Perhaps I may say one other thing about Haass. I am probably the only person here who was involved. We sat talking about the past. The noble and right reverend Lord, Lord Eames, clearly identified the huge emotional capital that people have invested in this issue. People in both Northern Ireland and the rest of the United Kingdom are horrified by what is unfolding here. As I said, we were discussing the past and talking about setting up institutions such as the Historical Enquiries Team, which would have had a mini-police force and would have been able to conduct inquiries. Some people in those discussions knew about

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these proposals but nobody said anything. I can tell the House that this has done huge damage. Who will now sit down with any confidence and discuss these matters when something like this was going on behind our backs? Not only that but does anybody seriously believe that this is the only outstanding issue? It is very corrosive and, unless people come clean and make a clean breast of it, we will never regain the trust.

When we were discussing an amendment moved by the noble Lord, Lord Trimble, last week, the noble Lord, Lord Browne, said in very good faith that we had had the longest period of stable government since devolution started. Of course, he was correct in that, but within 24 hours we had a mini-crisis. It was a resignation that never was, and I am glad that it never was, but the fact is that we ended up with a potential crisis. We should not forget that if the First Minister resigns, he automatically takes out the Deputy First Minister, and I think that there are only seven days in which to replace them. Therefore, by this week we would have had a major crisis and we might have been discussing an emergency Bill to reinstate direct rule. That is just how serious this has been.

The fact that we are saying that we cannot accept amendments because that would interfere with devolution, when in fact the Government are the biggest culprit in interfering with devolution, has to lead us to the conclusion that we need a complete rethink on how we deal with these matters. I have a lot of sympathy—

Lord Morrow (DUP): I thank the noble Lord for giving way. He refers to the potential crisis that unfolded last week. I am sure he accepts that the crisis has not gone away; rather, I suspect that it has been suspended as a result of the Prime Minister’s intervention and his announcement of a judge-led inquiry into the matter. Should that not happen, and should the terms of the inquiry not be satisfactory, then we will go straight back to where we were.

Lord Empey: I think that there is an element of truth in what the noble Lord says, although huge issues relating to the Human Rights Act and the Data Protection Act surround some of the conditions that were attached by his colleagues to the First Minister’s potential resignation, such as the production of a list of names. Somebody else suggested that the letters be rescinded. They have not been rescinded and I do not believe that they will be. The possession of those letters is the issue. The people who possess them can always go to the court and those Acts will be their defence. I doubt whether a court will overrule that.

In her response to the previous amendment, the noble Baroness talked about people having letters and not being investigated. However, what happens if the evidence that existed when the person received the letter is subsequently capable of further interpretation either by scientific advance or other material? What impact is that going to have on those letters, and will it be a satisfactory defence for the people who hold them?

I return to the amendment. Without doing injury to the devolution settlement, we are trying to signal that, if requested to do so, the Secretary of State would

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positively respond to the Assembly by providing a guarantee that opposition status could not be arbitrarily changed by the activities of majority parties at some point in the future. The purpose of the amendment is very simple. I would encourage the Assembly to go down the road of creating an Opposition but it still needs that extra guarantee. The purpose of this amendment is to ensure that that guarantee is sought by the Assembly. It is much weaker than I would have liked but, nevertheless, it does what it says on the tin. It is a response to a request from the Assembly to the Secretary of State after a cross-community vote. Therefore, I believe that it is perfectly capable and compatible with the settlement that we have before us. I beg to move.

Lord Lexden: My Lords, I have supported my noble friend on previous occasions on which he has brought forward amendments designed to strengthen the constitutional basis on which an Opposition would be established in the Northern Ireland Assembly. As he has explained, this is a more modest, scaled-down version of the amendments that have gone before. It still seeks to give effect to the fundamental principle, which is extremely important, on constitutional grounds, as I have said previously. My noble friend and I have listened to the Government’s view. We have held discussions with the Secretary of State. We have sought to meet the points that have been raised to render this amendment as compatible as possible with the Government’s view of the position. I hope very much at this late stage that my noble friend will be able to indicate the Government’s support for it.

Lord McAvoy: My Lords, we come to an issue which was discussed at Second Reading, in Committee, on Report and now again at Third Reading. The creation of an Opposition in the Northern Ireland Assembly already has been discussed extensively at every stage of this Bill but I need to apologise if my remarks sound repetitive. I maintain the position that the Opposition have held before. This amendment acknowledges the powers of the Assembly regarding an Opposition. Behind it there is an understandable concern to prevent the Assembly withdrawing anything it were to grant. However, as I have said so many times before, the Northern Ireland Assembly is a special creation designed to have as many representatives of the community in different shades as possible. It is not the time for this amendment.

I repeat that unfortunately this is not the time to accept this amendment. In June 2013, the Assembly and Executive Review Committee concluded that, as yet, no cross-community consensus had been reached. This followed a government consultation in 2012 that reached the same conclusions. The Assembly must reach a cross-community consensus on the creation of an Opposition before Parliament can consider legislating in this way. Consensus cannot be created retrospectively as this amendment would seek to do. It is for the Assembly to make the first moves towards creating an Opposition.

Lord Kilclooney (CB): The issue is about having an Opposition. Should it be our Parliament making this decision or should it be by consensus within the Northern Ireland Assembly? In taking the latter position, the

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Government are asking some of the five main political parties in Northern Ireland, all of which are in the Government, to resign to become the Opposition. What incentive is there for any of the five parties to resign from the Government? The answer is none: they will never reach a consensus to have an Opposition.

Lord McAvoy: I take a slightly more optimistic view. Whether I have that view or not, the fact of life is that this is for the Assembly. As I mention that, I notice the noble Lord, Lord Lexden, has a smile of experience on his face. I hesitate to say this but it is not yet in the tradition of this Parliament, although I hope that we are on the road to it. Surely the latest stramash—the incident of last week—shows that we are not there yet. But we are on the road and we should be going there.

Lord Empey: I thank the noble Lord. I just get the impression that he is looking at a different amendment. The first line states:

“Following a request to do so arising from a resolution of the Assembly”.

Whether there is a consensus currently or not is irrelevant. Such a request could come only when there is consensus. The amendment refers to “following a request” from the Assembly. Therefore, it can come only when such a consensus is reached.

5.45 pm

Lord McAvoy: The noble Lord is taking great care to quote me but I must remind him of the sentence that I used; namely, that consensus cannot be treated retrospectively, as this amendment would seek to do. It deals with a situation that has not yet been created. I hope that we are still on the road to a continued normalisation of politics.

Lord Empey: The noble Lord has just said that we do not want retrospectively to accept something. We have just passed an amendment anticipating something that the Assembly might do in the future; that is, decide to reduce its size. It is the same thing.

Lord McAvoy: It is a matter of judgment as to whether one takes that point of view or not. I do not share the noble Lord’s point of view. I still insist that the United Kingdom and Northern Ireland are not ready yet. I am repeating myself, although I was trying not to. Last week, I referred to the fact that we are still on that rocky road. This amendment does not have the support of the Opposition.

Baroness Randerson: I thank the noble Lord, Lord Empey, for his introductory speech. I want to deal briefly with the points he made about the letters that were sent. Perhaps I may say yet again that because these were purely factual letters, they were of course non-statutory. Therefore, they were not the subject of any formal transfer provisions in the legislation that accompanied devolution in 2010. The noble Lord asked questions about further evidence and how it would be treated. I refer him to my earlier answer to the noble Baroness, Lady O’Loan, because it is important we remember that this is the subject of part of the inquiry.

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As I have said previously, the noble Lord, Lord Empey, and my noble friend Lord Lexden, have done us a great service in raising the profile of this issue through the various amendments that have been tabled. At Report, I indicated that the Government would consider the matter further and set out their position at Third Reading. I am sorry to disappoint the noble Lords but we will not be supporting this amendment. As I have said previously, the creation of opportunities for responsible opposition in the Assembly would be a progressive step. As a Member of the Government here in Westminster I know only too well how much an Opposition can keep us on our toes. I think that noble Lords have illustrated that point very effectively during the passage of this Bill. It would be a welcome development if similar arrangements were put in place in Northern Ireland. I believe that the Assembly’s reputation would be enhanced if that were to happen.

We are, however, talking about the Assembly’s internal procedures and it is important that we do not make changes to those without, at the least, having consulted the Assembly. I know that I have mentioned this previously but the Government consider that it is important that the Assembly should be consulted. “Consulted” implies that one would take account of their expressed view.

In previous debates, it was noted that the Assembly could provide for an Opposition through its existing standing orders. It was also noted that the rights accorded to an Opposition created in this way could be revoked at the behest of the largest parties in the Assembly. It is right and proper that any Opposition in the Assembly should have the ability to carry out their functions without fear of losing their status by virtue of having challenged the Executive. It is also right that opposition parties should have sufficient status if they are to be truly effective in holding the Executive to account. To the noble Lord, Lord Kilclooney, who asked what incentive there was to become a member of the Opposition, I say that the original amendment of the noble Lord, Lord Empey, envisaged the potential status that would come to opposition parties: that would be part of the incentive.

The noble Lord’s amendment attempts to offer a safeguard in the shape of the Secretary of State’s involvement. I pay tribute to the effort that the noble Lord has expended in refining his successive amendments to the Bill. However, we still do not believe that this amendment is the appropriate means of ensuring more effective opposition. We believe that it would be inappropriate in any circumstances for the Secretary of State to have such a direct role in the internal procedures of the Assembly, as envisaged in the amendment—the more so when the Assembly, as I said, has not been consulted.

The noble Lord will point out that his amendment would allow no role to the Secretary of State unless the Assembly took the first step. Even so, given that the Assembly has not been consulted, our taking this step now could be misunderstood by at least some in Belfast as hostile interference in the Assembly’s procedures. The consequences of that would be negative for the long-term prospects of facilitating opposition. As the noble Lord, Lord McAvoy, said, there has been discussion of this in recent years in the Assembly, and there was

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no consensus. I will add that we also see technical difficulties with this amendment. I would not normally draw attention to them, but we are now at the stage where such difficulties cannot be remedied.

I welcome the comment in Committee of the noble Lord, Lord Browne, that his party was willing to support additional resources and speaking time for genuine opposition. I hope that his party will deliver on this commitment and that other parties in the Assembly will share that view. I am also encouraged by the Private Member’s Bill brought forward by Mr John McCallister in the Assembly, and I hope that it will spur more debate. I hope that the Assembly, when it debates the Bill, will take cognisance of the various points that have been raised here.

In the mean time, the Government will impress on the parties in Northern Ireland their desire to see an effective Opposition in the Assembly and will consider ways in which we might do so. I hope that noble Lords will feel reassured that this is an issue that the Government take seriously and on which we hope to see real and meaningful progress in future. I hope that the noble Lord will feel able to withdraw his amendment.

Lord Empey: My Lords, it is almost as if one is answering a debate on an amendment that one has not actually tabled. The amendment is based on the assumption that the Assembly is the initiator. That was to ensure that no harm would be done to the convention. The Minister also said that of course the Assembly has not been consulted. That is a fair point. However, neither has it been consulted—to my knowledge —about reducing in size to 90. It has not been consulted —nor did it seek to be—on the content of the next two amendments. It appears that we have a law for one process and a totally different law for another.

That is hardly surprising, and dare I say to the Minister—although it is not her responsibility—that the one big thing that the Assembly was not consulted about was what was going on behind its back. That is the elephant in the room, and has been since last week. One can be very picky about what one decides to use as a mechanism for saying that one does not want to do something, but I have to say that the Minister’s arguments were not convincing.

On the technical aspects of the amendment, I accept that there is an issue. One understands that those of us in your Lordships’ House have only limited resources to table amendments; we do not have the power of the Government. The Minister made it very clear in her closing remarks in Committee that she and the Government acknowledged that there was a genuine concern that an Opposition born exclusively out of the Assembly changing its standing orders would be vulnerable. I feel that that point at least has come across. On whether this is the right mechanism to deal with the issue, we have an open mind.

The Minister also indicated that the Government were going to set out ideas on how the matter could be addressed. So far, those have not been set out. I hope that the Minister will shortly be in a position, through the Secretary of State, to set out the Government’s proposals. Like so many other things regarding change, they are all stalled and going nowhere.

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If we have done nothing else, we have raised the profile of the issue. It will not go away. I think that the necessity to have a guarantee that an Opposition cannot be abused by a majority in the Assembly has been accepted by the Minister. Of course, I acknowledge that there are technical issues, to which she correctly drew attention. On that basis, and not on the basis that the amendment does any harm or ill to the Assembly, I beg leave to withdraw it.

Amendment 4 withdrawn.

Clause 10: Civil Service Commissioners for Northern Ireland

Amendment 5

Moved by Baroness Randerson

5: Clause 10, page 9, line 7, at end insert—

“( ) Section 4 of that Act (transferred, excepted and reserved matters) is amended as follows.

“( ) In subsection (2), for “and (3)” substitute “to (3D)”.

“( ) After subsection (3) insert—

“(3A) The Secretary of State shall not lay before Parliament under subsection (2) the draft of an Order amending paragraph 16 of Schedule 3 (Civil Service Commissioners for Northern Ireland) unless the Secretary of State has, at least three months before laying the draft, laid a report before Parliament.

(3B) The report under subsection (3A) must set out the Secretary of State’s view of the effect (if any) that the Order would have on—

(a) the independence of the Civil Service Commissioners for Northern Ireland;

(b) the application of the principle that persons should be selected for appointment to the Northern Ireland Civil Service on merit on the basis of fair and open competition; and

(c) the impartiality of the Northern Ireland Civil Service.”.”

Baroness Randerson: My Lords, the amendment refers to the appointment of Civil Service Commissioners. At present, that is an excepted matter and this function is exercised by the Secretary of State on behalf of Her Majesty. The functions and procedures of the Civil Service Commissioners are currently reserved matters.

Northern Ireland has had its own Civil Service since the 1920s. This was referred to in our previous debate. It is quite distinct from the Home Civil Service that serves the Westminster Government and the Scottish and Welsh Administrations. The Northern Ireland Civil Service itself is and always has been a devolved matter, but a decision was made in 1998 not to devolve the Civil Service Commissioners for Northern Ireland for the time being. They, like their Whitehall counterparts, are responsible for ensuring that appointments to the Northern Ireland Civil Service are made on merit and on the basis of fair and open competition.

Clause 10 moves the appointment of the commissioners from the “excepted” category in Schedule 2 of the Northern Ireland Act 1998 to the “reserved” category. Appointment of the commissioners would then be in the same category as their functions and procedures. The Bill does not propose any immediate devolution

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of these responsibilities. The change it makes in constitutional categories opens the way to devolution at some future point following votes in the Northern Ireland Assembly and here.

6 pm

Many matters at the time of the Good Friday agreement were regarded as too sensitive to devolve. There were, in this case, concerns about safeguarding the independence of the Civil Service in the face of political pressures. Since then, the Executive and the Assembly have taken on many sensitive responsibilities, not least the field of law and order. It does not seem unthinkable to us that at some point the Civil Service Commissioners—like the Human Rights Commission, which we will come to shortly—should pass under the aegis of the devolved institutions.

However, it has become clear in debates, as we have carefully noted, that there were acutely felt concerns about the implications. I think we are all in agreement that impartiality and merit in the NICS are of paramount importance and that the commissioners, whatever their constitutional status, should be in a position to protect those principles. Protections for the Home Civil Service were enhanced in the Constitutional Reform and Governance Act 2010, but there is nothing similar for the Northern Ireland Civil Service. I outlined on Report some elements that we envisaged incorporating in an amendment, and I have previously indicated that any future devolution of responsibility for the Civil Service Commissioners would be subject to prior public consultation. This is not a statutory matter, but I reiterate that commitment here today.

This amendment requires the Secretary of State to lay a report in Parliament at least three months prior to bringing any order on the devolution of responsibilities in respect of the Civil Service Commissioners. The intention of that time restriction is to ensure that there is adequate time for both Houses to debate the matter and influence the Government’s proposals before any devolution order is brought. A number of noble Lords, including the noble Lord, Lord Butler, and my noble friend Lord Alderdice, had concerns that a vote on any order would be on a simple yes or no proposition and therefore a blunt instrument. Our new proposal is intended to guarantee time for a wider debate in advance of a devolution order being brought forward. I confirm now that we as a Government will facilitate such a debate if and when the time comes and take into account its outcome in deciding whether to bring forward a devolution order.

The amendment also requires the Secretary of State’s report to set out the effect such an order would have, in her view, on the impartiality of the Northern Ireland Civil Service, including on the merit principle for appointments and the independence of the Civil Service Commissioners. Again, we have gone further in the amendment than our initial proposals. The responsibility for the Northern Ireland Civil Service is a transferred matter, and changes there would be for the devolved institutions. However, the amendment recognises that the House would wish to take into account the overall arrangements governing the Northern Ireland Civil Service, including the safeguards for the merit principle and impartiality,

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before making a decision on whether or not to devolve the appointment, functions or procedures of Civil Service Commissioners.

Although we cannot amend much of the law relating to the NICS itself in this Bill, as it is a devolved matter, that does not mean that Parliament cannot take account of the overall position of the Civil Service in Northern Ireland before making a decision relating to the Civil Service Commissioners. This amendment will ensure consideration of safeguards in respect of the Civil Service in the devolved sphere before devolution takes place. I hope that noble Lords will agree that this amendment provides an appropriate mechanism for scrutiny of any future proposals to devolve responsibility for the Civil Service Commissioners and that they will feel able to support it.

Lord Bew (CB): My Lords, I thank the Minister for the discussions on this matter. The language that she is now putting before the House is better than the language we had before. However, I remain uneasy about the necessity for this provision at all. The noble Lord, Lord Alderdice, referred to a spirit which runs throughout the Bill, of a certain disconnectedness from the affairs of Northern Ireland. The noble Lord, Lord Empey, has also raised issues about elements within the Bill for which there is no obvious hunger in Northern Ireland. This is one of them. I am unaware of any particular local pressure, inside or outside the Assembly, on this point.

None the less, if there is to be devolution in this area, it is important to send a signal. I am very grateful to the noble Baroness for meeting me and for having discussions with other noble Lords who are concerned about this matter. I am also very grateful to her officials for the work that they put in on this. At least now we are sending a signal that this Parliament believes, in principle, in the importance of the independence of the Civil Service Commissioners and that appointment to the Northern Ireland Civil Service should be on an impartial basis and on the grounds of merit. It is important that a clear signal should continue to be sent out by Parliament on this point. It is certainly clearer in the language that the Government are currently offering than it was when the Bill first came before this Chamber. I thank the noble Baroness for her help in this matter.

Lord Alderdice: My Lords, I, too, thank my noble friend. In Committee and on Report I put my name to an amendment which was originally piloted by the noble Lord, Lord Empey, because of our concern about the impact at home in Northern Ireland. A number of things that my noble friend has said, and which are in the amendment, are extremely helpful. First, there is the fact that the Secretary of State would be required to produce a report. The contents required to be in the report are also spelt out, as is the fact that it would have to be done three months beforehand. Furthermore, my noble friend has given undertakings that if we find ourselves in that situation, the Government will facilitate the opportunity for debates on the report in this House and in another place, and will take account of the content of those debates. That is a very helpful undertaking.

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I think that my noble friend has also indicated something which goes a little further and which I really welcome—that any expectation that the Northern Ireland Executive might have that such legislation will be passed here will to some extent depend on whether there has been demonstrable progress on the Northern Ireland Civil Service rules and bringing them up to date with the arrangements on this side of the water. I am rather encouraged by that because one of the concerns that I expressed at a previous stage was that the Civil Service in Northern Ireland—for which I have enormous respect—has not necessarily kept up with some of the progress on this side of the water as quickly as it might have done. My noble friend has indicated—not just in the amendment but in her undertakings and her description of the amendment—that this could be a very helpful lever if we come to a time when the Northern Ireland Executive were eager to make progress in the direction of the amendment and this clause in the Bill.

Not only have the Minister and her officials listened, taken account of what was said and obviously consulted the Secretary of State but there has been a very positive response. I welcome that and I certainly support her amendment.

Lord Empey: My Lords, I am glad that we brought this matter forward for discussion. There is no doubt that the proposals in front of us are infinitely better than the ones that were in the Bill as originally drafted. However, I am still not clear what the driving force behind this is. It was left as an excepted matter quite deliberately and for very good reasons, and in my opinion those reasons are as valid today as they were then. It would be impossible for me to avoid pointing out to the noble Baroness that there has been no consultation with the Assembly on this, and it is not an issue that has any traction except within the small group of people who are directly affected. But the proposals in front of us today are a lot better than what was there before. Some protections have been put in. I am quite sure that reference to the 2010 Act could very well have been the mechanism to sort the whole thing out at the end of the day. Nevertheless, I thank the noble Baroness for listening to us and for acting on what has been said. At least we have put in some protections that were not there before and, I hope, will be of benefit in the long term. On that basis, I support the amendment.

Lord Brooke of Sutton Mandeville (Con): My Lords, I was greatly encouraged by the Minister’s offer when we previously debated this matter to have conversations with those of your Lordships who had taken part in the earlier debate on this subject. It is perfectly clear that, unlike with Amendment 1, we are not talking about a secret deal. There has clearly been openness in discussing this. It has obviously been extremely constructive. I infer that there is approval of where we now are.

I have only one tiny niggle. I hold no proxy whatever for the noble Lord, Lord Butler, but those who have been taking part in these debates will recall that, in our most recent discussion of this subject, he raised the question of why the Government appear to have resiled

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from the position that the Minister had expressed in Committee. Is the Minister confident that the noble Lord, Lord Butler, is now satisfied—or would have been satisfied, had he been here—by what she said in moving the amendment?

Lord McAvoy: My Lords, at the risk of upsetting the noble Lord, Lord Empey, I join him in supporting this amendment. It would have been a lot better if we had discussed this on Report but the flexibility shown by the Minister, referred to by other noble Lords, indicates that once again there has been a success in talking to people.

As the noble Lord, Lord Alderdice, said, this amendment requires the Secretary of State to lay a report in Parliament at least three months prior to bringing any order on the devolution of responsibilities in respect of the Civil Service Commissioners. The report should set out the Secretary of State’s view of the effect such an order would have on the impartiality of the Northern Ireland Civil Service, including the merit principle for appointments and the independence of the Civil Service Commissioners. The amendment marks a move towards ensuring the impartiality of the Northern Ireland Civil Service, and we welcome it.

There are key differences between the Northern Ireland Civil Service and the Westminster Civil Service. Senior civil servants in Northern Ireland have a higher profile than their counterparts in the rest of the United Kingdom. This is partly because, particularly when the Assembly has been suspended or there have been different governance arrangements, it has often been a civil servant who has undertaken the role that Ministers have here in defending or promoting policies and engaging with the public. The difference is cultural and practical. Due to these marked differences, the Northern Ireland Civil Service would benefit from a requirement for the Secretary of State to produce a report that outlines the effect such an order would have on the impartiality of the Civil Service, including the merit principle for appointments and independence of the Civil Service Commissioners. I am delighted to welcome the amendment on behalf of the Opposition.

Baroness Randerson: I thank noble Lords for their comments. Specifically, I thank the noble Lord, Lord Bew, for the very constructive comments he has made on this throughout. My response to his specific question is that so much of the Civil Service in Northern Ireland is already either devolved or reserved and this was the one aspect that was still within the purview of the UK Government. Therefore, it is the logical next step to put this in the same category as the procedures and functions of the Civil Service Commissioners.

I say to my noble friend Lord Alderdice and the noble Lord, Lord Empey, that there are now strong safeguards on the condition and position of the Civil Service Commissioners. Indeed, this could be a real improvement on the status quo, and it is important. The noble Lord, Lord Brooke, mentioned the comments made by the noble Lord, Lord Butler, in an earlier debate. The noble Lord, Lord Butler, has not pursued those issues with me directly but I hope that he is now content, particularly because of the commitment in this amendment to provide for a debate on the Secretary

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of State’s report. That ensures that the views of noble Lords who have a particular interest in this issue will be heard. I commend the amendment to the House.

Amendment 5 agreed.

6.15 pm

Clause 11: Northern Ireland Human Rights Commission

Amendment 6

Moved by Baroness Randerson

6: Clause 11, page 9, line 13, leave out from “matters),” to end of line 16 and insert “after sub-paragraph (a) insert—

“(aa) in Part VII, sections 68 to 69A, 69C to 70, 71(2A) to (2C) and Schedule 7;”.”

Baroness Randerson: Noble Lords will probably be relieved to hear that my comments on this amendment will be rather briefer than they were on the previous one on the Civil Service Commissioners because there are considerable parallels between the two.

Serious concerns were expressed in our earlier debates about the possibility of devolving responsibility for the Northern Ireland Human Rights Commission. These concerns were in many respects analogous to those that were outlined concerning the Civil Service Commissioners. In this case, too, we believe that those concerns deserve a very serious response. We have revised our approach in a similar way, so, as I said, I will make my comments as brief as is in accordance with being clear—I hope. As with the Civil Service Commissioners, I outlined a possible approach on Report. We have taken that approach substantially further in the amendments we have now tabled.

To recap, responsibility for appointments to the Northern Ireland Human Rights Commission is currently an excepted matter, as are the commission’s functions. Clause 11 moves these responsibilities from the “excepted” to the “reserved” category. The Bill does not, however, propose the devolution of these responsibilities at this time. In previous debates, concerns were expressed in respect of the commission’s independence should it ultimately be devolved. Your Lordships regard this as being of great importance. We share those concerns and are clear that they must be addressed before devolution. I indicated previously that any future devolution of responsibility for the Northern Ireland Human Rights Commission would be subject to public consultation. That remains the case.

These amendments require the Secretary of State to lay a report in Parliament at least three months prior to bringing any order on the devolution of responsibilities in respect of the Human Rights Commission. As I have set out in relation to previous amendments, that is intended to ensure that there is adequate time for debate and for noble Lords to influence the approach being taken in Belfast before a devolution order is laid. As before, we undertake to facilitate a debate at that point. I hope your Lordships will agree that this is a reasonable approach to ensure proper consideration and scrutiny.

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These amendments would require that the Secretary of State’s report should set out the effect, in her view, that such an order would have on the commission’s independence—which is of cardinal importance to its work. I recognise the emphasis that the commission places on its compliance with international best practice, currently embodied in the Paris and Belgrade principles. My noble friend Lord Alderdice referred to this in speaking to his amendment on Report. To reflect these concerns, this amendment would also require the Secretary of State to set out in her report the effect, in her view, of devolution on the commission’s compliance with internationally accepted principles in respect of national human rights institutions.

An important issue bearing on the independence of the commission, and dealt with in the principles, is the relationship of the commission and the Northern Ireland Assembly. These amendments would therefore require the Secretary of State in her report also to address the effect of devolution on that relationship. I hope noble Lords will feel we have reflected their concerns expressed here in debate and are able to support this amendment. I beg to move.

Lord Alderdice: My Lords, I again welcome the amendments brought forward by my noble friend the Minister. I accept what she said about this device or resolution being similar to that in the previous question on the Civil Service Commissioners. However, the matter at issue here is very different and one of much more substantial importance. Indeed, the Minister will recall that at Second Reading this issue was one of two that I identified as being absolutely critical. In Committee, I spoke against the question that the clause should stand part of the Bill. On Report, I came back with an amendment on the question and I am very grateful to my noble friend the Secretary of State and her officials for being prepared to engage on the question.

I do not want to repeat what I said before but I point out the signal importance of this issue and its difference from the previous one. Right back in the late 1960s and early 1970s, there was pressure in Northern Ireland for a Human Rights Commission. In 1973, when the legislation was passed, a Standing Advisory Commission on Human Rights was established. That was not sufficient but it was the best that could be achieved at that particular time. It produced some very worthwhile reports, some of which were acted upon in part and some more fully. Some very distinguished colleagues, not least my predecessor as leader of the Alliance Party, Sir Oliver Napier, was a chairman of the Standing Advisory Commission on Human Rights. Eventually, we moved on. We had a Human Rights Commission for Northern Ireland. The point is that this is not something that came in with the Good Friday agreement. It did not arise lately. There was absolutely critical demand and pressure for it from the 1960s and onwards. It continues to be of signal importance.

In her amendment, my noble friend has very helpfully identified a similar procedure to the previous issue. The Secretary of State would, at least three months in advance, bring forward a report identifying three very important issues: the independence of the Human

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Rights Commission, its relationship with the Northern Ireland Assembly, and the international commitments and responsibilities of Her Majesty’s Government. That is extremely good. She has also said, again very helpfully, that in the event that your Lordships’ House wanted to debate such a report, it would be given an opportunity by the Government to do that, and that the content of that debate would be taken seriously in the construction of the draft legislation. That is all extremely helpful and very welcome.

However, I feel strongly about the significance of this issue. If the Government did not bring forward a satisfactory report or set of proposals, this is of such significance that it is the kind of thing that one would be prepared to vote down. Not many things come forward here in terms of Orders in Council where your Lordships’ House is called on to use what we might describe as the politically nuclear option. This matter of the Human Rights Commission is of such importance that a Government—not just this one; it is likely that a subsequent Government might find themselves in this position—should not be under any illusion that if this matter were to come forward in an unsatisfactory way, they would face very serious opposition. I would be part of that opposition.

My noble friend has listened seriously to the concerns of the moment. The Government are clearly intent on making this facility available to the Northern Ireland Executive, whether or not they wish to take that up. The Minister has listened seriously and there has been a reasonable response. If all the things in this amendment are fulfilled as she described I would be more optimistic that a positive outcome might be possible. On that basis, I support her amendment.

Baroness O'Neill of Bengarve (CB): My Lords, I think I support the amendment. I see that it takes account of the comments from the Joint Committee on Human Rights. It would help if the Minister could give the House one assurance—I do not know whether she can.

New subsection (3D)(b) refers to,

“the application of internationally accepted principles relating to national human rights institutions”.

That is exactly the right criterion. I declare an interest as chair of the Equality and Human Rights Commission of the UK. In the UK we are in an exceptional position in that three human rights bodies are brigaded together for the purpose of receiving a certain status. I am happy to say that at present it is an A status. Our fates are bound together in that way. It would be extremely important to be clear about the implications of this move to a new status for the Northern Ireland Human Rights Commission. We must take into account the fact that if that misfired it could bring down the Scottish Human Rights Commission and the UK Equality and Human Rights Commission. Could the Minister comment on that? It would be helpful to know that, in considering this move, that particular set of risks would also be considered.

Lord McAvoy: My Lords, the Opposition support this amendment and commend the Minister and the noble Lord, Lord Alderdice, for their discussions and

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decision to bring it forward. Everyone agrees about the fundamental importance of human rights to the exercise of devolved government in Northern Ireland. It is also agreed that this is ensured through the independence of the Human Rights Commission and the impartial nature of its work. The preservation of this impartiality will be foremost in discussions when we come to actually devolve these powers. The Government’s amendments mark a move in the right direction to enable that. They have our full support.

Baroness Randerson: I thank the noble Lord, Lord McAvoy, for his support for this amendment and amendments moved throughout this afternoon. To answer my noble friend Lord Alderdice, we believe we have now taken a belt-and-braces approach to this issue. We accept its considerable importance but surely it is of the same order of importance to Northern Ireland as policing and justice, both of which have been successfully devolved to the Northern Ireland Assembly. The Government hear my noble friend’s concerns and take note. We will certainly bear in mind that his intention would be to vote against anything that did not come up to what he judged to be the appropriate approach.

On the question asked by the noble Baroness, Lady O’Neill, we are well aware of the impact of one human rights institution on another in terms of their reputation. That is one reason why we may be looking towards the Scottish model, because it has been successful in providing answerability to the Scottish Parliament. Although that is not absolutely specified in the report that the Secretary of State would make to Parliament, it is in the amendment as something of which account has to be taken.

A future Government would be mindful, of course, of the risks to the UK’s reputation in human rights issues as a whole. I commend the amendment to the House.

Amendment 6 agreed.

6.30 pm

Amendment 7

Moved by Baroness Randerson

7: Clause 11, page 9, line 16, at end insert—

“( ) In section 4 of that Act (transferred, excepted and reserved matters), after subsection (3B) (as inserted by section 10) insert—

“(3C) The Secretary of State shall not lay before Parliament under subsection (2) the draft of an Order amending paragraph 42(aa) of Schedule 3 (Northern Ireland Human Rights Commission) unless the Secretary of State has, at least three months before laying the draft, laid a report before Parliament.

(3D) The report under subsection (3C) must set out the Secretary of State’s view of the effect (if any) that the Order would have on—

(a) the independence of the Northern Ireland Human Rights Commission;

(b) the application of internationally accepted principles relating to national human rights institutions; and

(c) the relationship between the Northern Ireland Human Rights Commission and the Assembly.”.”

Amendment 7 agreed.

4 Mar 2014 : Column 1273

Clause 28: Commencement

Amendment 8

Moved by Baroness Randerson

8: Clause 28, page 17, line 30, at end insert “(but see subsection (2A) below)”

Baroness Randerson: My Lords, as noble Lords will be aware, Clause 24 amends an order-making power already passed in the Protection of Freedom Act 2012 to allow us to take forward by order the changes to the new biometric framework in the reserved and excepted fields, which the Northern Ireland Department of Justice could not legislate for within its Criminal Justice Bill, which received Royal Assent in April 2013. It will allow us to bring the position in Northern Ireland with regard to the retention, use and destruction of biometric data in the interests of national security, or for the purposes of a terrorist investigation, into line with that in Great Britain.

The amendment makes a technical change to the commencement of Clause 24. As the Bill is drafted, the clause would come into force on the day the Act is passed. However, the order-making power in the Protection of Freedoms Act—paragraph 8 of Schedule 1 —is not yet in force. The proposed change to commencement is intended to avoid a situation where the amendment to the order-making power in Clause 24 comes into force before the power itself, which would have no practical effect and which I understand is technically undesirable. This is a technical change to the clause which I hope that the House will feel able to support, as it is not an issue that has raised concern previously.

Before I sit down, I take this opportunity to thank all those who have participated in debate on the Bill. Any Minister attempting to shepherd a Bill through this House feels some trepidation because of the great reservoir of expertise and experience here. As a relative newcomer to Northern Ireland, I was certainly very aware that I could not hope to match the knowledge of some noble Lords, who have first-hand experience of many of the events which led to the settlement we have today.

I also want to thank the Bill team and other Northern Ireland Office officials, who have worked so hard on the Bill and have made huge efforts to address and take account of the concerns raised by noble Lords in debate. I am grateful for the patience and the willingness that has been shown by noble Lords to attend not only debates but the many meetings we have organised outside this Chamber. I respect the persistence that has been evident in raising those issues of most concern. I believe that the Bill has been greatly improved as a result of our dialogue.

We have developed our understanding of some of the issues which set the context for this Bill: the nature of devolution; the limits of government power and influence in devolved matters; the operation of the agreements which established the current settlement in Northern Ireland; and the scope for development of those institutions. Those debates are important, not just for Northern Ireland, but for our constitution throughout the UK.

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I introduced this Bill on a note of optimism as a Bill for more normal times. It is the first Bill in recent times not to have been subject to emergency procedures in Northern Ireland. I cannot conclude our debate without acknowledging the extent to which political peace has been challenged, not least by the events of the past week. It has been a difficult time for Northern Ireland, particularly for those who have suffered as a result of the atrocities of the past. Our thoughts must be with them at this time.

I believe that there is still reason for cautious optimism. Despite the real anger and hurt felt by many on both sides of the community, the devolved institutions have avoided crisis and devolved government continues. This underlines the progress that has been made in Northern Ireland as a result of the peace process. While ensuring that we deal properly with the past, it remains essential that our determination to build a shared and prosperous future in Northern Ireland is unwavering.

The Bill is, I believe, a modest way of making a contribution to fulfilling that objective, and I commend it to the House.

Lord McAvoy: My Lords—

Lord Alderdice: My Lords, I do not want to address the technical aspects of the amendment, but I cannot let the opportunity pass without saying something about my appreciation of and gratitude to my noble friend Lady Randerson. Perhaps it is because of her distinguished service and experience in the Welsh Assembly, perhaps it is just because of the person that she is, perhaps it is because of the conscientious way in which she approaches her work, but, for whatever reason, she has shown great sensitivity to the difficult issues in devolution in a provincial part of our United Kingdom and to the complexity of the issues concerned. Nowhere was this better shown than in your Lordships’ House today, where she dealt with such extraordinary patience with all the difficulties, which were not immediately difficulties of the Bill, but were certainly difficulties with the context in which the Bill is passing in Northern Ireland. The patience that she showed in her responses reminded me a little of George Mitchell and the sort of patience that he had to show at a much earlier stage in the whole process. She has been an exemplar in that regard.

It is also the case that no predecessor for a very long time has had to take a Bill on Northern Ireland here through all the normal stages and passage of time. I see the noble Lord, Lord Rooker, nodding his head, because he was very familiar with those times and that work in Northern Ireland. The Minister, her officials and, indeed, the Secretary of State in the other place, have listened carefully and responded as far as they felt able. Even to our questions today, I think that she responded as far as it was possible to do given the difficulties and complexity of the problem. I express my sincere appreciation for all that she has done, in the knowledge that she will continue to serve in this House for Northern Ireland—and for other places, but from Northern Ireland’s perspective I express my appreciation.

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Lord McAvoy: My Lords, I apologise for my overeagerness, especially to support the Government in principle. As the noble Lord, Lord Alderdice, said, this is a technical amendment, it is welcome and I have no intention of going into the fine detail that the Minister had to in introducing it. I also join in commending her for her attitude throughout the process in listening and making changes. I also pay tribute to the officials of her office for the way that they have responded to the various processes within the procedure.

As mentioned by the noble Baroness, I also pay tribute to the expertise existing in this Chamber. I have been involved in Northern Ireland for a long time, back and forward, off and on. I know how she felt about having some trepidation in getting involved in a Bill with all the expertise around this House. It has been a success for her, a success for this House in processing the Bill in the way that we have, especially with the events of the past week, and we support the amendment.

Amendment 8 agreed.

Amendment 9

Moved by Baroness Randerson

9: Clause 28, page 17, line 36, at end insert—

“(2A) If paragraph 8(1) of Schedule 1 to the Protection of Freedoms Act 2012 comes into force on a day after that on which this Act is passed, section 24 comes into force immediately after that paragraph comes into force.”

Amendment 9 agreed.


Moved by Baroness Randerson

That the Bill do now pass.

Lord Brooke of Sutton Mandeville (Con): My Lords, I would like to make a brief footnote to the debates that we have just had. My noble friend Lord Mawhinney made reference in debate on Amendment 1 to my noble friend Lord King of Bridgwater and myself. I did not intervene in that debate, especially on the subject of secret deals, but certainly my basic attitude to such matters was learnt at my mother’s knee. I mention this because I recall that the Reith lectures given by the noble Baroness, Lady O’Neill of Bengarve, treated on the same matter. It is happy that she is here so that she can reprove me if I misrepresent her. Her view on behaviour was that those people with whom one has contact react and respond to the way that you treat them. If you communicate liking, they are likely to behave in a likeable manner while if you show that you trust them, they are likely to behave in a trustworthy manner. In both these examples, the converse is true. Secret deals are therefore fundamentally counter- productive. I once worked for a great American who taught me that the strongest argument against falsehoods is that the truth is much easier to remember. I am not seeking a response.

Bill passed and returned to the Commons with amendments.

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Gambling (Licensing and Advertising) Bill

Gambling (Licensing and Advertising) Bill


6.42 pm

Amendment 1

Moved by Baroness Howe of Idlicote

1: Clause 1, page 1, line 6, at end insert—

“(b) after subsection (5) insert—

“(6) The Commission may give a direction under this subsection if the Commission reasonably believe that a person or organisation who does not hold a remote gambling licence is providing remote gambling services in the United Kingdom.

(7) A direction under subsection (6) may be given to—

(a) a particular person operating in the financial sector,

(b) any description of persons operating in that sector, or

(c) all persons operating in that sector.

(8) A direction under subsection (6) may require a relevant person not to enter into or continue to participate in—

(a) a specified transaction or business relationship with a designated person,

(b) a specified description of transactions or business relationships with a designated person, or

(c) any transaction or business relationship with a designated person.

(9) Any reference in this section to a person operating in the financial sector is to a credit or financial institution that—

(a) is a United Kingdom person, or

(b) is acting in the course of a business carried on by it in the United Kingdom.

(10) In this section—

“credit institution” and “financial institution” have the meanings given in paragraph 5 of Schedule 7 to the Counter-Terrorism Act 2008;

“designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given;

“relevant person”, in relation to a direction, means any of the persons to whom the direction is given.””

Baroness Howe of Idlicote (CB): My Lords, Amendment 1 is in my name and that of the noble Lord, Lord Stevenson. It would give the Gambling Commission a discretionary power to block financial transactions between people living in the UK and online gambling websites that have not secured a UK Gambling Commission licence. The aim is to prevent funds being transferred to illegal operators, thereby creating a disincentive both to the company to operate illegally and to UK gamblers, who will find it much easier to go to the many licensed operators available.

The Government have argued that this Bill is about consumer protection. On 19 November the Minister, Helen Grant, said that the new licensing proposals address,

“the fundamental purpose of the Bill, which is to enhance consumer protection by ensuring that all operators offering remote gambling in Britain are regulated by the Gambling Commission, whether they are based in Britain or overseas”.—[

Official Report

, Commons, Gambling (Licensing and Advertising) Bill Committee, 19/11/13; col. 74.]

At first glance, this seems absolutely right because the Bill, for the very first time, requires all online gambling providers based outside the UK who want to access the UK market to get a UK Gambling Commission

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licence. For this to constitute a meaningful bid for greater protection, however, it must be connected to a parallel provision preventing those providers which do not have a licence from selling to UK consumers. The Bill before us contains no such provision. In the absence of a credible enforcement mechanism, the primary implications of the Bill are twofold.

First, there would be significant liberalisation of online gambling advertising. At present, only providers located in a limited number of whitelisted and European Economic Area jurisdictions can advertise in the UK. However, under the Bill any provider based anywhere in the UK will be able to advertise in the UK, so long as they get a UK Gambling Commission licence. This significantly widens the scope for online gambling advertising. Not only that: it would be advertising liberalisation for a form of gambling which is associated with a significantly higher problem prevalence figure than gambling generally. The 2010 general problem prevalence figure was 0.9% but it was more than 9% for online on an annual basis and more than 17% on a monthly basis.

The second implication is that of providing a framework for increasing the tax take in co-operation with the 2014 Finance Bill. The 2005 Act created a tax loophole by allowing providers based in EEA or whitelisted jurisdictions still to advertise in the UK. All but one moved to whitelisted jurisdictions under more generous regimes. The Bill corrects this loophole by providing the Treasury with a framework to address the problem. It requires all providers accessing the UK market to get a licence, while the Finance Bill requires all online gambling providers with a UK licence to pay UK tax. It will come as no surprise to your Lordships that, as the wife of a former Chancellor of the Exchequer, I have absolutely no problem with seeking to close a tax loophole. However, the good news is that that tax loophole can be closed at the same time as providing a robust enforcement regime that upholds the consumer protection objective set out by Helen Grant. We do not have to choose between one and the other.

The Government have of course sought to argue that they have the necessary enforcement mechanism. At Second Reading, the Minister said:

“Where illegal operators attempt to target British consumers, the Government and the Gambling Commission are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. These include action on illegal advertising, player education and, ultimately, prosecution”.—[Official Report, 17/12/13; col. 1252.]

The problem with this is that neither clamping down on illegal advertising nor better player protection will prevent illegal operators accessing the UK market. That leaves prosecution but the truth is that the DCMS has already recognised in its remote gambling consultation that prosecution has no teeth. The DCMS said that,

“we recognise that without extra-territorial extent, it will be difficult to actually pursue the offence through the Courts if the operator is located outside Britain”.

Given the clear problems with the enforcement mechanisms highlighted by the Government, it has been clear to me since the first day when the Bill appeared that it is crying out for a proper enforcement mechanism. In this context, as I have said previously, Amendment 1, which gives the Gambling Commission

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discretionary financial transaction blocking powers to protect UK consumers from transacting with illegal providers, crucially restores integrity to the Bill. Far from being a curious add-on my amendment, in providing a credible enforcement mechanism, is central to the main purpose of the Bill.

When pressed on this point the Government have, until now, always rejected financial transaction blocking on the basis that the evidence is mixed.

Although I readily admit that financial transaction blocking is not 100% successful—very few public policy solutions are—it is my contention that it is the best available enforcement mechanism, and one that would greatly enhance the Bill. In making this case, I want to make some points. First, I shall briefly consider the experiences of other jurisdictions. In the USA, the Unlawful Internet Gambling Enforcement Act 2006 prohibits any person, including a business, engaged in the business of betting or wagering from knowingly accepting payments in connection with the participation of another person in illegal remote gambling. In practice, this means that credit and debit cards and banks do not allow their services to be used in relation to a merchant code associated with remote gambling. This means that if a person tries to gamble on an illegal or unregulated website, they will not be able to transfer funds directly into their gambling account. These merchant codes are used as a matter of course and as part of agreements made between gambling entities and the financial sector.

My conversations with online gambling providers suggest that, while this approach has not been perfect, it has made a very significant positive difference. Indeed, such is its success that other countries have since followed its lead; in Europe the most notable is Norway, as well as France, Belgium and Estonia. Other jurisdictions have also implemented policies that reflect the blocking of the financial flow to illegal websites—for example, in Israel, Turkey, Singapore and Malaysia.

Secondly, having looked at the experience of other jurisdictions, I want to reflect on the appropriateness of financial transaction blocking in a British context. In considering all the jurisdictions that have implemented FTB, it is vital to appreciate that they operate closed or relatively closed markets. For example, the US does not allow remote gambling across state borders or from overseas. Norway, meanwhile, operates an even more restrictive market.

If one operates a closed or relatively closed market, one faces two challenges. First, one has to block lots of transactions. That would not be the case in the UK, where we operate an open market. Then there is a greater incentive in closed or relatively closed markets for punters to seek to evade the blocks than in an open market, where the available odds should be relatively competitive. In a market like the UK, where there is a need for less blocking and where—on the occasions when it is used—financial transaction blocking is more likely to be effective, FTB is likely to be more successful than in the jurisdictions where it has been employed thus far.

Thirdly, mindful of the above, I want to reflect on the huge irony of the position that the Government have adopted. They have rejected financial transaction

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blocking on the basis that the results are “mixed”, citing instead their preference for prosecution. Given that, while not perfect, FTB has encountered some considerable success, and given that it is more likely to be successful in the UK than in any other jurisdiction where it has been used, I find it a little extraordinary that the Government should reject it in favour of prosecution on the basis that FTB is not perfect. Prosecution is far less likely to be successful than FTB. As we have seen by the Government’s own admission, prosecution does not work. The idea that the UK Government can afford to chase multiple small online providers through the courts of multiple jurisdictions is, surely, fanciful. The providers in question know that the chances of their ever being successfully prosecuted are tiny, a calculated risk that they can afford to take. By contrast, FTB is likely to have a significant deterrent effect on small illegal providers, as the experience of Norway has demonstrated.

Yesterday many noble Lords will have received a letter from the Minister, the noble Lord, Lord Gardiner, that addresses enforcement. The letter says:

“I am pleased to confirm that the Gambling Commission has reached agreement with a number of major payment systems organisations to work together to block financial transactions with unlicensed operators”.

I very much welcome this announcement. It really is quite a turnaround from the suggestion during the earlier stages of the Bill that its enforcement provisions were sufficient. However, just as I highlighted deficiencies in what the Government said during those stages, I feel compelled to do so again today, because while I warmly welcome the announcement I do not believe that it constitutes a credible alternative solution.

The problem is that it pertains to only three payment processes and is voluntary. Of course Visa is a very big player and covers a large part of the financial transaction market, so you might be tempted to conclude that this solution would address a large part of the problem. In reality, though, the market is dynamic, and experience from abroad demonstrates that alternative payment mechanisms spring up to do the job in place of the big names that are persuaded in the name of social responsibility to adopt a different approach on a self-regulatory basis. Thus I am firmly of the opinion that we need the statutory approach of Amendment 1, which applies to all payment mechanisms.

I have heard it said that the Government do not want to accept amendments to the Bill. They contend that it is a simple Bill, with a sharp focus that amendments would only distract from. Far from being a distraction from the main purpose of the Bill, my Amendment 1, by providing a credible enforcement mechanism, is absolutely key to that central purpose. Rather than placing the simple integrity of the Bill in jeopardy, the amendment’s key mission is actually to complete that integrity—to ensure that rather than being half a Bill, alienated from an enforcement mechanism, it is in fact a whole Bill, very much at one with its enforcement mechanism. My modest discretionary financial transaction blocking amendment would restore integrity to the Bill, in my view, something that is urgently needed. I hope that in due course the Government will agree, and I beg to move.

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Lord Stevenson of Balmacara (Lab): My Lords, I pay tribute to the noble Baroness for her campaigning on this and many other issues, and particularly on the tenacity with which she is pursuing this topic. I place on the record that we on this side of the House support her in this amendment. Do the Government? We have seen reports over the weekend, amid the most extraordinary amount of material that has been released through papers and articles and by people talking directly to the press, about how keen the Government are to make progress in this area, how shocked they were to discover some of the points that have been made in the noble Baroness’s speech—but had also been raised before in Committee—and how important it was that they should be seen to be taking action. However, talk is not going to get us to where we want to go on this issue, as the noble Baroness has said.

The Bill lacks the capacity to deliver the means to achieve the ends that it sets out very clearly, and with which we agree. There have been very clear calls for strong enforcement measures to accompany the Bill. The Bill may be modest in terms of what it does, but it will be even less effective if it does not have these additional measures. In addition to the points made by the noble Baroness, which I do not wish to repeat because she made a very positive and clear endorsement of the position that she is trying to adopt, we have to have regard to the fact that there will be people inside the industry who will hold licences who deserve to be supported, who are trying to do the right thing and who need to be given a clear endorsement in the Bill that those who are not doing the right thing by the Bill will be prosecuted but will also be made unable to operate by removing their financial support and by ensuring that they cannot connect through the internet.

These are issues that come up in other places. There is obviously a read-across to the field of the protection of children, and therefore it is important that we should begin to think hard about how we work in this world of new technology. As the noble Baroness said, the amendment complements the Bill. Voluntary arrangements, although welcome, will not achieve what we want. They are a step in the right direction, but they are not sufficient. The very idea of relying simply upon prosecution in offshore, foreign territories is absolutely bizarre. If the noble Baroness wants to test the opinion of the House, we will support her.

7 pm

Viscount Astor (Con): When my noble friend the Minister replies, will he address two issues that concern me about the amendment? The first is the ability to control what the noble Baroness referred to as illegal websites. It seems to me that websites spring up and have an almost infinite ability to replicate themselves. I am not sure how the Government could control them, even if they wanted to. Secondly, there seems to be evidence in other countries that financial transaction blocking has not been terribly successful. Will the Minister comment on whether that is the case? If we were to have this amendment, it is important that it is workable and would achieve its purpose. Otherwise, we have to look at other alternatives to achieve the same outcome.

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Lord Browne of Belmont (DUP):My Lords, I am very pleased to speak in support of Amendment 1 because it is of fundamental importance. If this Bill is not endowed with a credible form of enforcement so that unlicensed operators are prevented from accessing the UK market then, as the noble Baroness, Lady Howe, has explained, the notion that this Bill is about consumer protection breaks down. Its primary impact will instead be a truly dramatic change to online gambling advertising in the UK.

I am particularly grateful to the noble Baroness for raising this issue throughout the passage of the Bill and particularly for the excellent seminar that she hosted for Peers last week, which was fascinating. It comprised two central presentations, one from the online gambling provider Paddy Power explaining why, from the perspective of online gambling providers, the provision of proper enforcement is absolutely key, and a second presentation from a charity, CARE, whose prime concern is the care of problem gamblers, which also argued passionately for the provision of credible enforcement.

In managing to create a coalition between the online gambling industry and problem gambler charities, the Government have really accomplished quite a feat. On a more serious note, it seems to me that if such disparate groups with such disparate aims and objectives are prepared to come together to present basically the same argument, the Government need to pause and take note. Paddy Power made it very clear that the online gambling industry is growing very quickly right across the world and that there are lots of small providers which will be tempted to access the United Kingdom market without getting a licence. The point was made very powerfully that the Government cannot possibly hope to chase these multiple small providers through the courts of multiple jurisdictions. It would cost far too much and take far too long. The small providers know that the chances of them being prosecuted, let alone convicted, are absolutely tiny and that it is a risk well worth taking.

In this context, the online gambling industry and the charity sector are very clear that financial transaction blocking is the best way forward. The Government, of course, have resisted this argument, claiming that the evidence for FTB is mixed. If by this they mean that it is not 100% successful, then I agree with them, but the notion that in order to be suitable an enforcement mechanism must be 100% effective is problematic for two reasons. First, in my experience, very few public policy solutions can make that claim. Secondly, the enforcement mechanism promoted by the Government—prosecution—is far less likely to be successful than FTB. Of course, I read with interest the letter from the Minister yesterday announcing that, despite earlier statements, the Government have now consented to a self-regulatory approach to prohibiting payments with three providers. That is a very welcome turnaround, but it is not a credible solution. The integrity of this Bill clearly requires a statutory solution that covers all providers.

This Bill has so far travelled from DCMS to the Commons and now through the Lords to Report stage without a single amendment. As a revising Chamber, we are here to detect problems and put them right.

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The noble Baroness, Lady Howe, has spotted a fundamental problem. I do not believe that we should allow this Bill to complete its passage through your Lordships’ House without the insertion of the clear enforcement mechanism presented by Amendment 1. I strongly urge noble Lords to support this very important, seminal amendment.

The Lord Bishop of Chester: My Lords, I want to associate myself fully with the remarks just made by the noble Lord, Lord Browne, and with the powerful and comprehensive speech made by the noble Baroness, Lady Howe, in introducing the amendment. I do not intend to repeat the points they made so powerfully, but I shall add a general consideration. With the introduction of the internet, we are living through a revolution that is probably more powerful than the invention of steam power or the internal combustion engine. One does not want to be critical of the many benefits that flow from the internet revolution but it brings with it, at every point, corresponding dangers of which the Government need to be very aware. If in doubt, I would say that the balance of the argument comes down on putting in place powers to regulate and prevent the abuses that the internet can open up. I hope that general consideration will support the specific points so powerfully made in the debate so far.

Baroness Jolly (LD): My Lords, I thank noble Lords for a wide-ranging and constructive series of discussions as the Bill has progressed to this stage. As we said earlier, this is a small, five-clause Bill focusing on consumer protection. As a result of it, all overseas operators selling to British consumers—around 85% of the market—will be required to hold a British Gambling Commission licence. That will mean that those operators will be subject to robust and consistent regulation and that will increase protection for consumers.

Although it had been introduced with a distinct focus on new licensing and advertising arrangements for remote gambling activities, we have collectively explored a fuller set of related gambling considerations. Noble Lords will have seen some of them announced by the Secretary of State over the weekend. Work which had been ongoing has been catalysed by these debates, in which some very important matters arose, while ensuring that the core of the Bill, which I think I can say is widely supported, can pass into law.

One such issue is in relation to enforcement and I thank the noble Baroness, Lady Howe, for her amendment. It would enable the Gambling Commission to give direction to financial institutions to stop financial transactions with operators which do not hold a Gambling Commission licence. This is known as financial transaction blocking. The Government share the overall objective articulated so clearly by noble Lords, which is at the centre of this amendment, but the Bill must be enforceable. That is central to achieving the consumer protection purposes that lie at the heart of the Bill, which will extend the existing enforcement provisions to offshore operators selling or advertising into the GB market.

The Bill includes three important tools. First, the Gambling Commission can take action against illegal advertising. That is important as advertising is the

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lifeblood of so many operators. The Bill will make it easier for advertisers to identify what can and what cannot be advertised into the UK. Only lawful gambling may be advertised. Secondly, player education is another important tool. The current system makes it impossible for the Gambling Commission to advise consumers to buy from commission-licensed operators, as operators from anywhere in the world, subject to a range of different regulatory regimes, can transact with consumers in Great Britain. Thirdly, the Gambling Commission has powers to prosecute, so the commission will have the legal powers to pursue any unlicensed operators, wherever they are based. It is also worth noting that, although the collection of tax is a matter for HMRC, it has extensive powers of its own that may be deployed in the case of unlicensed operators, where this is appropriate.

However, alongside this, I can announce a further mechanism. I am pleased to confirm that the Gambling Commission has reached agreement with major payment systems organisations—notably MasterCard, PayPal and Visa Europe—to work together to block financial transactions with unlicensed operators which seek to use these payment systems for illegal purposes. What does this actually mean in practice? It means that when a consumer uses payment facilities for illegal gambling this may amount to a breach of the payment system’s terms and conditions. These require that all transactions must be legal in all applicable jurisdictions. Such a breach may result in the operator having its payment facilities withdrawn by the payment system. This process will disrupt revenue to unlicensed gambling operators selling into our British market.

We have heard the arguments in detail throughout the passage of the Bill as to the effectiveness of financial transaction blocking. We believe that the approach I have just outlined is a good way to test and evaluate this mechanism. The mechanism provides an efficient way of achieving blocking in a single case, which is mostly where we expect this approach will be used. The reason this approach is efficient is that the Gambling Commission has a direct route to the payment organisations and does not need to go through a potentially lengthy and expensive court process.

However, as we have all agreed in this debate, the landscape can change quickly. Technology moves faster than legislation. The nature of these arrangements is such that they will be adaptable and can respond to the very latest developments. That is why the Government believe this is the most appropriate way to proceed: working in partnership with these organisations that share our determination to tackle illegal activity. We want to ensure that the enforcement arrangements continue to be effective and have asked the commission to report on its enforcement activities in relation to remote gambling. The Gambling Commission will provide an assessment of the effectiveness of these arrangements in enforcing the Bill in its annual report to Parliament. The Government and the Gambling Commission will use this to assess the success of this approach and monitor the implementation of the new regime. This will enable the Government to ensure that the Gambling Commission continues to have all the enforcement tools it needs.

4 Mar 2014 : Column 1284

I thank the noble Baroness for bringing this issue forward and all noble Lords who took part in the debate. I hope that I have assured the House that the Government’s approach is the most appropriate way to achieve the objectives behind the amendment and does not require legislative change. I therefore ask the noble Baroness to withdraw her amendment.

Baroness Howe of Idlicote: My Lords, I am grateful to all noble Lords who have participated in this important debate. I also thank the Minister, the noble Baroness, Lady Jolly, who kindly met me yesterday to outline the steps that the Government have now taken to begin to address this problem. I very much welcome, too, the fact that rather than saying that there already are adequate enforcement mechanisms, the Government are now bringing forward, somewhat belatedly, the measures that have been outlined to us today.

However, this really is a classic example of too little, too late. The online gambling providers we have consulted have been clear that, even if you target big transaction-processing companies that currently service the market but do not adopt a more statutory approach that relates to all such companies, gambling transactions will simply migrate to other or new providers. I still believe that the Bill is flawed because of this lack of an enforcement mechanism and because of self-regulatory measures, especially those which relate only to three providers, with no compensation for this. Separated from a proper means of enforcement, the Gambling (Licensing and Advertising) Bill is still very much half a Bill.

As other speakers have noted, to date the Bill has passed unamended through the Commons and also until Report stage in the Lords. Increasingly, everyone acknowledges that we are here as a revising Chamber to spot problems and to try and put them right. I would argue that we have identified a significant problem here that cannot be addressed by a voluntary agreement between just these three providers, which may or may not at some future stage give rise to litigation.

We have today the opportunity to address this shortfall. Although I hope very much that the Government will accept other amendments today, I want to take this opportunity to test the opinion of the House.

7.16 pm

Division on Amendment 1

Contents 171; Not-Contents 185.

Amendment 1 disagreed.

Division No.  1


Aberdare, L.

Adams of Craigielea, B.

Adonis, L.

Anderson of Swansea, L.

Bach, L.

Bakewell, B.

Bassam of Brighton, L.

Beecham, L.

Berkeley of Knighton, L.

Best, L.

Bew, L.

Billingham, B.

Blood, B.

Boateng, L.

Borrie, L.

Brennan, L.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Belmont, L.

Butler of Brockwell, L.

Cameron of Lochbroom, L.

Chandos, V.

4 Mar 2014 : Column 1285

Chester, Bp.

Clark of Windermere, L.

Collins of Highbury, L.

Colville of Culross, V.

Corston, B.

Craigavon, V.

Crawley, B.

Cunningham of Felling, L.

Davies of Coity, L.

Davies of Oldham, L.

Dean of Thornton-le-Fylde, B.

Desai, L.

Donaghy, B.

Donoughue, L.

Drake, B.

Dubs, L.

Eames, L.

Elder, L.

Farrington of Ribbleton, B.

Filkin, L.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Gale, B.

Gibson of Market Rasen, B.

Giddens, L.

Glasman, L.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Grantchester, L.

Greenway, L.

Grenfell, L.

Grey-Thompson, B.

Griffiths of Burry Port, L.

Grocott, L.

Hanworth, V.

Harris of Haringey, L.

Harrison, L.

Hart of Chilton, L.

Haworth, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hennessy of Nympsfield, L.

Hilton of Eggardon, B.

Hollick, L.

Hope of Craighead, L.

Howarth of Newport, L.

Howe of Aberavon, L.

Howe of Idlicote, B. [Teller]

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Woodside, L.

Hunt of Chesterton, L.

Hunt of Kings Heath, L.

Irvine of Lairg, L.

Jay of Paddington, B.

Jones, L.

Jones of Whitchurch, B.

Judd, L.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kirkhill, L.

Lawrence of Clarendon, B.

Layard, L.

Lea of Crondall, L.

Levy, L.

Liddell of Coatdyke, B.

Liddle, L.

Listowel, E.

McAvoy, L.

McDonagh, B.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

McKenzie of Luton, L.

Maginnis of Drumglass, L.

Martin of Springburn, L.

Masham of Ilton, B.

Maxton, L.

Meacher, B.

Mendelsohn, L.

Monks, L.

Moonie, L.

Morgan of Ely, B.

Morgan of Huyton, B.

Morris of Handsworth, L.

Morris of Yardley, B.

Morrow, L.

Nickson, L.

Nye, B.

O'Loan, B.

O'Neill of Bengarve, B.

O'Neill of Clackmannan, L.

Palmer, L.

Pannick, L.

Parekh, L.

Patel, L. [Teller]

Patel of Blackburn, L.

Patel of Bradford, L.

Peterborough, Bp.

Pitkeathley, B.

Ponsonby of Shulbrede, L.

Prescott, L.

Prosser, B.

Quin, B.

Radice, L.

Ramsay of Cartvale, B.

Rea, L.

Reid of Cardowan, L.

Richard, L.

Rooker, L.

Rosser, L.

Rowe-Beddoe, L.

Royall of Blaisdon, B.

Sawyer, L.

Sherlock, B.

Simon, V.

Skidelsky, L.

Smith of Basildon, B.

Smith of Finsbury, L.

Snape, L.

Soley, L.

Stair, E.

Stevens of Kirkwhelpington, L.

Stevenson of Balmacara, L.

Stirrup, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Sutherland of Houndwood, L.

Taylor of Bolton, B.

Taylor of Warwick, L.

Temple-Morris, L.

Thornton, B.

Tunnicliffe, L.

Turnberg, L.

Uddin, B.

Walpole, L.

Walton of Detchant, L.

Warnock, B.

Watson of Invergowrie, L.

West of Spithead, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wilkins, B.

Wills, L.

Woolmer of Leeds, L.

Worthington, B.

Young of Norwood Green, L.

4 Mar 2014 : Column 1286


Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Allan of Hallam, L.

Anelay of St Johns, B. [Teller]

Ashcroft, L.

Ashton of Hyde, L.

Astor, V.

Astor of Hever, L.

Attlee, E.

Bakewell of Hardington Mandeville, B.

Balfe, L.

Barker, B.

Bates, L.

Berridge, B.

Black of Brentwood, L.

Blencathra, L.

Borwick, L.

Bourne of Aberystwyth, L.

Brabazon of Tara, L.

Bridgeman, V.

Brinton, B.

Brooke of Sutton Mandeville, L.

Brougham and Vaux, L.

Browning, B.

Burnett, L.

Byford, B.

Caithness, E.

Carrington of Fulham, L.

Cathcart, E.

Chadlington, L.

Chidgey, L.

Clement-Jones, L.

Colwyn, L.

Courtown, E.

Crathorne, L.

De Mauley, L.

Dixon-Smith, L.

Dobbs, L.

Dundee, E.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Eden of Winton, L.

Edmiston, L.

Elton, L.

Empey, L.

Falkland, V.

Faulks, L.

Fellowes of West Stafford, L.

Fink, L.

Finkelstein, L.

Fookes, B.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Geddes, L.

German, L.

Golding, B.

Goodlad, L.

Green of Hurstpierpoint, L.

Grender, B.

Hamwee, B.

Henley, L.

Heyhoe Flint, B.

Higgins, L.

Hill of Oareford, L.

Hodgson of Abinger, B.

Hodgson of Astley Abbotts, L.

Holmes of Richmond, L.

Home, E.

Horam, L.

Howe, E.

Humphreys, B.

Hunt of Wirral, L.

Hussain, L.

Hussein-Ece, B.

Inglewood, L.

James of Blackheath, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jopling, L.

King of Bridgwater, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Lang of Monkton, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Linklater of Butterstone, B.

Loomba, L.

Lucas, L.

Luke, L.

Lyell, L.

McColl of Dulwich, L.

MacGregor of Pulham Market, L.

Maclennan of Rogart, L.

Magan of Castletown, L.

Mancroft, L.

Manzoor, B.

Marland, L.

Marlesford, L.

Mawhinney, L.

Mayhew of Twysden, L.

Montrose, D.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Nash, L.

Neville-Jones, B.

Neville-Rolfe, B.

Newby, L. [Teller]

Newlove, B.

Nicholson of Winterbourne, B.

Northover, B.

Norton of Louth, L.

Oakeshott of Seagrove Bay, L.

O'Cathain, B.

Oppenheim-Barnes, B.

Paddick, L.

Palumbo, L.

Parminter, B.

Patten, L.

Perry of Southwark, B.

Phillips of Sudbury, L.

Popat, L.

Purvis of Tweed, L.

Randerson, B.

Rawlings, B.

Renfrew of Kaimsthorn, L.

Rennard, L.

Ridley, V.

Risby, L.

Roberts of Llandudno, L.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharp of Guildford, B.

Shaw of Northstead, L.

4 Mar 2014 : Column 1287

Sheikh, L.

Shephard of Northwold, B.

Sherbourne of Didsbury, L.

Shipley, L.

Shrewsbury, E.

Shutt of Greetland, L.

Skelmersdale, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stephen, L.

Stewartby, L.

Stoneham of Droxford, L.

Stowell of Beeston, B.

Strathclyde, L.

Suttie, B.

Taylor of Goss Moor, L.

Taylor of Holbeach, L.

Thomas of Swynnerton, L.

Thomas of Winchester, B.

Tope, L.

Trefgarne, L.

Trenchard, V.

Trimble, L.

Tyler, L.

Tyler of Enfield, B.

Ullswater, V.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Warsi, B.

Wasserman, L.

Wei, L.

Wheatcroft, B.

Wilcox, B.

Williams of Trafford, B.

Willis of Knaresborough, L.

Younger of Leckie, V.

7.28 pm

Amendment 2

Moved by Lord Stevenson of Balmacara

2: After Clause 1, insert the following new Clause—

“Licence compliance, stipulations and control

(1) Notwithstanding the regulation of spread betting by the Financial Conduct Authority, operators licensed for remote gambling by the Gambling Commission shall, to ensure their continued fitness as such, be obliged to comply with Condition 15.1 of the Consolidated Licensing Conditions and Codes of Practice 2011 (or its equivalent from time to time) in relation to all areas of their gambling operations, including spread betting and any other operations not within the jurisdiction of the Gambling Commission.

(2) In the event of any breach of subsection (1) which the Gambling Commission believes calls into question the fitness of the relevant operator, the Gambling Commission may require the operator to provide an explanation of such breach within one month and may, if not satisfied with such explanation, revoke the operator’s licence.”

Lord Stevenson of Balmacara: My Lords, the promotion and upholding of integrity is one of the key functions of all sports governing bodies and event organisers. The whole concept of sport is based on what is described as fair competition between participants under agreed rules. A vital principle for any sport is that all its participants are competing to win and that its officials are honest, and are seen to be so.

This amendment deals with a situation which could not have been forecast when the Gambling Act 2005 passed through this House and into law. At that time, the idea that people would somehow be able to vote without ever being close to or involved in a game was not thought of as likely to happen, and we certainly did not see, or have evidence to suggest that we had seen, any ideas that people involved in the betting industry—not the industry as a whole—might seek to use means to try to fix matches. The situation that emerged out of the 2005 Act is not one that we could have predicted; times have moved on. Therefore, we need to think hard about how to protect sports integrity as we move forward. Those who seek to influence the outcome or progress of sports events to secure rewards through betting undermine the very principles that I have been talking about. Worse than that, any suspicion that that is happening is almost as bad as the event itself happening. So some action needs to be taken.

4 Mar 2014 : Column 1288

The Government have been working with the Gambling Commission—and I give them credit for this—on how best to ensure that information flow is made available to those with responsibilities in this area. As a result, there is a series of regulations that operate, particularly licence condition 15.1, which ensures that information about practices that might be redolent of an event that has been fixed are brought quickly to the attention of the sports governing bodies and authorities so that action, if necessary, can be taken.

During the passage of the Bill in another place, my colleague in the Commons, Mr Clive Efford, spotted a gap in the overall approach being taken here, which is that the responsibility for spread betting is and continues to be with the FCA, which does not have the licence conditions—including licence condition 15.1—that apply to those organisations registered through the Gambling Commission itself. However, in the period since then there have been meetings and discussions, and I am very pleased that we have now got to a situation where, in respect of those bodies that are involved in regulating sports events, which include spread betting operated under the auspices of the FCA, the effect will be that licence condition 15.1 will apply, so that all information can be channelled to those who require it in a way that will allow them quickly to take action if required. This is terrific—and, if I am going to hear that from the other side, we will welcome it. It may influence how we take forward this amendment.

However, in closing I make one point. The situation that we will find ourselves in if what I hope is the case comes through is that those in scope to the Gambling Commission will have the effect of licence condition 15.1 applied to them. But if there were a situation in which a spread betting organisation were to start taking bets on gambling activity but was not in scope to the Gambling Commission, the information flows would be interrupted. Can the Minister reflect on that point and give us some information, if he has it, on that issue? Subject to hearing more about that, I am very happy to move this amendment and look forward to hearing what the Minister has to say in response.

Baroness Heyhoe Flint (Con): My Lords, this amendment returns us to an issue that has already received considerable scrutiny. As we have heard, it is vital that national sports governing bodies receive information and intelligence about any untoward betting patterns as a matter of urgency so that they have the greatest opportunity to prevent corrupt activities and behaviour. Spread betting needs to be regulated just as effectively as fixed odds betting. Yesterday, the Minister informed noble Lords that the Gambling Commission is to extend the remit of its licensing code 15.1 to include spread betting in its information reporting requirements, as is placed on those who have a fixed odds betting licence. I commend this remit, because it will address most of the issues that sports bodies have raised. Presently, the two companies that offer spread betting also offer fixed betting and thus have Gambling Commission licences. Could my noble friend tell me when the Gambling Commission will introduce this new licensing code?

I am also pleased that in recent weeks the FCA has finally agreed to take responsibility on this issue, no doubt following pressure generated by noble Lords—

4 Mar 2014 : Column 1289

I say, immodestly. It has come forward with proposals for its own industry guidance for spread betting companies that take bets on sport. This guidance will be broadly similar to that issued by the Gambling Commission, but there are two main areas where it will be deficient in comparison and concerns remain.

The first is that the guidance will not be made public. I find that somewhat curious. Surely, regulatory requirements set by public bodies should be open, transparent and accountable. How is the sports sector to have confidence in a regulation if it does not know what it says? How can it be used as educational material or act as a deterrent in the sporting world if we cannot show people the actual guidance? Can the Minister give an assurance that a way will be found to make sure that this guidance is made publicly available to those in the sports sector?

Secondly, the industry guidance issued by the FCA will not require as a statutory requirement that the spread betting company must share any information that it has, not just with the FCA but, most importantly, with sports governing bodies. Sports bodies understandably have ongoing concerns about the quality of information that they might eventually receive and the speed at which it will be made available. I gather that the reason for this is that the FCA says that its own statutes do not allow it to instruct spread betting companies to share information directly with sports governing bodies. That would be a major anomaly and a threat to sports integrity, should a spread betting firm operate without having a fixed betting arm. That means that it would not fall under the regime being proposed by the Gambling Commission. Can the Minister tell me what action the Government are taking to ensure that any future spread betting company that is established and does not have a fixed betting operator licence will still be subject to the same requirements that the Gambling Commission is introducing?

The easiest way in which to guarantee a level regulatory playing field between traditional and spread betting companies would be to transfer responsibility for sports spread betting from the FCA to the Gambling Commission, as the amendment would seek to do. I understand that there are powers contained in a Treasury-regulated activities order that would enable the transfer of sports spread betting from the FCA to the Gambling Commission, which may be a more suitable route to address the issue than in this Bill. Could the Minister give a commitment that that option will be further explored as a matter of urgency, and that, should there be any development of standalone spread betting companies setting up, we could expect to see the application of a transfer of sports spread betting from the FCA to the Gambling Commission using that Treasury-regulated activities order? That would ensure that sports integrity continues to be upheld.

Lord Gardiner of Kimble (Con): My Lords, I thank the noble Lord, Lord Stevenson, for tabling his amendment, which seeks to ensure that spread betting operators who hold a remote gambling licence from the Gambling Commission are required to report suspicious betting patterns to both the regulator and

4 Mar 2014 : Column 1290

sports governing bodies under licence condition 15.1. Your Lordships have heard that my noble friend has tabled an amendment on that issue.

First, I acknowledge the determination with which Members of both Houses have pursued this matter—and the noble Lord, Lord Stevenson, mentioned one of his colleagues in the other place. The point about our deliberations is that it has undoubtedly led to more speedy progress.

As I said in Grand Committee, the Government take the issue of ensuring the integrity of sport very seriously. People must be able to trust that the sport that they are watching is fair and uncorrupted by cheating. The effect of this Bill will be that this will apply to all operators who offer remote gambling in the British market, regardless of where they are based, and information is at the very heart of the detection and disruption of any such corruption by regulators and sports governing bodies. But the Government believe that the following two-pronged approach achieves the objectives that noble Lords seek. This approach will ensure greater consistency in how suspicious activity is reported, and in a way that can be effectively enforced.

First, the Gambling Commission will soon be publishing its revised licensing conditions and codes of practice, which will include a change to licensing condition 15.1. This will make it clearer that, when a sports spread betting firm holds an operating licence with the Gambling Commission for its fixed odds activity, it will be required to report suspicious activity arising in relation to its sports spread betting activity. The revised licensing conditions will be published by the end of this month, and I say to my noble friend Lady Heyhoe Flint that the revised 15.1 will take effect in June.

Secondly, noble Lords will be aware of the FCA’s commitment to issue guidance for sports spread betting operators. The guidance will be issued under FCA Rule 15.3.17, which relates to the types of fraud and irregularities that must be reported to the FCA. The guidance will make it clear that the fraud and irregularities that will need to be reported by sports spread betting firms include suspicious sports betting. The FCA is also in discussion with the firms to put in place a mechanism by which information received by the FCA can be notified to the Gambling Commission and the relevant sports governing body. The finer details of the guidance are in the process of being finalised with the individual firms. However, I should make it clear that the underlying FCA Rule 15.3.17 is in place now.

I should say to the noble Lord, Lord Stevenson, and my noble friend Lady Heyhoe Flint that where a spread betting firm does not have a Gambling Commission licence, it will be bound by the updated FCA guidance, which will, of course, be mandatory.

We believe that the approach we are taking will work and will facilitate the appropriate sharing of information —the noble Lord, Lord Stevenson, particularly emphasised sharing of information, which is absolutely key to success—and it ensures that the licensing conditions, be it the expanded licence condition 15.1 adopted by the Gambling Commission, or the guidance issued by the FCA under the FCA rules, have a clear route

4 Mar 2014 : Column 1291

back to the relevant regulator. Any failure to comply by an operator will be enforceable by the relevant regulator.

My noble friend Lady Heyhoe Flint asked a number of questions, seeking confirmation. As regards publishing the FCA’s guidance, as this is individual guidance it would not normally be made public. However, I will ask the two spread betting firms if they would be content to publish this individual guidance, once it is finalised. I should also mention that the first draft of the guidance was shared with the Gambling Commission, for its consideration and comment.

On best practice in information sharing—another point raised by my noble friend—I can confirm that the commission established the tripartite forum, involving betting operators and representatives of sports governing bodies. That forum continues to provide a space for debating these kinds of issues, which, again, is very important.

As regards future changes to the regulation of sports spread betting, I understand that there has been recent discussion between the FCA and the Gambling Commission as to whether the question of transfer needs to be revisited. Indeed, this matter remains very much alive. However, it is a very complex issue, and there was a deliberate decision at the time of the 2005 Act that it remain within the regulatory purview of the FCA as a financial services product. However, I can confirm that the mechanism for transferring the regulation from the FCA to the Gambling Commission is by amending the regulated activities order by statutory instrument. That issue was raised by my noble friend.

I hope that I have been able to reassure noble Lords that action has, and is being, taken on this important issue to ensure greater consistency in the way that suspicious activity is reported, and how this can achieved. The Government take this issue extremely seriously as the work currently going on around sports integrity and match fixing illustrates. We believe that the steps we are taking, and what noble Lords seek, is the right path. Indeed, we think that our approach goes somewhat further than what is sought in the amendments in so far as the new FCA guidance complementing an enhanced 15.1 provision is concerned. On that basis, I very much hope that the noble Lord will feel able to withdraw the amendment.

Lord Stevenson of Balmacara: I thank the noble Baroness, Lady Heyhoe Flint, for her amendment and for speaking to it so excellently and, indeed, adding a number of questions which have provoked the Minister to take us further down this route, which makes us better understand the process that we are going through.

I also thank the Minister for acknowledging that this has been a co-operative team effort. He said that our deliberations had resulted in speedier progress. However, I think that they made the measure a bit better; I think he is being a bit mean in his praise. We were able to get together around some common themes that emerged as a result of the discussions on Second Reading and at the beginning of Committee, and, with others present today, we looked hard at what was being attempted here. In the sure and certain knowledge

4 Mar 2014 : Column 1292

that gambling (licensing and advertising) Bills do not come before your Lordships’ House very often, we decided to try to hook a lift on one or two paragraphs in order to make improvements, which I hope will be long lasting and effective in terms of improving the situation for the sports governing bodies, the regulators and, indeed, of course, the consumers, who are, after all, what this is all about. That is my rant over.

I am not very experienced in matters to do with legislation, having been a mere three or four years in your Lordships’ House, but this is a model that we might try to export and use again in some future circumstances. I am certainly up for that. I am very pleased that the Minister was able to spell out in a bit more detail some of the additional regulatory framework that exists. It is important that the FCA and the Gambling Commission are in discussion. As mentioned by the noble Baroness, Lady Heyhoe Flint, there probably is a case for transfer of, if not all the functions, at least some of them because it seems to me that the regulatory functions relating to gambling will get more complex and will be challenged by the new technologies, and I am sure that the FCA has other issues on which to focus.

We will return to match fixing in later debates this evening so I will not delay the House further on that point. In the interim, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

7.45 pm

Amendment 3

Moved by Baroness Jones of Whitchurch

3: After Clause 1, insert the following new Clause—

“Consultation on remote gambling advertising

The Secretary of State shall consult on the current regulatory position concerning advertising of remote gambling and other forms of online gaming activity where it is likely to be seen by, or influence, a child or children and shall lay a report of the findings before both Houses of Parliament not later than the final day of 2014.”

Baroness Jones of Whitchurch (Lab): My Lords, Amendment 3 calls for a review of the effects of online gambling adverts shown to children before the 9 pm watershed. Our amendment calls on the Secretary of State to conduct an investigation into whether there are sufficient controls, and report back to Parliament.

Our amendment recognises that the world of gambling adverts has changed dramatically since the 2005 Act, which gave exemptions to adverts for betting on televised sporting events and for bingo. Since then, televised sports coverage has multiplied so that it is now possible to watch sports programmes 24 hours a day, seven days a week. This has coincided with the massive growth in online gambling, so rather than place a bet in a betting shop on the outcome of a race or a match, gambling is now carried out at home. It is instant, compulsive and has become more complex. It is no longer enough to bet on the outcome of a game, you are now encouraged to bet on the first no-ball, the first

4 Mar 2014 : Column 1293

corner, the first goal scorer and so on. This has been fuelled by the growth of spread betting with high stakes and winnings, but also potentially high losses.

As we have already identified, these days, viewers of televised sporting events are bombarded with betting adverts in the commercial breaks, with all kinds of tempting, and often misleading, offers for correctly predicting the run of play and the outcome. They capitalise on viewers’ excitement and emotion in the moment.

Equally, in 2005, I do not think that anyone predicted the rise of online bingo. In its original form, bingo had a strong social aspect, providing a safe community activity, particularly for women, in predominantly working-class areas. However, online bingo has none of these attributes: it is solitary, repetitive and addictive. It is not surprising to discover that most online bingo adverts are on daytime TV, targeting those who are home alone.

There is a third development which was also not anticipated, which is the rise of gambling adverts throughout the day on social media and music websites, which by their very nature are targeting a younger audience. We know that gambling adverts are profitable and increasingly prolific. For example, between 2005 and 2012, while the total number of TV adverts almost doubled, over the same period the number of gambling adverts increased eightfold to more than 4% of the total adverts shown. It may be that a more general review of the regulation of these adverts is necessary, but our amendment seeks to address one aspect of particular concern, which is the exposure of children to these ads before the 9 pm watershed.

Of course, these adverts are not specifically targeted at children, and there are codes of practice that prevent adverts seeking to exploit young people or appealing to children. However, this is not the point. The fact is that children are being increasingly exposed to remote gambling adverts as they watch TV sport or daytime TV, or listen to music channels. We know that children will often be accessing these programmes without their parents being present, and we know that children are more computer savvy than their parents and can therefore be tempted to find ways to participate in these betting opportunities. We also know from other studies how susceptible children can be to adverts, which is why there are already restrictions on other adverts before 9 pm.

Following Committee, the Minister wrote to us on this issue and I am grateful to him for the letter. He referred us to an Ofcom report published in November last year and went on to say that its research suggests that the current arrangements are working well. I have to say to the Minister that I have looked at the report and it was far from reassuring. Instead, it showed that since 2005 children’s exposure to gambling ads has increased by 272%, whereby in 2012 there were 1.8 billion views of these ads by children. Moreover, in 2012 children were exposed to more than 8% of all the lottery and scratchcard ads on music channels. I could quote more examples but the point is that I do not see anything in that Ofcom report that suggests that these statistics are acceptable.

The truth is that we do not know the extent to which children are influenced by these ads but we know that sports, bingo and social media ads are

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multiplying and becoming more sophisticated. This is why our amendment calls on the Secretary of State to initiate an investigation into the impact of these adverts on children and report to Parliament on her findings. We were therefore pleased to read at the weekend that the Secretary of State has now accepted the need to look again at the regulation of gambling advertising with the aim of providing better protection for children and the vulnerable. We were also pleased to receive yesterday a letter from the Minister confirming that an independent review will now be carried out, with the aim of implementing any changes in the autumn of this year.

It would therefore be helpful if the noble Lord could confirm today who will be involved in this review and who will make the ultimate recommendations to the Secretary of State. Can he also confirm whether the review will be underpinned by an open consultation? Can he reassure the House that Parliament will have the ultimate say on the proposals? Can he confirm the projected timetable for this review if it is anticipated that the changes will be implemented in the autumn?

It is in all our interests that we understand, while there is still time to act, whether these ads are encouraging a gambling culture among children. I hope that the noble Lord is able to reassure us that the Government are now prepared to take this issue seriously and have a robust and accountable review process in place. I look forward to his response on this matter.

Lord Clement-Jones (LD): My Lords, my motives in speaking to this amendment are entirely about probing further. I appreciated much of what the noble Baroness had to say about the opposition amendment and I am massively impressed by the growing consensus between the two Front Benches as the evening draws on.

However, the nature of the amendment is much narrower in scope than the review that the Secretary of State has promised. I am a little concerned about the sudden switch that has taken place. The noble Baroness referred to the letter of 22 January from my noble friend, as compared to the most recent letter of 3 March. There has been quite a turnaround, and we had the article from the Secretary of State in the Sunday Times last weekend. What concerns me is that this or any inquiry has to be firmly rooted in the evidence. I absolutely share what the noble Baroness had to say about the importance of child protection and the exposure of children to these gambling adverts but I do not want us to engage in some kind of moral panic when it comes to advertising to adults.

Gambling and the activities that take place, whether in casinos or remotely, are legitimate and it is legitimate to advertise them. Unless there a clearly established connection between advertising and problem gambling—from the research so far, it does not appear to be a major factor—I hope that this debate will be devoted largely to looking at the impact on children. There probably are conflicting views on the nature of the Ofcom evidence: the Advertising Association seems to be saying that only 42 seconds of advertising out of nearly 17 hours spent watching television each week is seen by 10 to 15 year-olds. I do not know whether that is the case or whether the figures that the noble Baroness,

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Lady Jones, cited are correct. If there is an issue here, we should definitely explore it. From his letter, I know that the Minister will clearly respond positively.

However, I am concerned, particularly when the Secretary of State makes a statement referring to a 600% increase in gambling advertising. I am not a mathematician; in fact, I am virtually innumerate but I know that if you use percentages such as that it can sometimes be from a very low base. Let us face it, between 2006 and now, remote gambling of the kind that is advertised so heavily has grown hugely as an industry, and it is hardly surprising that gambling advertising of that nature has increased in that period.

All that I am saying is that I hope that when the Secretary of State commissions this inquiry, questions of the kind being asked by the noble Baroness will be answered. I also hope that those answers will be firmly rooted in evidence and that we do not just rush to condemn gambling advertising per se, when what we are really after is the impact on the under-18s.

Lord Mancroft (Con): My Lords, I had not intended to intervene in this short debate but, after listening to my noble friend Lord Clement-Jones, I cannot resist doing do.

Looking around your Lordships’ rather empty House at this late hour, I see that I am the only Member who sat on the joint scrutiny committee on the 2003-04 Bill, which became the 2005 Act. I remember the tortuous hours of evidence that we heard about the effects that this new phenomenon of gambling advertising would have. I do not make this as a party-political point but as a general political point: the Government of the day swept that aside. I heard my noble friend give a figure of a 600% increase but that was of course from a low base, which was zero; there was no advertising of this sort at that time. It was introduced under the 2005 Act, amid a lot of people—some sensible and some not so sensible—saying that it would cause awful mayhem. Of course, there is no mayhem and nightmare because the background is that we were also advised that we should take into account what is now called evidence-based policy, which is introduced on expert advice and allows the Minister of the day to avoid exercising his political judgment—probably the reason for which he was elected, but that is neither here nor there.

However, the reality is that this debate is the child of the 2005 Act, which was put through far too fast, not thought through and not based on evidence. Now we are in this Bill having in part to clean up some of the mess that the Act created—quite rightly, because that is what Parliament does from time to time. However, that is the history and everyone has to recognise that that is what happens when you legislate in haste.

Baroness Howe of Idlicote: My Lords, I add my support for the amendment in the names of the noble Baroness, Lady Jones, and the noble Lord, Lord Stevenson. Having listened to everybody’s contributions, I think that what is really important here is the effect on children of this increased access to advertising. It provides an early start to children getting gambling problems, which then have to be sorted out, and that is

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what my amendment was seeking to address. I do not feel one way or the other about what other noble Lords have said but I think that the age of the children being exposed to this advertising is important. A 10 o’clock watershed would be ideal if only it could be applied to online activity, although we all know that it cannot. Nevertheless, other ways of checking this should certainly be looked at in detail.

8 pm

Lord Gardiner of Kimble: My Lords, I thank the noble Baroness for tabling this amendment in respect of gambling advertising, particularly because, as noble Lords have said, there have been some recent developments in this important area.

The Government recognise that the relaxation of restrictions on gambling advertising following the implementation of the Gambling Act in 2007 has led to a significantly greater volume of gambling advertising on television and in other media. Indeed, over the weekend my right honourable friend the Secretary of State expressed concern about some of these developments and outlined some of the actions that will be taken.

Although the nine o’clock television watershed arrangements—I think that the noble Baroness, Lady Howe, mentioned 10 o’clock but my understanding is that the watershed arrangements are from 9 o’clock at night—have limited the exposure of children to such advertising compared with adults, children still see considerably more gambling advertising on television than ever before.

In addition, we have seen significant innovation in the gambling industry since the current regulatory controls were established in 2007. The codes, including the industry voluntary code, which govern gambling advertising are now applied across a much changed gambling landscape with the availability and promotion of new products which were not anticipated when the codes were devised. These technological developments have led to intense competition in remote gambling advertising, which has coincided with an increase in complaints about gambling advertising to the Advertising Standards Authority. It is timely, therefore, that the codes are re-examined to ensure that existing controls keep pace with developments in the market and that they remain consistent with public expectations about gambling advertising.

Noble Lords may be aware that the Government have been working for over six months with the organisations responsible for regulating gambling advertising to monitor the impact of developments and to consider whether the current controls remain adequate. In particular, I reassure the noble Baroness, Lady Jones, that this work includes both remote gambling advertising and other forms of online gaming activity, including online bingo. As a result of these discussions, I am now in a position to explain the four strands of work being undertaken, and to what timetable, to ensure that the regulatory controls on gambling advertising are properly examined, especially in relation to children and the most vulnerable. The Secretary of State particularly mentioned children and the most vulnerable.

I say to my noble friends Lord Clement-Jones and Lord Mancroft that it is absolutely key that this work is rooted in evidence and that there is a thorough

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review. Therefore, the first of the four strands is that the Government have asked the Remote Gambling Association to co-ordinate an industry-led review of the voluntary Gambling Industry Code for Socially Responsible Gambling. As noble Lords will be aware, this code supplements the principal regulations on gambling advertising by providing industry standards in certain areas, including educational messaging and the 9 pm watershed arrangements for television advertising. The Remote Gambling Association has agreed to complete its review with a view to coming forward with any proposed revisions by the summer of this year.

Secondly, the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have committed to evaluate the findings of a new report into gambling advertising to consider what regulatory implications arise as a result. This report will be published by the Responsible Gambling Trust this month and will examine the available evidence on gambling advertising and its relationship with problem gambling. The committees will publish their findings on completion of this work, which could lead to changes in the principal codes controlling gambling advertising. The findings are expected by the autumn of this year.

Thirdly, the Advertising Standards Authority will undertake a review of its enforcement action on the gambling rules, taking into account internal intelligence, complaints statistics and trends to ensure that it is enforcing the rules proportionately and consistently. The ASA will communicate the outcome publically by the autumn of this year.

Finally, the Gambling Commission will consider what revisions might be necessary to the licence conditions and codes of practice to ensure that all gambling advertising continues to comply with the licensing objectives of the Gambling Act. This work will be principally focused on ensuring that free bets and bonus offers are marketed in a fair and open way by the gambling industry.

I hope that that provides noble Lords with the reassurance that significant activity, which can have a real impact, is in hand. To my noble friends in particular, I emphasise that this will be rooted in evidence, and there are four strands to it. The terms of reference for the reviews are currently being defined and will be made public by the spring.

I am confident that the multi-agency approach will provide the comprehensive and robust examination that is necessary. As regards the point made by the noble Baroness, Lady Jones, about consultation, the Government intend to involve all relevant stakeholders during the review. Any statutory regulations would be preceded by consultation and the Government will confirm their position by the end of this year. They will consider the findings of the review before determining what further action may be necessary and will confirm their position by the end of the year. I will arrange for a summary of the findings of the reviews and the Government’s response to be placed in the Libraries of both Houses as soon as they are available but definitely by the end of this year. I very much thank all noble Lords for contributing to the debate. On this basis, I hope that the noble Baroness will feel able to withdraw her amendment.

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Baroness Jones of Whitchurch: My Lords, I thank very much noble Lords who have spoken in this debate and the Minister for his reply. I echo his view that of course any proposed changes should be based on evidence and empirical research, which has been somewhat lacking in the past. Therefore, there is a rather urgent need to address that issue. Nevertheless, I welcome the change in mood and position from the Secretary of State and the Minister over the past couple of months. It has been a very welcome conversion on the road to Damascus. I also welcome the detail that the Minister has spelt out in terms of the steps that will now be taken. I suppose I have a remaining concern that, although the Minister described them as four strands, there very much is a need to pull those four strands together and to pull them into an ultimate set of recommendations. I am taking him on slight trust that that certainly is the intention of the Secretary of State and that we will end up with one set of recommendations regardless of the four pieces of work that are taking place. I very much welcome the commitments that the Minister is now able to give.

When a Bill is over, there is a tendency sometimes in this House for it to be out of sight and out of mind but in this case we will pursue the Government as regards the work that is taking place over the coming months and try to hold them to account for the commitments that they have given. In the spirit of co-operation and working on the basis of trust, I take the Minister’s good word on this matter. Therefore, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendment 4 not moved.

Amendment 5

Moved by Viscount Astor

5: After Clause 1, insert the following new Clause—

“Power to extend the horserace betting levy to overseas bookmakers

(1) The Secretary of State may by regulations amend any provision or provisions of the Betting, Gaming and Lotteries Act 1963 (at a time when the provisions listed in section 15(1)(a) to (c) of the Horserace Betting and Olympic Lottery Act 2004 (horserace betting levy system) have not been entirely repealed by order under that section), the Gambling Act 2005 and/or the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159 for the purposes of ensuring that each person who holds an operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting shall be—

(a) liable to pay the bookmakers’ levy payable under section 27 of the Betting, Gaming and Lotteries Act 1963; and

(b) subject to the provisions of section 120 of the Gambling Act 2005 (as modified in accordance with the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159) if that person is in default of such bookmakers’ levy.

(2) Regulations under this section must be made by statutory instrument.

(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

Viscount Astor (Con): My Lords, I should start by thanking my noble friend Lord Clement-Jones, and the noble Viscount, Lord Falkland, for moving this amendment in Committee. I also thank the noble

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Lord, Lord Collins of Highbury, for his support for the amendment. I should apologise for missing Committee but after joining the Prime Minister on his trip to China in December, I was called back to Beijing in January and so missed that stage.

My amendment produced an informed and generally supportive debate. The Minister concentrated his response by saying that now was not the right time to replace the levy and that a reform was needed to be considered across the whole system. I absolutely agree but my amendment does not seek to reform the levy. I agree that there should be a major reform that takes in all aspects of the issues that surround racing, whether it is on-course betting, off-course betting, offshore or onshore betting, betting exchanges, media rights or issues of state aid.

My amendment is simple. It allows the Secretary of State to bring in legislation to encompass offshore bookmakers who do not presently pay the levy. Racing is losing about £10 million a year that it is entitled to. That word “entitled” raises the question of why. There is a simple analogy. If the Government are going to regulate those based overseas on areas such as problem gambling and integrity on bets on UK sports, that shows that there is already that reach and the entitlement. My amendment does not force the Government to do anything but if they want to support racing they could use it. It does not cost any money and, in fact, it would provide an addition to the Treasury coffers. The reason it is important for racing is that we know that there is no time to legislate this Session. Therefore, the earliest time will probably be half way through the next Session of Parliament, by which time racing will have lost out on nearly £100 million of income.

I read carefully the Minister’s response in Grand Committee. He said that my amendment was too narrow in its scope. That may be so, so I look forward to the Government widening and improving it. The Minister said that the levy is regarded as state aid by the EU. I think we all agree with that. However, my amendment does not change anything. It just allows the levy to be collected as it used to be from all bookmakers. It is not necessarily a substantive change to the existing system as some have claimed. If permission is required from the European Parliament, the Government can ask for clarity before they proceed. After all, that is what the French did and it worked. If accepted, the amendment would allow the Government to continue their discussions with the European Commission.

My amendment supports the racing industry. Following the very useful discussions I have had with the Minister of Sport, Helen Grant, I understand that my noble friend might be able to reconsider his earlier response. I look forward to his reply. My amendment would put bookmakers based in the UK on an equal footing with those based abroad. It would allow the Government, if they wish, to remove the unfair competition that those based abroad currently enjoy and which benefits racing. I beg to move.

Lord Clement-Jones: My Lords, I rise briefly to support the principle of my noble friend’s amendment. It would be especially suitable for the Minister to take

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heed of it as it is the Chinese year of the horse. My noble friend spent some time in Beijing, so clearly he was inspired by the horse to put forward the amendment.

The question is whether we are going to miss the boat. The opportunity has been taken to hang off the architecture of the Bill a number of amendments that do not necessarily relate to remote gambling. It is incumbent on the Minister, if he is going to avoid further and perhaps unwanted amendments, to reassure those of us who see a boat going by without the opportunity to make desirable amendments, because we know that there will not be another gambling Bill for another five years or so. This is one of the issues that we face. I hope that the Minister will be able to give us an assurance on the ability of the Government—or any Government—to institute a new, improved form of levy that safeguards the future of the industry, without it being incorporated in the Bill. Otherwise, it will make reserved powers very attractive as a mechanism for introducing a future form of levy. That is a dilemma.

This evening, the Minister very adroitly proceeded by way of voluntary agreements and assurances in a number of areas, or by actions that do not require primary legislation. I hope that this will be another such instance. However, it is a subject of considerable anxiety in the racing industry and I very much hope that the Minister will be able to satisfy all those who want to see some action going forward in this case.

8.15 pm

Lord Collins of Highbury (Lab): My Lords, I am very pleased to associate myself with this amendment. I hope that my new alliance with the noble Viscount will produce positive results tonight. Perhaps it is a sign of things to come and we can co-operate on other issues.

What the noble Lord said reminded me that, in the Chinese zodiac, I am in fact a horse. However, that does not mean that I support the amendment simply from a vested interest point of view. Many people have placed a bet on a horserace at one time or another, but I suspect that few realise that racing is the second largest sporting employer, supporting a predominantly rural industry that makes a significant contribution to the UK economy.

As we have heard, the purpose of the amendment is to capture the revenue that should be paid, as Parliament has already determined, from all betting operators that take online and telephone bets on racing in Britain, wherever they are located. I pay tribute to my honourable friend Clive Efford in the other place, who has consistently raised this issue. The change, as we have heard, could be worth up to £20 million a year to British horseracing, and would undoubtedly lead to a healthier sport, and to more investment, growth and jobs.

Too often, people focus just on the prize money and do not see the work of the board and the training, education and employment initiatives that the levy supports, year in and year out. Nor do they see the broader picture of how the industry has a direct link to building sustainable rural economies. Why should offshore betting operators and those in betting shops pay the full levy while others who are based overseas and do not have a voluntary agreement pay nothing?

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In Committee, we heard the argument that any reform of the levy to capture revenues under a point of consumption licensing regime would constitute state aid. As the noble Viscount pointed out, that interpretation is not accepted by the British horseracing industry—and nor, following the ruling of the European Commission, is it one that we need to accept. The French raised the issue and we have had a decision on it.

This sets a precedent that I understand is being reviewed by the department’s lawyers. Clearly it is better that we should rely on new legislation rather than just have another round of disputes following messy court cases. I agree with the comment that in the long term, the Government may want to consider a more modern and commercial framework for the levy. That is something that I know the industry would support. However, with the best will in the world, the sport will be waiting several more years for that, all the while losing out on a vital source of income. Action has long been required and Ministers must not simply allow this once-in-a-Parliament opportunity for primary legislation to pass.

Clearly, there is a strong argument for further consultation and assessment of the implications of the European Commission’s warning on state aid. However, I would ask the Minister to begin consultation on levy reform as soon as possible and to include all options, particularly the option for a “horseracing right”. As the noble Viscount said, the amendment is about the reserve power to allow that to happen, giving the Government the opportunity to consult the Commission and, if that route of action is considered the right one, the power to act. I look forward to hearing the Minister’s response.

Lord Gardiner of Kimble: My Lords, my noble friend’s amendment seeks to give the Secretary of State reserved power to extend liability to pay the horserace betting levy to offshore remote gambling operators. We have had some useful discussions about the future of the levy at all stages of the Bill, including some particularly interesting ones in Committee. They have been extremely valuable and I want to reassure your Lordships that the Government have been listening. I am grateful to all noble Lords for the constructive discussions we have had.

We agree with the view that while we still have a statutory levy, it should be fairly applied. Furthermore, we are persuaded that including a clause about extending the levy to offshore remote operators is fully in keeping with the context and purpose of the Bill. We will therefore bring forward a government amendment at Third Reading which will remedy your Lordships’ concerns about ensuring a level playing field between onshore and offshore betting operators in terms of the levy. With the consent of the House, this amendment will give the Secretary of State power to use secondary legislation to secure extension of the levy to offshore remote operators. I shall ensure that all noble Lords who have expressed an interest in this matter during the Bill’s passage are invited to a briefing on the detail of the amendment before Third Reading. Bringing forward a government amendment will complement the work which, as I mentioned to your Lordships, is already under way to seek clarity on the

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state aid issues from the European Commission. The Government will consult on implementing an extension before any secondary legislation is brought before Parliament.

The Government want British racing to continue to thrive. I know from my own experience just how important racing is to so many in the countryside and of course in all communities—not only its economic impact but the pleasure it gives to so many millions of people. Extending the levy to offshore remote operators will help achieve the objective we all share. I want to say particularly to the noble Lord, Lord Collins of Highbury, that bringing forward a government amendment about extending the levy in the way that I have described does not of course close down options for wider levy reform or replacement. This is very much work in progress.

The Government have committed to bringing forward an amendment at Third Reading which will achieve the outcomes being sought tonight. Consequently, I ask my noble friend whether he will withdraw his amendment.

Viscount Astor: My Lords, I am particularly grateful to my noble friend for his response and I thank him for all the help that he has given me. I also thank the officials in his department for all the help that they have given on this issue. It has been extremely useful and we have come to a very satisfactory conclusion.

I think that all noble Lords agree that we want a commercial relationship between all the entities that comprise the racing industry. However, we need the Government to take a lead. If they do not, I am afraid that the industry will not come up with a solution itself, as there are too many vested commercial interests at play. I hope that the Government will consider setting up a consultation process with all involved in the racing industry to consider how best to put this new commercial relationship in place to replace the levy at a point in the future.

I should have declared an interest in that I own one and a third legs of a three year-old. I have to say that, on its current form running as a two year-old, I do not think it will be contributing to the levy or indeed benefiting from it. However, I am ever hopeful, and if your Lordships are interested in contributing to the levy, it is called Squaw King—it is trained by Eve Johnson Houghton and I very much hope it will run in May. In the mean time, I thank all those who spoke in this debate, particularly my noble friend and the noble Lord opposite. I thank the Minister and beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6

Moved by Lord Clement-Jones

6: After Clause 1, insert the following new Clause—

“Facilities for remote gambling

(1) Section 235 of the Gambling Act 2005 (gaming machine) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (h)(ii), leave out “and”, and

(b) in paragraph (i)(iii), at the end insert “, and

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“(j) a machine is not a gaming machine by reason only of the fact that it is remote gambling equipment (within the meaning of section 36) which is made available for use in a casino”.

(3) After subsection (2) insert—

“(2A) The Secretary of State may make regulations providing for the nature of, and circumstances in which, remote gambling equipment to which subsection (2)(j) applies (a “casino remote terminal”) may be made available for use in a casino.

(2B) Regulations under subsection (2A) may, in particular, provide for—

(a) a casino remote terminal to be constructed or adapted so as to—

(i) only permit users to gain access to remote gambling facilities; and

(ii) not be capable of accepting or processing any form of payment; (other than any payment made by the user via an online account to the provider of the remote gambling facilities),

(b) the maximum number of casino remote terminals which may be made available in a casino,

(c) the location within a casino where, and circumstances under which, a casino remote terminal may be used,

(d) any other matter.””

Lord Clement-Jones: My Lords, as I pointed out in Grand Committee, during pre-legislative scrutiny of the Bill, the Culture, Media and Sport Select Committee made a cross-party recommendation to the Government to amend the Bill to allow British bricks-and-mortar casinos to offer their online gaming products within their own premises.

Currently a regulatory anomaly means that people can play on remote internet sites using their own mobile phones, tablets or laptops, whether in their homes, on the move or in any public or private place, including inside a casino. However, while under existing regulations onshore casino operators can and do hold remote licences which permit them to advertise their online products in their casinos, these licences do not allow operators to indicate that the product is available from any internet-linked computer within their casinos or advertise their online sites on or around an actual computer with internet access supplied by the operator. In other words, it is currently illegal for a casino to offer a customer access to their own legitimate online business if the customer is inside their bricks-and-mortar business.

It seems commercially illogical that the most rigorously controlled premises, intended by statute to be at the top of the regulatory pyramid, are not permitted the most up-to-date technological products. This amendment would simply provide a synergy between the casino’s online and land-based products, already recognisable to casino customers, in a similar way to land-based bricks-and-mortar retailers, such as John Lewis, which offers its products in store and via an online facility inside its land-based stores.

More importantly, it is also a missed opportunity to undertake research and player protection in that the product itself will not be available in terrestrial casinos, which are required by law to have the most rigorous control measures. All casino gaming staff are licensed by the Gambling Commission; all staff, including all food and drink and administrative personnel, are trained annually in responsible gambling practices; and effective

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policies are in place to protect the young and vulnerable. UK terrestrial casinos already provide their customers with laptops, iPads and computers, which are available in their business-style lounges, and the products that could be offered through this amendment are not slot machines.

The Government’s intention appears to be to continue to categorise internet terminals supplied by operators in casinos as gaming machines—probably category A machines—while allowing the use of precisely the same devices owned by customers in those casinos without restriction. The idea that consumers accessing their own accounts on a gambling website should have the content controlled simply because it is in a different area of the same building and on something called a category A gaming machine provided by the operator rather than on their own internet access device adds nothing to player protection and is confusing for the consumer.

In Grand Committee the Minister raised a number of concerns, notably around the perceived lack of controls over how remote terminals might develop. This new amendment seeks to respond to all those concerns. It defines the exact nature of a remote gaming device and addresses the concerns raised by the Minister by placing the responsibility for all associated decisions solely with the Secretary of State. It provides the Secretary of State with the power to stipulate not only the maximum number of remote terminals within a casino but the location where and the circumstances in which a remote terminal may be used, as well as a remote terminal’s specific use and appearance and the fact that these machines would not be capable of accepting or processing any form of payment. To go one step further, the revised amendments would even enable the Secretary of State to provide for any other matter. I really believe that this new amendment would provide DCMS with all the safeguards it requires.

8.30 pm

These proposals can realistically be achieved only through primary legislation. I noted what the Minister said in his letter and understand that he still says that the changes the industry desires to allow remote devices in casinos can be achieved by the secondary legislation route. However, that is very much not the preferred route of the industry. As I said, it leads to all the complications of designating these machines as category A. I believe that that position has been repeated to the National Casino Forum by officials and the department’s lawyers, but without any detail given about how secondary legislation could be effective. There are considerable uncertainties about this route. Surely trying to do this via just secondary legislation would add an unnecessary layer of complexity and uncertainty, whereas this amendment would give clear definition to the changes.

I very much hope that my noble friend will agree that this amendment offers and provides all the necessary safeguards, including going further with the provision for the Secretary of State to regulate on any other matter. In conversation, the Minister used the phrase “unforeseen consequences”. However, as an enabling piece of legislation that does not necessarily need to be brought into effect, it is simply there for use if it is decided that that is the way forward. That would seem

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to cater for all unforeseen circumstances. In many items of government legislation—I think of the Digital Economy Act as merely one—quite often sections are not brought into effect where the Government, on mature reflection, believe it is right to not do so. I very much hope that the Government will accept this amendment on the basis that it is perfectly possible to have a clause in the Bill and then maturely reflect on whether it is the right way of dealing with an issue. I believe that it is. Eventually, if the Government incorporated it, it would be a sensible addition to the remote gambling provisions. I beg to move.

Viscount Astor: My Lords, my name is attached to this amendment as I fully understand the arguments made by the casinos sector. It is in what one might call an unfair position at the moment. I understand that my noble friend the Minister is not unsympathetic to those arguments.

As I understand it, the difficulty is that the department, while having what one might call fruitful discussions on the issue, believes that the solution can be progressed safely and satisfactorily through secondary legislation. Of course, it would be helpful if the outline of that secondary legislation could be agreed before we get to Third Reading but I accept that this is a complicated area—the more so as one looks at it and realises what can be accessed online, whether with one’s own machine or one provided by a casino. I understand that the Government want to get this right.

I presume that my noble friend the Minister will want to come back again and say that secondary legislation is the right way to proceed with this issue. I will accept his assurance provided that he can give one bit of comfort to us: that, once this Bill has completed its passage through the House, the issue will not be kicked into the long grass and forgotten but will still be dealt with. It should be looked at carefully and as speedily as possible. I am sure that it will be, so that we can have a solution that is satisfactory to all those concerned.

Lord Mancroft: My Lords, I, too, put my name to the amendment in Grand Committee. Amazing though it may sound to your Lordships, the Prime Minister manages to travel the world without my company so, unlike my noble friend Lord Astor, I cannot claim that I was in China. I cannot actually remember where I was, but it was not in China.

There is no need to explain the background: my noble friend Lord Clement-Jones has done that adequately. Reading the Hansard of Committee stage to prepare for this evening, I noticed that my noble friend Lord Flight—who, sadly, is not in his place this evening—described the anomaly that my noble friend Lord Clement-Jones talked about and which the amendment is intended to address as a silly anomaly. Nonsense, he called it. He said that the amendment in its previous incarnation was straightforward and common sense. That was quite right. He also described the Government’s position at the time as pretty silly, and he was quite right about that too.

In Committee, the Minister talked about basing remote gaming around existing machine rules—I think I have quoted him correctly on that. It was that which

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really drew my attention to this, because I have history on legislation in gambling regulation. That is the sort of thing that leads to ineffective and bad regulation. That is exactly what the previous Government tried to do when a new class of gaming machine came out. That is the problem that we now have with what are called fixed-odds betting terminals, which are not betting terminals at all: they are gaming machines. It is really important when new machines and new forms of gambling appear that we regulate them correctly and do not try to fit them into boxes that are not really there. That is what I would call the DCMS’s attempt at the King Canute style of regulation, holding back the waves of new technology. That is what we did before and we must be very careful not to do it again in this case. My noble friend Lord Clement-Jones’s amendment is an attempt to address that.