30 July 2013 : Column 1633

30 July 2013 : Column 1633

House of Lords

Tuesday, 30 July 2013.

11 am

Prayers—read by the Lord Bishop of Guildford.

Agriculture: Common Agricultural Policy


11.07 am

Asked by Lord Greaves

To ask Her Majesty’s Government what progress is being made on greening the common agricultural policy.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, agreement on common agricultural policy reform was reached in June at both the Agriculture Council and in the European Parliament. As part of the deal, from 2015, 30% of Pillar 1 farm subsidies will be dependent upon a series of greening practices being carried out on farms. We shall be working in the coming months to devise a greening policy for England. At the same time, we are making plans for the new rural development programme from 2015. I should declare an interest as a beneficiary under the current CAP.

Lord Greaves: My Lords, the progress made on the CAP is welcome, though not as radical as some people will allege. The increased requirements for environmental compliance by farmers who are getting the single payments are particularly welcome. The proposals for transferring more money from Pillar 1 to rural development, including environmental works, are also welcome. Will the Minister assure us that the Government will remain firm on these objectives and not give in to the short-sighted campaign by some people, including the NFU, to try to block these valuable changes?

Lord De Mauley: My Lords, we have a legal obligation to implement what is known as greening from 2015. No decisions have yet been taken on implementation. We will consult stakeholders, including farmers’ representatives and NGOs. We need to achieve genuine environmental outcomes from greening, without impacting unnecessarily on farmers’ business activities.

Lord Plumb: My Lords, I declare an interest as a farmer. First, to satisfy 28 nations with a policy that is acceptable to all, when we see such a diverse structure of farming there, is a recipe for an uncommon market rather than a common market. Secondly, does my noble friend the Minister not agree that the emphasis at this time should be on the growth of food and the food security part of that, rather than just on greening? The whole emphasis seems to have turned to greening, switching from one pillar to the other. How do the new greening rules overlap with the existing agri-environmental

30 July 2013 : Column 1634

scheme commitments, and what changes will those produce, as against the existing commitments faced, when the greening comes into effect?

Lord De Mauley: My Lords, there are a couple of questions in there from my noble friend. Our priorities for CAP reform have always been to help EU agriculture become more competitive and market-oriented while improving the capacity to deliver better environmental outcomes. It is unclear precisely what the greening requirements will look like since the detailed rules have yet to be drawn up. However, we are working to ensure that all these elements are complementary and coherent so that we have a smooth transition to the new programme in 2015.

Lord Curry of Kirkharle: My Lords, could I pursue with the Minister the issue of the existing environmental schemes referred to by the noble Lord, Lord Plumb? Many farmers have signed contractual agreements for the entry-level scheme, and I can claim some responsibility for that scheme, having recommended it. They are under an obligation under those contracts. Will these be jeopardised by the new greening arrangements? There is a lot of concern and some confusion among the farming community on this issue.

Lord De Mauley: My Lords, the noble Lord makes a very good point. If I have understood him correctly, no, it is very much our intention that they should not be adversely prejudiced.

Lord Forsyth of Drumlean: My Lords, notwithstanding the progress being made on greening, what progress is being made on pruning the CAP?

Lord De Mauley: Well, my Lords, that is indeed a question. In the context of the reduced CAP budget, the UK’s key aims for the CAP reform negotiations were to increase the resilience, market orientation and international competitiveness of EU agriculture; to improve the CAP’s capacity to deliver environmental outcomes; and to simplify the CAP for farmers and authorities. We want an efficient and responsive agricultural sector in the EU and globally, and we want the future CAP to achieve this.

Lord Grantchester: My Lords, I declare my interests in the countryside. Does the Minister’s department recognise that success in greening policies relies very heavily on good will and implementation from farmers? Is the cart before the horse in this instance? Will the Minister outline what the Government want to achieve from greening measures, rather than transferring funds into Pillar 2 from Pillar 1 simply because they can?

Lord De Mauley: I understand the noble Lord’s question, and others have asked that. The Government’s view is that environmental outcomes can be more targeted and more effective if they are delivered through Pillar 2. There will be a new set of environmental measures within Pillar 2 but we will honour the obligation in Pillar 1 to achieve the greening that is set down.

30 July 2013 : Column 1635

Lord Tomlinson: Does the Minister accept that when we look at the European Union budget, it really does not reflect priorities? We have an agricultural budget that exceeds that of research and development and indeed that of employment measures. While I agree with the noble Lord, Lord Plumb, on the need to maximise food production, we ought perhaps to take some lessons from the Cairns Group and put them into effect in Europe.

Lord De Mauley: I cannot find very much to disagree with in what the noble Lord says. We worked very hard in the direction in which he is moving. The cut to the CAP budget was €55 billion, which is roughly equal to the annual level of spending on the CAP budget and better than a real freeze.

Baroness Scott of Needham Market: My Lords, given the very different patterns of agriculture across the 28 member states, to what extent is there flexibility within the new arrangements for member states to implement the greening measures in a way that suits British farmers and builds on some of the very real progress that they have already made?

Lord De Mauley: My Lords, my noble friend makes an important point. We have fought hard to achieve an element of flexibility in the greening requirements. Perhaps we have not got as far as we would have liked but we are negotiating with nearly 30 other states and, of course, the Parliament.

Lord Cormack: My Lords, can we inject some intelligibility into the language with which these things are described? It really is the most awful gobbledegook. How can people outside be expected to understand about caps, pillars, greening and all this nonsense?

Lord De Mauley: My Lords, that is music to my ears.



11.15 am

Asked by Lord Hoyle

To ask Her Majesty’s Government when they will implement the European Commission decision to restrict the use of neonicotinoid pesticides to protect bees.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, the European Commission implementing regulation requires the new restrictions to be in place by 1 December 2013. We will introduce the restrictions from that date.

Lord Hoyle: Will all these chemicals be monitored? Will the Minister also condemn those commercial interests which are introducing foreign bees with parasites that are damaging our own species?

30 July 2013 : Column 1636

Lord De Mauley: On the latter point, the noble Lord is right that parasites—particularly the varroa mite, but there are a number of others—are something that we really must watch out for. He asked whether the full range of neonicotinoids is subject to the restrictions. He is right to ask that. There are a couple that are not. I am not sure I can pronounce them but I will try: acetamiprid and thiacloprid—

Noble Lords: Hear, hear!

Lord De Mauley: I am grateful. These are not covered by the restrictions as they are of relatively low acute toxicity to bees. The restrictions apply to the remaining three neonicotinoids—which I hope noble Lords will permit me not to pronounce—and are intended to remove those uses that might cause bees to be exposed to the compounds. Therefore, uses permitted include spray applications made to crops after they have flowered.

The Earl of Selborne: I declare an interest as food grower; my living therefore depends on pollination. Does the Minister accept that, while it is very important to protect bees, it is equally important to protect all insect pollinators? Therefore we have to make sure that their habitat is conserved, which is a much wider issue than just protecting honey bees.

Lord De Mauley: My Lords, yes. We have had this discussion in your Lordships’ House before. I was pleased to announce recently that we are developing a national pollinator strategy precisely because of the concerns my noble friend raised.

Baroness Howe of Idlicote: My Lords, may I recommend, as an alternative to pesticides, the method used by the winner of this year’s St Andrews Prize? Around the crop growing areas, the trees were equipped with beehives because the elephants, which were doing the major damage in that area, were terrified of bees. This not only produced safe areas for crops but meant that there was honey money as well.

Lord De Mauley: I am really very grateful to the noble Baroness. Farmers have not been complaining to me recently about the numbers of elephants but I shall keep my ears open.

Lord Knight of Weymouth: My Lords, reports this weekend that bees and other pollinators have bred well this year are most welcome. More concerning are reports that the lead government scientist on the effect of neonicotinoids on bees is joining Syngenta, one of the leading manufacturers of the insecticide. She previously worked on a Syngenta-funded project on bees and pesticides for Fera. Given the widespread concerns among the public about bee health, what assurances can the Minister give us that this closeness between policymakers and commercial interests benefits taxpayers more than shareholders?

30 July 2013 : Column 1637

Lord De Mauley: My Lords, of course, all public servants go through the proper procedures before they take up a role outside government after they leave government.

Lord Jones of Cheltenham: Noble Lords may have seen a recent programme on ITV about bees, in which the Food Minister David Heath and Matt Shardlow of Buglife gave their views on neonicotinoids. Mr Heath said that there are other chemicals that are even more damaging to bees. Is my noble friend able to tell us what those other chemicals are and what action the Government are taking to ensure that they are not used? While ensuring that our Government implement the suspension of neonicotinoids as soon as possible, will the noble Lord encourage Ministers and officials in his department and scientists who advise them on this issue to take time to watch “Horizon” on BBC2 at 9 pm this Friday, when the presenter Bill Turnbull, himself an experienced beekeeper, investigates “What’s Killing Our Bees?”?

Lord De Mauley: My Lords, as regards my noble friend’s second question, I am very grateful to him for resolving the thorny problem of how I should spend my Friday evening. As regards his first question, I am not absolutely sure of the chemicals to which my honourable friend referred. However, in the absence of neonicotinoids, we expect farmers to use the available products, such as pyrethroids and organophosphates, for their particular pest problems. Without something effective, the consequence for farmers could be a reduction in crop yields, potentially substantial in scope. Despite not being as effective as neonics, these other products are legal and have passed the safety tests set in legislation.

Lord Curry of Kirkharle: My Lords, the scientific evidence supporting this is sketchy at best. It appears that some useful work has been done in Australia. Are the Government researching the work that has been done in Australia to help us better understand the impact of these chemicals?

Lord De Mauley: My Lords, we certainly are aware of the work that has been done in Australia. In fact, my right honourable friend the Secretary of State went there recently and is certainly aware of it. We used that in making our case prior to the vote. That did not seem to work, so we are now working towards doing our own trials to fill out those evidence gaps.

The Countess of Mar: My Lords, there is some evidence that bees can tolerate neonicotinoids. However, when combined with glyphosate, which is in the ubiquitous Roundup, their immune systems become affected. That is one of the reasons why they cannot withstand the varroa bug. Can the Minister say how much research is being done on combinations of pesticides and the way they affect bees, particularly their immune systems?

Lord De Mauley: The noble Baroness makes a point which has concerned a number of people. Considerable work has been done, which shows that chemicals with different toxic actions normally act

30 July 2013 : Column 1638

independently. Chemicals with the same toxic action normally act additively. There is only limited evidence for combination effects in excess of those for individual chemicals.

Regulation of Investigatory Powers Act 2000: External Communications


11.22 am

Asked by Lord Strasburger

To ask Her Majesty’s Government what guidelines Secretaries of State adopt in deciding whether electronic communications sent from the United Kingdom to a United Kingdom addressee but routed outside the United Kingdom fall within the definition of “external communications” in Section 20 of the Regulation of Investigatory Powers Act 2000.

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi): My Lords, I am sure that your Lordships’ House will understand why I cannot go into detail on operational matters. The Regulation of Investigatory Powers Act 2000 sets out that authorisations for all interceptions of communications, internal or external, must consider necessity and proportionality. My right honourable friend the Foreign Secretary has stated that privacy is at the forefront of the minds of Secretaries of State. Great care is taken to balance individual privacy with duty to the UK’s national security. The Interception of Communications Commissioner provides thorough and independent oversight of all of these considerations.

Lord Strasburger: I thank my noble friend the Minister for her reply. We now know that GCHQ is routinely hoovering up and storing prodigious quantities of the internet communications of millions of innocent people, turning us all from citizens into suspects. As far as I am aware, Parliament has not sanctioned this industrial-scale seizure of our private data by the state. Can the Minister please tell the House whether this blanket snooping on all of us is authorised by a Minister, and if so, which Minister sanctioned it, and under which section of which Act of Parliament?

Baroness Warsi: I do not accept the noble Lord’s question, or indeed the points he made in it. I can assure the House that we take the interception of communications incredibly seriously. For these actions to go ahead we need a warrant from one of the most senior members of the Government as well as detailed legal advice to support it. That decision will be reviewed by independent commissioners and implemented by agencies, which are bound by legal and ethical frameworks, alongside parliamentary scrutiny through the Intelligence and Security Committee. This provides one of the strongest systems of checks and balances and democratic accountability for secret intelligence agencies and their work anywhere in the world.

30 July 2013 : Column 1639

Lord Reid of Cardowan: My Lords, I think the House recognises that electronic communications have grown exponentially and are now global and transnational, not merely international. In order to have some perspective and context to this Question, can the Minister give us a rough indication of how many terrorist plots have been foiled and how many British lives have been saved through the legal supervision of those electronic communications?

Baroness Warsi: The noble Lord makes an important point which is, of course, based on his many years of experience in dealing with this very real threat. I cannot give precise numbers here at the Dispatch Box. However, I can say that secret intelligence work is vital to our country. It detects threats that our country is facing, ranging from nuclear proliferation to cyberattacks, it prevents serious and organised crime, it prevents and disrupts complex terrorist plots and it supports the work of our Armed Forces. These are all things that protect our country and its citizens.

Baroness Gardner of Parkes: My Lords, perhaps I may raise the more basic point of nuisance calls. In the past, I have asked why we cannot prevent them here and I have been told that if they are international calls we can do nothing to control them. It is only the calls started locally that can be controlled. Is it still the situation that all the phone calls we get advising us to do a million things cannot be dealt with because we have no control at all?

Baroness Warsi: I am not sure that I can answer my noble friend’s question. I do not have details of that in the brief. However, I can confirm that it is a question that my mother asks regularly so I probably should get the answer to it.

Lord Campbell-Savours: My Lords, does not the use of the terms “blanket” and “hoovering up” by the noble Lord, Lord Strasburger, indicate a complete absence of knowledge about what GCHQ is actually doing?

Baroness Warsi: I am not sure that I would go that far, but of course I take the noble Lord’s point that the function of GCHQ is an incredibly important and vital aspect of our national security.

Lord Pannick: The Joint Committee on the draft Communications Bill made a number of recommendations for improving and updating the law in this area. Do the Government have any intention of implementing those proposals?

Baroness Warsi: The noble Lord will be aware that the matter has now passed through two parliamentary committees and it is the Government’s intention to bring the matter back to Parliament. However, at this stage, final proposals have not been drawn up.

Lord Elystan-Morgan: The Minister mentioned that ministerial licences had been specifically granted for such interceptions. Can she kindly tell the House

30 July 2013 : Column 1640

roughly how many licences have been issued over a convenient period—whether it be the past 12 months or the past 24 months?

Baroness Warsi: I believe that that would be an operational matter. I think that noble Lords would agree that I take my responsibilities to this House incredibly seriously and that I am usually incredibly frank and detailed in my answers. However, I hope that noble Lords will bear with me when I say that that is an operational matter and that I can comment only so far on these matters.

Energy: Fracking


11.28 am

Asked by Lord Harries of Pentregarth

To ask Her Majesty’s Government, in the light of the blockade of the Cuadrilla Resources drilling site in Balcombe, West Sussex, what assessment they have made of the feasibility of pursuing fracking in the United Kingdom in the face of public resistance.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma): My Lords, the Government understand that there will be a range of public opinions and that communities need to be properly engaged and informed on the implications of pursuing the exploration of unconventional gas resources. We welcome the industry’s commitment to early engagement. The Government have set up the Office of Unconventional Gas and Oil and have made it a priority to help people understand the facts about shale gas. The UK has a strong regulatory system that provides a comprehensive and fit-for-purpose regime for exploratory activities.

Lord Harries of Pentregarth: I thank the Minister for her Answer. However, does she agree that the fears of the villagers of Balcombe are very understandable—not only the thought of a very significant environmental footprint, as we have had in the United States, but, more fundamentally, the fear of water pollution? I know that the latest study of the Royal Society and the Royal Academy of Engineering says that fracking takes place hundreds of metres below the aquifer, but does she not agree that the science is still in a fairly early stage? Would it not be better to wait until next year’s report of the United States Environmental Protection Agency before authorising any more fracking projects?

Baroness Verma: My Lords, I take the noble and right reverend Lord’s points very seriously. However, the Health and Safety Executive scrutinises well design and monitors progress to ensure that the operator manages risk effectively throughout the life cycle of the well. The well design is also reviewed by independent examiners. The Health and Safety Executive assesses all well notifications before construction and monitors well operations based on weekly reports to well specialists.

30 July 2013 : Column 1641

Release of substances into ground water is regulated also by the Environment Agency. We have a very strong regulatory framework in this country and we should leave it to the regulators to ensure that all that needs to be done is done thoroughly.

Lord Teverson: Does the Minister agree that the greater environmental threat at the moment from energy is the resurgence of coal being used for electricity generation? Coal has now overtaken gas and accounts for 40% of total generating capacity, with most of it coming from Russia. Will the Minister confirm that it is the Government’s intention that unabated coal generation should cease within the near term?

Baroness Verma: My Lords, my noble friend makes some very important points. He will be aware that the Government are doing exactly that through the measures that we have in our EMR package to make generation from low-carbon resources more attractive than generation from coal. All existing coal plants will be required to meet the requirements of the industrial emissions directive, which aims to reduce emissions of harmful oxides of sulphur and nitrogen, and in particular we will make sure that we work towards coming off coal in the long run.

Baroness Worthington: My Lords, the RSPB yesterday highlighted the fact that updated planning guidance now recommends that decisions relating to wind farms must take into account protecting local amenity but does not require the same for fracking. Will the Minister explain the reason for this discrepancy? Also, given that the lobbying firm of the Prime Minister’s adviser, Lynton Crosby, has links to the fracking company, is this the latest example of putting the interests of big business ahead of the concerns of the general public?

Baroness Verma: My Lords, the noble Baroness will be fully aware that community engagement is the prime source from where we will get opinions for and against fracking and wind farms. On both issues the Government are working very hard and very closely with operators, developers and communities.

Lord Howell of Guildford: My Lords, does the Minister accept that it could be a mistake to discuss fracking in terms of the whole of the United Kingdom in one go? Obviously, in beautiful rural areas there are worries not just about drilling and fracking, which I think are exaggerated, but about trucks, deliveries, roads and disturbance, which are quite justified. However, there are large, uninhabited and desolate areas, certainly in parts of the north-east, where there is plenty of room for fracking, well away from anybody’s residence, and where it could be conducted without any threat to the rural environment. Does the Minister agree that a distinction should be made between one area and another rather than lumping them together, and that if we can push ahead with this kind of gas production, it will take us fast away from coal burning, which is increasing at the moment because of the delays in authorising gas production that the noble Lord, Lord Teverson, talked about a moment ago?

30 July 2013 : Column 1642

Baroness Verma: My Lords, my noble friend raised a number of very important points. As noble Lords are aware, we are in the early stages of exploration at the moment. There will be areas of the landscape that will not be suitable for fracking, as my noble friend rightly pointed out. However, we are in the early stages, and as the Government are determined to ensure that we are dependent not on coal but on gas and low-carbon energy sources, my noble friend made some very important points.

Baroness Farrington of Ribbleton: My Lords, I declare an interest as a resident of Lancashire who is aware of the enormous beauty of the Trough of Bowland. Will the Minister join me in condemning the alleged remarks of protesters in the south of England that all the fracking could be done in the north? Will she join me in insisting that the beauty of Lancashire is as important as—not more important than—the beauty surrounding, for example, Guildford?

Baroness Verma: My Lords, again I accept the noble Baroness makes some very important points. I am sure that my noble friend did not say that Lancashire was not as beautiful. All parts of this great country are beautiful.

Lord Kilclooney: My Lords, a large area in County Fermanagh has been identified as suitable for fracking. Of course, its successful development would mean a lot to the economy of Northern Ireland, and County Fermanagh in particular. Can the noble Baroness confirm that the recent tax incentives for those carrying out fracking will apply to Scotland, Wales and Northern Ireland as well as to England?

Baroness Verma: My Lords, I believe that these are devolved matters but, in case I am wrong, I will write to the noble Lord and make available the information in the Library.

Lord Greaves: My Lords, when I get up every morning and look out the window I look across the valley at the beauty of Pendle Hill and reflect that Pendle Hill consists largely of Bowland shale. So not all Bowland shale is in remote, desolate and uninhabited places—in fact most of it is not. Does the Minister agree that what we really need is a properly organised commercial exploitation of shale gas in one place to see exactly how it works under the regulatory system that we have in this country? That might set everybody’s mind at rest, or it might not.

Baroness Verma: My Lords, I think that I made it clear in my opening remarks that we have an effective planning system that will ensure that we properly explore the feasibility of shale gas and other unconventional gas and oil in this country. DCLG has the lead on this but I will take the noble Lord’s views to the department.

30 July 2013 : Column 1643

Lord Brooke of Sutton Mandeville: My Lords, does my noble friend think that it would be prudent during her summer reading to make some study of the early days of coal mining?

Baroness Verma: My Lords, I will add it to the many tasks that I already have for my summer reading.

Inheritance and Trustees' Powers Bill [HL]

First Reading

11.37 am

A Bill to make further provision about the distribution of estates of deceased persons and to amend the law relating to the powers of trustees.

The Bill was introduced by Lord McNally, read a first time and ordered to be printed.

BBC (Trustee Election and Licence) Bill [HL]

First Reading

11.37 am

A Bill to make provision for the election of the trustees of the BBC by licence fee payers and provisions in relation to civil enforcement of non-payment of TV licence fees.

The Bill was introduced by Lord Pearson of Rannoch, read a first time and ordered to be printed.

Standing Orders (Public Business)

Motion to Agree

11.38 am

Moved by Lord Hill of Oareford

That the standing orders relating to public business be amended as follows:

Standing Order 40 (Arrangement of the Order Paper).

In Standing Order 40(9), insert at end “, except for balloted topical Questions for Short Debate on Thursdays, which shall be entered after the first motion for general debate.”

Motion agreed.

Electronic Deposit of Documents

Motion to Agree

11.38 am

Moved by Lord Hill of Oareford

That, in respect of any bill relating to High Speed 2 that is introduced into the House of Commons in Session 2013-14 and subsequently brought up from the House of Commons and to which the

30 July 2013 : Column 1644

Standing Orders relating to private business are found by the Examiners of Petitions for Private Bills to apply, it shall be sufficient compliance with:

(a) any requirement under those Standing Orders for a document to be deposited or delivered at, or sent to, an office of a government department, body or person if it is deposited or delivered at, sent to or otherwise made accessible at that office in electronic form;

(b) any requirement under those Standing Orders for a document to be deposited with an officer if it is deposited with or delivered, sent or otherwise made accessible to that officer in electronic form;

(c) any requirement under those Standing Orders for a document to be made available for inspection at a prescribed office, or to permit a document to be inspected, if it is made available for inspection at that office, or is permitted to be inspected, in electronic form;

(d) the requirement under Standing Order 27(7) or 36(3) relating to private business to permit a person to make copies of a document or extracts from it, if there is provided to that person, on request and within a reasonable time, copies of so much of it as the person may reasonably require and such copies may, if the person so agrees, be provided in electronic form;

(e) the requirement under Standing Order 27(7) relating to private business for a memorial to be made on every document deposited under that Standing Order, if the memorial is made on a separate document;

(f) any requirement under Standing Order 4A(1), 27A(5) or 83A(8) to make a document available for sale at prescribed offices, if it is made available for sale at an office in London.

That this order shall not affect any requirement under those Standing Orders to deposit any document at, or deliver any document to, the office of the Clerk of the Parliaments.

That any reference in those Standing Orders to a document which is deposited, lodged, delivered or sent under those Standing Orders includes a reference to a document which is so deposited, delivered or sent in electronic form.

That any reference to a document in this order includes a reference to any bill, plan, section, book of reference, ordnance map, environmental or other statement or estimate.

Motion agreed.

Standing Orders (Private Business)

Motion to Agree

11.38 am

Moved by The Chairman of Committees

That the standing orders relating to private business be amended as follows:

30 July 2013 : Column 1645

After Standing Order 83 insert the following new Standing Order:

“83A Comments on environmental statement

(1) This order applies to any government bill in relation to which the Examiner decides Standing Orders 4 to 68 are applicable and in relation to which an environmental statement is required to be deposited under Standing Order 27A.

(2) In this order:

“the relevant Minister’ means the Minister of the Crown with responsibility for the bill;

“the environmental statement’ means the environmental information originally deposited by the relevant Minister in relation to the bill for the purpose of Standing Order 27A;

“supplementary environmental information’ means any additional environmental information deposited by the relevant Minister, after the deposit of the environmental statement, to supplement that statement for the purpose of meeting the requirements of any EU Directive relating to environmental assessment.

(3) The notice published under Standing Order 10 in relation to the bill shall state that any person who wishes to make comments on the environmental statement should send them to the relevant Minister in such manner and on or before such date as shall be specified by the relevant Minister in the notice, that date being no earlier than the 56th day after the first publication of the notice.

(4) For the purpose of Standing Order 83 paragraph (3) shall be treated as one of the Standing Orders compliance with which must be examined by the Examiner.

(5) The relevant Minister shall, in such form as may be specified by the Examiner, publish and deposit in the office of the Clerk of the Parliaments any comments received by him in accordance with this order and shall also submit those comments to the independent assessor appointed under paragraph (6) below. The relevant Minister shall deposit a certificate in the office of the Clerk of the Parliaments setting out the date on which all comments have been received by the independent assessor.

(6) (a) If the bill originated in this House and if comments are received on the environmental statement in accordance with this order:

(i) a report shall be prepared by an independent assessor summarising the issues raised by those comments;

(ii) the Examiner shall appoint the independent assessor within the period for commenting on the environmental statement prescribed by paragraph (3) above;

(iii) the assessor shall be instructed to prepare the report within such period as the Examiner shall specify, the end of that period being no earlier than the 28th day after the date certified by the relevant

30 July 2013 : Column 1646

Minister, in accordance with paragraph (5) above, as the date on which the assessor received all of the comments from the relevant Minister;

(iv) before specifying a period in accordance with sub-sub-paragraph iii above, the Examiner shall consult the relevant Minister on the length of this period;

(v) the Examiner shall submit the report of the assessor to the House.

(b) If a report is submitted to the House in accordance with sub-paragraph (a)(v) above, the Examiner has leave to submit the report of the assessor to the House of Commons.

(7) If paragraph (6) above is applied, the bill shall not receive a second reading until at least 14 days after the report of the independent assessor on the comments on the environmental statement has been submitted to the House.

(8) If any supplementary environmental information is deposited in relation to the bill:

(a) it shall be prefaced with a statement that the information is being deposited as supplementary information under this order;

(b) the requirements of Standing Order 27A in relation to the deposit of copies of the environmental statement shall apply to the supplementary environmental information;

(c) copies of the supplementary environmental information shall be made available for inspection and sale at the offices prescribed by Standing Order 27A(5);

(d) notice shall be published in accordance with Standing Order 10 (save in respect of dates) above stating that any person who wishes to make comments on the supplementary environmental information should send them to the relevant Minister in such manner and within such period as may be specified in the notice, the end of that period being no earlier than the 42nd day after the date of the first publication of the notice;

(e) paragraphs (5) and (6) above shall have effect in relation to any comments received on any supplementary environmental information deposited in this House as they apply to comments received on the environmental statement and irrespective of the bill’s House of origin;

(f) the Examiner shall examine and report to the House whether or not paragraphs (8)(a) to (d) have been complied with and Standing Order 83 shall apply to that examination;

(g) the bill shall not receive a third reading in this House or, if supplementary environmental information has been submitted before second reading, second reading in this House until at least 14 days after the assessor’s report on the comments on the supplementary environmental information has been submitted to the House.

(9) At third reading of the bill the relevant Minister shall set out:

30 July 2013 : Column 1647

(a) the main reasons and considerations upon which Parliament is invited to give consent to the project to be authorised by the bill;

(b) the main measures to avoid, reduce and, if possible, offset the major adverse effects of the project.

A written statement setting out this information shall be laid before this House not less than 7 days before third reading.

(10) The costs of the assessor and also the costs of the process of appointing an assessor, incurred by the House by virtue of paragraphs (6) and (8)(e) above, shall be reimbursed by the government.

(11) For the avoidance of doubt, any supplementary environmental information accompanying an amendment to a bill which, if the bill were a private bill, would require a petition for an additional provision shall be subject to paragraph (8) above and not paragraph (3) or (7) above.”

Motion agreed.

Protection of Freedoms Act 2012 (Code of Practice for Surveillance Camera Systems and Specification of Relevant Authorities) Order 2013

Protection of Freedoms Act 2012 (Guidance on the Making or Renewing of National Security Determinations) Order 2013

Motion to Postpone

11.39 am

Moved by Baroness Anelay of St Johns

That the Motions be postponed.

Baroness Anelay of St Johns: My Lords, unless any noble Lord objects, I beg to move that the Motions in the name of my noble friend Lord Taylor of Holbeach be postponed until after the Motion later today in the name of my noble friend Lord Boswell of Aynho. I make the suggestion with the agreement of the usual channels because we anticipate that there will be a debate on the first Motion which may take some time. It would be preferable, therefore, not to delay all the other business before the House today.

If the House agrees to this Motion—I note that the noble Baroness, Lady Smith of Basildon, signifies her consent from a sedentary position, for which I am grateful—these two approval Motions for the statutory instruments, which were considered in Grand Committee earlier this month, will be considered again, and I hope approved, as our last business later today.

Motion agreed.

30 July 2013 : Column 1648

Working Time (Amendment) Regulations 2013

Motion to Approve

11.40 am

Moved by Lord De Mauley

That the draft regulations laid before the House on 20 June be approved.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 22 July.

Motion agreed.

Local Elections (Ordinary Day of Elections in 2014) Order 2013

Motion to Approve

11.40 am

Moved by Lord Ahmad of Wimbledon

That the draft order laid before the House on 26 June be approved.

Relevant document: 7th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 24 July.

Motion agreed.

Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2013

Motion to Approve

11.41 am

Moved by Baroness Stowell of Beeston

That the draft regulations laid before the House on 26 June be approved.

Relevant document: 7th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 24 July.

Motion agreed.

Financial Services (Banking Reform) Bill

Order of Consideration Motion

11.41 am

Moved by Lord Newby

That it be an instruction to the Committee of the Whole House to which the Financial Services (Banking Reform) Bill has been committed that they consider the bill in the following order:

Clauses 1 to 7, Schedule 1, Clauses 8 to 16, Schedule 2, Clauses 17 to 21.

Motion agreed.

30 July 2013 : Column 1649

Intellectual Property Bill [HL]

Third Reading

11.41 am

Baroness Anelay of St Johns: My Lords, this is a procedural Motion that is commonly put and it falls to the Chief Whip to do so. I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Intellectual Property Bill, has consented to place her prerogative, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Clause 13 : Offence of unauthorised copying etc. of design in course of business

Amendment 1

Moved by Viscount Younger of Leckie

1: Clause 13, page 12, line 19, after “person” insert “—

(a) ”

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie): My Lords, on Report we had further detailed debates about the introduction of criminal sanctions for the deliberate copying of a registered design. Noble Lords raised various issues intended to refine and improve the way the sanction operates. The noble Lord, Lord Stevenson, while opposing the principle of the criminal sanction, nevertheless sought to ensure that certain activities clearly fell outside the sanction. He said:

“However, should the proposal be approved, we think that the Bill should also contain a defence for any person who reasonably believed that they were not infringing”.—[Official Report, 23/7/13; col. 1181.]

To that end, both he and the noble Lord, Lord Young of Norwood Green, proposed an amendment on Report which sought to address this issue.

Over the past few weeks, my officials and I have had a number of detailed discussions with stakeholders, including members of the International Chamber of Commerce, the IP Federation and the Chartered Institute of Patent Attorneys about the scope and operation of the proposed criminal sanction. I have listened very carefully to their concerns and to the concerns voiced by Members of this House. I am pleased to bring forward this amendment, which the Government believe goes to the heart of the concerns raised.

As noble Lords will be aware, it has always been the Government’s clear aim that the offence should be directed to blatant and intentional copying of a design that belongs to another. In this regard, the Government remain concerned to ensure that the offence is properly focused on wrongful business behaviour and so minimises any potential chilling effect on businesses which operate legitimately.

It is important that those who have acted diligently and decently, doing their best not to infringe the rights of others, should not have cause to cease innovating lawfully, simply for fear of falling foul of the offence. Consequently this amendment introduces to the existing defence of non-infringement a further defence of reasonable belief that the design in question was not

30 July 2013 : Column 1650

infringed. This defence is dependent on facts within the defendant's own knowledge: his state of mind, the reasons why he held the belief in question and materials he can furnish to support that belief. It will help to ensure that the courts are able to reach a just and fair outcome in such cases.

11.45 am

The defence is within the spirit of that set out in trade mark legislation, but the Government believe that the proposed formulation will result in a clearer and simpler application of the law. Noble Lords will recall that it sits alongside the existing defence of reasonable belief on the question of the validity of the registered design. In conclusion, the amendment will ensure that those who had sufficient reason to believe that their activity was not infringing would not be guilty of a criminal offence. This is a further safeguard for businesses which act innocently. I beg to move.

Lord Stevenson of Balmacara: My Lords, the arguments for and against criminal sanctions for designs have been extensively aired over our discussions on this Bill. Proponents feel that current civil enforcement is expensive for small innovators and that current civil sanctions are not dissuasive to large infringers. Opponents are concerned that unexamined IP rights are a dangerous basis for taking criminal sanctions and that there is a risk of stifling competition in useful products.

We understand the Government’s aim in this Bill. As the Minister said, we were anxious to see if we could move towards a common position. However, we are still concerned about whether it is appropriate and proportionate, whether it would really deter those pirates and counterfeiters whose behaviour the public would consider criminal and whether it may turn out to have a stifling effect on innovation and competition.

One concern, which we have expressed previously, is that the proposed provision could turn into a tool to be used by unscrupulous companies to the detriment of UK designers. It is reasonably inexpensive to register a design, especially as there is no effective examination involved. An unscrupulous company could apply to register designs it copied from a UK designer, then threaten that designer with criminal sanctions for producing his or her own designs. The prospect of defending a criminal action might be enough to make the designer give in. What sort of fairness does that speak to?

As the Minister says, the Government’s intention is that blatant, deliberate copying of designs for commercial gain, safe in the knowledge that many of the victims will be unlikely to have the resources to respond, is an act worthy of punishment, and they believe that the UK needs a coherent approach to the protection of intellectual property rights. On the other hand, the measure is opposed by the IP Federation, the Intellectual Property Bar Association, the City of London Law Society, the Chartered Institute of Patent Attorneys and a number of IP lawyers and specialists. I put it to the Minister that it may not turn out to be a brilliant career move for the IP Minister to cross swords, as he has done, with Sir James Dyson and, indeed, the Ministry of Defence on this point.

30 July 2013 : Column 1651

As Roger Burt, president of the Chartered Institute of Patent Attorneys, says,

“the Intellectual Property Bill could result in people being charged with criminal offences and locked up for up to 10 years, just for producing a design that looks ‘substantially’ like an existing design”.

We tried to find a compromise position with the Government on this point. We wanted the Government to raise the bar for criminality so that criminal penalties could be considered only in cases, using the words used by the Minister, of “blatant, deliberate copying of designs, for commercial gain”, but we failed. However, we are glad that the Minister listened to one part of our argument, which is that the legislation as drafted might open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policy makers have been keen to encourage as a driver of growth.

We therefore welcome the government amendments tabled today, which propose a defence for anyone who reasonably or in good faith believes that their actions were non-infringing. We will continue to oppose the introduction of criminal sanctions for registered design infringement as a matter of principle. However, we are pleased that there will now at least be a defence for any person who reasonably believes that they are not infringing. The objective test of reasonableness should cover situations such as where someone has taken legal advice on the issue, or where an opinion of non-infringement is secured from the IPO opinion service.

They should also extend more broadly to cover competent self-analysis and explanation by a defendant as to why he or she believed that an informed user would perceive the product as creating a different overall impression to the registered design. This is an important amendment and we are happy to support it.

Lord Clement-Jones: My Lords, as the Minister knows, I have always been a supporter Clause 13. I know that many small designers will be delighted to see it contained in the Bill and I hope that it survives its passage through the Commons.

Although I did not feel that the clause needed a huge amount of amendment or that it will be the blunt instrument that some people have predicted, if the addition of the amendment makes it more acceptable, it must be welcomed. I welcome the fine tuning that the Minister has carried out.

In welcoming the amendment, and given the restrictions on speeches at Third Reading, I want to thank the Minister for the accessible and receptive approach that he has taken throughout the Bill. I hope that as the Bill goes through the Commons the further discussions that he has promised on lookalikes—and, in particular, on the comparative advertising issues which may be applicable to lookalikes—and on the kind of penalties that might be appropriate to digital copyright infringement will bear fruit.

Lord Howarth of Newport: My Lords, I echo the noble Lord, Lord Clement-Jones, to the extent that he has welcomed the Minister’s constructive response to

30 July 2013 : Column 1652

some of the issues raised by my noble friends on the Front Bench and myself in Committee and on Report on the matter of the criminal offence. More broadly, perhaps I may I express my appreciation of the Minister’s scrupulousness and fair mindedness in the way he has responded to a range of issues raised by noble Lords throughout the various proceedings on the Bill. I thank him for that.

Viscount Younger of Leckie: My Lords, I am grateful for the contributions to this short debate on the government amendment of the noble Lords, Lord Stevenson and Lord Howarth, and my noble friend Lord Clement-Jones. I should say to the noble Lord, Lord Stevenson, that I have long since realised that as intellectual property Minister I cannot please everyone all of the time. I am certainly aware of the opposition from certain quarters, including CIPA, to the criminal sanction aspect of the Bill.

I would like to take this opportunity to thank, in particular, the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, who have put their names to the amendment, for their collegiate and constructive approach. I also extend my thanks to those Members on all sides of the House who have taken part in the debates on the Bill. I am grateful for the detailed consideration that they have included in this process, both inside and outside the Chamber. The House has engaged in its role of proper scrutiny, improvement and revision and the Bill which is being sent to the other place is greatly improved. I would also like to put on record my thanks to my Bill team and other officials for their expertise and support throughout this process.

The amendment clarifies the scope of the criminal offence further and provides greater security and confidence to the UK’s designers. I commend it to the House.

Amendment 1 agreed.

Amendment 2

Moved by Viscount Younger of Leckie

2: Clause 13, page 12, line 19, at end insert “, or

(b) reasonably believed that the person did not do so”

Amendment 2 agreed.

Bill passed and sent to the Commons.

European Union (Approvals) Bill [HL]

Second Reading

11.53 am

Moved by Lord Gardiner of Kimble

That the Bill be now read a second time.

Lord Gardiner of Kimble: My Lords, the sole purpose of the Bill is to enable Ministers to support two draft decisions of the Council of the European Union. The European Union Act 2011 provides that Ministers

30 July 2013 : Column 1653

may not support certain decisions in the European Council unless they are approved by an Act of Parliament. Neither decision can be adopted by the Council of the European Union without the unanimous support of all member states.

The Bill provides Parliament with the right, given to it by the European Union Act 2011, to consider the proposed use of the Article 352 treaty basis. This article is used in those cases where further action is necessary to achieve one of the objectives set out in the treaties, but where there are no specific provisions to give the EU institutions a specific power to take that action.

The two measures for which approval is sought are proposed Council regulations brought forward under Article 352 of the treaty on the functioning of the European Union. The first draft decision establishes a legal obligation on the European institutions to deposit their paper historical records at the European University Institute in Florence. Previously, European institutions have voluntarily deposited their archives at the European University Institute, and the proposed move to an obligation seeks to provide long-term certainty that the archives will be preserved in accordance with recognised international standards at a single accessible location.

A 1983 Council regulation already obliges the European institutions to preserve and provide access to their historical papers once those records are 30 years old, when they would no longer be in business use. The European Council, Parliament, Commission, Court of Auditors, Economic and Social Committee and Investment Bank currently meet that obligation by depositing their paper archives within the EUI on a contractual basis. The proposed legal obligation reflects these existing arrangements, and will not change the point in time at which the public can access historical records, or the place at which they can be accessed.

Making this practice a legal obligation will help to ensure transparency and scrutiny of the European institutions’ work, and fits alongside the Government’s drive for greater transparency. A measure which allows for greater accountability around EU decision-making is one that the UK should surely welcome.

As the EU moves towards digital record-keeping, the measure also provides that the European institutions should, where possible, make their records available to the public in digital form. In addition, the EUI is to be given permanent access to each institution’s digital archives to fulfil its obligation to make historical records accessible to the public from a single location once they are 30 years old.

The Court of Justice of the European Union and the European Central Bank will be exempt from the obligations under the proposed regulation, but will be able to deposit their records on a voluntary basis. I would like to explain why this is the case. For the Court of Justice, this is because of the volume of records, most of which are case files often containing sensitive personal data, which need to be quickly accessed to support the court’s functions. For the European Central Bank, the exemption is due to the bank’s organisational autonomy and because its historical records are subject to a separate 2004 regulation.

30 July 2013 : Column 1654

This measure will be financed by contributions from the depositing European institutions from their existing budgets, and will have no financial impact on the UK. The Italian Government have made suitable premises permanently and freely available to the European University Institute to ensure that the deposited archives of the European institutions are preserved and protected in accordance with recognised international standards.

The Justice, Institutions and Consumer Protection Sub-Committee of your Lordships’ European Union Committee had the opportunity to consider this measure. Your Lordships sought clarification on the reasoning for allowing the Court of Justice of the European Union and the European Central Bank to deposit their records voluntarily, and on the digital provisions of the proposals, both of which I have just outlined. The committee cleared the measure from scrutiny after the Government provided satisfactory clarification on these points.

The Council has published the final agreed text of this measure and it has received consent from the European Parliament. It is therefore ready for adoption, subject to UK agreement.

The second draft decision provides for the establishment of the Europe for Citizens programme for the period January 2014 to December 2020. This builds on an existing programme of the same name covering 2007-13, but will adopt a simpler and more effective approach. The programme is concerned with improving the way citizens can participate in and contribute to EU matters: first, by strengthening remembrance and common values; and, secondly, by encouraging broader engagement and debate.

Commemoration and participation are the core elements of the programme. Around 20% of the overall budget will provide funding to commemorate both world wars and the victims of totalitarian regimes. It also seeks to raise awareness of the fundamental aim of the European Union to promote peace, values and the well-being of its citizens.

The second and more substantial pillar of the programme, which will receive around 60% of the overall budget, is designed to encourage democratic and civic participation of citizens at European Union level by developing their understanding of the policy-making process in the Brussels institutions and promoting opportunities to empower communities and encourage social action, including volunteering.

At a time when we hear so much about the democratic deficit of the European institutions, and the perception that they are remote from the people they were set up to serve, these are worthwhile and important objectives. Europe for Citizens is a funding programme that will support a range of organisations with a general European interest, with a view to stimulating citizens’ interactions on EU matters, together with organisations that promote debate and activities concerning European values and history.

Like its predecessor, the programme will be implemented through grants based on open calls for proposals and through service contracts based on calls for tender. It will provide for the analysis and dissemination of the results of its activities, supported by regular external and independent evaluation. An interim

30 July 2013 : Column 1655

evaluation report on the implementation of the programme will be drawn up by the European Commission no later than the end of 2017, and a final evaluation report no later than 2023.

The programme has no new impact on UK domestic policy, and these types of activity have been supported for some time. It reflects the Government’s aim of localising action to encourage communities at grass-roots level. The continuation of the Europe for Citizens programme will ensure that a source of funding at European level will continue to be available to UK civil society organisations, and I would certainly encourage them to submit project proposals so that they may benefit from it.

Looking to the future, I am especially pleased that my officials have obtained confirmation from the European Commission that funding from the Europe for Citizens programme will be eligible to support projects commemorating the centenary of the outbreak of World War I in 2014, with numerous events in both France and the UK being planned for this important anniversary. We anticipate the final version of the text to be adopted in the autumn, once the Commission has confirmed the final budget. It will then be submitted to the European Parliament for consent and subsequently be ready for adoption, pending UK agreement.

The Justice, Institutions and Consumer Protection Sub-Committee of your Lordships’ European Union Committee had the opportunity to consider this measure. The committee considered the measure to play a useful role, and noted its relatively small budget. Following clarification by the Government of the need for a parliamentary debate prior to consent, it subsequently cleared the measure from scrutiny.

It is important that the Europe for Citizens programme is agreed in time for projects to be funded from the time it starts. Our aim is for the Bill to receive Royal Assent before the end of 2013. This would enable the Council regulation to be approved in advance of the period during which it would be active. The Bill extends to the whole of the United Kingdom, and its subject matter does not give rise to any devolution issues. There will be no financial effects or any impact on public service manpower as a result of the Bill. The provisions contained within it do not require an impact assessment. For Europe for Citizens, the EU Commission had originally proposed a budget of €229 million, representing an increase of around 7% on the budget for the existing programme of €215 million. Following the negotiations on the multi-annual financial framework earlier in the spring, it is hoped that that figure will be significantly reduced. This would be a realistic response to the constrained financial conditions which we all have to take into account, but not so severe as to jeopardise the integrity of the programme as a whole.

I confirm that I do not consider that any of the Bill’s provisions engage European Convention Rights and so no issues arise as to the compatibility of the Bill with these rights. It is also the intention for the Bill to come into force on the day of Royal Assent. For the reasons that I have outlined, I commend this Bill to your Lordships. I beg to move.

30 July 2013 : Column 1656

12.05 pm

Baroness Falkner of Margravine: My Lords, I am grateful to the noble Lord, Lord Gardiner of Kimble, for so comprehensively introducing what is, ultimately, a very small measure. I do not intend to detain the House very long; I know that the next debate, on the work of the European Union Committee, will engage your Lordships much more than this Bill will.

We welcome both clauses, particularly on the depositing of historical archives. It will be very useful for researchers to be able to access information from one source—the European University Institute in Florence. The noble Lord, Lord Gardiner, will be aware of how important transparency is to the EU’s citizens and commercial enterprises. He will also be aware of the debate that the board of the European Central Bank has been having on the lack of transparency of that bank’s minutes on interest-setting decisions. Given how relevant this is to London as a financial centre, although we are not directly engaged with the European Central Bank, will Her Majesty’s Government enthusiastically support those of its members who are seeking greater transparency? This is the only major central bank that does not publish its minutes at the moment.

We broadly welcome Clause 1(2)(b) on the Europe for Citizens programme, which, as the noble Lord, Lord Gardiner, pointed out, seeks to enhance understanding and to take action to build capacity for civil participation. Among the programme’s priorities, the noble Lord, Lord Gardiner, mentioned remembrance and European citizenship, which are profoundly important as we lead up to the centenary of the start of the First World War. He also mentioned democratic engagement and civic participation.

That is the area on which I would like to press Her Majesty’s Government. I declare an interest as the parent of a 16 year-old. Having seen the national curriculum’s GCSE programme and the entire content of the secondary school education programme, there is very little mention of the European Union. There is certainly greater emphasis in history, religious studies and so forth on historical events that have affected the European Union as we see it today, but the actual processes, procedures, decision-making, structure and organisation of European Union institutions are not touched on in any depth of knowledge at all. There are no courses at A-level that prepare candidates for European Union decision-making studies or employment in the EU. While this lies in the purview of national Governments, this Government have been profoundly aware for many years of the lack of United Kingdom participation in the EU Civil Service and the institutions of the EU, and the extremely low numbers of civil servants that find themselves working at EU level. Will my noble friend tell us how we expect to boost our influence within EU institutions when we do not prepare our young people in any meaningful sense to be able to understand what the European Union is about in terms of day-to-day life?

I have another point on democratic engagement and civic participation. As I was reading the programme’s lofty ideals, all of which I completely agree with, I looked at the terminology and the methods by which it

30 July 2013 : Column 1657

is intended to appeal to civil society. It becomes evident that a group of bureaucrats of a certain age has dreamt up the programme, because it has no relevance to the way in which social media work and young people think, or to the communication means by which they engage with each other, irrespective of the remit of institutions. I shall give an example from page 6 of the programme. The Minister mentioned “Remembrance and European citizenship” and “Democratic engagement and civic participation”; he did not mention the third highlighted point, which is “Valorisation”. With the indulgence of the House, I shall explain what this means. It is described as,

“a horizontal dimension of the programme … It will focus on the analysis, dissemination, communication and valorisation of the project results from the above-mentioned strands”.

I was so impressed by this attempt at defining “valorisation” that I looked it up in the Oxford English Dictionary, where it is defined as

“to give or ascribe value or validity to … by artificial means”.

That is profoundly important. All these programmes are top-down rather than bottom-up. They are guided rather than being spontaneous in any sense; anyone who has worked with civil society will know that bottom-up approaches are far more important. They do not speak to citizens in terms that enthuse them about the value of the European Union. While one commends the programme for what it is, if we in the United Kingdom are to challenge the anti-European bias in our media and public discourse, we will have to do better than this.

12.12 pm

Lord Renton of Mount Harry: My Lords, I listened with great interest to what my noble friend Lord Gardiner had to say in taking us through the Bill. I am particularly interested in it because I played some part in the previous Bill on this subject so it is good to be talking about it again.

I have no objection to the first part of the European Union (Approvals) Bill—if it is appropriate to deposit papers and historical records at the European University Institute in Florence, so be it—but I find the second and major part rather difficult. I am surprised by the draft decision in relation to the Europe for Citizens programme.

I have managed to get hold of the Council of the European Union’s document on the programme, which came out on 4 July. Pages 9 and 10 talk about its specific objectives being to,

“raise awareness of remembrance, common history and values and the Union’s aim that is to promote peace, its values and the well-being of its peoples by stimulating debate, reflection and development of networks”,

and then to,

“encourage democratic and civic participation of citizens at Union level”.

It continues:

“In order to achieve its objectives, the programme shall finance inter alia the following types of actions … Mutual learning and cooperation activities such as … Citizens’ meetings, town-twinning, networks of twinned towns … remembrance projects with a … European dimension”.

30 July 2013 : Column 1658

I do not see how all that fits in with the present programmes and ideas of some of the most serious people in the Conservative Party. Here we are: we are just removing ourselves from the justice provisions of the European Union. It is ironic, for example, that we are planning a referendum on whether we stay in the EU and at the same time taking hold of this Bill with plentiful support. These situations may not seem not to contradict one another, but I think that they do. For that reason I should like to hear more from my noble friend on this subject. It is not a problem for me personally. I have always been in favour of our active membership of the European Union and convinced that it is only through that active membership that Britain will grow. I should like to think that the Bill goes some way towards supporting that view, but it comes at a slightly odd time.

12.16 pm

Lord Liddle: My Lords, on these Benches we support the principle that the Bill should come before this House and we support its detailed content. I hope that it will not detain the House for very long in its further stages. We support the principle, because we believe that it is right that Parliament should approve this type of decision, and we support that aspect of the EU Act 2011.

As regards the specific content of this approvals Bill, we support the clarification of the need for the EU to keep a proper archive. As the noble Lord said, this is important for transparency. We also support the Europe for Citizens programme. I should like to ask a couple questions on the first matter and make some comments on the second, particularly in the light of the remarks of the noble Lord, Lord Renton.

On the matter of the archive, I do not expect the Minister to be able to answer these questions today, but it would be interesting if he could write to me. I wonder whether that archive will contain the material of real substance that will enable historians to analyse how decisions were taken in the European Union. In my experience, you do not get much of that flavour from the official documents or from the official conclusions of ministerial meetings. A historian would need access to things such as the notes that the secretary of the Commission meeting took about who said what, the correspondence between commissioners and the records of the chef de cabinet meetings. In this way it could be seen how decisions were prepared. Access would also be needed to the verbatim reports that are made of the European Council meetings, rather than simply the conclusions. I would throw in the proceedings of COREPER. Although it is not an official European institution, it played a crucial role over the years.

Will those documents be part of the archive? This is an important point. We have seen in the 60-year development of the European Union that we are moving step by step from a world of secretive diplomacy, where suspicious nation states came together to take the first bold steps towards union, to a much more open democracy. Analysing that process will be very important for the future.

It is on that theme that we support the Europe for Citizens programme. It is right that, as Europeans, we should commemorate things such as the 100th anniversary

30 July 2013 : Column 1659

of the First World War. It is, of course, one of the main reasons why the idea of Europe is still so vital. I always remember reading Mitterrand’s final speech to the European Parliament. My French is appalling, but he reminded everyone that:

“Le nationalisme, c’est la guerre”.

That is one of the fundamentals of Europe. Therefore, we should be commemorating those events.

Even in the United Kingdom, there is a sense that we need to have a cross-border, cross-national debate about the future of the European Union and that we need to engage citizens in it. We, together in the European Union, are part of what political scientists call a community of fate. In other words, what happens in all those countries really matters to us; and what happens in the European Union really matters to us. A classic example is that the British economy has not avoided the consequences of the euro crisis simply because we are outside the euro.

The present Government are coming to terms with the need for debate. The noble Lord, Lord Renton, mentioned the justice opt-outs. More interesting is the decision to opt back in to most of the most important parts of the JHA agenda. That is because the Ministers dealing with this point recognise that we are part of a community of fate—we have to take these decisions together. We can see the same in the single market, where the Government are increasingly emphasising the importance of the single market to our economy.

I do not want to be too sociological about it, but there is a European demos in the making, and the euro crisis has brought it to the fore. We should be looking at this as an opportunity to promote debate between citizens about how they see Europe and the future of the Union.

If the Prime Minister’s plans go ahead—of course, I do not think that he will win the next general election, but were he to do so—and there is a renegotiation in 2016 and a referendum in 2017, I hope that that will be played out against a background of much commemoration of Winston Churchill’s great speeches calling for Europe to unite.

12.23 pm

Lord Gardiner of Kimble: My Lords, I am most grateful for all the contributions that have been made. We have had a short but most interesting debate—indeed, a prelude to further consideration of the European adventure. These two EU measures, both of which provide for more citizen engagement in the EU, are of great benefit.

First, we discussed a measure to secure the long-term future of the EU institutions’ archives which takes account of the advances in record-keeping in an increasingly digital age. I was of course intrigued by the point of the noble Lord, Lord Liddle, about the substance of archives. For someone such as me, who is interested in history but extremely amateur, the point of the history book is when it hits on something that goes beyond the ordinary notes and into the most intriguing parts. Although I cannot answer the noble Lord precisely, I very much hope that he is right that

30 July 2013 : Column 1660

this will be an archive that historians will find of great value, not just for the agenda and minutes of the meetings but for the discussions and how they came to the decisions that they made. I will consider that and obviously come back to the noble Lord if I have anything of greater value to add, but I am with him on that.

The measure also reflects the flexibility required in introducing digital archiving and accordingly avoids prescribing technical solutions, which would not allow for rapidly evolving technologies. Approving this measure would contribute to ensuring the transparency and scrutiny of the EU. I was particularly taken by the point that my noble friend Lady Falkner of Margravine made about transparency because the Government definitely support the general principle of transparency, both domestically and within the European Union. I wish that I was able to comment more fully or specifically on the minutes of the European Central Bank but I very much hope that it will continue to make as much of its archive available as possible because that, again, plays into what the noble Lord, Lord Liddle, was saying about the importance of archives.

This also reflects our own Government’s priority in using digital platforms as a means of facilitating contact between citizens and public institutions. Again, my noble friend Lady Falkner of Margravine mentioned the engagement of young people and I endorse very much the concern that she raised. However, we need to remember that there are young people coming forward who need to know more. One of the great advances with digital platforms is that I very much hope that they will be a medium that young people will find more user-friendly. It is this digital technology which provides the means for bringing people of all generations more closely together, an aspect of today’s world that is very much to be welcomed. I saw this for myself in a recent visit to the outstanding National Archives at Kew, which certainly opened my eyes to the scope and opportunities that these advances provide.

Perhaps I may turn to the Europe for Citizens programme, which should be seen in the same context. I hesitated at what my noble friend Lord Renton of Mount Harry said about the contradiction because this programme will run from next year to 2020 for all of Europe, and I see this as a positive. Whatever decisions the British electorate may or may not make about the position of this country in Europe, I believe that from 2014 to 2020 there is a great citizens’ programme across all the nation states, which is of value to this country and to the citizens of all the countries. I do not see it as a contradiction in that way. This is a positive, whatever happens.

It is particularly poignant at this moment to commemorate those in the two world wars and their lives, and many of your Lordships have been much involved in that. There are certainly many communities up and down the land involved in town twinning. I know that they come from all generations and all countries. Again, this is a very positive part of where taxpayers’ money is going. It is going, through the European institutions, towards this being a rewarding exercise.

30 July 2013 : Column 1661

This is a real opportunity for civil society organisations. To pick up on something that my noble friend Lady Falkner of Margravine said, we encourage a much more positive engagement at institutional and local level for citizens of all ages. I particularly go back to young people who have ideals. Having many ideals about the common values that are shared is an important part of the European adventure, so I very much hope that this programme will be seen as an opportunity. I very much agree with the point that the noble Lord, Lord Liddle, made about the opportunities. I also hope that this Bill will not take too much time because, in the end, this is a measure that we need to get through to enable the important work to begin for 2014.

If there are any points that I have not answered, I will come back to noble Lords but I believe that these two measures will definitely benefit citizens across the European Union. I commend the Bill to your Lordships and ask your Lordships to give it a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

European Union Committee: 2012-13 (EUC Report)

Motion to Take Note

12.30 pm

Moved By Lord Boswell of Aynho

That this House takes note of the Report of the European Union Committee on its work in 2012–13 (1st Report, HL Paper 15).

Lord Boswell of Aynho: My Lords, this Motion invites the House to take note of the report of your Lordships’ European Union Committee, which I have the privilege of chairing, on that committee’s work in the 2012-13 Session. I am pleased that this round-up of our committee’s important work has been given valuable time on the Floor of the House as its work has been recognised, not least by Sir Jon Cunliffe, the present UK permanent representative to the EU, as,

“enormously influential in Brussels and on Government thinking”.

I recognise that many in the Chamber today are very familiar with our work, but we are anxious to encourage a wider understanding of it among all Members of the House. For the benefit of those who are perhaps less au fait with it, I shall summarise the Committee’s role. It scrutinises EU policies and proposed EU laws, seeking to influence their development; holds Her Majesty’s Government to account for their actions in, and connected to, the EU; and represents the House in its dealings with the EU institutions, and other member states and their national parliaments. Much of this work is carried out by the six EU sub-committees, and we will be hearing from a representative of each sub-committee during the course of this afternoon’s debate.

I will mention a few highlights from this past Session, but before doing so I wish to pay tribute to the sub-committees’ hard work and meticulous efforts. A

30 July 2013 : Column 1662

rigorous approach to detail is what this House is well known for and we apply that principle to the scrutiny of EU affairs. We seek at all times, and I hope that normally we succeed, to act in a non-party-political way to advise the House neutrally on EU matters. Given the current rather fetid political climate, it is essential that we continue in that vein, and I have no doubt that we will continue to rise to that challenge. I am deeply and genuinely grateful to each of the chairmen, the members of all the committees and, by no means least, the expert staff team that supports them so ably.

My committee and its sub-committees have undertaken an extraordinary level of work this year. We have scrutinised over 270 EU documents and proposals, sent 653 letters to Ministers examining the Government’s position and putting forward the committee’s own views, heard from over 210 witnesses in person, considered around 270 pieces of written evidence and published 16 reports—all this at a time when, in accordance with the House’s wishes, we have reconfigured our sub-committee system.

I shall now mention a few of the most significant pieces of work we have done during the Session. The Select Committee itself regularly conducts one-off hearings with the Minister for Europe regarding the outcomes of European Council meetings. During the 2012-13 Session there were three such hearings, covering topics as diverse as the G20 growth and jobs action programme, the situation in Mali and the EU’s neighbourhood policy. In addition, we followed up our inquiry into the multiannual financial framework and conducted and completed a new inquiry into the future of European Union enlargement. That report emphasised the importance of enlargement to securing stability and economic prosperity for the European Union itself and its neighbourhood. It analysed the way in which the enlargement process was conducted by the Commission and the Council, and made recommendations about how to make the process more transparent and better understood by European citizens.

I turn to the sub-committees. The Economic and Financial Affairs Sub-Committee has carried out a range of important work but I want to highlight two aspects. First, it has conducted regular evidence sessions following up on the euro area crisis report of 2012, which highlighted concerns about the future of the euro area, raised further questions about the desirability and efficacy of eurobonds and set out how the democratic legitimacy of solutions to the crisis could be ensured. Secondly, the sub-committee undertook a significant piece of work considering the consequences for the United Kingdom of proposals for a European banking union, as well as, of course, other work.

The Sub-Committee on Internal Market, Infrastructure and Employment undertook a timely inquiry into a proposal to set Europe-wide gender quotas for company boards. The committee urged the Commission to bring forward a system for monitoring the numbers of women in senior positions, but warned against quotas as they failed to address the root causes of inequality. It further questioned the Commission’s assertion that national measures to improve gender balance on boards

30 July 2013 : Column 1663

were not working and, following a debate in the House, a reasoned opinion was issued raising concerns about subsidiarity.

The External Affairs Sub-Committee continued to operate at considerable pace, dealing with a wide range of proposals on foreign affairs, development, defence and international trade. During the Session it conducted an inquiry into the EU’s External Action Service, the EEAS, which concluded that the service had been successful in a number of areas, such as developing a comprehensive approach to countries and regions like the Horn of Africa and the Sahel, and in calming the relations between Serbia and Kosovo. However, the committee also highlighted challenges for the EEAS.

The Sub-Committee on Agriculture, Fisheries, Environment and Energy undertook a noteworthy inquiry considering whether the EU’s energy policy met, and would continue to meet, Europe’s basic requirements for energy. The committee expressed some alarm at the uncertainty, complacency and inertia surrounding the need to secure an affordable supply of low-carbon energy, and highlighted concerns about where the necessary investment in energy infrastructure could be found. This report, like several others that I have mentioned, received considerable press interest, but the unreported, perhaps seemingly unexciting yet essential and detailed work of our committees is also vital to ensure that the Government are properly held to account and that Parliament is well informed about EU matters.

The Justice, Institutions and Consumer Protection Sub-Committee completed a high-profile inquiry into fraud against the EU budget. The inquiry report highlighted that the European Union’s antifraud system had a number of weaknesses and that the Commission’s estimates of the cost of fraud to the EU budget in its annual reports were significant underestimates. That sub-committee also undertook an important piece of work in an innovative partnership with the Home Affairs, Health and Education Sub-Committee regarding the block opt-out decision under Protocol 36, which has been the subject of great debate recently in the House. The report of this inquiry has been recognised as a dispassionate, sound analytical tool to aid the Government and Parliament in forming views on the desirability of the opt-out.

Separately, the Home Affairs, Health and Education Sub-Committee examined the operation of the Commission’s global approach to migration and mobility, GAMM, and the implications of the UK’s partial participation in the European Union’s asylum and immigration policies. The committee concluded that the control of immigration from third countries was rightly the responsibility of individual member states, but that a co-ordinated approach by the European Union and its member states was imperative. The committee called for the GAMM to take a more focused approach in future and for the Commission to have a more prominent role internationally, particularly in forums such as the Global Forum on Migration and Development.

30 July 2013 : Column 1664

Noble Lords will no doubt wish to focus on the work of each sub-committee in greater detail but I want to record again my thanks to the sub-committee chairmen and members, and in particular to thank the noble Lords, Lord Teverson, Lord Carter of Coles and Lord Bowness, the outgoing chairmen of sub-committees C, D and E respectively, and welcome the new chairmen of those committees—the noble Lord, Lord Tugendhat, and the noble Baronesses, Lady Scott of Needham Market and Lady Corston.

The work of our committee and its sub-committees depends on the necessary information being provided in a timely manner by the Government, in accordance with its obligations. Although several departments produce excellent Explanatory Memoranda well within agreed deadlines, I regret that Her Majesty’s Treasury has repeatedly fallen short of the expected level of openness and helpfulness to Parliament—a matter which I am, once again, pursuing with Ministers. In addition, we are disappointed to have observed a gradual decline in the quality of the Explanatory Memorandums being produced by a range of departments. To quote one of my own straplines, an Explanatory Memorandum is not much use if it does not explain itself. We do all we can to support departments, and so we should, and yet we can only carry out our role effectively if given the right tools. I have no wish to be pompous but I do need to be firm about it. Despite the current pressures on civil service departments, the necessary resources must be given to these tasks as European Union matters affect the people, business and other organisations of this country in many different ways. In any case, as a matter of principle, government departments should meet the obligations into which they have entered.

Our committees continue to make significant contributions to interparliamentary conferences and work. I am most grateful for the work of COSAC—the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union. It is not the easiest acronym and not always the easiest organisation but it is one which I think is beginning to feel its feet. COSAC meets twice a year in plenary form and is a crucial, if little known, formal mechanism for interparliamentary co-operation.

Furthermore, we continue to benefit enormously from good links with the chairs of the EU scrutiny committees in the other place and the devolved Administrations, not least through our twice-yearly EC-UK meetings. There are also regular tripartite meetings bringing together members of our committee, the European Scrutiny Committee in the other place, and United Kingdom Members of the European Parliament. We met twice during the 2012-13 Session. These meetings raise important issues and allow for an exchange of views and understanding of each other’s work that might otherwise be lacking. Finally, our excellent EU liaison officer and the National Parliament Office provide a valuable link to Brussels and help to build effective relationships with other national parliaments and parliamentarians.

To conclude, what does the current Session hold? As usual, we will be engaging with a wide range of issues in inquiries—including, at Select Committee level,

30 July 2013 : Column 1665

the role of national Parliaments in the European Union, and, among the sub-committees, youth unemployment, genuine economic and monetary union, the Transatlantic Trade and Investment Partnership, and the continuing discussion about the block opt-out—while maintaining our routine scrutiny function.

At a time of ongoing discussions about the European Union and the United Kingdom’s future relationship with it, it is even more important than ever that the House retains its ability to understand, impartially examine, challenge and influence the European policies of Her Majesty’s Government, and the development of European Union policy and law across the whole union. The family of EU committees, which I have the honour to head, is an important mechanism for that, and I commend this report of its work in the Session 2012-13 to the House. I beg to move.

12.45 pm

Baroness Corston: My Lords, I am very grateful for the opportunity to speak in this debate and to follow the noble Lord, Lord Boswell of Aynho, who chairs the main European Union Select Committee of your Lordships’ House with the utmost diligence and courtesy. I want also to place on record that for the majority of the 2012-13 Session Sub-Committee E—the committee on justice, institutions and consumer protection—was chaired by the noble Lord, Lord Bowness. He certainly handed on to me a very well-oiled machine.

It reminds me somewhat of an exchange with the then clerk of the Joint Committee on Human Rights, when I was its founding chair more than 12 years ago. He told me that he had previously been clerk of the Defence Committee, which he described as like Inspector Morse’s Jaguar. It was a classic, needed a little light touch on the tiller and the accelerator, had regular servicing and caused very little trouble, whereas, he said, the Joint Committee on Human Rights was a kit car with the instructions in Hungarian. The committee handed on by the noble Lord, Lord Bowness, was much more like Inspector Morse’s Jaguar and I am very grateful for that.

In the previous Session there was more than enough work for Sub-Committee E. In addition to very substantial scrutiny work, the sub-committee carried out one full inquiry, a joint inquiry together with Sub-Committee F, and a follow-up inquiry. I shall briefly describe each. We conducted an inquiry on combating fraud against the European Union’s finances. It was launched in July 2012. It was timed, in part, to coincide with the publication by the Commission of its proposed directive designed to protect the EU’s financial interests via the criminal law. Evidence was taken from a range of parties, including academics, the United Kingdom police, government agencies, the relevant European Union Commissioner and, after some reluctance, the Exchequer Secretary, Mr David Gauke. I will say at this point how surprised we were that the Government refused permission for us to take evidence from Her Majesty’s Revenue and Customs and it took quite a lot of prodding for the Minister to appear before us at all. In addition, members of the committee travelled to Brussels to take evidence from, among others, MEPs, Eurojust, and OLAF, the European

30 July 2013 : Column 1666

Union’s anti-fraud body. In total, the sub-committee held 13 evidence sessions with more than 30 individual witnesses.

Our subsequent report identified a number of weaknesses in the EU’s current anti-fraud system, including a lack of enthusiasm among the member states in taking their responsibilities to combat EU fraud seriously, weaknesses in the ability of OLAF to fulfil its remit to protect the EU’s financial interests, and a considerable mismatch between the known levels of fraud perpetrated against the EU’s finances. The Commission’s figure of €404 million for 2011 and the committee’s own estimate in the region of €5 billion are at variance to say the least. In their response to the report the Government stated that,

“no amount of fraud should or will be tolerated”.

While they recognise that in some areas the EU’s anti-fraud system needs improvement, overall, however, the Government believe that the system is “on the right track”.

In the course of the inquiry, we were unable to ascertain whether any government department or agency in the UK takes overall responsibility for fraud against the EU’s finances. No one was able to tell us with any confidence how much known EU fraud is perpetrated from within these shores, despite the fact that the individual member states are required to tell the relevant EU authorities when they uncover these offences. In our report, we called for a single government department or agency to take responsibility for fraud against the EU’s finances. However, the Government rejected this recommendation on the grounds that any move designed to place responsibility for the matter on to what they called a “single UK department or agency” would create duplication and slow the process down.

On the sub-committee’s estimate that the level of fraud against the EU’s finances is more likely to be €5 billion as opposed to the €404 million that the Commission estimates, the Government say merely that they are “concerned” by this figure, but that it,

“is not a figure that is recognised”.

They do not say who it is not recognised by, and the response may be somewhat perfunctory.

Finally, in relation to the upcoming proposals for the creation of a European public prosecutor’s office—the EPPO—the Government state that the creation of another EU body is not the answer to the problem of EU fraud. The Government recognise that the current system is “not perfect” but suggest that it works and continues to improve, and that, as far as the UK is concerned, the anti-EU fraud position is “strong”. The Government have stated that the best way of ensuring that the decision to prosecute remains a national matter is not to participate in any EPPO. They also point out that the treaty envisages a system whereby the EPPO will be empowered to,

“investigate, prosecute and bring to judgement”,

those responsible for committing EU fraud, which is a role that conflicts with the UK system where the investigation and prosecution functions are kept entirely separate. The proposals to create the EPPO were published last week and the sub-committee intends to launch an inquiry into these proposals in the autumn.

30 July 2013 : Column 1667

I now turn to the workload of the Court of Justice of the European Union. The sub-committee carried out a follow-up inquiry into this matter in the later part of the Session. We sent a call for evidence to all those who provided evidence during the original inquiry and also took oral evidence from the Minister for Europe. In our report, we expressed concern that the number of cases pending before the Court of Justice continues to rise year on year and we called for the right balance to be struck between the length of time it takes for the court to dispense with a case and the quality of its judgments in order to preserve its credibility. We also found that although the latest statistics from the general court indicate a reduction in the number of pending cases, the number of new cases has more than doubled between 2000 and 2010. Those cases are of great interest, principally to business in this country. We therefore reiterated that there is still a very strong case for increasing the number of judges in the general court and urged member states without delay to find a system for appointing additional judges to safeguard the stability of the court and the quality of the judiciary.

In their response, the Government agree with most of the report’s conclusions. They appear to have shifted their position a little in that they are being more positive about appointing additional judges to the general court as a means to deal with the court’s backlog of cases. Also, the Government now appear to favour a merit-based selection process to appoint additional judges to the general court instead of a rotating system of appointment. The sub-committee hopes that progress will be made soon on resolving the general court’s excessive workload and it will follow developments in this area with interest.

I now turn to the 2014 opt-out decision on Protocol 36 to the Lisbon treaty. I do not intend to go into any of the detail on this inquiry. I will leave that to the noble Lord, Lord Hannay of Chiswick, when he addresses the House. Suffice it to say that on 9 July this year the Home Secretary made a Statement that provided more information about the Government’s approach to the opt-out decision. At the same time, the Government published Command Paper 8671—not the easiest of documents to digest—which sets out a list of 35 measures that the UK will seek to rejoin if the opt-out is exercised and includes Explanatory Memoranda that cover the 130 measures falling within the scope of the opt-out decision. The first debate was held in the House on 23 July and a vote took place on the opt-out decision. The House supported the Government’s decision to opt-out and endorsed the list of 35 measures they would seek to rejoin. A second vote on the final package of measures will take place in due course, following the conclusion of the negotiations with the Commission and the Council.

Sub-Committees E and F have agreed to reopen their inquiry and report to the House on the 35 measures that the Government wish to rejoin. The call for evidence for the reopening of the inquiry was published on 18 July and the deadline for submitting evidence is 11 September. Oral evidence will be taken from Ministers on 9 October. The sub-committee is looking forward to continuing working on this issue, together with the Home Affairs Sub-Committee.

30 July 2013 : Column 1668

As to the reform of Eurojust, last week the Commission published proposals for a regulation on the European Union Agency for Criminal Justice Co-operation—known as Eurojust. The UK opt-in applies to these proposals and the sub-committee will consider them in September.

I turn to our enhanced scrutiny work. At the beginning of the previous Session, the sub-committee took over responsibility for consumer protection and culture from the now defunct Sub-Committee G. In this regard, we scrutinised the European Consumer Agenda and proposals for a common sales law. The sub-committee held an informal briefing with the consumer rights campaigning organisation Which? in October and heard oral evidence from Jo Swinson MP, Minister for Employment Relations, Consumer and Postal Affairs, on the alternative dispute resolution for consumer disputes. More recently, the sub-committee held a private briefing from Ofcom on the Commission’s Green Paper Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values. The sub-committee may continue work in this area in the autumn.

The sub-committee is also conducting enhanced scrutiny on the Commission’s package of proposals on trade mark reform. To this end, the sub-committee has sought comments from the Institute of Trade Mark Attorneys on the proposals, and further activities may continue in the autumn. The sub-committee has been interested for some time in the work of the Fundamental Rights Agency and the possible overlap with the work undertaken by the Council of Europe. Accordingly, the sub-committee will invite the Fundamental Rights Agency to give evidence on its role and the work it carries out. That is expected to take place in late October.

Finally, those noble Lords who were involved in the European Union Select Committee acknowledge that this committee represents and does some of the most important work done in your Lordships’ House. To scrutinise all European Union legislation is an extraordinarily important function. I am proud that this House does it so well and I am grateful for the opportunity to take part.

12.57 pm

Baroness Scott of Needham Market: My Lords, I will speak on the work of Sub-Committee D which, for the uninitiated, deals with agriculture, fisheries, environment and energy. I have had the honour to chair it since the start of this Session in May, but all credit for the past year’s work must go, of course, to my predecessor, the noble Lord, Lord Carter of Coles. I extend my thanks to him and to his committee during that session; he has set a remarkably high bar. I also note that since May, without the benefit of quotas, we now have 50% female and 50% male chairs of the EU sub-committees.

The obvious feature of the past Session for Sub-Committee D was the addition of energy policy to the remit following the reduction in the number of sub-committees. While this was a substantial new policy area, it was very well aligned with the committee’s existing responsibility for climate change policies. As one might expect, the sub-committee approached

30 July 2013 : Column 1669

its new remit with great enthusiasm and, as we have heard, chose to focus on EU energy policy for its principal inquiry during the previous Session.

The energy report was debated only yesterday in Grand Committee, so I will not dwell on content. However, I am pleased that many noble Lords made reference to our report during the debate in Committee on the Energy Bill. It is pleasing that an EU committee report has served the House in its wider context of scrutinising UK legislation—which helps to emphasise the obvious point, that UK legislation cannot be scrutinised in isolation from EU legislation, and vice versa.

Our energy report received widespread press coverage in the UK and beyond and has been referred to by the members of the parliaments of many other member states. Our report was primarily timed to feed into discussions at EU level on its future energy and climate change policy framework. It is pleasing that the report was published in good time to do that. I know that the Commission has been drawing on some of the material and phrases from our report in its consideration of future policy options. Our phrase “the energy trilemma”, to describe the balance between affordability, sustainability and security of supply, is now coming into common parlance.

Beyond the inquiry, the sub-committee’s scrutiny focused on major reforms to the common agricultural policy and the common fisheries policies. Both have demonstrated the long-term added value of the work that we do in this House on EU scrutiny. In the case of fisheries reform, for example, the thrust of the new package very much reflected the sub-committee’s 2008 report. In the case of agricultural reform, the new rural development policy reflects several of the recommendations that the sub-committee made in its Innovation in EU Agriculture report some years ago. While EU decision-making is slow, and it is difficult sometimes to show immediate policy impact, I think that we can demonstrate the long-term beneficial effects of examining policy areas at an early stage of their development.

Not content to just leave these issues as they lie, the sub-committee is undertaking short pieces of work on how these reforms will be implemented. In fisheries, we have recently held evidence sessions to examine issues relating to the new ban on discards of over-quota fish. In agriculture, we will hold several sessions with stakeholders in the autumn to have a look at implementation issues and concerns on CAP reform.

Turning to the sub-committee’s plans for the new Session, we are about to launch a new inquiry into food waste prevention, examining how EU policies can assist rather than hinder attempts to prevent food wastage, and how local, national and EU initiatives can be harnessed most effectively. This will build on previous work that we have done on agricultural innovation and fisheries discards. We hope that this will feed into work being done by the European Commission on food waste and on waste policy more generally. In particular, it is our aim to produce a piece of work that will be helpful to the incoming European

30 July 2013 : Column 1670

Parliament and the Commission next year; it is an attempt to build a “coalition of the willing” with other member state parliaments.

The noble Lord, Lord Carter, and I have been very fortunate to have an enthusiastic and knowledgeable committee backed by a skilled and dedicated secretariat. They absorbed the new area of energy policy with great enthusiasm. However, I flag up my strong belief that any further attempts to reduce EU scrutiny committees should be resisted. From my experience on Sub-Committee B previously and now Sub-Committee D, I do not believe that either could take on a new major policy area without the quality of the work suffering in some way.

The Minister for Europe and the Foreign Secretary have recently flagged up the importance of national parliament scrutiny of EU legislation, and they are right to do that. However, if we are to do such work, it needs to be properly resourced and supported, not just in this House. Frankly, I am dismayed at how much time my small team of three has to spend chasing up government departments which do not provide information on time and within deadlines, or which produce explanatory memoranda that are neither explanatory nor particularly helpful. Above all, we must be very cautious not to see the important issue of national parliament scrutiny of the EU obscuring the need for effective scrutiny of government action within the EU. That is a very important part of the scrutiny role of this House and it is one that we must hold on to.

1.04 pm

Lord Hannay of Chiswick: My Lords, this is a very good and very necessary time for the House to debate the work of its EU Select Committee during the previous Session. Whatever view one takes of the future role of the EU, and of the UK’s role within it, it is surely a debate worth having ahead of what is likely to become an exceptionally intense period of debate about the UK’s continued membership of that Union.

Moreover, it is a time when the role of national parliaments in shaping and influencing EU legislation is coming into sharper focus than ever before. As the noble Lord, Lord Boswell, mentioned in his contribution to this debate, the Select Committee is on the verge of undertaking an inquiry into the role of national parliaments. I suggest that we need to subject our own performance to the very closest scrutiny. I welcome particularly the contribution of our distinguished and effective chair during the period in question, the noble Lord, Lord Boswell, who moved this debate. He has made a major contribution over the period since he took up the chairmanship and I am convinced that he will continue to do so.

This debate also marks the end of the first Session after the reduction in the number of EU sub-committees, to which several previous speakers have referred. The number of sub-committees, which conduct the majority of the Select Committee’s business, was reduced from seven to six. This allowed the House to create new committee activities in other policy areas. While I, like many others, was rather unhappy with that decision, we have nevertheless done our best to make it work.

30 July 2013 : Column 1671

The abolition of Sub-Committee G resulted in the reallocation of its remit among the remaining sub-committees, my own included, expanding their respective workloads accordingly. Despite that, the six sub-committees have taken on and discharged their new roles effectively, as is being highlighted in the contributions to this debate. However, I join the noble Baroness, Lady Scott, in saying that I think that it would be a gross error if any attempt were made to reduce further the number of sub-committees. The elastic is being stretched pretty tight and the burden on our extremely able staff has become greater in the past year. It would be frankly irresponsible to increase it further.

I will focus first on the work of the Sub-Committee on Home Affairs, Health and Education, which I have the honour to chair, and to pay tribute to its members both past and present, some of whom are here today, for their hard work and effective contributions. During the period in question, the sub-committee produced two major thematic reports, one on the EU’s global approach to migration and mobility, normally known as the GAMM, of which more later, and one on the UK’s 2014 justice and home affairs block opt-out decision, which, as the noble Baroness, Lady Corston, indicated, I will say a bit about.

This report was produced jointly with the Sub-Committee on Justice, Institutions and Consumer Protection, first under the able chairmanship of the noble Lord, Lord Bowness, and now under the chairmanship of the noble Baroness, Lady Corston. Incidentally, joint work by two sub-committees of the sort that we did—every single one of our meetings and all our evidence sessions were held jointly—is an extremely unusual occurrence and is not without its logistical difficulties. I believe that its success in this instance is a testament to the flexibility and adaptability of the system and, above all, to the willingness of the members of the two sub-committees to work together as a single team. I must mention that the report that we adopted, which I think was quite influential and will continue to be so, was adopted by unanimity—by people from all three main parties and from none. This was certainly something of an achievement. That joint report appeared in April of this year. We recently reopened the inquiry following the Home Secretary’s Statement of 9 July. A supplementary report to the House will be produced by the end of October, as the Government have proposed.

A third thematic report, on the EU’s next five-year justice and home affairs programme—likely to be known as the Rome programme as it is likely to be adopted under the Italian presidency in the second half of 2014—was announced by the committee yesterday. However, as this deals with matters falling within the present Session, I will make no further reference to it in this debate.

With respect to the report The EU’s Global Approach to Migration and Mobility—the GAMM—when the sub-committee conducted its inquiry into this matter, it was conscious that debates about migration, like migration itself, are not new. However, recently the tone has sharpened and there is a risk that a rational and measured discussion of complex issues will be drowned out by cries of populist outrage, riding on the back of stress caused by the recession.

30 July 2013 : Column 1672

Our report sought to avoid falling into that trap. The committee’s view was that, given the current and prospective demographic challenges facing Europe, member states, in particular those with skills shortages, will need to be flexible in the operation of legal migration from third countries in order to secure the economic growth and competitiveness that they desperately need. At the same time, we also recognise, rightly in my view, that member states retain the primary decision-making responsibilities in this area, including determining the number of third-country migrants they choose to admit to their territory. We did not suggest that there should be any change to that, and nor did any of our interlocutors, including the Commission and the European Parliament.

The report also focused on a specifically UK policy choice: the Government’s inclusion of international students in their current policy objective of reducing net migration to the UK by 2015 to the tens of thousands per year. My committee was one of five Select Committees of the Lords and Commons, the chairs of which wrote to the Prime Minister last January to argue that it made no sense at all to include genuine international students within the public policy scope of the Government’s immigration policy, and that by so doing the Government were risking serious damage to what is, after all, one of the UK’s most valuable, successful and vibrant invisible exports. I have not yet heard a single convincing argument in support of that policy, and I ask the Minister to address this matter when he winds up the debate.

I agree that yesterday’s announcement of an international education strategy by the Minister for Science and the Business Secretary was a step in the right direction. However, a good deal more than warm words will be needed if the higher education sector’s contribution to our involvement in the global race is not to be undermined by the Government’s immigration policy. I noted that the Secretary of State for Business, in an interview at the weekend, said what I believe: namely, that regarding students as immigrants is absurd.

I return to the important matter of the block opt-out. I will not revisit the complex arguments for and against it, nor delve into the byzantine complexity of the issue’s component parts, which the House had ample opportunity to debate as recently as 23 July, and will no doubt return to again before the end of the Session. Instead, I will focus on the process. On parliamentary engagement and handling, the Government’s approach to the opt-out decision has thus far been notable in a number of respects—but, alas, for all wrong reasons. Since the Home Secretary made her initial statement to Parliament about the matter last October, the committee has been persistently denied official information to aid its scrutiny of this important matter. Deadlines have continually slipped, and attempts to elucidate a coherent government position and rationale have proved elusive.

As noble Lords will be aware, the situation finally improved only on 9 July, when the Home Secretary made a further Statement about the Government’s intentions in this area. However, any feeling of welcome was again undermined by the extraordinarily short period allowed to this House before we were asked to debate and vote on exercising the opt-out. I admit

30 July 2013 : Column 1673

that we were allowed a bit longer than the House of Commons, but not much. That was compounded by the Government’s decision to respond to the committee’s April report more than a month late, and only hours before the debate that took place on 23 July. I hope that the Minister will give an assurance of more punctilious behaviour in the future handling of this matter. I ask him to undertake in particular to keep the House regularly informed of the progress of negotiations with the Commission and the other member states once they formally begin in early November.

In addition to these two major inquiries, my sub-committee also conducted enhanced scrutiny of the Commission’s proposal for a revised tobacco products directive. This involved taking oral evidence from pro and anti-smoking organisations and from Public Health Minister Anna Soubry MP, as well as receiving a large volume of written evidence. While public debate in the UK has focused on the contentious matter of plain packaging, I remind the House that provision for this does not feature in the proposed directive. It will be left as a matter for individual member states to decide.

The output of the process of enhanced scrutiny was a detailed and well received letter to the Minister, outlining the sub-committee’s position on the proposal, which was broadly supportive. This work has been followed up in the current Session with another round of enhanced scrutiny of the Commission’s related proposal for an EU cigarette-smuggling strategy, on which oral evidence has been heard from officials at the EU’s anti-fraud agency, OLAF, and at Her Majesty’s Revenue & Customs. I will say, in advance of our taking that further, that what the noble Baroness, Lady Corston, said about her sub-committee’s inquiry into OLAF showed again how difficult it is to co-ordinate all parts of the British Government that have an input into this area. I am sure that we will address that when we write to Ministers after the recess.

In conclusion, I turn briefly to a matter that falls outside the purview of my sub-committee, and which relates to the Government’s balance of competences review—a matter dear to the heart of the Minister who will reply to this debate. While the EU Committee as a whole, and its sub-committees, have not engaged directly with this review, my sub-committee has made recommendations relevant to the review in both its recent reports: the one on the GAMM and the one on the block opt-out. It expects these to be taken into account by the review’s current second semester, which will include a report on free movement, which was covered in our GAMM report, and in the forthcoming third semester, which will include a report on policing and criminal justice. I hope that those will both be taken on board, and I hope that the Minister will give an assurance that that will be done.

On free movement, the committee’s GAMM report, which I discussed earlier, concluded that the free movement of persons is fundamental to the structure of the EU and is an integral part of the single market, with revision of its terms in the treaty being neither desirable nor feasible. The logic of producing the review’s report on police and criminal justice matters after the Government had made their decision to opt out of a number of existing pre-Lisbon policing and criminal

30 July 2013 : Column 1674

justice measures totally eludes me. After all, both the block opt-out decision and the decision to seek to rejoin 35 measures are precisely designed to determine the balance of competences in this area—so why on earth did we not conduct the review before attempting to take the decision?

1.18 pm

Baroness O'Cathain: My Lords, I am grateful that the occasion of this debate on the European Union Committee’s 2012-13 report gives me two opportunities. The first opportunity is to pay tribute to the work of the European Union Committee chairman, the noble Lord, Lord Boswell, for the important work of scrutiny of EU legislation. The fact that so much of our legislation is directed from the European Union—from Brussels—or amended in response to the deliberations of the European Parliament makes it essential that we keep a watching eye on all that goes on.

The European Union Committee does a great job, mainly behind the scenes, in ensuring that all EU proposals, directives, regulations, information—usually called “superinformation documents”—and the rest are scrutinised. The noble Lord, Lord Boswell, has a very tough responsibility, but he is ably supported by the clerk, Jake Vaughan, by legal advisers and by staff, who prevent anything slipping through the net—or the “sift”, as it is commonly called. The House owes them all a great debt of gratitude.

As the noble Lord, Lord Boswell, described, the scrutiny process is carried out by six sub-committees. Today’s debate therefore also gives me the opportunity to enlighten Members of the House about what goes on behind the scenes in one of those six sub-committees. I act as chairman of EU Sub-Committee B, whose remit is the internal market, infrastructure and employment. I am pleased to have the opportunity of sharing with the House the highlights of the 2012-13 Session.

Before doing so, I must thank all current and past members of the sub-committee who have worked so hard, week after week—and we do meet weekly—and all of whom have contributed greatly to our work in this Session. Due to them we have accomplished much, enjoyed our Monday afternoons, and developed a great atmosphere of mutual respect. That may seem too good to be true but believe me that it is so. Attendance is excellent and even yesterday there were minor regrets—I have to say minor—that we were not meeting again for many weeks. I think we all feel that we need this break and are looking forward to buckets, spades, sandcastles and paddling as well as a well earned break from the wave after wave of directives, regulations, and other documents which pile up each week awaiting scrutiny.

We were sad to say au revoir to the noble Baroness, Lady Buscombe, the noble Lord, Lord Elton, and the noble Baroness, Lady Scott, who is now chairman of Sub-Committee D. I thank them all. We gladly welcomed the noble Lords, Lord Cotter and Lord Freeman. The noble Lord, Lord Freeman, previously chaired Sub-Committee B but has never said, “In my time we did x, y, and z”, although I am sure that he has been tempted to do so. We also gladly welcomed the noble Baroness,

30 July 2013 : Column 1675

Lady Hooper, who came to us from Sub-Committee A. As an aside, the newcomers—bringing specific, most valuable experience and expertise—seem to have moved seamlessly into our work patterns and schedule.

Of course, without our clerk, policy analyst and committee assistant we could not have coped. All three were new to us but, yet again, the powers that be managed to appoint exactly the right persons for each of these critical roles. I can safely say that without each of them our work output would be well below that which we have achieved and they are universally brilliant in guiding us, working indefatigably, anticipating our needs, filling in the gaps of our knowledge on the workings of the EU, and ever ready to go that extra mile. They do all that plus they are so nice and, at times, funny. Yes, we are a happy, productive, determined team and I feel deeply honoured to be their chairman.

During the year we completed two new inquiries and published the subsequent reports. The first inquiry was on women on boards, and we published our report on 9 November last year. This subject has been debated several times in this House and, indeed, it seldom seems to be off the business and other pages in the press. We regard it as unfinished business as we are now told that the final decision will not be taken until November this year. This is quite strange because there was a delay in coming clean about what the directive was going to be in November of last year, so it indicates that there is quite a lot of disagreement both in the Commission and in the Parliament. Behind the limelight, however, we continue to encourage other member states to take our line—namely, no quotas—while suggesting that the Commission bring forward an EU-wide system for monitoring progress.

What did we learn from this inquiry? We certainly developed better engagement with other parliaments, greater use of video conferencing, establishing links with the Commission, all of which were most satisfactory. Time spent in deepening understanding and making and keeping alive contacts is time well spent and—with the greater use of modern technological developments—does not necessarily entail expensive time-wasting travel. Similarly we have initiated and maintained mutually respected links with officials in Whitehall in the various departments who are responsible for the sectors of our very wide remit. Our dealings with departmental heads and the coal face have led to much greater understanding and are a terrific help in adding to the ultimate value of our scrutiny role. The subject of Explanatory Memoranda has come up already in this debate and this has been a deeply discussed issue. Certainly one or two departments are already beginning to produce documents that we can understand, so they are Explanatory Memoranda.

The second inquiry was on the effectiveness of EU research and innovation proposals, and we published our report on 30 April. We highlighted the fact that the EU’s competitiveness has been, and is, increasingly threatened by the emphasis placed, and work undertaken, in emerging economies. We focused on the ability of the EU to compete and retain its reputation and leadership in this sector. It was a short inquiry but we received a great deal of interesting evidence from a very wide range of witnesses including those from the

30 July 2013 : Column 1676

SME sector—the sector on which are pinned the hopes of so many of us for growth and job creation. This is ongoing. The Government response has been received and we hope to receive the response from the Commission before we debate the report in the autumn.

What did we learn from this inquiry? It was very challenging for the committee. It dealt with an important and broad subject in a relatively short time—three and a half months between the call for evidence and publication of the report. I have to say that it was a steep learning curve for those of us who feel scientifically challenged. However, we had strong help from certain members of our committee who are leading lights in this area. This is a great example of the very wide breadth of expertise which is available in this House.

I now turn to other work. The committee believes that it is most important to revisit our previous work. For example, we had a meeting with the incumbent Minister of Transport to address the lack of government engagement in our previous report on the Channel Tunnel—another item that is back in the news. We also had informal, information-gathering talks with Deutsche Bahn and Eurotunnel. Revisiting work is scheduled for the Women on Boards report as it continues through the EU legislative process. We are still inclined to participate in the debate, following the developments since the publication of our report.

During the Session the committee made history, publishing two subsidiarity reports under the reasoned opinion mechanism introduced in 2009 by the Lisbon treaty. Incidentally, in the four years since 2009 only four such reports have been published by the UK. We had two of them in the space of about three months— on aid for the most deprived and gender balance on boards. The issue of subsidiarity has provoked much discussion and debate in the committee, and in the House, about the meaning of this difficult concept. One example is the Oral Question on subsidiarity asked by the noble Lord, Lord Kakkar, on 5 March 2013.

What about current and future work? We plan enhanced scrutiny on EU migrants. The Minister, Mark Harper MP, gave us valuable evidence a week ago. Our next big inquiry will be on youth unemployment. We shall launch a call for evidence in September, and we had a scoping meeting yesterday to discuss the shape of the inquiry and the potential witnesses.

To conclude, I am sure that we are no exception to the other sub-committees in that we take our work very seriously. We are committed to ensuring that the quality of our work is beyond reproach. We are dedicated to providing the best scrutiny to assist our Government to play a leading, constructive role in the EU and to work for the best outcomes, not only for the over 500 million inhabitants of the 28 member states but, particularly, for the citizens of the UK within the EU. Last but by no means least, we will continue to maintain the high reputation of the House of Lords EU Committee in EU circles and elsewhere.

1.28 pm

Lord Harrison: My Lords, I, too, pay tribute to the noble Lord, Lord Boswell of Aynho, for his excellent stewardship of the Select Committee, and for his

30 July 2013 : Column 1677

encouragement for us to think outside the box sometimes, in ensuring that our work is mirrored in the work of the House as a whole. I say to both our Front Benches—I give an example of the Tyrie commission on banking that was recently published—that we are going to see the advent of the Liikanen proposals that will come before us from the European Union, and are not always sure that things done on the European scene in the single market are matched in the way that they should be by the work in this House. I hope that we in the Select Committee can promote that process even more urgently.

Some of the important elements of the Economic and Financial Affairs Sub-Committee of the European Union Committee that I chair include the European banking union, on which we published a major report in December 2012, led by the President of the European Council, Herman Van Rompuy in his four presidents’ report, backed up by the European Commission’s blueprint.

Suggestions were for a proposed three-pillared approach; that is, a single supervisory framework, a single resolution mechanism which was recently published, and a single deposit insurance mechanism. However, the last of those three was quickly dropped under German pressure and progress on the second, as I have said, has been recently published. As such, the proposals initially were set out only in relation to the first pillar, the single supervisory framework. The committee’s report reflected on those proposals as well as on the further steps towards banking union that were required. We undertook a very deep inquiry which included evidence from the President of the Council, Herman Van Rompuy; the Commissioner for Internal Market and Services, Michel Barnier; the vice-president of the European Central Bank, Vitor Constâncio; and the chairman of the European Banking Authority, Andrea Enria. I should also say that when we were in Brussels we took advice on the European Banking Union from Sir John Cunliffe. He, of course, has now been nominated as the new Deputy Governor of the Bank of England.

The committee found that a European banking union was urgently required to restore credibility to the euro area banking system and to break the vicious circle between banks and sovereigns. Although the UK has stated that it would not participate, the consequences for this country could be enormous. The committee warned of the significant risk that the UK could be marginalised as banking union participants moved towards ever-closer integration. This, in turn, threatened to fracture the single market as the authority of EU’s 27 bodies, such as the European Banking Authority, came under threat. The committee warned that the Government’s assurances about the impact on the City may prove to be misplaced. It called for the Government to ensure that London’s pre-eminence as a financial market was not imperilled and that the integrity of the single market was retained. UK isolation in such debates would be disastrous.

The committee also expressed regret that the three-pillared approach was so quickly undermined under political pressure. However, it welcomed the single supervisory mechanism proposals as a significant first step. It agreed that the ECB should take on supervisory

30 July 2013 : Column 1678

responsibility over euro area banks but warned that the concentration of so much power in one institution meant that powerful safeguards needed to be put in place, and that there should be no conflict between the European Central Bank’s supervisory and separate monetary policy tasks. Indeed, the ECB should be accountable to the European Parliament and to national Parliaments in the exercise of its supervisory powers, and there should be equality in the decision-making process within the ECB between the euro area and the non-euro area participants and the role of the European Banking Authority in representing the 27 member states must not be undermined. It now represents the 28 member states.

The committee has not rested on its laurels since publication of the report. It has engaged in several rounds of correspondence with the Financial Secretary to the Treasury as a deal on the single supervisory mechanism emerged, which, in spite of some of our concerns about the bail-in deal, is in itself an undoubted achievement. We have given particular consideration to changes to the voting arrangements in the EBA and the so-called non-discrimination clause, which the Minister argued would be a significant achievement and safeguards against any restriction of the UK’s role as a financial centre of the single market. However, we were concerned that such safeguards were not as watertight as thought. There will be a review of voting arrangements if and when there are four or fewer non-participating member states. As recent developments with Latvia remind us, all but two member states are under a legal obligation to join the single currency.

We examined banking union in the context of the Commission’s broader proposals to strengthen fiscal, economic and political union in our new inquiry into genuine economic and monetary union and its implications for the United Kingdom. One notable recent development is the publication of the Commission’s proposal for the second pillar of banking union, the single resolution mechanism. We will continue taking evidence on these important subjects. We have meetings lined up with the Commission’s Vice-President, Olli Rehn, who recently said that that vicious circle between the banks and sovereigns was to be diluted rather than broken. We shall quiz him on that. In Frankfurt, we shall meet Dr Constâncio who we have interviewed previously on these important issues.

The committee published an important report on markets in financial instruments regulations and directives, MiFID II: Getting it Right for the City and the EU Financial Services Industry. We highlighted the threat to the City of London by trying to block off third countries coming into the single market of 28 members; the dangers of the pre-trade transparency that was originally there which threatened to undermine proper competition within these trading instruments; and the algorithmic or high-frequency trading, an issue to which we will have to return under a different title.

We also highlighted the financial transaction tax. At the end of the 2011-12 Session, we published our report, Towards a Financial Transaction Tax?. The committee’s report was highly critical of the Commission’s proposal for an FTT. We argued that it would not fulfil any of the Commission’s five stated objectives

30 July 2013 : Column 1679

and that there was a significant risk that financial institutions would relocate to avoid the tax. The UK had made clear that it would not participate. Yet we warned that an FTT would nevertheless have a significant effect on the United Kingdom, not least because of the obligation placed on UK authorities to collect the tax under EU mutual assistance agreements or under the provisions of joint and several liability.

Follow-up work to that report has consumed much of the committee’s attention during the 2012-13 Session and at the start of the current Session. We criticised the Government and the City for what seemed to us to be an entirely complacent attitude, assuming that such a flawed proposal could never survive, but this seriously underestimated the political will behind the proposal in Brussels. While the Commission’s original proposal was ditched in late 2012, 11 member states, led by Germany and France, announced their intention to implement the FTT under the enhanced co-operation procedure, whereby a smaller number of member states may pursue a proposal, so long as the rights of non-participating member states are not infringed. When the new proposals were published, they included a new provision, the so-called “issuance principle”, whereby financial institutions located outside the European Union would also be obliged to pay the financial transaction tax if they traded securities originally issued within the EU; for example, a trade in Volkswagen shares between London and New York would be caught. This raised concerns about the potential extraterritoriality of the tax and added to the committee’s concerns about the potential deleterious effect on the United Kingdom.

In light of this, we undertook a follow-up piece of work early this year when we urged the Government to consider a legal challenge against the proposal. This finally did the trick and awoke the Treasury from its slumber. Sure enough, the United Kingdom has since launched a legal challenge. Indeed, the Minister has acknowledged,

“that the grounds on which the Government has challenged the authorising decision are all points on which your Committee has previously flagged concerns”.

It is also becoming clear that participating member states are growing increasingly nervous about the impact of the financial transaction tax. Informed observers have predicted that, given the political capital invested in the project, an FTT will survive in some form, but that it will be significantly watered down, possibly to mirror UK stamp duty. We wait to see and, of course, the committee will continue to keep a close eye on developments.

Finally, the euro area crisis: amid these complex legislative proposals the committee has also sought to remain informed on the political and economic context in which the eurozone and the European Union as a whole operates. During the 2012-13 Session we continued with our twice-yearly updates on the eurozone crisis. In January and February 2013, we held a seminar on the effects of the austerity agenda on the EU, which was attended by academics, campaigners, think tanks and a number of EU member state ambassadors.

30 July 2013 : Column 1680

At that time, EU leaders were suggesting that the worst of the crisis was over. In that context, we warned that the biggest enemy in the worst of the crisis was to suggest that the worst of the crisis was over. Complacency is a danger that we must guard against, especially as it can affect the United Kingdom and the integrity of the single market. Your Lordships will be pleased to hear that the committee has not let up on its examination of these issues. Even this morning I have hot-footed it straight from a meeting of Sub-Committee A, where we agreed our latest letter on the crisis, in which we set out our views that the EU tendency to muddle through the crisis may not be enough.

I conclude with this: as others have expressed, we, too, have been disappointed by our relationship with the Treasury and, in particular, the Financial Secretary to the Treasury, Mr Greg Clark. We have been disappointed both by the tardiness of receiving explanatory memoranda and the lack of quality that we should expect from the Government. When he was before us last week, we were so angry with these failures that I threatened from the chair the meeting’s conclusion that we would bind up all his explanatory memoranda in a leather-bound document to be presented to him when he left so he could take them away on his summer holidays and read some of the poor quality explanatory memoranda that we received from Government. Whether he is keen to have that happen, I do not know.

Finally, perhaps I may say that it is a joy to have chaired the committee. I am particularly pleased that Stuart Stoner and Rose Crabtree have been working so hard—as all the members of the sub-committees have expressed. We really are blessed with the very best of help from the young men and women who attend to us.

1.43 pm

Lord Bowness: My Lords, I too thank the noble Lord, Lord Boswell of Aynho, for so comprehensively introducing this report and for his leadership of the Select Committee during this past session. I am delighted, too, that this is the second year running that we are debating the committee’s annual report. I am pleased that it is not purely historic on this occasion, but includes a chapter setting out the future work that the committee and sub-committees will undertake.