I have three amendments—the noble Lord referred to them in his comments—which the Magistrates’ Association has asked me to put forward to clarify particular issues. As the noble Lord said, Amendment 50A is an amendment to the Government’s amendment which seeks to add that specified and relevant information should be made available to the court. The concern raised by the Magistrates’ Association is that magistrates should have access to the right information, such as DVLA records, as appropriate. The amendment was worded in a wider sense because if one was dealing with television licences one would need information on non-payment. The amendment is to ensure that magistrates, when sentencing, have specific and relevant information in front of them.

Amendments 50B and 51A would require the court to give public notice of trials under the single justice procedure and to publish the outcomes of these trials. I know the Magistrates’ Association has been consulted fully on these changes and everyone is aware that we are dealing with high volume, low level regulatory cases more than anything else. Nevertheless, it is important that these cases are dealt with properly and that the public should have confidence in our legal system. Therefore they need to know when the trials are happening and the results of those trials. The purpose of the amendments is to provide some clarity on what the Government intend to do in making sure that the trials and their results are well published.

As the Minister pointed out in his comments, if anyone turns up for a trial, the matter would be put off to be dealt with by a Bench of three. That is, of course, right and proper.

Lord Beecham: It is some 23 years since I last appeared before Newcastle magistrates. I should make it clear that I was in a professional capacity, although I had the pleasure recently of seeing them in a political capacity. As I think I mentioned at Second Reading, I attended a meeting of what is now the Northumbria Bench—in the current state of play, of course, there is no longer just a local Newcastle Bench. Unlike my noble friend Lord Ponsonby, who of course has long experience as a sitting magistrate, I was initially attracted to the notion that some have suggested; namely, that, although the procedure is generally to be welcomed, it should be not one magistrate but two who sit on these matters. However, I am persuaded not only by the eloquence and logic of my noble friend but, perhaps more relevantly, by the almost unanimous opinion of the local Bench in Newcastle and Northumbria that such a precaution is unnecessary.

There are, however, a number of issues, which are the subject of amendments to which I shall now refer. The first of those is Amendment 49A, which would ensure that there is a proper procedure for determining which offences can be tried under the new system. It is obviously sensible for many of the offences which have been canvassed in discussion—television licences and matters of that sort—to be dealt with in this way, but

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the amendment would require that the issues be determined by regulations and approved by Parliament. We do not want added to the list for disposal in this way matters which are not necessarily the first that come to mind as more or less formalities. It would not be asking too much of the Government for them to indicate what they intend and how many offences and for them to proceed by way of regulation. In this case, the negative procedure would be quite acceptable.

Amendment 49B would remove the automatic paper trial if the defendant did not respond to the notice that would have been given. There is a potential for difficulty to be encountered here if, for example, the defendant does not understand English or the purport of the document. What is sought in the amendment is that failure to respond would not itself trigger the automatic transfer to dealing with the case on the papers.

Amendment 49C, on the provision of evidence in respect of vehicle licensing cases, would require the court to be satisfied with the position as recorded by the DVLA, so that the defendant would have an opportunity to say that matters had been dealt with on the basis of the DVLA providing information. It is a relatively modest requirement.

6.15 pm

Amendment 50C would, contrary to the provision of the Bill as we understand it, remove the provision that would require the court to proceed as if a party were absent, even if he or she appeared after the beginning of proceedings. So if someone is late in coming to court but turns up, the procedures should not take place without a hearing.

Amendment 50AA is important and would remove the provision that permits the court to proceed in chambers. It is envisaged that the court would simply operate behind closed doors, as it were, with no possibility of the public being present. Many of us feel that that would be unsatisfactory. Justice needs to be seen to be done. I suspect that it is unlikely that there would be a queue of people to sit enthralled while decisions are made and handed down, but it is nevertheless better for justice to be administered openly so that, if there is an interest, members of the public and, for that matter, the press could attend.

Publicising the results of the hearing is the subject of Amendment 51B. Again that is a question of justice being seen to be done and information being available. The Magistrates’ Association, if I recall correctly, is sympathetic to those suggestions. I hope that the Minister will recognise that the Opposition certainly support the principle of the Government’s proposal, which we welcome. It may well speed up matters. Nevertheless, there need to be safeguards, particularly in relation to the public aspect of the administration of justice, which is not normally conducted behind closed doors in this country, even in routine matters. I hope that the noble Lord will give consideration to these amendments.

Lord Faulks:I thank noble Lords who have taken part in this useful debate. In addition to my response and the moving of government amendments, the debate has enabled the Government to place on record the

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rationale behind these provisions, which are broadly welcomed. I am reassured to hear, as I knew was the case, that the Magistrates’ Association is very much in sympathy with this, as are magistrates such as the noble Lord, Lord Ponsonby, and Newcastle magistrates’ court, which, sadly, misses the noble Lord, Lord Beecham. There is general consensus that this is a move in the right direction. Nevertheless, I also understand that there is the feeling that there should be safeguards to ensure that there is no sense that these hearings take place behind closed doors unless it is entirely appropriate that that should be the case.

I shall deal first with Amendment 49A, which seeks to require that the list of offences to which the new single justice procedure should apply is set out in secondary legislation. Our intention is that all summary, only non-imprisonable, offences should be in scope of the procedure. However, we anticipate this procedure being used only in the more straightforward cases, such as where the particular circumstances of the case mean there is no direct victim or specific threat to public safety involved, or cases that involve offences designed to regulate the conduct of some particular activity in the public interest where there is a minimal or no mental requirement needed to prosecute. In legal terms, this would mean cases where there is no mens rea or it is easy to prove mens rea.

We expect offences that are technically in scope of the legislation but which might not be suitable for the new procedure to be initially filtered out by prosecutors who make decisions on the handling of these types of cases on a daily basis. It will, of course, be for a single justice to decide whether a case is appropriate for this procedure, and he or she can refer it to the ordinary court at any time. I fully understand the temptation to try to limit or specify a list of offences to which the single justice procedure might apply. However, we have high-quality magistracy in this country who are well used to exercising their powers to determine the right forum within which cases should be heard.

Amendment 49B relates to the rights of the defendant under the single justice procedure. Our provisions allow the court to use the single justice procedure unless the defendant explicitly states that he or she does not want that to happen or intends to plead not guilty, in which case it will automatically be referred to a traditional magistrates’ court. The objective of the single justice procedure is to address the current situation, whereby a significant number of defendants fail to engage with the process at all. Although the effect of the amendment would be to allow a single justice to consider any case, regardless of the defendant’s response, I understand that the intention is to remove the ability of the single justice to hear cases where the defendant has not responded. I recognise that this may be in response to concerns about the assumption that, where a defendant does not engage, the case should nevertheless still be heard by a single justice. However, it should be remembered that the defendant will have the right to request a traditional hearing in open court at any point before his or her case is considered by the single justice. If a defendant does not know about the case until after it is finished, they can make a statutory declaration to that effect, which will start the proceedings again from the beginning.

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Amendment 49C would introduce a new requirement that the documents sent to the defendant with the single justice procedure notice should include a copy of the submission from the DVLA informing the court of any penalty points on the defendant’s driver record. It is the explicit responsibility of the holder of a driving licence to ensure that it is kept up to date by surrendering it as and when required for details to be changed or endorsements added. If there are endorsements on a driving record that do not appear on the counterpart of the corresponding driving licence, the licence holder might well be committing a further separate offence. I assure noble Lords that courts will have direct access to DVLA records. The days that the noble Lord, Lord Beecham, remembers of a moth-eaten driving licence being handed up to the justices have departed. A single justice will have information about an offender’s previous offences before them when trying a motoring offence.

Lord Ponsonby of Shulbrede: My Lords, I am sorry to disabuse the noble Lord, but those days are not departed. In fact, it is far more common for the defendant not to be able to produce a driving licence at all.

Lord Faulks: I defer to the noble Lord’s experience in that regard, although the new format of the driving licence makes it slightly less destructible than its predecessor. I maintain nevertheless that the courts do have access to the DVLA records, so, when trying a motoring offence, a single justice will have the information even if the defendant does not produce a driving licence at all. I am therefore confident that the safeguards we have built into this procedure make the amendment unnecessary.

Amendment 50AA would remove the provision that a court can decide a case under the single justice procedure other than in open court. That would undermine one of the main drivers behind this policy. We consider the time wasted and costs incurred in requiring magistrates to sit in open court and decide cases disproportionate in the type of straightforward, low-level cases that this procedure will apply to. Safeguards are in place to enable a prosecutor to ensure a case is heard in open court by issuing a requisition and a defendant to ensure the same by indicating his or her wishes in response to the single justice procedure notice. I reassure the noble Lord that the fact that a case is heard under the single justice procedure will not impact on the court’s duty to ensure that proceedings are open and transparent. The press and public will continue to have access to information about these cases, as they do now.

Amendment 50C would allow a single justice to hear and consider evidence from a party to the case if they turn up when the single justice is considering the case. In practice, parties will not know when a case will be considered by a single justice under this new procedure, so it is extremely unlikely that this situation would occur. However, there is a risk that it could be seen as encouraging prosecutors to turn up and assist the court. That could be perceived as unfair and unequal, particularly if the case was being heard other than in open court. We could not allow evidence to be heard by a magistrate when a single justice was making a

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decision, as that would lead to unfairness if the other party had not been given the opportunity to consider that evidence. In any case, there is clear provision in the Bill stating that when a person wants to be heard by a magistrates’ court, they are perfectly able to request a hearing.

Amendment 51B would introduce a legislative requirement to publish in advance details of cases to be heard under the single justice procedure and to publish the outcome of these cases. It is, of course, vital that the media and the public continue to have access to information on these cases under the new single justice procedure. However, the appropriate place for such provisions is within the Criminal Procedure Rules. Those make it clear that certain specified information must be made available to journalists and other members of the public on request. The rules also allow the court to make certain additional case information available to third parties on request. The Criminal Procedure Rule Committee will be invited to review the Criminal Procedure Rules to make sure that they are fit for purpose for the single justice procedure.

I can reassure the noble Lord that the fact that a case is heard under the single justice procedure will not impact on the court’s duty to ensure the proceedings are open and transparent. The press and public will continue to have access to information about cases, as they do now. There is a protocol in place between Her Majesty’s Courts and Tribunals Service, the Newspaper Society and the Society of Editors whereby magistrates’ courts routinely make written lists of cases and results available to local media, most often by e-mail. This arrangement will continue.

Amendment 52A introduces another condition on which a defendant can make a statutory declaration so that, in addition to being unaware of the proceedings, the defendant can state that they did not understand the information contained in the single justice procedure notice and the accompanying documents. This deals with the point made by the noble Lord, Lord Beecham, about things such as language difficulties. The associated documentation sent to defendants under the single justice procedure will be no more complex that the documentation which is currently sent in this type of case; indeed, we are confident that the flexibility afforded by this new procedure will enable us to make the whole system for these cases more easily understood by defendants. As with the existing process, prosecutors have developed strategies to identify those who may require further assistance and Her Majesty’s Courts and Tribunals Service is also considering, as part of implementation planning, how it will continue to discharge its duty to provide assistance to unrepresented defendants. The provisions, as set out, provide magistrates’ courts with the flexibility they need to operate the single magistrate procedure effectively while ensuring that the rights of defendants are protected.

I will say a little more about the suggestion put forward by the noble Lord about the availability of information on case outcomes. I agree that the information should be available as soon as possible after the trial has concluded. In both cases, the noble Lord suggests that this should be within 21 days. However, such detailed procedure should not be contained within

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the legislation itself. As I said earlier, the appropriate place for such detail is within the Criminal Procedure Rules.

We know that journalists and the general public seldom attend to watch this type of hearing and this is the reason behind the protocol to which I referred. As to the listing, we accept that it is vital for there to be access to information and we anticipate that cases will initially be listed in the same court buildings as they are at the moment. This arrangement with local media will replicate exactly what currently happens in practice. In future, we will want to take advantage of the fact that consideration of cases in writing can happen anywhere, and maximise the efficiency that can be derived from this greater flexibility. In doing so, we will want to maintain flexibility and transparency.

There are opportunities, as part of the criminal justice system digitisation agenda, to look more radically at how we can use the opportunities of digital to preserve and perhaps enhance open justice. It is our intention to make case information available on a self-service basis and enable the press and public to access cases in real time and follow the progress of the digital process online in a more meaningful way than they can at present. The rule committee will be invited to review the rules to ensure they are fit for purpose for the single justice procedure. I am sure that such a review will want to take into account the proposals made by the noble Lord, Lord Ponsonby. Any necessary amendments can be made, subject to annulment by either House of Parliament in the usual way.

I hope that, in the course of rather too long a response to those amendments, I have been able to allay any concerns and explain the thinking behind the single justice procedure. With that reassurance, I hope noble Lords will not press the amendment.

Lord Beecham: That was a very thorough response for which I am extremely grateful, but one thought has just occurred to me in relation to some of the noble Lord’s later remarks. I may be wrong, but I understand that it is possible that some of these cases will be taken, as it were, to some other court and thus will not necessarily be heard in the place where the offence was committed. Perhaps I have misunderstood the noble Lord, but if that is right, does that not make the question of the openness of the process in terms of recording the outcome more difficult? There will not be a local reporter in, say, Newcastle for a case that has been transferred from there to Middlesbrough. Perhaps the noble Lord could look into this because I would be interested to hear his views on it. I think that it would be regrettable. If we are to have this process, it should be based in the local court where the offence occurred and where it would normally be dealt with.

6.30 pm

Lord Faulks: Perhaps I may look into that and confirm the position in writing to all those who have taken part in this debate.

Amendment 49 agreed.

Amendment 49A not moved.

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Clause 36, as amended, agreed.

Clause 37 agreed.

Clause 38: Trial by single justice on the papers

Amendments 49B and 49C not moved.

Amendment 50 agreed.

Amendment 50A, as an amendment to Amendment 50, not moved.

Amendments 50AA to 50C not moved.

Amendment 51 agreed.

Amendments 51A and 51B not moved.

Amendment 52 agreed.

Amendment 52A not moved.

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(1) A statement contained in a document is admissible in proceedings conducted in accordance with section 16A as evidence of a matter stated if, in the particular case—

(a) the document is one in relation to which section 16A(1)(c) is satisfied, or

(b) section 16A(3A) applies to the information in that document (as the case may be).

(2) Subsection (1) does not prevent a court taking into consideration the nature of the evidence placed before it when deciding whether it is appropriate to try the written charge in accordance with section 16A.

(3) In this section “statement” means any representation of fact or opinion.”

Amendment 53 agreed.

Clause 38, as amended, agreed.

Clause 39: Trial by single justice on the papers: sentencing etc

Amendment 54 agreed.

Clause 39, as amended, agreed.

Clause 40 agreed.

Amendment 55 had been withdrawn from the Marshalled List.

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(4) In section 5 (supplementary provisions about decisions on bail), after subsection (5) insert—

“(5A) Directions must be made in accordance with Part 1 of Schedule 2 to the Constitutional Reform Act 2005 to secure the results referred to in subsections (5B) and (5C).

(5B) Immediately after a court gives its decision to withhold bail in criminal proceedings from a person to whom section 4 of this Act applies, the court must ask whether the defendant has children or elderly, disabled or otherwise vulnerable adults dependent on them for their care (“dependants”), and, if the defendant or any other person in court states that the defendant does have such responsibility, the court must ask what arrangements there are for their care while the defendant is on remand in custody.

(5C) If it appears that there are no arrangements in place for any such dependants, the court must either—

(a) allow the defendant to make a telephone call to secure such arrangements, or

(b) direct any appropriately skilled person present in the court to make enquiries with the aim of ensuring that such dependants are provided with suitable short-term care to meet their needs;

where necessary, this may require contacting the appropriate local authority children’s or adult social care team.”

(5) The provisions inserted by this section shall come into force two months after the day on which this Act is passed.”

Lord Low of Dalston: My Lords, I can be quite brief. This amendment arises from a conversation which began at Second Reading when the noble Lord, Lord Blair, and I identified the problem of children and vulnerable adults who are dependent on an adult who is sentenced to a prison sentence being left without support when the offender is sent to prison. It is estimated that some 200,000 children have a parent in prison at any one time, which is nearly three times the number of children in the care system. They are twice as likely as other children to experience behaviour and mental health problems, and three times as likely to go on to commit an offence themselves. Sixty-five per cent of boys with a convicted father will themselves go on to offend. Therefore, there is an obvious need for these people to be picked up and supported, yet there is no official way of identifying them or ensuring that their need for support is taken care of.

Organisations such as Barnardo’s and other members of the Families Left Behind campaign report from their work in prisons that a lack of identification of the children or vulnerable adults dependent on a parent or carer remanded in custody or sentenced to imprisonment often puts the child or vulnerable adult at risk. They have records of cases where children have been left with friends or neighbours as a temporary measure and are then passed on to other friends or associates; cases where children have been left with individuals who misuse drugs and alcohol; cases of children left at school with no one to collect them and with no one contacting the school; and cases of children left with elderly relatives, relatives with disabilities, relatives in distress or relatives living in poverty who have offered to step in to provide emergency care but do not really have the resources to do so.

In the past, the probation service would have stepped in to bridge the gap but, with the probation service progressively becoming more of an offender management and less of a social service, a vacuum has opened up. In 2011, with the support of the NSPCC, Action for

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Prisoners’ Families and HM Courts and Tribunals Service, Pact published a range of resources aimed at promoting good practice in relation to children and dependent adults whose primary carers had been sent to prison, including guidance asking magistrates to check that there were no immediate welfare needs. Three years on, however, it is clear that many courts are not following this guidance, and there continues to be a lack of awareness of the need to make sure that arrangements are in place for the care of children and dependants of people placed in custody. Accordingly, the Families Left Behind campaign is calling for a statutory duty to be placed on courts to ask an individual, when they are sentenced to prison or held on remand, whether they have any dependants. If they do, steps can then be taken to ensure that appropriate care arrangements are in place.

At Second Reading, the Minister acknowledged the problem and undertook to consider it. I am very grateful to him for the constructive discussions he has made possible and to the members of the Bill team for the positive contribution they have made and for all their help in getting the amendment right. As a result, I am hopeful that we now have an amendment that the Government can broadly support. The Minister felt that a statutory duty might be a bit heavy-handed and suggested that the amendment might be better couched in terms of guidance. Accordingly, the amendment now seeks to achieve its effect through directions, although I note that the word “duty” remains in the heading of the proposed new clause. The Minister may have something to say about that.

The amendment would amend the Criminal Justice Act 2003 and the Bail Act 1976 to put in place a system for courts to establish whether an individual sentenced to prison or held on remand has children or vulnerable adults who are dependent on them and who may need immediate welfare support. The proposal is that, immediately following the decision to send someone to prison, the defendant will be asked by the court whether they have children or vulnerable adults dependent on them and, if so, whether care arrangements are in place. If there are no such arrangements, the defendant will be given the opportunity to make a phone call to family members to inform them about the situation and make the necessary short-term arrangements, such as for collecting a child from school or nursery, or ensuring that they are not left at home alone. If this does not achieve a satisfactory result, the court should direct an appropriately qualified person in the court—for example, probation staff, the defendant’s legal representative, court staff, a voluntary sector organisation or a police liaison officer—to take specific action before the defendant leaves court. Where necessary, this may entail contacting the appropriate local authority children’s or adult social care team.

I hope the amendment may give us a basis for moving ahead consensually on a matter which, once pointed out, has prompted concern across the whole House. I beg to move.

Lord Blair of Boughton (CB): My Lords, I support the noble Lord, Lord Low, in this matter and I am grateful to the Minister for the co-operation that he and his office have shown in relation to the amendment.

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I declare an interest as the chairman of the Thames Valley Partnership, a criminal justice organisation which, as it says on the tin, is in the Thames Valley. I came across this problem in relation to some of the partnership’s work, as there is at the moment absolutely no statutory requirement for anyone, for instance, to inform a school that a child attending the school has a parent who is now in prison. The failure to do this is also often compounded by the embarrassment of the other parent. She is not going to mention it but the other children in the playground will know who has just had their father sent to prison and the bullying and exclusion start. This relatively short amendment, which imposes the lightest of requirements on the sentencers, fills an obvious lacuna.

I apologise to the House that I was not in attendance for the first 30 seconds of the speech of the noble Lord, Lord Low, so I do not know whether he mentioned the fact that the numbers are vast—200,000 children, which is three times the number in care. Obviously, that is not every year in terms of sentences but there is a long-term impact. Some of the work done by the Thames Valley Partnership shows that children increasingly, as they grow older into their teenage years, lose contact with the parent in long-term custody.

I hope the Government will accept the amendment. I understand there are a number of routes we can take between now and Report. Whether this is done through statute or practice direction, I hope that we can close the gap which leaves children vulnerable when some parts of the agencies of the state know what has happened but are not talking to one another.

Lord Hodgson of Astley Abbotts (Con): My Lords, my name is on the amendment. The noble Lord, Lord Low, has made a powerful speech. I do not intend to repeat his arguments and I shall not detain the Committee long.

In this case we must surely be seeking a balance. There is the need to ensure that the position of children or dependents of a person detained in custody is properly protected at a time of considerable trauma and family disturbance. The impact on the children of a parent, particularly a mother, going to jail has been well documented—it has been referred to by the noble Lord, Lord Low, and in briefings that your Lordships will have received from Barnardo’s and other NGOs—and that is one side of the balance. The other side of the balance is that we have to do this without tying up the courts in extensive bureaucratic form filling, much of which is time consuming and may prove ineffective. It is the balance between those two considerations that Amendment 55A seeks to achieve.

All that remains for me to do is to thank the Minister, his officials and, indeed, the Government for the courtesy they have shown in considering this difficult matter. I hope that this redrafted amendment will commend itself to him.

Lord Touhig (Lab): My Lords, I support the noble Lord, Lord Low, and other noble Lords on Amendment 55A. I do so having supported a similar amendment to the Anti-social Behaviour, Crime and Policing Bill in

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November 2013, to which an amendment was tabled by the noble Lord, Lord Ramsbotham, with my support. This is a straightforward request. It simply requires the courts to inquire whether individuals who are refused bail or are sentenced to prison have caring responsibilities for any children or vulnerable adults; and, if they do, to allow them or another—probably social services—to take the appropriate action to provide care and support. With representatives of the Families Left Behind campaign, the noble Lord, Lord Ramsbotham, and I had a very good meeting with the then Minister, the noble Lord, Lord McNally, who was very helpful and encouraging to us at that time. I was even more encouraged later when I received a reply to a letter I had sent to Lord Justice Gross, the senior presiding judge in England and Wales, who agreed to reissue existing guidelines to the courts on this matter. Although that is certainly most welcome, we need to underpin the whole issue with this amendment.

6.45 pm

Young children and vulnerable adults are being put at risk, and we have a chance to do something about it. The proposed change would not have any bearing on decisions of the courts about length of sentence or whether or not bail should be granted. It would place no burden at all on the courts to make care arrangements. It is simply a safety net and, had it existed before, the cases which were brought to my attention would not have occurred. A seven year-old boy would not have been neglected and left alone when his mother was sentenced. A woman, on being sentenced, was not aware where her daughter had been placed and a social worker had to make calls to four different councils before finding that the child had been hospitalised. There was a case where a 19 year-old was left in charge of five brothers and sisters when his mother was unexpectedly denied bail.

The noble Lord, Lord Low, and others, have already referred to the fact that 200,000 children in England and Wales live with the experience of a parent being in prison. There are no figures available for the number of vulnerable adults who might suddenly be without a carer who is imprisoned. However, that figure, too, is likely to be significant when we consider that the prison population is around 80,000 and one in eight adults in Britain is a carer. This is a big problem, which would become much smaller if this amendment were agreed to. I hope the Minister sees the sense in this.

Baroness Benjamin (LD): My Lords, I also support the noble Lord, Lord Low, and other noble Lords on Amendment 55A, which will help meet the needs of a vulnerable group of people. As we have heard, they are children and adults dependent on someone who is sent to prison. This amendment is supported by the Families Left Behind campaign, which includes a number of organisations that offer support to the children and families of offenders through direct provision of services, advocacy and research. One such organisation is the children’s charity Barnardo’s, and I declare an interest as one of its vice-presidents.

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In an Oral Question last year, I asked the Government to give consideration to this issue by putting measures in place to protect vulnerable children. Barnardo’s has found that children of prisoners are a highly vulnerable group who are twice as likely to experience depression and problems with mental health, alcohol and drug abuse. They are more likely to live in poverty and poor accommodation or to be part of the care system. We have recently been hearing about how many children and young people have been abused while in care—something which destroyed their lives for ever and imprisoned them. Sadly, many of these young people go on to offend and are disproportionately represented among young offenders. These children suffer through no fault of their own.

The reasons for parental imprisonment often relate to family problems, including domestic violence or drug and alcohol abuse. This is not a perfect environment for any child to be brought up in. It can seem to them that the whole world is against them. Despite all this, there is currently no requirement to identify any child or dependent adult that an individual remanded or sentenced to prison may be leaving behind. Believe it or not, there is not even the slightest check on arrangements for their safety, care or well-being. Therefore, these children—as we have heard, there are around 200,000 of them—are unlikely to be offered any targeted support because often there is no record of them and no requirement to identify them. Disturbingly, they are not known to children’s services.

This is why Barnardo’s and the Families Left Behind campaign call for the introduction of a statutory duty on courts to ask whether an individual has dependants when they are sentenced or held on remand, in order that it can be confirmed that appropriate care arrangements are in place. This will not impact on courts’ resources or create any additional work. It will just be a case of asking two simple questions. Barnardo’s has found that defendants will not necessarily volunteer this information without being asked.

Therefore, I ask the Minister whether the Government will create a statutory duty on courts to identify defendants who have children dependent on them. By collecting this data, we will be better placed to detect vulnerable children with a parent in prison and ensure that these children get the support they need. Like the Families Left Behind campaign, I believe that Amendment 55A will ensure that children and adults are better protected when their loved ones are in prison.

Baroness Howe of Idlicote: My Lords, I, too, have had correspondence from those very concerned about this issue. I do not intend to take up your Lordships’ time by going further into this whole matter, but in as far as this is not already in place it clearly needs to be, and the sooner it is put into effect the better. I am still rather surprised that it does not exist automatically as a natural procedure in court.

Lord Ponsonby of Shulbrede: My Lords, first, I apologise to the noble Lord, Lord Low, for not being in the Chamber for the whole of his contribution. I wish to make a couple of points. The first is that this is good practice within magistrates’ courts at the moment.

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Certainly, every court I have sat in has made these inquiries. Nevertheless, I take the point that it may not be universal practice and it may not be a statutory requirement.

Secondly, I wanted to pick up the point made by the noble Lord, Lord Blair, about informing the schools and so on. It seems to me that this amendment does not go that far; all it does is allow the defendant to make a telephone call. Some of the defendants I see in front of me would make a telephone call, but one might not have confidence in the telephone call that they made. Therefore, I think there needs to be a more active inquiry by, for example, social services or the probation service about the possibility of dependants at home. Nevertheless, I agree with the objectives of the amendment. I look forward to the Minister’s response about the practicalities and also whether the amendment goes far enough.

Lord Kennedy of Southwark (Lab): I am delighted to support the amendment in the name of the noble Lords, Lord Low of Dalston, Lord Blair and Lord Hodgson of Astley Abbotts. With their wide range of experience they have correctly identified that, despite the best of intentions, the support of the Courts Service and of charities, in too many cases courts are not making sufficient checks with regard to the immediate welfare needs of children and dependent adults. The amendment seeks to put in the Bill what should happen at present but has clearly not been delivered in many cases, and that is a matter of much regret. I agree with the noble Lord, Lord Blair, that this is a fairly small measure but it deals with an important issue that needs to be addressed.

My noble friend Lord Touhig told the House of a number of young people and children who were put into difficult situations because simple provisions were not in place. I agree also with many noble Lords when they said that the children of prisoners were a highly vulnerable group of people who need to be looked after.

As the noble Lord, Lord Low of Dalston, explained to the Committee, the amendment will require the courts to inquire of a defendant who has been sentenced or remanded to prison whether they have dependants and whether arrangements have been made for them. If they have not, they would be allowed to make a phone call to make arrangements or, where that is not possible, the court could direct someone to take action before the defendant leaves court.

People sometimes need to be sent to prison. All this amendment does is to seek to ensure that adequate immediate provision is made for dependants. As the noble Baroness, Lady Benjamin, said, all we are requesting is for two simple questions to be asked. I do not think this amendment in any way places a burden on the courts that could not be handled. If the noble Lord, Lord Faulks, is going to say that, I hope he will explain very carefully why he thinks that is the case and answer the point that I and other noble Lords have made in this debate, which is that the voluntary provision has failed and that continued failure is likely to cost far more to dependants and to their welfare.

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I see the provision working fairly simply. When I sat in court as a magistrate, although that was some time ago, courts adjourned for all sorts of reasons. It is very easy for questions to be asked and action taken. It is also true that in many cases, especially if the defendant fully expects to receive a custodial sentence, arrangements for dependants will have already been made.

All we are looking for is a clear set of proportionate responses to come into play with the welfare of the dependants of someone who has received a custodial sentence at their heart. I hope that the Government can either accept this amendment or at least look at this issue again and the problems that have been identified before we come back to it on Report.

Lord Faulks: My Lords, the amendment from the noble Lords, Lord Low and Lord Blair, and my noble friend Lord Hodgson, seeks to place a statutory duty on a court to inquire into the arrangements for care of dependants of those being sent into custody. I recognise that the proposed new clause is a revised version of one debated by this House during the passage of the Anti-social Behaviour, Crime and Policing Bill 2013. I welcome the contribution of the noble Lord, Lord Touhig, and the interest that he continues to show in this important issue, just as I welcome the contribution of the noble Baroness, Lady Benjamin, with her connections with Barnardo’s. I should also reiterate that I was grateful, too, for the opportunity to discuss some of the details of the previous version of this new clause, not the one that finds its way into the amendment, with the noble Lords whose names appear on the amendment, together with some staff from Barnardo’s.

As my noble friend and predecessor in this position, my noble friend Lord McNally, said last year, the Government completely understand the concern behind this proposed new clause. We should all be concerned with the welfare of children and other dependants of those who are about to be sent into custody. I do not disagree with anything noble Lords have said about the importance of protecting these children and vulnerable adults. We should all recognise that the children of those sent into custody can be subject to immediate risks to their welfare, and there is the risk that they themselves will fall into crime.

The Government support the desire to identify and ensure that children of offenders are cared for. Unfortunately, the Government cannot accept this new clause, even in its revised form, for the reasons that I will explain. The new amendment seeks, via an amendment to the Criminal Justice Act 2003, to require the Lord Chief Justice to issue a practice direction under his powers in the Constitutional Reform Act 2005. In this way, Parliament is being asked to approve a provision which would require the Lord Chief Justice to issue a practice direction and require the Lord Chief Justice to issue a direction with the particular content set out in this proposed new clause. This, noble Lords will appreciate, would amount to an inappropriate restriction on the Lord Chief Justice’s powers and discretion to issue practice directions which the Constitutional Reform Act is designed to protect. However, I understand the thinking behind

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this amendment and the Government agree that it would be better to approach this problem not by a statutory duty, but by more practical measures. This might include, via the independent bodies that are responsible for these things, guidance, practice directions or procedure rules.

We welcome the changes that noble Lords have made to the clause, which goes some way to addressing the concerns expressed in regard to the earlier version. We remain concerned, however, by the focus on post-sentence or post-remand consideration.

The proposed new clause applies only to the post-sentence process, or the process following the decision to withhold bail, but the existence of dependants is also of vital importance to the decision to remand or sentence to custody—in other words, pre-sentence. As for the Sentencing Council, the current sentencing guidelines already specifically mention care of dependants in relation to the approach to the sentencing decision. There is a clear process for making representations to the court with regard to sentence. Information supplied post-sentence, although it may help with making care arrangements once a person is sent into custody, is simply too late to enable the court to consider the full circumstances of the offender.

7 pm

The need to care for children, and the impact of the loss of a parent or carer, is a well established mitigating factor in sentencing. As the noble Lord, Lord Ponsonby, said, it is often at the forefront of inquiries made by the court, and it is likely that anyone represented is bound to explain, through their lawyer, the circumstances that exist in an offender’s home. The weight to be given to the impact of separating a parent and child is set out in case law. The courts can, and in certain circumstances must, consider and inquire into the potential impact of a custodial sentence on dependants. If they do not where it is relevant, that could give rise to an appeal against the sentence. We therefore encourage information about dependants to be placed before the court as soon as possible.

I should make it clear that the Government have never had any concerns about the consideration of dependants before sentence being likely to lead to “soft sentences”. As I have indicated, it is clearly a responsibility of the court to consider these factors in remand and sentencing decisions. This amendment, I suggest to noble Lords, would place a specific requirement on the Lord Chief Justice and is too focused on the post-sentence process.

In view of the importance of this, I will say a little more about specific issues which arise, in particular as regards female offenders. I will mention some practical things that are already happening and how we might develop things further. I start by making the point that offenders who are primary carers are likely to be —although they will not always be—women. The National Offender Management Service already takes steps to ensure that dependants of women sentenced to custody are identified and their needs addressed. Prison Service orders state that, as part of the reception into custody process, female prisoners should be offered at least one free phone call to enable them to resolve

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urgent family and childcare issues. Women should be allowed more than one call where it is necessary to sort out complicated childcare arrangements.

We are developing the custodial estate so that women who the courts have decided must go into custody can stay closer to home and maintain links with their families. Under our transforming rehabilitation reforms, all women’s prisons are to become resettlement prisons—I am due to visit Holloway this Friday. This will mean that most female prisoners will serve their sentence as close to their home, and importantly their children, as possible, which is vital if we are to help women break the pernicious cycle of reoffending. In addition, as part of the implementation of the estate review, the provision of family days in women’s prisons is being reviewed, with a view to developing and increasing the number of events held across the women’s estate. This work is being taken forward with input from governors, commissioners and members of the advisory board on female offenders.

I have stressed that we consider it is too late if we are identifying dependants after the sentencing decision, but this has to be an issue that we look at in the criminal justice system as a whole. I am sure that the noble Lord, Lord Blair, will agree that the police have an important role here. It is often the police who have the best information on the existence of children and are likely to be the first authority to detain a person, and therefore to have an impact on any dependants. We need to ensure that information on dependants that is gathered at all stages of the criminal process is recorded and shared where appropriate.

Lord Hodgson of Astley Abbotts: My noble friend talks about the importance of this information being inquired about before sentencing. But is it not better that it should be inquired about at some point rather than not at all?

Lord Faulks: I entirely agree with my noble friend. It is important that it should be acquired before sentence rather than after sentence.

The Children Act 2004 already requires inter-agency co-operation to safeguard and promote the well-being of the child. It is important that probation staff—albeit that in the view of the noble Lord, Lord Low, they have become more concerned with offender management —those working in court or those preparing pre-sentence reports have a responsibility to consider the impact of custody on an offender’s children. All those who have read such reports will realise that that is almost always a central feature of them. If there is a likelihood of custody then children’s services will be alerted by probation to ensure that arrangements are in place to safeguard the well-being of any children. We are working to ensure that this system of assessment and referral is as robust as possible for both pre-sentence report assessment and court practice. This is a very important role for the new National Probation Service.

Much reference was made to the existence of troubled families, and quite rightly so. The Government understand the challenges and poor outcomes faced by children dealing with parental imprisonment, including higher risk of mental illness, poor educational outcomes and

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offending in later life. I agree it is important that these families receive appropriate support, alongside support for offenders’ rehabilitation and for tackling inter- generational offending. We have already had conversations with organisations such as Barnardo’s to discuss the issues raised by its report

On the Outside

, published in May this year, and intend to expand our discussions wider to other government colleagues, criminal justice system agencies and practitioners such as legal representatives.

The scope of this approach is potentially very wide—childcare is obviously a pressing concern—but there are also other concerns for families of offenders: financial support, continuing accommodation and so on. This is another reason why it is simply not realistic for the criminal courts to step in and manage an offender’s life after they have been convicted. However, there is a role for government here. That is why we are working across government, and in partnership with local authorities under the troubled families programme, to turn around the lives of 120,000 families suffering from the most complex problems by May 2015. We have already announced an expansion of the programme to an additional 400,000 families from 2015-16. The next phase of the programme will focus on families with a broader range of problems.

I should also mention the important role of the charitable voluntary sector. My noble friend Lord McNally has in the past paid tribute to the work that organisations such as Pact have done and continue to do to support the families of those in custody. I add my own appreciation of that important work and my commitment that the Government will look at how we can both publicise and support the services those organisations provide. I am glad to hear that Lord Justice Gross is concerned that some further guidance should be given in relation to the problem identified by the amendment.

Lord Touhig: Perhaps I did not make it clear that, in his reply to me, Lord Justice Gross said he would reissue the existing guidelines, not set out any new ones.

Lord Faulks: I am grateful for that clarification. Perhaps reissuing the guidance will bring it home to those who see it. Perhaps for the first time it will remind them of the pre-existing obligation.

I started my response with a list of reasons why the Government could not accept the proposed new clause, but we believe that the issue should be addressed. It is a difficult area but we are now making progress in developing consensus on the best approach. I hope we can continue to work with noble Lords who have consistently shown an interest in this matter, with Barnardo’s, with the judiciary and with the legal profession to develop the best way to tackle this issue. Although I cannot accept the amendment, we are very much concerned to ensure that nobody should slip through the net in the way that the amendment is directed. I hope that, with the reassurance I have given, the noble Lord will feel able to withdraw the amendment.

Lord Kennedy of Southwark: The amendment identifies a problem. The Government refer to guidance and advice. The noble Lord, Lord Ponsonby, said that in

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his court there is not a problem. What worries me is that there will be best practice in lots of courts but there will be one or two cases where that is not the case. That is why we want this duty on the face of the Bill. I am worried that guidance will not be enough. That is my main problem.

Lord Faulks: In fact, the amendment places a statutory duty on the Lord Chief Justice. Of course, whatever one does in terms of guidance, not all courts are necessarily going to be as good as each other, but we hope that, by taking various different steps, we can ensure, in so far as it is possible, that the problem that can exist is unlikely to arise in practice.

Lord Kennedy of Southwark: Is the noble Lord saying that if the amendment was worded to put a duty on the courts and not on the Lord Chief Justice, the Government would look at that?

Lord Faulks: No, I am saying that I do not think that a statutory duty is the answer.

Lord Low of Dalston: My Lords, I am grateful to all those who have spoken in this debate. It bears out my contention that there is concern about this issue across the House. Indeed, that concern is shared by the Government. Like the Minister, I would hope that we are not yet at the end of this discussion and that discussions and work can continue with a view to finding a solution around which we can all unite. We have a bit of time because of the Recess and we will not be coming back to this until Report in the autumn. In particular, I would like to thank the Minister for his meticulous reply, to which I have listened carefully. There are obviously a number of issues that need to be addressed. There was the question that the amendment related purely to after sentence. We put that in because we were concerned about issues of this kind contaminating the sentencing process. However, if the noble Lord feels that that is not an issue, that can certainly be revisited. The noble Lord, Lord Ponsonby, made some useful points about the inadequacy, perhaps, of a telephone call and that in some respects it is important that whatever process we put in place should go further than this amendment. I very much welcome having further discussions with the noble Lord, Lord Ponsonby, about that and seeing whether there are ways in which we can take account of the concerns that he raised.

The most important points came from the Minister about the inappropriateness of trying to achieve what we want to achieve through a practice direction. We thought that, in that way, we were seeking to put in place a more light-touch process than creating a statutory duty, but if that is not appropriate, we can certainly revisit that and avoid trying to do things by statutory practice direction—trying to effect practice directions by referring to them in the amendment.

I would make this point, to which I think the noble Lord, Lord Kennedy, also referred. The Minister indicates that we should work through a range of pragmatic steps that can be taken by a variety of bodies and that they might be collected together in guidance, but there is evidence that guidance is not working. There is

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guidance around but there is still a problem. I continue to feel that there is a need for whatever we put in place to have a statutory basis. Therefore, I would like to continue discussions with the Minister to see whether we can get a statutory basis with which he is happier and which would give what we are all trying to achieve a bit more teeth than the guidance, which is not working, would appear to have. With those remarks and, in the hope that we can do more work over the summer and come back with an agreed result in the autumn, I beg leave to withdraw the amendment.

Amendment 55A withdrawn.

7.15 pm

Schedule 7: Trial by single justice on the papers: further amendments

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“(1B) Where this subsection applies, the person must (instead of complying with subsection (1))—

(a) cause the licence to be delivered to the designated officer specified in the single justice procedure notice within such period as the person is allowed for indicating a wish to make such representations,

(b) post it, at such time that in the ordinary course of post it would be delivered within that period, in a letter duly addressed to that officer and either registered or sent by the recorded delivery service, or

(c) if the person indicates a wish to make such representations, have the licence with him at the hearing appointed to be held because of that indication.

“(1C) Subsection (1B) does not apply (and subsection (1) applies instead) if, before the period mentioned in subsection (1B)(a) comes to an end, a summons is issued under section 16B(3)(b) or 16C(3)(b) of the Magistrates’ Courts Act 1980.”

(3) In subsection (2)—

(a) for “In subsection (1) above “proper officer” means—” substitute “In this section—

“proper officer” means—”, and

(b) at the end insert—

““single justice procedure notice” and “written charge” have the same meaning as in section 29 of the Criminal Justice Act 2003.””

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62: Schedule 7, page 102, line 41, at end insert—

“Vehicle Excise and Registration Act 1994 (c. 22)

6C (1) Section 55 of the Vehicle Excise and Registration Act 1994 (guilty plea by absent accused and amount payable under section 30 or 36) is amended as follows.

(2) After subsection (2) insert—

“(2A) This section also applies if—

(a) a person is convicted of an offence under section 29 or 35A while being tried in accordance with section 16A of the Magistrates’ Courts Act 1980 (trial by single justice on the papers), and

(b) it is proved to the satisfaction of the court, in the manner prescribed by Criminal Procedure Rules, that a relevant notice was served on the accused with the written charge.”

(3) In subsection (3)—

(a) in paragraph (a), for “in a case within subsection (1)(a)” substitute “if the offence is an offence under section 29”, and

(b) in paragraph (b), for “in a case within subsection (1)(b)” substitute “if the offence is an offence under section 35A”.

(4) In subsection (5), for “The court shall not so proceed” substitute “Where this section applies by virtue of subsection (1), the court shall not proceed as described in subsection (4)”.

(5) After subsection (5) insert—

“(6) Where this section applies by virtue of subsection (2A), the court shall not proceed as described in subsection (4) if the written notification served by the accused or the legal representative of the accused in accordance with the single justice procedure notice includes a statement that the amount specified in the relevant notice is inappropriate.

(7) In subsection (6) “single justice procedure notice” has the meaning given by section 29 of the Criminal Justice Act 2003.””

Amendments 56 to 63 agreed.

Schedule 7, as amended, agreed.

Lord Faulks: My Lords, Amendment 63A is designed to provide clarity about the operation of Section 22A of the Magistrates’ Courts Act 1980, inserted by Section 176 of the Anti-social Behaviour, Crime and

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Policing Act 2014, which made low-value shop theft a summary offence. Your Lordships may recall that although theft from a shop of property valued at £200 or less became a summary offence, the defendant’s right to elect to be tried by the Crown Court was retained. Where it is exercised, Section 22A provides that the case is to be sent to the Crown Court. The basis on which the magistrates’ court would now do so is that once the defendant has elected, as the court has no option but to send to the Crown Court, the offence becomes indictable only and falls to be sent there on that basis under Section 51 of the Crime and Disorder Act 1998.

Amendment 63A provides absolute clarity about the basis on which such a sending takes place as it is not sufficiently clear in the legislation. It makes clear that a low-value shoplifting case in which the defendant elects is to be treated in the same manner as an either way offence in which the defendant has elected. The magistrates’ courts will still be obliged to send the case to the Crown Court where the defendant elects and will continue to do so under Section 51 of the Crime and Disorder Act. Amendments 84A and 84B provide for that change to come into effect two months after the Bill is passed. Amendment 63F is required to put beyond doubt the role of the court in relation to the imposition of the criminal courts charge.

The Serious Crime Bill includes a provision that amends Section 13 of the Proceeds of Crime Act 2002 to make clear that the imposition of the confiscation order should not be taken into account when the court makes a victim surcharge order. That is because the court has no discretion over whether to impose victim surcharge, or how much. In a similar way, the court’s charge will be imposed by the court in any case where an adult is convicted of a criminal offence and the charge levels will be specified in secondary legislation. Amendment 63F therefore makes a similar change to Section 13 of the Proceeds of Crime Act to include the criminal court’s charge as an order in relation to which the imposition of a confiscation order should not be taken into account. I beg to move.

Lord Beecham: My Lords, I am grateful to the Minister for explaining the amendments. I am not quite sure what difficulties have been occasioned by the subject of the first amendment, in particular, or whether this proposal will make any difference in the real world. Could the noble Lord kindly explain it a little further? Unless he can show that it has, in fact, led to difficulties, I am somewhat puzzled.

In respect of the second matter, I suppose the question of consistency is relevant. I wonder whether there has been any review of the impact of the victim surcharge order in relation to outstanding fines. This, of course, deals with the confiscation order but, as we have established, there is a huge backlog of confiscation orders that have not been enforced and fines that have not been collected. While this is a tidying-up exercise, the practical effect may be negligible unless considerably greater efforts are made to enforce both fines and confiscation orders. Perhaps the noble Lord will enlighten us as to what the Government will do about the substantial backlog running into, as I recall, something like £2 billion under these heads. Otherwise,

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this will become a cosmetic change, with no real likelihood of the grave current situation being improved. In fact, unless additional resources are provided, matters will potentially get worse since efforts are presumably not now being made which would be brought into the scope of the provisions on confiscation. That might be an added case load which there seems little realistic prospect of achieving. Perhaps the noble Lord could clarify, in respect of both these matters, where the Government are and, more particularly, what they will do to make sense of the confiscation order procedure under whatever head it takes.

Lord Faulks: The noble Lord asked whether any problems have arisen. We are not aware of any, but the purpose of the amendment is simply to clarify the position for the purposes of a good law. The Government’s view on the existing drafting is that, after election for trial, this offence is sent up under Section 51(2) of the Crime and Disorder Act 1998. The noble Lord is no doubt anxious to know the answer to the question. This is not stated clearly in the 2013 Act and the interpretation has consequences which, although not significant in practice, make little sense. One example is low-level shoplifting cases where the defendant, as elected, would be brought within the ambit of the unduly lenient sentence scheme. The present amendment clarifies the position and avoids the consequences; it is the simplest way to deal with the issue.

Amendment 63F is simply a consequential amendment to remove any possible doubt as to whether the court has any discretion over imposing the criminal courts charge or the level of that charge. It would not be appropriate for courts to exercise discretion over a charge that directly contributes to the funding of the courts, but we will consider the role of charging in the next group of amendments. If I may, I will deal then with the questions of charging and victim surcharge and the appropriateness of those.

Amendment 63A agreed.

Clause 41, as amended, agreed.

House resumed. Committee to begin again not before 8.24 pm.

Euro Area Crisis Update (EUC Report)

Question for Short Debate

7.25 pm

Tabled by Lord Boswell of Aynho

To ask Her Majesty’s Government what is their response to the Report of the European Union Committee on the Euro area crisis: an update (11th Report, Session 2013–14, HL Paper 163).

Lord Harrison (Lab): My Lords, on behalf of my noble friend Lord Boswell of Aynho, and at his request, I beg leave to ask Her Majesty’s Government what is their response to the report of the European Union Committee on the Euro area crisis: an update. I thank

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my colleagues behind the scenes—namely, Stuart Stoner, our indefatigable clerk, Sarah Yusuf, Rose Crabtree and Katie Kochmann—who all helped and contributed over the years to these important deliberations.

I am delighted to speak to this short debate on the Euro area crisis: an update. This work was undertaken by the Economic and Financial Affairs Sub-Committee, which I chair. The report brings together four short update inquiries undertaken since the European Union Committee’s previous February 2012 report on the crisis. The most recent update was undertaken in February and March 2014. We heard from a stellar line-up of witnesses, including: Senator Mario Monti, former Prime Minister of Italy and a former Commissioner; likewise Erkki Liikanen, a former Commissioner, now the governor of the Bank of Finland and author, of course, of the Liikanen report on the European Union banking structural reform;Sir Jon Cunliffe, erstwhile UK ambassador to the European Union and now deputy governor for financial stability at the Bank of England; as well as a panel of economic experts, which included the Mayor of London’s chief economic adviser, Gerard Lyons.

We took as our starting point a very simple question: was the euro area crisis over? The answer we received was that the crisis had undoubtedly eased. In particular, the existential crisis afflicting the euro had diminished, in no small part thanks to the European Central Bank president Mario Draghi’s authoritative commitment in 2012 to “do whatever it takes” to save the euro. There were other encouraging signs: the reduction in sovereign bond spreads; Ireland’s exit from its adjustment programme; the entry of Latvia into the single currency; the hint from Poland—not only in terms of its financial line-up but even from so venerable a colleague as Lech Walesa—that it also had aspirations to join the euro; the return to growth in many member states; and even a growing confidence in Greece, the epicentre of the crisis. I thank also the noble Lord, Lord Boswell, who presides over the European Union Committee. He and I were in Athens recently at a COSAC meeting to hear of a very good report that was given by Prime Minister Samaras.

Having said that, we found that fundamental weaknesses remained, including: the extremely high levels of unemployment, particularly youth unemployment; immense economic imbalances between core and periphery member states of the eurozone; anaemic growth; inhibited bank lending, particularly to small businesses; and perhaps incomplete and uncompleted structural reforms in a number of the member states. There was also an overstrong euro on the exchange rates. Perhaps most of all, there were growing fears of a damaging deflationary spiral. All of this fed into wider political tensions about the effect of the austerity on the lives of European Union citizens—tensions that the May 2014 European parliamentary elections in part illustrate.

Our conclusion was that, while the crisis may have abated, it would be wholly unwise to conclude that the storm had entirely passed. In particular, the economic fragility of many member states meant that the euro area remained vulnerable to future shocks. Events since the publication of our report have borne this judgment out. The recent crisis of the Portuguese

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Banco Espírito Santo led to nervous jitters spreading across the euro area periphery. Industrial production remains low and overall growth is running at only 0.2% a quarter. The recovery remains as ill balanced as ever, as Germany leaves other members of the single currency in its wake—although even with Germany more recently there has been some holding back in its traditional economic growth. Inflation is currently running at only 0.5%, as growth continues to bump along. The threat of a prolonged period of low inflation or even a deflationary spiral looms ever larger. The European Central Bank was applauded for its action in June of this year, when it announced that the deposit rate for banks would be cut from zero to minus 0.1%, alongside targeted long-term refinancing operations, and yet the jury is out as to whether these measures will have any tangible effect.

The euro area crisis has also had a prolonged impact on the EU institutions. The European Central Bank has emerged with well deserved credit for its handling of the crisis. Nevertheless, it faces significant challenges, not only from the deflationary effect but also over the handling of its comprehensive assessment of the banking system, including of course the so-called stress tests, the result of which will be announced in October. Reports last week suggested that banks would have two weeks to plug any gaps in balance sheets that the ECB uncovered. This process will test the robustness of the euro area’s recovery and future health as never before. Overall, we found that the crisis had seriously altered the institutional and decision-making structures of the European Union. Those representing the euro area, such as the European Central Bank and the euro group, have grown in importance. By contrast, the Commission’s powers and influence in determining the crisis response have perhaps diminished. I should remind colleagues that the new Commission President, Jean-Claude Juncker, was a former chair of the euro group, with all the implications that that has.

This trend has significant implications for the United Kingdom. Closer integration is vital if the single currency is to prosper. We therefore agree with the Chancellor that the UK must do all in its powers to support its EU partners on this path. Nevertheless, such moves towards integration leave the United Kingdom in an increasingly isolated position. Noble Lords will be aware that the EU institutions are in a state of flux. As I mentioned, the newly elected European Parliament is finding its feet, the new President of the Commission has been chosen and the shape of the new college of Commissioners will emerge over the coming weeks. In this context, the Government and the Bank of England must maintain and develop constructive relationships with the increasingly powerful euro area authorities. All parties should redouble their efforts to convince euro area colleagues of the benefits of having the City of London as the leading global financial centre for the European Union as a whole. If they can be convinced of the mutual benefits of prosperity for the euro area and the single market, then the UK and the City of London will have much to contribute and much to gain.

I look forward to the Minister’s response on the steps that the Government are taking to ensure that the UK and the euro area enjoy such mutually beneficial relationships in the months and years to come.

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7.36 pm

Lord Maclennan of Rogart (LD): My Lords, this report is helpful and I am glad to acknowledge that the committee proposes to continue reviewing these developments every six months. I think that will be exceedingly important.

There have been some positive developments, which have flowed largely from the European Central Bank. That is acknowledged by, among others who gave evidence to the committee, Sir Jon Cunliffe of the Bank of England, who noted that the redenomination of currencies was now very unlikely. However, as the noble Lord, Lord Harrison, said, we cannot take anything for granted, and we must watch very carefully. As the report suggests, and the Minister who replied to the report agreed, we must maintain and develop constructive relationships with the euro group and the ECB.

Will the Minister tell the House how that process is being maintained, particularly as we in this country appear to be the odd man out, seeking special deals for Britain without allies or even being particularly specific about what these deals are? It is quite clear that the United Kingdom must support our EU partners on the path towards greater integration of the euro area, but there is of course a risk, if that goes ahead, that we shall find ourselves increasingly isolated as a country and decreasingly influential in decision-making. I entirely endorse the view of the committee that we should be looking to strengthen the role of the City of London as the banking centre for Europe. However, if we remain completely at arm’s length from these developments, that will be an increasingly difficult project.

In their letter of reply to the committee, the Government suggested that we should,

“tackle unsustainable levels of debt, reform labour markets, and support business creation and innovation”.

It would be helpful if the Minister could indicate how these steps are to be taken. With banks currently withholding loans and, as Sir Jon Cunliffe said, with cross-country lending diminishing, that seems quite difficult. The Government should make it clear that they do not intend to limit cross-border immigration of skilled workers as part of the European Union’s so-called reforms. We need these developments if we are to have new business creation and innovation. Without them, there will be particular difficulties for small and medium-sized enterprises.

We look forward to hearing what the comprehensive assessment process of the European Central Bank will reveal. It is a difficult exercise for it because if it reveals too many banks being in difficulties, that could actually not strengthen the system, although we were very happy to hear from Mario Draghi as long ago as June 2012 that the bank would do anything to safeguard the future of the euro. It would be interesting to know what the Government are doing in the negotiations that they are participating in with the euro group to ensure that new arrangements work for those outside the euro area. I do not hear much about that specifically, but it would be helpful to know.

The noble Lord, Lord Harrison, spoke about the deflationary spiral. It seems that that is not an imminent threat but it is something that we have to watch.

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I would also be interested to know how the Government view that and what they are saying about the austerity programmes that could induce such a spiral.

This is a factually interesting report with interesting evidence from witnesses, but we need more particular replies from the Government. They are generally supportive of the report, but they have not given much indication of how they intend to proceed.

7.42 pm

Lord Davies of Stamford (Lab): My Lords, it was a pleasure once again to combine with colleagues in producing this report. It is fair to say that all possible perspectives on the issues were represented round the table in our committee and our debates were extremely stimulating and very instructive.

I want to use my time to address three illusions—or delusions, I should perhaps call them—that are extremely widespread, making it very difficult for people to appreciate the problems dealt with in this report. They are serious delusions and very erroneous, and I hope that in the very short time that I have to speak, I can go some way towards destroying them. The first delusion is the idea that the euro crisis is what it sounds like; that is to say that it is a crisis resulting from the existence of the euro and is the fault of the euro project. It is nothing of the kind. The so-called euro crisis is a debt crisis. There is no way in which the existence of the euro, or the existence of any particular currency, would necessarily have produced the outcomes in terms of excessive debt which we have been coping with in the last few years in the euro zone and indeed, elsewhere in the western world.

The reasons for the unbelievably irresponsible and often incompetent excessive lending practices go beyond the subject of this debate, but we are familiar with the general picture. Suffice it to say that we had banks in the European Union—in Ireland and Spain particularly— which lent on real estate projects with less than 10% equity. They were allowing more than 50% of their total assets to be exposed to the real estate sector.

Of course, as a result of the weakness of banks’ balance sheets, the government funds standing behind them produced a move from a banking crisis to a state funding crisis in countries such as Ireland and Spain. The position was made much worse in Greece by the falsification of the national accounts but elsewhere it was almost entirely a result of lender irresponsibility, or even worse than irresponsibility.

I have no doubt that incentives have an important effect on human behaviour, and some of the incentives in terms of short-term bonuses and so on were undoubtedly extremely perverse. They led to people lending to bad risks, taking a bonus on the basis of capitalising the profits to be generated from the loan and then walking off and getting a job somewhere else. We have had to deal with those matters decisively and thank heaven we have.

This was a debt crisis not a euro crisis. Irrespective of the currency these countries had, they would have faced the same magnitude of problems given the levels of debt that had been incurred, the bad debts that had been incurred and the central mispricing of risk that

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was going on. There was a quite disgraceful mispricing of risk. Again, serious professional incompetence was directed at the management of the enormous resources of the banking system in the European Union. It was a very serious matter indeed.

Some people say that one reason why it was the fault of the euro was because lenders thought that somehow a hidden or covert guarantee was being given by Germany or the other more solid economies to any other economy in the EU that got into trouble. Of course, such people were not only incompetent but they presumably could not read because the treaty precluded such a bail out or guarantee.

I am not suggesting that we had in place all the necessary measures to cope with the crisis and the shock which ensued from this bad lending—we did not. In three areas there was a deficiency of measures and institutions available to cope with this kind of scenario, one of which was that there was insufficient co-ordination of fiscal policy. We had under the euro until recently—until the stability and growth pact in fact—one monetary policy but 17 or 18 fiscal policies. That is not a good situation, but it has now been remedied. There was insufficient co-ordination and no centralisation of banking supervision which, in some areas, was plainly inadequate. The single supervisory mechanism, with the ECB taking charge, is taking place this year and will come into force next year. It is an encouraging measure.

There were, and still are, inadequate mechanisms of automatic stabilisation in the European Union. There is some measure of automatic stabilisation in the working of the cohesion and structural funds, but there should be much more. I am drawn to the idea—I have defended it in many contexts, including in this House—that we should have in the eurozone a single, integrated unemployment insurance system, which would certainly have a major automatic stabilisation effect in a crisis or an asymmetric shock affecting different members of the Union or different parts of the Union in different ways.

There are lessons to be drawn from the crisis. However, under no circumstances can it be called a euro crisis to the detriment of the reputation of the euro because that would not be consistent with the facts. It was a debt crisis.

I move now to the second great delusion, which is even more commonly held. In many places it is an assumption that people take for granted and, therefore, it is never challenged and never thought about. I hope that my mentioning it today might begin to remedy that. It is the assumption that we were quite right to stay out of the euro, that we are much better off out of it, and that it would have been a crazy, inconceivable thought that we would want to join the euro because the euro is in such a crisis. First, that is a misreading of the crisis, as I have already explained. Secondly, it is mathematically incorrect as a description of where the country would be if we had joined the euro. I remind the House of the figures, which I have noted down to make sure that I get them right. In the 15 years from 2000 to 2014—from the beginning of the euro project, if you like—sterling parity has fallen against the euro from 65p to 82p. That is a fall of 27%. So, all other

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things being equal, we would have been 27% richer—we would have had 27% higher net assets and net revenues—if we were in the system than if we were out of it.

One could say that we would not have had the same growth rate over the same period if we had been in the euro system. I have no idea whether that is the case. Our growth rate over that period has been an average 1.8% per annum. If you take the original EU 12 which were members of the eurozone—and the figures are more or less exactly the same if you take the larger number of countries that joined the EU subsequently—you will see that their growth rate over that period has been 1.2%. That is a difference of 0.6%, which, on the basis of compound interest over 15 years, works out at about 12%. If you make the assumption that our growth rate had been that of the average eurozone member over the period since the beginning of the euro, which is less than we have actually had—it may not be a realistic assumption; it certainly seems odd to make an assumption that our growth rate would have been less than the average eurozone growth rate because we pride ourselves on having a more efficient and more flexible supply side than most of the eurozone— the result would have been that we would have been some 15% better off today, so that is a significant difference.

I refer to a final delusion: the idea that we still face dire consequences from the crisis. The general indicators seem to be rather favourable. Unemployment is falling in the majority of EU countries, including all the four problematic ones—Ireland, Spain, Portugal and Greece. Growth has resumed in the eurozone. The best predictor of the future which I know is the stock market, which tells one really quite an encouraging story about both the future of the eurozone as a whole and about that of the problematic countries within it.

7.51 pm

Lord Flight (Con): My Lords, I pay tribute to the noble Lord, Lord Harrison, for chairing our committee and for the production of this report, which, given the spread of views on the committee, is very fair and accurate. I think that the noble Lord, Lord Kerr, began to get slightly worried that he found himself agreeing with me on too many issues.

The report is, as the noble Lord, Lord Harrison, has suggested, slightly optimistic in that recovery in southern Europe is pretty weak, the public finances are still worsening, the threat of deflation remains and the unemployment position is terrible. The real problem is that the euro locked Europe into a gold standard. Italy, Portugal, Spain and so forth had happily devalued 2% or 3% every two or three years, but when they could no longer do that and Germany put great effort into becoming super-competitive by holding wage rates down, it ended up with about 30% uncompetitiveness among the countries of southern Europe as against Germanic Europe, and they are stuck with it. They have taken measures to address that. The only scope is internal devaluation, but that is extremely painful and, candidly, I am quite surprised that predominantly socialist politicians, in the cause of sustaining the euro, have been apparently happy to see the lives of a whole generation of young

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people in southern Europe wrecked with a massively high level of unemployment, so there is a slight problem there.

Lord Davies of Stamford: My Lords—

Lord Flight: No, I shall not give way because I do not have long to speak.

The prospect of real political and economic union is for the time being not particularly promising. The big issue is that if you are going to share a currency, you have to have transfer payments. Britain has £70 billion or £80 billion of transfer payments from the prosperous south-east to other parts; in America, some 30% of federal spending goes on transfer payments. When we went to visit every element of Germany and asked them about transfer payments, the answer we got was “Not a pfennig”. Nobody in Germany was willing to face up to the fact that, if they wanted a united Europe and if they wanted to sustain the euro, they would have to be willing to make transfer payments to the less prosperous parts of Europe.

As the noble Lord, Lord Harrison, mentioned, we have yet to see how robust the banking system is with the stress test coming in October. I hope that the test will be genuine and robust, but if it reveals serious undercapitalisation of the banking system, that presents its own problem, because, in essence, it will have to be the relevant Governments who bail out the banking system. Thus the link between government debt and banking problems is not removed but, if anything, worsens.

I cannot help but comment that we have been here before in that in the 1860s, the French established a common European currency, the silver franc. We spent most of the 1870s debating whether to join it, and indeed in the British Museum there are notes and coins which were produced showing what they would be like if we did join. Walter Bagehot, the great economist, was wholly in favour of doing so. It lasted for 30 years until eventually the author, France, became so uncompetitive with something like 35% unemployment that it ditched the silver franc and ended the first attempt at a common European currency. I should add that everyone participated, including Switzerland, other than the German states because Germany had not yet united.

As the noble Lord, Lord Harrison, and others have pointed out, the report makes the point that the crisis has created the eurozone versus the peripherals. Although it is slow, I think that from now onwards there will be a gradual process towards political, economic and financial integration. Noble Lords will know the story of when Kohl and Mitterrand were discussing the euro. Kohl said, “We can’t start the euro because there isn’t much political integration”, and Mitterrand responded by saying, “We’ll never get political integration unless we put the euro into effect, which will force it”. I think that may be true. However, the UK is obviously not part of the eurozone and, as the report states, it is already a semi-detached member of the European project. In particular the loss of sovereignty over financial regulations has damaged the City of London. I describe it by saying that the City enjoyed a boom for around 40 years. It then plateaued and now it is on the

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way down in terms of earnings, activity and the number of people employed. The AIFMD has been particularly damaging and has moved a lot of business to New York and Singapore, and the biggest threat is the financial transaction tax. If noble Lords have not read it, I particularly recommend the report of EU Sub-Committee A on that.

The point is that although the report exhorts everyone to be friendly and co-operative—indeed the representative and lobbying bits of the City in Brussels never cease to grow, with around seven different institutions that are all there to be friendly and lush up their colleagues—there is a difference of interest. I am afraid that London is at the mercy of what suits Europe, along with its particular jealousies of London’s dominant position. The City has put up with that and got on with it, but beneath the surface there is mounting resentment. If the financial transaction tax were to go ahead, I think that it would be the straw that breaks the camel’s back.

I end by making the point that there is the irony of the British Government being the first to recommend that Europe should get its act together and get a move on with financial, political and economic unification, and yet that is the very thing which has led to Britain being a semi-detached member. The view is becoming clearer and more widely held that the right relationship for the UK is as a member of the EU customs union and the single market, but not of the EU political union. I detect that, one way or another, this is now the direction in which we are heading.

7.59 pm

Lord Kerr of Kinlochard (CB): My Lords, my text is taken from the fourth chapter of the book of Harrison. I pay tribute to the prophet for his skill in achieving a consensus, but I shall now try to demonstrate that there is a wide range of views on the committee, as I shall not agree with everything that the noble Lord, Lord Flight, has just said.

I am not competent to follow the noble Lord, Lord Davies of Stamford, into the economics, so I shall stick with chapters 3 and 4 of our report, where we argue about the institutional effects and the impact on the United Kingdom. In particular, paragraph 71 states:

“The economic fortunes of the UK and the euro area are intrinsically linked … moves towards integration leave the UK in an increasingly isolated position. In order to ensure that the UK’s interests are effectively promoted, the Government and the Bank of England should therefore maintain and develop constructive relationships with the increasingly powerful euro area authorities, notably the Eurogroup and the ECB”.

The initial brief reply from Nicky Morgan, who was briefly Financial Secretary to the Treasury, said that we had correctly identified,

“that the changes in governance precipitated by the euro area crisis has seriously altered the EU’s decision making structure and that, in turn, impacts on the UK”.

However, she assured us that,

“going forward the Government will remain, as it has done so far, closely involved in negotiations … to ensure that proposals fully take into account the interests of all Member States”.

I thought that a little complacent. I was also struck by the passage in thebalance of competences review that was published by the Treasury yesterday that states:

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“Access to the single market in financial services and the Free Movement of Capital provides significant benefits for the UK financial services industry and for consumers … While the ultimate impact of the banking union is hard to predict at this stage, it is likely to pose a number of challenges to the UK’s interest in maintaining a central role of influence in an internationally competitive financial market in the EU”.

We got some advice, as has been mentioned, from Sir Jon Cunliffe, deputy governor of the Bank of England, who advised that the Government would do well to try to maintain,

“contacts with the Eurogroup, ensure its meetings took place in the context of other EU meetings, and being ready to offer technical advice without lecturing or providing unwanted counsel”.

I thought that rather good advice. Maybe Sir Jon could persuade the Governor of the Bank of England, or the Minister could persuade the Chancellor, that the euro group should be invited to hold one or two of its meetings in London, where it could be briefed about, and familiarise itself with, its key market—the City. Maybe the Minister could think about a suggestion made in evidence to the committee yesterday by Sharon Bowles, who until the European Parliament elections chaired the ECON committee of the European Parliament, that the eurozone should be encouraged to meet after, rather than before, meetings of ECOFIN so that it would be better able to take account of the interests of all 28 member states, as the treaty requires it to do.

The balance of competencesis right to talk of challenges. I can think of five. First, the eurozone will have a qualified majority from November. Secondly, the UK, as a non-eurozone member, is in practice now ineligible for any of the top economic jobs in Brussels, including: the president of the ECB; the president of the euro group; the Economics Commissioner, who might be combined with the president of the euro group; and the President of the Commission and the President of the European Council, because such a large part of their agenda relates to the euro.

The third challenge is that the UK is in a different position from most other member states, including most other non-eurozone member states. Most non-eurozone member states purport to be, or see themselves as, pre-ins. They say that they want to join one day; we say very firmly that we have no intention of ever joining, which rather singularises us. We said the same about fiscal union—not that it was very stringent; it turned out to be a rather loose form of discipline to apply the austerity that we were at that time loudly preaching. But we chose, with our Czech friends, to flounce out. We alone have refused to contribute to any bailouts of member states in trouble during this crisis and we take great pride in that as one of our great achievements. We report that we have managed to avoid being involved in any bailout. On banking union, it is my impression that most of the pre-ins, such as the Poles and the Swedes, who are certainly not going to join the euro in a hurry, have managed to keep rather closer to banking union than we have done. That could be damaging to the City.

The fourth challenge is that we cannot have any key position on the economic side of the European Parliament as non-eurozone members—Sharon Bowles’s successor is an Italian. Regarding the institutions, the British

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Bankers Association brought out an interesting report the other day saying that the representation of UK public servants in the institutions is down to under 5%, proportionally lower than at any time since we joined. If that figure was based on our population share, it would be 12%. Only one in every 25 new recruits to the institutions is a British citizen, although one in every five comes from a British university. Why are the Brits not going? It reflects a wider problem: just as young people cannot be sure that a career in Brussels would not be brought to a sudden end, so other member states cannot be sure that it makes sense for them to do deals with us when, as the President of the European Council puts it, they can see that our hand is on the door-handle and when they hear the new Foreign Secretary saying—without defining what we want—that, if they do not give us what we want, he would be ready to recommend that we leave.

None of these problems is easily soluble. We are in a hole and, as the report says, we are “increasingly isolated”. We could remember the first law of holes, which I remember the noble Lord, Lord Healey, explaining: when you are in a hole, stop digging. It would be quite good, as Sir Jon Cunliffe said, to avoid lecturing people. We could also avoid hectoring or denouncing them, for example in articles in the weekend press. It would be good to try to avoid deliberate distancing. The French have a saying: “Les absents ont toujours tort”, or “Those not present are always in the wrong”. Alternatively, you could say, “We’ve got to be in to win”. Given that we are not in the eurozone, it behoves us, and the interests of the City, to stay as close to it as we possibly can.

8.07 pm

Lord Davies of Oldham (Lab): My Lords, I, too, congratulate the committee on this latest stage of its continuous hard work on these issues. I very much appreciated the excellent introduction by my noble friend Lord Harrison, who covered all the significant points in the report and rendered nugatory any intention on our part to mention them in detail. However, of course, we need to look at the report as a pointer to what needs to be done and the situation that we are in as far as Europe is concerned. There is some cause for optimism: the euro appears to be out of crisis although, as I think my noble friend Lord Harrison said, the storm has not exactly and entirely passed by. That will do as an analogy, but the situation is a good deal better than the one we were facing only a short while ago. Clearly, several countries have significantly improved their economies on the way to some recovery. Ireland in particular has made progress in these terms, as have Spain and Portugal, although, as has been mentioned and is emphasised in the report, employment levels are very low. That leads to an important issue, which I will comment on later, about the level of demand in the European economy.

I am grateful to my noble friend Lord Davies for expanding on what the report makes clear, which is that the euro crisis is part of a global crisis. We are so used to the Conservative perspective on the crisis as being manufactured in the UK and being solely the responsibility of the Labour Government, who spent too much money. There is no comment of course

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about the collapse in receipts going to the Labour Government at that time because of the crisis that affected the banking and financial sector in particular, which is such a crucial part of our economy. This report puts the euro position into the broader perspective. It is important, therefore, that we recognise that a great deal still needs to be done.

As the report indicated, austerity has been costly. It is costly, of course, in terms of living standards. We have seen that in our own country but, because the margins for some in the euro area have been so low, austerity has had a very bleak impact on populations there. As has been indicated in this debate, we have seen a loss of confidence in and support for Europe because austerity brings discontent where people’s living standards fall as rapidly as they have been doing. The report indicates that it is essential that we see policies that return to growth, and we have to make sure that we pursue the necessary reforms to create that growth. None of us underestimates in a number of European countries how deep the problems are—referred to as requiring structural reforms. They are mighty challenges but it is clear that both Europe and particularly Britain, with its relationship to the European economy, want to see those reforms carried out because it is very much in our interests to have an effective single economy.

The single market is of great advantage to this country in our trading relations but it is also important to the City of London, which is a pivotal point of our economy as a major financial centre. I agreed very much with the point made by the noble Lord, Lord Kerr—that we had better take steps to ensure that there is a close relationship between the institutions in Europe. The Central Bank also clearly helped to avert the crisis in the eurozone and we now need to see the Bank of England establishing closer relationships for the good of all countries in the Community.

The problem with all this is that the challenges are big but we have a Government who seem to exacerbate the issue. The Prime Minister says that he is setting out to reform Europe in meeting these challenges. The task that he has set himself is to effect significant reforms in Europe in the next 24 months with the support of 27 states, when at the moment his support extends to none, except for the United Kingdom, of which he is Prime Minister. We saw a dimension of the failure of diplomacy in the rather ham-fisted attempt to prevent the appointment of Juncker as head of the Commission.

How can we make progress when the Prime Minister seems to be more concerned with negotiating with his party than with Europe? We saw an instance of this in this House this very day. On Monday, we all read in the press and on Sunday we had seen on “The Andrew Marr Show” the new Foreign Secretary making it absolutely clear that he had a terminal point when it came to membership of Europe, and that if there were not very significant changes in the structure of Europe and Britain’s relationship to it, he was voting for “out”. In this House today, the Government’s business spokesman said in answer to a question that there is no question of withdrawal. These are not just members of the same party; they are important figures in the Government of this country because of the role that

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they play in the party, yet, from what I can see, they have quite contrary positions. What does the Minister have to say about how he proposes to wrestle with those kinds of difficulties?

Finally, I want to make what might be regarded as a minor but quite clear point. We are also losing influence in Brussels because we no longer provide people who operate part of the civil service there. In 2004, more than 9% of civil servants in Brussels were British. That is down to 5.3%. Not a single Briton has gained entry to serve the Commission through the highest-level examination. That is loss of influence and it is a reflection of the fact that the Community’s confidence in Britain is being lost by the stance the Government are taking. It is being reflected in a grievous way, which will adversely affect this country.

8.15 pm

Lord Newby (LD): My Lords, I thank the noble Lord, Lord Harrison, and European Union Sub-Committee A for publishing the updated report. I also thank members of the sub-committee for organising the debate, and everybody who has spoken.

It is blindingly obvious that a stable euro area is in Britain’s interests. Some 40% of UK goods and services exports go to the euro area and the economic uncertainty emanating from the euro area at the height of the crisis had a chilling effect here. The Government welcome the return to growth in the euro area, but vulnerabilities obviously remain. We agree with the committee that the storm has not entirely passed. While growth has returned, it is weak and unemployment remains high. As the noble Lord, Lord Harrison, pointed out, growth across the euro area is ill balanced. The balance of payment surplus of Germany, for example, has reached record highs, while obviously other member states are still suffering very considerable economic problems.

The ECB’s announcement of its outright monetary transaction mechanism and its clear commitment to stand behind the euro have clearly helped relieve the pressure from the sovereign debt crisis. However, the euro area has to make some important steps to strengthen the single currency for the longer term. Countries in the euro area periphery are undergoing a painful but necessary adjustment. They need to carry on confronting head-on their problems of high deficits and low competitiveness. They are making very considerable progress. By the end of 2014, Spain is forecast to have reduced its deficit by almost five percentage points since 2012, while it, Italy and Portugal all registered current account surpluses in 2013.

My noble friend Lord Maclennan asked whether that adjustment was too quick. It is interesting to see that the rate and path of deficit reduction in Spain, for example, is much sharper than the one we have decided to follow here. It has had a number of consequences, one of which has been high unemployment and a fall in real wages. What is interesting about the Spanish economy is the extent to which it is rebalancing away from property and rebounding. The absolute pace at which some of these economies are adjusting and the extent to which that is optimal will not be clear for some time. However, they have made very significant

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steps and are to be congratulated, not least against a background, two or three years ago, in which many people in the UK said they would never be able to do it and that the euro would collapse as a result.

A well designed banking union comprising centralised decision-making on supervision and resolution supported by credible financing arrangements, can, in our view, support the long-term stability of the single currency. The ECB’s comprehensive assessment process is critical to restoring market confidence over the medium term and is an important step in implementing the single supervisory mechanism. We strongly support the announcements on stress tests and believe they provide for a robust process. However, all elements of banking union must protect the unity and integrity of the single market and the interests of non-participating member states and be legally sound.

Some progress has also been made on closer oversight of fiscal policy. Exit from the crisis will be easier the more the euro area does to support demand and share the burden of adjustment. The noble Lord, Lord Davies of Stamford, and my noble friend Lord Flight referred to the challenges of greater fiscal co-ordination. The noble Lord, Lord Davies, suggested an integrated unemployment insurance system, but I think my noble friend Lord Flight answered the question of how plausible that is, certainly in the short to medium term, by pointing out that the country making the transfer payments in such a system would be, to a large extent, Germany. There is very little evidence that Germany feels that is an appropriate way forward.

The Chancellor has long made clear his view that there is a remorseless logic that the euro area, like any single currency, needs closer economic and fiscal integration. The euro area needs the right governance and structures to address its current challenges, but the change in governance precipitated by the crisis has altered the EU’s decision-making structure and affected us, as we have heard from a number of noble Lords. We must ensure that any new arrangements work for those outside the euro area as well as for those within it.

My noble friend Lord Maclennan asked how we would maintain our position given these new arrangements and, although the noble Lord, Lord Kerr, thought it was slightly thin, the Financial Secretary to the Treasury pointed out that we will be and are closely involved in negotiations on EMU and in ensuring that proposals fully take into account the interests of both the euro outs and the euro ins. In answer to my noble friend Lord Maclennan’s question about how we are doing this, we are in constant contact with euro area partners at European Council and ECOFIN meetings, and we are pursuing the informal interpersonal relationships that we discussed at some length when we last had a discussion on the issue. I completely agree with the suggestion that in these interactions, we need to avoid hectoring and denouncing—something that UK Ministers of all parties, over several decades, have found exceptionally difficult in dealing with our European partners.

My noble friend Lord Maclennan asked how we are supporting the leveraging labour market reform and innovation. The Government support the attempts to tackle these issues. We support the ECB’s comprehensive

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assessment—stress test—and the asset quality review as a means to improve confidence in the banking system. We support the ECB’s moves further to develop the European securitisation market as an alternative to bank lending. Labour market reforms need to be undertaken on a country-by-country basis, along with wider structural reforms to promote growth.

The noble Lord, Lord Kerr, referred to the balance of competencies review and the challenges that it identified. It is a helpful and formidable document and has the great advantage of having a large number of sensible and practical suggestions of how decision-making processes might move forward. He identified a number of key challenges, none of which I suspect anyone in your Lordships’ House would disagree with. The one I highlight, which the noble Lord, Lord Davies of Oldham, also mentioned, is the question of staffing, which we have discussed in your Lordships’ House on a number of occasions. We discussed it at our last debate on the subject, and following that debate I wrote to the noble Lord who raised the issue of staffing and I hope that other noble Lords who took part in that debate, most of whom are here today, will have seen a copy of that letter about the initiatives that the Government were taking.

It seems to me that the banking sector needs to be willing to encourage its staff to participate in the European institutions. The sector is quick to denounce the Government but slow to take action itself and, in private moments, will admit that if it has somebody really good who would do it really well, the last thing they are prepared to do is to give that person up to do it. As long as that remains the view of the sector, the current situation will continue.

The noble Lord, Lord Kerr, made a couple of interesting and practical suggestions about the euro group and where and when its meetings might be held. I will draw those suggestions to the attention of the Chancellor.

The Government could not agree more with the points made in the report about the importance of the City of London as a leading international centre. We do not altogether share the gloomy prognosis of the noble Lord, Lord Flight, for the City. The City will evolve. Some areas of business will undoubtedly move elsewhere as global markets evolve. However recent developments, such as renminbi trading in the City and the Government’s decision to initiate a sovereign sukuk and therefore promote Islamic finance, offer very significant new areas of activity for the City which will help underpin its position as Europe’s leading international financial centre.

My noble friend Lord Maclennan asked about cross-border workers and pointed to the important role that they play in the UK economy. As I pointed out at Question Time recently, the growth in house building in the UK, that all parties now believe to be very important to the period ahead, will happen only if we continue to employ large numbers of skilled workers from the rest of the EU because it is physically impossible to train large numbers of skilled workers in the short term. For the future growth of the British economy, the continued involvement here of skilled workers from the rest of the EU is very important.

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We have had an extremely interesting debate across some relatively familiar themes. I would like again to thank the committee for this contribution to the debate, and I look forward to its next update.

Criminal Justice and Courts Bill

Committee (3rd Day) (Continued)

8.26 pm

Clause 42: Criminal courts charge

Lord Beecham (Lab): My Lords, the amendments in this group deal with the Government’s proposal to require a charge to be levied on those convicted of offences, in addition to any financial or other penalty which may be levied on them. Characteristically, this would be a mandatory provision, judicial discretion thereby being further eroded, and the proposition is unsupported by an impact assessment. Out of thin air, Ministers pluck a figure of some £65 million for the estimated yield of this new charge, which will be calculated not merely on the costs of the individual case but on the overall costs of the court system.

As I pointed out at Second Reading, this sum is but a fraction of the vast amount of money owed under court orders: some £2 billion as at March 2013, two-thirds of it represented by unenforced confiscation orders. At that point, £420 million was outstanding by more than 12 months and there were no fewer than 1.2 million individual accounts outstanding. That puts into perspective the amount which this proposal would, perhaps, realise. Not all the figures that I have referred to relate to criminal matters. However, Liberty, to which I am indebted for a most informative briefing, averred that in the first quarter of this year £549 million was outstanding. Collection rates are poor across a range of orders, with 48% of fines and 35% of costs unpaid after 18 months. The Ministry of Justice does not even bother to collect statistics in relation to older debt.

There are serious difficulties with the Government’s policy, quite apart from the likelihood that, on present form, they will be very unlikely to recover anything like the amount ordered. Several of the difficulties are identified in Amendment 63AF, which seeks to prohibit an order where the court thinks it might affect a decision on how the accused pleads. This is clearly a serious matter. Defendants should not be deterred from advancing a defence on the grounds that they may be liable for not only punishment for the offence but what might be a significant amount to be paid under the provisions for a court charge. The amendment would deal with the issue of where enforcement costs are likely to mount to more than the charge, as enforcement costs could well be significant, and where the charge relates to any part of the hearing for which

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the defendant is not responsible—for example, adjournments—or any appeal, as the charge would apply not just to the original trial but to any potential appeal. The deterrent effect could, again, come into play. Finally, the amendment would seek to preclude the operation of the charge if a written means assessment had not been carried out.

8.30 pm

Amendments 63AA, 63AJ, 63AK and 63AL seek to restore judicial discretion. This would replace the obligation laid down in respect of the magistrates’ courts, Crown Court and the Court of Appeal which, under the terms of the Bill, must make an order to levy the charge. It is quite improper, in my submission, for this to be made a binding obligation on the courts irrespective of the circumstances. Amendment 63AD would therefore require the court, before making such an order, to find it just and reasonable to do so in all the circumstances. Amendment 63AG would require the court to give reasons for imposing or, to be fair and balanced, not imposing an order. Amendment 63AE would require a reasonable assessment of the defendant’s finances before a collection date is decided. Finally and, again, reasonably, Amendment 63AH would prescribe that, where there is more than one defendant, any charge as a result of the case should be divided equally between the defendants and not be imposed just on one or less than the total number convicted. In addition, Amendment 63AA would restrict orders to defendants over the age of 21. That relates to our earlier discussion about the position of younger defendants but, in this case, it is not just those under the age of 18.

It should be borne in mind that the court currently has the power to award prosecution costs where it considers it just and reasonable to do so. However, the Bill’s provision allows no consideration of the defendant’s means or other issues such as health or family considerations. Data on the background of prisoners cited by Liberty indicate that a substantial proportion of prisoners—especially women—earn less than half the national average, with 64% in receipt of benefits. The profile of prisoners may be somewhat different from those who do not receive custodial sentences but there is nevertheless likely to be an approximate equation of these factors between the two categories. Even allowing for the possibility that the average might be different for defendants receiving non-custodial sentences, it is clear that mandatory orders would inflict considerable difficulties on large numbers of offenders. The Joint Committee on Human Rights has pointed out the risk that the change envisaged by imposing this charge may infringe Article 6 of the European Convention on Human Rights if it is seen as restricting access to a court or tribunal—for example, by way of appeal. In addition, given the serious concerns about the measure, it would be inappropriate to wait three years for a review of the operation of the charge as predicated by Clause 43. Hence Amendments 63FA and 63FB call for a review after a year. Given the number of cases in the courts, particularly if the Bill passes unamended, there should be ample evidence on which to base a review after such a period.

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Finally, Amendment 63FC requires any variation of an order to be made by an officer of the court directly employed by HM Courts and Tribunals Service rather than an employee of whichever private contractor that will no doubt be added to the lengthening list of private sector organisations taking over public services. In other words, if there is to be a variation, it should be done by an officer of the court for whom there is perhaps less incentive than for a private contractor to take a decision that might be prejudicial to the defendant.

I conclude by raising a point made by my honourable friend Andy Slaughter in the Public Bill Committee considering the Bill. He put an interesting question. If the Government are intent on proceeding with the charge, why will they not apply the proceeds—that £65 million or some other figure—to reducing the savage cuts in criminal legal aid which everyone, from criminal law practitioners to civil society organisations and the judiciary, is warning will have dire consequences for our criminal justice system? In the Opposition’s view, this is an unnecessary and unhealthy provision, but if it is going to be implemented, if a certain amount is to be collected, and if the Government are right in thinking that those sums will amount to around £65 million, that would be one-third of the entire cuts made in the legal aid budget. As this is a late and novel introduction, I cannot see why the Government should resist that conclusion if, against our advice and the advice of other organisations, they press ahead with this retrograde and ill-thought out change to our system. I beg to move.

Lord Marks of Henley-on-Thames: My Lords, I rise to speak to the group of amendments to Clause 42. As the noble Lord, Lord Beecham, has made clear, Clause 42 proposes the imposition of the criminal courts charge to cover the costs of providing the judiciary and the rest of the court system. Such a charge is proposed, as he has also made clear, to be compulsory for offenders of 18 and over unless the offence is of a class listed in regulations as excluded.

I have put my name to a number of amendments, along with my noble friends Lady Hamwee and Lady Linklater, and in some of those we are joining with those proposed by the noble Lords, Lord Beecham and Lord Kennedy of Southwark. Our principal purpose in those amendments is to ensure that the criminal courts charge is recoverable on a discretionary basis. I put that quite apart from the arguments about whether the sums sought to be recovered will in fact be recovered and I agree with the analysis of the noble Lord, Lord Beecham, that the Government’s expectation in this regard is entirely optimistic.

Quite simply, we can see no point in setting out a requirement that the criminal courts charge be imposed in cases where it will not do any good and is unlikely ever to be recovered. It will no doubt be argued by my noble friend the Minister that the power to remit the criminal courts charge under new Section 21E at a later date, some time after it is imposed, will provide an answer to the point we make. However, I am bound to say that I doubt it will. Will the Minister clarify what the Government see as the point of imposing a mandatory requirement that a defendant pay a charge and coupling that with a power to let the defendant off

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the charge if he cannot pay it? In many cases, the reality is that the inability to pay the charge in the first place is obvious throughout.

That really is the problem. In a very large number of cases, there is absolutely no prospect that the criminal courts charge will prove to be recoverable. We entirely accept that in those cases where a defendant can afford to pay the charge because he or she is in work or has means, then the court should be able to impose one. The courts charge in those circumstances would make it clear to the defendant that the public insist that the cost of providing the services of the court should be met, at least in part, by the defendant. That would have two salutary effects in those cases. First, the public would recover some of the costs that have been defrayed in order to bring and prosecute the case. Secondly, the court would be making it absolutely clear to the defendant what trouble, inconvenience and expense he has caused, and that he should pay for at least some of the extra costs.

However, as we all know and as was made absolutely clear in Committee, many offenders come before the court without work and means, beset by complex problems of inadequate education, physical and mental health, harsh and criminal backgrounds, dysfunctional families and, above all, a lack of employment opportunities. What such offenders need, as has again been repeatedly stated, is rehabilitation and support. Generally, we are all agreed in this House that where a custodial sentence is not absolutely necessary, rehabilitation and support should take place in the community. One of the cardinal aims of any rehabilitation programme should be to enable offenders to secure employment. Until they do so, there is no prospect of their being able to afford to pay the criminal courts charge.

I suggest that saddling all offenders, regardless of circumstances, with outstanding debt is a thoroughly bad idea. I am concerned that the existence of an outstanding charge will make it much more difficult for an offender to secure credit. That, in turn, may make it that much more difficult for him to secure employment. Even if it is only that he needs to buy suitable clothes for interviews or perhaps a bicycle or other transport to get to work, he will not be able to fund them. Furthermore, the fact that such an offender has a charge hanging over his head is likely to be a disincentive to his securing employment because he will know that the repayment of the charge will come from any income he may earn. Now, that may be a less meritorious argument but it is none the less valid for that.

It is also important that the court should have the discretion to set the charge at an appropriate level. There is no such discretion in the proposal made in the Bill. Where the court decides to impose one, it should be for the court to set the level of the charge. It should not be a one-size-fits-all penalty, any more than a fine should be. Plainly, there must be a maximum. That is appropriately defined in new Section 21C as,

“the relevant court costs reasonably attributable to a case of that class”.

However, to say that a charge in that maximum amount is the only charge that may be imposed is unhelpful and unrealistic. It is not sensible to rely on a power—again,

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at a later date—to remit a proportion, because that involves effectively indicating to a defendant that some of the charge will not have to be paid. The advice will be: “If you cannot pay it all don’t worry, pay what you can and you will be let off the rest”. That is hardly an incentive to pay. It would be far better for the courts to set a sensible and achievable figure at the outset.

Turning to our amendments therefore, we would make the charge entirely discretionary. Our Amendment 63ABA would make it clear that the court would have to consider the justice of the case, having regard to the circumstance of the offender and of the offence and, where appropriate, to the circumstances of any failure to comply with the requirements of a court order. That last point is necessary to deal with the fact that the charge may be imposed for failure to comply with the requirements of a community order or a suspended sentence order or with a supervision requirement.

Amendment 63AFA would leave out subsection (4) at the end of page 41. That subsection rather strangely requires a court to leave out of account a defendant’s liability to the criminal courts charge when considering the penalty,

“for an offence or for a failure to comply with a requirement”.

I see no reason for that provision. If a court regards it as being important to bring home to a defendant the extent of the costs he has caused to the system, why should it not be free to impose a criminal courts charge and lower any other financial penalty accordingly? That salutary discretion is specifically removed by the subsection, and we suggest that it should therefore go. Amendment 63AM would enable a charge lower than the maximum to be imposed, while Amendment 63AN is a tidying-up amendment that would enable the court not just to remit some of the charge, but to remit any interest on the charge when remitting it.

In summary, our position is that a criminal courts charge will be a useful new tool in the court’s armoury when sentencing, but we do not see it as sensible simply to tie it to the overall cost of the justice system. We do not see any reason for tying the court’s hands in such a manner as inevitably to reduce its power to do justice in ways that are not tailored to the individual cases before it.

8.45 pm

Lord Ponsonby of Shulbrede (Lab): My Lords, I shall speak to Amendments 63B to 63E, tabled in my name. The effect of these amendments would be to remove the requirement to delay remitting the criminal courts charges; in other words, magistrates could remit in the same breath as imposing the charge, although only if they were satisfied that that was in the interests of justice. It is a different method of achieving the same aims as those of the noble Lord, Lord Marks, and my noble friend Lord Beecham. As the noble Lord, Lord Marks, has said very clearly, what is the point of imposing court charges on people when it is plainly obvious that they will not be able to pay, and the court in any event has the power to remit the charges in the future?

I want to say a little more about the general principle of criminal courts charges. Magistrates’ courts, particularly those in London, very often deal with people who are

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poor and who have mental health problems and/or drug and alcohol problems. It is not that unusual to find defendants in front of one who have no national insurance number, no money, no benefits and no legal status within Britain. They come before the court for whatever reason has brought them there, and they are living off the kindness of friends with no recognisable status. It really is ridiculous for a court to be required to put a charge on these people in addition to the victim surcharge and other possible charges when there is absolutely no chance of them paying. It is already the case that one ranks the payments that are to be made. It is compensation which is discretionary so far as the courts are concerned. Compensation would be paid first, to be followed by prosecution costs, which are discretionary. Third in the rank would be the victim surcharge, which is non-discretionary, and then after that will come the courts charge, which is also non-discretionary. If defendants are made aware of the non-discretionary nature of the victim surcharge and the courts charge, poorer people could be more likely to plead guilty so that there are less extensive court charges, rather than going into a lengthy trial where there is an unpredictable but mandatory level of courts charge if they are found guilty.

I understand that there will be a three-year review period; I presume that one purpose of that review period is to look at whether there is any statistical basis for poor people being more likely to plead guilty. That is a very profound question, because it would be a consideration of some of the poorest people that we see in our courts today.

I will check one point with the noble Lord. I hope that I know the answer to it, but I wanted to check that it is open to the courts to deem the criminal courts charge served by time spent in custody—one day deemed served—in a similar way that that discretion exists regarding the victim surcharge. Therefore in that very specific way, with someone drunk and disorderly who has spent some time in the cells, you can deem both the victim surcharge and the criminal courts charge as served. I am not in favour of that in principle. My group of amendments try to restore finding a particular way to restore discretion to judges and magistrates so that they can deal with the reality of the situation they come across every day.

Lord Kennedy of Southwark (Lab): My Lords, I will speak briefly from the Back Benches. I agree very much with the comments made by the noble Lord, Lord Marks, and my noble friend Lord Ponsonby. I was a magistrate many years ago. I do not sit any more, but when I lived in the Midlands I used to sit on the Coventry Bench. Again, like my noble friend Lord Ponsonby, there were times when people came in front of me who had absolutely nothing. In particular, I used to sit in the fines court, to which people were brought back because they had not paid their fines. When you looked at their circumstances, the only way they could pay those fines was to go out and commit more crime; it was impossible otherwise. Now we have an additional charge here. It is important that we take into account people’s circumstances: not to allow the court to have that discretion is a bad move. To have

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loads of fines when there is no possibility of their ever being paid back is a complete waste of time. It makes a mockery of justice, and we should not do it.

The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, the criminal courts charge scheme has been designed to be clear and transparent, with charge levels that reflect the costs reasonably attributable to a particular type of case, and offenders expected to pay at a rate they can afford. The changes proposed by these amendments make the scheme far more difficult to understand and apply.

Amendments 63AA, 63AD, 63AG, 63AJ to 63AL and 63ABA would provide the court with significant discretion over whether to impose the criminal courts charge. As the court is the main beneficiary of the charge, there is a risk that this would be perceived as providing the ability directly to influence the funding of the criminal courts. The judiciary is an integral part of the courts system, and it has a vested interest in its success. Furthermore, where there is no clear indication as to what the court should base its decision on, other than the broad definition of the imposition being “just and reasonable”, accepting these amendments risks offenders being treated unequally.

If what lies behind these amendments is to protect poorer offenders, this is unnecessary. The offender has the opportunity to provide means information that the court can take into account when setting the rate of repayment for the charge, as it does with court-ordered financial impositions. Offenders can manage their repayments so that they pay the charge at a rate they can afford. For instance, they can apply to pay by instalment, and if necessary request subsequently to vary the rate of repayment. Also, those offenders who make their best efforts to comply with payment terms and do not reoffend will be able to apply to have the charge cancelled after a specified period of time.

Amendment 63AB proposes to limit the charge imposed to no more than 50% of the total cost they have imposed on the courts.

Amendment 63AM enables the court to impose a charge up to the amount specified by the Lord Chancellor. If an offender has committed a crime and imposed a cost on our criminal justice system, the Government believe it is right that they should be liable to pay back up to the full amount of costs reasonably attributable to that particular class of case. I have already outlined the protections in place to avoid placing an offender in hardship as a result of the charge.

Amendments 63AC and 63AF seek to limit the circumstances in which the criminal courts charge would be imposed. Specifying that an order imposing the courts charge should not be made if doing so would, in the opinion of the court, affect a decision on plea is unnecessary. I can assure noble Lords that the courts charge will come into play only once a verdict has been reached—long after the defendant makes a decision about plea.

Amendment 63AF also provides that the courts charge must not be imposed where the enforcement costs are likely to amount to more than the value of the charge. The charge will be enforced in the same way as existing financial impositions, so it is unlikely

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that the costs would exceed the level of the charge. Furthermore, it would not be possible for the court to anticipate how much enforcement activity will be required in a particular case.

We believe that excluding from the charge any costs associated with part of the hearing for which the defendant was not responsible would be unworkable. Charge levels will be set up to the cost reasonably attributable to that type of case, not based on a costs calculation of each individual case. Attempting to cost each individual case and then determine whether or not the offender was responsible for each element would be extremely time-consuming and totally impracticable.

Amendment 63AF also seeks to prevent the courts charge being imposed in relation to any appeal. The principle behind our courts charging policy is that offenders should bear some of the costs that have been incurred by the criminal courts as a result of their actions. It is appropriate to charge offenders a contribution towards the cost of an unsuccessful appeal. Finally, the amendment inserts a condition that the courts charge cannot be imposed before a written means assessment has been carried out. Amendment 63AE also prevents it from being collected before an assessment of the defendant’s finances has been made. The criminal courts already impose a number of financial impositions and established systems are in place to ensure that the court is provided with an offender’s means information. For these reasons Amendments 63AF and 63AE are unnecessary.

Amendment 63AFA would allow the court to consider the court charge imposed when sentencing or dealing with breach of a community order, community requirement, suspended sentence order or supervision requirement. The scheme is designed so that the charge reflects the cost an offender imposes on the courts system. It is not a punishment that relates to the severity of the offence committed. It should not therefore be taken into account when deciding on the appropriate sentence.

Amendment 63AH would divide the payment of criminal court costs between defendants where two or more defendants are convicted during a single hearing. The Bill currently makes each offender liable to pay the criminal courts charge as prescribed in secondary legislation. We expect that each offender will pay the full amount, although the power will exist to charge multiple defendants less when they are convicted at the same time as others. The amendment creates unnecessary complexity and is likely to result in one offender, who has been tried with one or more co-defendants, paying less then an offender who has been tried on their own, despite the fact that they may have committed identical offences. This raises questions of fairness. Our approach is the fairest approach and should be both simpler to operate and simpler for offenders and the public to understand.

Amendments 63B, 63C, 63D and 63E seek to withdraw the conditions that must be met for the courts charge to be remitted and give the courts a wide discretion about doing so. As previously mentioned, the clause currently allows a court to remit the charge where the offender has taken all reasonable steps to pay and does

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not reoffend. This provides a powerful incentive for offenders to repay the charge and refrain from reoffending, while also ensuring that those who meet these conditions are not necessarily required to make payments over an excessively long period.

Amendment 63AN specifies that, where the charge can be remitted, it includes the remission of interest. The purpose of the provisions to remit the charge is to relieve the offender of the debt where they have paid accordingly and not reoffended. It is therefore logical that any remission of the charge should include the whole debt—both the principal amount and the interest. The amendment is therefore unnecessary.

Amendment 63EA has the effect that offenders aged 18 to 21 who are sentenced to detention or imprisonment would be eligible to have their charge remitted earlier. The current proposal is that a court may remit the charge after a specified period that begins either when an offender is convicted or, if they have received a custodial sentence, released from detention or imprisonment. In practice it is unrealistic to expect many offenders to pay the charge while they are being detained. By setting the period after which the charge may be remitted to run from conviction rather than release for 18 to 21 year-olds, the amendment would mean that more serious offenders are likely to end up paying less than offenders who are not sentenced to custody. That would not be fair.

9 pm

As to reviewing after three years, Amendments 63FA and 63FB would make changes to the provisions for the review of the criminal courts charge. At present, Clause 43 requires the Lord Chancellor to carry out a review of the operation of the criminal courts charge three years after the provisions come into force. Amendment 63FA would reduce this from three years to 12 months. It is intended that the review will consider various aspects of how the policy is operating in practice, including an assessment of enforcement costs and direct income arising from the policy. However, in order to be able to consider these issues in a robust way, the review must be after a period that will allow the criminal courts charging provisions to bed in and produce reliable results. We would simply not be able to do so after 12 months.

Amendment 63 FB relates to the mechanism for the repeal of the criminal courts charge in response to the review of the charge. Should the Lord Chancellor consider it appropriate to repeal the criminal courts charge, there is a related power to deal with consequential and transitional matters. This amendment would oblige the Lord Chancellor to make such consequential and transitional provision. The duty to create such provision is not needed. It is important that we consider, in any repeal process, the consequential and transitional issues of doing so. This is a complex exercise and I can assure noble Lords that any Government exercising the repeal power would consider these matters carefully.

Amendment 63FC would prevent the power to vary an offender’s rate of repayment being exercised by anyone other than an officer of court directly employed by HMCTS. Fines officers already have powers to vary repayment rates for existing financial impositions prior to default. Clause 44 extends these powers to

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enable repayment rates to be varied after default and to vary on less favourable terms to the offender, with the offender’s consent. HMCTS is in the process of procuring an external provider for the future delivery of compliance and enforcement activity for criminal financial impositions. This would improve efficiency and the collection of financial impositions as well as reduce the cost of current service. A court will impose the obligation to make payments. Fines officers will simply apply collection measures to satisfy that obligation. It is not inappropriate for an external provider to use powers to vary the collection.

The noble Lord, Lord Beecham, asked various questions. He asked what proportion of the financial impositions is currently collected. Of the financial impositions imposed in quarter 2 of 2012, 58% were paid within 18 months of the imposition month and, of the fines imposed in quarter 2 of 2012, 54% were paid within 18 months of the imposition month. The noble Lord complained that there was no impact assessment. There is, in fact, an impact assessment, which has been published on the Bill’s website.