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House of Lords

Monday, 16 March 2015.

2.30 pm

Prayers—read by the Lord Bishop of Winchester.

Income Tax: Top Rate

Question

2.37 pm

Tabled by Lord Forsyth of Drumlean

To ask Her Majesty’s Government whether income tax revenue received from top rate taxpayers has increased or decreased since the rate was cut from 50 per cent to 45 per cent; and by how much.

Lord Borwick (Con): My Lords, in my noble friend Lord Forsyth’s absence, and at his request, I beg leave to ask the Question standing in his name.

Lord Newby (LD): My Lords, the latest projections show that income tax receipts from additional rate taxpayers in 2013-14 were £45.9 billion, compared with £38 billion in 2012-13, which was the last year when the additional rate was 50%.

Lord Borwick: My Lords, there was therefore an £8 billion increase in revenue as a result of lowering tax by 5%. Would my noble friend agree that Labour’s policy of putting the tax rate back up would not increase revenue, but rather discourage entrepreneurs, who are so responsible for increasing employment?

Lord Newby: Yes, my Lords.

Lord Kinnock (Lab): My Lords, does the Minister recognise, along with most analysts, that the figures that he has just given have probably been distorted by the practice of forestalling? Does he realise that such practice by some top rate taxpayers meant that they delayed their returns from 2012 to 2013 to take advantage of the 5% top rate tax cut in the following year, after it was announced in the 2012 Budget? Instead of drawing glib conclusions from the figures that he has given, would he and Her Majesty’s Revenue & Customs not realise that each 1% increase on the top rate of income tax can generate an extra £1.1 billion? Therefore, a cut can lose £5 billion in any year following the first year after the tax cut. When we have—

Noble Lords: Oh!

Lord Kinnock: When we have a deficit of £90 billion, can the country really afford that when we are supposed to be all in it together?

Lord Newby: My Lords, I am afraid that the noble Lord’s figures are just completely wrong. The figures produced by HMRC, which I am sure he has read,

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showed that its central estimate of the effect of reducing the top rate from 50p to 45p was a cost of £100 million, against which should be set—among other changes that this Government have made that exclusively hit the very affluent—the changes in disguised remuneration, which brought in £3.5 billion this Parliament, and the reduction in pensions tax relief, which will bring in £5 billion a year.

Lord Razzall (LD): My Lords, following up on the question from the noble Lord, Lord Kinnock, does the Minister accept that a by-product of the much welcomed coalition pressure on banks and other organisations in the City to reduce bonuses, which I assume is welcomed by the Labour Party, has been a reduction in tax revenues?

Lord Newby: My Lords, there has been a reduction in the amount paid in bonuses in the City. This will undoubtedly have meant a fall in the amount of tax on those bonuses, but I am sure that the whole House will welcome that development and hope that it will lead to something of a change in bank culture.

Lord McFall of Alcluith (Lab): My Lords, I refer the Minister to a recent ONS study which looked at the combination of direct and indirect taxation and found that the group paying most—paying more than the really well-off—was in the bottom quartile. Is not the big social injustice in the tax system in this country that the poorest are indeed paying the most? That is not helped by the Chancellor, George Osborne, and his cohorts rubbishing social security and welfare payments. Does the Minister not agree that that only compounds and exacerbates the problem that we have in our iniquitous tax system?

Lord Newby: But, my Lords, the top 1% of income tax payers is now paying between 27% and 28% of all income tax, which is a higher proportion than at any point during the last Labour Government. The two changes that I have mentioned, which bring in more than £6 billion extra a year, apply only to the highest earners.

Lord Hamilton of Epsom (Con): My Lords, despite the comments of the noble Lord, Lord Kinnock, is it not true that lowering tax rates increases revenue, and does that not make it rather surprising that the Liberal Democrats are not prepared to lower the top rate to 40%?

Lord Newby: No, my Lords, it does not. HRMC estimates that if you reduce the top tax rate from 45% to 40%, the likely cost to the Exchequer will be about £1 billion.

Lord Davies of Oldham (Lab): My Lords, does the Minister not acknowledge that in fact the very wealthy have various stratagems for reducing the impact of taxation? That is why, whatever the Government do, it does not produce the resources that the nation needs. Why does the Conservative Party not drop the idea that supporting the wealthy will somehow lead to a

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trickle-down advantage for the rest of the community, when the disparity between the wealthy and the poorest in our society is growing wider, and why do they not address themselves to the real issue, which is that the vast majority of people in this country are poorer under this coalition?

Lord Newby: My Lords, I do not know which bits of that question to deal with first. However, given the time, I just point out to the noble Lord that the group of the population whose income, by percentage and absolute amount, has suffered most and which has lost the most is the top 20%. They have seen a 3% cut in their income, which is a greater cut than has been experienced by any other tranche. The noble Lord does not like it because it is an inconvenient truth, but it does not stop it being a truth.

Lord Leigh of Hurley (Con): My Lords, does my noble friend the Minister agree that during the life of this Government corporation tax has fallen from 28% to 21% but corporate taxation revenues from companies has increased from £35.8 billion to £39.3 billion? That underlines the point made by my noble friend Lord Borwick that a decrease in rates of tax helps to increase revenue, reducing the biggest problem that we face at the moment—the deficit.

Lord Newby: My Lords, it is important to have competitive corporate tax rates, which is why we have reduced them, although it is obviously the case that you reach the point as you are reducing taxes when you lose revenue. The trick is to get the balance right, which is what we have done by reducing corporation tax, for example, and by putting capital gains tax up very significantly from the level it was under the Labour Government.

Lord Dubs (Lab): Could the Minister explain how it is that some wealthy people—leaders of our big companies—manage to get themselves domiciled abroad, in places such as Hong Kong, as the senior management of HSBC has done? Surely, that is the real tax dodge.

Lord Newby: My Lords, we have taken a number of measures to make sure that non-doms pay more per annum and have introduced a new charge on non-doms of £90,000 a year for those who are in the UK for a long time.

NHS: Health and Social Care Act 2012

Question

2.45 pm

Asked by Lord Wills

To ask Her Majesty’s Government what assessment they have made of the impact of the Health and Social Care Act 2012 on innovation by National Health Service clinicians.

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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, the Act created the architecture within which NHS England’s innovation, health and wealth strategy is being implemented. As part of this, the innovation scorecard shows a real improvement in the uptake of certain NICE-approved innovations. The NICE implementation collaborative has also resulted in increased national spend on key technologies. The department and NHS England have commissioned an independent evaluation of innovation, health and wealth, which is expected to be completed by winter 2017.

Lord Wills (Lab): I am grateful to the noble Earl for that Answer, but does he recognise that there is a significant gap between those fine words and what is actually happening on the ground? To take the case of giant cell arteritis, for example, 2,000 to 3,000 people go blind needlessly as a result of it. I hope the House will indulge me for a few seconds if I set out this important example. The condition is easily treatable. Professor Dasgupta, in Southend, has pioneered a fast-track pathway for diagnosis and treatment which has reduced the numbers of people going blind by two-thirds. Rolled out nationally, that would save thousands of people every year from going blind. It would save them and their families needless misery and suffering and would save the taxpayer hundreds of millions of pounds every year.

In January, Sir Bruce Keogh, the medical director of NHS England, wrote to me and said that this “represents a new way of doing things which is better and costs no more. We must learn from such innovative examples”. Is the Minister aware of what has happened since he wrote to me? Thousands of people have gone blind—

Noble Lords: Oh!

Lord Wills: Noble Lords opposite ought to listen to this; the people who suffer most from this are elderly and it is very much in their own interests to listen. Nothing has been done to roll out this innovative pathway. Can the Minister not accept that having a few guidelines is simply not good enough? Can he not accept that since the Health and Social Care Act came in, there has been no good example of good practice in this area?

Earl Howe: My Lords, I recognise the noble Lord’s close interest in this important topic. We recognise that early diagnosis and treatment of giant cell arteritis is extremely important to preventing sight loss. I am aware of the interest in the Southend GCA pathway developed by Professor Dasgupta. I recently raised the issue of the pathway with NHS England and understand Sir Bruce Keogh will be writing to the noble Lord very shortly about this. As he may be aware, the Royal College of Physicians has produced a best practice guideline on the diagnosis and management of GCA, which Professor Dasgupta has helped to develop. That is good progress and provides a very good framework for disease assessment, immediate treatment and urgent referral.

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Lord Hunt of Kings Heath (Lab): My Lords, the noble Earl has been answering health Questions for nearly five years now with courtesy and skill. How does he feel, as possibly the sole apologist, other than Mr Andrew Lansley, for the Health and Social Care Act 2012? What is his response to the independent King’s Fund, which described the Act, which the noble Earl piloted through this House with great skill, as having an impact that was both “damaging and distracting”? Is that not the real answer to my noble friend? The reason he has identified a problem and a shambolic decision by NHS England is that we have a shambolic organisation, which this Government are responsible for.

Earl Howe: If I had to single out two or three things from that Act which have been of enormous and incomparable benefit, one would be the enhancement and promotion of clinical leadership within the system, which has happened as result of the creation of clinical commissioning groups. The second is the creation of Public Health England and the transformation of public health delivery in this country. The third is the separation of elected politicians from the running of the health service, which has enabled the NHS to free itself up to look at innovation in a more creative way

Baroness Greengross (CB): My Lords, does the noble Earl not agree that if specialist secondary clinicians worked a more significant part of their time in primary settings in the community, this would be a welcome innovation across the country?

Earl Howe: I do agree. That idea is being taken up by a number of the vanguard sites, which are looking at the new models of care that were foreshadowed by the five-year forward view. It is, I think, the shape of things to come.

Lord Brooke of Alverthorpe (Lab): My Lords, it would be churlish not to accept the noble Earl’s remarks that there have been some changes which have been beneficial. But does he not agree that the public at large recognise that overall there have been many downsides? Many of those downsides have been hidden and continue to be hidden by politicians, who refuse to release the risk register that was drawn up prior to that Act going through.

Earl Howe: My Lords, we are back to that one. As the noble Lord knows, the strategic risk register for the department is something that we are entitled to keep confidential, as all Governments have done. The Cabinet took the decision that the transition risk register should remain confidential because of the principle of the need to preserve private space for civil servants when advising Ministers.

The Countess of Mar (CB): My Lords, some months ago I led a debate on the lack of clinical governance between health and social care. I was promised a meeting with the noble Earl by the noble Baroness, Lady Jolly. One of the big problems is the fact that there is no governance framework between health and

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social care, and as a result a lot of people are falling into a black hole. Can the noble Earl say when that meeting will take place?

Earl Howe: My Lords, I should be more than happy, as I always am, to meet the noble Countess. I am sorry if there has been a delay in that respect. I would be happy to talk to her one to one on that matter.

Baroness Corston (Lab): My Lords, does the Minister accept that one of the—I hope unintended—consequences of the Health and Social Care Act has been the disastrous effect on the recruitment of GPs, the number of people going into the GP profession and the number of people leaving the profession or who have said that they will be retiring early? It was described to me recently as an impending car crash.

Earl Howe: My Lords, I think we all recognise that general practice is under unprecedented pressure but I would not attribute that to the 2012 Act; I would attribute it to the unprecedented rise in demand from patients. The NHS across the piece is busier than ever before and naturally that has an effect on morale. We are, however, taking steps to promote recruitment into general practice and to reduce the day-to-day burdens that are imposed on general practitioners.

Population: International Migration

Question

2.53 pm

Asked by Lord Green of Deddington

To ask Her Majesty’s Government what is their latest assessment of the impact of international migration on the population of the United Kingdom, taking into account the children of immigrants already in the United Kingdom.

The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con): My Lords, the Office for National Statistics publishes results from the Annual Population Survey. In the year ending December 2013, an estimated 7.8 million people were born outside the UK, while 4.9 million were non-UK citizens. For the calendar year of 2013, births in the UK to non-UK born mothers accounted for 25% of all live births. That is why we need to reduce immigration.

Lord Green of Deddington (CB): My Lords, I declare an interest as the chairman of Migration Watch. I thank the Minister for his reply. This is my first intervention on this subject in your Lordships’ House. Does the Minister agree with me that a sensible level of immigration is a natural and valuable part of an open society and economy? Indeed, there are a number of Members of this House whose very presence attests to that. Is the Minister aware that of the increase in the UK population over the past 10 years, at least two-thirds was due to immigration, and that if you include the natural increase in the number of migrants

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who are already here, that percentage becomes 80%? Will he therefore instruct his officials to clarify the position so that the public finally and fully understand the impact of immigration on our society? Lastly, is he aware that if net migration is allowed to continue at present levels, in the next 10 years we will have to build the equivalent of the city of Birmingham every two years, with the schools, hospitals, et cetera, that will be necessary?

Lord Bates: First, I pay tribute to the noble Lord for the work that he has done through Migration Watch, which is, I think, widely regarded as a balanced think tank that makes a positive contribution to the debate on immigration in this country.

The noble Lord, Lord Green, referred to a figure of two-thirds and suggested that that could rise to 80%. The figure that we have to hand on this is 53%. However, we are absolutely at one on needing a firm but fair immigration policy to protect the public services of this country and provide opportunities for those who want to come here to work.

Lord Soley (Lab): My Lords, the Question is about the children of immigrants. Go outside into the Royal Gallery and you will see a picture of a black man on the ship with Nelson. There were 188 sailors of African origin in the Royal Navy at Trafalgar. I know two or three Indian citizens in the Ealing area who have the Victoria Cross. I wonder what we are saying about their children. It seems to me that their children have made an immensely valuable contribution to the United Kingdom; we ought to be proud of that and say so.

Lord Bates: The noble Lord is absolutely right. In fact, I see no difference whatever between his assertion and the questions that the noble Lord, Lord Green, has raised. The best service that we can show to those who come to this country is to make our public services and healthcare available to them and make sure that those who have come here legally and are making a contribution are not disadvantaged by those who have come here illegally and are taking from the state.

Baroness Hussein-Ece (LD): My Lords, is it not the case that Her Majesty’s Government, political leaders and civic leaders need to make a case for the positive impact that immigration has had on this country? Of all doctors in the NHS, 26% were foreign-born and 85,000 nurses were born abroad. The care system would collapse without immigrant labour. Does the Minister think that the constant negative narrative of immigration, without the positive, is detrimental to British society—a society that has always been one of tolerance which values and upholds democracy in building better institutions? Do the Government not really need to take the lead on this?

Lord Bates: That is true, but that sensible and rational view was drowned out when the lid was taken off immigration and the controls taken away so that under the previous Government we had net migration

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of 2.5 million. That fed into a change in the narrative away from the fact that most people who come to this country make an absolutely outstanding contribution to it and we are blessed to have them.

Baroness Afshar (CB): My Lords, is the Minister aware that, if we did not have immigrants or the children of immigrants, we would not have buildings, schools, a vibrant food industry or vibrant markets? They contribute and their contribution creates a multiplier effect, which means that they create money that goes around. They should not be underestimated.

Lord Bates: I certainly assure the noble Baroness that that contribution is not underestimated and that it is not going to stop. We want people who want to come here to study, to work, to invest and to visit. We want all those people to come. What we are doing is drawing a line to say that we must get much tougher with those who want to come here and abuse our openness.

Lord Tomlinson (Lab): My Lords—

Lord Skelmersdale (Con): My Lords—

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, it is the turn of the Labour Benches.

Lord Tomlinson: My Lords, will the Minister explain to the House how the Prime Minister got immigration figures so stunningly wrong when looking at this country’s need for overseas students? He promised us that immigration would be controlled at tens of thousands rather than hundreds of thousands. His words in emphasising that were, “No ifs, no buts”. If he can get those figures so stunningly wrong, why should we believe any of the statistics that are coming from the Government on immigration?

Lord Bates: It could well be that when the Prime Minister made those remarks the country was in the depths of despair in 2010. Since then, we have had a jobs miracle. We are creating more jobs than the rest of Europe put together. As a result of that, not surprisingly, the place where people want to come to find work is the only place where the jobs are being created. That is in the UK.

Lord Skelmersdale: My Lords, would my noble friend accept that the real problem is not immigration but integration?

Lord Bates: That is a more philosophical point—and a good one. It is one reason why we need to work on those other programmes of integration through the education system and through ensuring that people have a sense of what British values are and feel part of this country.

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NHS: Cancer Drugs Fund

Question

3 pm

Asked by Lord Hunt of Kings Heath

To ask Her Majesty’s Government why the public are not allowed to appeal against a decision to remove certain drugs from the Cancer Drugs Fund list of approved drugs.

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, NHS England’s appeal process for the national cancer drugs fund list centres on whether due process is followed with regard to decisions to add or remove drugs from that list. NHS England considers that third parties not involved in the application process, including patients, would not be in a position to make a judgment about whether due process had been followed.

Lord Hunt of Kings Heath (Lab): My Lords, the cancer drugs fund was set up as a way of getting round NICE’s refusal to approve the use of a number of drugs by NHS patients. Would the noble Earl concede that NHS England has, essentially, set up a new rationing tool to exclude patients from drugs which had originally been agreed through the cancer drugs fund? Last Thursday, NHS England listed 19 drugs no longer available. Although the noble Earl said that the process is around the procedure used, does he not agree that in the end this impacts directly on patients who can no longer get those 19 drugs? Why should not patients be involved in an appeal process? How does the mantra “No decision about me without me”, which the Government have set for the NHS, fit the lack of patient involvement in these decisions?

Earl Howe: The noble Lord is right that NHS England has just gone through a reprioritisation process. There are three important things to observe in that process. NHS England has assured the department that no patient whose treatment is currently being funded through the fund will have funding withdrawn, as long as it is clinically appropriate that they continue to receive that treatment. In addition, no drug will be removed from the fund where it is the only therapy for that condition. Clinicians will still be able to apply for individual patients to receive a drug not on the national list on an exceptional basis. We have seen through experience that many of those applications succeed.

Lord Walton of Detchant (CB): Would the Minister accept that NICE is faced with an extremely difficult problem in continually having to consider the efficacy and affordability of new cancer drugs as they emerge in a National Health Service under financial constraint? Would he also accept that another major problem is emerging in relation to the orphan and ultra-orphan drugs now coming on stream for the treatment of rare diseases, which are equally deserving in many respects? How does he feel that the next Government—however they are constituted—will be able to consider this increasingly serious problem?

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Earl Howe: My Lords, the noble Lord is right that there is a particular issue around the appraisal of new cancer drugs. That is why NHS England, the Department of Health, cancer charities, NICE and the Ethical Medicines Industry Group, as well as the ABPI, are working together currently as part of a new working party tasked with finding the best way to get new cancer drugs appraised and commissioned for patients. A number of proposals have been looked at to reach an integrated process between NHS England and NICE which results in clear and final decisions on baseline commissioning of chemotherapy drugs.

Baroness Brinton (LD): My Lords, given the good news that the Minister just gave us about the working group looking at the future of some of these complex drugs, and the whole policy about “No decision about me without me”, would it not be sensible to have patients’ advocates, such as Prostate Cancer UK, able both to present and to appeal the case for a drug? It seems bizarre that this is the one area where there is no input of anybody other than the committee making the decision.

Earl Howe: I differ slightly from my noble friend on this point. I think that the key determinant for the reprioritisation process has to be clinical input, and that is indeed what happened. It is necessary to have as objective a process as possible when looking at how to reprioritise a cash-limited fund of this kind.

Lord Hunt of Kings Heath: My Lords, if I could come back to the noble Earl, the NICE processes make sure that patients are involved in every stage of the process. I do not understand why there is a difference between the NICE process, which is incredibly thorough and well regarded internationally, and this hurried rationing tool used by NHS England, which is more about its own budgetary problems than an effective solution to these issues.

Earl Howe: My Lords, I do not agree about the hurried rationing tool, as the noble Lord puts it. The tool used by NHS England is one that has been tried and tested, and accepted and shared with the pharmaceutical industry. The point here, as I said in my original reply, is that there is due process here. NHS England believes that any patient group or third party not involved intimately with that due process would not be in a position to make a judgment about whether the process had been followed correctly.

Business of the House

Motion on Standing Orders

3.06 pm

Moved by Baroness Stowell of Beeston

That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday 17 March to allow the Corporation Tax (Northern Ireland) Bill and the Supply and Appropriation (Anticipation and Adjustments) Bill to be taken through all their remaining stages that day.

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The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Lord Foulkes of Cumnock (Lab): My Lords, this Motion is illustrative of the kind of flexibility and co-operation without which this House could not operate. However, it might sometimes be appropriate to remember that such flexibility and co-operation should work in both directions.

Motion agreed.

Immigration (Health Charge) Order 2015

Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015

Restraint Orders (Legal Aid Exception and Relevant Legal Aid Payments) Regulations 2015

Immigration and Nationality (Fees) Order 2015

Motions to Approve

3.07 pm

Moved by Baroness Williams of Trafford

That the draft orders and regulations laid before the House on 29 January and 2 February be approved.

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments, 27th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 10 March.

Motions agreed.

Local Audit and Accountability Act 2014 (Special Trustees) Amendment Regulations 2015

Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) and Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) (Amendment) Regulations 2015

Motions to Approve

3.07 pm

Moved by Earl Howe

That the draft regulations laid before the House on 29 January and 3 February be approved.

Relevant documents: 22nd and 23rd Reports from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 10 March.

Motions agreed.

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Broadcasting Act 1996 (Renewal of Local Radio Multiplex Licences) Regulations 2015

Motion to Approve

3.08 pm

Moved by Lord Bourne of Aberystwyth

That the draft regulations laid before the House on 5 February be approved.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 10 March.

Motion agreed.

Statistics and Registration Service Act 2007 (Disclosure of Revenue Information) Regulations 2015

Motion to Approve

3.08 pm

Moved by Lord Gardiner of Kimble

That the draft regulations laid before the House on 5 February be approved.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 11 March.

Motion agreed.

Deregulation Bill

Commons Amendments

3.08 pm

That this House do not insist on its Amendment 38 and do agree with the Commons in their Amendments 38A and 38B in lieu.

Commons disagreement and amendments in lieu

The Commons disagree to Lords Amendment 38 and propose Amendments 38A and 38B in lieu.

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(b) if the Secretary of State proposes to do so, an outline of the steps that the Secretary of State proposes to take in consequence and when those steps will be taken.”

Lord Gardiner of Kimble (Con): My Lords, the Government are very clear that the review of the TV licence enforcement regime is a high priority. The overriding aim is to ensure that the system is appropriate, proportionate and fair, and that it represents the best value. This independent review, led by David Perry QC, will identify whether the current enforcement regime is appropriate and proportionate, and will ensure that there is a strong, evidence-based case for any potential changes to the TV licence enforcement regime. Due to the importance of this issue, the decision was taken to commence this review in advance of Royal Assent, while retaining a clause that commits the Government to carry out the review to ensure that this important piece of work is completed in a timely manner. The findings of the review, which will be complete by the end of June 2015, will be laid in both Houses of Parliament and presented to the BBC Trust.

The proposed amendments made in the other place in lieu of Lords Amendment 38 place additional reporting commitments on the Government, but still require that any changes to the licensing regime may not come into force before 1 April 2017. The amendments require the Government of the day to consider the report promptly and properly, setting out their response and the next steps to be taken within three months of the report’s completion. The Secretary of State must report to the House, setting out whether the Government propose to exercise the power to change the sanctions that apply to the failure to have a TV licence, and, if so, detailing the next steps to be taken and to what timetable.

As I have said, the proposed amendments also require that any regulations may not be made so as to come into force before 1 April 2017. We have always maintained that the report’s findings, and potential next steps, should be considered in the context of charter review, and this remains the case. The BBC’s current charter expires on 31 December 2016. The Government will not begin charter review until after the general election, and there is no set process for how the review should be conducted, or when. It will be for the Government of the day to take forward any further actions as they see fit.

We must not pre-empt the recommendations Mr Perry will make, particularly as the public consultation element of this work is currently ongoing. However, it remains the case that any next steps will need to be considered within the scope and timing of the charter review, and it will be for the next Government to ensure that the right enforcement regime for licence fee payers, the courts and indeed the BBC itself, is in place. Our amendments ensure that the Government of the day will be committed to consider whatever recommendations David Perry QC wishes to make and to set out their intentions. Any changes that may be introduced must follow a clear timetable to be set out in the Government’s

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Statement, leading up to when the Secretary of State’s regulation-making power commences in April 2017. I beg to move.

Baroness Howe of Idlicote (CB): My Lords, following the successful vote in your Lordships’ House a week or two ago, we are very pleased to see that the Government have accepted our important amendment to the Bill by including it in their own Motion A. What we now have before us is a cast-iron guarantee that any proposed changes to the licence fee enforcement regime will not take place until at least 1 April 2017 when the current licence fee settlement expires.

In particular, I would like to thank the noble Lords, Lord Stevenson, Lord Clement-Jones, and Lord Grade, for their invaluable support in this matter in signing the original amendment. This cross-party support demonstrated the broad strength of feeling on this whole issue. Any changes imposed before April 2017 would without doubt have had an impact on the BBC’s revenue. The consequences for the BBC’s funding need to be fully considered. Funding, along with everything else to do with the BBC, must be looked at in the context of the upcoming charter review and licence fee settlement.

We recognise that the David Perry QC review into licence fee enforcement is currently taking place, and I understand that the BBC is engaging with the review. Our amendment, now included in the Government’s Motion, does not affect the review’s recommendations or seek to change the outcome, but focuses on the timing of any implementation and ensures that the recommendation can lead into wider discussions that will affect all licence fee payers.

3.15 pm

Having the commitment to the funding agreed at the last licence fee settlement in 2010 firmly confirmed means that the BBC can continue to plan and budget accordingly. As highlighted by the recent report of the National Audit Office, the BBC has made and continues to make significant efficiency savings throughout the organisation. To have reneged on the 2010 agreement would have meant an unpredictable future for many of the services and programmes that audiences value not only throughout this country but around the world. The inclusion of our amendment is a much needed reassurance for the broadcasting industry, and therefore the creative industries as a whole, as the current mixed funding broadcasting ecology is proving incredibly successful, and we hope that it will continue to thrive.

Make no mistake about it, we in the UK are incredibly lucky to have the BBC. The BBC is appreciated the world over as a key source of impartial, accurate and independent news, as a producer of quality original British drama and for investing in an array of services ranging from children’s programmes to increasing levels of innovation online. With this amendment, the current licence fee remains secure and the future of public service broadcasting can be planned and assessed in sufficient time and within the appropriate context.

In conclusion, as well as welcoming the Commons amendment, I thank the noble Lord, Lord Gardiner, and his Bill team, for the helpful way in which they

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arranged a number of meetings to listen to our concerns and explain the position of the Government at the time.

Lord Grade of Yarmouth (Con): My Lords, first, I draw attention to my interests in this matter as a former chairman of the BBC Board of Governors, the chairman of Pinewood Studios, an occasional—far too occasional—supplier of services to the BBC, and any other interests in the register.

It has been a very good experience putting this matter to rights, and I offer my congratulations to the noble Baroness, Lady Howe. She and I have not always seen eye to eye on broadcasting matters over many years, but I am delighted to support the remarks she made earlier. I thank the Minister for reaching such a happy resolution on this matter, which means that when the starting gun goes on the charter review debate at the BBC after the election, we can start with a blank sheet of paper and no subsidiary issues that might get in the way. My thanks go to my noble friend and in particular to the noble Baroness, Lady Howe, for running with this matter. I have been very happy to support her, I continue to support her and I am very happy to support the government Motion.

Lord Stevenson of Balmacara (Lab): My Lords, although the Minister tried to argue that all sides of the House were in agreement in support for the BBC, I am bound to say that the Government’s position on this issue, repeated at earlier stages of the debate in your Lordships’ House, was precisely the opposite. Had the Government prevailed, that would have had a very destabilising effect on the BBC. The Minister may speak now with the passion of the converted, but we heard him in Committee, we heard him again at Third Reading, and we will remember.

Over time, we have in this country established appropriate procedures for exercising effective but arm’s-length oversight of the BBC involving periodic reviews of the charter and licence and the regular fixing of budgets. The lesson to learn from this episode is that it would be very unwise for any political party to play around with the BBC mid-licence period for short-term political advantage.

We support the independent review being undertaken by David Perry QC. We do not know what the review will recommend on this important but rather narrow question of decriminalising penalties for not paying fines imposed by the courts. But we think it is right to wait for the outcome of the review before any decisions are taken for the simple reason that this would ensure that there will be no significant effect on BBC funding—up or down—before the end of the BBC’s current licence fee settlement, which is due to expire at the end of March 2017.

When the 2010 licence fee settlement was announced, the then Secretary of State said that it would provide,

“a full financial settlement to the end of the year 2016/17, with no new financial requirements or fresh obligations of any kind being placed on the BBC and/or licence fee revenues in this period”.

I am delighted that the Government are now prepared to honour that commitment and we support the amendment.

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Lord Gardiner of Kimble: My Lords, I am most grateful to noble Lords who have spoken in this debate and indeed a number of other noble Lords who I have engaged with on this issue. We have, both in the Chamber and outside, had some very useful and constructive discussions. I am particularly grateful to the noble Baroness, Lady Howe, for her generous remarks welcoming the Government’s amendment. The noble Lord, Lord Stevenson of Balmacara, said that he would remember. I know that if I look back I shall remember this Bill for a number of issues. We have had a fascinating journey, as it were, but on this particular issue we have provided the reassurance of timings. When we had the discussion I said that we were not very far away and I did not think that we were because by the time all the work was going to be done, we would be very close to 1 April. But we have reached that degree of certainty, which I know noble Lords were keen to achieve.

I am particularly pleased that the BBC is engaging in the review. That is what I would have expected from one of our great institutions. From all I hear, Mr Perry is dealing with this matter with the rigour that one would expect of a QC of his experience. That is also extremely important.

I am pleased that this has produced an opportunity for the alliance between my noble friend Lord Grade and the noble Baroness, Lady Howe, to break out in such good measure. But we are now in a position where we are able to consider decriminalisation with the sort of evidence that we needed. There has been a lot of feeling about this, but the review will mean that a thorough piece of work has been undertaken and with these government amendments we will be in a position for the next Government to come to a view and bring this matter forward in a proper fashion. We will have considered the matter properly.

This has been an important feature of your Lordships’ House. It may have been inconvenient to me at the Dispatch Box to lose by three votes, but we have probably found ourselves in a position where there is clarity for the BBC and certainty, which is very important. This has been a valuable exercise.

Motion agreed.

Armed Forces (Service Complaints and Financial Assistance) Bill [HL]

Commons Amendments

3.24 pm

That this House do agree with the Commons in their Amendments 1 to 27.

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(b) an allegation of maladministration in connection with the handling of a service complaint (including an allegation of undue delay), where the Ombudsman is satisfied that the complaint has been finally determined;

(c) an allegation of undue delay in the handling of a service complaint which has not been finally determined;

(d) an allegation of undue delay in the handling of a relevant service matter.”

16 Mar 2015 : Column 920

13: Clause 2, page 7, line 10, leave out “investigated an application relating to” and insert “carried out an investigation under subsection (1)(a) or (b) in relation to”

16 Mar 2015 : Column 921

24: Clause 7, page 13, line 25, leave out subsection (2)

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(3) After paragraph (9B) insert—

“(9BA) Where the service complaint is dealt with by a person or panel appointed by the Defence Council by virtue of section 340C(1)(a) of the Armed Forces Act 2006, it is to be treated for the purposes of paragraph (9B)(b) as withdrawn if—

(a) the period allowed in accordance with service complaints regulations for bringing an appeal against the person’s or panel’s decision expires, and

(b) either—

(i) the complainant does not apply to the Service Complaints Ombudsman for a review by virtue of section 340D(6) of that Act (review of decision that appeal brought out of time cannot proceed), or

(ii) the complainant does apply for such a review and the Ombudsman decides that an appeal against the person’s or panel’s decision cannot be proceeded with.”

(4) Omit paragraph (9C).

(5) For paragraph (9D) substitute—

“(9D) The presentation of a complaint to an industrial tribunal in reliance on paragraph (9B) does not affect the continuation of the procedures set out in service complaints regulations.”

(6) Omit paragraph (9E).

(7) In paragraph (10)—

(a) in the definition of “service complaint”, for “section 334” substitute “section 340A”,

(b) after that definition, insert—

““service complaints regulations” means regulations made under section 340B(1) of that Act;”, and

(c) omit the definition “the service complaint procedures”.

Race Relations (Northern Ireland) Order 1997 (S.I. 1997/869 (N.I. 6))

1D (1) Article 71 of the Race Relations (Northern Ireland) Order 1997 (application to Crown etc) is amended as follows.

(2) In paragraph (8), for sub-paragraph (b) substitute—

“(b) the complaint has not been withdrawn.”

(3) After paragraph (8) insert—

“(8A) Where the service complaint is dealt with by a person or panel appointed by the Defence Council by virtue of section 340C(1)(a) of the Armed Forces Act 2006, it is to be treated for the purposes of paragraph (8)(b) as withdrawn if—

(a) the period allowed in accordance with service complaints regulations for bringing an appeal against the person’s or panel’s decision expires, and

(b) either—

(i) the complainant does not apply to the Service Complaints Ombudsman for a review by virtue of section 340D(6) of that Act (review of decision that appeal brought out of time cannot proceed), or

(ii) the complainant does apply for such a review and the Ombudsman decides that an appeal against the person’s or panel’s decision cannot be proceeded with.”

(4) Omit paragraph (9).

(5) For paragraph (10) substitute—

“(10) The presentation of a complaint to an industrial tribunal in reliance on paragraph (8) does not affect the continuation of the procedures set out in service complaints regulations.”

(6) Omit paragraph (11).

(7) In paragraph (12)—

(a) in the definition of “service complaint”, for “section 334” substitute “section 340A”,

(b) after that definition, insert—

““service complaints regulations” means regulations made under section 340B(1) of that Act;”, and

(c) omit the definition “the service complaint procedures”.”

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27: Schedule, page 15, line 19, at end insert—

“Consequential revocations

10 The following instruments are revoked—

the Race Relations (Complaints to Industrial Tribunals) (Armed Forces) Regulations 1998 (S.R. (N.I.) 1998/104);

the Equal Pay (Complaints to Industrial Tribunals) (Armed Forces) Regulations 1998 (S.R. (N.I.) 1998/105);

the Sex Discrimination (Complaints to Industrial Tribunals) (Armed Forces) Regulations 1998 (S.R. (N.I.) 1998/106).”

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con): My Lords, two separate groups of amendments were made to the Bill in the other place. Commons Amendments 1 to 20 reflect changes to the Bill that were made following the Commons Committee stage. They extend the role of the proposed Service Complaints Ombudsman in a number of important ways and are the most significant of the amendments in this group. Commons Amendments 21 to 27 make some changes to equalities legislation in Northern Ireland that are needed as a consequence of the Bill and make minor changes to the transitional provisions. I therefore intend to speak mainly about Amendments 1 to 20, although I will cover the other amendments at the end.

In Commons Committee on 10 February, it was agreed that the role of the proposed ombudsman should be extended in three ways: first, that the ombudsman should be allowed to look at the substance, or merits, of an individual complaint, not just whether it had been handled correctly by the services; secondly, to require the ombudsman to look for any maladministration that may have occurred in individual cases, not just the specific maladministration alleged by the complainant; and, finally, the Bill was changed in relation to when the ombudsman can look at allegations of undue delay.

The changes that were made to the Bill in Commons Committee were recommended by the House of Commons Defence Committee in its report on the Bill which was published on 23 October last year—that is, after the Bill had left this House. It was clear when the Bill was debated in the Commons that the changes recommended by the Select Committee had cross-party support. The Government therefore accepted in principle the changes to the Bill that were made in Commons Committee and tabled a number of government amendments at Commons Report to make sure that the changes to the ombudsman’s role were clear and worked from a legal and drafting point of view. The government amendments also filled an important gap in the ombudsman’s powers to make recommendations in individual cases that had been left by the original amendments. The government amendments were agreed at Commons Report and are therefore the ones we are looking at today.

Although the amendments extend the scope of the ombudsman’s role, they follow the framework which the Bill originally set out. It is important to emphasise a point that has sometimes been lost in our debates—the ombudsman will normally become involved in individual complaints only once the consideration of it by the services has finished. That is an important point. The ombudsman is the backstop, the place of last resort on

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individual complaints that have been through the internal system. If complaints are successfully dealt with by the services, there will be no need for the complainant to go to the ombudsman.

It is important to make that point because of the third aspect of change agreed in the other place. This allowed the ombudsman to investigate allegations of undue delay in three different respects: as part of a maladministration investigation; where delay is alleged in relation to a complaint that is being considered by the services; and, finally, where there is an allegation of undue delay before a complaint has even been made.

It is in everyone’s interests that we have a complaints process where roles and powers are clear so that there is no confusion. It is also important that the wishes of the individual remain at the heart of the process, given that this is an individual grievance procedure, and equally that the rights of anyone alleged to have committed a wrong against another person are also protected. It remains the case that the services will, in every case, still be left to decide how to respond to any findings and recommendations made by the ombudsman, even in relation to the extended scope that the ombudsman will now have.

The Chief of the Defence Staff has confirmed that the amendments do not substantially affect the primacy of the chain of command because the Service Complaints Ombudsman can investigate the substance of a complaint only after the chain of command has done so, or where the chain of command decides not to investigate and the complainant still wishes to pursue the matter. He has made it clear that a well run organisation should have nothing to fear from the system that would be put in place if these amendments are made.

3.30 pm

The government amendments that were agreed in the other place also made the necessary additional changes to the rest of the Bill’s provisions, so that there can be no doubt as to the precise scope of the ombudsman’s powers. Commons Amendments 1, 3 and 6 set out in clear terms that the ombudsman can investigate, first, a service complaint, when that complaint has completed the internal system. That is what makes clear that the ombudsman can look into the merits of a complaint. Secondly, the ombudsman can investigate an allegation that there has been mishandling of a service complaint, including undue delay, when that complaint has completed the internal system. This is what deals with maladministration. Thirdly, the ombudsman can investigate allegations that a service complaint has been unduly delayed, before that complaint has completed the internal system, or alternatively that there was undue delay before a service complaint is made.

For everyone concerned to have confidence in the findings made by the ombudsman, particularly where she will now be able to investigate the substance of a complaint, it will be important for her staff to have the right skills and knowledge for the job. This is something that we must now work through carefully with the Service Complaints Commissioner as part of the ongoing work to prepare for implementation of the new system.

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As it is now possible to make an application to the ombudsman alleging undue delay when a complaint has not been concluded in the internal system—or, indeed, where a complaint has not even been made—it is important that the Bill sets out for the avoidance of doubt what is meant by the internal process having been completed. This is why Commons Amendment 1 introduces the new wording of “finally determined” to differentiate investigations into the service complaint or alleged maladministration which can only happen after the conclusion of the internal complaints system. This term is defined by virtue of the change to the Bill in Commons Amendment 6. I want to be clear that the phrase “finally determined” does not in any way preclude the ombudsman from looking into the merits or maladministration of a complaint. It is simply there to make it clear that she can do so only once consideration of it has been completed in the internal system by the services, and where the applicant has asked the ombudsman to investigate in accordance with the requirements of the Bill.

It remains important for the ombudsman to have a reasonably clear idea of what the applicant wants them to look into, and for investigations to remain focused and proportionate. Commons Amendment 4 would require the applicant to specify which kind or kinds of investigation the complainant wants the ombudsman to carry out. This is not an onerous obligation for the complainant but will help to focus the efforts of the ombudsman on what is most important to the applicant.

Connected with that is Commons Amendment 14, which would enable the ombudsman, as part of her discretion, to decide whether to investigate the whole service complaint or allegation, or just part of it. It will be open to the ombudsman to decide not to reopen particular aspects of a service complaint or rerun parts of the process if she is satisfied that these were adequately dealt with in the internal process. It is clearly in everyone’s interests that the new ombudsman stage does not add to the delays that these reforms are, at least in part, seeking to address.

Commons Amendment 11 sets out the changes providing for the ombudsman’s power to investigate any maladministration that she identifies in the course of an investigation into alleged maladministration or one looking at the service complaint. We want the ombudsman to be free to report on any other aspect of mishandling that she may come across, and have amended the Bill accordingly to make this clear throughout the relevant provisions. These changes do not require the ombudsman to search for maladministration in every case. That was an essential clarification made in the government amendments agreed to on Report in the Commons. There is also no power for the ombudsman to investigate the service complaint if the application does not ask for the ombudsman to do this.

It is important to stress that this change also does not give the ombudsman an unrestricted power to look into matters that are not related to the complaint being investigated. The ombudsman will not be able to investigate operational matters or to look more generally at service ethos and culture. There are other, more appropriate, forums for any such investigations. Equally,

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it will remain for the services themselves to grant any appropriate redress where the ombudsman finds that a complaint is well founded. It is equally important for everyone that the powers of the ombudsman are clear regarding what she can do having completed an investigation. Her ability to produce a report with findings and recommendations is fundamental to the view that many will rightly have about whether this new role really does have teeth.

The government amendments will also fill a gap here that was left following the amendments made in Committee in the other place. Amendments 16 to 20 make clear that the ombudsman must, after carrying out an investigation, prepare a report setting out their findings and recommendations. On an investigation into the service complaint, the ombudsman will need to make findings on whether it was well founded and, if so, what recommendations, if any, to make on appropriate redress. We expect that the ombudsman will share a draft of her recommendations with the MoD and the services before making these final. This is covered in the current draft of the ombudsman regulations. The Defence Council will also retain responsibility for how to respond to any recommendations. The amendments also clarify that the ombudsman must set out any recommendations as a result of a finding of maladministration or undue delay.

Amendments 21 to 24 are of a minor and technical nature, so I do not intend to speak to them for long. The Bill originally provided in Clause 6(2)(b) for commencement regulations to make transitional provisions. Those regulations would have been subject to no parliamentary procedure. During the passage of the Bill the department has progressed its preparations for the transitional provisions. It has become clear that some of the necessary regulations might go beyond the scope of this power. This is particularly the case where it may be desirable to transfer some, or perhaps many, existing service complaints on the commencement day to the new system with all the advantages that will bring.

Amendments 21 to 23 would provide the Secretary of State with a free-standing power under a new clause in the Bill to make the necessary transitional provisions for the new complaints provisions to come into force. The transitional regulations will be subject to the negative resolution procedure. The new clause will come into force on Royal Assent. The existing power in the old Clause 6 will be removed by these amendments. Amendment 24 makes a minor and purely procedural amendment to remove a provision made in this House to recognise and maintain the privileges in the other place on financial matters.

We have identified a small amount of other legislation that needs to be amended as a result of this Bill. This is all equalities legislation relating to Northern Ireland and is covered by Commons Amendments 25 to 27. Each of the instruments that needs amending refers to the existing service complaints system and therefore needs to be updated as a result of the Bill. The amendments are similar to those being made in the Bill to Section 121 of the Equality Act 2010. These amendments will remove uncertainty by clarifying how the Bill interacts with other legislation. None of the amendments raises devolution issues.

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The amendments agreed in the Commons are necessary to ensure that the provisions in the Bill are clear. They also ensure that the drafting is coherent and complete while giving full effect to the amendments agreed to in the other place, which had cross-party support and that of the Defence Committee. The Commons amendments give us a Bill and a process that will help the services understand when they can approach the ombudsman, on what matters and at what stage of the process. They will give the ombudsman the teeth needed to hold the services and the MoD to account. I beg to move.

Lord Stirrup (CB): My Lords, Amendment 1 makes a very significant change to this Bill. In essence, it provides for a complainant who at the end of the full military process of investigation and hearing is dissatisfied with the judgment that has been reached to apply to the ombudsman for, essentially, a totally new hearing, not a review of whether the complaint was handled properly and appropriately, and not of whether the judgment reached was reasonable within the range of reasonable decisions that could have been reached, but an entirely new judgment on the merits of the case.

It is, of course, perfectly possible for two or more people to reach, in varying degrees, different views on the merits of a case on the same set of facts as presented. Perhaps the most obvious example of this is a dissenting judgment in the Supreme Court. This Bill, as amended, is now essentially saying that the judgment and view of the ombudsman is of more value and is more reliable than those of anyone in the military chain of command or of the Defence Council. Noble Lords will be able to judge for themselves whether they think that is a sensible thing to do. All I will say is that having been in the position of having to review many such hearings and judgments at Air Force Board level, I certainly, to some extent or other, found in favour of the complainant on quite a number of occasions. I could not give your Lordships an exact percentage at this remove, but my sense is that it was quite a significant percentage. The sense that someone in the chain of command is automatically going to be prejudiced and unable to give the complainant a fair hearing is entirely unfounded.

Nevertheless, this Bill provides for a process that is not simply judicial review but is essentially a rehearing on the facts. Given the number of complaints that go through in any given year, and that one of the defects that this Bill was intended to address was the delay in the hearing of such complaints because of their volume, it seems inevitable that the number of complaints on merit that are to be made in future to the ombudsman following the service process will be fairly large. This means that the ombudsman will not in every instance be able to hear that case personally. Some of her deputies, some of the people in her new office, will have to do that on her behalf. Although she will, of course, be called upon to sign off the outcome in every case, it will be people from the ombudsman’s office rather than the ombudsman herself who will hear some of these retrials, if I can put it that way. Therefore, it seems to me that if we are to agree to such an amendment, the very least we must insist on is that within the regulations that will give effect to this Bill in

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due course, the qualifications and training that will be necessary for anybody from the ombudsman’s office to sit in judgment on such de novo hearings are set out in no uncertain terms. The Minister alluded to this in his speech, and I welcome his words, but when he sums up I ask him to reassure your Lordships that he will come back to us with a form of words which, at the very least, will satisfy us that this unfortunate amendment will do as little harm as possible.

Lord Palmer of Childs Hill (LD): My Lords, first, I take the opportunity to thank the Minister, my noble friend Lady Jolly and other noble Lords for their input into this Bill. I think it is very important. I take issue with the noble and gallant Lord, Lord Stirrup, because, when my colleagues in the other place asked me if I had any problems during earlier stages of the passage of this Bill in this House, with the Bill having started in your Lordships’ House before moving to the other place, I said that one thing that I spoke about, on which they spoke in the other place, was that the ombudsman would be able to look only at the process rather than the detail. I believed at that time, during the earlier stages of the Bill in this House, that the ombudsman should, in certain circumstances, have the ability to do so—but, as my noble friend said, this is after it has been through all the chains of command, and it is not meant to usurp any of those points.

3.45 pm

I am very pleased with the first amendment which, as my noble friend said, is to do with the substance and merit of the complaint, not just the process. That gives some teeth to the new ombudsman, although I hope that my noble friend will address the point made by the noble and gallant Lord as to the number of cases that might build up. I am very pleased with the earlier amendments to the Bill—the later ones are purely of a technical nature.

A further point that I hope that the Minister will deal with is the number of cases in the pipeline. My belief is that there are about 1,000 cases waiting to be heard, which gives some credit and support to what the noble and gallant Lord said. Those cases will be heard under the old process, as I understand it, rather than under the new one; in other words, the ombudsman would be able to look only at the process, not at the substance. That is all very well, but when the complaint is not allowed under the old process, does the complainant have the ability to ask for it to come back under the new Act, as it will be, allowing them to look at the detail? In discussions with the Bill team, I was told that that was not the case and that once it had been allowed to go forward under the old process they would not be able to look at the substance. What would stop the complainant making a new, slightly different, complaint under the new process, thus taking advantage of the ombudsman and her staff to look into the detail? I hope that my noble friend will be able to deal with that when he replies.

The unanswered questions in the Bill are more to do with the cases in the pipeline and any transitional arrangements that need to be made rather than the very welcome amendments that have come from the other place and which I support.

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Lord Brown of Eaton-under-Heywood (CB): My Lords, I rise to speak with some diffidence, it being nearly 60 years since I completed my own national service—and I now speak as a superannuated judge. But this new power in the first amendment strikes me as a very remarkable and extreme power. It confers on the complainant an unlimited appeal right on the ombudsman and an unlimited power to hear an open appeal on the substance and merits of the complaint on a de novo basis. By definition, by this stage, the aggrieved complainant will have failed to establish and failed to persuade the various levels in the chain of command of the merits of his complaint on a number of occasions.

This new provision is strikingly different from the well known formula that appears in the TPIM Act 2011, which I take as an illustration, where review and appeal rights are thus constrained:

“the court must apply the principles applicable on an application for judicial review”.

I repeat: here there is an unlimited appeal. When promoting the Bill at Third Reading last October, the Government originally objected to any such provision on the basis that it undermined the military chain of command. It is true, as the Minister said today, that at the end of the process the ombudsman’s findings—and, if they are favourable to the complainant, recommended redress—go to the Defence Council. Frankly, the Defence Council will effectively be obliged to give effect to them, unless it chooses, as would be its right, to judicially review the ombudsman’s conclusions. If the Defence Council does not do that and does not give effect to them, it is highly likely that the complainant will judicially review the Defence Council.

For my part, I can do no more at this stage than offer such support as I can to the urging on the Government from the noble and gallant Lord, Lord Stirrup, to make sure that those who will exercise this radical new power in the ombudsman and entertain a service complaint not against the background of their own service experience, and despite its failure before the various levels of the military, will at the very least be trained so that they fully understand the exigencies of service life.

Lord Dannatt (CB): My Lords, I support the observations made by the noble and gallant Lord, Lord Stirrup. It is somewhat disappointing that there is this residual difficulty in the main thrust of the Bill, which one very much supports—it is perhaps a regret that we have to have an ombudsman at all, but that is where we are.

I simply make two points. The first is in support of what the noble and gallant Lord, Lord Stirrup, said: if this goes through, those who take part in this process must be properly trained so that they understand the circumstances and context in which the cases come. Secondly, I simply observe that the cause of a large number of the cases in the pipeline is excessive delay, often occasioned by complaints not being investigated at a low enough level in the chain of command process. In reading noble Lords’ comments in this short debate, I hope that every effort will continue to be made to streamline the process such that complaints can be

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dealt with speedily at a low level, so that we do not get the backlog of the size that we currently have. This will lead to much greater efficiency in the system, which will bring satisfaction and resolution through speedy agreement.

Baroness Manzoor (LD): I congratulate my noble friend on the amendments that have been proposed. As a former Legal Services Ombudsman in England and Wales, I think it is right that one looks at the substance and merits of the complaint. Without that, you deal only with issues of delay. To take the point that the noble Lord made, any decent, transparent, effective and efficient ombudsman can take into consideration different complaints and the time that they will take. If you allow a draft report to the defence side or to the service side, will the complainant also get the option to comment on the draft report? After all, the role of an ombudsman is to be independent, transparent and fair in every way.

Lord Thomas of Gresford (LD): My Lords, I speak as chairman of the Association of Military Court Advocates—I declare an interest; I am not expressing the view of that association.

I very much welcome the extension of the role of the ombudsman to considering the merits of a particular issue. I approach it from the point of view of the complainant and the complainant’s family, and the importance of the confidence of the public in the system of justice in the Armed Forces. From the point of view of recruitment and retention of service personnel, it is very necessary that those who undertake the burdens of service life should feel that they have a fair and just system of complaint. As I expressed when the Bill went through this House, the weakness of simply looking at process was that a decision on process would not be satisfactory to the complainant and their family. They would want an ombudsman to act like an ombudsman and to look at the merits of a particular case. I am grateful that the Government have moved in that direction.

Lord Craig of Radley (CB): My Lords, following the Government’s defeats on this Bill in the other place, their initial reaction was to consider how best to reverse them when the Commons amendments were considered in your Lordships’ House. I shared that reaction. Not to reverse the defeats would be a further withdrawal from the position adopted by the Government and reaffirmed in correspondence that I had with the Minister of State, Anna Soubry, following the Bill’s consideration in this House. She wrote to me:

“The bill as it currently stands”—

that was before the defeats in the Commons—

“gets the balance right between having a strong and independent Ombudsman and preserving the PRIMACY of the chain of command. It is that balance that I wish to maintain”.

We now have this run of government amendments reflecting their new position. No doubt this change of heart within government has been brought about in part by the imminence of Dissolution, in part by the weakness of their position in this House on this matter, and in part by the acceptance by the Chiefs of Staff,

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albeit on the basis of shotgun pressure upon them, that the Bill as amended is the least bad of the possibilities likely to be available. However, is not that latter acceptance itself due in part to the character of Nicola Williams, the nominee for the new post of ombudsman, and the position that she has adopted of recognising the ethos and value of the chain of command? Whether she accepts, as Anna Soubry stated, the primacy of preserving the chain of command remains to be judged.

However, in due time, will her replacement be as savvy? We are legislating about principles, not personalities. I am also concerned to learn that the ombudsman’s office may be 20-plus strong, not all of them lawyers, as will be the ombudsman, and so probably less qualified to undertake systemic examinations of complaints handlings, let alone of actual complaint topics.

Moreover, there seems to be no presumption of improvement in the working of the chain of command over time in dealing with complaints—in fact, the opposite. The default presumption is that complaints will continue to be subject to systemic and irreversible maladministration, as bad as or even worse than it is today. Once again, it is the unspoken but damaging inference that civil authority does not believe that the military chain of command is ever really competent or trustworthy, or is ever really worthy of being upheld or supported. Such an attitude would concern me very greatly.

The Human Rights Act 1998 flew in the face of and upturned long-standing Armed Forces legislation. It removed the majority of the Armed Forces’ legal processes from the chain of command and was damaging to the sense of trust. For example, the convening and review of courts martial are no longer exercised by the chain of command.

The Human Rights Act and other, more recent, statutes affecting the position of the chain of command have served to chip away at and undermine the essential and irreplaceable value of trust and support up and down the chain of command. Although each individual change may seem not to be too damaging or serious, it is the cumulative impact of a number of statutes on the values of the chain of command that worries me and that must be considered. Such values are vital to the use of armed forces in peace or war and to success in operations.

Will the Minister give an undertaking that, as and when there are significant improvements in dealing with complaints by the chain of command, the size and scope of the ombudsman’s team will be reviewed? Otherwise, and given those improvements, there will surely be a temptation to avoid idle hands and deploy the efforts of the 20-plus in systemic work which might, on balance, prove to be inimical to and derogatory of the standing and desired primacy of the chain of command. I look to the Minister for that assurance.

4 pm

Lord Rosser (Lab): My Lords, I thank the Minister for his typically calm and measured explanation of the amendments made to the Bill in the other place, which we support and which I understood—I hope not wrongly—had the support of senior serving military personnel. The amendments were among those called

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for by the Common Defence Select Committee in its report published last year, and were opposed by the Government in Committee in the Commons in the same way that proposed changes to the Bill, some along similar lines, were rejected by the Government during debates in this House.

The Government were clearly unhappy about their defeat in the Commons when one part of the coalition broke ranks and voted with the Opposition. Fortunately, good sense prevailed and the Government themselves put forward amendments on Report in the Commons to make sure that the changes adopted in Committee worked correctly from a drafting point of view.

The changes made in Committee extended the role of the ombudsman in three ways. The first, as the Minister said, was that the ombudsman should be allowed to look at the substance or merits of an individual complaint and not just at whether there had been maladministration in the way the complaint had been handled by the services. The second was that the ombudsman should not just look at any maladministration alleged by the complainant but should be able to consider any other maladministration that comes to light. The third change agreed at Commons Committee stage allows the ombudsman to investigate allegations of undue delay in the laid-down circumstances to which the Minister referred in his introductory comments.

Clearly, one effect of the Commons amendments is to increase, potentially, the workload of the ombudsman. The Minister in the Commons said that the effect of the amendments carried in Committee, against the Government’s wishes, would be to extend the role and remit of the ombudsman. In opposing in Committee the extension of the power of the ombudsman to look at any maladministration that came to light—not just maladministration alleged by a complainant—the Minister in the Commons said that it was undesirable and might add considerably to the time it took each case to be concluded.

Now that the Government have accepted the outcome of the votes in the Commons Committee, could the Minister say, in the light of the comments from his ministerial colleague in the Commons to which I have just referred, what further additional resources will be provided to the ombudsman in the light of the extension of the role and remit of the position? How much additional money will be provided over and above that originally required before the role and remit was extended by the Commons amendments, and how many additional staff do the Government now consider the ombudsman will require when the position of ombudsman finally comes into being? One would assume that, without additional resources, there would be a danger that effective delivery of the extended remit provided for by the Commons amendments we are now considering would be put in jeopardy.

I will raise a few specific points about some of the Commons amendments. Commons Amendments 1 and 2 refer to “a person”, “the complainant” and “the person who raised the matter”—that is, always in the singular. Does that mean that the ombudsman cannot consider a complaint about the same matter made by, say, half a dozen people? In that situation, will the ombudsman have to treat them as six individual separate complaints even though they relate to the same issue?

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Commons Amendment 21 refers to the transitional provisions,

“in connection with the coming into force of sections 1 to 3 and the Schedule”,

and gives the Secretary of State powers,

“to modify the operation of the old complaints provisions in relation to pre-commencement complaints”,

and,

“to apply any of the new complaints provisions … in relation to pre-commencement complaints”.

Can the Minister say a little bit more about what the Government envisage in respect of the transition provisions? The noble Lord, Lord Palmer of Childs Hill, also referred to this issue. Will an individual who has a complaint being considered by the Service Complaints Commissioner at the time that the new position of Service Complaints Ombudsman, with the enhanced remit, comes into being, be able, if they so wish, to have that complaint considered under the enhanced remit of looking at the complaint itself rather than just the issue of maladministration under which it would currently be considered? If not, will the individual be able to submit the complaint again to the ombudsman asking for the substance of the complaint to be considered?

The Minister referred to what the ombudsman could and could not investigate. Commons Amendment 1 states:

“The Service Complaints Ombudsman may … investigate … a service complaint”,

among other issues. Who defines how much information, what kind of information, what kind of inquiries and how extensive those inquiries need to be in order to “investigate” a service complaint in order to determine findings and make recommendations to the Defence Council? Is that a decision for the ombudsman alone? Is it for the ombudsman alone to decide whether, in order for it to be undertaken properly, the investigation needs also to investigate factors and events surrounding and prior to the issue giving rise to the complaint? Is it for the ombudsman alone to decide how wide-ranging or narrow the recommendations to the Defence Council should be? When is it expected that the new position of Service Complaints Ombudsman and the associated new system of enhanced remit will come into effect? In addition, why are the Commons amendments relating to Northern Ireland, to which the Minister referred, being brought forward at this late stage in the passage of the Bill?

We fully support the Bill and we welcome the Commons amendments. We believe that the new arrangements will lead to a better, more widely accepted and more effective means of addressing situations that inevitably will occasionally arise, where things have gone wrong or have been felt by Armed Forces personnel to have gone wrong, and have not been resolved to the satisfaction of those concerned. We wish the new Service Complaints Commissioner well in her current role and we also wish her well when the commissioner becomes an ombudsman, with an enhanced remit and enhanced powers. We also hope that the concerns that have been expressed this afternoon will, as we believe, prove unfounded.

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Lord Astor of Hever: My Lords, I thank noble and noble and gallant Lords for their general support for these amendments. I will do my best to answer their questions.

The noble and gallant Lord, Lord Stirrup, pointed out, quite rightly, that there would be a larger number of complaints. Obviously, people in the ombudsman’s office will have to take on a lot of that workload so it is really important that the staff she takes on have the right skills and qualifications for the job and are properly trained. We are well aware of that. This is something that we must work through carefully with the Service Complaints Commissioner as part of the ongoing work to prepare for the implementation of the new system.

I can say to the noble and gallant Lord and other noble Lords who are interested in this issue that my noble friend Lady Jolly and I met Nicola Williams last week and we were very impressed by her. I have arranged for her to meet any interested Peers at 11.30 am on Wednesday 25 March in Room 10A. My office will write to all those noble Lords who we think might be interested. However, I can tell noble and noble and gallant Lords that she is well aware that those people working in her office must be properly selected and must have the adequate training. We discussed that at great length with her. She has considerable experience as an ombudsman and I am sure that she will carry on the good work of the previous commissioner, Dr Susan Atkins. She agrees that it is important that she and those working in her office have a thorough understanding of how the services operate. She assured me that she will be making frequent visits to all three services and will encourage those who work in her office to do the same thing so that they understand the ethos of the services. She understood that that was a really important point. I can give the noble and gallant Lord the assurance that we will come back to the House before the regulations are considered.

I thank my noble friend Lord Palmer for his support. He asked how many cases are in the pipeline: I understand that it is about 1,000. My noble friend asked what would stop a complainant making a slightly different complaint. Recent complaints on the same matter will, as now, not be permitted.

In a speech that I very much look forward to reading in Hansard, the noble and learned Lord, Lord Brown, was concernedthat this would undermine the chain of command. We have been clear from the start that the authority of the chain of command should not be compromised by the creation of an ombudsman. Maintaining the integrity of the chain of command is essential for our ability to deploy battle-winning forces. We have achieved the right balance with these reforms and the Chief of the Defence Staff has confirmed that the amendments made in the Commons do not substantially affect the primacy of the chain of command because the Service Complaints Ombudsman can investigate only the substance of a complaint after the chain of command has done so or where the chain of command decides not to investigate and the complainant still wishes to pursue the matter. The noble and learned Lord also mentioned the selection and training of those working in the ombudsman’s office. This is an issue that we take very seriously.

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I thank the noble Lord, Lord Dannatt, for his support and also my noble friend Lady Manzoor, who I understand was Legal Services Ombudsman for England and Wales and therefore knows a lot about this issue. I also thank my noble friend Lord Thomas of Gresford.

The noble and gallant Lord, Lord Craig, asked whether we will review the size of the team if the services get their act together. We will obviously keep the numbers under review and we hope that, if things go well, the number of people working in the office will be reduced. The number must be proportionate, but it is important to point out that the ombudsman’s office can investigate only matters arising from this legislation; they cannot go off and consider other things.

I thank the noble Lord, Lord Rosser, for the Opposition’s support for the Bill. The noble Lord asked me several questions. He pointed out that the commissioner’s role will be expanded and asked what additional resources the office would get. We envisage the extra cost to be around £500,000 and anticipate that her staff numbers will rise from nine up to 20.

4.15 pm

The noble Lord asked what would happen if six different people were to make a complaint. This would be up to the commissioner to decide. The noble Lord also asked the same question as my noble friend Lord Palmer: what happens if a complaint is already in the pipeline? The complainant will not be able to make a complaint about the same issue twice under the new system.

The noble Lord asked what “investigate” means in Amendment 1 and who would decide. It would be for the commissioner to determine, but the investigation could relate only to a service complaint or an allegation of maladministration.

The noble Lord also asked when the new system would come into effect. Before the new system can be introduced, the services and the commissioner’s office need to convert their current structure and processes to the new ways of working. We also need to put the necessary regulations in place and issue guidance to personnel on how the new process will work. Much initial work has already been done, but it is important that we get it right. We therefore expect the new system to be introduced by the end of this year. Nicola Williams will be appointed as the Services Complaints Ombudsman by Her Majesty once the Bill is brought into force.

The noble Lord asked why the Northern Ireland amendment is so late. It is because we did not have the approval of the Northern Ireland Office to do it earlier.

The noble Lord, Lord Dannatt, asked me about delays to complaints. I can provide him with an assurance that we will continue to bear down on delays in handling complaints. All three services are working hard to clear the backlog of complaints and to make sure they are dealt with as quickly as possible.

My noble friend Lady Manzoor asked whether the complainant would have the opportunity to comment on draft reports. That will be a matter for the ombudsman. We anticipate that happening at least in cases where the chain of command is asked to comment.

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Lord Rosser: Perhaps I may ask the Minister to clarify the response that he gave to me on additional finances and staffing. Is the additional £500,000 as a result of the extension of the remit that is covered in Commons amendments, or was it the amount that was going to be needed anyway in additional money to cover the changes in the Bill as it was originally worded? Was the increase in staffing from nine to 20 also to cover the changes in the Bill as it was originally worded? Surely if the remit has now been extended in the way that it has under the Commons amendment, does that not require additional resources and additional staffing? I was not entirely clear from the answer that the Minister gave to me whether that was what the £500,000 and the increase in staff from nine to 20 covered.

Lord Astor of Hever: My Lords, I stand to be corrected, but I think that the extra cost of £500,000 would have arisen anyway and we would have needed to increase the number of staff from nine to 20 anyway under the original Bill.

Lord Rosser: Does that mean that, if that was what was deemed necessary under the original Bill, no further money is coming forward to take account of the enhanced remit—and it is an enhanced remit—under the Commons amendment and there is no provision for any additional staff?

Lord Astor of Hever: My Lords, I need to check on this, but the message that I received was that everything would come out of the £500,000 and that the staffing level would be adequate for the additional responsibilities.

Motion agreed.

Standardised Packaging of Tobacco Products Regulations 2015

Motion to Approve

4.19 pm

Moved by Earl Howe

That the draft regulations laid before the House on 23 February be approved.

Relevant documents: 24th Report from the Joint Committee on Statutory Instruments, 29th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, these regulations propose to introduce standardised packaging for tobacco products, which I believe to be an important public health measure. I pay tribute to all the noble Lords who campaigned for the introduction of these regulations—in particular the noble Baroness, Lady Finlay, the noble Lord, Lord Faulkner, and my noble friends Lady Tyler and Lord McColl, who all pressed for it during the passage of the Children and Families Bill in 2014.

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Tobacco use remains one of our most significant public health challenges. Smoking places an enormous strain on the NHS, and is a significant driver of health inequalities. More people die from lung cancer in the UK than any other form of cancer and almost nine in 10 of all lung cancers are caused by smoking. For this reason, the Government have prioritised action to reduce smoking rates, which is why we published the tobacco control plan for England in early 2011.

We have looked carefully at the evidence and it shows that introducing standardised packaging is highly likely to bring important public health benefits, primarily by reducing the appeal and attractiveness of tobacco packs, especially to children and young people, and improving the salience of health warnings on packets. Packaging and branding are promotional tools used to attract consumers. Since the ban on advertising tobacco products in the UK, packaging has become a key avenue for the promotion of tobacco, and it is notable that one tobacco company referred to tobacco packaging as its “mobile billboard”. Opponents of standardised packaging claim that there is no evidence that it will bring about a reduction in smoking prevalence or the resulting health benefits. In fact, Sir Cyril Chantler, who reviewed the evidence, concludes that,

“it points in a single direction”,

and that there is no,

“convincing evidence pointing the other way”.

Let me first outline what the regulations propose, before discussing the wider issues. The Children and Families Act 2014 gives the Secretary of State powers to regulate the retail packaging of tobacco products. In November 2013, health Ministers commissioned Sir Cyril Chantler, the eminent paediatrician and medical researcher, to undertake an independent review into whether standardised packaging would be likely to have an effect on public health, in particular in relation to children. Sir Cyril’s thorough and well considered report, published in April 2014, concluded that standardised packaging would be highly likely to have a positive impact on public health.

On the publication of the review, my honourable friend Jane Ellison, Public Health Minister, announced that the Government were minded to proceed with standardised packaging, subject to a final consultation. There has been extensive engagement and consultation with the public and stakeholders on this proposal, including two public consultations—one in 2012 and a further consultation in 2014. The Department of Health has carefully considered all responses to both these public consultations and the wider points that they raise.

These regulations propose to standardise the retail packaging of all cigarettes and hand-rolling tobacco. Cigars and pipe tobacco are not currently covered by the regulations. The regulations specify mandatory colours for those parts of the packaging that are not taken up by health warnings or duty marks. The outside of packs will have to be a uniform dull brown and the insides plain white. The brand name of the product may appear but must be in grey with a fixed size and typeface. This means, in effect, that no branding will be allowed except for the brand name. The regulations

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also specify that individual cigarettes must be plain white with a cork effect or white tip, but will allow the brand name to be printed in small text. An illustration of what a standardised cigarette packet could look like has been published, which noble Lords may wish to see.

The draft regulations will also implement certain packaging-related requirements from the European tobacco products directive that was agreed last year, such as the shape, material and minimum content of packs. The remainder of the tobacco products directive will then be implemented through separate regulations, which the Department of Health will be consulting on shortly. Standardised packaging would be a UK-wide measure. Public health is a devolved matter but Scotland, Wales and Northern Ireland have provided the necessary consent for the regulations to extend to their Administrations.

Looking wider than the UK, there is international momentum towards introducing standardised packaging. Although the only country to have implemented standardised packaging is Australia, many other countries are taking positive steps towards legislating, including Ireland, France, Norway, New Zealand and Turkey. The Australian Government were clear when introducing the measure that they expected the benefits of standardised packaging to be “generational” and come in the longer term. The Cancer Council Victoria has recently reviewed the available Australian evidence and data so far, and concluded:

“Prevalence of smoking in Australia fell dramatically between 2010 and 2013”,

and that,

“plain packaging is likely to continue to contribute along with Australia’s other tobacco control policies to further reducing the prevalence of smoking in Australia”.

There have been some suggestions that standardised packaging may lead to growth in the illicit tobacco market. I want to reassure noble Lords that this issue has been considered carefully across government. HMRC leads on reducing the size of the illicit tobacco market and has undertaken a detailed assessment of the potential impact of standardised packaging on the illicit trade of tobacco, which was published and put into the Library in February. The HMRC report concluded:

“We have seen no evidence to suggest the introduction of standardised packaging will have a significant impact on the overall size of the illicit market”.

Some also have concerns that this will be the start of a slippery slope towards standardised packaging for other products, such as unhealthy foods or alcohol. I want to be absolutely clear that the Government have no intention to extend standardised packaging to any product other than tobacco. Tobacco has been treated uniquely in regulatory terms before, as it is a uniquely harmful consumer good. All smoking is addictive and harmful to health, and half of all regular smokers are eventually killed by smoking-related illness. This is not true for other consumer products.

I understand that some noble Lords will, rightly, have concerns with regard to the potential legal implications of introducing standardised packaging. Let me be clear that thorough consideration has been given to such concerns. We know that the tobacco

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industry is likely to challenge this measure should the regulations be made, as it has with other tobacco control legislation. Threats of legal action have already been made by tobacco companies. However, we believe that these regulations are a proportionate and justified response to a major public health challenge, and will be defensible in the courts. We cannot let the vested interests of the tobacco industry control the public health agenda, and we will defend public health legislation from legal action.

Smoking remains a critical public health concern. Smoking is an addiction, largely taken up in childhood and adolescence. The choice to smoke is not like other choices and is often not made as an adult decision. Research included in the Chantler review shows that around 600 children between the ages of 11 and 15 start smoking every day in the UK. It is crucial that we do all we can to reduce that number. We also need to do all that we can to assist those already addicted to quit; and I believe that standardised packaging will contribute to doing so. The introduction of standardised packaging is likely to deliver important public health benefits and, as part of a comprehensive tobacco control strategy, will bring us a step closer to a smoke-free generation. I beg to move.

4.30 pm

As an amendment to the above motion, to leave out from “that” to the end and insert “this House declines to approve the draft Order laid before the House on 23 February as it does not reflect the impact evidence from the Australian introduction of standardised packaging; makes no allowance for the continuance of the security system “Codentify” currently in operation with HM Revenue and Customs to differentiate between legal and illegal packs; and because the anticipated start date in 2016 does not give sufficient time for the supply chain and retailers to make adjustments, in contrast to the three-year period allowed for the display ban.”

Lord Naseby (Con): My Lords, the House knows that I have no interests to declare in relation to the tobacco world. I do not smoke, I never have smoked and I do not own any tobacco shares. What I do declare is that for 30 years of my life, before coming to your Lordships’ House or the other place, I worked in marketing, sales, market research and consumer attitude research. I bring those skills to my analysis of the latest evidence before us on standardised packaging.

I also bring the latest evidence that we have on the incidence of smoking today, which was published only a few days ago. I applaud as much as anybody else, and as the House will applaud, the fact that the percentage of adults who smoke in this country has come down to 18.7%. That is the smallest percentage in any developed country. The important point, according to research by a company called Simply E Liquid, is that the key determinants are the new anti-smoking laws, particularly the ban in pubs and restaurants, and the popularity of vaping.

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It is against that background that we have to assess whether it is necessary to go as far as my noble friend on the Front Bench in relation to standardised packaging. He is right to say that Sir Cyril Chantler is an eminent paediatrician. He is someone I have known for a great many years; I studied at the same college as him. However, I have to say that eminent paediatrician he may be, but eminent marketer or market research man he is not. That is a key point in relation to the evidence from Australia.

I want to look at four aspects that affect standardised packaging: Australia, HMRC, Codentify, which my noble friend did not mention, and the impact on the packaging industry, which, again, my noble friend did not say a word about. Let us turn first to Australia, which is one of the key dimensions. As my noble friend rightly says, it is the only country to have introduced standardised packaging. It was claimed that the rate of new smoking would decline. In fact, today it is at a seven-year high in Australia. That is evidence from the Australian Institute of Health and Welfare. It was claimed in evidence from the Australian National Accounts that standardised packaging has not accelerated the decrease in tobacco use. It has not accelerated the pre-existing downward trend of smoking rates; that comes from the work of Kaul and Wolf. Health warnings have not become more effective following the implementation of standardised packaging. That comes from the Department of Health and Aged Care in Australia. According to recent work by KPMG, since the introduction of standardised packaging, illegal tobacco consumption in Australia has now grown to its highest level in seven years. By mid-2014, illicit tobacco consumption stood at an unprecedented 14.7% of the market as a whole, some 25% higher than it was in 2012. Those are the facts against which we have to make a decision, which the country will have to accept or not. But those facts were not exactly what my noble friend on the Front Bench talked about. Most of them were not referred to but they are vital in analysing whether standardised packaging works.

I now turn to HMRC. My noble friend put great emphasis on its work but the survey or evidence he cited was from prior to HMRC’s publication on tax gap figures in 2014. So there is further evidence now that my noble friend has, for one reason or another, chosen not to put before the House this evening. The illicit trade in tobacco products costs this country £2.1 billion. It is my view that that money would be better spent on the health service. If we look at some of the components of that, HMRC has now stated that standardised packaging will provide a suitable environment in which the illicit market in white cigarettes will continue to grow. It argues that it is possible that the introduction of standardised packaging will lead to increased attempts to infiltrate counterfeit products into the lower end of the retail supply chain. Finally, HMRC has accepted that plain packaging could increase the likelihood of small local retailers getting into trouble and being prosecuted.

I turn briefly to the Codentify system, something that noble Lords could be forgiven for not knowing much about and which was not even mentioned by the Minister. The draft regulations before us do not provide for the inclusion of Codentify markings on tobacco

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packs. One must ask: why are they not included? Codentify is a product security and authentication tool that provides a unique, secure identifier for each individual packet of cigarettes and hand-rolling tobacco. It allows manufacturers and, in some ways more importantly, Customs officials to authenticate products and trace the origins of packs all the way from the start of the manufacturing process right through to when they are sold. It plays a vital role in the fight against the illegal tobacco trade because it allows law enforcement officers to check. Without Codentify, it will be impossible for manufacturers to use that existing security and authentication technology between May 2016, when, I understand, the new system is to come in, and May 2019. Why May 2019? Because that is when the second tobacco product directive will be introduced and there will be a new tracking mechanism.

It is all very well for the Minister for Public Health in another place to state that this is being looked at. It is not good enough for your Lordships just to look at things when they are so vital. My noble friend talks about public health. There is nothing worse for public health than having illicit counterfeit cigarettes floating around the market. I hope that when he comes to reply, he will address that issue. Without a means of tracking, I do not see how we will be able to restrict illicit goods entering the market.

The third issue is packaging. As one who has worked in it for many years, I can say that the print industry is very complex; it is not simple. The Minister in another place stated:

“The print industry has known for some time that standardised packaging has been under discussion—the issue has not been recently sprung on it, so it has had a chance to consider how to respond”.

The Honourable Member for Bradford South, Mr Gerry Sutcliffe, disputed the Minister’s claim. He is a former print worker. He told the committee that such a claim misunderstood the nature of the packaging business:

“It takes time in the printing industry, which is very competitive, to offer alternative proposals, even if those are for standardised packaging. It will take at least 18 months to two years for the designs to be made and the buyers and marketers to go out to try to change people’s opinions”.—[Official Report, Commons, Twelfth Delegated Legislation Committee, 9/3/15; col. 24.]

He said that in Bradford alone there are 400 jobs in the packaging industry that may be put at risk and that, with other tobacco control measures that have been introduced, such as a display ban, three years were allowed to make adjustments, which is a reasonable length of time. In this case, it is only 18 months. Why has the time been reduced? It is far too short a timescale. The Consumer Packaging Manufacturers Alliance, which represents a number of packaging companies in the tobacco supply chain, has called for a delay in implementation of the plain packaging regulations if they go through. That will give people time to adjust and understand what the changes are. A great many people do not really understand how complicated and unique the packaging for cigarette products is. It involves gravure printing, rotary embossing and hot-foil stamping. Many other markets do not use those elements and certainly do not involve the huge volume involved.

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I appeal to your Lordships to think very hard about the necessity to go as far as is suggested in the Government’s Motion. The introduction of plain packaging for tobacco products will not produce, in my judgment, the results claimed. I base that on the evidence from Australia, which has been authenticated by various government bodies there. I have given the quotations and where they come from.

Frankly, plain packs are little more than a smuggler’s charter. They offer criminals a wonderful template that will allow them to copy tobacco packaging easily and thereby infiltrate the supply chain more effectively. The extraordinary exclusion of the Codentify system from standardised packs will further drive the illicit trade and illegitimate supply and will make it far harder to detect and seize. Without a reasonable revision for adjustment for the packaging companies, hundreds, perhaps thousands, of jobs will be put at risk. Is this really part of the enterprise economy or is it just another example of the UK wishing to be a world leader?

The Motion before us is not needed. The evidence is not there and, on top of that, although my noble friend says that it will never affect another industry, I frankly do not believe him. This will adversely affect trademarks and intellectual property rights and it will affect many other industries as we move forward. It is not a sound Motion and it should be rejected. I beg to move.

Lord Faulkner of Worcester (Lab): My Lords, unlike the noble Lord, Lord Naseby, I am pleased to welcome unreservedly the regulations moved by the Minister and to congratulate him not only on the way he introduced the debate but on the part that he played in persuading his ministerial colleagues that the introduction of standard packaging for tobacco products will make a significant contribution towards public health. I thank him for the kind words that he spoke about me and the other four members of the group, from all sides of the House, who saw the opportunity to add amendments to the Children and Families Bill to introduce a range of tobacco control measures.

The Minister has described in great detail the steps that the Government have taken since the amendments were added to that Bill. The most important of those was the study by Sir Cyril Chantler, who concluded that standardised packaging,

“is very likely to lead to a modest but important reduction over time on the uptake and prevalence of smoking and thus have a positive impact on public health”.

All the objective evidence—I stress the word “objective” for reasons I will explain in a moment—supports the case for standardised packs. It would, in the words of the Canadian Cancer Society:

“(1) eliminate promotional aspects of packaging; (2) curb deceptive messages conveyed through packaging; (3) enhance the effectiveness of health warnings; (4) reduce tobacco use”.

It is precisely because the adoption of these measures will work that the tobacco industry has been spending such enormous sums of money in its efforts to defeat them. The tactics it has followed are consistent with everything it has done to oppose tobacco control measures since the 1950s. First, it attempted to discredit the results of Sir Richard Doll’s research that proved the link between lung cancer and smoking. Then for

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years the industry denied the addictive properties of nicotine. It lobbied extensively and expensively against every piece of legislation aimed at reducing smoking prevalence, from curbing sponsorship and advertising, protecting people from the effects of second-hand smoke, limiting displays of tobacco in retail outlets, and now these regulations on standard packaging.

4.45 pm

The statistics on prevalence, which the noble Lord, Lord Naseby, cited, are an indication that these measures are working and that we have made great progress. It is a great pity that when those measures were before the House they did not have the universal support of all our Members, and I do not remember the noble Lord, Lord Naseby, speaking up in favour of any of them. The tobacco industry funds front organisations which lobby for it, such as FOREST, which makes claims based on so-called freedom of choice. British American Tobacco funded the National Federation of Retail Newsagents’ campaign against the display ban, although to begin with it denied that. It put money into think tanks, such as the Institute of Economic Affairs, which obligingly produces reports following the tobacco industry’s line. What else does the tobacco industry do? It spends a fortune offering hospitality to parliamentarians. The Independent last Wednesday reported under the headline “Plain cigarette packaging”:

“One in four MPs who opposed measures have declared links to tobacco industry”.

The vast majority of gifts declared by the MPs were from JTI and came in the form of tickets to the Chelsea Flower show, worth up to £1,600.

A further effort to influence this debate here and in the other place was made by Imperial Tobacco on 27 February, when it purchased what in the advertising industry is called a “wrap” on the front and back covers of The House, with the monstrous slogan:

“Plain Packaging: Bad for Business Good for Criminals”.

I know a number of noble Lords have written to the editor and to the publisher protesting against this disgraceful use of what Dods still calls Parliament’s Magazine, though it is very different from the journal I co-founded back in the late 1970s, which was edited with such great distinction by the noble Lord, Lord Cormack, who I am pleased to see in his place.

However, it is the sponsorship of spurious research which should concern us most, particularly as it relates to the effect of standard packs in Australia. The claims the industry makes on such matters as smoking rates, the effect on retailers and on the packaging industry, smuggling and counterfeiting—all based on research which it funded—have been shown to be false in almost every respect, mainly because sample sizes were far too small to be of any value and because the questions asked were loaded in a way to produce the response the industry wanted. The Government—and the noble Earl the Minister—have repeatedly made it clear that the incidence of counterfeiting and smuggling has continued to decline in the UK and standard packaging certainly will not make it worse. The experience in Australia supports that.

In his amendment, and in his speech just now, the noble Lord, Lord Naseby, referred to the security system “Codentify”. This is a tobacco industry controlled

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system which the World Health Organization has concluded does not meet the requirements of the WHO Framework Convention on Tobacco Control anti-smuggling treaty that tracking and tracing systems have to be controlled by Governments, not by the tobacco industry. There is already a marking system on packs in the UK which enables enforcement officers to determine whether cigarettes are counterfeit.

The tobacco industry opposes standard packaging for one reason only, and that is because it works. It reduces the attractiveness of smoking, discourages children and young people from taking up the habit and, over time, reduces national rates of smoking prevalence. Although Australia got there first on standard packaging—I pay a warm tribute to the then Minister of Health Nicola Roxon, who a number of us in this House had the pleasure of meeting when she visited Parliament—the United Kingdom has for the last 10 years been at the forefront of tobacco control measures, an achievement that will be celebrated next Wednesday when the Department of Health’s tobacco programme will receive the Luther Terry award for,

“Exemplary Leadership by a Government Ministry”.

The citation states:

“This prestigious triennial award by the American Cancer Society honours the UK as a world leader in tobacco control, alongside previous award winners such as Australia and the Republic of Ireland. It is the exceptional commitment by successive UK governments to reducing the harm caused by tobacco, supported by an outstanding team of civil servants and enabled by Parliament and the public health community which has led to this award”.

So all of your Lordships who have been on this mission with us deserve a big pat on the back. I support the regulations and oppose the amendment.

Baroness Tyler of Enfield (LD): My Lords, I congratulate the Minister and the Department of Health on producing a high-quality and thorough set of regulations after a thorough consultation exercise. I join the noble Lord, Lord Faulkner, in adding my congratulations to the department for receiving the Luther Terry Award for Exemplary Leadership by a Government Ministry. It is measures such as these that make Britain a world leader in public health.

In our debates on this subject, I have spoken extensively about the need for these regulations and the evidence that they would make a real difference. The bare facts are these: only one in 10 smokers in the UK started after the age of 19, and two in five started before 16. We have already heard from the Minister the figures on how many people die each year from smoking-related diseases, and the number of children between the ages of 11 and 15 who take up the habit and risk their health by spending hundreds, if not thousands, of pounds a year on a toxic product.

The unconscious trigger of attractive packaging is an extremely successful marketing tool that encourages children and young people to glamorise and take up smoking. Bright colours, sleek designs and slim cigarettes—to name but a few—all make people falsely believe that such cigarettes are less harmful. I remember as an impressionable teenager the impact that some of those cigarette pack designs had on me. It made a big difference and I indeed wanted to start smoking, and did so; and I think I was influenced by some of that marketing material.

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I should like briefly to turn to some of the objections that have already been advanced by opponents of these regulations in this debate. First, the tobacco industry has claimed that standardised packaging would increase the volume of illicit tobacco on the market. This is flatly contradicted by a recent HMRC assessment and an independent review by Sir Cyril Chantler, both of which indicated that there is no evidence for such a claim. Indeed, there is no evidence that standardised packs would be easier to counterfeit. Standardised packs are not “plain packaging”—that is a misnomer. They would carry the same security systems as current packs. There is no evidence that that there has been an increase in the illicit tobacco trade in Australia since the implementation of the policy. The total weight of illicit tobacco detected by Australian customs has remained roughly static since 2007-08. Indeed, a recent study shows that there was no change in the availability of illicit tobacco in Australian shops since the introduction of standardised packaging. At any rate, it seems logical that the way in which to reduce illicit trade is through more effective regulations, which these regulations clearly are.

Secondly, the tobacco industry has claimed that standardised packaging would damage small businesses because it would make it more time-consuming for shop assistants to retrieve packs, and that this delay would make tobacco less profitable for small businesses as opposed to large supermarkets. Tobacco companies based these predictions on interviews with just a handful of retailers. In contrast, peer-reviewed studies of small shops in Australia before and after the standardised-packaging policy demonstrate that there was no significant increase in serving time.

It is true that standardised packaging is likely to result in reduced tobacco sales. In fact, it is the very purpose of these measures; it is the Government’s hope and certainly mine. Every pound that consumers no longer spend on tobacco they will surely spend on other goods and it is very likely that small businesses will pick up some of this trade. After all, shops, including small shops, have adjusted to the continuous decline in the prevalence of smoking from half of the population in 1960 to roughly one-fifth now and there is no reason to suppose they will not be able to adapt further. On this point, can the Minister confirm that in the interests of reducing costs to retailers the measures will be implemented at the same time as the packaging and labelling measures in the EU tobacco products directive in May 2016? Can he also confirm that retailers will be given a full year after the implementation date to sell through existing stores of non-standardised packs? It comparison, retailers in Australia were given just eight weeks to do that.

The tobacco industry has made what I think is a very convoluted argument that standardised packaging will lower prices and thus increase tobacco consumption. In the process of conducting his review last year, Sir Cyril Chantler was told by tobacco companies that sales had increased slightly, despite the fact that the industry had told its investors the opposite. Analysis by the independent market research company Euromonitor concurred that there had been a decline in sales in Australia between 2012 and 2013.

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As we have already heard, it seems to be contested—although frankly I do not know why—what the impact in Australia has been since the introduction of standardised packaging. I have looked very carefully at what the helpful leaflet Standardised Packaging for Tobacco Products,produced by very reputable organisations such as the British Heart Foundation, King’s College London, the University of Waterloo, Cancer Council Victoria and the UK Centre for Tobacco and Alcohol Studies, has said about the impact so far. It shows that there is a reduction in young people taking up smoking and an increase in the proportion of existing smokers who are trying to quit. Indeed, the National Drug Strategy Household Survey in Australia showed that the proportion of 18 to 24 year-olds who had never smoked increased from 72% in 2010 to 77% in 2013.

A 2014 study from Australia that reported in the British Medical Journalshows that the prevalence of smoking among adults fell by 15% in the second half of 2013 alone. Finally, following evidence that smokers find cigarettes in standardised packs less appealing—which of course is the very purpose of it—there is new evidence that calls to Quitline, a free smoking cessation service, have increased by 78% since the introduction of standardised packaging.

It is a credit to the very thorough and painstaking way that this measure has been developed by the Government that these are the best criticisms opponents can level. Above all, it is time to listen to the 72% of Britons and the majority of all political parties and support standardised packaging.

Viscount Falkland (CB): My Lords, I am a non-smoker but having been in your Lordships’ House for some years one thing that concerns me about this measure is the unintended consequences. One is always worried in this House about them and so we should be. It seems very odd that so few people have expressed the view that tobacco is a legal product. How can you interfere with the marketing and the sales of a legal product? I think the product is undesirable and the arguments of the scientific community about its danger to health are indisputable. However, we have to think rather carefully about what may follow. If you get away with this without too much protest there are all kinds of bien pensants and vigorous politically correct people who will seek to do various things. For example, it could happen quite easily that in some local authority someone of limited life experience might suggest that, with obesity and the compulsion that people have to eat too much, it might be a good idea to prevent restaurants allowing people to eat on the pavement under an awning because that attracts people to sample the restaurant’s delicious wares. Noble Lords may think that this is a trivial, Clarksonesque point, but it bears thinking about.

I am grateful for the efforts that have been made to curb the ill effects of smoking. I am a frequent cinema goer—I have been a film buff since I was a boy. I do not think I would be talking to noble Lords today if they had not banned smoking in cinemas. I may have a husky voice, but I would probably be dead by now, I should think. These are things that have to be considered.

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In the speeches so far, there has been scant respect for one thing that is very important to this country, and I hope it will be borne out in the speeches during the election campaign. This is a trading country, and trading countries require freedom in order to encourage the production of goods, to sell them and to market them correctly. If you do not like smoking, then ban it, for heaven’s sake. Do not try to pretend that this is going to deal with it—it is not going to deal with it. We have already seen the unintended consequences on the streets. In some of our best streets in the West End of London you see cigarette ends everywhere because people are smoking at lunchtime in doorways, smoking in the open air and smoking in groups; they are also smoking in their homes because it is unsatisfactory outside so that the smoke filters through badly constructed walls.

There are all kinds of aspects of this whole problem which have not been properly addressed, and I do not think that packaging is the answer. Should the noble Lord who introduced this amendment guide us towards the Lobbies, I shall follow him.

Lord Warner (Lab): My Lords, I had not intended to speak in this debate, but I want to congratulate the Minister and the last speaker has provoked me to take us back to the time when I, as a Minister, was taking through this House the legislation banning smoking in public places and in the workplace. Some of the arguments which we heard from the last speaker and from the noble Lord, Lord Naseby, took me back to those times, the good old days when Parliament was challenged because it had the temerity to introduce legislation in this area to protect people’s health and, in particular, to try to protect children’s health. We heard the same old rubbish, if I may put it that way, on second-hand smoke, which was later proved scientifically to be as dangerous as direct experience of smoke. We can sit through these debates hour after hour, but the science does not change. The science is the same as it always was. It just gets better for those who want to control the consumption of tobacco. The Government are to be congratulated on taking this legislation forward, and I hope the House will support it overwhelmingly.

Before I sit down, I shall ask the noble Lord, Lord Naseby, whether he enjoyed the Eagles concert last July which he experienced as a guest of JTI Gallaher.

Lord Naseby: Yes. I declared the interest and went to one concert. I do not imagine the noble Lord has ever been to anything, anywhere, paid for by anybody else. I just hope he has always declared it.

Lord Warner: I have not. I pay for my own concert tickets.