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Baroness Vadera: My Lords, the Government have intervened exactly when it comes to home credit, which a large part of the market that my noble friend refers to is dependent on. There was a Competition

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Commission inquiry in 2006 and some of the measures which resulted from it are currently being embedded. That includes increasing transparency and allowing for portable credit that will enable poor and vulnerable consumers to access other forms of finance. We have also provided significant funding for debt advice and financial capability advice, which is the best way to help the poor and vulnerable.

Lord Lawson of Blaby: My Lords, is the Minister aware that while I endorse pretty well everything she has said, there is nevertheless a further dimension: to ensure that those institutions that lend imprudently are not bailed out by the taxpayer for the consequences of their mistakes?

Baroness Vadera: My Lords, if the noble Lord is referring to Northern Rock, I think he will find that we “bailed out” depositors and the public, not Northern Rock’s shareholders. It is important to note that in the current climate we face a very different environment from the one we faced in the early 1990s: inflation is low at 2.5 per cent, compared with 7.5 per cent then; interest rates are at less than 6 per cent, compared with 15 per cent; and we have had 64 consecutive quarters of growth and a record level of employment. So we are not in a position of having to bail anyone out.

Lord Rotherwick: My Lords, the Minister says that inflation is at only 2.5 per cent. Why is it that fuel, mortgages and a range of other things have increased by perhaps 20 per cent or 25 per cent? It is just not consistent with saying that the rate of inflation is only 2.5 per cent.

Baroness Vadera: My Lords, those are independent figures provided by independent forecasters and by the Bank of England. Nevertheless, the noble Lord is correct to point out that we face a difficult time ahead. We must not underestimate that, particularly when it comes to fuel, commodity and food prices, as well as the small number of people who are having to remortgage at a time when there is disruption in the financial markets.

Lord Tomlinson: My Lords, does my noble friend agree that if Members opposite want to start nit-picking on certain details of the economy, you could easily take them for a trip down memory lane and remind the noble Lord, Lord Lawson, of the chaos over which he presided in the days of 3 million unemployed and double-digit inflation? Most Members on this side of the House would congratulate the Government on the work they are doing.

Baroness Vadera: My Lords, I thought I had just taken a trip down memory lane. I thank the noble Lord.

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Voluntary Organisations

2.59 pm

Lord Judd asked Her Majesty’s Government:

Lord Davies of Oldham: My Lords, the Government recognise and support the independence of voluntary organisations to advocate for their community and campaign for change, irrespective of any funding relationships that might exist. The Government are also committed to increasing the capacity of voluntary organisations to act independently through, for example, the £130 million Grassroots Grants programme.

Lord Judd: My Lords, while I thank my noble friend for that positive reply, and put on record the fact that many of us who are trustees of voluntary organisations and charities welcome the positive and co-operative attitude of the Government towards the work of charities, is he nevertheless aware that the Charity Commission is concerned about perceptions in the voluntary and charitable sector that it is not altogether free from influence? Research recently undertaken by the Charity Commission demonstrated that only 26 per cent of organisations receiving government funding believed that they were totally free of influence in their priority. Because advocacy is such a vital part of furthering the objectives of charities, what can my noble friend and the Government do to reassure charities, and not only this House, that this is not the position of the Government and that the Government are fully behind their advocacy work?

Lord Davies of Oldham: My Lords, I am grateful to my noble friend for his opening remarks, in which he recognises the progress that the Government have made. As I indicated in my original Answer, we are committed to the independence of voluntary organisations and their ability to carry out the role of advocacy for their communities and causes. It will take time for all charities to recognise the shift in policy that has taken place. It is the job of the Charity Commission to monitor this overall position and to see that it is fulfilled accurately. I have no doubt that it will fulfil these obligations.

Lord Maclennan of Rogart: My Lords, do the Government also recognise that the independence, effectiveness and value for money of third-sector organisations would be better secured if, when they are dependent upon government grants, they could be core funded for a period of years, rather than having to seek funding annually?

Lord Davies of Oldham: My Lords, I broadly agree with that sentiment, and so do the Government. We are looking towards a time when we are able to see three-year funding of charities, so that the element of independence is thereby enhanced. The noble Lord will appreciate the change in the position of the

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Charity Commissioners over the past 12 months, and that it takes a little while to work this policy through. The Government are thinking along exactly the lines that the noble Lord suggests.

Lord De Mauley: My Lords, how is the stipulation that initiatives which involve direct lobbying of the British Government are ineligible for DfID’s development awareness fund reconciled with what the Minister said earlier and to the statement by the Cabinet Office Minister that charities should not feel constrained from biting the hand that feeds them?

Lord Davies of Oldham: My Lords, the position is clear. Charities will have their independence protected, whatever the source of their resources. The Government are determined that where they receive grants, they should not feel in any way inhibited from challenging areas of government policy that relate to their work. That is different from pressure-group activity. There is a world of difference between the work of charities seeking objectives within the charitable framework and pressure groups. The Government have a different perspective, as I am sure any serious analyst would, on the role of pressure groups.

Lord Walton of Detchant: My Lords, having spent much of my professional life involved with charities of one kind or another, I confirm the tributes that have been paid to the contributions made by the charitable world to medical research, medical care and many other areas. However, does the Minister agree that something that, from time to time, prejudices decision-making in the charitable sector, is the same issue that has often bedevilled decision-making in certain parts of the National Health Service? I refer to this problem as “decibel management”—he who shouts loudest and longest often tends to win the day. It is not an easy situation to resolve. Does the Minister have any ideas about how that can be overcome?

Lord Davies of Oldham: My Lords, the whole House recognises the very significant role that charities play in the development of medical research and development in this country and the extent to which they supplement the work of the National Health Service. There is always the danger that those with the greatest resources can make the greatest noise but judicious government and the values that obtain in the Medical Research Council, on which the noble Lord served with such distinction for many years and on which I served for three undistinguished years, should obtain throughout government, too.

Baroness Miller of Chilthorne Domer: My Lords, is the Minister aware of the report produced last year under the chairmanship of the noble Baroness, Lady Kennedy of The Shaws, in which leading charities state that they have great difficulty with the differentiation that the Minister makes between a charity and a pressure group? Does he accept that many prime charities, such as Christian Aid, Oxfam or the RSPCA, sometimes have to act as pressure groups in order to fulfil their charitable role?

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Lord Davies of Oldham: My Lords, no one gainsays that—charities often apply hugely important and successful pressure. However, I sought to distinguish between support from the Government in the form of smaller grants to smaller charities to create essential building blocks so that the charities can work effectively in their local communities and the large, well-established charitable foundations that are neither dependent on government for funding nor scared of presenting their case to government.

Planning and Energy Bill

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

European Union (Amendment) Bill

3.07 pm

The Lord President of the Council (Baroness Ashton of Upholland): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The LORD SPEAKER in the Chair.]

Clause 2 [Addition to list of treaties]:

Lord Astor of Hever moved Amendment No. 25:

“(i) Article 1, paragraph 50, inserted Article 28E TEU, relating to permanent structured co-operation in defence; and(ii) ”

The noble Lord said: The purpose of Amendment No. 25 is to remove from the treaty the framework now named,

rather than “enhanced co-operation”. This is a probing amendment to generate debate. We do not believe the Government should ever have accepted this provision. Indeed, back in 2003 Peter Hain said:

But at the negotiating table the Government caved in to European pressure and gave way. These Benches entirely agree with their original stance. This is perhaps the most dangerous of the treaty provisions relating to European defence. It takes us further down the road towards the point where a single European defence is used to excuse the evasion of serious national defence capabilities.

The Explanatory Notes published with this Bill state, as the twelfth of twelve points within Note 5, that the principal changes made by the treaty of Lisbon include:

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We do not object to defence co-operation between the nations of Europe. Indeed, we welcome it and we would wish to encourage it. For such co-operation between one nation and one or more others to be enhanced would be a move in the right direction, but why do nine nations have to get together? Why does their co-operation have to be organised through Brussels? Why should they be exercising EU competencies?

The provision as it now stands points towards an inner core of countries capable and willing to participate fully in an integrated European defence. Other member states that choose not to join will be able thereby to opt out. They will thus be able to take a minimal role, both in self defence and in collective defence. That is how it works out and NATO’s overall defence capability will not be improved as it needs to be. That capability will be damaged as some—perhaps the smaller countries—exclude themselves from such co-operation and decide to take no further part in either European defence integration, or more worryingly, NATO. They will be able to meet minimal EU military commitments, shifting the burden of fulfilling meaningful NATO expectations on to the larger EU members such as France, Germany, and of course, the UK.

Outside these three countries, EU countries spent an average of 1.7 per cent of GDP on defence in 2006. If permanent structured co-operation goes ahead there will be even less incentive for these countries to increase their military capabilities than is currently the case. NATO already suffers from a lack of military capability among its smaller members. This provision will make this worse. The treaty provides no reassurance as to how the PSC will operate. As with so much else, nothing has yet been finalised. Everything is to be decided after ratification. We have no idea of how many troops or how much money will be committed. Will the Minister tell the House what discussions have been had with other likely participants as to their plans for PSC? What other countries have stated their intention to join?

We fear that the Government are committing this country to sign up to an undefined commitment that will have no benefit for NATO’s capability but which will needlessly drain our military capability, already under the most enormous pressure. When the Minister comes to reply to this amendment, the Committee—and indeed the country at large—would welcome a reasoned statement of HMG’s precise intention in this respect. I beg to move.

Lord Lee of Trafford: I am sorry that the noble Lord, Lord Astor, takes such a negative view of permanent structured co-operation. The provision for permanent structured co-operation between a smaller group of member states is laid down in Article 28A(6), which allows greater co-operation in the area of capabilities. Article 28A(7) establishes a clause for mutual defence but without a security commitment along the lines of NATO’s Article V.155. The provision for mutual defence is limited under Article 27(7) to,

member states’—

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Article 28E together with Article 28A(6) sets out the arrangements whereby member states can engage in permanent structured co-operation in defence matters.

3.15 pm

The criteria and capability commitments for doing so are set out in the protocol on permanent structured co-operation. Article 1(b) of that protocol states that participating member states should have the capacity to supply by 2010 at the latest, either at national level or as a component of multinational force groups, combat units and supporting elements, including transport and logistics. Those would be capable of deployment within five to 30 days, in particular in response to requests from the UN. They would be sustained for an initial period of 30 days and extended up to a period of 120 days.

The protocol also sets out provisions in the area of capability harmonisation, the pooling of assets, co-operation in training and logistics, regular assessments of national defence expenditure and the development of flexibility, interoperability and deployability among forces. The possible review of national decision-making procedures with regard to the deployment of forces is also emphasised.

Jean-Yves Haine, of the Institute for Security Studies, commented on permanent structured co-operation when it was introduced in the constitution:

That is why we on these Benches support permanent structured co-operation.

Lord Bach: We had an excellent debate on defence issues during our previous Committee day. Amendment No. 25 relates to the provision on permanent structured co-operation.

Our discussion last week highlighted that capability development remains at the heart of being able to address effectively the security challenges facing us. As my noble friend Lord Robertson reminded us in his graphic phrase, we cannot send a wiring diagram to a crisis. Permanent structured co-operation is a new mechanism that is designed to address precisely that need, and it is focused solely on military capability development, as set out in the treaty article that has been referred to and the accompanying protocol. I underline that it is not about a smaller inner grouping undertaking operations. There do not have to be nine member states involved in PSC.

Improving the military capabilities of EU partners—this is cross-party—is a key UK objective. Improved military capabilities, whether it is having more deployable and flexible forces or new equipment needed for modern operations, will produce more equitable European burden-sharing and make interventions more effective. The mechanism of permanent structured co-operation is designed to take advantage of the ability to generate political leverage in the EU. Member states are more

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likely to sign up to developing further their capabilities if the alternative is being left out in the cold and left out of an EU grouping.

As one of the foremost capability players in the EU, we would expect to see the UK playing a key role in establishing and leading permanent structured co-operation. This provision is a good example of a pragmatic, UK-inspired initiative that is focused on producing practical improvements on the ground. There is danger of confusion between enhanced co-operation and PSC. They are separate mechanisms. The main difference is that PSC is confined to military capability development, and it has nothing whatever to do with some inner group co-operating on defence issues, whether those issues be common defence or anything like it. I think the noble Lord, Lord Lee, was making that point.

As has often been said, there is but a single set of forces in Europe. Investments to European military capabilities benefit not only ESDP but NATO. The EU-NATO capability group will provide a mechanism to ensure that capability improvements leveraged through permanent structured co-operation are compatible with capability development in NATO.

Permanent structured co-operation involves some QMV decision-making: to establish permanent structured co-operation; to confirm participation of a member state that subsequently wishes to participate; and to suspend participation of a member state. This is in line with our objective to make PSC easier to set up and easier for member states to join—and to make it easier, frankly, to suspend member states that do not perform and do what they have signed up to do. All other decisions will be taken by participating members by unanimity.

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