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House of Lords

Wednesday, 21 November 2007.

The House met at three o'clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Newcastle): the LORD SPEAKER on the Woolsack.

Financial Institutions

Lord Renton of Mount Harry asked Her Majesty’s Government:

Lord Davies of Oldham: My Lords, there is nothing I can usefully add to what the Chancellor of the Exchequer said in the other place on 11 October.

Lord Renton of Mount Harry: My Lords, I confess that I find that an extraordinarily disappointing reply. I have to say that I think that we deserve better. Is it not true that the Government have, perhaps unwittingly, created the landscape in which a financial crisis could arise and has done? Is it not also true that while in the years 1997 to 2004, it might have been sensible to create a Financial Services Authority that first took over banking supervision and then added the regulation of general insurance and mortgage companies, that is not sensible today? Times are very different. Surely it would be right at the moment for the Bank of England to have clear over-riding responsibility for the health of the system while the Financial Services Authority acts as a junior partner looking after the liabilities and the balance sheet of financial companies. That must be the way to go at the moment. Please would the Minister take steps in that direction towards the Chancellor?

Lord Davies of Oldham: My Lords, I am sorry the noble Lord was disappointed by my initial reply, but he will recognise that the Chancellor of the Exchequer was explicit about the way in which the tripartite system works. It has been tried and tested on a number of occasions. Of course, this is a very serious test indeed, and there are lessons to be learnt from the developments with regard to Northern Rock, but the noble Lord will recognise that the Chancellor has made it clear that each of the institutions involved will evaluate its work over this period. He expects the Financial Services Agency to produce its report on its work by the end of the year. Of course, evaluation is going on on the operation of the system, but it should be recognised that it has stood this country and its economy in good stead. It should also be recognised that it is much admired elsewhere in the world and others are eager to follow a similar strategy to tackle what we all recognise is a very difficult situation.

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Baroness Noakes: My Lords, how can the Minister stand there and say that this system has been tried and tested? At its first trial, it failed dismally. How can the Minister stand there and say that in the six weeks since 11 October he has nothing to add on how the tripartite arrangements need to be changed for the future? It is clear that the Government have to take some action. When are they going to share that with the House?

Lord Davies of Oldham: My Lords, the Government could be criticised if the component parts of the tripartite system were not devoting all their energies to solving the problem of the distressed bank. Whether action could have been taken at a different time in a different way by any of the principals and whether procedures need to be improved needs to be evaluated over time and needs full consideration, but the priority is to solve the problem.

Lord Bilimoria: My Lords, Britain's regulatory system has long been admired, but under the tripartite arrangement between the Bank of England, the FSA and the Treasury, when times have been good, it has been a happy merry-go-round but, now that times are bad, it has become a miserable blame-go-round. Will the Minister please clarify who is responsible for what?

Lord Davies of Oldham: My Lords, as I said, the Chancellor of the Exchequer made absolutely explicit in his Statement who is responsible for what. Of course I can reply directly to the noble Lord in the Chancellor's terms. Unfortunately, as is to be expected, the Chancellor's terms occupy two paragraphs or more, which is well beyond the scope that I have for answering an individual question today. I emphasise to the noble Lord that the Government have been entirely explicit about the roles of the three members of the tripartite system. They have, of course, been questioned: there have been not only general questions here and in the other place, but the Treasury Select Committee has examined each of the principals and listened to their responses. We are quite clear on how they work.

Baroness Kingsmill: My Lords, does my noble friend agree that the recent problems of Northern Rock have resulted far more from a failure of management than from a failure of regulation; that regulations that exist are robust and sensible; and that no one would want them to be any stronger than they already are? It has been a failure of management that has caused the recent problems.

Lord Davies of Oldham: My Lords, I am grateful to my noble friend. There is a danger from the interesting questions that emerge, primarily from the Opposition, that anyone would think that the Government had conjured up this problem out of thin air, when the bank is failing—admittedly, as we all recognise, in difficult international financial circumstances, which began in the United States of America—as my noble friend so accurately identified, through deficiencies of management.

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Lord Newby: My Lords, does the Minister accept that the principal failure in this case was not one of the tripartite system but a failure, first, of the FSA, by being far too dilatory in taking action to review what Northern Rock was up to and, secondly, of the Bank of England, for not moving more quickly in August; thirdly, that has now been compounded by the Chancellor not moving more quickly to bring Northern Rock into public ownership and bring some certainty to the situation?

Lord Davies of Oldham: My Lords, the virtue of public ownership, as the noble Lord continually emphasises to the House, is that it brings an element of certainty to the position. Of course, it also produces very great dangers for the public purse and the money that has been invested in Northern Rock and rules out any other solution when, at present, alternatives continue to exist.

On the other points that the noble Lord made about the failures of the Financial Services Authority and the Bank of England, all I can say is that he has only the same access to information as everyone else. That is his interpretation of the position, which scarcely squares with the facts of the way in which the Bank, the Financial Services Authority and the Chancellor have responded to questions from the Select Committee in another place.

Lord Barnett: My Lords, despite what my noble friend and others have said, does not my noble friend accept that the FSA did not exactly do very well in its monitoring of the bank? Was it not rather surprising that, in that monitoring, it did not note the aggressive nature of the bank's behaviour and did nothing whatever about it?

Lord Davies of Oldham: My Lords, as I indicated in my earlier comments, the Chancellor is expecting a report from the Financial Services Authority on its operations in this crisis by the end of the year.

Children: UN Convention

3.09 pm

Baroness Whitaker: My Lords, I declare an interest as a trustee of UNICEF UK. I beg leave to ask the Question in my name on the Order Paper.

The Question was as follows:

Baroness Crawley: My Lords, the Government have no plans to incorporate the Convention on the Rights of the Child into domestic legislation. UK law often goes further than the convention requires. The key articles and general principles are given full effect in the Human Rights Act 1998, which incorporates the articles of the European Convention on Human Rights.

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Baroness Whitaker: My Lords, I thank my noble friend. She no doubt accepts that the Committee on the Rights of the Child, the monitoring body for the implementation of the convention, has deprecated the UK immigration reservation from its first consideration of the UK Government’s response in 1995 and that it described the reservation as being incompatible with the object and the purpose of the convention to protect all children. Does my noble friend agree that the Committee on the Rights of the Child is right to encourage the Government to withdraw their reservation, given that it is not necessary when UK law accords with Article 22 of the convention?

Baroness Crawley: My Lords, although I acknowledge my noble friend’s commitment to this important issue, I am afraid that I shall disappoint her—there is a theme running through Question Time today—by saying that, following a government review, a decision was taken to maintain the reservation because it was seen as necessary to preserve the integrity of our immigration laws. The point is that we do not wish the immigration laws to be interpreted in the light of a convention that says that it requires the best interests of the child to be made a primary consideration but does not indicate what this might mean in practice. Does it mean, for instance, that unaccompanied children should have a right to be joined in this country by their parents and their siblings because that is more in their interest than not being joined?

Baroness Morris of Bolton: My Lords, a basic right for a child is their right to privacy. Along with many influential voices, we have been critical of the Government’s determination to hold details, sometimes sensitive details, on every child in the country. We were told that the data would be safe in the Government’s hands but, in the light of yesterday’s announcement of the appalling loss of the child benefit details, how can parents and children have confidence in that? Is it not time for an urgent review of ContactPoint and would not the money be better spent on those children who are most in need?

Baroness Crawley: My Lords, in the context of the Question that was asked of me on the UN Convention on the Rights of the Child, one of the areas in which even critics say that we have not done badly at all as far as children are concerned is privacy and family life.

Lord Avebury: My Lords, does the noble Baroness agree that full compliance with the convention could not create a new avenue of appeal under the immigration Acts, as the noble Lord, Lord Bassam, claimed during consideration of the UK Borders Bill, but would merely add a new argument to the existing arguments that are used on appeal? If it is so difficult for the Government to remove unwanted children from the United Kingdom, why not say that the convention should not apply to decisions to grant, refuse or vary leave to remain in the United Kingdom but should extend to all other functions of the Border and Immigration Agency?

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Baroness Crawley: My Lords, the Government are not seeking to be intransigent on this matter. As far as immigration is concerned, nothing in the reservation prevents the Government from having regard to the rights set out in the UNCRC, even where the circumstances are within the terms of the reservation. There have been many instances in which the Government have accepted that children were not complicit in the immigration abuse that led to their coming to the UK, and have declined to enforce a return to circumstances in which a child might be at risk.

Lord Elystan-Morgan: My Lords, I refer to Article 37 of the convention, which enjoins everyone not to incarcerate children, save as a measure of last resort. Nevertheless, in 2005, England and Wales incarcerated 2,274 children—a greater total than that of France, Germany, the Netherlands and Norway together. How many would we be incarcerating if we were not taking the principle of Article 37 very much to heart, as we were told yesterday?

Baroness Crawley: My Lords, we take into account the principle of Article 37. The new joint youth justice unit, which has been created in the recent machinery of government changes, will take forward the Government’s work in this area. The Youth Justice Board has secured improvements in healthcare arrangements, including provision of 24-hour healthcare, physical and mental health screening and the transfer of responsibility for healthcare provisions from the Prison Service to primary care trusts. We take the matter of children in the penal system very seriously.

Lord Judd: My Lords, when the Joint Committee on Human Rights was taking evidence on this concern, it was very perturbed to discover that frequently in the immigration process children were treated not primarily as children but as an extension of the immigration problem. Is it not essential that children be recognised as children whether they are British, migrant or whatever and that we live up not only to the legal detail but to the spirit of the convention, of which, after all, we were pioneers? Our reservations are very perplexing to the world as a whole.

Baroness Crawley: My Lords, I hope that we step up to the plate when looking at the principles and the spirit of the convention. There is a long list—I will not go through it—of areas where we are working on the rights of the child, such as in the Children Act 2004 and Every Child Matters. Those rights very much engage with the articles of the convention.

Smoking: Fire-safer Cigarettes

3.16 pm

Lord Harrison asked Her Majesty’s Government:

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The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, careless handling of smokers’ materials continues to be one of the major causes of UK accidental fires in the home. My department has been instrumental in encouraging the European Commission to look into the case for creating a European standard for fire-safer cigarettes. The European Commission will vote later this month on whether to create such a standard.

Lord Harrison: My Lords, I thank my noble friend for that encouraging Answer. Given that 2,000 deaths each year are attributable to this type of fire in 14 member states of the European Union, I believe that the final remedy will have to be found through the EU. But given the urgency of the situation in this country, where 110 lives are lost and 1,100 people are injured in 3,000 such fires annually, will my noble friend encourage the interested parties, including the Tobacco Manufacturers’ Association, to see what can be done now to extinguish this blot on our social life?

Baroness Andrews: My Lords, the noble Lord is right. We have already engaged with the Tobacco Manufacturers’ Association and with manufacturers to encourage their co-operation on the European standard, which will be based on the existing American standard. We will continue to do so, and continue to take a lead in Europe. We expect that next week’s vote in Europe will be positive and Sir Ken Knight, the Chief Fire and Rescue Adviser, has already volunteered to chair the technical standards committee to take the work forward.

Baroness Trumpington: My Lords, while approving entirely of the sentiments of the noble Lord’s Question, I do not understand it. Does it mean that if you stop sucking the thing goes out? If so, it seems hardly worth buying any.

Baroness Andrews: My Lords, in response to that very technical question, the position is that if you stop sucking, it goes out. These cigarettes have little bands like speed bumps which are made of extra, less porous filter paper. Consequently they extinguish themselves—sadly.

Lord Dixon-Smith: My Lords, it is difficult to discuss a puff of smoke after the previous two questions. However, I acknowledge the benefit on the fire-hazard front. Can the noble Baroness assure the House that there will be no change to the health risks of cigarettes as a result of doing this?

Baroness Andrews: Yes, my Lords, I can. New York State was the first place to legislate under the American standard to ban the use of conventional cigarettes and 22 American states now have such legislation in place. As we understand it, there is no change to the health considerations.

Baroness Scott of Needham Market: My Lords, can the noble Baroness explain why her department’s report persists in using the term “fire safe” to describe these cigarettes? Does she agree that it is rather irresponsible to suggest that a lit cigarette does not imply some sort of hazard, even if it is reduced?

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Baroness Andrews: My Lords, if the department is using that term it is a mistake, because the term is “fire-safer”. It is a very important distinction. As the noble Baroness says, no cigarette is safe as long as it is alight; but because these cigarettes do not burn their full length they are much safer than conventional ones.

Baroness Gale: My Lords, does my noble friend agree that the good example set by Wales in introducing a smoking ban has now been followed by England? Can she give an indication of how successful a smoking ban in England has been? It has been a great success in Wales. Does she also agree, returning to my noble friend’s Question, that the fewer the cigarettes smoked, the smaller will be the hazard from fire?

Baroness Andrews: My Lords, as we all know, Wales often takes the lead. However, we have some very positive statistics for England. The smoking ban was introduced in July, and 98 per cent of smoke-free premises and venues inspected in August by local authorities across England were properly compliant. That is an excellent result. We have a range of strategies to help people stop smoking and to make it difficult for them to smoke, but as long as people continue to smoke, and to die from it, we must do all that we can to protect them from death and injury resulting from fire as well.

Lord Skelmersdale: My Lords, since the subject of health and smoking has come up, does the Minister agree that a practical aid to giving up smoking would be for every tobacco outlet to stock and sell nicotine replacement therapies?

Baroness Andrews: My Lords, that is a sensible idea and I cannot think of a reason why it should not be done. In fact, since the beginning of October the minimum age for the sale of cigarettes has gone up from 16 to 18 years, so the retail industry is playing its part in this. But I am sure that the Department of Health will want to consider what the noble Lord has just said.

Lord Greaves: My Lords, will the new system—with speed bumps on the cigarette paper—apply also to the cigarette papers used by those who roll their own?

Baroness Andrews: My Lords, I knew that there would be variations on this theme, though I was expecting a question on pipes. People who roll their own cigarettes are such technicians that I am sure they will be able to manufacture a way of dealing with this. I shall try to get a template organised for the noble Lord.

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