, the French, have resolved those problems. Moreover, the European Convention on Human Rights contains a definition of, and protection for, the right of privacy. I can say now that on this side we believe that that right should be entrenched in British law together with the right to freedom of expression, when properly exercised, as also in the convention, and freedom of information, and that those three pillars (privacy, freedom of expression and freedom of information) strike the right balance between ensuring that the public interest and the right to know matters of genuine public concern are published, while protecting the right of private individuals to their privacy.

In one area of that, where the Government, as in all areas, are doing nothing, Calcutt was, in my view, good and clear on preventing technological intrusion. He states clearly that various acts of physical intrusion should be criminal offences. The Select Committee supported that and in fact widened it. I shall remind the

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House what those acts were. They were entering private property without consent to obtain personal information for publication; placing surveillance devices similarly; taking photographs or recording voices of individuals on private property for publication without consent; the improper interception of private telecommunications and, of course, the low hooliganism of journalists "doorstepping". Those seem to me to be clear offences which should not be tolerated in a civilised society. Many Members of both Houses and the Select Committee have expressed concern. I should point out that the public supports constraints in those areas. A while ago, there was a Gallup poll which showed over 80 per cent. of the public supporting constraints in those areas. But it was, surprisingly, one of the polls that the press did not consider interesting enough to print.

I am not talking about protecting the rich, the powerful and the politicians because they have their own ways of protection—and, in public life, one is properly exposed—but about ordinary citizens exploited in situations of painful, family grief. I am talking about the sick and what happens with their medical records and especially about the mentally ill, where there have been many appalling cases of abuse. The range of offences is wide and the bad record of the press is very long. I am unconvinced as to why there is no proposed legislation for those specific offences.

The Government say that there are problems with definition and enforcement. I do not accept that. Moreover, lawyers do not accept that fact. We know in this House that such problems of definition and enforcement have not deterred the Government in many other areas of legislative endeavour. Indeed, we seem to spend much of our time on such cases. I wonder whether it is true, as is widely asserted, that the Department of National Heritage—a decent department—was willing to operate in those areas but the Home Secretary refused because he was afraid to offend the press ahead of an election.

On self-regulation and the Press Complaints Commission, we welcome the recent and proposed improvements of its conduct. The membership is better now with a lay majority; but I believe that it needs an even better lay majority. It was certainly ludicrous when it was composed of representatives of the press. I remember an old saying that, if you were setting up a committee to devise a better mousetrap, you would not compose it entirely of mice. Therefore, it needs a bigger membership and a further tightening of the code would be welcome. I believe that the entrenching of code conditions in journalists' contracts of employment is an improvement, but it should be made universal. I wonder whether there are any proposals for that and if the commission will try to pursue them.

I should also say that the commission only responds to complaints. Many individuals are actually afraid to complain. They feel that the press will be vindictive towards them. They feel intimidated. I believe that the commission should be encouraged and enabled to take the initiative in pursuing the press on matters of genuine public concern. We also think that it should have a better research capacity so that it can pursue such matters.

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The Calcutt Report recommended that if the press fails to demonstrate that self-regulation works, there should be a statutory system. On this side of the House, we have reservations about a statutory system; indeed, we note that the Government have rejected it. However, the Government have also rejected the Select Committee's recommendation for an ombudsman. I do not understand that. Therefore, in this, as in other areas, they are doing nothing. Do they feel that self-regulation is now working or that it will work? It is interesting to note that, since the first Calcutt Report, the past five years have seen the most irresponsible press behaviour with the worst intrusions into privacy this century. Perhaps the Minister will tell us what degree of irresponsibility constitutes failure and where they would look again.

As the announcement makes clear, the Government are doing nothing. They are doing nothing on the criminal offences of the various kinds of physical intrusion. I must tell the Minister that that is an area which was very specifically defined in Calcutt, and indeed in the Select Committee's report, and where we on this side of the House could have joined the Minister and formed a great deal of consensus. There is nothing on the Select Committee's recommendations for a civil remedy for the infringement of privacy and nothing on the ombudsman.

The Government are relying on the Press Complaints Commission which is an honourable and well-meaning body which we give all our support. However, we really cannot believe that that will be enough when the press is inevitably a commercial operation and driven by circulation wars. In those situations, we cannot believe that the odd rap on the knuckles from the commission or a rather contrived rebuke from a newspaper proprietor to a journalist—we notice that no one is sacked—will be enough. I have to say that this is an extremely disappointing document.

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