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The review concluded that it should be possible to find a way to use intercept evidence in a manner that protected the interests of national security. It set out nine conditions to that effect, and recommended that further extensive work be done to see if those conditions

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could be met. The Government accepted that. At the same time the Prime Minister said:

“The Chilcot team have made it clear to me that the necessary work should be led by an implementation team within government; and that that team should move ahead comprehensively and quickly”.

It is that particular point that I am interested in.

The Prime Minister announced that an implementation team would be formed within Government, overseen by a steering group and advised by a cross-party group of privy counsellors to produce a detailed implementation plan. Since then the Government have not, at least on their own initiative, updated your Lordships’ House or indeed another place on the progress of that implementation team. In response to a Written Question from me in July the Minister said:

“A work programme has been drawn up and endorsed by the steering group ... This is now being taken forward. Subject to the Chilcot tests being met, we would hope to bring forward legislation in due course”.—[Official Report, 22/7/08; col. WA 267.]

I suppose the question is: how due is that course?

The first part of the amendment would require the Government to update your Lordships’ House and another place on the progress of the implementation team within three months of the Bill receiving Royal Assent. Indeed, I would hope that that period could be reduced. Perhaps the Government will now take it upon themselves to keep your Lordships’ House updated on the work of the implementation committee. Will the Minister place in the Library of the House a copy of the work programme referred to in his Answer? It would be helpful to know what he reckons the timetable is and when we might be likely to see the committee’s report, and it would certainly be helpful to see the guidance the committee has been given.

The second part would require the Government to bring forward legislation to implement the recommendations of the Privy Council review within six months of the implementation team reporting or concluding. Obviously this is dependent on the outcome of the work of the implementation team and whether the Chilcot tests can be met—which, I trust, they can. Assuming those tests can be met, will the Minister accept this part of the amendment?

That leads me to one last point. Is there really a willingness and a desire across government to use intercept evidence while protecting the interests of national security, which is our shared objective? That desire and that will seem to be a crucial prerequisite for the success of the implementing team, so I would be interested to have the noble Lord’s response to these various points. I beg to move.

Lord West of Spithead: When he met the Counter-Terrorism Bill Committee on 15 May 2008, my right honourable friend the then Minister with responsibility for counterterrorism, Tony McNulty, committed the Government to update Parliament at the appropriate time. It is very much our intention to update both Houses on progress against the first design phase of the implementation work programme agreed by the advisory group of privy counsellors, well before three months after the Bill becomes law. However, that update report cannot form the basis for a final decision

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to proceed because of the further phases of work, as agreed by the advisory group, required to build and test the model.

I am sure I can put a copy of the work programme in the Library of the House. I assure the noble Baroness that I will try to ensure that that happens. We hope that the update on phase 1 progress will be before the Christmas Recess.

The cross-party Chilcot report, published in February, concluded that it should be possible to find a way of using intercept material as evidence but, as has been said, it would need to meet key operational requirements or tests. That is fundamental; we have to meet those, because if we fail in any of those tests it could mean that we would lose these amazing intercept skills because there would be a risk to them. In doing so, the report clearly recognised both the public protection and law enforcement benefits achieved from the non-evidential regime at present and the real damage that could be done from hasty or ill-considered implementation of intercepted evidence. It concluded, for instance, that,

and that:

“Before legislation could be introduced ... further extensive work would be required to develop a detailed regime”.

The work programme currently under way is closely based on that recommended at paragraph 214 of the report, and will be consistent with legislation in the 2009-10 Session.

Also consistent with the Chilcot report, however, the Government believe that in order to ensure that the regime is workable, and to protect vital national security and law enforcement interests, legislation should be introduced only when the necessary work has been completed and the operational requirements identified have been clearly met. Further, the Chilcot report underlines the importance of creating confidence in stakeholders, including communication service providers and international partners. Any departure from, or pre-emption of, the agreed Chilcot process would jeopardise that confidence and potentially damage national security and public protection, even if the Chilcot tests could be met.

It is interesting to reflect on the fact that, while we are keen to make this happen, twice during the previous Conservative Administration and five times in this Labour Administration we have looked at this issue and each time, for whatever reason, the Government in power have decided that one could not ensure that safety. It is an important issue that a Government in power have to look at very closely.

Reflecting that, the Government are unable to accept the proposed amendment, but I hope I am giving a feel for what lies behind it. I hope that noble Lords will continue to back the implementation process for change recommended by Chilcot and the work we and others are committed to doing to fulfil it. The process is underpinned by the cross-party advisory group of privy counsellors, so I think that all parties are aware of what is going on, reflecting the successful example of the original Privy Council review, in order to ensure that the key objectives of safeguarding intelligence capability and protecting the public are

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not harmed as this work develops and is progressed. On that basis, I ask the noble Baroness to withdraw the amendment.

Baroness Neville-Jones: I thank the Minister for that helpful reply. I am glad to hear that the design phase is coming to an end. It will be helpful to be able to see the work programme that he has agreed can be put in the Library. I hope that the further phase of work on what I would perhaps regard as the operational regime does not take too long. Any indication that the Minister can give us regarding the timetable for that would be helpful, as that is the key to bringing intercept evidence into use in court.

We entirely agree with the Government about the need for care, but the admissibility of intercept evidence would help the legal process. As the Joint Committee on Human Rights has noted, its absence is,

The Crown Prosecution Service is clear that the use of intercept evidence would lead to more guilty pleas and fewer abortive trials. In addition, the Director of Public Prosecutions was told in Australia that prosecutors who do not use intercept evidence in terrorist cases are not being serious. I would not put it in quite those terms, but the point itself is serious, as this can assist the judicial process. The situation in this country is the more anomalous, given that intercept evidence is admissible in organised crime cases.

Having said that, I am grateful to the Minister for his response and look forward to receiving further information on the timetable. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 98 and 99 agreed to.

Lord West of Spithead moved Amendments Nos. 143 and 144:

143: After Clause 99, insert the following new Clause—

“Meaning of “ancillary offence”

(1) In this Act “ancillary offence”, in relation to an offence, means any of the following—

(a) aiding, abetting, counselling or procuring the commission of the offence (or, in Scotland, being art and part in the commission of the offence);

(b) an offence under Part 2 of the Serious Crime Act 2007 (c.27) (encouraging or assisting crime) in relation to the offence (or, in Scotland, inciting a person to commit the offence);

(c) attempting or conspiring to commit the offence.

(2) In subsection (1)(b) the reference to an offence under Part 2 of the Serious Crime Act 2007 (c.27) includes, in relation to times before the commencement of that Part, an offence of incitement under the law of England and Wales or Northern Ireland.”

144: After Clause 99, insert the following new Clause—

“Meaning of “service court” and “service offence”

(1) In this Act “service court” means the Court Martial, the Service Civilian Court or the Court Martial Appeal Court.

(2) Until the commencement of the relevant provisions of the Armed Forces Act 2006 (c. 52), the following is substituted for subsection (1)—

“(1) In this Act “service court” means—

(a) a court-martial constituted under the Army Act 1955 (3 & 4 Eliz. 2 c. 18), the Air Force Act 1955 (3 & 4 Eliz. 2 c. 19) or the Naval Discipline Act 1957 (c. 53);

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(b) the Courts-Martial Appeal Court; or

(c) a Standing Civilian Court.”.

(3) In this Act “service offence” means an offence under—

(a) section 42 of the Armed Forces Act 2006 (c. 52),

(b) section 70 of the Army Act 1955 (3 & 4 Eliz. 2 c. 18) or the Air Force Act 1955 (3 & 4 Eliz. 2 c. 19), or

(c) section 42 of the Naval Discipline Act 1957 (c. 53).

(4) References in this Act to the “corresponding civil offence” in relation to a service offence are—

(a) in relation to an offence under section 42 of the Armed Forces Act 2006 (c. 52), to the corresponding offence under the law of England and Wales within the meaning of that section;

(b) in relation to an offence under section 70 of the Army Act 1955 (3 & 4 Eliz. 2 c. 18) or the Air Force Act 1955 (3 & 4 Eliz. 2 c. 19), to the corresponding civil offence within the meaning of that Act;

(c) in relation to an offence under section 42 of the Naval Discipline Act 1957 (c. 53), to the civil offence within the meaning of that section.”

(5) Section 48 of the Armed Forces Act 2006 (supplementary provisions relating to ancillary service offences) applies for the purposes of subsection (4)(a) above as it applies for the purposes of the provisions of that Act referred to in subsection (3)(b) of that section.”

On Question, amendments agreed to.

Clauses 100 to 102 agreed to.

Clause 103 [Repeals]:

Lord West of Spithead moved Amendments Nos. 145 and 146:

145: Clause 103, page 70, line 14, after “repealed” insert “or revoked”

146: Schedule 8, page 97, line 36, at end insert—

“Part 4AAsset Freezing
Title and numberExtent of revocation

Terrorism (United Nations Measures) Order 2001 (S.I. 2001/3365)

Article 4(7) and (8).

Al-Qa’ida and Taliban (United Nations Measures) Order 2002 (S.I. 2002/111)

Article 8(7) and (8).

Terrorism (United Nations Measures) Order 2006 (S.I. 2006/2657)

Article 5(4) and (5).

Al-Qaida and Taliban (United Nations Measures) Order 2006 (S.I. 2006/2952)

Article 5(4) and (5).

On Question, amendments agreed to.

Clause 103, as amended, agreed to.

Schedule 8, as amended, agreed to.

Clause 104 agreed to.

Clause 105 [Extent]:

Lord West of Spithead moved Amendment No. 147:

147: Clause 105, page 70, line 37, at end insert—

“( ) Nothing in this section shall be read as restricting the application of any provision of this Act in relation to service courts or service offences.”

On Question, amendment agreed to.

Clause 105, as amended, agreed to.

Clause 106 agreed to.

In the Title:

Lord West of Spithead moved Amendments Nos. 148 and 149:

148: In the Title, line 5, leave out “under United Nations terrorism orders”

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149: In the Title, line 6, leave out “inquests and”

On Question, amendments agreed to.

Title, as amended, agreed to.

House resumed: Bill reported with amendments.

Health Service Branded Medicines (Control of Prices and Supply of Information) Regulations 2008

6.43 pm

Earl Howe rose to move, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 21 July, be annulled (SI 2008/1938).

The noble Earl said: My Lords, the Prayer that I have laid relates to a set of regulations whose main effect can be summarised quite briefly. The regulations limit the maximum price of prescription-only branded medicines supplied to the NHS in respect of any company which is not already a member of a voluntary scheme designed to control such prices.

Why am I objecting to these regulations? To answer that, one needs to understand what has led up to them. The pharmaceutical price regulation scheme is a voluntary arrangement between the Government and the pharmaceutical industry whose main purpose is to control the prices of branded prescription medicines sold to the NHS. It does that by regulating the profits that companies make on those sales. The formula is one which successive Governments have followed with minor modifications ever since 1957. It seeks to achieve a reasonable balance between fair prices for the NHS and a fair return for the industry, not least to enable it to research and develop new products. Every five or six years, the PPRS is renegotiated. The most recent scheme came into force on 1 January 2005 and was designed to last for five years.

In August 2007, barely halfway through that five-year period, the Department of Health announced its intention to renegotiate the PPRS. Under the terms of the scheme, it was within its rights to do so. However, being within its rights to do so and being justified in doing so are clearly two different things.

When the Government gave formal notice to end the PPRS, they cited three reasons: first, the recommendation from the OFT that the scheme should be reformed; secondly, the NHS had to make financial savings; and, thirdly, that having ruled that the PPRS was a legal contract, the High Court had thereby undermined a key element of the scheme. The validity of these three grounds is in my opinion highly contestable. However, there is one overriding feature of the Government’s actions which they have so far failed utterly to acknowledge. When the last PPRS was being negotiated, the industry was given a choice. It could either accept a five-year deal and a substantial price cut or a much shorter deal and a much lower price cut. The industry chose the five-year deal for one main reason: the pain of a higher price cut could be tolerated if, thereby, the industry was enabled to invest and plan for the future on a longer time horizon. The

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stability afforded by a five-year deal is of huge importance to pharmaceutical companies, whose very survival depends on long-term planning.

The message sent out by the Government in drawing stumps on the deal could therefore not have been worse. The pharmaceutical industry is global. Decisions about where in the world companies should locate their R&D capacity rest on a number of factors, not the least of which is trust in the Government of the country in question. The Government’s action in announcing the premature end of the PPRS sent out a highly negative and damaging message about their attitude to honouring deals and their attitude towards the pharma industry. It was, and is, regarded as a breach of faith. In pharma headquarters around the world, these things are noticed, and they matter.

However, the Government’s next steps were, if anything, even more damaging. On 29 February this year, they served six months’ notice of the end of the PPRS. In doing so, they brought the industry to the negotiating table in order to thrash out a deal for a new voluntary scheme. The new deal was agreed in outline on 16 June. At that point, the Government issued a consultation document. The consultation related to two issues: a statutory price freeze covering the past four months of this calendar year and a subsequent price cut as part of a new statutory scheme—the scheme we see before us in the regulations. The purpose of the statutory scheme is to be there as the mandatory alternative if any company should decide not to sign up to the voluntary scheme.

The way that these consultations were handled was, frankly, shocking. On the statutory price freeze and on a number of key issues relating to the working of the statutory scheme the Government gave the industry only four weeks in which to respond to the consultation. That timeline was in clear breach of parliamentary convention and of the Cabinet Office code of practice which specifies a minimum of 12 weeks. The decision was completely unreasonable, because in the four weeks that it had available the industry did not have sufficient information to enable it to make a fair comparison between the proposed statutory scheme and even the interim voluntary alternative, because details of the voluntary scheme did not begin to emerge for another month and are still not clear.

We know why the Government set the four-week deadline: because the six-month period of notice to end the PPRS expired at the end of August. But there was another alternative open to the Government: once the heads of agreement of the voluntary scheme had been settled in mid-June, it would have been perfectly possible for both parties to agree a straightforward extension of the old PPRS until the end of the year. During that time, the details of the new voluntary scheme would have emerged. That would have avoided the need to lay the regulation. But no: that was not something that the department was prepared to do.

The second part of the consultation, relating to the extent and timing of the price cut and how to set the price of out-of-patent branded medicines, had a deadline of 25 September. It is clear that the industry needed time to digest and respond to those crucial questions. In the consultation document, the Government indicated

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that they would lay regulations on the statutory scheme in the autumn, to take effect on 1 January. But what did they do? On 21 July they laid a regulation covering not just the price freeze to apply during the last four months of the year but all aspects of the consultation process, including all elements of the new statutory scheme. That action rendered the consultation deadline of 25 September completely superfluous. Never mind what the industry thought or was going to say in its response, the Government were pressing ahead regardless.

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