26 Mar 2014 : Column GC169

26 Mar 2014 : Column GC169

Grand Committee

Wednesday, 26 March 2014.

Arrangement of Business


3.45 pm

The Deputy Chairman of Committees (Viscount Simon) (Lab): If there is a Division in the House, the Committee will adjourn for 10 minutes.

Domestic Renewable Heat Incentive Scheme Regulations 2014

Motion to Consider

3.45 pm

Moved by Baroness Verma

That the Grand Committee do consider the Domestic Renewable Heat Incentive Scheme Regulations 2014.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, I am pleased to open the debate on the Domestic Renewable Heat Incentive Scheme Regulations 2014. Before focusing on the details of these regulations, I will take time to provide some background to the scheme, which I shall now refer to as the RHI.

In November 2011, we introduced the world’s first long-term financial support programme for renewable heat—the non-domestic RHI. Today, I am very pleased to introduce the regulations to extend this innovative and ambitious scheme to householders.

This decade, the RHI will help to contribute to meeting the country’s 2020 renewables target. The RHI also has a longer-term ambition. By encouraging people to switch to renewable heating now, the RHI is preparing the country for the widespread rollout of low-carbon heating from 2020 onwards, helping us to achieve our 2050 aim of near-zero carbon emissions from household heating. The RHI and, in particular, the domestic scheme also have an immediate aim—to help householders to reduce their heating bills. Heating is the single biggest energy use for householders. For people living off the gas grid whose costs are greatest, this represents a significant burden. Off-gas grid consumers could see between 10% and 40% savings in their heating bills, as well as saving carbon by moving away from fossil fuels. Moreover, renewable heating systems function better within properly insulated homes. The domestic RHI, working with the Green Deal, can therefore offer a whole-house solution to high energy bills.

The RHI covers the whole of Great Britain, with Northern Ireland running its own scheme. Our non-domestic scheme, launched in 2011, supports the installation of renewable systems that heat commercial, public or not-for-profit properties and systems that

26 Mar 2014 : Column GC170

heat multiple homes. The latest published figures show that we already have in excess of 4,700 applications, more than £38 million paid in RHI support and more than 978 gigawatt hours of heat generated from renewable sources under that scheme.

It has always been our intention that the RHI will be extended to cover the domestic sector. The innovative nature of the domestic RHI as a world first means that it has been a challenging and time-intensive policy to develop. We have consulted extensively. In September 2012, a public consultation was launched to seek views on proposals for the domestic scheme. This provided us with a huge amount of valuable evidence from stakeholders and a wide range of views, all of which we have to consider.

Given the current economic climate and the need to deliver value for money through government expenditure, it was particularly important to get the scheme right. Following this period of extensive analysis, the finalised scheme outline was published in July 2013. Providing support until the launch of the domestic RHI, the renewable heat premium payment grant scheme has, to date, supported the installation of more than 17,000 renewable heating systems by homeowners and social landlords. The budget for the domestic RHI allows for more than 35,000 installations in the first year of the scheme before a reduction in tariffs is triggered.

The domestic RHI scheme which these regulations will implement will extend RHI support to renewable heating systems that heat individual homes, provided they were installed on or after 15 July 2009. The scheme will be open to everyone, whether they are connected to the gas grid or not. Those who live off the gas grid with high heating costs will benefit the most from switching to renewable heating. Homeowners, social and private landlords, their tenants, and self-builders can all benefit.

The domestic RHI will support biomass-only boilers and pellet-only stoves with integrated boilers. It will also support air-to-water, ground-to-water and water-to-water heat pumps, provided that they run on electricity. Both biomass and heat-pump systems will be eligible only if they deliver heat via a liquid—for example, through radiators—and provide space heating only or both space heating and hot water. Evacuated tube and flat plate solar thermal panels will be eligible too, although only if they provide just hot water. Panels that generate electricity as well as heat will not be eligible. The list of technologies that will be eligible at the launch of the scheme is fixed. That said, however, we recognise the importance of innovation and we will consider including other technologies in the future.

To provide consumer protection, the regulations require that all products meet specified, recognised European technology standards. Furthermore, an installation must be certified by the Microgeneration Certification Scheme or an equivalent scheme. MCS is a quality mark that demonstrates compliance with industry standards. It has a framework in place to deal with any potential disputes between homeowners and installers. We also want to protect air quality from any potential impacts of increased uptake of biomass; the domestic RHI therefore follows the non-domestic scheme by setting emissions limits in relation to the two main

26 Mar 2014 : Column GC171

pollutants for new biomass installations: particulate matter and oxides of nitrogen. Heat pumps need to meet an additional requirement: they must have a minimum efficiency rating—known as a seasonal performance factor—of 2.5 in order to ensure that they are genuinely renewable. Apart from self-builders who will already be meeting the requirements of current building regulations, we are also tackling the energy efficiency of homes by requiring loft and cavity wall insulation to be installed, where appropriate, and by requiring that a Green Deal assessment be undertaken.

Renewable heating technologies work best in an energy-efficient home and reducing the size of the heating demand from each house means that each home saves money on its fuel bills and that we can support more households through the RHI. The domestic RHI will provide ongoing support in the form of tariff payments based on a set rate per unit of renewable heat produced; the rate depends on the technology installed. Tariff rates compensate for the additional costs of installing a renewable heating system compared with a conventional off-gas grid system, such as an oil boiler. Ofgem will administer the domestic scheme and will make the payments over seven years. They will be calculated quarterly and adjusted to reflect inflation each year. The basis for the payments will be the amount of renewable heat produced by the technology. In most cases, it will be based on an estimate of the amount of heat that the home needs in a year, known as deeming. For biomass and heat-pump systems, this estimate will be taken from the property’s latest energy performance certificate. For heat pumps, the figure will be adjusted to take into account the estimated efficiency of the heat pump in order to ascertain the renewable proportion of the heat produced. For solar thermal systems, payments will be based on the estimate of system performance produced as part of the installation.

In certain circumstances, applicants will need to install meters and will be paid based on their meter readings—for example, where the installation is in a second home or where there is an additional system in place that also provides space heating. Any payments based on metering will be capped at the amount set by the deeming approach. On top of their RHI tariff payments, a householder could receive additional payments if they take up the metering and monitoring service package. These packages are similar to a service contract and will allow the householder and the installer to view detailed information about the heating system in order to improve its performance. Only heat pumps and pellet-only biomass boilers will be eligible for these additional payments. The payment for heat pumps will be £230 per year and for pellet boilers it will be £200 per year. A mechanism for managing the budget for the domestic scheme will be in place using degression to control costs. Degression works by gradually decreasing tariffs as quarterly thresholds of spend are reached. Any reductions will be announced with one month’s notice and the reduced tariffs will apply only to new applications. DECC will also publish monthly updates of spend and progress towards triggers which will allow applicants and installers to determine the likelihood of a future decrease to their tariff.

26 Mar 2014 : Column GC172

RHI participants will need to provide annual declarations and, in certain circumstances, further information about their ongoing compliance. Ofgem will also have the power to investigate further and to withhold or claim back payments of non-compliance.

Finally, a random selection of applicants will be chosen to have meters installed which collect data on performance of technologies for evaluation. The cost of the installation will be covered by DECC.

These regulations will have effect in England, Scotland and Wales. RHI policy in Northern Ireland is devolved. Scottish Ministers have given their consent to regulations as required by the Energy Act 2008. Northern Irish Ministers administer a separate but equivalent scheme and have been notified of these regulations, as have Welsh Ministers.

These regulations represent a significant and exciting step towards the goal of reshaping our heating market. The domestic RHI scheme will sit alongside its non-domestic counterpart in a world-first approach to incentivising the uptake of renewable heat. Its short-term aim will be to help households save on fuel bills and contribute towards helping the country meet its 2020 renewables target.

However, the ambition goes beyond that. It will also set the country on the path towards the wider rollout of renewable heating everywhere from the 2020s and onwards. Driven by RHI, we hope to see the industry expand, costs to reduce and consumer awareness and familiarity to increase. The result will be renewable heating becoming a viable and competitive alternative for all households. I commend these regulations to the Committee.

Baroness Worthington (Lab): My Lords, I am grateful to the Minister for introducing these exciting regulations. This is a real step forward; we have been waiting for it and we are pleased that it has finally arrived.

Perhaps I may first ask some general questions on how we are doing on the RHI. We have had previous debates on other orders and I am always keen to know how we are doing in relation to our target. This is a world first and things may not be going as fast as we would like. That is understandable—it is a complex policy area—but it would be good to have an update on where we are in relation to the terawatt hour target for 2015-16, which I believe was set at five to seven terawatt hours. It is not that long away now and I would be interested to know how we are doing.

I have raised the issue of underspend before. There is a budget surplus under the RHI and I hope that we will increase the speed at which we get through this budget and that measures will be installed. The regulations refer to the earlier scheme, the renewable heating premium payments. It was a sensible move to introduce an early scheme in order to assess take-up and it would be interesting to know what the take-up was and how many people came forward to receive payments under that scheme. My questions are related to getting a sense of how we are doing and the background against which this policy should be judged.

26 Mar 2014 : Column GC173

On integration with the Green Deal, it is sensible that we should try to join up policies, particularly policies that involve interaction with householders. The Green Deal and the RHI should complement each other well.

How are we going to make sure that Green Deal assessors are fully cognisant of all RHI technologies? Perhaps the Minister could say a few words about how we make sure when training Green Deal assessors that they are fully aware of all of the RHI technologies, how they can be applied and the properties and situations which would be beneficial for consumer take-up. If they are not joined up, they could otherwise become a barrier. If we are not integrating this, people may not be aware of RHI and its availability; equally, there might be a barrier the other way in requiring a consumer to have a Green Deal assessment—if an assessor comes in and perhaps is not aware or does not give information about the RHI, that could be an unnecessary impediment towards the take-up of this technology. I want to make sure that we really are joining up the policy at a delivery level.

4 pm

I have a question about enforcement, which I know is a tricky matter. We have gone for a deemed contribution rather than a fully metered contribution, for good reasons as it is about a balance between the effectiveness of the policy and the costs involved in monitoring. However, I wonder about the potential perverse incentives. It is true that if you fit a biomass installation, you have a fuel cost. If you are able to avoid that fuel cost but still get the payments, that creates a perverse incentive. I know that the authority will be able to inspect properties but there is a particular problem if a property, which may be rented accommodation, remains empty or unlet for a period or if it is simply empty for other reasons. How are we to spot these properties and is there a sufficient stick—a penalty—for people who are perhaps trying to game the system?

I looked through the regulations but in the section on enforcement and inspection there did not seem to be a sanction. There did not seem to be a fine or any kind of disincentive. It may be that I am missing something and that the noble Baroness can put my mind at rest. Obviously, we want this scheme to go forward but it would be terrible if it were to get mired in Daily Mail headlines about people using climate change policies to an ill end, so enforcement sanctions are an important part of making this a success. People have to have confidence in the scheme and we do not want to leave any loopholes open for negative publicity, which would set the scheme back.

We have just had a Question in the Chamber on the Green Deal. Clearly, that scheme has not had as much take-up as we would have wanted. I really hope that we can learn the lessons from that and that this policy will be much more successful in meeting the targets set for it. Can the Minister say a little more about promotion plans and how we are going to get it taken up? It is probably fair to say that this is a fairly complex and technical policy. Nevertheless, at the moment we have a population who are focused on their energy bills. They are concerned about being able to pay their gas bills, so it would be a good time to talk to people about

26 Mar 2014 : Column GC174

how they can move forward quite considerably to take themselves out of the fossil fuel market and insulate themselves against future price volatility. That would make a real difference to their energy bills. I suppose the question is: will the low take-up of the Green Deal have an impact on the corresponding take-up of the RHI? I would hope not; instead, in an ideal world, the RHI could help the Green Deal’s take-up. However, it would be nice to know a little more about how we are going to promote and encourage the take-up of this scheme.

I am sorry if this question is a little detailed but it is mentioned in the regulations that new build will not be eligible. I can see why, as people do not want to pay for something that is already happening. However, it made me think: if these microgeneration technologies are being installed into new build and they are renewable heat, how are we capturing them and making sure that they count towards our targets? It would be a great shame if, for example, new build were to integrate renewable heat—and that would make sense, as it is the cheapest point at which to do it—if that does not then contribute to the targets. How are we making sure that those 7,000 to 8,000 microgenerating technologies are counting towards our targets, so that we can capture an important point in this policy? The point is that if you can put it into a new build, it will be cheaper and have far fewer barriers to uptake. It will also help to normalise the technologies.

I have one final question—perhaps this is for a subsequent debate, but perhaps I could meet officials to talk about it. I am very interested in the use of bio-oils in the renewable heat market. I know that currently they do not qualify, but I have heard—perhaps I am wrong—that if you have an oil-based heating system, with a few not very expensive changes, you can switch that to run on biodiesel. That seems to me an effective way to get more renewables into the system. If you can keep the existing infrastructure but simply switch the fuel, surely that must be more cost-effective than ripping everything out and putting something new in. We get a lot of representations from bio-oil producers, who are very uncertain about their market in future. It is definitely more efficient to use bio-oil in a heating system than it would be, say, for transport. Can we not do more to promote it? Perhaps when we have the next review of the policy, we can consider how we can encourage fuel switching from oil to bio-oil, which I think has potential.

In summary, despite the number of my questions, we support the policy. It is very exciting. I hope that we will see strong up-take and that with all the measures for degressions, caps on spending and careful management we have not overcomplicated it and lost sight of the biggest picture, which is that we really want people to take this up for it to be a success. We hope that as much emphasis will be placed on promoting, encouraging and publicising it as we have had on trying to ensure that the budgets are not overspent because, in reality, those budgets are often underspent. That is not a sign of success, it is a failure. Let us hope that with this great, exciting step forward, we can look forward to future reports of lots of activity in this policy area, and we wish it all the best and accept the regulations.

26 Mar 2014 : Column GC175

Baroness Verma: I thank the noble Baroness for her support. I shall try to answer her questions, but if I miss any, I will go back, read Hansard and write to her. She asked whether we would meet our renewables targets. We have managed to achieve 4% of total energy from renewables in 2011-12, compared to our interim target of 4.04%, so it is within the margin of error. We remain resolute that we will work towards even more ambitious renewables targets—I think that both the noble Baroness and I are sighted on achieving that ambition.

The noble Baroness also raised a point about underspend. In order to meet our targets, we will require growth in a broad range of renewable heating technologies, and we recognise that some technologies will need appropriate financial support through the non-domestic RHI and some technologies have lower than expected deployment. That is why we had to review the tariffs last year. In December, we published plans to increase tariff levels and introduce new technologies to the scheme. We will shortly lay regulations to bring those into force. I hope that, eventually, it will balance itself out. Like the noble Baroness, we do not want unnecessary underspend, but we want to ensure that it is being spent to achieve a more tangible outcome.

The noble Baroness also asked about the take-up. At the end of February 2014, 19,640 vouchers had been issued under the RHPP, of which 13,325 have been redeemed.

I absolutely agree with the noble Baroness that we do not want perverse incentives, so the scheme has robust enforcement mechanisms, including when a property is rented. Sanctions will include suspending payments and recovering RHI payments if a participant does not meet their obligations under the scheme. I thought that I had covered that in my opening remarks, but I hope that I have now clarified the position. Before responding to what more we can do to incentivise biofuels, I am more than happy for the noble Baroness to meet officials to go at it in a more detailed way than the brief explanation that I am about to give. They are not eligible for the domestic RHI partially because we do not believe that these renewable solutions have a sufficient role in the transformation of the domestic heating sector to subsidise them through the RHI. We are keen to see the replacement of fossil fuel systems with wholly renewable domestic heating solutions to maximise both our renewable heat generation and carbon savings. That is a debate and discussion for another time, and perhaps looking at the expression of the noble Baroness, it is better that we take this away.

The noble Baroness also asked about the gaming of the system. Participants will be required to declare annually that they are complying with the eligibility criteria of the scheme. If their circumstances have changed and they are living in the property for less than 183 days per year they will be required to install meters to measure their heat use. The noble Baroness touched on the training for Green Deal assessors. MCS installers are training to be Green Deal assessors and creating partnerships to ensure a joined-up service. I agree with the noble Baroness that we have a lot of

26 Mar 2014 : Column GC176

very good programmes in place, and it would be far better if they were much more integrated. While the noble Baroness may see the Green Deal as not being as successful as it should be, I reiterate that it is a 20-year programme. People have taken out green deals not using the Green Deal finance plan; they have used other means. On those we cannot go back and measure, but we know that half a million have been undertaken. Of the people surveyed, more than 80% said that they were very happy to have had that measurement done in their homes.

We have to take it in context; we do not want short, quick fixes for what is a deeply embedded problem in our property market. I agree with the noble Baroness that the process may have been too complicated, and the Government have tried to simplify it by listening to the installers, assessors and consumers. The regime has been simplified by making sure that there is certainty in the system for both industry and consumers by being able to signpost consumers for a more informed journey. We have taken all those things on board and introduced them, but it is far too early to say that the Green Deal is not working. We have to look at the measures that are working alongside others, so the narrative needs to be much more integrated, with the smart meter programme, RHI and the Green Deal. We need to congratulate ourselves as a country on being a global leader on energy efficiency measures. We should never underrate the perception out there. By talking down programmes because they have not achieved their aims as quickly as anticipated, we undermine the very committed, dedicated small businesses that are involved in the Green Deal.

4.15 pm

Baroness Worthington: I thank the noble Baroness for her comprehensive answers. However, if she would write to me on a couple of matters, I would be grateful.

I was specifically interested in how we are doing on the terawatt hour target for the RHI and not only renewables targets overall. A short note on that would be very helpful. On the new build installations, how will the microgeneration be counted towards the target? We do not want to miss things out of our targets, so that would be helpful. I would like to take the opportunity of having a meeting on biofuels because I do not quite follow the logic.

Baroness Verma: The noble Baroness asked two questions. On the second question, while new build installations are not supported through the domestic RHI, other than self-build, they will still be counted towards our renewables target through the use of market intelligence from the renewable energy sector based on sales figures.

I am extremely grateful to the noble Baroness and the Opposition for their support for these regulations.

Motion agreed.

26 Mar 2014 : Column GC177

Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014

Motion to Consider

4.17 pm

Moved by Viscount Younger of Leckie

That the Grand Committee do consider the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con): My Lords, in moving the Motion on the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014, I shall also speak on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014. I am afraid that these are rather dry subjects for debate, as your Lordships may have ascertained from my introduction. They are highly technical pieces of legislation, characterised by various consequential and transitional provisions. However, debate them we must and my challenge is to make this an interesting and rewarding experience for us all.

That gives me the chance to place these orders in the context of our much wider and far more interesting reforms to competition law, because the real significance of these orders is to serve as the two final pieces in the legal jigsaw that creates the Competition and Markets Authority, or CMA, within a reformed competition regime from 1 April.

Noble Lords will recall—how could any of us forget?—the Enterprise and Regulatory Reform Act, which I had the pleasure of taking through this House last year. I hope that the Committee will permit me to refer to it as the 2013 Act for the purposes of this order. In its competition elements, the 2013 Act laid the foundations for the establishment of the CMA and a major reform of the UK’s competition regime. The CMA will be responsible for promoting effective competition in markets across the UK economy and for delivering major benefits for consumers. It will have strengthened responsibilities and powers, taking on the work of the Competition Commission and a number of the responsibilities of the Office of Fair Trading. This afternoon’s brief debate gives me the opportunity to provide noble Lords with an update of what has been achieved since the 2013 Act received Royal Assent.

The CMA was launched in shadow form in October last year. The Government have appointed a well respected board for the new organisation. We have also published our strategic steer for the CMA, setting out the key benefits that it should bring for consumers, and a performance framework that explains how we will measure its impact. We are on course for the full launch of the CMA next week, on 1 April.

26 Mar 2014 : Column GC178

Both the orders that we are debating today are, as their titles suggest, largely concerned with consequential and technical amendments to other legislation. These amendments are required to give full effect to the range of administrative and legal changes to the competition regime that Parliament enacted in the 2013 Act, so it is important to stress that there is nothing novel or unexpected in what we are asking your Lordships’ approval for today.

To be clear, the changes that these orders make were both foreseen and intended by the 2013 Act. By way of a very brief recap, Part 3 of the 2013 Act abolishes both the Office of Fair Trading and the Competition Commission and creates the new CMA to assume their competition functions from 1 April. Part 4 of the 2013 Act makes various changes to those competition functions. It amends the provisions on mergers in Part 3, on market studies and market investigations in Part 4, and the definition of the cartel offence in Part 6 of the Enterprise Act 2002. It also amends the anti-trust provisions in Part 1 of the Competition Act 1998. I hope that noble Lords are all still with me, because this is where it gets slightly more complicated.

First, the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order, as its name suggests, makes consequential amendments to a wide range of primary legislation. Many of these amendments are simply replacing references to the OFT and the Competition Commission with references to the CMA. Others ensure that changes in the 2013 Act to the regime for market investigations apply across the regulated sectors, such as gas, water and rail. Where the sector regulators share powers to refer markets for investigation with the national authorities, they ensure that the streamlining and modernisation in the 2013 Act apply as appropriate to the regulators.

I should add that the order also amends the Enterprise Act 2002 to reflect the CMA’s role in the enforcement of consumer legislation. The CMA will have primary expertise on unfair contract terms. This will enable it to take enforcement action where there are structural market failures. The CMA will also have access to other enforcement powers to ensure that consumer choice is not restricted. That being said, the great majority of consumer law enforcement will continue to be done by trading standards services, with the National Trading Standards Board responsible for co-ordination and prioritisation under the chairmanship of the noble Lord, Lord Harris. As competition is a reserved matter, the order also makes similar amendments to Scottish, Welsh and Northern Irish legislation. Article 3 and Schedule 2 make transitional and saving provision in connection with the transfer of functions from the OFT and the commission to the CMA.

All of that is pretty straightforward when compared with what I am about to cover—namely, the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order. This amends a previous order of the same name from 2003. Again, many of its changes reflect the abolition of the OFT and the Competition Commission and the transfer of their competition functions to the CMA. The order relates to one of the

26 Mar 2014 : Column GC179

three situations under the Enterprise Act 2002 in which the Secretary of State may intervene in a merger case that raises potential public interest concerns. Specifically, it sets out when the Secretary of State may issue a European intervention notice—or EIN, for short—to repatriate elements of merger cases that otherwise fall under EU jurisdiction. This may arise in merger cases where competition jurisdiction falls exclusively to the EU but where the case raises potential public interest concerns in the UK.

The changes in the order to this EIN process replicate those already made in the 2013 Act to the other two public interest regimes. These are the public interest intervention notice, or PIN, regime, which enables the Secretary of State to intervene in merger cases where the CMA has jurisdiction, and the special public interest intervention notice, or SPIN, regime—noble Lords should perhaps insert their own punchlines here—which enables the Secretary of State to intervene in a merger case on particular public interest grounds where the threshold for CMA jurisdiction is not met. Changes have been made to the powers available to deal with pre-emptive action. Powers to accept undertakings have been repealed and powers to make orders have been strengthened.

Allow me to leave your Lordships with a closing thought. It is true that these orders are unremarkable in themselves but, by approving them today, we are reflecting Parliament’s will to establish the Competition and Markets Authority and the new competition landscape that it will oversee from 1 April. I am confident that these reforms will enhance the competition regime and deliver greater benefits for consumers. I therefore commend these orders to the Committee.

Lord Stevenson of Balmacara (Lab): My Lords, I thought for a moment that we had doubled our numbers and increased the interest in the dry but very important issues raised by the noble Viscount, but I was wrong. He rather threw me at the end by saying that he was expecting us to approve the orders today. Perhaps he could very quickly give me an answer on that, as I do not think that that is what we are doing today; I think that we are considering them. The approval comes later and, of course, one cannot bind what I and my colleagues might wish to do when the orders are put to the House for consideration, so we may have to go through all this again. The noble Viscount should not get too carried away at this stage with his rhetoric, which I did enjoy.

The noble Viscount mentioned the pleasures that he had had on the ERR Bill and I was, again, slightly confused by that, as there were occasions where the Minister was distinctly uncomfortable about some of that Bill and may remain so deep in his heart, given the way it was taken over into other areas under his direct responsibility. Some of the points that were brought in remain, in our view, poorly drafted and badly exercised in terms of consultation and process and not up to the standards that we would expect in this House. However, we are where we are. It was always a pleasure to debate the issues with the Minister and I pay tribute to him not only for being a model of what is required at the

26 Mar 2014 : Column GC180

Dispatch Box but also for being able to generate a vast number of letters that inflect, add to and complete the questions that are sometimes asked but are not able to be answered in the process. For that I thank him very much. To have that on an almost regular basis makes my days in the office much more exciting.

The noble Viscount challenged us by saying that he would make these speeches exciting; I am afraid that I cannot do that myself. I have a number of questions but, as he said, these are not novel or unexpected statutory instruments. We knew that they were coming down the line, but what is novel and unexpected is that they are so close to the start of the CMA to which they refer, which comes into force in a matter of days rather than weeks, as would normally be the case. I suspect—although I have no evidence of this—that the fact that so many colleagues from the department are here suggests that there has been a bit of a problem in getting some of the details of this correct and that it has come close to the wire. Maybe I am wrong on that but, as the noble Lord went through it, it was clear that the orders are very detailed indeed and that there must have been some difficulty in getting them right.

The points that I want to make are very limited. One question on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014 is whether the Minister can explain a bit more for the benefit of the Committee the discussions that took place with the devolved Administrations. Although this is a reserved matter and therefore not a matter of competence in those areas, the impact that it will have and the suggestion that the Government were legislating at a time that might impact on the devolution and independence discussions going on in Scotland raise the question of what exactly would happen. I understand that there were no Sewel requirements but I would like to have a sense of that, if others have some thoughts on it.

4.30 pm

The Minister’s point about the responsibility for the implications that arise from the order falling largely to the National Trading Standards Board raises questions that have arisen before in other areas about whether the Government have thought carefully about the cost implications. When he comes to respond, perhaps the Minister can explain whether there are proposals to do that in any way that mirrors the work that we heard about in previous discussions in recent weeks about applying a particular local authority’s responsibilities so that, as is the case in some competition issues, one local authority takes the lead for the whole of the United Kingdom. In the case that we have been discussing in other places, the issue was an England-only one. I would be interested to know to what extent the responsibilities that would fall to a local authority on a matter that is on a UK basis would apply across a border or borders, as there obviously will be different arrangements north of the border in trading standards.

Turning to the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014, I was grateful to the noble Viscount for taking us through

26 Mar 2014 : Column GC181

the acronyms that exemplify what is being done in the process. Perhaps surprisingly, I do not have much of interest to say about the order itself, which seems absolutely right: it has been foreshadowed, we knew that it was coming and we accepted that this is how it would be expressed.

I was intrigued to read in the Explanatory Notes put on the web earlier two or three references to changes, which seem to me to raise an issue related to previous errors. I wondered whether, when he responds, the Minister could give us a bit more detail about that. In the section that relates to Article 2 in Schedule 1, it states that the order affects amendments made by the ERR Act,

“to the applied provisions of the Enterprise Act. Article 16(7) corrects an error in paragraph (i) of Schedule 1 to the 2003 Order”.

I do not want overly to delay the Committee, but it would be interesting to know exactly what that bears on. Later, the notes state:

“Article 18(2)(a) revokes a provision applying section 69 of the Enterprise Act, because section 69 was repealed by the Communications Act”.

Unfortunately, I have not been able to find out exactly what impact that had. It would be helpful if the Minister could give us a brief sentence or, if that is too difficult, write one of his letters, which I would be very happy to receive and read in more leisured times. Those are the two points that I wanted to raise; I would be grateful to hear the Minister’s views on those points.

Viscount Younger of Leckie: My Lords, first, I apologise to the noble Lord and the Committee in relation to the consideration of the order. For clarity, the Motion before the Grand Committee today is that the Grand Committee do consider the instrument. The instrument is then subject to a separate Motion to approve on the Floor of the House, usually without further debate, after Oral Questions, as is the norm. I realise that I will have to move the Motion on the next order formally at the end.

I thank the noble Lord, Lord Stevenson, for his comments in this brief debate, albeit between just two noble Lords. I, too, have greatly appreciated the discussions and debates that we have had in my office, in the Chamber and outside, as well as—if I may put it this way—his general congenial interactions. I hope that that will continue. As for the letters that I write, I rather hope that that may not continue, for the noble Lord’s sake, but my aim will be to inform and communicate to him as necessary.

A short closing speech addressing the noble Lord’s questions—I hope that I shall be able to address them all—is also a welcome opportunity to provide noble Lords, just days before it becomes a reality, with an update on the establishment of the CMA and to expand on what I said in my opening remarks. This provision will enable the CMA to fulfil its mission, which is to make markets work well in the interests of consumers, businesses and the economy.

26 Mar 2014 : Column GC182

The interests of consumers are at the heart of the CMA’s mission. We have given it a target over three years of demonstrating direct financial benefits to consumers of at least 10 times its relevant costs to the taxpayer and we are requiring the CMA to report annually on how it is delivering those consumer benefits. It will have primary expertise on unfair contract terms legislation and will have additional consumer enforcement powers to tackle practices and market conditions that make it difficult for consumers to exercise choice in an otherwise competitive market. The OFT super-complaint mechanism will be transferred to the CMA, so designated consumer bodies can continue to expect fast-tracking of issues that significantly harm the interests of consumers.

The CMA will co-ordinate its efforts with trading standards on both enforcement and the sharing of research and intelligence. We believe that there is a strong case for reform. We have created the CMA to improve the effectiveness of competition enforcement, to streamline processes by improving the quality of decisions and by taking forward the right cases and to improve speed and predictability for business. This is not to denigrate the outgoing competition bodies. That is an important point that I want to make, given the debate that we had some time ago during consideration of the ERR Bill. They had excellent reputations both at home and abroad and the CMA intends to build on that and, indeed, the leadership.

The CMA will be a non-ministerial department with full operational independence. It will have a mission to make markets work well in the interests of consumers, businesses and the economy. It will be obliged to report annually on the delivery of consumer benefits and the wider benefits in terms of growth, business and consumer confidence, compliance and the deterrence of anti-competitive behaviour.

Finally, the CMA has five strategic goals: first, to deliver effective enforcement, making strong and effective use of its powers; secondly, to extend competition frontiers proactively to identify and address markets where competition is not working well; thirdly, to refocus consumer protection, working with consumer protection partners; fourthly, to achieve professional excellence with robust decisions and effective and proportionate remedies; and, fifthly, to develop integrated performance and demonstrate improved efficiency.

I should like to attempt to answer a number of questions. The noble Lord, Lord Stevenson, asked about the reason for the delay. There have been no problems at all in getting the details correct. The timing is more a result of a proper public consultation that has been required and the scheduling of the business of the House, so it is much more of a process issue.

Lord Stevenson of Balmacara:I cannot find the exact reference. The Minister referred to extensive consultation but I think that I read somewhere that neither of these documents required much consultation. If I have got that wrong, I should be grateful if the Minister could clarify it.

26 Mar 2014 : Column GC183

Viscount Younger of Leckie: That is a fair question. Although there has not been a formal consultation, there was a need to consult a wide range of bodies. I will double-check that and write to the noble Lord if that needs to be corrected or expanded on.

The noble Lord also raised the issue of whether there had been discussions with the devolved Administrations. I can reassure him that drafts of the order were shared with the devolved Administrations, who were able to consider the provisions to amend the legislation and make some comments. He also raised the issue of errors corrected by the protection of legitimate interests order. The corrections made by the order include Article 16(7), which corrects a typo. Article 18(2)(a) is a revocation consequential on the repeal of Section 69 of the Enterprise Act 2003; the same applies to Article 18(3). Article 18(16) deals with a missed consequential amendment when Section 118(1)(aa) was added to Section 118 of the Enterprise Act. I know that this is a serious matter. Perhaps the noble Lord is attempting to compete with me on the dryness of the issues, but I hasten to add that they are important.

The noble Lord also raised the issue of who leads in different areas. Trading standards are more devolved across different nations. Competition law and enforcement is a reserved matter, however, so I can confirm that the CMA, under the leadership of the noble Lord, Lord Currie, will look across the UK. To clarify a point that I made earlier about the consultation, there was in fact a public consultation on the protection of legitimate interests order—it was on that specific order.

Lord Stevenson of Balmacara: I am sorry; I have now found my reference. The point that I was trying to make was that, in relation to these instruments being so late relative to the formation of the CMA, which we welcome, the Minister used the reason that the Government had to do extensive consultation. I would not say that it was an excuse, as that is a terrible thing to say. However, that consultation closed in July 2013 and there was plenty of time to absorb anything that came out of it, particularly as this goes on to say that there were no substantive comments.

Viscount Younger of Leckie: As I said earlier, and say again, I will definitely now write to the noble Lord to clarify the process and the element of consultation in as much depth as I can.

To conclude, these orders represent the final stage in the parliamentary process, which began with the Enterprise and Regulatory Reform Bill, to create that new competition landscape. They give effect to policy objectives and provisions that Parliament enacted in that Bill. I therefore commend these orders to the Committee.

Motion agreed.

26 Mar 2014 : Column GC184

Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014

Motion to Consider

4.41 pm

Moved by Viscount Younger of Leckie

That the Grand Committee do consider the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014

Motion to Consider

4.42 pm

Moved by Viscount Younger of Leckie

That the Grand Committee do consider the Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con): My Lords, the relevant licensing bodies—or collecting societies as they are better known—are already self-regulating and using codes of practice based on minimum standards set by the Government. The purpose of this legislation is to support their self-regulation and ensure that this good practice continues. It allows the Secretary of State for Business, Innovation and Skills to remedy any problems or gaps that may emerge in self-regulation. These gaps would emerge if a collecting society started to deviate from the minimum standards; for example, if it had no proper complaints procedure or did not make provision for an independent ombudsman for its members and users.

Collecting societies are the organisations that copyright owners use to license their rights and collect their royalties. They are an economically significant sector. The nine or so collecting societies in scope of these regulations together collect around £1 billion per year and have nearly 400,000 members. Their role is valuable; indeed, they are central to the monetisation of copyright. They bring together rights holders and users efficiently, are instrumental in ensuring that income is received by rights holders and facilitate legal access to copyright works.

These regulations have their genesis in the Hargreaves recommendation that collecting societies,

“should be required by law to adopt codes of practice”.

26 Mar 2014 : Column GC185

This recommendation was made against a background of concerns about the operation of some collecting societies. These concerns were often reflected in correspondence to Ministers—indeed, I have seen some myself—as well as in meetings with trade and representative bodies. They ranged from the levels of transparency for members to complaints by licensees about unfair practices and heavy-handed licensing tactics.

Complainants, many of whom were small businesses, were often especially frustrated because they had no choice to shop elsewhere for their copyright material if dissatisfied. This is because most collecting societies tend to be monopolies or quasi-monopolies. The regulations that have been laid before this House complete the system of co-regulation that the Government have been developing with stakeholders over the past couple of years.

Many of your Lordships may recall the extensive debate in this House during the passage of the Enterprise and Regulatory Reform Act. I emphasised our preference for self-regulation then and I do so again now. We want collecting societies to run themselves to the highest possible standards. The sector is doing this and must be congratulated on its progress. Most collecting societies now have self-regulatory codes of conduct. Noble Lords should be assured that statutory intervention is, and must be, a last resort.

4.45 pm

The minimum standards on which self-regulation is based were developed with users and collecting societies, and they set the benchmark for collecting society operations. For example, they make provision for, first, access to a complaints procedure for members and licensees; secondly, recourse to an independent ombudsman; and, finally, regular independent review of the collecting societies’ codes of practice.

The regulations before your Lordships are designed to preserve self-regulation as far as possible. That is why they incorporate a three-stage process. First, the Secretary of State may give notice to a collecting society that its code of practice is not complying with the requisite standards. The collecting society then has 49 days to amend its code. This time period balances the need to give the collecting society sufficient time to make its code compliant while ensuring that members and licensees enjoy as soon as possible the protections that compliant codes offer.

Secondly, if the collecting society does not amend its code, the Secretary of State may direct it to adopt a compliant code. Thirdly, if the collecting society ignores the direction to adopt a compliant code, only then will the Secretary of State act to impose a statutory code on it. I hope that the Committee will agree that it would be appropriate to intervene only at this stage. After such a catalogue of non-compliance, it would be right for the Secretary of State to take decisive action.

The regulations enable the Secretary of State to impose financial penalties in certain circumstances. These are capped at £50,000. They can be used, for example, if a collecting society does not comply with certain directions issued by the Secretary of State. These provisions are designed to deter non-compliance.

26 Mar 2014 : Column GC186

They will give members and licensees the assurance of guaranteed standards. This is important because they usually do not have a choice to shop elsewhere for their licences.

The imposition of the financial penalty, and its amount, can be appealed. Likewise, there is provision for appeal against the Secretary of State’s decision to impose a compliant code of practice on a collecting society. Any appeals will be heard by the General Regulatory Chamber of the First-tier Tribunal, which is part of Her Majesty’s Courts and Tribunals Service.

In the first instance, monitoring will be by the industry-appointed code reviewer. Noble Lords will no doubt be pleased to know that the first of these reviews is already under way. Walter Merricks, the industry’s independent code reviewer, is due to publish his report on compliance and performance by the sector in May this year. His appointment is an example of self-regulation in action.

I am confident that, together, the self-regulatory system and the provisions in these regulations will create a level playing field and embed best practice in the sector. We have already seen a significant drop in the number of complaints that government receive since the sector put in place codes of practice. We know also that the sector has continued to grow. We consider these regulations to be a reasoned and proportionate reform, and I commend them to the Committee.

Baroness Buscombe (Con): My Lords, I should like to speak briefly on these provisions, which I welcome. The regulations give the Secretary of State a reserve power, and I think that this must be emphasised to all those who have expressed concerns over the past few months in relation to the Government’s progress following the introduction of the new legislation.

It is very important to emphasise that these are backstop reserve powers which can be used to close any gaps that may emerge in the self-regulatory system. This is nothing new. The advertising industry’s self-regulatory system has backstop powers invested in Ofcom to intervene.

Put simply, those powers work and the industry trusts them. The system remains light touch. I believe that it is in the best interests of the industry to have such a system which can be trusted. It needs to be sufficiently robust and flexible to protect the interests of all those who benefit from collecting societies. The success or effectiveness of a self-regulatory system is dependent on all those who manage that system, so if the system fails it is important to have reserve powers to deal with breaches robustly but, as we have heard from the Minister, in a very light-touch way through three stages. I genuinely believe that that is reasonable.

If there is a breach, it may affect the reputation of the system as well as those who are subject to it. I believe that these provisions will protect the light-touch self-regulatory system.

Lord Razzall (LD): My Lords, I join the noble Baroness in welcoming these regulations. I wish to raise with the Minister four concerns which have been

26 Mar 2014 : Column GC187

raised by PRS for Music. I am not sure whether he has had the benefit of its representations on these four points.

First, paragraph (2) of regulation 9 provides for information to be given within two weeks of receipt of the request. I understand that that time limit was not included in the consultation process. Does the Minister envisage that the ombudsman or the co-reviewer can extend that time limit if that is relevant to the particular inquiry for information that is made?

Secondly, paragraph (1) of regulation 9 can impose an obligation for information to be supplied “for any purpose”. That is an extremely wide provision and there is concern that this is hardly light-touch regulation. Does the Minister have any idea what constraints would be imposed on the requirement to supply information for any purpose?

My third issue is a fundamental one. Regulation 10 provides that penalties may be imposed on a licensing body itself. However, some of these licensing bodies will be voluntary, non-profit-making organisations owned by the members themselves. Therefore, the members would ultimately be liable for any penalties that may be imposed. However, the regulations are being introduced for the benefit of the members. What factors does the Secretary of State envisage taking into account in imposing any such penalties?

I think that my fourth concern is easily answered. There is a provision for fees to be charged to whichever relevant collective management organisation they are imposed on. There is a concern that it should be made clear that the fees should be charged only to a collective management organisation which is being targeted, rather than being spread more widely.

Lord Stevenson of Balmacara (Lab): My Lords, I thank the Minister for introducing the regulations. I declare an interest as I have received sums of money from ALCS in the past and therefore am part of a collecting society. Like other noble Lords, I support this approach which is a sensible expression of backstop powers and will be a light-touch operation. It will probably not be as rigorously regulated as was suggested by Hargreaves in the original report, but I do not think that that is necessarily a bad thing. The consultation and the accompanying debates reflect the fact that there is a good system out there which works well. Therefore, it is not necessary to introduce draconian powers and the measure being introduced is an appropriate balance between two things.

Having said that, there are two impacts and it would be helpful if the Minister would respond to them as I did not hear him mention them in his opening remarks. The first, as is set out in the papers, is the proposal that deals with an issue raised through Professor Ian Hargreaves’s review on digital opportunity. It anticipates work that is going on in Europe on similar issues, so the collective rights management directive, of which I understand a final text is now available, casts a shadow over this operation. I wonder whether the Minister could sketch out where he thinks there are differences in the current approach.

26 Mar 2014 : Column GC188

The Deputy Chairman of Committees (Viscount Simon) (Lab): My Lords, a Division has been called so we will adjourn for 10 minutes.

4.55 pm

Sitting suspended for a Division in the House.

5.05 pm

Lord Stevenson of Balmacara: My Lords, I was making two points about issues contextual to the order. One was the question of whether the CRM directive would have an impact and, if so, whether the Minister could outline either how well his proposals in the draft SI fit into it or any gaps that he has already perceived in it. A monitoring period before the regulations will take place in 2016, just at the time that the CRM directive will be introduced. We therefore need to be careful that we are not overburdening the industry or those who draft the orders by having to do all that at the same time.

My second point was an issue which we raise from time to time in debates on intellectual property, which is the progress of the Copyright Hub and the impact that this secondary legislation could or would have on the operation of the hub. I suspect and hope that they have been designed to be complementary, but the issues of collecting societies fit closely with those who are operating the hub. The hub, which is trying to widen access, clearly has interesting feedback into the work of the collecting societies.

My other points have largely been touched upon. It would be helpful to have some comments on the question asked by the noble Lord, Lord Razzall, about the timescale. On the question of how penalties will apply, I note that in the impact assessment on the statutory instrument we are told that during the consultation, there was consideration of whether fees should apply to the organisations only—as has been said, some of them are quite small and voluntary—or whether it would also apply to the individual offices of those operations. It is not clear to me from reading the regulations which way that has come out. If it is the latter, issues were raised during the consultation. The report states that the relevant licensing bodies objected to the provisions for sanctions against offices, but the provision has not been amended because of the overwhelming evidence from an earlier consultation and the desire of the Government to have robust protection in place for those who deal with the relevant licensing bodies, especially as they often have the choice to shop elsewhere. Again, I want clarity about who could be subject to the fees and how that could operate in practice.

Finally, I put it on record that although we support this operation, it is intriguing to us that the policy adopted is effectively to legalise a number of monopolies operating in this area. In any situation where monopolies are recognised, there is a sense in which competition must be the right answer. Here, we are choosing a different route because it is understood that the processes going on in the collecting society area are different in both quantum and quality to those which might apply under a more vigorous competition arrangement.

26 Mar 2014 : Column GC189

That having been said, we should recognise that that is what is happening. These bodies cannot have competition. They will be operating as monopoly suppliers of copyright licences in particular circumstances. Although, on behalf of the Opposition, I am happy to support the proposal, we think that we have to keep that point in mind.

Viscount Younger of Leckie: My Lords, I thank all noble Lords who have taken part in this short debate for their valuable and broadly supportive comments.

We intend to use these powers where self-regulation fails, as has been mentioned. This power is light touch, as my noble friend Lady Buscombe mentioned, and is important to guarantee minimum standards. These powers are proportionate and designed to act as a deterrent. I think there is general agreement in the Committee on that.

We recognise that collecting societies play an important role in facilitating legal access to copyright works. They bring together rights holders and users to enable them to do business efficiently. The Government have worked with the collecting societies to develop the co-regulatory framework so that they continue to operate effectively, while ensuring that there are protections in place for their members and licensees.

I should like to emphasise again that the Government’s preferred option is self-regulation. This is why these regulations are designed to allow licensing bodies to remedy matters themselves in the first instance before recourse to statutory intervention. We are confident that collecting societies can self-regulate effectively. However, when needed, these regulations will provide robust, proportionate measures.

The regulations also contain provision for financial penalties, which are designed to deter non-compliance. They can be used only should self-regulation fail. This gives members and licensees the comfort of knowing that the standards that are set out in the collecting societies’ self-regulatory code of practice are guaranteed.

I hope that I have made it clear that the Government are serious about self-regulation and it is important that collecting societies have every opportunity to put their own house in order. Equally important, if they fail to do so there should be no way to avoid the consequences. If the Secretary of State is concerned about a collecting society’s behaviour, there is an opportunity for him to act, using the three-step process in the regulations. The fallback position is to impose a statutory code if collecting societies have not taken up that opportunity. While it appears unlikely at the moment that that point will be reached, it is important that the statutory power is available so that there is a deterrent to ensure that collecting societies face consequences if they do not act in a proper manner.

My noble friend Lord Razzall raised a number of points relating to a letter received by the PRS. I will attempt to answer them. The first issue was on information and timing. The collecting society concerned should have all the relevant information to hand anyway, and therefore be able to meet the 14-day deadline. The timeframe for supplying information to the statutory licensing code ombudsman and code reviewer are included in the regulations to ensure that any investigation can be conducted as swiftly and efficiently as possible.

26 Mar 2014 : Column GC190

The licensing code ombudsman will require information to effectively investigate disputes between a collecting society and the licensee or member. The code reviewer’s power relates to the information needed in order to undertake an effective review of the codes of practice adopted by collecting societies and their compliance with their provisions. If a collecting society has concerns about meeting the deadline, it is open to it to notify the licensing code ombudsman or code reviewer as soon as possible. Finally, where the collecting society concerned can show that it has made every effort to comply with any request, the Secretary of State can take these arguments into consideration when deciding whether to impose a financial penalty. If such a penalty is imposed, there remains the option to appeal against its imposition and the amount. I rather laboured that answer but I hope it provides a full response to my noble friend.

My noble friend also raised the issue of cost recovery. Where the Secretary of State has incurred costs by having to intervene, it is right that he should be able to cover the costs of that intervention, but they should not be borne by the taxpayer. Where a collecting society has had a statutory code imposed on it and/or has failed to appoint an ombudsman or code reviewer, as required, the associated costs of regulation should be borne by the collecting society concerned. Where the Secretary of State needs to appoint a statutory ombudsman or code reviewer when the self-regulatory appointment has failed, it is right that all the collecting societies which will use the new system should bear the costs of that appointment and any ongoing costs. I should state that this would have gone way down the line before that point was reached, so it would be in extremis that this provision would be realised.

My noble friend Lord Razzall raised the issue of the legal basis. The gist of his question was: what legal power enables the Secretary of State to request information from collecting societies under Regulation 9? The provisions in Schedule A1 to the Copyright, Designs and Patents Act 1988 allow for the Secretary of State to request information, as outlined in Regulation 9.

Paragraph 7(1)(a) includes the power to make incidental, supplementary or consequential provisions and paragraph 5(3)(a) allows for provisions for determining whether there has been a failure to comply with the requirement of a code of practice. The provisions in Regulation 9 will enable the Secretary of State to request the information necessary to enable them to discharge their duties equitably under the regulations.

5.15 pm

The noble Lord, Lord Razzall, raised the issue of fees. The imposition of a financial penalty on a collecting society is very much a last resort, as I indicated earlier. There would need to have been a history of non-compliance before any penalties were imposed. It is important to have proportionate, dissuasive and effective sanctions to deter non-compliance within the self-regulatory framework. We believe that there is sufficient scope for collecting societies to meet the cost of penalties from within their administrative budgets. In addition, where a director or similar officer is responsible for a breach, the regulations do allow for the individual

26 Mar 2014 : Column GC191

rather than the collecting society as a whole to be held accountable. This would be a matter that would or could arise a long way down the line of a particular issue.

The noble Lord, Lord Stevenson, asked about the relationship between these regulations and the CRM Directive. When the intention to bring forward a directive was announced in 2010, domestic policy was well advanced. After lengthy delays, the proposed directive was published, as the noble Lord will be aware, in 2012. With no guarantee that it would be agreed, and with our desire to give licensees and members safeguards at the earliest possible time, we decided to press ahead with these measures. We developed these with an eye on the draft directive so as to minimise burdens on business. This is why, for example, the definition of relevant licensing body in the regulations mirrors that of collective management organisation in the directive. Ultimately, the intention is to implement the directive where possible, avoiding additional burdens on collecting societies.

The noble Lord, Lord Stevenson, also asked about the link between the codes and the regulations and the Copyright Hub. The impact on the Copyright Hub will depend ultimately on how that industry-led initiative develops. A hub that simply signposts people to the correct licensor would not be subject to the self-regulatory system, although some participants are collecting societies and so would be covered. If the hub expands its role over time and becomes a relevant licensing body, it will be governed by this self-regulatory regime. I would argue that it is a work in progress. The noble Lord also mentioned that, and I am pleased to say that we continue to make progress. I recently met with the chief executive officer, Dominic Young, and had an update on the Copyright Hub.

I hope that I have covered all the questions that were raised and if I have not I apologise; I will write to noble Lords. In conclusion, I have every confidence that these regulations, coupled with the self-regulatory framework, will create a level playing field on which licensees and members of licensing bodies can enjoy minimum standards of fairness and transparency. I have given due regard to the Secondary Legislation Scrutiny Committee’s decisions and comments. The Government believe that these regulations are a reasoned and proportionate reform, and I commend them to the Committee.

Motion agreed.

City-to-city Diplomacy

Question for Short Debate

5.19 pm

Asked by The Earl of Dundee

To ask Her Majesty’s Government what assessment they have made of the case for city-to-city diplomacy in Europe as a means for providing better practice.

26 Mar 2014 : Column GC192

The Earl of Dundee (Con): My Lords, in my remarks today I would like to connect three themes. The first is the nature and purpose of city-to-city diplomacy. The second is how it can assist democracy and stability in Europe. The third is the ways in which the United Kingdom and Her Majesty’s Government might now take a timely lead in supporting and advancing it. In some respects this subject is quite new. That apart, its issues are, I think, consensual and cross-party. I am grateful to all colleagues who are speaking today and I look forward a great deal to their contributions and guidance.

At first sight, city-to-city diplomacy appears to be no different from twinning cities. After the Second World War the latter development was most successful. In different countries it established links between population centres recently caught up in Europe’s fighting and conflict. Such twinnings were able to express and build up good will—a very important and necessary achievement. Yet the links did not go much further than that. Nor did they need to do so. Nevertheless, for the same cities the past 20 years have provided a wider opportunity, not least as a result of the fall of the Iron Curtain in 1989, as well as through Europe’s current affiliation of states: 28 within that of the European Union and 47 within that of the Council of Europe. Thus, to the advantage of national and international democracy, this prospect is to evolve good practice and to do so through joint programmes and initiatives embarked upon by cities at their local levels.

Some programmes may be analytical, identifying potential needs, gaps in the delivery of services or weaknesses in economic growth and so on; some may be proactive, between cities implementing business, trade and tourism or education and culture exchanges; while others might set out to enhance the methods of local government, the levels of citizen participation and the well-being of civic communities.

Clearly all those endeavours benefit cities, their member states and Europe alike. For the advantages are both internal and external. City-to-city programmes can address cross-border issues and other aspects of conflict prevention, thus assisting the work of NGOs and international organisations. Within their own European states the local and national connections are fairly obvious. For to the extent that locally city-to-city diplomacy evolves good practice of any kind, it does so nationally as well. Equally, the strength of local democracy which it may inspire and engender also becomes a greater strength of national and European democracy as a result.

Then there is the current background to local democracy in Europe. This is better than and much different from what it used to be. Diplomacy is no longer the prerogative of officials from national foreign ministries. Increasingly it is advanced through people themselves. There is growing evidence of good results deriving from the absence of formalities and structures. Ever frequently it is demonstrated that economic, community and social progress have become less dependent upon public funding and strategies in the first place and, instead, for their advancement and reinvigoration more reliant upon academia, the private sector and professional bodies.

26 Mar 2014 : Column GC193

Against this background, city-to-city diplomacy reduces costs and boosts the local economies concerned. That is particularly so when the focus is upon a variety of associated initiatives rather than only a disparate few. Last month, assisted by the Council of Europe, it was in this context that between Croatia and the United Kingdom just such a project was launched between the cities of Zadar and Dundee.

So the purpose and effect of city-to-city diplomacy is to augment stability and democracy at local, national and European levels together.

When we come to the role of European Governments, and in particular that of Her Majesty’s Government, there are of course some important considerations. As a forceful expedient for local democracy, how should Governments cause working synergies between cities to form and flourish without undermining them through government direction and prescription? No doubt the simple answer is support without interference. Both the European Union and the Council of Europe are now prepared to facilitate projects. However, a great many cities are completely unaware of that, as they also are of the positive scope offered by city-to-city diplomacy in the first place. Does the Minister therefore agree that now is the time for the Government to give much more guidance and encouragement to our own cities? To that end can he say what actions he would take?

Within the United Kingdom the Government have already taken steps to promote more active citizenship. They are also researching policies to improve the well-being of communities. Does my noble friend concur that, as city-to-city diplomacy already advances each of these aims, this is a further reason for the Government to seek to advance it now?

Then there is current government policy on European Union revision, which many of us support. That is to remove competitive burdens and restrictions while completing the single market. However, this structural progress may take a long time. Meanwhile, the development of local democracy in Europe is quite another matter. Does my noble friend believe that this is where city-to-city diplomacy has a key role to play? For if the latter can serve the aims of active citizenship and community well-being at home, then the corollary is that it is also well able to do the same abroad and in Europe. Does my noble friend therefore conclude that this is exactly where the United Kingdom and Her Majesty’s Government can begin to give and be seen to provide a constructive lead to enhance local democracy in Europe?

In summary, city-to-city diplomacy is an extremely effective and attractive intervention. That is all the more so as it is free from the structures and politics of member state Governments. Yet at the same time in Europe it is central and complementary to their priority aims of stability and democracy.

5.27 pm

Lord Anderson of Swansea (Lab): My Lords, the noble Earl raises a challenge not only to the UK Government but to the devolved Administrations with their responsibilities for local authorities. He has been

26 Mar 2014 : Column GC194

a persuasive advocate of the concept of city-to-city diplomacy and greater public participation, which I have witnessed not only in the Parliamentary Assembly of the Council of Europe but also in the All-Party Group on Croatia, culminating in the launch of the new city diplomacy project with Zadar and Dundee on 4 February.

The noble Earl tried to distinguish his concept from that of town twinning. I think that he would agree that his concept needs to be sharpened a little. In some way it stems from the concept of twinning, which began, as he said, after the Second World War and which is now, alas, on the ebb. There are a number of reasons for this: there is the austerity—it was perhaps the first cutback made by local authorities; people are travelling more; some have sought to politicise it—Cuba, the West Bank; and there is the amount of councillors going to exotic locations at council tax payers’ expense. However, city-to-city diplomacy clearly builds on the concept of town twinning.

I hope that the noble Earl will say that we need to learn the lessons of what has been good and bad in the existing town twinning system. We should also learn the lessons of what we did immediately after the fall of the Berlin Wall, where we sought to buttress local democracy and active citizenry in the countries that were formerly part of either the Soviet Union or the Soviet empire by sending senior local government officers there, be it chief executives, deputy chief executives and so on, or be it in leisure. We should consider what was done well and what lessons we learnt from that.

The noble Earl is well aware, of course, that work in this field is being done by the European Union—Europe for Citizens. This is supported by the Government, rather surprisingly, because it not only deals with commemoration but promotes the concept of Europe itself. Clearly it needs co-ordination with the European Union. The European Union has the money and the Council of Europe perhaps has the resources and the wider membership. Given the precedent of, for example, the partnerships for democracy with Morocco and the Palestinian Authority, there needs to be close co-operation between the narrower European Union and the wider 47-member Council of Europe.

There is a new wave of localism in Europe, which we need to encourage. We need to exchange best practice to learn from the initial Dundee-Zadar precedent. This is clearly good for individual countries, good for local democracy and good for international co-operation. Again, I commend the noble Earl.

5.31 pm

Lord Shipley (LD): My Lords, I am very grateful to my noble friend Lord Dundee for initiating this debate. My experience, which I shall draw on over the next few minutes, relates to Newcastle upon Tyne, where I was a council leader for a number of years. Newcastle has had a number of twinning relationships, particularly in the post-war period, which had, and still have, a very important role because they bring people together. They include sports club exchanges, cultural events, choirs, church group visits, youth groups and school exchanges, as well as the more formal city-led exchanges.

26 Mar 2014 : Column GC195

However, the world changes and new possibilities open up. It is not just about twinning, as my noble friend Lord Dundee said. I have concluded that there are three levels to successful city-to-city diplomacy. I mean the wider sub-region by “city”. The three levels are people to people, institution to institution and city leadership to city leadership, which includes business. In this context, I have always been struck by the words of Professor Michael Parkinson, who was founder and former director of the European Institute for Urban Affairs at Liverpool John Moores University. He said:

“A significant feature of successful continental cities is the importance they attach to internationalisation and having city ‘foreign policies’”,

investing time and,

“effort in international networking to raise their profile, gain new allies, expand market share, influence decision-makers and learn new strategies and practices”.

I find that a very useful rationale for developing city-to-city diplomacy.

When we began to rearticulate Newcastle’s approach a few years ago, it was based on those principles. It focused on networks, connections and projects with cities and city regions that have similar characteristics or special links, and where there is economic benefit for business, trade or innovation. The advantages are in sharing learning and best practice, in collective access to funding—particularly European funding, supporting key institutions, such as our universities— and scope for projects that promote language—learning and culture.

In Europe, Newcastle’s twin cities are Gelsenkirchen in Germany, Nancy in France, Groningen in the Netherlands and Bergen in Norway. They have all seen very positive outcomes in recent years—in cultural links, school twinning, shared provision in higher education and in public policy. What can be done by universities? For example, an innovative, dual award programme provides an opportunity to study for a master’s degree in advanced international business management from Newcastle University, and at the same time an MSc in international business and management from the University of Groningen in the Netherlands. At undergraduate level for a BSc honours in economics and finance, which includes international financial management, there is an optional study-year abroad at the University of Groningen to provide an international perspective. Those derive from our existing twinning relationship with the city of Groningen.

Finally, I want to draw attention to the potential of honorary consul networks in building bridges between the diplomatic establishment and local businesses and academia. In Newcastle, the honorary consulates of France and Germany have a shared facility in the civic centre. It is the first shared facility in Europe and it is an approved commitment by the city council, too. The honorary consuls help to lead the organisation of the annual North East in Europe conference, now an established and valued event. However, we can extend into new areas. Developing connectivity between the north-east of England and Sweden has been particularly impressive with a consul-led UKTI trip to Sweden for

26 Mar 2014 : Column GC196

22 new exporters and several other outward and inward- bound missions, not least in the environmental sector. That is based on a growing new relationship with the city of Malmö and the existence of a Swedish consul in Newcastle. There is enormous potential for the Government to assist and I hope that they will help to spread good practice.

5.35 pm

Viscount Falkland (CB): My Lords, I confess that I am somewhat daunted by the Question although I have been asked to talk about the twinning of towns and cities. Therefore, I will not talk about the actual Question but about twinning. Indeed, a noble Lord virtually said that what we are discussing is “twinning plus”.

I have always been fascinated by twinning although I did not know very much about it. When I was asked to speak in this debate, I rang a number of councils. Given the time constraint in this debate, I shall discuss only three of them. These three councils are very different but have in common the fact that their communities decide the way in which they operate their twinning systems with towns in different countries, which I like. I am sure that the noble Earl would have no difficulty answering questions on this topic but anyone who is vaguely Eurosceptic might become more so on hearing his speech. However, I obviously need to do a lot more homework on that.

The twinning system is withering on the vine. The noble Lord, Lord Anderson, gave various reasons for that but did not refer to age. People are getting older. Two local authorities told me that they had built up wonderful relationships over many years. For example, Torquay has a curious relationship with Hamelin, or Hameln as it is known, which you would not expect. Those who have read the Grimms’ stories will know the story about the pied piper and the rats. Torquay has built up a very strong relationship with Hamelin in relation to a number of issues, including life saving, which I thought was very strange. Germans from Hamelin come over every year and discuss life-saving issues with people in Torbay, which has a lifeboat service. When I asked why the citizens of Hamelin would be interested in that, I was told that the Weser is a very deep river. Noble Lords will remember the fate of the rats in the fairy story. The charming thing about twinning is that you learn such interesting and varied facts.

Barnet is an interesting example in this regard. It has a budget for this work, which it does not think is big enough. However, it wishes that it had no budget at all because most of its time is taken up dealing with freedom of information requests, which can be asked by all kinds of cranks and lunatics. This is the phenomenon of the unexpected effects that flow from seemingly perfectly worthy legislation. These requests take up all that authority’s time. People want to know how much of the relevant budget is being spent, and on what. It emerged that the cost of this work for each taxpayer in Barnet was 0.01 of 0.01p. We are in a ridiculous situation in this country. We should not impose on people all kinds of strange democratic things which I hardly understand, although I suppose

26 Mar 2014 : Column GC197

that I am a democrat. Basically, we have got this right. It just needs to be brought up to date and changed as new pressures emerge.

The other council I contacted was Basingstoke, which is closest to the example given by the noble Earl as it is working on projects as they come up. I have talked to a number of people involved in this issue, including volunteers who were enthusiastic, polite and pleased that I was inquiring about it. Therefore, I put in a request that we leave the situation as it is and forget “twinning plus” for a while.

5.40 pm

Baroness Wilcox (Con): My Lords, as ever the noble Earl, Lord Dundee, poses an interesting Question. It is very interesting for me because I did not want to take part in the debate today as I do not believe in any of it. However, he was insistent that I did take part and listen to everybody else to see whether I could glean anything, as I certainly have in such a short time already. The noble Lord, Lord Anderson, can always talk about the nature of cities and make that sound terribly interesting for me. We have heard about good practice from the noble Lord, Lord Shipley, from whom I have learnt all about Newcastle upon Tyne. Then I listened to the noble Viscount, Lord Falkland, and thought that I should just sit down and say very little because I agree with him.

The question I ask is: what would it achieve? What would its purpose be that would actually be that different from what we already have? That may be looking a bit tired or sad, and as if it ought to be gingered up a bit. It may be just because Russia is dashing all over the place in the Council of Europe area that we are all rather overexcited about looking to and after each other. That may be what it is about a bit as well. The noble Earl has also had wonderful success with his twinning, which has been different and, by the sound of it, rather magnificent.

I have to speak from the background of being a trader. As a trader, I therefore believe in free trade right across the world, wherever possible, without many barriers if we can avoid them. I also believe that cities are mini-worlds. Every city is different and grows in its own way. It may be on a river or on the sea, or up a mountain, but it will have its own things—its own dynamic and energy. It is geography that makes us and, very often, it is trade routes that make cities unique. History also teaches us that the next things we need are talent, technology and tolerance. I would vote for those three things rather than reinventing new ways to bring along democracy or whatever we are calling it, with all sorts of other new civil servants to help us and tell us all how to run our lives.

Each city trades differently and for different reasons. The danger from what is implied here is that the greatest in size and wealth among the 47 countries of the Council of Europe will be talking only to each other. The biggest will talk to the biggest; the best will talk to the best. I cannot see any other way. What we would be looking at is city states. We have seen city states and we know what happens with them. It is hard enough to protect the countries and cities that we already have. Is there to be a war among the cities or a

26 Mar 2014 : Column GC198

wasteland between them? Are these going to be cities with transport and treasure? I see sieges and armies; I see corruption and exclusion.

So as a trader, I would rather see 1,000 flowers bloom in the 47 countries of the Council of Europe. The noble Earl, Lord Dundee, the noble Baroness, Lady Eaton, and the noble Lord, Lord Anderson, are, of course, representatives to that council as delegates, as am I. Indeed, the Minister who will answer in a minute has also been a delegate there. To see this functioning any better than what we have now is going to take all the things that I do not want us to do: more diplomats, more civil servants, more talk, more meetings, more dinners, more cost and less free trade.

5.44 pm

Baroness Scott of Needham Market (LD): Exactly two weeks ago, I was in Denmark chairing a conference of local and regional authorities from around the North Sea. During my two days in Aalborg, I had an opportunity to reflect on the nature of international co-operation at a local level. I was considering how best to raise these points in your Lordships’ House, so I am very grateful that the noble Earl has given me a chance to do so so quickly.

The North Sea Commission was founded in 1989 as a way of allowing local and regional authorities with a North Sea border to come together to discuss areas of common interest and to see whether, by working together, we could arrive at better solutions. I was a councillor in Suffolk when we took the decision to join. I was involved until 2005 and spent much of that time as chair of the heritage, culture and tourism group. Membership was beneficial to Suffolk. It gave us a ready-made pool of the European partners that we needed to join in EU-funded programmes. These ranged from the promotion of local foods and the creation of local business to sustainable tourism and diversification of jobs in Lowestoft, which had been very badly hit by the decline in the fishing industry.

We went on to discover that there are issues and problems common to the North Sea region which cannot always be tackled by individual councils, regions or member states. The North Sea Commission used its influence to bring together fishermen, scientists, environmentalists and civil servants when previously they would not even sit in the same room. What we had then has now developed into an EU-wide regional organisation with legal powers over fisheries. We shared experience together on how to deal with many of the problems brought about by oil and gas exploration. Noble Lords will remember the Brent Spar. The North Sea Commission still does that work but it is now also heavily involved in renewable energy and the development of a North Sea energy grid. Coastal erosion, flooding and pollution are issues which all suggest that there is a need for a body which looks at the North Sea from a North Sea perspective rather than a local or national one.

Not very much has changed in the nine years since I stopped being involved, except for one big change which I did notice. In 2005, English local authorities from Newcastle down to Kent were members. Now, Southend is the only English representative on the

26 Mar 2014 : Column GC199

North Sea Commission. Scottish councils are, thankfully, still very active. So what has happened? There is still a need for a body such as this. I saw no evidence that the NSC is less effective. Indeed, the presence of a number of very senior officials from the European Commission suggests that it is highly regarded, and the presence of members from all other countries, including Norway, which is not in the EU, suggests that it is still valued. So what has happened in England? I think that there are two factors and they are both relevant to this evening’s debate.

First, public services are increasingly required to demonstrate the outcomes of expenditure of public money. That is absolutely right, but it means that spending on areas where the outcomes are more intangible, such as partnerships, become harder to justify. Secondly, there is the irony that, as the world is becoming smaller and individuals travel more and communicate across the globe, outside, the notion that public servants and elected members might actually leave the country to meet colleagues is viewed with great suspicion and even hostility. To some extent, that is understandable. It is hard for elected members to justify foreign travel, even if it is to a wind farm in Germany, when cuts are being made in public services.

Returning to the narrower context of the North Sea Commission, it became clear to me at the conference that there will be an increased focus on the North Sea, especially in the context of energy. The EU is looking to the North Sea Commission to help to drive progress in these areas and, when that happens, there will be no English voices round the table. I think that that will be a serious omission. I should like the Government to consider what practical assistance can be given to ensure that that does not happen.

5.48 pm

Baroness Eaton (Con): My Lords, as others have done, I thank my noble friend Lord Dundee for initiating this debate, and I welcome the opportunity to make a minor contribution.

My interest in active co-operation with other European cities and organisations began when I was a student, before the time when it was fashionable to make studying abroad part of a course. As a student teacher, I was invited to attend a student exchange at the Pädagogische Hochschule in Osnabrück. Here, I made many friends but, very importantly, I learnt about and observed the different teaching methods in Germany. Our 1960s liberal teaching methods were very different from the German structured form of learning.

Later in life, as a family, we were very active in an organisation called the Junior Chamber of Commerce, now known as the Jaycees. The international activities of the Jaycees brought together from all over the world individuals and families who shared an interest in business and commerce. Our children grew up seeing friends from all parts of the world over the breakfast table and, as a consequence, they learnt much about life from many different perspectives.

Several noble Lords have spoken about twinning arrangements after the Second World War. In my experience, however, many of the cities involved in

26 Mar 2014 : Column GC200

twinning have developed their twinning arrangements well beyond their beginnings and the desire to create good will. My own city of Bradford, where I am an elected member, has had a number of twinning arrangements which were active in developing commercial, cultural and sporting links. The cities were Skopje, Roubaix, Mönchengladbach and Hamm. These cities shared common activities in business, trade, culture, the textile industry and other commercial activities, as well as being home to a number of minority ethnic groups.

As the leader of the council, I was very pleased to encourage the mutual interest in art and culture with Hamm in Germany. Bradford is the home of David Hockney and the city is proud to have collections of his works. Bradford and Hamm had an exchange of the work of the artist Otmar Alt and some of David Hockney’s works. Our parks and public spaces proudly showed the colourful modern sculptures of Otmar Alt and the people of Hamm delighted in the Hockney exhibition.

All of the activities I have described, and many others, have had many benefits for all involved—business, trade, culture, improved local government, more citizen participation and improved national and political stability. It is clear that working synergies already exist.

EUROCITIES was an example of 23 European cities working together around information-sharing, exchanging ideas and employment programmes. Members of EUROCITIES were able to influence policy workers in Brussels to help develop the social agenda. The many positive experiences that I have had, and those that I have observed, taught me that already many cities in the 47 states of the Council of Europe have the ability and the will to work together for the common good. I hope that the Governments of the member states can recognise the role and the ability of the Council of Europe in encouraging city-to-city diplomacy. However, as the noble Baroness, Lady Wilcox, has said, this project should not create the need for more officials and paid bureaucrats. Diplomacy should no longer be solely the prerogative of officials from foreign ministries. City-to-city diplomacy can, I am sure, make a major contribution to enhanced stability and democracy if the citizens themselves develop such diplomacy.

5.52 pm

Lord Dykes (LD): My Lords, it gives me great pleasure to congratulate my noble friend Lord Dundee on his excellent speech which launched this brief debate and I am grateful to him for his suggestions. I echo the specific question put at the end of her remarks by my noble friend Lady Scott and I should be grateful if the Minister would include me in the answer to it. It is a very pertinent question.

In this period of austerity it will be very sad if twinning withers on the vine and the working synergies, which are even more important, profound and deep, are cut back by budget pressures. Their achievements can be made at the margin on modest amounts of money. Without sounding too boastful, I remind the Committee of what we did in Harrow when we twinned with the last significant untwinned town in northern France, Douai—the judicial centre of northern France

26 Mar 2014 : Column GC201

many years ago—which was a great success. The figures we issued of how much that programme cost were very modest. That was when there was no austerity and we could do it.

Perhaps I may make one European point as my noble friend Lord Wallace is in his place as the duty Whip. I have always found it bizarre that the anti-Europeans on the right-wing side of British politics are happy if companies and corporations become international and global but they do not like countries in the European Union to join others and link up on all sorts of things. I find that strange because not only does each country then benefit from the collective strength of the whole Union but its own individual sovereignty goes up; it does not go down. There is no loss of sovereignty in net terms. Everyone gets stronger and so does the Union. That is an example which, on an administrative scale, can be done for cities, towns, villages and so on. We were very proud of its success.

I declare an interest: I live on the Normandy-Picardy border because I had to live in at least one country that was in the eurozone when we foolishly failed to join the euro many years ago. I notice that the town twinning is now mostly not with English towns but with German ones. I am sure that noble Lords will agree that probably one of the finest stories in post-war Europe has been Franco-German reconciliation, with really deep relationships developing now. There is no withering on the vine in the twinning that I can see in those areas. There is work and synergies of all kinds, from football teams to choirs to individuals getting married—an extraordinary development of very profound relationships that are European as well as in the sense of being proud of one’s own country. The two things go together.

In Harrow I had the great pleasure and privilege of having Bentley Priory, the RAF base, in my constituency, where the Battle of Britain was directed by Air Chief Marshal Dowding. Because of that, with our liaison function, we always had a USAF officer, an officer from l’Armée de l’Air in France and, indeed, visiting German officers from the German air force. One year I was particularly pleased when I persuaded the organisers of the September Battle of Britain cocktail party to play not just the marvellous Royal Air Force march but the Luftwaffe march as well. The whole gathering applauded when the Luftwaffe march was played. It could not have been done decades before then but it is done now because people want to get together and we must provide those examples and opportunities to them.

I do not think it is right to say that officials should not be involved. Budgets must be strictly controlled but you need intelligent, constructive officialdom, not excessive bureaucracy. You need private initiative. You need companies to be involved. You need intellectuals, students and teachers. Then you begin to make progress of understanding at the lower levels of human society—not lower in the sense of being low, literally, but the more modest levels of your own village, district, town or city—and then rising up through the political system as well, so that politicians are involved in espousing those things and not being suspicious of them or hostile to them, as is the rather sinister atmosphere developing among, I hope, a small number of people

26 Mar 2014 : Column GC202

in this country, some of whom may be heard tonight in the exchanges that are coming between two significant political leaders.

5.57 pm

Lord Bach (Lab): My Lords, I start by congratulating the noble Earl, Lord Dundee, on securing this debate. I thank him for initiating such an interesting and expert discussion. It is impossible not to admire the noble Earl’s commitment to and enthusiasm for city diplomacy, and the Opposition Front Bench welcomes the debate he has started. I was slightly disappointed by the response to this debate by one or two noble Lords, which was slightly negative, I think. No one is saying that this scheme is fixed for all time. The plans are beginning and it is very important that we should be broad-minded in our approach.

I think that I understand the difference between city diplomacy and town twinning, and must confess to an abiding support for the latter, having been involved in it at both city and small-town level for a number of years. I will make a few quick points. The idea of city diplomacy seems to be yet another example of soft power in action. We hear a lot, rightly, about the World Service and the British Council. I declare my interest as chairman of the British Council All-Party Parliamentary Group. But soft power should go beyond those two brilliant institutions.

The idea that local government, particularly cities, should play a part in diplomacy or soft power—whatever you want to call it—is not new. It has happened in green affairs around the world for a long time now. The noble Baroness, Lady Eaton, has great experience of local government in this field. The Dundee-Zadar city diplomacy project is an interesting and timely development. The noble Earl outlined his intent in his speech, saying that the purpose and effect of city-to-city diplomacy is to augment democracy and economic stability at a local, national and European level.

That seems sensible. Who could object to that as a principle? Of course it needs a great deal more working out in practice—no doubt that is what the Dundee-Zadar experiment will show us. This is also a question for the Minister: is it not particularly relevant at a time when Foreign Offices, not just in this country but around Europe, are looking for funding—desperate, in fact, for resources to undertake diplomacy and fulfil their function?

My city is Leicester, and I intend to pass the Hansard of this debate to the executive mayor’s office. The city has a strong tradition of twinning and of working with other cities, so I will do that locally, but in my role as part of the Opposition Front-Bench team responding to the debate, I intend to take the noble Earl’s idea about city diplomacy forward to be considered as part of future proposals. For the moment, however, it is this Government who have to respond to his debate. As always, I look forward to hearing what the noble Lord has to say.

6.01 pm

Lord Ahmad of Wimbledon (Con): My Lords, first, I join all other noble Lords in thanking my noble friend Lord Dundee for giving us an opportunity to discuss

26 Mar 2014 : Column GC203

this important subject. From listening to the contributions today, it is clear that this has generated a lot of interest across the Committee. The noble Lord, Lord Bach, and my noble friend Lady Eaton, raised the issue of soft power. That is important. Too often we are caught between what initiatives are being taken specifically and sometimes underrate soft power in terms of language, cultural exchanges and so on. That is an important part of city-to-city diplomacy.

I begin by reminding your Lordships of this Government’s commitment to localism. The Government have returned more powers to individuals, communities and local councils than many thought possible. Indeed, my noble friend has acknowledged this. We passed the Localism Act in 2011 to ensure that local people could come up with and implement the most effective solutions to local problems. As a former local councillor with responsibility for culture—in my own patch we had the All England Club—I had experience of the powerful messages that you could send through sport, a point made by my noble friend, and of extending that in city-to-city initiatives.

The Government’s view is that we need to give further control back to our cities and we are already seeing the success that this change has brought about. Only last week, Cambridge joined the ever-increasing number of British cities benefiting from a city deal. As noble Lords are of course aware, under this deal cities, including Cambridge, Manchester, Birmingham, Bristol, Leeds and many other successful cities, will now have greater responsibility for and control over decisions that affect them, and a greater chance to shape their own development.

My noble friend Lord Dundee talked about the importance of city-to-city initiatives, particularly in encouraging active citizenship and general well-being. Giving back power was the start of that process. We now want cities and regions to use the freedom they now have to strengthen their communities and economies. All places are unique. Some places will do that better than others. Some policies will work well; others may take time before they get going. So it is important that local policymakers have the opportunity to discuss among themselves, to share success stories and discuss possible risks and pitfalls.

The Local Government Association encourages this domestically. My noble friend Lady Eaton played an important role in this respect as a former chairman. Its Peer Challenge and Knowledge Hub programmes are good examples of developing better practice through engagement but, as my noble friend Lord Dundee pointed out, and as he knows well from his considerable experience with cities in the sterling work that he has done in the UK and in Croatia, there is much that can be gained from sharing experience internationally, and we have worked hard to develop spaces for cities to share best practice.

In answer to my noble friend’s question, we support fully the strengthening of such initiatives, and city-to-city diplomacy can play an extremely important role in developing local democracy. The UK Government will continue to support institutions facilitating this

26 Mar 2014 : Column GC204

development. Indeed, my noble friend Lady Stowell of Beeston is currently in Strasbourg to address the Congress of Local and Regional Authorities.

The noble Lord, Lord Shipley, asked about trade. That is a valid issue to raise. UKTI encourages cities to focus directly on activities such as building their local foreign direct investment capacity, understanding their sector or other strengths and establishing inward investment propositions for their area. The noble Lord, Lord Bach, will recognise that many embassies around the world have a UKTI hub to encourage bilateral trade. I hope that point will be welcomed by my noble friend Lady Wilcox.

The Organisation for Economic Co-operation and Development is one of the organisations that provides such spaces for city-to-city diplomacy. It brings together experts to discuss policy challenges and solutions, in relation to both specific cities and wider urban policy. OECD analysis was used to good effect to support the introduction of the city deals that I have already mentioned. Another example of the value provided by OECD co-operation is the project in which Manchester is currently participating. Organised by the Directorate for Public Governance and Territorial Development of the OECD, this project brings together a small group of international cities with the aim of finding best practice for dealing with ageing populations, which is an increasingly relevant topic.

The OECD urban working party directs initiatives, such as the Manchester ageing project, and other OECD work on cities, such as the recent project on green growth in the Benelux. The UK recognises the value of OECD work in this area and plays an active role in the urban working party. The environment was also mentioned quite forcefully and rightfully by my noble friend Lord Dykes.

My noble friend Lady Wilcox mentioned the Council of Europe. It has a strong track record and has an important role to play in city-to-city diplomacy. With the Congress of Local and Regional Authorities and the European Committee on Democracy and Governance, the Council of Europe can facilitate direct exchanges between cities and local authorities and allow national Governments and local authorities to take a step back and address strategic challenges faced by cities and regions in Europe. As noble Lords will know, the UK sends a sizeable delegation of local and municipal officials to the congress. The delegation, with a mandate of four years, is made up of 18 full members and 18 substitute members from local authorities and the devolved Administrations.

The UK is also represented at the European Committee on Democracy and Governance, which we chaired until January 2014. During our chairmanship of the Council of Europe in 2011-12, the UK achieved wide consensus on our priority of streamlining the Council of Europe’s activities on local democracy to ensure the effective co-ordination of activities and the efficient use of resources. The creation of the Centre of Expertise for Local Government Reform marked another step forward in the Council of Europe’s capacity to help cities and regions develop best practice through co-operation.

26 Mar 2014 : Column GC205

Within the European Union there are many opportunities for city-to-city diplomacy. I assure noble Lords that the Government, through attending various EU meetings, seek to disseminate information from EU presidency meetings designed to spread good practice among cities.

Noble Lords will be aware of the Committee of the Regions, which provides further opportunities. It aims to shape future EU policy decisions by getting involved in policy-making at an early stage and has greater influence now than before the Lisbon treaty. The UK appreciates the importance of ensuring that the impact of EU legislation on local issues is understood. The UK delegation promotes UK local government and devolved Administration interests in EU law-making and decision-taking.

The ERD fund is another key tool in facilitating city-to-city contact. The ongoing negotiations on the new sustainable urban development programme illustrate how this Government are working hard in Brussels to make sure that UK cities can access this tool. When our cities and regions are able to work with the fund, it is clear that engagement is worth while.

Using funds from the EU and national Governments, Glasgow is yet another example of a city now working with 11 partner cities to promote the employability of young people in the labour market. Birmingham is leading a group of 10 cities as they develop links between creative industries across Europe. Manchester is one of six cities sharing work on how to use financial instruments better in municipal planning. Here in London, Westminster local authority is engaging with Barcelona, Dublin and five other cities to promote urban markets as key drivers of economic development, urban regeneration and sustainable living.

My noble friend Lady Scott and, I believe, my noble friend Lord Dykes talked of EU funding for regions and cities. I have already illustrated some of the instruments that are available. EU funding has been valuable in city-to-city diplomacy but we must continue to make sure that access to this funding is available for our cities. The co-operation seen in the frameworks for the Council of Europe and the OECD are examples of this. Specific mention was made of the North Sea Commission and that UK representation was declining in that respect. The Government have introduced measures allowing local authorities more and greater control over their budgets, and they can now appropriately prioritise their spending. If those local authorities see the value of the North Sea Commission, they can of course pursue that.

Baroness Scott of Needham Market: I apologise for interrupting the noble Lord but is he aware that when the Secretary of State in another place makes comments from the Floor of the Chamber criticising individual local authorities for participating in travel abroad, it really does not help the Government’s case?

Lord Ahmad of Wimbledon: I am sure that has been noted in Hansard and I will write specifically to my noble friend in that respect.

My noble friend Lady Eaton talked about sporting links and the noble Lord, Lord Bach, talked about soft power. I have already alluded to the fact that this

26 Mar 2014 : Column GC206

is an important part of city-to-city diplomacy. The Olympic Games in London in 2012 were an excellent sporting spectacle from which all cities could learn—indeed, we are sharing experiences across the world. The noble Lord, Lord Anderson, and the noble Viscount, Lord Falkland, also raised concerns that twinning is declining, in part due to budget constraints. This Government have brought in a raft of measures intended to give local authorities more control over and responsibility for their budgets, and we allow them to decide on their spending priorities as they are directly accountable to their electorate. City-to-city diplomacy has provided twinning schemes and I fully acknowledge the worth of those that have been set up.

I am increasingly aware that we are running slightly short of time. The exchange of views between cities should, of course, lead to stronger communities, more effective policing and more proactive education for young people. However, as my noble friend Lady Wilcox said, these new initiatives should not lead to increased bureaucracy. We can see that when conditions are created that allow city and local authorities to interact and co-operate on areas close to them, best practice develops and our cities thrive.

My noble friend Lord Dundee has made a powerful and persuasive argument, which I know Ministers and officials across Whitehall will reflect on. I pay tribute to the leadership that he has shown on this issue and look forward to further efforts to strengthen the role of city-to-city diplomacy in the future.

UK Visas and Immigration

Question for Short Debate

6.14 pm

Asked by Lord Steel of Aikwood

To ask Her Majesty’s Government what is their assessment of the operation and accountability of UK Visas and Immigration.

Lord Steel of Aikwood (LD): My Lords, I do not intend to have a great debate on immigration. I put down this Question for Short Debate as a result of two recent experiences of dealing with individual cases, about which I would like to inform the Committee. Last August, I received a letter from a small charity, the Friends of Meisori School. This is a group of schools and churches that have got together to help sustain a primary school in Kenya with scholarships and that kind of thing. It had invited the headmaster of the school to come to Britain and conduct a programme of visits to schools in York, Hereford and Bristol. At the last minute, it found that he could not get a visa and his whole visit fell to the ground. The charity wrote to me angrily because it had seen my name on the foundation stone of a library, which I had laid some years before. I had no connection at all with the charity.

I wrote to Mark Harper, who was then the Minister for Immigration, to ask for reasons why the visa had been refused and I was completely dismayed by his

26 Mar 2014 : Column GC207

reply, which simply told me about the visa requirements. I wrote to him on 30 October last year to say that I was dismayed. My last sentence was:

“I feel a parliamentary question coming on unless I can get a clear reason why the visa for Mr Lekae was refused”.

Well, 2013 came and went and I had no reply so I duly put down a Written Question which was replied to by our good and noble friend Lord Taylor of Holbeach. He simply said that:

“Due to its obligations under the Data Protection Act, the Home Office is unable to comment on an individual case”,—[Official Report, 16/1/14; col. WA68.]

without the permission of the applicant, so that did not get me anywhere.

I then wrote to Mr Samuel Lekae and asked for his permission to pursue the case. He sent me that permission and, eventually, having failed to get a response, I put down a Question and wrote to the Minister again. He replied on 10 January and, to be fair to Mr Harper, he wrote a very nice handwritten apology at the bottom of the letter. He gave the same argument about the Data Protection Act, so having got the authority from the headmaster to act on his behalf I wrote to the Minister again on 27 January. To date, I have had no reply. Of course, that Minister has disappeared and been replaced by another one, but that is not really an excuse. However, I visited the school last month and met the headmaster. The point I want to make is that it is in a remote area and he had made several visits to Nairobi to try to get the visa. That is four or five hours by car each way but, at the end of the day, the visa was refused.

The other case was just last month. I was taking part in a conference to commemorate the bicentenary of David Livingstone, organised by the Scotland Malawi Partnership. That body has government funding and the conference was co-sponsored by the Open University, which is also a body with public funding. A distinguished lady from Malawi was invited to be one of the speakers and, at the last minute, she was refused a visa. The charges that they have to pay—£400 a time—are of course lost but so is their airfare for which we, the taxpayer, had paid. The attempt to raise money by raising the fees is negated every time there is a refusal, while the public body which has invited and sponsored a visitor ends up paying for an abandoned airfare.

The timescale involved is ridiculous. It usually takes three weeks to get an answer, in the case of Malawi. In December last year, just three months ago, a new system was introduced by e-mail but it seems to be entirely dysfunctional. The website is an embarrassment. It routinely crashes and there are sections that simply have not been finished. For example, the user has to state which country they are applying from by using a drop-down menu, within which the only information is the starting letter of the country. If you are looking for Malawi, you look for the letter M and you then have to guess how far down the list it might be and what other countries there are whose name begins with M, and then you tick the right box. There seems to be an assumption that all applicants will have regular and easy access to a computer, to an internet

26 Mar 2014 : Column GC208

connection with strong bandwidth and to a printer. That effectively rules out almost everybody in Africa except the urban elite.

It appears that the Government have outsourced their legal responsibilities on immigration to a private company which was the cheapest bidder. It is almost impossible for an applicant to contact the private company, because, in the case of Malawi, the private company is in Pretoria in South Africa, which handles all UK visa applications for the whole of southern Africa. Even if they could make contact, the company closes all its offices at midday on Fridays for an early weekend, irrespective of the workload or the urgency of applications. Being a private company, it is not governed by the same standards of delivery, service and transparency which one would expect from a government department.

There is a further complication in the case of Malawi. As all its visa applications are handled in South Africa, significant delays are caused, as passports, birth certificates, bank details and other documents are sent backwards and forwards across the continent. It also means that decisions are being made remotely by people who have do not necessarily have intimate knowledge of the country from which the application has been made.

In the case of Malawi, there is a further, peculiar difficulty. The applicant has to pay for a visa application using a credit card and pay in the currency of the country where the regional visa-issuing centre is based. That means paying in South African rand. The Scotland Malawi Partnership has been advised that it is illegal in Malawi to make online payments in a foreign currency unless you have specific permission from the Reserve Bank of Malawi. We are also informed that almost no Malawians have international credit cards that would be suitable for the purpose. My argument to the Committee is that the system is not conducive to visitors coming to this country, and I think that the reputation of the country is being damaged by the incompetence and cost of it.

I raise with the Minister one particular query about rule 41(vii) of the Immigration Rules, which insists that visitors to the UK have evidence of sufficient funds to cover the cost of their visit and their return to their country of origin. That is apparently UK policy, but a recent conference in Cardiff was told that that was not the case and that it would be sufficient if the sponsor had enough money to cover the costs of the applicant. So there seems to be an element of confusion even about what the policy is.

I end by making three suggestions to the Government. First, before the Commonwealth Games start in Glasgow in a few months’ time, the agency must make it clear that people attending from Africa—in this case, athletes, their trainers and so on—will require visas. The Commonwealth Games will be disrupted if many of the applicants are not able to get there because of visa restrictions. How many short-term applications have been turned down? How many applications have been received and what percentage of them were rejected?

Secondly, it should be an instruction to the agency that, when visitors are being sponsored by reputable bodies in this country, there should be an obligation on it to contact the sponsors and double-check. It can

26 Mar 2014 : Column GC209

do that quite easily by e-mail quite and check the bona fides of the applicant, rather than go on demanding more and more visits to a remote centre and more and more fees. I would not object even if we were to introduce a system of bonds, whereby sponsors could give—let us say—£1,000 as an assurance that the person concerned would return. That is a suggestion which the Minister might like to pass on to his colleagues in the Home Office.

I mention in my QSD the question of accountability. I do not think it is good enough to hide behind the Data Protection Act and I think that any MP or Peer who raises a question about a visa application is automatically doing so on behalf of the applicant and should not be put off by being told that the Data Protection Act is in the way. When I was an MP, it was possible in visa cases to write to or even phone a high commissioner and ask them to examine a particular case. Sometimes the visa was refused for good reasons, which would be explained, and other times the decision would be overruled. There is a total lack of accountability now and it is that that I am really complaining about.

6.25 pm

Baroness Neville-Jones (Con): I thank my noble friend for enabling us to bring some of those cases to the attention of the Minister. I have a case to raise that has many characteristics in common with what we have just heard. It also concerns immigration, or at least visitors, from Africa.

I have the impression that it is becoming very hard to visit this country unless one is well off. I know that we want to attract the well heeled but I wonder whether it is right that we should get into a position where only the well-off can come here. In Hereford—it is Hereford again—there is a linking charity that, since 1985, has with other linking charities sponsored short visits, typically of four to six weeks, of more than 100 mid- career health professionals from Tanzania to come to see how we do things here and then, with that knowledge, go back to improve the functioning of their own institutions. These people are obviously not students in the formal sense. They come on ordinary visas, fully sponsored, with all costs paid by the British organisers. They are therefore of no burden to the British taxpayer. On the other hand, without that sponsorship, they most certainly would not be able to come because they could not afford to.

What has happened to this little programme? Beginning about three years ago—in other words, I fear, under the present Government—the already onerous and intrusive visa paperwork became even more so. My noble friend set out the costs involved for those who have to go a distance, and in this case I think it was to Nairobi. In 2012 and 2013, two of the four applications relating to the Hereford-Muheza link—Muheza is in Tanzania—were turned down. In relation to other link programmes over the past four years, there have been 15 rejections, which is a pretty high rate considering the overall annual numbers coming in. That has a pretty destructive effect on the link programmes and involves a great deal of wasted effort because these refusals come through only after a number of tractations and a lot of effort on the part of those who are then turned down.

26 Mar 2014 : Column GC210

Rather like the cases raised by my noble friend Lord Steel, this has also led to correspondence with the Home Office. One of the organisers, Dr John Wood, wrote to Mark Harper in February 2013. He did not, however, get a letter back from the Minister. He had one from a Ms Ioannou in May 2013, explaining that it was only right that the UK welfare system should be protected from non-genuine visitors, that visitors should be able to show that they could maintain and accommodate themselves while in the country and indicate, with a return ticket, that they intended to return to the country with which they had demonstrably genuine ties—the same reasoning that we have heard. These stipulations are, I agree, reasonable. They are tough but they are certainly reasonable and defensible. However, the link programme, in all its years of operation—now 13—has never had an absconder and there is no reason to believe that it would have one now or that the conditions would not have been met. Also, in shades of what was said by my noble friend, Ms Ioannou said, “flexibility in the Immigration Rules for visitors exists, if they can be maintained and accommodated by relatives or friends where they do have the financial means to support their visit”. Is that not exactly the same thing as being told that there is a way through? That is precisely what the link programme provides: maintenance and accommodation while in the country.

Subsequent to this correspondence, the link programme’s postbag is still full of rejections on the grounds of the inability to guarantee return, which appears, in turn, to be related to suspicion about the consequences of the inability to self-fund. Of course, if those visitors could fund themselves, they would not need sponsorship. It is a Catch-22. The fact of costs being fully covered and sponsorship by an impeccable organisation—which I think it is—appears to be irrelevant to the refusals. They have sponsors, but the fact that they could not pay for themselves were they not being sponsored, although they are, means that they get turned down. As regards the inability to guarantee return, what guarantees beyond having your costs being covered, your return ticket and your ties to your homeland are good enough for the Home Office? Does it want an armed guard throughout the visit and to the airport? That is what it begins to amount to. What has happened to the flexibility in the rules alluded to at the conference and in correspondence with Dr John Wood? Is it ever exercised and what does an applicant or the sponsoring organisation have to do to bring it into operation?

The Government have managed to devise a list of reputable colleges to which overseas students may apply without the vires of the application immediately being brought into question. The penalty is, of course, loss of status for the college if the students do not leave at the end of their study period. Is it beyond the wit of our immigration system to devise a similar list of sponsoring organisations in good standing which the local immigration office can hold and with which there can, if necessary, be dialogue in individual cases by e-mail, as my noble friend suggested?

The system as presently operated frustrates charitable activity, which cannot be good, and, in my view, it also fails the test of proportionality. Unsurprisingly, it has

26 Mar 2014 : Column GC211

now got to the stage where it has given rise to an application under the Freedom of Information Act by angry sponsors who want to know how many invited visitors of this type have actually absconded. The application has not been answered on the grounds that the cost of collating the information exceeded the cost limit specified in the regulations. My last point is: what about this cost limit? Is it so low that even the collation of extensive and readily available evidence is precluded by it or, as is perhaps more likely, is it that the evidence is too scanty to provide convincing support for refusal decisions? I hope that in reply the Minister will be able to give an undertaking that the operation of the Immigration Rules in relation to these charitably sponsored visits will be looked at in a fresh light with a view to devising a solution which will enable them to continue to operate under rules which are reasonable in principle—

Lord Gardiner of Kimble (Con): My Lords, I apologise, but we are risking not having a full quota for the Minister at the end. There is no slack in the timing.

Baroness Neville-Jones: I apologise. I will finish my sentence. I am sure that the intention behind our legislation was that it should be reasonable.

6.33 pm

Lord Berkeley (Lab): My Lords, I am grateful to the noble Lord, Lord Steel, for obtaining this debate. I am afraid I have to agree with both speakers that this is a shambles and probably just the tip of the iceberg.

I shall talk about UK immigration problems on the cross-channel rail services. It is worth recalling that the Channel Tunnel was built—I played a small part in it—to create seamless travel to the continent. We have somehow substituted for a physical barrier an administrative blockage which is an absurd obstruction to travel to and from the continent.

Starting 25 years ago, you had the juxtaposition of French or Belgian and British immigration at London, Paris, Lille or Brussels. Sometimes immigration checked passengers on the train coming back into this country. That may be fine for those cities with quite big volumes, but now that the operators want to move to the south of France, Amsterdam, Frankfurt and many stations in between, it just does not work. The latest situation is that if Eurostar is running a train from the south of France, going out it is fine—you can get out of this country all right, for the moment anyway—but coming back the train stops at Lille and everybody has to get out with their suitcases, go upstairs, through security and immigration and back down again. The train leaves an hour later. So many more passengers go out than come in by train, which is no great surprise.

The same will apply to Frankfurt, Amsterdam, Cologne, Aachen, Schiphol or wherever we want to go. DB, the German railway, has said that it would like to come to London but it is not going to because it just does not work. That is because, in addition to what I have explained, immigration will not allow you to mix domestic passengers with international passengers.

26 Mar 2014 : Column GC212

Therefore, if the train is coming from Frankfurt, it cannot carry passengers from Frankfurt to Brussels because they might leave a bomb on the train or have the wrong passport. It is also expected that on every station at which the train stops there should be an immigration officer checking people’s passports, followed by security. What operator is going to fund that? It is totally uneconomic.

The same will apply with HS2. There are supposed to be international services going from places north of London—such as Manchester, Birmingham, Glasgow and Leeds—to Paris perhaps. This will not happen because we will not be allowed to carry domestic and international passengers on the same trains. I can assure noble Lords that there will not be enough people travelling from Birmingham to Paris to fill a complete train—it will need London passengers as well—and I suppose that they will all have to get out at London and go through security and immigration again. This is killing international rail travel. I do not see any way at the moment in which things can change.

I have had several meetings with Ministers. They have been very helpful but they cannot offer any solutions. I have three solutions. The first is very tongue in cheek but it is made on the basis that we will have to be checked going out of the country. I am told that it will be like using an Oyster card, which takes half a second to get through a barrier. A passport check going out will take 12 seconds. Imagine taking 12 seconds to get into Holborn station in the rush hour. The queues will go all the way round the block. We put chips in dogs to make sure that they are rabies-free. Would it not be better if we all had chips and could walk straight through? The Government know everything about us—they spy on our e-mails and so on—so it would not make much difference. So that is my first suggestion. I am not sure that the Minister will accept it but it is always worth a try.

My second suggestion is that we could join Schengen, but, with this Government, that is pie in the sky. The third suggestion is that we check passports on the train. It used to be done, as I have said. I have been told, “Oh, it takes much too long and we cannot get the latest signal that Mr al-Qaeda suddenly might be coming. Five minutes from getting into the tunnel he will get in and claim asylum”. There should be the technology to do this online and on the move reasonably quickly. It is the only thing that will work when coming in and going out. It behoves the Government to develop a system and make it work.

Something needs to be done. The immigration and security services are not achieving anything. Parts of the Conservative Party seem to want total physical as well as economic separation from the continent but, as I have said, it is bad for business and for Britain’s reputation. We must do something about it.

6.38 pm

Lord Phillips of Sudbury (LD): My Lords, I, too, thank my noble friend Lord Steel of Aikwood for this debate. It is couched in extremely wide terms and I may introduce two subjects that no one else may consider come within its purview, but I think they do.

26 Mar 2014 : Column GC213

The first thing I wish to say in this short space of time concerns universities and overseas students which, as everyone knows, is a vexed subject at the moment. It is of huge importance for this country in that we have, for our size, the most successful university sector in the world in attracting overseas students, particularly non-EU students. It has quite extraordinary benefits for us, and not only the obvious financial and economic ones. One cannot put a finger on the cultural value of having in our midst these amazing overseas students who bring to us all their particular knowledge, culture, language, arts and so on. Most important are the friendships created by this mingling of British students with overseas students. That has value for the future in terms of one’s personal development, in terms of knowledge and understanding between different cultures and countries, and in terms of affection and friendship, which spills over into all sorts of economic outlets and manifestations.

I put it to the Minister, as it has been put to many other Ministers, that bundling up overseas students at our universities with other economic migrants who are here permanently and equating the temporary, three-year undergraduate to a permanent economic migrant for the purposes of our immigration figures is wrong. It gives a wrong impression and creates unnecessary tensions within this country. I know that the UN has a definition of students that would pull in the temporary, learning immigrant coming to university, but we do not have to use that UN definition for our own internal purposes. Indeed, it is different from the OECD definition. It is a simple but important point. We have not got through the Immigration Bill and I hope that the Government will be moved to exclude university students from its purview in terms of immigration figures.

The other thing that I want to talk about in the three minutes that I have left is the report that came out in February called Tier 1 (Investor Route): Investment Thresholds and Economic Benefits, produced, as it was, by the Migration Advisory Committee under the chairmanship of Professor Sir David Metcalf. It had a brief to look at the economic benefits of these tier 1 immigrants. Most here will know that, under that arrangement, if one invests £1 million, one can have an unlimited right to remain in this country—in effect, becoming a permanent migrant resident in the UK. There is a residence test and you have to spend at least 180 out of 365 days here, but that, as it stands, is the rule.

I put it to the Minister that I think the Migration Advisory Committee did its very best. In its final report it expressed all sorts of reservations about some of the assumptions underlying this scheme, but one thing that it was not asked to do but which I think it is absolutely essential is done before the outcome of its consideration is finalised in any change to the tier 1 scheme is to consider the serious damage to our reputation as a financial centre from the fact that this scheme encourages some of the biggest rogues on earth to come to this country. Black money in tens of billions has flooded into the UK because this scheme gives the so-called owner of this black money the right to permanent residency here. One thing is clear from the report: people bring their money here for non-pecuniary reasons. They do so because this is a safe and stable

26 Mar 2014 : Column GC214

country, it has relatively incorrupt markets and, interestingly enough—this comes on everybody’s list of factors—there is an excellent private education system to which they can send their children.

I have not got long anyhow, but I do not think that one needs to labour the point that the reputation of this country, through all the awful things that have happened in the City in the past six or eight years, is already seriously damaged. In looking at the report of the Migration Advisory Committee, the Government should look at the whole issue of due diligence to make sure that money that comes in is good money and not corrupt money, and is properly owned by the people who invest it here.

6.44 pm

The Earl of Clancarty (CB): My Lords, I, too, thank the noble Lord, Lord Steel, for the opportunity to participate in this debate. I want to talk about a single, shocking and very recent case of the American organist, Cameron Carpenter, a musician with a global reputation, whose performances include one at the Proms here in London in 2012. According to his testimony, which he put on his Facebook page, he arrived at Birmingham Airport at 10.30 at night on Monday last week to prepare for a concert on Wednesday 19 March at Birmingham Symphony Hall. Tuesday was to be his rehearsal time. He intended to come in on the permitted paid engagement scheme. My understanding is that UK Visas and Immigration officials at Birmingham did not know about the PPE scheme. He was held for seven hours by the security firm Tascor in a brightly lit room with interviews and fingerprinting during the night, and at 7.05 in the morning was escorted by armed guard on to the first plane back to Berlin.

At this stage, I think, most people would have given up. However, Cameron Carpenter is a resourceful man, who was—and I quote from his blog—

“consulting all the way”,

through his flight,

“with some of the best management the world has to offer”.

He goes on to say:

“What would become of artists not so fortunate as I am to have such representation, I fearfully wonder”.

Yes, what indeed?

What happened next was that, after landing in Berlin, he had a shower and caught the next plane to Heathrow. At Heathrow he was also detained for a shorter period but finally allowed in on PPE, as, of course, he should have been in the first place.

To my mind, there are three issues here, which are also of more general relevance. The first and most serious is that this is more than the heavy-handed treatment which we know occurs and has indeed been meted out to other artists visiting the UK. This is quite simply abuse. Cameron Carpenter arrived late at night, and was subsequently subjected to all-night sleep deprivation. The question has to be asked why a security force, Tascor, is involved in such circumstances at all. This person is clearly not a terrorist—and indeed it should not matter whether he was in the right or not. This is abuse that should not be happening to

26 Mar 2014 : Column GC215

anyone who has been detained. Has this become a part of Britain where we have thrown away the principle of innocent until proven guilty, where, as long as you remain detained and beyond, you are treated as a criminal? Well, the answer is, of course, yes.

In my estimation this is unacceptable, and it raises questions about accountability. The Minister may not be able to give me the answer now, but I would request a Written Answer, placed in the Library about who is precisely responsible for what and accountable to whom, including Tascor’s relationship to the new immigration bodies at each stage of such a process as I have described. This is an important matter that needs to be sorted out urgently.

Secondly, there is the question of competence—or rather incompetence. The Minister may recall the debate we had just over three years ago, which he answered, where a real concern was expressed about the repeated poor treatment of artists visiting or trying to visit this country. The Manifesto Club, English PEN and others worked hard to have a change in the system, and we were pleased that the Government responded to these concerns with the introduction of PPE outside the points-based system in 2012. But this was two years ago. By April 2012, UKBA officials at every single port of entry should have been fully apprised of the scheme. I ask the Minister when border officials will be properly informed about PPE.

Finally, there is the matter of our reputation on the world stage. That a world-renowned artist has been subjected to this form of treatment is an absolute scandal in itself, although Cameron Carpenter’s experience, unfortunately, does not exist in isolation. As we know, there have been numerous incidents in recent years, including the case of the Sachal Jazz Ensemble, which the noble Baroness, Lady Smith of Basildon, raised in an Oral Question in December. But there is also a basic, bureaucratic stupidity about this, which UK Visas and Immigration must address. A couple of minutes on Google will tell anyone who Cameron Carpenter is and what his status is.

In the Government’s favour—and I am very grateful in this respect for the conversations I have had with the noble Lord, Lord Taylor of Holbeach, and those conversations that I and others have had with the Home Office—I appreciate that we are in a period of transition. I hope very much that the Government can promise that there will be significant change for the better, and that this kind of unacceptable treatment will be consigned to history.

6.50 pm

The Lord Bishop of Chester: My Lords, I associate myself very closely with all that has been said, although the second half of the contribution from the noble Lord, Lord Phillips, focused a bit too much on mammon for my level of expertise. However, I take him as an authority on that aspect. The introduction the noble Lord, Lord Steel, gave, was powerful and shocking in equal measure, and made the case on its own. I can say to the noble Baroness, Lady Neville-Jones, that I am aware of the Hereford situation; indeed, clergy are among those who are able to come under the scheme she mentioned.

26 Mar 2014 : Column GC216

I have been looking at the painting up there; we often have it above us in this Room without realising that it portrays an innocent and rather vulnerable girl there who is being misused by the authorities of the day—a rank case of injustice. I have never sat here debating a subject more relevant to “The Judgement of Daniel”, the painting we have had above us all these years.

As the noble Lord, Lord Phillips, says, we could talk about a whole range of things, but I will talk about how this impacts upon the church in particular. The church is an international body, and intrinsically so: Christianity spread through missionaries travelling to other countries. A great deal of interchange has ensued over the years in both directions, which has caused no difficulties but has been a source of mutual enrichment in all sorts of ways. New rules, as well as the inefficiencies and delays in the system, are now making things very problematic.

I will take an example, not from the Church of England but from the Salvation Army. Last year a British Salvation Army minister, if I may call him that, married someone from outside the EU, but could not return with her from his honeymoon because while he was abroad the rules had changed, and the salary—or stipend—he had from the Salvation Army did not meet the £18,000 threshold. The fact that he was given a house and a car was not apparently taken into account, so he was allowed back in but his wife was not. It was an awkward choice; they simply ended up going somewhere else, abroad, to work with the Salvation Army where they were welcome.

Another area of growing difficulty is exactly that of obtaining visas for people who are of relatively poor means themselves to visit the UK under the various partnership arrangements that exist. Most of the 43 English dioceses have active partnership arrangements with churches abroad, often in Africa because of the links between the church in this country and Africa. Again, that provides huge mutual enrichment, and Africa needs that more than anything, not least at present.

In Africa, the level of documentation we take for granted just is not there. People do not always have birth or marriage certificates, or bank accounts so that they can demonstrate that they have the money we expect them to have. It is a different culture—a different world. A visit from someone who comes from one of those overseas churches will typically be paid for in advance, and underwritten and guaranteed by a perfectly reputable body—I hope that the Church of England can still count as a perfectly reputable body—which will pay its debts if necessary. I put the question to the Minister: why should there be any difficulty? What has happened to cause all those difficulties? There should not be a problem. Can the Home Office give us a single example of somebody who has come on one of these short-term visits and who has not gone back when they have been sponsored by one of the mainstream churches? That is the question, exactly in the spirit of the introduction the noble Lord, Lord Steel, made to this debate.

I will finish with an example in a slightly different form, from my own diocese, relating to someone from Zambia. He came to the UK—I think he may have

26 Mar 2014 : Column GC217

been in the UK beforehand, perfectly legally, but was then sponsored for ordination and studied that here at one of our theological colleges. He and his wife wished him to be ordained and to serve a title of curacy in this country, and I was delighted to offer that to him. He has had a splendid two and a half years’ curacy in one of our parishes. In the mean time, his wife has been training as a nurse, paying overseas fees; the money has been got together and they are paying every penny they can out of his stipend towards his wife’s fees for the nursing course. I hope that, in due course, they go back to Zambia. In many ways, it would be a good thing if they took back the skills that they have learnt here. But, equally, if he wants to spend more time working in this country, that to me is a thoroughly good thing that should also be possible.

However, when we try to get the visa and immigration authorities to tell us what we have to do as a diocese and what the conditions are, we find that letters get lost. My colleague who deals with this is in despair. We write letters but nothing comes back. Time is ticking away and the training curacy of the chap I am talking about is coming to an end. I want to know the conditions under which I can offer him a post. I need some advice on that from the immigration authorities. Even if the advice is that the rules say he cannot stay here under any circumstances, at least that would be an improvement in that we would know where we were. I think that it should be possible for him to be offered the post, providing there are no other applicants, but getting to the starting gate with the authorities is extremely difficult. Part of the problem is that the church does not “tick the boxes”. Clergy are treated as if they are just factory workers or employees of any sort. We need a lot more flexibility, sensitivity and common sense in the system.

6.56 pm

Baroness Smith of Basildon (Lab): My Lords, I commend the noble Lord, Lord Steel, for raising this issue today and for his introduction to the debate. He highlighted the danger of losing sight of the personal or wider impacts that policies may have, particularly when they are ineffective or inefficient or, as he said, impractical or dysfunctional.

This has been a wide-ranging debate in which we have benefited from noble Lords’ expertise. The noble Lord, Lord Berkeley, spoke modestly of his involvement with Eurotunnel, and the noble Lord, Lord Phillips, spoke of his experience of dealing with overseas students. I would like to pick up on a few of the points that were made.

As regards overseas students, I have never understood the reasons for a net migration figure. The fact that many professional people are leaving the UK and there is a big reduction in the number of overseas students coming here and paying fees constitutes a success in the Government’s mind because it reduces the net migration figure. That is a nonsense.

It is good that we are discussing this Question today against the background of the Immigration Bill that is going through your Lordships’ House. One of the issues that concerns me, and which has been brought home in this debate, is the Government’s proposal to

26 Mar 2014 : Column GC218

abolish the right of appeal against visa decisions and to rely instead on administrative review. The Minister is aware of our opposition to that stance and he understands the reasons for it. It is clear from the reports of the Chief Inspector of Borders and Immigration and from other reports that the Home Office is struggling to deliver a quality service and that there are huge casework backlogs, as we have heard today. Therefore, a system which allows for appeals, and for mistakes to be addressed, is even more important when we recognise the problems in the current system.

I have gone through the relevant figures before and do not want to do so again. However, more than 12,500 asylum cases are still awaiting an initial decision. That is a 17% increase on the previous quarter. The Home Affairs Select Committee revealed a previously undisclosed backlog in permanent and temporary migration decisions of 190,000. I understand that the total immigration backlog at the end of 2012 was some 502,000. The Independent newspaper has calculated that it will take 40 years to clear that backlog.

However, more important than the backlog is the quality of decision-making. The latest statistics reveal that 32% of deportation decisions, 49% of, managed migration appeals—that is, work and students appeals—and 49% of entry clearance applications were successfully appealed last year. We have heard that for some people appeals are impossible—the opportunity to appeal is just not there. Given that most of the appeals allowed are due to simple casework errors in the initial decision-making, to remove the right of appeal and go for administrative review seems to us totally wrong. The Government’s priority should be to improve the efficiency of these initial decisions, make sure that there is no need for appeals and try to ensure that we have a fair and effective system. As we have heard, we are judged on how our visa system operates for people across the world. Mistakes can have serious implications for the individuals concerned.

The cases mentioned by noble Lords raise a number of issues. The noble Lord, Lord Steel, referred to a particularly pertinent issue concerning a private company undertaking such checks—the same issue raised in the case referred to by the noble Earl, Lord Clancarty. I am curious as to the standards that the Government expect private companies to adhere to, and whether they are open to the same checks and monitoring that they would have been had they remained government agencies.

We have had some powerful examples of what seem to be incredible and unreasonable decisions that have been hard for noble Lords to understand. The Minister could take away from today how many of these cases are known to noble Lords personally and how many other noble Lords and members of the public can give similar examples. I have dealt with two similar cases which I find incredible. One is a small business man known to me personally. His wife has been applying for leave to remain for some time. I have confirmed that I know it to be a genuine existing relationship. They have a child. He has been back and forward to get a decision made. The latest news is that they have given her indefinite leave to remain because they have lost the documents, but she has not heard anything about it yet, so that poor family is living in limbo.

26 Mar 2014 : Column GC219

A friend of mine who has businesses in this country and in India wanted to bring the man who cared for his father when his father was dying over for a holiday to thank him. Immigration did not understand why he did not have enough money in the bank. He had a job, a home and family to go back to, but he did not have enough money in the bank. Every time he appealed against the decision, he had to make a journey of several hundred miles. There has to be some humanity, some practicality and some common sense in our decision-making.

To come back to the point made by the noble Earl, Lord Clancarty, I am also aware of the case of Cameron Carpenter. It worries me enormously that people acting as immigration officials on behalf of the Government do not seem to know what permitted paid engagement is. An important point raised by the noble Lord, Lord Steel, was that our reputation could be damaged by incompetence and the cost to the system. That is the message that we should take from today: we want a fair, efficient system and one that works in our interest. There are some wise decisions and some wacky ones, such as chipping us all as we leave the country, but I hope that the Minister will assure your Lordships today that he will give all those matters his full consideration.

7.02 pm

Earl Attlee (Con): My Lords, I start by thanking my noble friend Lord Steel for initiating this Question for Short Debate. It is vital for the security and prosperity of this country that we have a visa operation which is effective and transparent.

The subject for this debate is quite wide-ranging but I have very good advice. As we have heard, it will take some time completely to fix the system but I think it is important that we acknowledge the progress that has been made since we took the decision to scrap the UK Border Agency almost exactly one year ago. The international visa operation, as many, including the chairman of the Home Affairs Select Committee, have recognised, is working well. Our standard service compares favourably with those of competitor countries but I accept that the system is not error-free. Last year, we processed almost 2.5 million applications overseas. The average processing time was seven and a half days—well within the service standard. This is despite significant rises in demand from some of our key growth markets. For example, last year in China applications rose by almost 40% on the year before.

We are also increasingly leading the world in the provision of high-quality tailored visa services. For example, we now offer priority three-to-five-day services in 70 countries, which will be expanded to more than 90 by the end of the year. We have also introduced a same day, super-priority service in India, which will be rolled out to China this summer and other countries later this year.

The Committee should be aware that none of this is at the expense of security. In the past year, we have interviewed more than 100,000 people applying to come to the UK as students to check that they are genuine and have the required language skills. I will

26 Mar 2014 : Column GC220

say more about the speech of my noble friend Lord Phillips in a moment. We are also doing more detailed checks, including sharing details with other government departments, such as HMRC, to deal with those applicants who seek to abuse the immigration system.

This is not only overseas. We are also increasing interviewing and the checks that we do in our in-country operations. This is the part of the business where we have had the biggest problems in the past. Under the UK Border Agency, sadly, a lack of proper planning meant that there simply was not enough resource in place to deal with the level of work coming in. A lack of proper performance management arrangements in business areas meant that this was not spotted until it was too late, leading to the build-up of backlogs. The UK Border Agency’s closed, secretive and defensive culture then meant that Ministers and Parliament were not told the full extent of these problems early enough.