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House of Lords

Tuesday, 8 January 2008.

The House met at half-past two: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Ely.

Bank of England

Lord Barnett asked Her Majesty’s Government:

Lord Davies of Oldham: My Lords, the mechanism by which the Bank of England provides central bank money for banks and building societies is a matter for the Bank, which is responsible for setting the framework of its sterling money market operations.

Lord Barnett: My Lords, I think that I am obliged for that Answer. As my noble friend will know, our right honourable friend the Chancellor did an interview with the Financial Times in which a major change was proposed, to which my noble friend has not referred. I think that I had better quote the article because it is very important. It states:

should be the bank of last resort. That is quite a major change and I should be glad if my noble friend could confirm it.

Lord Davies of Oldham: My Lords, I am always distressed when my noble friend is not satisfied with my original Answer, but he was asking me about the remit to the Bank of England and the funding of commercial banks and I gave an accurate and proper response to the situation as it is now. In his supplementary he referred to the consultations taking place on possible future changes to those operations. The Chancellor indicated that such changes would be the subject of widespread consultation, which is now taking place, and that they would in due course require legislation. So we have a long way to go before these issues become effective. My noble friend will also recognise that this issue revolves around other aspects of the tripartite arrangement and not only those to which he referred.

Lord Roberts of Conwy: My Lords, in the interview that the Chancellor gave to the Financial Times he seemed to anticipate a greater role for himself, as chairman of the COBRA committee, and for the FSA. What could the Chancellor or the FSA have done in the Northern Rock situation under the new powers that he anticipates for them?

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Lord Davies of Oldham: My Lords, it is comforting to hear a member of the Opposition asking questions about what we could have done in the past. They have tended to lecture me on what we should have done, so there is some improvement there. It is clear, as has been expressed many times both here and in the other place, that we have lessons to learn from the development of the crisis last summer in relation to each aspect of the tripartite structure. We believe that that structure has stood the test of time and that it will continue to enjoy the confidence of the banking community and the wider public. But improvements may be effected, some of which relate to the Financial Services Authority, and the Chancellor was referring to possible changes there.

Lord Peston: My Lords, does my noble friend recall that the legislation that set up the Monetary Policy Committee of the Bank of England referred to it being scrutinised by Parliament, by which was meant both Houses? I understand that our right honourable friend the Chancellor is appearing before the Treasury Select Committee of the other place. Has my noble friend been informed whether the Chancellor proposes to appear before our Economic Affairs Committee during this immensely important consultation period so that he might consult us on the way forward, since several of us here know quite a bit about the subject?

Lord Davies of Oldham: My Lords, although I certainly would not gainsay the latter point, my noble friend will recognise that I am not the Chancellor of the Exchequer’s diary secretary. I know of his diary commitment to appear this week before the Treasury Select Committee of the other place. It is a highly important meeting at which these issues will be covered with considerable intensity and we will all learn from those exchanges. However, I cannot hold out hope for a positive response in the near future to my noble friend’s seductive suggestion.

Lord Newby: My Lords, does the Minister accept that the proposal in respect of the COBRA committee in reality reflects what has happened with Northern Rock, in that the Chancellor determined that Virgin should be the preferred bidder and forced that view on the Bank of England and Northern Rock? Will he further confirm or deny recent reports that both the Virgin group and the other group currently in the running to take over Northern Rock are seeking to wriggle out of their previous commitment to make an initial substantial payment back to the Bank of England as part of the deal to take over Northern Rock?

Lord Davies of Oldham: My Lords, the noble Lord is probing in a very sensitive area in terms of the development of the discussions.

Noble Lords: Oh!

Lord Davies of Oldham: My Lords, that is all right, but the noble Lord is prone at times to be very definitive in his solutions. When he last spoke on this

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matter in the House, I think that he was advocating immediate nationalisation of the bank. The Government are properly keeping options open against the distinct possibility that these issues can be resolved by private company action. We must wait and see. The noble Lord and the House can rest assured that the Government want to see the outcome that best serves the public.

Baroness Noakes: My Lords, a few moments ago the Minister said again that the tripartite arrangements had stood the test of time. The plain fact, as he knows, is that they failed their first real test. The Governor of the Bank of England has said that he is happy for his written advice on the tripartite arrangements in connection with Northern Rock to be made public. The Government have so far refused. What are they afraid of?

Lord Davies of Oldham: My Lords, the Government have nothing to be afraid of because we have been clear throughout these developments that we are dealing with the public responsibility. There was very considerable investment in the Northern Rock bank, a private institution which ran into severe difficulties that had the potential to produce the most deleterious consequences for the wider financial community and with a cost to the whole nation. The Government and the tripartite structure responded positively and intelligently. As there was such pressure at the time, we can learn lessons from how all three partners acted. However, as the noble Baroness will recognise, the chief executive officer of the British Bankers’ Association is broadly in favour of sustaining the tripartite system, reflecting the fact that although improvements can be made to its operation, those structures should be in place. That is the view of the banking community and of the Government.

Lord Barnett: My Lords, can my noble friend confirm—

The Lord President of the Council (Baroness Ashton of Upholland): My Lords, we are into the ninth minute.

Extradition: UK-US Treaty

2.44 pm

Lord Taverne asked Her Majesty’s Government:

The Parliamentary Under-Secretary of State, Home Office (Lord West of Spithead): My Lords, Her Majesty's Government are not taking any steps to renegotiate our extradition treaty with the United States. The treaty came into force on 26April 2007, when the United States and the United Kingdom Governments exchanged instruments of ratification. Extradition arrangements between the United Kingdom and the United States are balanced and fair, despite differences in terminology and procedure.

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Lord Taverne: My Lords, at present it is easier for people to be extradited from the United Kingdom to the United States than vice versa. Is that position not intolerable because of the difference in burdens of proof? At a time when there seem to be signs of a considerable mood change towards a greater emphasis on fairness and justice in international relations in the United States, is this not rather a good time to reopen the issue?

Lord West of Spithead: My Lords, I do not accept that premise. The requirements are as broadly comparable as it is possible to achieve between two different jurisdictions. It is worth setting this in context by giving some figures. Since 1 January 2004, when the prima facie evidential requirement was removed from the United States, 37 people have been extradited from this country to the United States. Of those, 11 were to face allegations of so-called white-collar crimes such as mail fraud and satellite signal fraud. However, 26 of them—or 70 per cent—involved serious offences such as murder, rape, indecent assault, drugs and child pornography. Thirteen people have travelled from the United States to the United Kingdom, of whom four were for white-collar crimes—so it is roughly 30 per cent in each case. It is also interesting that in each case 54 per cent of the requests applied for have been granted.

Lord Campbell of Alloway: My Lords, I suggest that in this regard there is not injustice but a disparity. Is there not a case to review these reciprocal arrangements—one reason being the plea-bargaining structure in the United States?

Lord West of Spithead: My Lords, again, I do not think that that is necessary. The United States is a mature democracy with a legal system that is underpinned by its Bill of Rights, which owes its origins to our own Magna Carta. There are full and proper safeguards in the 2003 Act.

Lord Lester of Herne Hill: My Lords, the Minister will be aware that the United States is the UK’s largest extradition partner, so it is a very serious matter to ensure full equality of treatment between the two countries. Do the people of this county have to await a more liberal Administration in the United States and this country to achieve full reciprocity?

The Minister says that there is substantial equality but, with respect, that is not correct. The sixth amendment to the American constitution requires a greater standard of fairness than this extradition treaty—the Ashcroft-Blunkett treaty. Why can we not seek to remove six words from Article 8 of the treaty and achieve full reciprocity and fairness?

Lord West of Spithead: My Lords, I repeat that the requirements are broadly comparable. This is not only the case with the United States; the requirement not to provide prima facie evidence is not unusual—it applies also to Canada, New Zealand, Australia and to all the EU countries that are signed up to the ECE. That has been the case since 1991. So this is not at all unusual and is, I think, perfectly fair.

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Lord Elystan-Morgan: My Lords, can the Minister accept that the figures quoted by him are probably less than meaningful, bearing in mind the fact that the population of the United States is roughly five times that of the United Kingdom?

Lord West of Spithead: My Lords, the noble Lord makes a point that I could not have made better. The difference in numbers of those who have gone from one country to the other relates to the fact that there are some 260 million people in the United States and some 60 million here.

Lord Lester of Herne Hill: My Lords, is it not the case that the EU-US extradition arrangements provide greater guarantees than this bilateral treaty?

Lord West of Spithead: My Lords, I do not believe that that is the case. When we go from the UK to the US we have to show “reasonable suspicion” and, the other way around, “probable cause” has to be shown. We ask the US to provide information that would justify the issue of a warrant for an arrest of a person within the judge’s jurisdiction. As I have said previously, the US is a mature democracy and these arrangements are broadly comparable.

Baroness Hanham: My Lords, could the Minister advise us how many cases in which the British Government have asked for extradition were related to terrorism?

Lord West of Spithead: My Lords, perhaps I may come back to the noble Baroness later in writing. I think that it is a very small number—one or two cases, in fact.

Armed Forces: Harmony Guidelines

2.50 pm

Lord Luke: My Lords, on behalf of my noble friend Lord Astor of Hever and at his specific request, I beg leave to ask the Government the following Question:

Baroness Crawley: My Lords, perhaps I could take this opportunity to send our very best wishes to the noble Lord, Lord Astor of Hever, and wish him a speedy recovery.

In monitoring compliance with harmony guidelines, we do not distinguish between deployments and other causes of separated service. As at 30 September 2007, 10,110 Army personnel had exceeded the guideline of 415 days’ separated service in the previous 30 months. This represents 10.3 per cent of the trained strength of the Army.

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Lord Luke: My Lords, I thank the noble Baroness for her kind words about my noble friend, and I am glad to tell your Lordships that he is going on extremely well and arrived home from the hospital this morning. I hope that the noble Baroness will pass on our good wishes to her colleague, the noble Baroness, Lady Taylor, and that she will soon be fit again.

I also thank the noble Baroness for her Answer to the Question. These dismal figures amplify those in the MoD Autumn Performance Report and are surely evidence of overstretch, if the guidelines mean anything. Can the noble Baroness say whether and how the total number of our forces in Iraq has varied in the past six months and what were the numbers in Iraq on Christmas Day?

Baroness Crawley: My Lords, perhaps I can let the noble Lord, Lord Luke, have in writing the number of personnel in Iraq on Christmas Day, and the number relating to his question on Iraq. No, we do not believe that the Army is overstretched; we believe that the Army is stretched, but senior military officers advise that the situation is manageable. However, we remain confident that the Army is capable of meeting current levels of commitment, although we recognise that these levels cannot be sustained indefinitely. The overall situation, however, is improving and we expect that trend to continue.

There has been a gradual improvement as regards the harmony guidelines. For instance, in 2005, 16.9 per cent of personnel exceeded them, whereas in 2007, the figure was 10.3 per cent—so the trend is improving.

Earl Attlee: My Lords, when will Ministers stop exceeding the defence planning assumptions by 100 per cent?

Baroness Crawley: My Lords, I am not sure that I understand the noble Earl’s question. That is no fault of his.

Earl Attlee: My Lords, the defence planning assumptions are the MoD’s high-level plan about the level of operations we should be undertaking. We are currently exceeding the defence planning assumptions by 100 per cent. When will we get it to a reasonable level?

Baroness Crawley: My Lords, it is no secret that the Army is operating above planning assumptions. However, the vast majority of personnel are meeting harmony guidelines. Some 10.3 per cent are exceeding harmony guidelines. That tells me that we are stretched, but not overstretched.

Lord Soley: My Lords, every one of us recognises the enormous pressures on the Armed Forces at the moment—they are operating under very great pressure and we appreciate and respect that. But is it not incumbent upon individuals or political parties who believe that they are overstretched to tell this House and other people what commitments they would cut, or the extent to which they would expand the Armed Forces to meet those commitments?

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