This is an analogy for the Government to look at in terms of providing services for people who, for different reasons, are unable perhaps to follow a case properly, to understand it properly, or to give proper instructions to their legal advisers. I hope that the Government will look at that and look at this position in the round. The noble Baroness has already identified the discrepancy between witnesses and defendants. Here, we potentially have two classes of defendants, some of whom may not speak English adequately and for whom interpretation will be provided, and others who may not be able to follow because of learning disabilities or other aspects, and for whom nothing would be provided.

Looking at the whole situation surely is sensible. I hope that the Government will acknowledge that there is a disjunction here between what is provided for different classes of defendants, and will not simply put this on the back shelf but will look at it with a degree of urgency. Miscarriages of justice can flow at any time from failure to provide adequate assistance, whether that is legal aid or, as in this case at least, the kind of support that can be offered by those described in my noble friend’s amendment. I hope that the Government will acknowledge that there is an issue here and that, at the very least, if they are not able to respond firmly and conclusively tonight, that they will give it more urgent attention than was indicated in the letter which was recently sent out.

Lord Ahmad of Wimbledon: My Lords, I must admit that, as I listened to the debate, time stopped for a moment when I saw the annunciator freeze. I do not know whether that was due to the weight of arguments that were presented on the previous amendment. Nevertheless, my attention remains focused on this one. As noble Lords acknowledged—including the noble Lords, Lord Bradley and Lord Beecham—my noble friend Lord McNally, following the last debate, wrote to interested Peers on this amendment.

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I have nothing specific to add but certainly I will seek to answer some of the questions that arose. As was said on Report in response to an amendment moved by my noble friend Lady Linklater, there is already a provision in statute for “certain vulnerable defendants” to receive assistance from an intermediary when giving evidence. I shall return to that point in a moment. That is in Section 104 of the Coroners and Justice Act 2009.

The point was made about the Government deferring implementation. It is important to understand that they decided to defer implementation until full consideration could be given to the practical arrangements and resource implications. I reassure the House that we are still looking at these practical and resource issues because they are important.

On the points raised about discrimination, not only does Section 104 provide for intermediaries to be used in support of defendants but the courts already have the power under common law to order such use when they consider it necessary.

The noble Lord, Lord Ramsbotham, referred to vulnerable defendants. As I said, common-law powers exist to appoint an intermediary to assist vulnerable defendants if and when the courts consider it necessary. Guidance, therefore—the Government have moved forward on this—on appointing intermediaries in such circumstances was issued to all courts last year. It is the duty of the courts to ensure that defendants receive a fair trial. In the case of vulnerable defendants, that entails making sure that they fully understand what is taking place and that trials are conducted to timetables that take account of their ability to concentrate.

The noble Baroness, Lady Kennedy, made a point about a fair trial for all vulnerable defendants. To give a couple of examples, the court can make an order allowing a vulnerable defendant, for example, to give evidence over a live link. Much more can also be done by the defendant’s legal representative to aid communication. A vulnerable defendant should always be represented, as one of the criteria in the interests of justice test that is used to determine whether an applicant is entitled to legal aid is that the defendant may not be able to understand the court proceedings.

Coming back to the crux of the point, it is the duty of the courts to ensure that defendants receive a fair trial. The Government are committed to ensuring that vulnerable defendants fully understand what is taking place. I have already alluded to the fact that much can be done in terms of the defendant’s legal representative to aid communication.

In view of the reassurances that I have given, the letter written by my noble friend Lord McNally and the assurance that the Government are looking at this and at the common-law provisions that exist, I hope that the noble Lord will be minded to withdraw his amendment.

Lord Ramsbotham: My Lords, I wonder whether the Minister could answer a question about the increase in the number of out-of-court settlements. This is of extreme concern to the Magistrates’ Association, not least because of the increase in the number of out-of-court settlements of cases involving violence.

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Lord Ahmad of Wimbledon: The noble Lord raises an important point and, with the permission of the House, the Minister will write to him directly on that point. With the amendment as it stands, this issue may not have a direct impact, but the noble Lord raises an important point and the Minister will write to him.

Lord Bradley: It is disappointing that between Report and Third Reading the Government have not reached the conclusion that they should immediately implement Section 104, but I assure the Minister, as he would expect, that we will continue to pursue this matter with the implementation of the National Liaison and Diversion Programme, which fits neatly with the provisions for vulnerable defendants in court, to ensure that there is fairness of approach between witnesses and defendants in court proceedings. However, in the light of the Minister’s comments, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Clause 34 : Restriction on right of appeal from within the United Kingdom

Amendment 5 not moved.

Schedule 13 : Judicial appointments

Amendment 6

Moved by Lord Marks of Henley-on-Thames

6: Schedule 13, page 218, line 11, at end insert—

“Encouragement of diversity in appointments to the Supreme Court

(1) Part 3 of the Constitutional Reform Act 2005 is amended as follows.

(2) After section 31, insert—

“31A Diversity

The Lord Chancellor and any selection commission convened under section 26 must, in performing their functions under sections 27 to 31, have regard to the need to encourage diversity in the range of persons available for selection for appointments.””

Lord Marks of Henley-on-Thames: My Lords, I spoke on the topic of judicial diversity at some length on Report and I shall not detain the House long in this debate.

There is a consensus across this House and in Government on how important it is that the arrangements for encouraging judicial diversity should apply across the court system and particularly in the Supreme Court, and that the duty to encourage diversity should be specifically imposed at the highest level. It is for that reason that I welcome the Government’s Amendment 8. to which the noble Lord, Lord Pannick, and I have added our names. By imposing the duty, as the amendment does, to,

“take such steps as that office-holder”—

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either the Lord Chancellor or the Lord Chief Justice of England and Wales—

“considers appropriate for the purpose of encouraging judicial diversity”,

the duty is imposed in respect of those two officeholders’ exercise of all their functions where that duty may be relevant.

Amendment 8 may make my Amendment 6 unnecessary because it applies to judicial appointments to the Supreme Court. This leads me to my Amendment 7, which would permit a tie-breaker or tipping-point procedure to apply to appointments to the Supreme Court. There is no difference in principle between the Government and the movers of this amendment—myself, the noble Baroness, Lady Hamwee, and the noble Lord, Lord Pannick—as to the appropriateness of such a procedure. The procedure applies to other appointments lower down the system as a result of the Bill, but without the amendment it does not apply to appointments to the Supreme Court.

The Government have no difficulty in accepting the principle but my noble friend expressed the view that its application was already permitted by Section 159 of the Equality Act 2010. I took the liberty of writing in some detail to my noble friend to explain why I took a different view and, while I may not have completely convinced his officials of the rightness of my position, I now understand that the Government are inclined to resolve the issue by putting the matter beyond doubt at a later stage in the passage of this Bill. On the basis that I am right about that and that the amendment will be made, then I am grateful to the Government for their concession and will say nothing more at this stage.

5.45 pm

Lord McNally: I do not wish to pre-empt or shorten the debate, but it might help if I were to say something here. I hope that my noble friend Lord Marks will withdraw Amendment 6 as it is overtaken by the subsequent amendment. I will respond first to my noble friend’s Amendment 7, which seeks to apply a tipping-point principle to appointments to the UK Supreme Court.

The Government’s position has always been that a tipping-point principle should apply to the Supreme Court and we believed, as he said, that the tipping point in Section 159 of the Equality Act 2010 already applied to such appointments. However, as my noble friend Lord Marks explained, there could be a contrary legal view and I can see that there may be merit in the argument that this matter should be put beyond doubt. Therefore, I am happy to say that my right honourable friend the Lord Chancellor is content for me to take this amendment away for consideration with a view to returning to the matter when the Bill goes to the other place.

Amendment 8 concerns whether the Lord Chancellor and Lord Chief Justice should be under a statutory duty to encourage judicial diversity. Following the debate on this issue on Report, I agreed to discuss the matter further with the Lord Chancellor and Lord Chief Justice in order to reflect the strength of feeling expressed by the House. Amendment 8 is in response to that further consideration.

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There is much agreement in the House about the importance of a diverse judiciary that more closely reflects our society. There is also agreement that strong leadership is needed to bring about this change. Amendment 8 helps achieve that leadership by giving a clear declaration of the importance of the Lord Chancellor and the Lord Chief Justice promoting diversity. Therefore, as I explained, in view of the reasons and undertakings I have given, I hope that my noble friend Lord Marks will withdraw Amendment 6 and will not move Amendment 7. I commend to the House Amendment 8, relating to a diversity duty, and I thank the Constitution Committee and other noble Lords who made the case so strongly for an amendment of this sort. I emphasise again that I will take away Amendment 7 for suitable representation in the other place.

Baroness Jay of Paddington: My Lords, my name is not on this amendment but I have spoken several times on this subject during the course of the Bill. I welcome the Minister’s further discussions with the Lord Chancellor, and the government amendment. As he said, it reflects the Constitution Committee’s considerations of this matter which, as he mentioned in the discussion on a previous amendment, have been going on since the beginning of this year. I am delighted that he has taken the view that he has and that he is proposing Amendment 8.

Lord Pannick: My Lords, I, too, am very grateful to the Minister for bringing forward Amendment 8. It is important to underline that Amendment 8, and the personal obligation that it will place on the Lord Chancellor and the Lord Chief Justice, is not to question in any way the commitment and the work done in this field by the current Lord Chief Justice, Lord Judge, which has been considerable. Nor is it to suggest that appointments to the Bench should be made other than on merit. There are highly qualified women and members of ethnic minorities at the Bar, in solicitors’ firms, in the CPS and in the government legal service, and every effort needs to be made to communicate the message that applications from them for judicial appointment would be specially welcomed.

The House heard in Committee and at Report the personal commitment of the noble Lord, Lord McNally, on the issue of promoting judicial diversity. I am pleased that through his efforts the amendment has been tabled on behalf of the Government.

Baroness Prashar: My Lords, I, too, welcome this amendment and thank the Minister for accepting the arguments. The Judicial Appointments Commission recommended this way back in 2008 and I am delighted that it has been agreed and that it is recognised that promoting diversity is a tripartite effort and that leadership is much needed. I want to put on record my thanks.

Baroness Benjamin: My Lords, I would not normally speak in a debate such as this, but this matter is very close to my heart. I thank my noble friend for bringing forward the amendment and, most of all, thank the Minister for his response. I hope that this provision

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will be embedded in our society to make sure that people of diverse backgrounds feel as if they matter and that people care.

Baroness Neuberger: My Lords, as noble Lords know, I chaired the Advisory Panel on Judicial Diversity a couple of years ago. I have had lengthy conversations with the Minister on this subject. I am absolutely delighted—and want to place it on record—that we have Amendment 8 and that this commitment is now on the statute book. This really is a wonderful day.

Lord Beecham: My Lords, the Opposition are delighted to join in this outbreak of consensus and congratulate the Minister on a very statesmanlike response.

Lord McNally: Given those interventions, I wish only to quote somebody who never made it to this House and say that this is not the end of the beginning. I knew that I would get that wrong, but noble Lords know what I mean—it is the end of the beginning. Of course, the person I am quoting rehearsed these things much more than I do. However, I hope that this is the start of a real drive for diversity. Those who have just contributed to the debate have played a major part in that. However, as we sometimes find in other debates in this House, there is battle still to be joined in this area.

Lord Beecham: Perhaps the Minister would care to fortify himself before these debates in the same way that Mr Churchill did.

Lord Marks of Henley-on-Thames: I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7 not moved.

Amendment 8

Moved by Lord McNally

8: Schedule 13, page 218, line 24, at end insert—

“Encouraging diversity

9A In Part 6 of the Constitutional Reform Act 2005 (other provisions relating to the judiciary) after section 137 insert—

“137A Encouragement of diversity

Each of the Lord Chancellor and the Lord Chief Justice of England and Wales must take such steps as that office-holder considers appropriate for the purpose of encouraging judicial diversity.””

Amendment 8 agreed.

Schedule 15 : Dealing non-custodially with offenders

Amendment 9

Moved by Lord Woolf

9: Schedule 15, page 268, line 6, at end insert—

18 Dec 2012 : Column 1510

“Part 6A Provision for female offenders

28A (1) Contracts made by the Secretary of State with probation trusts shall require each probation trust to make appropriate provision for the delivery of services to female offenders.

(2) Provision under sub-paragraph (1) shall include provision for women wherever appropriate to carry out unpaid work and participate in programmes designed to change offending behaviour with the particular needs of women in mind.”

Lord Woolf: My Lords, I begin by disclosing an interest in respect of this amendment as chairman of the Prison Reform Trust. I also acknowledge at the outset that this amendment, which is supported by the noble Lord, Lord Ramsbotham, builds on an amendment tabled by the noble Baroness, Lady Linklater, and mirrors an amendment tabled by the noble Baroness, Lady Hamwee. I am grateful to them for the work they have done.

The noble Lord, Lord Rosser, supported the amendments which were proposed on Report. I hope that that will be his position today. I also hope that the good will which has just been displayed on both sides of the House will continue and apply to these amendments as they are very much like the amendments that the Minister and I have discussed on a number of occasions with regard to restorative justice. These amendments come out of the very distinguished report of the noble Baroness, Lady Corston, which is well known to this House, A Review of Women with Particular Vulnerabilitiesin theCriminal Justice System. That report was made as long ago as 2007 and at the time was received by all Members of this House with approval. I hope that I may take up a moment of the House’s time to read paragraph 3 of the report’s executive summary, which seems to me to sum up the report. The noble Baroness said that,

“it is timely to bring about a radical change in the way we treat women throughout the whole of the criminal justice system and this must include not just those who offend but also those at risk of offending”.

She said that this will require,

“a radical new approach, treating women both holistically and individually—a woman-centred approach”.

She continued:

“I have concluded that there needs to be a fundamental rethinking about the way in which services for this group of vulnerable women, particularly for mental health and substance misuse in the community are provided and assessed. There needs to be an extension of the network of women’s community centres to support women who offend or are at risk of offending and to direct young women out of pathways that lead into crime”.

I urge the House to accept that the amendments are very much in the spirit of that report. When similar amendments were proposed on Report, the Minister was very sympathetic towards them, as one would expect. However, he advanced the argument that that was not the time to accept them because the Government’s strategy regarding women in the criminal justice system had not yet been rolled out. He pointed out that the fact that a Minister had been appointed to be the champion of women in this area was a huge advantage and that we should be reassured by that and accept that the Government had the right intentions although they were not in a position to move on the matter at that stage. Certainly, I readily accept that the appointment of the Minister to whom I have referred, Helen Grant,

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is a great advance in this field. Her appointment should be warmly welcomed. I anticipate that over time great things will come from that.

However, we have drafted the amendments which the House is now considering in a way which we respectfully suggest could not in any way interfere with the rolling out of the Government’s strategy, once that strategy is revealed. If I am wrong in what I have just said and the Minister can indicate to me why, some five years after the publication of the Corston report, the amendment should not be the first recognition in legislation of what the report recommended, I will certainly consider my position further. However, I am bound to indicate to the Minister that, although I accept entirely that his intentions are the very best, I cannot see how the amendment could cause any embarrassment to the rolling out of the strategy to which I referred. I beg to move.

Baroness Corston: My Lords, I congratulate the noble and learned Lord, Lord Woolf, on tabling this amendment, for which I signify my support. However, I have to convey to the House an element of great frustration in that by the time the strategy which we have been promised is published three years will have been wasted. I have now wasted quite a lot of my patience listening to Ministers say they are following the Corston report. It is not true.

I entirely endorse what the noble and learned Lord, Lord Woolf, said about women at risk of offending. Giving money to a probation trust does not provide any services to women at risk. This is something that over time I have pointed out to Ministers and which I conveyed this morning to the Justice Committee of another place. Given the time of day and the pressure of business, I wish briefly to signify my agreement to the amendment tabled by the noble and learned Lord, Lord Woolf, and to urge the Government not to waste any more time.

6 pm

Lord Ramsbotham: My Lords, I echo everything that my noble and learned friend Lord Woolf has said. That is why I have added my name in support of the amendment. I also note what the noble Baroness, Lady Corston, said about the strategy. This is not the first time that we have had a champion to take forward women’s issues. I am interested that most recently the shadow Minister of Justice in the other place supported the cries which many of us have made over many years for a women’s justice board rather than just a champion. However, that is not the point of the discussion today.

I shall speak for a short time to my Amendment 10, which mirrors the suggestion for women but points out the need for special treatment of young adult offenders. I do this with a slightly heavy heart because six months ago, during earlier consideration of the Bill, we were promised a government response to the probation consultation. I had hoped that we would have had that by now setting out how probation trusts would be enabled to deliver appropriate support and rehabilitation arrangements for young adult offenders. It has not happened. I warmly agreed with the noble Lord, Lord McNally, in Committee when he said that if only we could extend some of the lessons that we

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have learnt from the treatment of young offenders under the age of 18, we might be able to have a similar impact on those aged 18 to 21 or 18 to 25. That has not happened. I note with wry amusement that the Minister castigates those of us who question current plans to commission justice services on a payment by results basis by saying we are looking a gift horse in the mouth because of the Prime Minister’s involvement in the rehabilitation process. I have to say that I have been looking for gift horses in this field for the past 17 years and they have all turned out to be chimeras and flown away.

Several times when discussing this issue I have suggested that instead of the clocks around this House saying 0:10, they should say PANT—standing for “people are not things”. We have had too much about things and not enough about people in this particular group. I shall quote four reasons. Young adults have many complex needs. They come on top of the physical and mental maturing that is taking place. When you add homelessness, poverty, unemployment, educational failure, substance misuse, mental health problems and victimisation, exacerbated by all child support services ceasing at the age of 18, you have an unhappy group. Although the age group makes up only 4% of the population, 15% of those starting community sentences come from it, as do 14% of those starting custody. When no one is responsible for looking after them in the criminal justice system, then you have a group which clearly needs attention.

It is interesting that the Barrow Cadbury Trust’s Transition to Adulthood Alliance has proved that imposing additional requirements without the necessary support to help these people understand what a sense of responsibility means and to address the underlying causes of offending and their chaotic lifestyles is likely to set them up to fail. This all boils down to the fact that people are at the heart of looking after the needs of these young adult offenders. In particular, there needs to be long-term contact with a responsible adult. That is worth all the programmes, initiatives, commissioning and payment by results that you can think of. Somebody is going to make that difference. If I make an impassioned appeal yet again for this amendment, it is because people are at the heart of what this country is all about. As I have said many times, if we as a nation continue to make inappropriate support and rehabilitation arrangements for this vulnerable group, then we fail them and deserve to be castigated for doing that.

Baroness Kennedy of The Shaws: My Lords, I too support this amendment. Those who work at the front line with women who come before the courts share the frustration voiced by my noble friend Lady Corston. So much time has passed since her report that it is a serious failure for us as a nation that we have not dealt with this issue of women offenders and the best way of responding to it. I know that the Minister is well aware of the statistics. About 80% of the women who come before the courts are victims, brought up in homes where domestic violence was part of the round or where they were sexually abused. They are more victims than many who readily bear that title. Over 60% of them suffer from mental illness and 66% are

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mothers with children. When we send them to prison, we actually visit the effects on whole families, bringing the care system into play. Housing is often lost and the consequences are dire.

Real speed is needed to respond to this. I attended a conference only a week ago chaired by the previous Chief Inspector of Prisons, Dame Anne Owers. The room was full of people who work on the front line in the probation service. All said that they hoped the Government would take urgent action. I support the amendment but I also want us to say that my noble friend Lady Corston did an absolutely vital piece of work. It reiterated what many people had said before, recently in Scotland by Dame Elish Angiolini. I hope that the Government will see that this is a story that has been told over and over again. Somehow we have to respond with greater speed than has happened so far.

Baroness Howe of Idlicote: My Lords, as someone who has put her name to amendment after amendment on this issue of why on earth we did not include women in a Bill on crime and courts, I hope that the Government will do something about it. The Corston report is totally brilliant. We have all agreed that. It set out the areas that needed attention and not just that: we all know that there were many reports before it. It is not just a question of five years, but of report after report making special recommendations about the needs of women offenders. We all know the degree of mental health problems and sexual and other forms of abuse that these women have had over the years. Equally, we know of the terrible damage to children when families are broken up and children taken into care.

Returning to what my noble friend said about young offenders, I was looking at a report by the probation inspectorate. Ofsted and, I think, Estyn did a sample looking at the support that these young people had. Many of them have, no doubt, come from homes such as this, and have been in care for goodness knows how long. More than a third of these children examined by the inspectorate were placed more than 100 miles from home, and a lot of them were found in situations where they were almost next door to offenders. One was found having sex with a 15 year-old boy in a children’s home. It is not exactly a pretty picture.

Although we did not manage to reach these amendments on the days that we were promised they would be reached, and therefore could not vote on them and cannot vote on them now, will the Government please think very hard about making these changes? I have waited a long time this afternoon and have not taken up time on other amendments. We should not wait just because we have a brilliant Minister; I am sure that she is brilliant. Above all, I hope that we can now ensure that mention is made in the Bill of the needs of women, who are a very important group.

Lord Phillips of Sudbury: My Lords, I hope I will be forgiven if I contribute briefly to this debate because I have taken little part in it hitherto. However, I cannot resist rising to speak strongly in favour of Amendment 10.

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I started my life in the legal profession traipsing around the magistrates’ courts of eastern England. For several years, I said to myself at the end of every day that there but for the grace of God would I have gone. We are an extraordinary race. We are so intelligent and forward-thinking in many ways, yet when it comes to penal affairs, we have an extraordinary ability to fail to see our own best interests. Today, we would all agree that community life is at a low ebb, and the weaker that the communities of this country are, the greater the likelihood of certain groups of young adults casting themselves adrift and offending against the mores of society, which, unfortunately, they often do.

We are in a society obsessed with money, celebrity and sex. There is a group of young men and women who think nothing of themselves and are thought nothing of. They have succeeded at nothing and failed at everything. Educationally, they are a failure. They have little prospects, little ambition, little self-esteem and no respect. It is this group who Amendment 10 seeks to help. Again and again, we allow our distaste for the behaviour of many of these young people to stand in the way of intelligent redress. It is in our self-interest to ensure that this amendment, or something like it, is passed and that Governments of all persuasions are required to do something specific about it. It is for those reasons that I strongly support Amendment 10.

The Earl of Listowel: My Lords, as we have heard, many of these women will, as children, have been abused in their own homes. A disproportionate number will have then entered the care system, and a disproportionate number of those will then have their children taken into care. A disproportionate number of the young people we have been discussing will have been abused in their homes when they were children and will have been taken into the care system. Although there have been improvements in that system, many will have experienced multiple foster placements—as many as 30, and some more than 30. They will often have experienced many changes in social worker.

I commend these amendments to the Government and I particularly commend the words of my noble friend Lord Ramsbotham when he said that what these young people need is a long-term, enduring and reliable relationship with a responsible adult. Again and again, reports into the care system identify that continuity and reliability is the key to improving outcomes for these young people. I hope that the Minister can give some encouraging response to these amendments, as I am sure that he will.

6.15 pm

Lord Rosser: My Lords, given that this is Third Reading, I will attempt to be reasonably brief. I want to talk separately to the two amendments in the group.

We support the principle behind Amendment 10, given that it is clearly designed to enhance the prospects of rehabilitation and reduce reoffending. That amendment is, no doubt, prompted by the fact that many child-focused support services fall away when young people reach the age of 18. Our reservation relates to the potential cost of delivering the services called for in that amendment because it seems to be a little open-ended, unlike the amendment on female offenders, which is more specific.

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The first part of Amendment 10 requires each probation trust,

“to make appropriate provision for the delivery of services to young adult offenders”,

and goes on to say that this,

“shall include provision for services which provide support and rehabilitation appropriate to the level of maturity of young adult offenders and which increases the likelihood of compliance with community orders”.

In other words, it would appear that these services will either be in addition to community orders or be extensions of community orders, because that amendment refers to these services increasing,

“the likelihood of compliance with community orders”.

It is not clear what these services will be and whether they are likely to involve a significant, or potentially significant, financial commitment going well beyond existing and projected levels of expenditure.

The issue raised by Amendment 10 is important and will, no doubt, receive further consideration when the Bill reaches the other place, including on the financial and resource commitments that would or would not be involved. However, because we do not have a feel for the cost of implementing that amendment in a way necessary to achieve the objectives referred to by the noble Lord, Lord Ramsbotham, we are not able to give it our support tonight and will abstain if it is put to a vote.

Turning to Amendment 9, we had a discussion on Report about provision for female offenders. In his response, the Minister reiterated what the Government have been doing in this field and then stated that they would no longer be publishing their strategic objectives for female offenders by the end of this year, which the noble Lord had indicated in Committee was the intention, due apparently to change of Secretary of State in September. The noble Lord told us that the delay was good news, which presumably means that if the Government had kept to their declared intention, as stated by the Minister in Committee, it would not be such good news.

The Minister’s argument for rejecting the amendments moved by two of his noble friends on Report was not one of cost—indeed, he told us of additional money being provided for the funding of women’s community services—but was simply because he did not think that the present situation would be improved by a statutory commitment on provision for female offenders, as provided for in those amendments. As has already been commented on, the noble Lord went on to say that some of his colleagues had an ability to look gift horses in the mouth. He did not tell us why the situation would not be improved by a statutory commitment. There is a body of opinion in your Lordships’ House that thinks that a statutory commitment in a Bill—with a schedule on dealing non-custodially with offenders that makes no specific reference to, or provision for, women, and with NOMS funding for women’s centres guaranteed only until March 2013—will be far more effective than soothing words and sincere good intentions in ensuring that appropriate provision for female offenders is made, now and in the future, through agreeing to the amendment. We support it and will do so, should it be put to a vote.

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Lord McNally: My Lords, we are soon to be passing the three-hour limit for these debates at Third Reading. A reoccurring theme in all the debates on the Bill has been the straying into what I would describe as Second Reading speeches and an attempt to rerun cases that have been made. I respectfully say to the House that if this is going to be the norm, we may well have to talk to the Opposition about how we handle Third Readings. I am not talking about whose amendment it is, I am talking about the usual channels. If we continually have complete reruns of debates, it does make business management extremely difficult. Sometimes I think that noble Lords overemphasise winning votes in this House; making things happen. I actually think that what has the greater influence is the well argued debate rather than the vote, but perhaps that is because I am getting used to being beaten at this Dispatch Box.

We had an informed and extensive debate about female and young adult offenders on recommital and Report. I would also say that sometimes the speeches of the noble Lord, Lord Ramsbotham, make it sound as though nothing has happened in the past 17 years. Successive Governments have grappled with this, and certainly during my term of office I have fought very hard to put the specific problems of female prisoners to the forefront. I fully accept the points that were made by the noble Baroness, Lady Kennedy. I am disappointed that the noble Baroness, Lady Corston, thinks that nothing has been done with her report. We expect to publish in January, and I make no apologies for the delay; I would rather get something right than meet an artificial deadline. I hope that when we publish in the new year noble Lords will see the work that Helen Grant has been carrying out with the support of the Lord Chancellor. As I have said before, do not belittle the fact that a Conservative Lord Chancellor has openly said that he sees the necessity of giving priority to women prisoners, as he said today at Questions in the House of Commons. Hopefully in the new year we will put that strategy into place, and I am sure that we will have a good opportunity to debate that.

Equally with young adults, it is not a matter of carving out from one Government to another on this. I read the report that was published today about young people in care with a sense of collective shame at how these things are being dealt with. However, as those who have previously had those responsibilities know, it is often a matter of convincing colleagues in government, and finding resources when there is competition from other departments that have equally strong arguments. I do not think there is any doubt that we believe that the rehabilitation of both groups is important. We strongly agree with the arguments that have been employed, and that is why we are already investing significant effort and resource to ensure that female and young adult offenders receive the right support.

In the previous debate, I gave examples of the many projects, including those in Lancashire, Durham and Derbyshire, that trusts are running for female offenders. For young adults, likewise, many probation trusts are already coming up with innovative approaches to supporting this group. For example, in London the trust is working on an imaginative project by which some staff will work in both the youth offending team

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and the trust. This is to ensure that the transition between the youth and adult estate works effectively. In the east of England, probation staff have been developing closer links with leaving care services to ensure that the particular needs of these young adults are being met.

I hope, therefore, that noble Lords will recognise the Government’s strong commitment to providing the right support for women and young adult offenders. There is agreement across this House that we need to do so. What we are debating is the mechanism for delivering that support, not whether we should deliver it. It is important to be clear here that the projects I mention have not been centrally imposed. They have been delivered from the ground up, by committed and passionate staff in probation trusts, to respond to the needs of women and young adults in the area.

Local innovation is critical if we are to have effective services for these groups. I believe the system we already have strikes a good balance between local innovation and central support. I do not believe that a statutory duty is necessary to deliver this.

The relationship between NOMS and probation trusts already gives a framework that ensures these groups are prioritised. For example, trusts are already required by the NOMS Commissioning Intentions document to make appropriate provision for women in the community. Trusts are currently discussing their proposals for services for female offenders in 2013-14 with commissioning experts at NOMS, and will be challenged where these do not appear to be sufficiently robust.

Similarly, I have already mentioned on Report that the operating manual on unpaid work requires that women should be allocated to work placements which take account of their needs. This sets out a presumption that female offenders will not be required to work alongside male offenders.

On young adults, our current system balances local delivery with central support. As with female offenders, trusts are required by NOMS to commission or deliver an appropriate range of services to address the causes of young adults’ offending. To support this, NOMS has provided trusts with information on the specific needs of young adults that will help them and other providers take an evidence-based, effective approach to tackling re-offending. This system allows for local decision-making on how best to meet the needs of these groups.

In short, I wholeheartedly agree with the arguments that noble Lords have made about improving outcomes for female and young adult offenders. I hope that I have reassured noble Lords that NOMS and probation trusts are already taking a tailored approach to supporting them. However, our focus should be on supporting local areas to make further improvements. The system that we have already allows for this. Creating new statutory duties for trusts is not the right way to bring about the improvements that we want for these two groups.

In light of these assurances, I hope that the noble and learned Lord, Lord Woolf, and the noble Lord, Lord Ramsbotham, will agree not to press their amendments. Perhaps I may give just one little bit of

18 Dec 2012 : Column 1518

encouragement to the noble and learned Lord, Lord Woolf. Yes, we did have lots of talks about restorative justice, and restorative justice is in this Bill, but getting it into the Bill took lots of talks between and within departments, letters to various Cabinet committees et cetera. Some of these things take time, but there should be no doubt that young offenders and women offenders are on the Government’s radar. Ministers at the MoJ, and particularly my colleague, Helen Grant, are working very hard to make progress in these areas. With those assurances, I hope that noble Lords will agree not to press their amendments.

Lord Woolf: My Lords, I thank those who have spoken in favour of the amendment and all those who have taken part in this debate, and I thank the Minister for his response. I hope that he will accept from me that I have no reservations in accepting that he sincerely believes what he has just said to the House.

However, there is a difference between the approach of the Minister and that which I was urging upon the House. I say that the situation with regard to women in the criminal justice system is one where there is a crying need for there to appear in the statute something which speaks of Parliament’s concern.

I have great sympathy for my noble friend Lady Corston in her feeling of frustration at a lack of action in respect of her report, which was welcomed so warmly. It seems to me that, in view of the issue between us and because the Minister has not sought to identify any possible prejudice that could come—

Lord McNally: I can only make one last appeal to the noble and learned Lord. Does he really think that it will advance one inch the cause that he espouses if we have a Division at this point, where people who have not been in the debate will come in and be told, “Oh, you’re voting in favour of women or voting against women.”?

Noble Lords: Shame!

Lord McNally: It is no use saying “shame”. There is no division between us, and to suggest that there is does not further the cause.

Lord Woolf: Well, of course, I listen very attentively to what the Minister says, but perhaps he will forgive me if I bring the agony to an end by indicating that, as I see it, there is nothing in the proposed provision which can harm the Government’s good intentions. I think that there is a difference of view here: between those who feel that the statute should contain a statement of recognition of the special position of women in the criminal justice system and those who do not. In those circumstances, I seek the opinion of the House in respect of my amendment.

6.32 pm

Division on Amendment 9

Contents 187; Not-Contents 159.

Amendment 9 agreed.

18 Dec 2012 : Column 1519

Division No.  2


Aberdare, L.

Adams of Craigielea, B.

Adonis, L.

Ahmed, L.

Alli, L.

Anderson of Swansea, L.

Andrews, B.

Bach, L.

Bakewell, B.

Barnett, L.

Bassam of Brighton, L.

Beecham, L.

Berkeley, L.

Best, L.

Billingham, B.

Bilston, L.

Blackstone, B.

Boateng, L.

Boothroyd, B.

Borrie, L.

Bradley, L.

Brooke of Alverthorpe, L.

Brookman, L.

Brown of Eaton-under-Heywood, L.

Browne of Ladyton, L.

Burnett, L.

Butler-Sloss, B.

Campbell-Savours, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Collins of Highbury, L.

Corston, B.

Davies of Oldham, L.

Davies of Stamford, L.

Dear, L.

Donaghy, B.

Donoughue, L.

Dubs, L.

Elder, L.

Elis-Thomas, L.

Elystan-Morgan, L.

Erroll, E.

Evans of Parkside, L.

Evans of Temple Guiting, L.

Exeter, Bp.

Falconer of Thoroton, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Fellowes, L.

Filkin, L.

Finlay of Llandaff, B.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Gale, B.

Giddens, L.

Gilbert, L.

Golding, B.

Goldsmith, L.

Gordon of Strathblane, L.

Gould of Potternewton, B.

Grantchester, L.

Greenway, L.

Grenfell, L.

Griffiths of Burry Port, L.

Grocott, L.

Hanworth, V.

Harris of Haringey, L.

Hart of Chilton, L.

Haworth, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hennessy of Nympsfield, L.

Hollis of Heigham, B.

Howarth of Newport, L.

Howe of Idlicote, B.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hunt of Chesterton, L.

Hunt of Kings Heath, L.

Hylton, L.

Janner of Braunstone, L.

Janvrin, L.

Jay of Ewelme, L.

Jay of Paddington, B.

Jones, L.

Jones of Whitchurch, B.

Judd, L.

Kennedy of Southwark, L.

Kennedy of The Shaws, B.

Kilclooney, L.

King of West Bromwich, L.

Kirkhill, L.

Knight of Weymouth, L.

Laming, L.

Layard, L.

Lea of Crondall, L.

Lichfield, Bp.

Liddell of Coatdyke, B.

Liddle, L.

Linklater of Butterstone, B.

Lipsey, L.

Lister of Burtersett, B.

Listowel, E.

Low of Dalston, L.

Luce, L.

Lytton, E.

McAvoy, L.

McDonagh, B.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Masham of Ilton, B.

Massey of Darwen, B.

Mawson, L.

Maxton, L.

Meacher, B.

Morris of Handsworth, L.

Morris of Yardley, B.

Morrow, L.

Neuberger, B.

Nye, B.

O'Loan, B.

O'Neill of Clackmannan, L.

Palmer, L.

Pannick, L. [Teller]

Parekh, L.

Paul, L.

Pendry, L.

Pitkeathley, B.

Plant of Highfield, L.

Prescott, L.

Prosser, B.

Puttnam, L.

Quin, B.

Radice, L.

Ramsbotham, L. [Teller]

Rendell of Babergh, B.

Richard, L.

Robertson of Port Ellen, L.

Rogan, L.

18 Dec 2012 : Column 1520

Rooker, L.

Rosser, L.

Rowe-Beddoe, L.

Royall of Blaisdon, B.

Sawyer, L.

Scotland of Asthal, B.

Scott of Foscote, L.

Sharp of Guildford, B.

Sherlock, B.

Simon, V.

Smith of Basildon, B.

Smith of Finsbury, L.

Smith of Leigh, L.

Soley, L.

Stern of Brentford, L.

Stevenson of Balmacara, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Symons of Vernham Dean, B.

Taylor of Bolton, B.

Temple-Morris, L.

Thornton, B.

Touhig, L.

Truscott, L.

Tunnicliffe, L.

Uddin, B.

Wall of New Barnet, B.

Walpole, L.

Warner, L.

Warnock, B.

Watson of Invergowrie, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Wilkins, B.

Williams of Elvel, L.

Wills, L.

Woolf, L.

Young of Hornsey, B.

Young of Norwood Green, L.


Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Anelay of St Johns, B. [Teller]

Arran, E.

Ashdown of Norton-sub-Hamdon, L.

Astor of Hever, L.

Attlee, E.

Avebury, L.

Bates, L.

Benjamin, B.

Bew, L.

Blencathra, L.

Bonham-Carter of Yarnbury, B.

Bottomley of Nettlestone, B.

Bowness, L.

Brabazon of Tara, L.

Bradshaw, L.

Brinton, B.

Brooke of Sutton Mandeville, L.

Browning, B.

Buscombe, B.

Caithness, E.

Campbell of Alloway, L.

Cathcart, E.

Chidgey, L.

Clement-Jones, L.

Colwyn, L.

Cotter, L.

Courtown, E.

De Mauley, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dykes, L.

Eaton, B.

Eccles, V.

Eden of Winton, L.

Edmiston, L.

Falkner of Margravine, B.

Faulks, L.

Flight, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Geddes, L.

German, L.

Goodlad, L.

Green of Hurstpierpoint, L.

Hanham, B.

Hannay of Chiswick, L.

Henley, L.

Hill of Oareford, L.

Hodgson of Astley Abbotts, L.

Hooper, B.

Howe, E.

Hunt of Wirral, L.

Hussein-Ece, B.

Inglewood, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jones of Cheltenham, L.

Jopling, L.

King of Bridgwater, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Lamont of Lerwick, L.

Lawson of Blaby, L.

Lee of Trafford, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Liverpool, E.

Loomba, L.

Lyell, L.

MacGregor of Pulham Market, L.

McNally, L.

Maddock, B.

Mancroft, L.

Mar and Kellie, E.

Marks of Henley-on-Thames, L.

Marland, L.

Marlesford, L.

Mawhinney, L.

Mayhew of Twysden, L.

Miller of Hendon, B.

Montrose, D.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Neville-Jones, B.

Newby, L. [Teller]

Northbrook, L.

Northover, B.

Norton of Louth, L.

18 Dec 2012 : Column 1521

O'Cathain, B.

Patel, L.

Patten, L.

Perry of Southwark, B.

Plumb, L.

Popat, L.

Randerson, B.

Redesdale, L.

Rennard, L.

Risby, L.

Roberts of Conwy, L.

Rodgers of Quarry Bank, L.

Roper, L.

Ryder of Wensum, L.

St John of Bletso, L.

Sassoon, L.

Scott of Needham Market, B.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Sharkey, L.

Sharples, B.

Sheikh, L.

Shephard of Northwold, B.

Shipley, L.

Shutt of Greetland, L.

Skelmersdale, L.

Smith of Clifton, L.

Soulsby of Swaffham Prior, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stevens of Ludgate, L.

Stewartby, L.

Stowell of Beeston, B.

Strathclyde, L.

Sutherland of Houndwood, L.

Taylor of Goss Moor, L.

Taylor of Holbeach, L.

Teverson, L.

Thomas of Winchester, B.

Tordoff, L.

Trefgarne, L.

True, L.

Tugendhat, L.

Tyler, L.

Verma, B.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Warsi, B.

Wasserman, L.

Wei, L.

Wilcox, B.

Willis of Knaresborough, L.

Younger of Leckie, V.

6.45 pm

Amendment 10

Tabled by Lord Ramsbotham

10: Schedule 15, page 270, line 24, at end insert—

“Part 7AProvision for young adult offenders

30A (1) Contracts made by the Secretary of State with probation trusts shall require each probation trust to make appropriate provision for the delivery of services to young adult offenders.

(2) Provision under sub-paragraph (1) shall include provision for services which provide support and rehabilitation appropriate to the level of maturity of young adult offenders and which increases the likelihood of compliance with community orders.

(3) For the purposes of this paragraph “young adult offender” means a person who is aged at least 18 but under 21 when convicted.”

Lord Ramsbotham: I listened with care to what was said, particularly on the question of resources. I think that in the circumstances it makes absolute sense for this amendment to go to the other place and to be debated as fully as possible. Therefore, I shall not move this amendment.

Amendment 10 not moved.

Arrangement of Business


6.46 pm

Baroness Anelay of St Johns: My Lords, this may be a convenient point to make a business statement relating to the proceedings today. Clearly, when the matters before us were set down, we had anticipated in the usual channels that the approach to Third Reading would be normal—that is, the practice of the House is

18 Dec 2012 : Column 1522

normally to resolve major points of difference by the end of Report stage and to use Third Reading for tidying up. Therefore, in the usual channels we felt that we were making an appropriate disposition of business today, whereby this Bill would be followed in the normal manner by a short Second Reading and that, after that, we could have a debate on—if I can colloquially call it this—matters of Leveson.

This Third Reading has gone beyond the normal time that one would expect for a Third Reading, and indeed some of the discussions have gone quite wide. Therefore, something that one might describe it as a little bit of a delegation came from those interested Peers who had been sitting very patiently waiting for their opportunity to take part in what, after all, is a major debate on the press and the media and all the matters surrounding the important report that was issued and known colloquially as the Leveson report. Those Peers felt that it had now become inappropriate for the House to consider the matter at a late hour.

I had some discussions with the members of that little, but very forceful, delegation, who felt that they were relaying some of the views of other Members. I certainly listened very carefully. I have had discussions with the opposition Front Bench, and I am very grateful to them, as ever, for their co-operation in the usual channels. As a result, it has been agreed that the Leveson debate will not proceed today but that we will find a date for it as soon as possible early in the new year. I have already had preliminary discussions with the Opposition and I feel sure that we will be able to find a convenient date very quickly. As soon as that has been achieved, I will naturally make a statement to the House. If it is a matter that we cannot resolve before the House rises, I will ensure that all party groups and the Convenor are able to put out the message as soon as possible so that the inconvenience which has clearly been experienced by the large number of Peers wanting to speak today is perhaps brought to an early end.

Lord Bassam of Brighton: My Lords, on behalf of the Opposition I thank the noble Baroness for her statement. She has been very gracious in agreeing to rearrange the business. It will not be to everybody’s convenience, but at least it will be at a more convenient time and will enable a more congenial debate. Therefore, on behalf of these Benches, I am very grateful to the Government for their swift action on this point.

Lord Soley: My Lords, the Leveson debate is incredibly important not just for this House but for people around the country. For us to have held the debate in the early hours of the morning—which is what it would have gone into—would, frankly, have been profoundly wrong. I know that I have an interest, inasmuch as I produced the first Bill on the press some 20-odd years ago, as well as many other things, but I really feel that we would not have done ourselves or the public any good if we had continued with this. Therefore, in my view, the Government have made the right decision. I appreciate that it is inconvenient for some people, but it is the right decision and I am grateful.

18 Dec 2012 : Column 1523

Lord Stoddart of Swindon: My Lords, the statement just made by the Chief Whip is a very wise one, but perhaps I may put this point to her. The Leveson report is very long and detailed. Would she consider, along with the other parties, whether we should have a two-day debate when it comes back in the new year?

Baroness Anelay of St Johns: My Lords, I have already had preliminary discussions about the revised debate with the Leader and chief representatives of the Opposition and I am grateful for that. I shall consider all the options with regard to tabling the debate. Suffice it to say that we will ensure that enough time is made available and that adequate advance notice is given of the rescheduling of the debate.

Lord Prescott: My Lords, with regard to the new timing of this debate, I accept that a delegation had to get home instead of taking part in it and I understand the difficulties, although it was their choice rather than that of this House. However, will the Chief Whip make sure that we have the debate before any decisions are made? This is a chance for the House of Lords to give an opinion on the most important issue of the day, but if we end up giving that opinion after the decisions have been made, that will be most unfortunate. That is what we have given up tonight. Although we cannot tell when all this will be settled, let us at least find a time that allows us the possibility of expressing our views before any decisions are arrived at.

Baroness Anelay of St Johns: My Lords, I agree entirely with the noble Lord, Lord Prescott. The matter of urgency was impressed on me by the delegation.

Lord Palmer: My Lords, does not the Chief Whip agree that the noble Lord, Lord Trees, ought to be given a letter of apology? He has gone through the agony of having to wait to make his maiden speech, but now he has had to postpone it. That really is pretty agonising.

Baroness Anelay of St Johns: My Lords, I think that perhaps the noble Lord, Lord Trees, in waiting to make his maiden speech, has seen how self-regulation takes place in this House. Sometimes the rules are so elastic that no one can predict the way in which our debates may extrapolate and develop into new realms.

The Earl of Erroll: My Lords, this Third Reading underlines the importance of returning to our previous custom of pressing amendments to a Division at the Committee stage as a matter of principle and then tidying up on Report. The practice of withdrawing amendments in Committee and then pressing them on Report is leading to this problem of tidying up at Third Reading. I think that we should return to our old custom of pressing most issues to a Division in Committee, even if they are deficient in some way, because the Report stage is for tidying up.

18 Dec 2012 : Column 1524

Crime and Courts Bill [HL]

Bill Main Page

Third Reading (Continued)

6.52 pm

The Deputy Speaker (Baroness Fookes): Perhaps I may assume that the House is now ready to return to the Bill.

Amendment 11

Moved by Lord Goldsmith

11: Schedule 16, page 273, line 36, leave out “broadly comparable to” and insert “not more than”

Lord Goldsmith: My Lords, this amendment can be dealt with briefly, and I would have said that before the Chief Whip made her statement. It concerns the question of the extent of the discretion that prosecutors will have, subject to the double lock of supervision by the courts, in reaching agreements on deferred prosecution agreements. Along with other noble Lords, including the noble Lord, Lord Marks of Henley-on-Thames, I have been concerned that the Bill does not appear to provide a discretion on the maximum reduction of financial penalty. For example, on 10 December at col. 968 the noble Lord, Lord Ahmad of Wimbledon, talked about a maximum discount of one-third, and it was not the first time that that had been said. That led me to consider whether that was the view of the prosecutors, and having made inquiries of them, it turns out that that is not what they thought the Bill was going to do. It was because of that, and only because of that, that I wanted to raise the matter again for clarification.

I wrote to the noble Lord, Lord McNally, and I am grateful to him and to his officials for his detailed response. What I asked in substance was whether it was in fact the case that one-third was not the maximum discount on the financial penalty that could be agreed; it could be greater than that. I understand from the Minister’s response that, shortly put, the one-third discount is not the maximum that can be agreed and that in appropriate cases, there could be an agreement—I underline, subject to the agreement of the court—which could be greater than that. If that clarification can be made, which otherwise would go uncorrected, although I personally would still prefer to see a greater discretion, at least it would deal with the major problem of an apparent one-third maximum reduction. For those reasons, I beg to move.

Lord Beecham: My Lords, I support the amendment moved by my noble and learned friend, although I do not anticipate that he will seek to divide the House on it. It is interesting to note that the amendment has come before the House on the same day as a question from the noble Baroness, Lady Williams of Crosby, that referred, of course, to the settlement of cases in America. She referred to a billion-pound settlement reached under a deferred prosecution agreement over there and contrasted that with the very modest levels of financial penalty incurred in this country under processes that usually involve the Serious Fraud Office or, in revenue cases, Her Majesty’s Revenue and Customs.

18 Dec 2012 : Column 1525

Throughout our debates on deferred prosecution agreements, my noble and learned friend has pointed to the need to incentivise potential corporate defendants. At the moment they are only corporate defendants, but in due course there may be a case for extending them to individual defendants. He has stressed the need to adopt this procedure rather than rely on prosecution because, as has been pointed out on several occasions, the success rate of the Serious Fraud Office in these cases has been, to put it mildly, not very marked. Unless there is a credible threat of a successful prosecution, there is virtually no incentive for a defendant corporation to plead guilty and every incentive for it to contest the case. The corporation has a very reasonable prospect of being successful. The case would seem to be similar in revenue cases, hitherto at any rate. HMRC has been apt to settle for rather more modest amounts than one might have expected relative to the level of abuse that is alleged to have taken place. The advantage of the agreements, as has been pointed out by my noble and learned friend and several other noble Lords, is not only that there is a financial penalty available as part of the agreement, but that other measures are available as well.

An additional reason for the Government, through their relevant agencies, to press for a deferred prosecution agreement is because, first, there is a greater incentive for companies to settle, knowing that they will not have to meet the full costs which they can take into account in balancing their considerations about whether to defend or not, and secondly, from the public interest perspective, there can be additional conditions that might apply to such an agreement. Those might be monitoring, changes in practice and so on. Furthermore, there can be a period during which matters can be reviewed. All of this suggests that greater flexibility in discounting from what might be expected to be the maximum fine would assist the whole process, although that does raise the question of what the sentencing guidelines from the Sentencing Council will be with regard to these penalties. Perhaps we ought to be moving more in the direction of the level of fines imposed under the American system, which it is hoped would increase the incentives.

My noble and learned friend is clearly minded to accept the position on the basis of the Minister’s letter. From the Opposition’s perspective, we are content with that, and we look forward to seeing in due course how the system moves forward. We would hope also to have an opportunity to review it, as has been discussed in previous debates. I commend my noble and learned friend on his persistence in this matter and the Minister on what has apparently been a sympathetic response.

7 pm

Lord Ahmad of Wimbledon: My Lords, it is always a pleasure to respond to the noble and learned Lord, Lord Goldsmith, at a rather earlier hour than has been the case in our previous exchanges, and that is always welcome. However, perhaps it is later than I thought would be the case.

Following the debate on Report, I know that my noble friend Lord McNally has corresponded with the noble and learned Lord and reassured him that paragraph 5(4) of Schedule 16 affords a broad discretion

18 Dec 2012 : Column 1526

to prosecutors and the court when considering a financial penalty term for a deferred prosecution agreement. In particular, on the specific point raised by the noble and learned Lord, my noble friend Lord McNally has confirmed in his letter that the extent of the discretion is such that scope to reduce financial penalty will not be restricted to a maximum of one-third in all cases.

It is appropriate that the noble and learned Lord, Lord Goldsmith, has pointed to the additional discounts in the sentence available for convicted offenders under Section 73 of the Serious Organised Crime and Police Act 2005, which was predated by more informal arrangements. It is our view that in a suitable case the parties to a DPA and the court could consider whether this further discount might be available. The level of any such additional discount would depend on the circumstances and of course reflect the level of assistance given; and the parties should be guided by sentencing practice and pre-existing case law on this matter.

In the light of these assurances and the correspondence that has taken place, and, of course, the related assurances that I have given, I trust that the noble and learned Lord, Lord Goldsmith, will withdraw his amendment.

Lord Goldsmith: My Lords, I thank the noble Lord, Lord Beecham, for what he said and for reminding us and the Government that we are going to come back to review these arrangements, we very much hope, for a number of reasons, including this one. My primary concern was to get an assurance that one-third was not the maximum discount that could be agreed. In the light of that assurance, I beg leave to withdraw the amendment.

Amendment 11 withdrawn.

A privilege amendment was made.


Moved by Lord Taylor of Holbeach

That the Bill do now pass.

Lord Taylor of Holbeach: My Lords, I would like to take this opportunity to thank the Bill team for its support. This has been a long, complex Bill, and two departments of government have had to contend with two different Ministers. If I might say so, my noble friend Lord McNally and I have enjoyed working together on this Bill. My noble friend has, of course, had a change of partner since Committee stage, and I know that my noble friend Lord Henley would like to be associated with these remarks. I thank, too, those who have supported us through this Bill.

Lord Beecham: My Lords, I echo the thanks to the Bill team for its support and to the Ministers. I congratulate the noble Lord, Lord McNally, on his new civil partnership. I also commend and thank the noble Lord, Lord Henley, for his contribution. I feel as though I and my colleagues—I speak now for two opposition teams as well—are emerging from a six-month sentence, which is perhaps an appropriate way to

18 Dec 2012 : Column 1527

regard these past few months dealing with this Bill. It has been a challenging but instructive and, at times, entertaining experience, and I am grateful that for the most part it has been conducted in the usual spirit of your Lordships’ House. We look forward to future pieces of legislation—preferably deferred for a while; some of us need some time to recover.

I am grateful to the ministerial team and, indeed, to noble Lords—especially noble and learned Lords—who have contributed so much to a very considered deliberation of an important measure.

Bill passed and sent to the Commons.

Small Charitable Donations Bill

Bill Main Page

Second Reading and Remaining Stages

7.04 pm

Moved by Lord Newby

That the Bill be read a second time.

Lord Newby: My Lords, the gift aid small donations scheme was announced as part of a package of measures to encourage charitable giving in the 2011 Budget. It is a complementary scheme to gift aid, which, as noble Lords will be aware, is one of the main tax reliefs available to charities and their donors and is now worth more than £1 billion per year to the charity sector.

The Government recognised, however, that charities were missing out on a significant amount of potential gift aid income because it is not practical for them to collect gift aid declarations from passers-by in the street or members of a congregation who give small cash donations. This Bill, therefore, enables charities to claim a gift aid-style top-up payment on those small cash donations without the need for a gift aid declaration. Most charities will be able to claim top-up payments on up to £5,000 worth of small cash donations in a tax year. This means that they will have up to an additional £1,250 of income each year to help advance their charitable purposes. This is a significant boost to the charitable sector, which will particularly help small and grass-roots charities. Her Majesty’s Revenue and Customs estimates that this scheme will be worth approximately £100 million in additional funding to the sector each year once the scheme is fully up and running.

In constructing the scheme, the Government have had to strike a balance. The scheme must be fair and affordable, and it must be protected from fraud. Unfortunately, all repayment schemes attract fraud. HMRC already experiences fraudulent claims for gift aid—which is a more secure system than the new scheme will be—because charities have to keep more records of their gift aid donations. The gift aid small donations scheme is cash-based, so there will be only a limited paper trail. That means that it is highly likely that some fraudsters will be attracted to the new scheme, so it has been necessary to put some safeguards in place.

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First, a charity must have had at least two years of a good gift aid track record with HMRC and have made successful gift aid claims in at least two out of the last four tax years. This will allow HMRC to get a good picture of a charity’s ability to claim gift aid correctly.

Secondly, charities and community amateur sports clubs must also claim gift aid alongside any claims for top-up payments under the gift aid small donations scheme. This means that a charity will need to successfully claim on traditional gift aid donations worth at least 10% of their claims under the new scheme in the same tax year. For example, to claim top-up payments on £5,000 of small donations, a charity must also claim gift aid on at least £500 of other donations in that year. This matching requirement allows HMRC to monitor the continuing compliance of the charity. The new scheme is designed to be light on paperwork, so it will be difficult for HMRC to comprehensively check whether a charity is compliant. So the ability to check the gift aid claimed by the charity gives HMRC a reasonable proxy to ensure that the charity is also claiming correctly under the new scheme.

Following representations in another place that the eligibility criteria were too strict, the Government tabled amendments that have reduced the matching condition from a minimum of 50% of gift-aided donations to 10%. The Government also agreed to reduce the eligibility criteria to claim under the scheme. A charity may become eligible to claim under the scheme after two complete tax years instead of three. In addition, instead of maintaining a gift aid claims record in at least three years out of seven, charities will need to claim in only two years out of four. These changes make the scheme more accessible, increasing the number of charities that can benefit and reducing the burden placed upon them.

As well as being accessible and protected, the scheme is designed to be fair. The Government recognised that an allowance of £5,000 per charity would have significantly inequitable results for some charities. Charities that perform similar activities are often structured differently for historical reasons. That means that, if every charity received this £5,000 allowance only, some charities could claim many hundreds—if not thousands—of times more in top-up payments than others. For example, every parish church in the Church of England is a charity, while the Roman Catholic Church is structured with a charity at diocese level, with some 200 parish churches forming part of each charity. Without special rules, the Church of England would have been eligible for many hundreds of times more claims under the scheme than the Catholic Church.

For this reason we have introduced the community buildings rules. These enable charities to claim an extra £5,000 allowance if they conduct charitable activities in a community building and meet certain other criteria. Charities that meet the criteria will be able to claim an extra £5,000 worth of small donations for each building in which they carry out charitable activities. HMRC will be issuing guidance to help charities understand the legislation and whether it applies to them. For charities that are unsure of their status, HMRC will be happy to give bespoke guidance.

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This Bill represents a boost to the charitable sector by enabling charities to claim new top-up payments on small donations where it is currently difficult or impossible to collect the necessary paperwork for gift aid to apply. I commend the Bill to the House.

7.10 pm

Baroness Hayter of Kentish Town: My Lords, first, I thank the noble Lord, Lord Hodgson, as through a small misunderstanding the names on the speakers list got put in the wrong order. I am not he. I also thank the Minister for introducing this welcome Bill.

The recent fall-off in charitable income—20% according to one recent report—particularly affects small and medium-sized charities, and this Bill is perhaps therefore even more important than it was when it started its life. Indeed, we understand that some one in six charities is threatened with closure and up to 40% worry that they may have to close if the economic situation fails to improve. A recent ACEVO report commissioned by the Cabinet Office revealed that charities stand to lose £1 billion this year as a direct result of government actions, at a time when demands on many charities are increasing, not least as a result of the Government’s economic policies. Nearly half the charities covered in this month’s CAF survey have been forced to use reserves to cover income shortfalls, with a quarter cutting some of their services.

We welcome the intention of the Bill and, indeed, its timing. We are not alone. The RNLI called it,

“a great opportunity for charities”.—[

Official Report

, Commons, Small Charitable Donations Bill Committee, 16/10/12; col. 36.]

The Institute of Fundraising estimates that it will benefit “a range of charities”.

The idea is good but the Government have made things far more complicated than they need to be. “Overly bureaucratic”, says the National Association for Voluntary and Community Action. Peter Lewis of the Institute of Fundraising said:

“The way that it has been drafted makes it far more difficult than Gift Aid itself”.

The Charities Aid Foundation, with all its experience and knowledge in the field, believes that,

“many charities that should be eligible for the Small Donations Scheme will struggle to access it”.

In particular, it stated that,

“linking the Small Donations Scheme to Gift Aid ... means that there is a hidden codicil”—

to the scheme—

“which should read ‘as long as they are also claiming sufficient normal Gift Aid on other donations, and have been doing so for at least two years’. This makes it less likely that very small organisations will be able to benefit from the scheme”.

Although we heartily wish the Bill well, we ask the Minister to think seriously about the problems raised repeatedly in the other House, especially where no movement was made by the Government. Of course, we are delighted with the changes that were made, in particular the changed ratio from 2:1 to 10:1, which opens up the scheme to many more charities, and the reduction from three to two years to qualify. I pay tribute to my colleagues in the other place, Cathy Jamieson and Gareth Thomas, whose determination

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and hard work, and in particular their understanding of the sector, enabled them to change the Minister’s mind. I hope that I will have similar success this evening; if not in amending the Bill, at least in getting a commitment out of the Minister. I will come on to that.

In seeking to assist small charities, the Government have come up with the most complicated of procedures that will involve far too much paperwork. This risks undermining their whole purpose. Of course, given that there is so much paperwork, there will undoubtedly be charities—Eton comes to mind—that will be well placed to take advantage. I am sure Eton has a large staff and, no doubt, a whole office dedicated to fundraising and gift aid. However, small grass-roots charities, parent-teacher associations or groups looking after victims or those with drink problems will not be able to. Many have no full-time staff, and they are exactly the charities that are answering phones, seeing clients, teaching riding to disabled children or running food banks. There is too much bureaucracy for them to handle.

Indeed, it seems that HMRC is more concerned with fraud than helping charities—the same HMRC, we must remember, which fails to tax Amazon, Starbucks, or Google, whose own executive chair said that he was,

“very proud of the structure that we set up”,

which was based on government incentives.

Will the Minister assure the House that those small but essential charities will be able to operate the complexity of this scheme, without the mass advice of a Google-sized team of lawyers and accountants? What thought has been given to those small charities which, by virtue of their size or lack of big donors, are not able to take advantage of gift aid and will therefore be excluded? Even those who do use gift aid are concerned, as the noble Baroness, Lady Barker, said in your Lordships’ House on Wednesday, that despite the fact that,

“the number of donations being given online and by text is increasing … charities are losing out, because gift aid is not yet fully digitised”.—[

Official Report

, 12/12/12; col. 1059.]

The scheme will succeed only if small local charities are aware of it, but these are precisely the ones less likely to be involved with the Charity Finance Group, the NCVO, CAF or the other umbrella organisations. How are they going to hear of it? We were disappointed that the Charity Commission chose not to give evidence to the Public Bill Committee. It makes us wonder how big a role it sees for itself in promoting the scheme—but if the commission does not do it, who will? Will the Minister outline his plans for publicising the scheme? We have heard talk of road shows, but we know that small charities do not have the time to spend time at those. I hope there will be something a bit more imaginative.

Perhaps the biggest problem with this overcomplicated scheme is the set of regulations covering community buildings. Although this might have been designed to assist church collections—which we thoroughly understand and endorse—it has ended up disadvantaging some of our most important groups. The RNLI is one organisation that has concerns, given that lifeboats, needless to say, carry out their work not in buildings but at sea. Where does the defined charitable activity take place: at sea or in the lifeboat station? If donation

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points are outside the station, how can one determine whether a donation was made during charitable activities or events? The definitions are too specific and not grounded in reality. Given such concerns about the workability of the new scheme, will the Minister tell the House whether HMT—or HMRC—consulted with relevant experts on the charity sector and, if so, which ones?

I come to the point where I seek a commitment from the Minister. We want this Bill to work. We need this Bill to work. However, it is key, given that we cannot amend it, that the Government look long and hard after two years at whether it is achieving all that we hoped for it. I therefore ask the Minister, quite simply, to commit to undertaking a review that will ask that question and report its results to Parliament. We need to know: how many charities are benefiting from the scheme; which are full, exempt or excepted charities; what the total outgoings on the scheme have been and how much extra money reached the charities, as well as the cost of administering it; and, finally, the level of identified fraudulent claims.

I feel certain that the Minister himself will want to know the answer to these questions. Will he undertake to share them with this Parliament—not after five years but after two? If the scheme does not work, those charities will need help by some other route to enable them to continue to do their work.

7.19 pm

Lord Hodgson of Astley Abbotts: My Lords, this may be a slim Bill but, as has already been made clear, it is an important one and I warmly endorse the purposes behind it. I do so for the very obvious reason that it is common knowledge that fundraising for charities is not easy at present. Of the surveys that the noble Baroness referred to, at least one indicates the impact on charities of the economic crisis and subsequent recession. These competitive pressures have led to the emergence of some unusual stresses. Between 2.30 pm and 3 pm, we were discussing the Question from my noble friend Lord Naseby about the competitive pressure on the National Lottery. That body saw an increase of 8.6%, or £246 million, in the six months to September, but it is clearly concerned about its competitive position. So that macrostatistic, along with a lot of microstatistics, indicate why this Bill is particularly important to smaller charities.

Turning to the Bill itself, I begin by congratulating my noble friend and the Government on the steps taken to increase accessibility. As he pointed out, the historic record required to enter the scheme is being eased from three out of the past seven years to two out of the past four, and the multiplier is being increased from 2:1 to 10:1. This will be particularly important for newly-established charities, which will not have a well established donor basis. My noble friend kindly arranged a briefing on the Bill last week. I have one or two questions, of which I gave him advance warning then.

The first question relates to the nature of the two qualifying years. Do they have to be consecutive or not? He reassured me at the briefing that they do not. I would be grateful if we could hear that on the Floor

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of the House, because there is a lot of sector interest in the detail of this Bill. Could he explain, therefore, how that ties in with Clause 2(2)? Clause 2 is headed, “Meaning of ‘eligible charity’”. Subsection (2) says:

“If a charity did not make any successful gift aid exemption claims in a period of 2 consecutive tax years, any claim … is to be disregarded”.

My noble friend indicated that “consecutive” was not an important word but the wording of the Bill seems to indicate that it might be. I am sure that his Bill team will have a simple answer to that, but it would be helpful to have it on the record.

The second area of concern is what I describe as “in again, out again”. Smaller charities have periods of intense activity interspersed with periods of quietude. I will take an example of a medium-sized charity in a city, focused on homelessness. The charity may experience a period of very strong professional or volunteer leadership, which leads to a high level of activity; as a result, probably, a successful entry is made to the new gift aid scheme. However, after a time this dynamic leadership moves on and is succeeded by less active individuals. During this stewardship, among other things, gift aid applications are not made. After the fallow period, new people arrive once again, who find that gift aid applications were not made in any of the past four years. It would be helpful for us to know whether this will be a one-off entry—once in the scheme, you are in it—or whether there is a constant rolling programme whereby two out of four years must be kept in order for the charity to remain eligible.

On this part of this Bill, I need to make a plea on behalf of newly-formed charities. The House will be aware that the problem for many smaller charities is how to fund their central expenses—what we might describe as keeping the office warm and the lights on. It may be difficult to find funding for the provision of services but it can be found, whether it comes from local or national government or from grant-giving foundations; but not, for example, for the cost of preparing the bid for these contracts, or indeed for keeping the organisation running. For such charities this new gift aid scheme could be highly significant. Of course, the charity will have to be four years old before it can become eligible.

My noble friend quite properly and understandably underlined the dangers of tax evasion. I have no doubt that that may be thought to be more prevalent in newer charities. For all charities—new, old or well established—HMRC requires a “fit and proper” test to be met. Given the particular needs of newer charities, it would be helpful if my noble friend could explain why it was felt that the “fit and proper” test was not good enough for smaller charities when they were set up, and whether any thought has been given to other ways of including smaller, newer charities—for example, by having a lower level of multiple during those formative, probationary years, or perhaps a multiplier of only 5:1, as opposed to 10:1. Any danger of tax evasion would then be commensurately reduced.

My final set of questions is grouped around the heading, “What happens next?”. In the Public Bill Committee in the other place on 16 October, Mr John Preston, the national stewardship officer for the Church

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of England, explained that the church currently spends 200,000 hours of volunteer time administering the present gift aid system. He expressed the hope to the Public Bill Committee that this time commitment would be reduced following the passage of the Bill. An illuminating remark followed from Mr John Hemming, the Liberal Democrat MP for Birmingham Yardley:

“What you are saying is that it is not necessarily stuff in the Bill”,

that matters,

“it is a question of how HMRC handles it. Referring specifically to the Bill, is there something we can simplify—to make it easier—or is it really just a question of how HMRC takes it?”—[

Official Report

, Commons, Public Bill Committee, 16/10/12; col. 5.]

It would be helpful, therefore—here I follow the noble Baroness, Lady Hayter of Kentish Town—to talk a little about the timetable for introducing the scheme and the nature of the publicity that will be followed. I assume that HMRC will write to every gift aid charity to try to publicise it in that way and to explain how these concessions would work. My noble friend referred in his opening remarks to the fact that guidance would be provided. I hope that he will forgive me for saying that the guidance needs to be very simple. These are small charities working on a shoestring; they do not have access to accountants or lawyers. The guidance needs to be as user-friendly as possible.

I gave my noble friend advance notice that I wanted to take the opportunity this evening to talk about the relationship between HMRC and charities. I wanted him to take on board—and perhaps discuss with HMRC—the attitude it is adopting towards the charitable status of many smaller charities. I want to give the House an example. This charity has an income of £15,849 in the year in question. In August 2012 it received a notice from HMRC asking it to complete a form CT600 (short), because it is a small charity. The form was sent off in September. Two weeks later HMRC returned the form, saying that it no longer accepted paper forms—HMRC had, of course, sent it out in the first place—and that filing had to be done online. To file online requires a user ID number, a UTR number—UTR stands for unique tax reference—and a corporation tax activation code. On receipt of these, about a fortnight later, the trustees tried to file again and were refused. They were told to wait because the corporation tax activation code was not yet working. After waiting two more weeks, they tried again; again, they could not file, because the link on the HMRC website that should have read “How to file a return” was missing. They then resorted to the HMRC helpdesk. They were logged on to a form which appeared to be CT600 (long)—in other words, for a large company—whereas they wanted a CT600 (short) form. Further inquiries to the helpdesk revealed that one logged on to the long form anyway and it automatically adjusted itself to the short form as one went along. However, this was not clear to the uninitiated in advance.

So it went on. The final surprise to the trustees was when they offered to send in a PDF of their audited accounts, which provides independent verification of their accuracy, they were told that these were not required. This process took from August 19 to November 5 —this for a charity with revenue below £16,000 per annum. I cannot begin to guess what the cost was to

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HMRC of all this backing and filling. However, this is just one of many examples. I hope that my noble friend will use this and, indeed, the other examples that I would be happy to provide to urge the tax authorities to be proportionate and open and to understand how the smaller charity sector works.

The second area I want to raise tonight is the tax position of foundations. I gave my noble friend a heads-up on this, and I am afraid that, because I had not dug into the full question, I may have slightly misled him. A family foundation with a permanent endowment is not able to reclaim the 10% advance corporation tax on the donations it gives. Foundations were caught up in Gordon Brown’s raid on pension funds. Their income, and therefore their grant-giving potential, was reduced by 10%. The question on which I seek an answer tonight is: why should foundations not be able to gift aid that tax allowance to tax-recipient charities as private individuals can? It is not a question of double-dipping gift aid, because the permanent endowment on which gift aid may well have been claimed and taken remains intact. Why cannot gift aid be given on the returns that the permanent endowment has earned? I appreciate that these are technical questions but they are important to the charitable sector. I am not asking my noble friend to give a full response tonight; I am more than happy for him to write to me and put a copy in the Library. In welcoming this Bill, I am asking the Minister to make sure that all the good it is planned to do, and that we hope it will do, will not be undone by heavy-handed bureaucracy by the tax authorities.

7.31 pm

Baroness Barker: My Lords, I declare an interest. I am the owner of a consultancy third-sector business that works with a lot of charities and social enterprises. In that regard, I should say that when I sat down to look at a Bill about the governance of charities, tax and eligibility, I felt as though I had had an early Christmas present. Thank you so much for sending me something that might seem boring to other people. I do not want to speak on behalf of the right reverend Prelate the Bishop of Exeter, who I am delighted is going to follow me, but, no doubt, given all the excitement going on in the church over the past couple of months, he is looking forward to a rather sedate ecumenical debate on tax as a relief because he is coming up to his busiest period of the year.

I imagine that every noble Lord who has spoken in this debate welcomed, as I did, the Chancellor’s announcement in Budget 2011 that we would have this scheme. When one first considers the gift aid small donation scheme, there is a tendency to think that we are talking about small charities. We are not. We are talking about small donations, and we could be talking about the biggest charities of the lot—the RSPCA and RNLI. It is important to bear that in mind. Nevertheless, there is particular added importance to the Bill now. The noble Baroness, Lady Hayter, mentioned the Charities Aid Foundation report and the ACEVO report. Having seen them, we all know that the outlook for charities, like that for other sectors, is going to be really bleak for the next few years. It is predicted that charities may lose up to £1 billion from a total income

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of £11 billion. That is an awful lot of money. In the charitable sector, that is an awful lot of jobs and an awful lot of community effort and social capital. This scheme, small as it may be, is none the less very welcome. If it succeeds in generating an income of between £50 million in 2013-14 and £115 million in 2016-17, it will be welcome.

I, too, have real difficulty with the way in which this Bill has been written. It seems that the original intention was to try to enable charities to derive maximum benefit from donations for which they cannot get names and addresses. The immediate default position of HMRC is fraud. We know that charities are used by unscrupulous people to perpetrate fraud, but that seems to characterise an awful lot of the relationship between HMRC and charities. At the end of my speech, I shall speak a little about how I think that might change. I understand that the Government have a duty to make sure that abuse and tax evasion are not in the system, but, like the noble Baroness, Lady Hayter, I sincerely hope that the same degree of assiduous attention is paid to the affairs of Google, Amazon and Starbucks.

What research was conducted by HMRC with the sector when it was putting together its proposals? I have read this Bill putting myself in the shoes of a treasurer of a small organisation and my heart sank the more that I read of it. I ask in particular because of the issue of connected charities. I listened very carefully to what the Minister said and I understand that taking the idea of connection as it relates to personal taxation and trying to apply that to charities has been done in a spirit of trying to generate some equality between different types of charity which, as he said, are set up in different ways for historical reasons. All the evidence from the charitable sector in the past three years is that rather than splitting up and becoming more profuse in their networks, charities are having to rationalise. We have had mergers galore as charities seek to make themselves not only more sustainable, but to ensure that like every other sector, they are becoming as smart, efficient and economical as they possibly can be in order to make their money go further. How realistic does the Minister think it is that charities will deliberately split their operations in the hope of generating a potential tax earning of £1,250?

What is the intention on community buildings? Is it to recognise the additional difficulties that charities have if they have to carry out their activities in community buildings or is it about trying to be fair to different groups of people who differ for other reasons? I read this part several times and it was not until I read it thinking it was about churches that it began to make some sense to me. I have some sympathy with it. I understand that it does not mention churches because it could also apply to secular organisations, such as scouts and guides, but the way that this is written is going to set up some anomalies. Worse than that, I think it is going to set up some confusion. Would the communal part of a housing association premises which is used once a week or once a month by an older people’s group for a lunch club or whatever be ruled out on the grounds that the premises are deemed to be largely of a domiciliary nature? Can the Minister clarify that?

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My most important plea echoes what the noble Lord, Lord Hodgson of Astley Abbotts, said: when the guidance for this is written, can it be written up in real examples? I fear that if it is written in the terms in which it appears in the Bill, there will be a dramatic amount of confusion. Can the Minister tell us whether HMRC has a default position, or will have in this case, that it will draft the guidance in direct consultation with the users and the people who will be implementing it and trying to work with this legislation? I went to a very interesting meeting at NCVO during the summer. It was part of its digital hub. I understand that there is an online community of churchwardens. They are largely men in their late 70s or 80s. They conduct online discussions about their churches and the work that they do. They sound like a fascinating bunch of people. They are more familiar with iPads than some Members of your Lordships’ House.

I say that because it takes me to my last point. I am going to go back and talk about the modernisation of gift aid and modernisation of the relationship between HMRC and charities. The Bill tends to display a rather old-fashioned view of charities, even small ones. The biggest and most effective weapon against fraud is transparency. HMRC could have said it was a condition of this scheme that a charity had to have a website—it could be a most basic website—where the charity must publish its annual report and financial statement, including a part saying what money had been received using the gift aid small donation scheme. It would have meant that any organisation would have to do that in its community. HMRC would not have to look at it—the community could go and look at it. Believe me, people would be as willing to shop a charity they thought was being dodgy as someone seeking benefits. I honestly think it is time to facilitate a programme of modernisation between HMRC and charities because, if we do not, we are in danger of equipping charities to fight the war that has just been fought, not the serious battles ahead. Having said that, I welcome the intent behind this scheme and I hope it works well in practice.

7.41 pm

The Lord Bishop of Exeter: My Lords, I declare an interest as chairman of the Churches’ Legislation Advisory Service, which represents all the main Christian and Jewish communities in the UK. On behalf of them and these Benches I welcome this Bill.

It was clear from the start that the Bill, first published in the Commons, was going to be helpful to the voluntary sector and to the churches in particular. However, there were fears then that some of its requirements were going to be too restrictive, particularly for small charities. I am glad to note, though, that before the Bill was published—and while it was going through the Commons—there were several informal and very productive discussions with officials. We are very pleased that Ministers have been so willing to listen to our concerns.

The reduction of the gift aid matching criteria from 1:1 in the original Bill to 1:10 in the Bill before your Lordships’ House will be very welcome to small congregations. Equally, the reduction in the time that a charity needs to have a successful gift aid claims

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history to participate in the scheme will make life a little easier for new charities, although I still question whether both this requirement and the matching one are really necessary.

As we have heard, churches vary enormously in the way they are structured as charities. For example, each Church of England parish—all 16,500 of them—is a separate charity, but the Salvation Army is a national charity with one registration number.

As the Minister has pointed out, the community buildings element in the scheme was introduced to create some degree of equitable treatment for charities such as the Salvation Army and the Roman Catholic Church that are not organised and registered at local level. The community buildings provisions in the Bill are still fairly complex, but I acknowledge that the Government have gone a long way towards meeting our initial criticisms and we welcome that.

Similarly, we felt that the initial proposals on connected charities ran the risk of connecting entirely different charities just because they had trustees in common—for example, where a trustee of a local music society is also a trustee of a local church charity. We are pleased that Ministers have clarified the position on that. However, I hope that this is an area where developing practice will be monitored, as there is still considered to be some risk that HMRC may try to suggest that local churches, or groupings within intermediate church bodies, are connected even though it would seem that the definition of connection in the Bill would not support this interpretation. For Church of England parishes there may be some additional protection in that parochial church councils are not trusts but bodies corporate. However, for other denominations and faith groups the situation may not be as clear cut.

The Church of England estimates that the scheme will be worth about £15 million to our parishes. On that basis, it will probably be worth at least that amount to other faith groups, if not more. That is extremely valuable but I will make a couple of suggestions that would make it more valuable still.

The first concerns simplicity. I am grateful to the noble Baroness, Lady Hayter, for her observations and I will not repeat them. Everyone in the voluntary sector is very much aware that a scheme of this nature is open to abuse and fraudulent claims, but I hope that HMRC will take a proportionate approach to regulation. We all know that no charity is immune from the occasional rogue trustee or treasurer, but the overwhelming majority of charities are honest and careful in their dealings with HMRC.

The second concerns payment methods. The scheme is about payments in cash only. One of the accompanying documents released with the Autumn Statement said that the Treasury wants to look at gift aid in light of the fact that people now give online and by text. It said:

“The Government will examine whether the administration of Gift Aid can be improved to reflect new ways of giving money to charity, in particular digital giving”.

While the Government are doing that, can they also look at how the small donations scheme is working? I can understand why Ministers want to keep the scheme simple at the outset but the world is moving inexorably

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in the direction of non-cash donations and perhaps at some point the scheme is going to have to take account of that. I should also say that for one religious group—the Orthodox Jewish community—a cash donation in the collection plate at the Sabbath service is simply not an option because Orthodox Jews are forbidden to carry money on the Sabbath.

This Bill is, inevitably, a complex one, but larger churches, including the Church of England, are reasonably confident of being able to produce full guidance notes in a simple format. It will be important though to ensure that the complexity of the Bill is accompanied by appropriate and accessible guidance across the whole sector.

In this context it needs to be remembered that gift aid is processed for the most part locally by volunteers. As we have heard, in the Church of England alone it has been estimated that it takes around 200,000 hours of volunteer time to do this, and we would not wish this to be increased by additional complexity. Finding further ways of refining operational simplicity would not come amiss, particularly for the benefit of smaller charities and churches,

It may be a matter of some small tweaks to the Bill’s provisions, but also for guidance to be given to HMRC. I echo the questions already asked by the noble Lord, Lord Hodgson, and I look forward to the Minister’s response. With those very slight reservations, I warmly welcome the Bill.

7.47 pm

Lord Newby: My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. I am very pleased that we decided to postpone the Leveson debate because if we had not there would be about 50 people grumbling at the fact that I will now attempt to answer the questions that speakers in the debate raised.

One concern everybody has raised is about whether the scheme is too difficult to administer and overbureaucratic, to which there are several answers. The key thing is that, at one level, it is very straightforward to operate. Charities are already filling in forms for gift aid. Under the scheme they simply have to tick a box to say that they want to claim additional cash under this additional scheme and they will get it. They do not have to fill in another form. If they are operating out of a community building, they have to give the address of the building. We are not talking about a long and hugely complicated form at all. It is very straightforward. That is one of the key things that HMRC is trying to do. It has to strike a balance between something relatively simple and something that is not open to fraud.

I confess that I started my professional life working in Customs and Excise, helping to devise schemes to help small shopkeepers account for VAT. There was a particularly assiduous Scotsman in our group who spent all his time in a corner trying to work out how shopkeepers could defraud Customs and Excise. We ended up with really quite complicated schemes as a result. They were designed to be simple, but because people were very worried about fraud—and you were talking about, as it were, real money then—we ended

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up with seven schemes which were designed to be simple but none of them was quite as simple as we had hoped. That is a danger of which HMRC have over the years become more aware, and why the scheme is designed to be as straightforward as possible.

Obviously, charities are not going to look at the Act, but at the guidance from HMRC. As a number of people have said, the guidance itself will be extremely difficult. HMRC is planning to produce two levels of guidance. First, a starter level will set out the rules as simply as possible; most charities will only need to use that, which will supplement the very easy form. Secondly, detailed guidance will explain how the law works to larger charities and charity representatives who want that degree of detail. HMRC will also help and advise charity representatives who want to develop their own guidance; we are thinking here possibly of the churches as an example.

A number of noble Lords asked about consultation with the charitable sector. HMRC undertook a public consultation on the detail of the scheme that ran from March until May this year. It was eight weeks long and 83 organisations and individuals responded to it. HMRC also held meetings with groups of interested people during the consultation period. It has been consulting on the detailed proposals with some charity representatives throughout the development of the legislation, including the Charity Finance Group and the Institute of Fundraising.

Over the summer, the Bill was used as a pilot for the public reading stage in another place. This is a new approach, a supplementary consultation stage where members of the public and organisations can give detailed comments on the draft Bill via the web. Sadly— I think it is rather sad—only 23 individuals and organisations responded to the public reading stage, and a number of them had already been involved in the consultation. It was a useful additional scheme, but whether or not it really added a huge amount is slightly doubtful.

The noble Baroness, Lady Hayter, and the right reverend Prelate raised the question of digital donations. The Government said in the Autumn Statement that we are examining whether the administration of Gift Aid can be improved to reflect new ways of giving money to charity, particularly digital giving. Obviously, young people in particular are going to give their money digitally; there is no doubt about that. As we are finding in many parts of legislation, the Government are, if anything, struggling to keep up with reality just as the digital revolution is changing the way we do everything.

We are starting this scheme with cash because we feel that that way we can make it work relatively easily, but we are going to look at digital giving and at digitising Gift Aid administration more generally. It is only a matter of time before we do all these things but, while people are currently worried about some of the complexities of the Bill, we are keen not to make them more complex at this stage and at least get going with straightforward cash donations.

Noble Lords asked about the publicity for the new scheme. HMRC is planning a four-stage publicity campaign over the next few months to alert charities

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to the new system and donation scheme. As well as media publicity, HMRC is planning to write in the new year to every charity that has claimed Gift Aid within the past three years to tell them about this scheme and about Gift Aid online. HMRC has also asked the charity representative bodies to help it spread the message.

The noble Baroness, Lady Hayter, asked me to commit myself to a review. The Government have committed themselves to a review. That is the good news. Sad to say, from the noble Baroness’s point of view, but entirely appropriately, the review is to be after three years. This is a relatively standard period for review after a scheme has come in and we definitely plan to do that. In the mean time, HMRC publishes national statistics on the cost of charitable tax relief three times a year. Once up and running, HMRC will publish details about the Gift Aid small donation scheme. These figures will be national statistics.

HMRC does not publish details of fraud rates, although as it received about £10 million of fraudulent Gift Aid claims last year, it is not an insignificant amount. Although, obviously, the last thing in the mind of the vast bulk of charities is fraud, there are people who will exploit any scheme if they think that they can do well out of it.

The noble Lord, Lord Hodgson, asked a number of questions. He asked about the detailed wording in the Bill on Clause 2(2), which refers to “2 consecutive … years”. Clause 2(2) does that because charities will need to make a Gift Aid claim at least every other year. The qualifying period is now two years, so it would be inappropriate to allow a charity a gap of two years or more in order to do so. I hope that that clarifies the position.

Baroness Barker: My Lords, could the Minister write to some of us to explain that point a little further?

Lord Newby: I would be only too pleased to write to all noble Lords here. Basically, it is the interaction of the general Gift Aid scheme and this particular element of it; but I will write to clarify that point absolutely.

The noble Lord, Lord Hodgson, asked again about the cost and whether HMRC would be proportionate, not heavy-handed, and efficient. He will not be surprised to hear me say that, of course, that is what HMRC plans to be. I hope it will be. My experience, working in HRMC—or Customs and Excise as it was—was that it did a lot of things extremely efficiently, and every now and then it did something which was less than efficient. It was the less-than-efficient examples which tended to get most of the publicity. I know that the relevant section of HMRC understands the point that the noble Lord is making. The Government are not setting up this scheme in order not to hand out the cash. We are setting up the scheme because we are very keen that it is successful and is able to help charities in this way.

The noble Lord asked about foundations and why they are in a position that is different from that of individuals. I am tempted to say, “Because they are not individuals”, but I will happily write to him with

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some of the background as to their tax treatment, which I absolutely understand is different from that of an individual.

He asked whether a two-year period was necessary, because a charity must already have been through the registration process, including the “fit and proper person” test. The test helps to ensure that charities, community amateur sports clubs and other organisations entitled to charity tax reliefs are not managed or controlled by individuals who might misuse the tax relief. Unfortunately, as I said earlier, fraudsters have been known to exploit charity tax relief, so the “fit and proper person” test exists to prevent that. However, even if a charity appears to be compliant in the first few years, changes in personnel can affect its attitude to compliance, so HMRC will need to continue to have evidence on which to base its assessment of the risk that the charity poses in relation to the scheme. That is why we have gone for a two-year qualification period. We believe that that gives an adequate protection against potential fraud, because people will have had to be up and running, making the thing work. Equally, it is not too long, which was the concern about the original proposals.

The noble Baroness, Lady Barker, asked specifically whether it would be possible under this scheme to collect funds and claim the gift aid from activities in housing association premises. To take a simple example, if the charity is a small local charity linked to a specific housing association and it wants to raise money from a collection in its premises or in a pub or anywhere else, it can do that. Things get more complicated if it is a branch of a large housing association—somewhat like a Catholic church—which wants to pray in aid the community building rules. In that case, because the housing association premises are essentially residential premises, it will not be able to do that, because that is the definition we have put in place.

That demonstrates that tax is complicated. There is no system we could have put in place that would have had any reasonable protection against fraud and which would not have run up against those kinds of complexities—and undoubtedly there will be anomalies. However, with tax, the choice before you is not whether you have anomalies but whether you do something or not. You are bound to have these anomalies. We took the view that putting in place a scheme that enabled charities to have access to £100 million was worth it, even though we knew that there would be some anomalies, because they come with the territory, as it were.

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I believe I have answered the point that the noble Baroness, Lady Barker, raised about guidance to users. We are doing that on the various levels that she talked about. We have consulted, and will continue to consult, the standing body that HMRC has for dealing with the charity sector as a whole.

The noble Baroness made the very interesting suggestion of having a website, on which reports and a financial statement would be put. That is a possibility. I suspect that, if we had done that, someone would say that it was grossly unfair to small charities that did not have a website. However, given that we expect everybody in respect of benefits to use electronic communications, and that HMRC increasingly wants taxpayers to use them, it is not an unreasonable suggestion, and I am sure that my colleagues in HMRC will look at it.

The right reverend Prelate asked a couple of questions about simplicity and whether all the requirements were needed. As I said before, we had to take a view, and that view was that this struck the right balance between ease of access to the scheme and protection against possible fraud.

This debate has demonstrated that, if this were not a money Bill, we would be having extremely interesting discussions in Committee and on Report. Sadly, however, this is a money Bill. I therefore hope that I have been able to deal with the points that have been raised—

Lord Hodgson of Astley Abbotts: I did not hear the Minister address this directly but do I take it from the commencement date of the Act that Gift Aid under the new scheme will be available in the next financial year, starting 6 April 2013? Will it be in by then?

Lord Newby: My Lords, I believe that it will be but, again, if I am mistaken, I will include that in the letter that I have already committed to write to the noble Lord.

We have sought to strike the right balance between effectiveness, accessibility and security, and I believe that we have achieved that. The scheme will deliver an important new stream of revenue to the charity sector. I therefore commend this Bill to the House.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

House adjourned at 8.05 pm.