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House of Lords

Thursday, 17 July 2008.

The House met at eleven o'clock: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Exeter.

Economy: Monetary and Fiscal Policy

Lord Higgins asked Her Majesty’s Government:

What steps they are taking to co-ordinate monetary and fiscal policy.

Lord Davies of Oldham: My Lords, monetary and fiscal policy are conducted within a clear and transparent framework. The Government set the Monetary Policy Committee’s operational target and the fiscal rules. In addition, there is a regular exchange of information between the Treasury and the Bank of England.

Lord Higgins: My Lords, I thank the Minister for that reply. Is it not painfully obvious that giving the Bank of England independence and a target to control inflation with only short-term interest rates as a weapon cannot work unless fiscal policy is used as well? If we are to continue with the charade of the Governor having to write to the Chancellor of the Exchequer to say why he has failed, should there not also be letters to the Governor of the Bank of England from the Chancellor explaining why he has made the Governor’s task impossible? Is not fiscal policy out of control, with massive increases in borrowing, subsequent to the Budget, due to changes in tax and expenditure policy? How much has borrowing increased above the amount projected at the time of the Budget, and will this be funded from the public, not the banks?

Lord Davies of Oldham: Well, my Lords, borrowing will of course be funded from the public, but the International Monetary Fund passed a judgment on the Budget and considered it to be fully operational and effective against what we all recognise to be a difficult international situation. Importantly, the Bank of England has responsibility for inflation. That is a very difficult task, given the pressure of world prices at present, and we will go through a period—a short period—in which inflation will be above the target rate. However, it is quite clear from our predictions and those of independent forecasters that in 2009 the policies being pursued will return inflation to within the framework, where it has been for a decade under this Government.

Lord Barnett: My Lords, is it not wrong to pretend that massive increases in oil and food prices will not mean a cut in living standards? Would it not be better and easier to co-ordinate fiscal and monetary policy if there were either a cut in public expenditure and/or a tax increase? I am not sure that that is what the noble Lord, Lord Higgins, or the Opposition Front Bench are suggesting, but no doubt they will tell us.

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Lord Davies of Oldham: Of course there is a challenge at present; the whole world recognises that. The difference is that the British economy is almost uniquely well placed to meet this challenge. We start off with a low inflation rate. I note that one or two noble Lords opposite are regarding these comments with less than the approval I would seek. Let me make it clear that our inflation rates both now and predicted are below those in Germany, France and the United States, and historically, even at their highest, they are only half of what was the norm under the previous Administration in the 1980s.

Lord Newby: My Lords, does the Minister agree that the slow-down will inevitably lead to a fall in tax revenues and an increase in expenditure, particularly on unemployment benefits? On their current policies, the Government are set to break their own fiscal rules. Do they intend to follow the advice of the noble Lord, Lord Barnett, by raising taxes or reducing expenditure elsewhere, or do they accept that they simply have to break the rules?

Lord Davies of Oldham: My Lords, the noble Lord, as ever, accurately identifies the difficulties. He will have to wait to see what our solutions to these difficulties are. We will again look at these matters and comment further on them in the Pre-Budget Report, which is not asking the noble Lord to wait a great deal of time in parliamentary terms. There are challenges to the public finances at this stage, but the noble Lord will recognise the mass of contradictions that could emerge from all sides. One side will suggest, as he does, a substantial cut in government revenues, while the other will suggest that there are windfall benefits from the higher oil price. The Government will reach a judicious position in due course.

Lord Forsyth of Drumlean: My Lords, why are the Government refusing to disclose the amount, which is clearly substantial, that is being provided to the banks in increased liquidity, and why is that amount being treated as off balance sheet?

Lord Davies of Oldham: My Lords, the noble Lord will recognise that the Government’s liquidity position with the banks is being adopted by all significant economies. He will be all too well aware of the extent to which the United States Government have been greatly concerned to increase liquidity for their banking structure as well. I recognise that the noble Lord is very much in favour of transparency —probably more so when this Government are in office than when his own side might be. Let me emphasise on the issue of transparency that the concern is to preserve confidence in the banking structure when we all recognise that there are significant shocks both internally and externally. He will know the magnitude of the problems that the American economy is wrestling with. I am not sure that his preferred remedy of complete transparency meets the seriousness of the situation.

Lord Sheldon: My Lords, does the Minister agree that the oil price increases need to be dealt with over a fairly shortish period? That means that there must be

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either some reduction in public expenditure or tax increases, maybe for a limited time only, but it is a solution that may be available to us.

Lord Davies of Oldham: My Lords, of course, my noble friend is wise in these matters, and he is right that that may be one of the solutions available to us. The strength of the British economy means that the methods that we have to adopt will be considerably less drastic than they would be if we were operating with significant deficits and high unemployment. My noble friend will have to join the noble Lord, Lord Newby, and the whole House in awaiting the Pre-Budget Report, which is not too far distant.

Internet: Privacy

11.15 am

Baroness Miller of Chilthorne Domer asked Her Majesty’s Government:

What guidance they have issued to internet service providers on when and how they can intercept their customers’ website use; and what information they have made available to the public about the privacy issues involved.

The Parliamentary Under-Secretary of State, Home Office (Lord West of Spithead): My Lords, the Home Office provides guidance about lawful interception conducted under warrant for law-enforcement purposes. This is separate from advice provided by the Department for Business, Enterprise and Regulatory Reform on the relevant business facing legislation. ISPs may, with the consent of the consumer, use information about consumers’ internet use for the provision of value-added services. The Information Commissioner provides information to the public on privacy issues.

Baroness Miller of Chilthorne Domer: My Lords, the Minister will be aware that my Question was prompted by the recent trials between BT and Phorm, which were conducted without the permission of subscribers. Does he agree that at the very least the British public must be offered an opt-in system when such trials or the scheme itself is put online? Furthermore, is he aware that in the US, Congress has asked that this scheme be put on hold while the privacy implications are examined? Will he do the same?

Lord West of Spithead: My Lords, the noble Baroness has a particular interest in this issue and she raises some very important and good points. Before I looked into it as a result of the Question, I certainly had not addressed it. The Home Office, BERR and the Information Commissioner were not aware of the two tests conducted by BT, which was not good. I know that the Information Commissioner’s Office and BERR are now investigating that very issue, which is very appropriate. Since then, BT has approached all three authorities about a trial with around 10,000 broadband subscribers.

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The right measures are in place to look at that, but we possibly need a test case to see whether this is interception or not. I am not clear in my own mind on that yet and I will take away that task to see whether it is. If it is, it will be covered by a chunk of the regulation of investigatory powers legislation. If it is not, we will need to think about how we will deal with it. I was aware that the Americans have an issue with it. At the moment, the Information Commissioner has given advice to people and we are protected.

Viscount Bridgeman: My Lords, in view of the concern expressed by the noble Baroness about privacy, will the Government withdraw their plans for a communications data Bill to set up a database logging every private phone call and e-mail? There has been enormous opposition to the idea, including that from the Information Commissioner.

Lord West of Spithead: My Lords, the noble Viscount is referring to the IMP. It is very early days as to where we go on this and it relates to entirely new methods of how telecommunications firms will transmit and move data. It is also early days to see how this will impact on any aspects of intercept. We have come to no decisions on any of that. It is still being looked at. It is too early to make any statement.

Lord Broers: My Lords, last year, in a Science and Technology Committee report of this House on internet security, the committee recommended that a system of kite marks be established that identified respectable behaviour from ISPs. That recommendation was rejected by the Government. In a follow-up report, the noble Baroness, Lady Vadera, said that the Government would look into this proposition. How is that going?

Lord West of Spithead: My Lords, I do not know the detail of that. I know that in the Data Sharing Review, published in July, the Information Commissioner, Richard Thomas, and Dr Mark Walport came up with a series of proposals. Perhaps I may get back in writing on that point.

Lord Roberts of Llandudno: My Lords, following my noble friend Lady Miller’s Question and the use of this technology, especially by Virgin Media, to write to 800 customers warning them about this downloading, is it not a real cause for concern that this can be used to infringe on a person’s privacy in this way?

Lord West of Spithead: My Lords, we have to be careful because very often people do not realise how much data are used by these various firms—they know your URLs, they know your name and they know when you log on and log off. All of these data are there already. It is quite legal, for example, if I go on to Google and say that I am a sailor and interested in ships, that when my web page comes up the adverts that appear on it tend to deal with ships and shipping. They already do this. What they are now asking to do through Phorm is to go further. That is why we have to monitor this issue closely. The ICO needs to get involved much more than he is. He has issued advice on Phorm

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on his website and we are keeping a close eye on this. I have made the point about whether this reaches into the regulation of investigatory powers legislation and whether we need a trial case to establish that. Otherwise we are covered. I used to say to my people in the Navy that more people look at your internet information than look at a postcard when you write it. People tend to forget that. The data are used for quite legal purposes.

The Earl of Northesk: My Lords, can the Minister explain how the Home Office advice to Phorm found its way onto the cryptome.org website? More broadly, the Minister referred to IMP: can he explain what the interaction between IMP and the SCOPE programme will be?

Lord West of Spithead: My Lords, as I said, I do not want to go down the IMP route at the moment. We are in the very early days of deciding what we want to do and where we are going and it would be imprudent of me to step into that debate at the moment.

Baroness Gardner of Parkes: My Lords, what is the division between national interest and national privacy? The net is worldwide and, therefore, our details are available worldwide. Is there a need for international discussion on these matters?

Lord West of Spithead: My Lords, perhaps I may first wish the noble Baroness a happy birthday. I go back to what I said. A lot of information is available to the internet service providers through headers, URLs and so on. There is no doubt that the driver for Phorm is the cut-throat market. Providers are finding it difficult to make the profit margins they want and wish to charge advertisers more. They can do this by promising that they will target precise adverts to people. That is the driver to it. There are concerns about individual privacy and so on. The noble Baroness is right: it is a worldwide system. Internet service providers have access to such details, but they have to put safety measures in place; and that is what the ICO is meant to ensure happens.

Criminal Records Bureau

11.22 am

Lord Marlesford asked Her Majesty’s Government:

What action they are taking to ensure that the Criminal Records Bureau gives accurate information to those referred to it.

The Parliamentary Under-Secretary of State, Home Office (Lord West of Spithead): My Lords, the quality control procedures at the Criminal Records Bureau are geared to achieving the highest level of accuracy. The CRB carries out a post-disclosure accuracy check, which analyses all aspects of the disclosure application and its issue. This is based on a statistical sample of disclosure applications, from which it can be ascertained that the accuracy rate for 2007-08 is 99.98 per cent.

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Lord Marlesford: My Lords, I thank the Minister for that Answer, but I am afraid that it does not accord with public perception. The much vaunted system of Criminal Records Bureau checks seems to have descended into farce and chaos. Will he at least ensure that, where there are allegations that a criminal record has been incorrectly attributed to someone, the appeal is determined within 14 days rather than the nearly three months that it takes at present?

Lord West of Spithead: My Lords, I do not agree with that characterisation of the CRB, which has been hugely successful. Obviously our foremost priority is to help to protect children and vulnerable adults by assisting organisations in doing these checks. We understand all the difficulties and the effect that they can have on people but, over the past 12 months, 3.4 million record checks have been carried out, of which 680 were slightly wrong. There is a clear method for resolving disputes. Compared with the old system, where no one knew what was being said about them, one of the benefits of the new system is that people who had been refused jobs for years were suddenly able to find out, because they had sight of their record, the reason why they were being refused. They were able to challenge it and, on a couple of occasions, they have been able to resolve it. This has been a good move. On timescales, we would like to do better. I think that we are down to 21 days now rather than the figure that was quoted, but obviously we would like to make it less. Overall, however, what has been achieved has been very impressive.

Lord Ramsbotham: My Lords, the Minister mentioned timing. I am sure that nobody would dispute the need for accuracy in this matter, but one of the unfortunate by-products is that a large number of volunteers who wish to be involved in work with children find that inordinate delays in the process prevent them from coming forward for the work. That must be of considerable concern to the organisations that need those people. What steps are being taken to speed up the process, particularly in an area where there is such a demand for the work?

Lord West of Spithead: My Lords, the noble Lord raises an important point. What is good is that we do this with no charge, as it is important to encourage and help people going voluntarily into a number of areas, such as the cadet forces. I do not have detailed answers on timescales and problems. I know that one of the problems with getting volunteers into this area is that some of them feel that the checks that are made on them are rather more than they feel that they should have when they are volunteering. That is a difficult issue, but we have to conduct these checks. I will get back to the noble Lord in writing on the specifics of timings and any details of exactly what we are doing on that.

Baroness Miller of Chilthorne Domer: My Lords, there is a vast variation between police forces in the time that they take to get back to the CRB with the data required. The CRB is supposed to be helping those forces that are not meeting the target times. Does the Minister think that that help is sufficient?

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