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Lord Harris of Greenwich: My Lords, is the Minister aware that many of us have a great deal of sympathy with the point made by the noble Lord, Lord Hurd? Is he further aware that any proposal to merge the prison inspectorate with that dealing with the Probation Service would be fiercely opposed by many in this House? The merger of the two inspectorates would undoubtedly have the effect of undermining the strong position of the Chief Inspector of Prisons.

Lord Bassam of Brighton: My Lords, perhaps I should reiterate the point that it is not our intention to do anything that would undermine the independence or effectiveness of the Chief Inspector of the Prison Service in any way, shape or form—or, for that matter, of the Probation Service. I suggest that the noble Lord should ponder the point that issues of sentencing, combination orders, flexible punishments, throughcare, and the CARATS programme—all regimes that attempt to address offending behaviour, and in particular the offending behaviour of those with drugs or alcohol abuse problems—are properly concerns of the inspectorate. Looking at different ways in which the probation inspectorate and the prisons inspectorate may work together with that independence and robustness of nature will help us to improve the regime in prison and the treatment of offenders outside prison.

Lord Elton: My Lords, surely the way to keep the closeness between the inspectorates is by close conversations between the inspectors, not by turning their appointments into one post. Is the Minister aware that on this side of the House, among Members with whom I am familiar, there is a strong feeling that to reduce or dilute the authority of the Chief Inspector of Prisons by giving him another job—that of looking after the Probation Service—would reduce his authority? It is most important that whoever takes the post shall have absolute security of tenure during his contract so that he may give his opinions—however unpopular—without fear.

Lord Bassam of Brighton: My Lords, I take to heart the comments made by the noble Lord. They are both well meant and well measured. We do not wish to dilute or in any way undermine the position of the Chief Inspector of Prisons. That is not the intention of the Government. We need a robust and genuinely independent inspectorate. Sir David has done a splendid job in that regard and I trust that he will continue so to do. His reports are widely circulated; they are also widely read and well understood. Their importance should not be undermined in any way.

Trafalgar Square: Feral Pigeons

3 p.m.

Baroness Gardner of Parkes asked Her Majesty's Government:

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Lord McIntosh of Haringey: My Lords, no significant risk to public health through casual contact with feral pigeons has been proved either in Trafalgar Square or elsewhere. Her Majesty's Government therefore do not propose to take any action on the issue.

Baroness Gardner of Parkes: My Lords, I thank the noble Lord for that Answer. However, I should point out that his response appears totally to contradict the statement made by Dr Tim Wreghitt of the Public Health Laboratory Service, who said that 60 per cent of pigeons are infected with disease. He further stated that, "inhaling dust from dried faeces can give you an infection". Is the noble Lord also aware that a South Yorkshire coroner has warned against people coming into contact with feral pigeons? He pointed out the particular problems caused by pigeons in Trafalgar Square. Given that the noble Lord's department issues licences to enable people to sell pigeon food, would he consider changing over to issuing licences for the sale of disposable face masks in order to help those licensees to retain their livelihoods?

Lord McIntosh of Haringey: My Lords, advice from our veterinary team states that although diseases are carried by birds, those diseases are likely to be conveyed to human beings only when they are in prolonged contact with pigeons; in enclosed spaces or in the presence of dust from feathers or guano; and when eating food contaminated by pigeon droppings. None of those conditions applies in Trafalgar Square. For those reasons, we do not think that the South Yorkshire coroner was right to come to such a conclusion as regards Trafalgar Square as a result of hearing a case concerning extrinsic allergic alveolitis which had been reported in the local area. Under the circumstances, no, we do not take the view that the last remaining licence for selling pigeon food in Trafalgar Square should be withdrawn. It will in any case expire on 30th September. After that the responsibility for renewal will fall to the Mayor for London.

Baroness Trumpington: My Lords, although I am entirely in favour of private enterprise, does the noble Lord agree that a health risk could be posed from the practice carried out by some who trap the pigeons with nets and then flog them to restaurants? I do not believe that eating Trafalgar Square pigeons can be good for one's health, or at least not for mine.

Lord McIntosh of Haringey: My Lords, is the noble Baroness suggesting that restaurants serve pigeons from Trafalgar Square?

Baroness Trumpington: My Lords, yes.

Lord McIntosh of Haringey: My Lords, I am appalled at that suggestion. I should have thought that they would be too tough and taste too unpleasant.

Viscount Falkland: My Lords, does the noble Lord agree that feral pigeons form as much a part of the

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London scene as do red buses and London taxi cabs? Surely the health of citizens and visitors is affected more by the emissions from those vehicles than by the feral pigeons?

Lord McIntosh of Haringey: My Lords, I do not think that under any circumstances the atmosphere in Trafalgar Square would be conducive to good public health. However, the noble Viscount is quite right. In 1996 a study was carried out on the pigeons in Trafalgar Square. The recommendation at the time was that steps should be taken to reduce the pigeon population. However, there was a public outcry and any suggestion that the licence should be taken away from the last pigeon foodseller found no popularity.

Lord Mackay of Ardbrecknish: My Lords, while reflecting on the situation in Trafalgar Square, is there any truth in the rumour that the Government are contemplating erecting a statue of the Prime Minister on the vacant plinth in order to test whether the feral pigeons have a higher regard for him than does the Women's Institute?

Lord McIntosh of Haringey: My Lords, I answer serious questions.

Baroness Gardner of Parkes: My Lords, in view of the noble Lord's response to the question put by my noble friend Lady Trumpington, does he know that a court case was held because a man was trapping pigeons in the square? Many felt that he should have been applauded rather than charged for so doing.

Lord McIntosh of Haringey: My Lords, that rather depends on the reason why he was trapping the pigeons. If he was trapping them for sport, I dare say that there are those sitting on the Opposition Benches who would defend that practice on other grounds. If he was trapping them to sell as food in restaurants, I repeat what I said to the noble Baroness, Lady Trumpington; it seems to be a very unpleasant idea.

Lord Jenkins of Putney: My Lords, as one who has been treated in a most unseemly fashion by the pigeons in Trafalgar Square, may I stand up for their right to do the same to anyone who follows in my footsteps?

Lord McIntosh of Haringey: My Lords, for his age, my noble friend has a very fine head of hair.


3.5 p.m.

Lord Carter: My Lords, after Consideration of Commons Amendments to the Financial Services and Markets Bill, my noble friend Lord Bassam of Brighton will, with the leave of the House, repeat a Statement which is being made in another place on hunting with dogs.

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Licensing (Young Persons) Bill

Brought from the Commons; read a first time, and to be printed.

Railtrack (Waverley Station) Order Confirmation Bill

Considered on Report.

Financial Services and Markets Bill

3.6 p.m.

Lord McIntosh of Haringey: My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.


[The page and line numbers refer to HL Bill 32 as first printed for the Lords.]


180 After Clause 149, insert the following new clause—

.—(1) Subject to subsections (2) and (3), the Authority is authorised to include in the code issued under section 110 a statement that behaviour of a person which is in conformity with the City Code does not amount to market abuse.
(2) Subsection (1) does not apply in respect of behaviour which satisfies the condition in section 109(2)(a).
(3) A statement made under subsection (1) may include such conditions and limitations as the Authority considers appropriate, including conditions and limitations specifying the behaviour and the persons covered by the statement.
(4) The Authority may at any time alter or replace any statement made under subsection (1).
(5) If a person behaves in a way which fulfils the requirements of any statement included pursuant to subsection (1) in the code issued under section 110, that behaviour of his is to be taken, for the purposes of this Act, as not amounting to market abuse.
(6) In this section—
"behaviour of a person which is in conformity with the City Code" means behaviour of a person which in the opinion of the Panel conforms with the responsibilities imposed on that person by the City Code;
"the opinion of the Panel" includes any revised opinion formed by the Panel as a result of any further consideration;
"City Code" means the City Code on Takeovers and Mergers issued by the Panel as applied by the Panel and as amended from time to time by the Panel;

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"the Panel" means the Panel on Takeovers and Mergers.")
The Commons disagreed to this Amendment but proposed the following amendment in lieu thereof—

180A After Clause 110, insert the following new clause—

(" .—(1) The Authority may include in the code issued by it under section 110 ("the Authority's code") provision to the effect that in its opinion behaviour conforming with the City Code—
(a) does not amount to market abuse;
(b) does not amount to market abuse in specified circumstances; or
(c) does not amount to market abuse if engaged in by a specified description of person.
(2) But the Treasury's approval is required before any such provision may be included in the Authority's code.
(3) If the Authority's code includes provision of a kind authorised by subsection (1), the Authority must keep itself informed of the way in which the Panel on Takeovers and Mergers interprets and administers the relevant provisions of the City Code.
(4) "City Code" means the City Code on Takeovers and Mergers issued by the Panel as it has effect at the time when the behaviour occurs.
(5) "Specified" means specified in the Authority's code.").

Lord McIntosh of Haringey : My Lords, I beg to move that the House do not insist on their Amendment No. 180 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 180A in lieu thereof.

I do not propose to detain the House with a detailed discussion of the background to these amendments. It is well-trodden ground and it has received plentiful coverage in the press. However, in order to avoid any doubt, I shall reiterate the Government's full support for the work done by the Takeover Panel in overseeing the process and conduct of takeovers. The panel carries out an important job and does it extremely well. We want to see that continue.

Contrary to some misleading reports that have appeared in the press, this is not a Bill to regulate takeovers. Our amendment does not give the FSA any powers to interfere in the work of the panel nor does it require the panel to seek the views of the FSA before taking action. At earlier stages we gave careful consideration to the arguments concerning the Takeover Panel. We concluded that nothing needed to be done. Indeed, it remains our view that the Bill, as introduced to your Lordships' House, would not have affected the position of the panel. The FSA intends to adopt robust policies which will keep it out of tactical manoeuvres by parties to a takeover. We are satisfied that those policies will work well.

It is important to remember that there is at present a measure of overlap. It exists between, on the one hand, the panel's rules and the regulatory regime and criminal offences of market manipulation and misleading statements on the other. To date, this has not caused any problems. The courts have taken a

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strong line, refraining from interfering during the course of takeovers. The noble and learned Lord, Lord Donaldson of Lymington, referred to that in the debate at Third Reading when he said that the courts would give no injunctive relief. We have no reason to suppose that in the future the courts will take a different view.

However, we have responded to the arguments that have been put forward in the House. In light of those arguments, we judged it prudent and sensible to propose a "safe harbour" amendment for the Bill. We did so at Third Reading. The amendment then brought forward would have allowed the FSA to provide a safe harbour for behaviour in conformity with all or part of the City code produced by the panel. However, again, concerns were expressed at Third Reading that the FSA should not be able unilaterally to impose its own interpretation, but in essence should be guided by the panel's interpretation.

We have addressed those concerns. Although we cannot allow Amendment No. 180 to remain part of the Bill, for reasons that I shall explain, we have made important improvements to the amendment previously tabled in this House.

Perhaps I may repeat what I said at Third Reading:

    "Given ... the nature of the [City] code and the panel's role in interpreting and applying it, I would naturally expect the FSA to take the panel's view before it decided whether behaviour fell within the safe harbour which the government amendment would enable it to provide. It would be very foolish if it did not .. I would expect the tribunal and, if the matter came before them, the higher courts, to attach due weight to the panel's views in accordance with established case law"—[Official Report, 18/5/00; col. 403.]

Our Amendment No. 180A will ensure that that happens. The FSA will be under a statutory duty to keep itself informed of the way in which the panel interprets and administers the relevant provisions of the code. This will mean that the FSA will have to have arrangements in place for seeking the panel's views on whether behaviour is in conformity with the City code. It will have to take this fully into account when deciding whether to act in cases of possible market abuse. The panel's views will be bound to carry a lot of weight with the FSA, the tribunal and the courts.

This issue was one of great importance in our earlier debates. I am pleased to have found a form of words which meet the concerns expressed by the noble Lord, Lord Newby, and others. This the right result. To go further would be to go too far and to make the panel the final arbiter of market abuse during takeovers. Apart from being objectionable as a matter of principle, this would also have consequences for the panel which might cause it a great deal of concern if it really thought about it. Under our amendment, the decision on whether behaviour amounts to market abuse will always rest with the FSA, the statutory regulator, and ultimately with the independent tribunal to be established under the Bill. Amendment No. 180, on the other hand, provides a safe harbour for behaviour which in the panel's opinion conforms with the City code. This would give the panel the power to decide that a person has not engaged in market abuse.

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In another place, the Liberal Democrat spokesman, Dr Vincent Cable, having listened to the arguments on both sides, supported our approach. He said:

    "If there is a conflict of jurisdiction and a choice has to be made, the FSA should prevail. The amendments make that clear so that the uncertainty and ambiguity about which Conservative Members have expressed concern do not arise".

He went on to say, before his party joined the Government in the Division Lobby, that,

    "The peers' judgment"—

that is, on our latest amendment—

    "was that there was no need to raise further objections because the fairness point had been accepted, the jurisdiction had been clearly defined and the work of the takeover panel had been incorporated".—[Official Report, Commons, 5/6/00; col. 100.]

As I have said previously, the issue of principle is simple. Should the ultimate decision on whether action constitutes market abuse, as defined in the Bill, rest with the statutory regulator, the FSA and the tribunal, or with the non-statutory Takeover Panel? The answer is equally straightforward. It must be right, in what I should expect to be the very rare event of a disagreement between the FSA and the panel, that the last word should rest with the FSA and the independent tribunal.

If Amendment No. 180 were allowed to remain in the Bill, I believe that, having taken advice at the highest level, there would be important consequences, particularly in terms of the European Convention on Human Rights, which were not appreciated by those who drafted the amendment. Giving the panel the final right to decide whether particular behaviour amounted to market abuse would, in effect, give it statutory functions. These functions would involve the determination of civil rights, and even possibly what would be regarded as criminal charges under the European convention.

Throughout the passage of the Bill, the Opposition have rightly insisted—the noble Lord, Lord Kingsland, has been admirably persistent on this point—that in exercising such functions the FSA should be fully accountable and that there should be the safeguard of access to an independent tribunal. We have ensured that the market abuse regime is fair, transparent and certain, with appropriate safeguards set out on the face of the Bill. These include the safeguards necessary to ensure compliance with the ECHR where what is at issue is the determination of criminal liability.

Let me make it clear that I am not questioning the arrangements for the accountability of the panel in the usual context in which it operates. This simply means that they are not appropriate here. They were never designed to deal with the determination of whether market abuse has occurred under Part VIII of the Bill. Against that background, I am sure that the amendment proposed in another place is the right one to deal with the concerns that have been expressed. Amendment No. 180A will ensure that if problems arise in this area—we are confident that they will not—adequate and effective safe harbours can be provided. That will be done without compromising the position of the panel or the single statutory regulator, the FSA.

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I do not know whether the noble Lord, Lord Alexander, would like me to speak to his amendment now or to reserve my remarks until the end of the debate. The noble Lord indicates that he would like me to reserve my remarks. I commend to the House the proposed amendment made in another place in lieu of Amendment No. 180.

Moved, That the House do not insist on their Amendment No. 180 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 180A in lieu thereof.—(Lord McIntosh of Haringey.)

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