Telephone message received: “Please call Geoff in Lord Strathclyde’s office as soon as possible. He would like to have a meeting with you before the Christmas break if at all possible.”

I have to admit to being intrigued.  This would be the first time that Thomas Galloway Dunlop du Roy de Blicquy Galbraith, 2nd Baron Strathclyde, Leader of the House of Lords, has ever asked to see me. And before Christmas …..??!!

I dial and speak to Geoff:

“Hello, this is Lord Toby Harris.  I had a message to ring.”

“Oh yes. Thank you Lord Harris.  Tom Strathclyde was keen to have a meeting with you and Lord Kirkham  in the next week or two before the Recess.”

This was even more intriguing: I have never even spoken to Lord Kirkham, the South Yorkshire billionaire, founder of the DFS Furniture Company and Chairman of the Conservative Party Treasurers.

“Are you sure you’ve got the right Lord Harris?  What’s the meeting about?”

“Oh, fundraising, I think.”

“What sort of fund-raising?”

“I guess, it is for the elections next May.”

“I think you have got the wrong Lord Harris.”

“Oh, err, are you sure?”

“Yes, I think you want Lord Harris of Peckham.”

Of course, Lord Harris of Peckham is not quite in the same league as Lord Kirkham: he is only worth £285 million and he only does carpets.

Still, it is good to hear that the Leader of the House of Lords and the Chancellor of the Duchy of Lancaster is doing his bit for the Conservative Party coffers from his Parliamentary office with the support of his civil servants ….

I have only just caught up with a speech made in the Moses Room (an alternative Lords Chamber for hosting smaller debates) last Thursday by Lord John Eatwell which sets out cogently what is wrong with the Government’s response to the economic situation and sets out a clear alternative vision.

He was responding to a motion from Lord Lamont of Lerwick on ”the economic situation of the United Kingdom, including the impact of the eurozone crisis on the United Kingdom and other non-eurozone members.”

He said:

“My Lords, like other noble Lords I am grateful to the noble Lord, Lord Lamont, for securing this debate, even though the topic has widened from that he initially intended. I also wish to congratulate the noble Lord, Lord Wolfson of Aspley Guise, on his witty maiden speech.

Despite appearances to the contrary, the debate has not been about economics. Instead, as the noble Lord, Lord Ashdown, pointed out, it has been about politics-the political choices made by Governments in the eurozone, most notably the Government of Germany, and the choices made by Her Majesty’s Government. Indeed, the common theme that has run through much of the debate has been the severe austerity that Germany demands of the rest of the eurozone and the similar economic misery that the coalition is inflicting on Britain. It is now clear that the eurozone embodies fundamental design flaws. These have been addressed by the noble Lords, Lord Lamont, Lord Alderdice and Lord Higgins, my noble friend Lord Myners and the noble Baroness, Lady Wheatcroft. A successful monetary union requires a powerful and active central
bank, an all-Union bond market managed by a central treasury function, some means of balancing the economic benefit between the most successful and least successful parts of the Union, easy migration and, it is hoped, some sort of all-Union employment policy. This is a reasonable description of the United States of America, with the employment policy being provided by the military.

My noble friend Lord Desai was right to point to problems in the bond market as far as short-term financial stability is concerned, for it is the existence of an all-Union bond market that is crucial. Given that the eurozone economy is the largest in the world, any major bond fund must have significant exposure to the euro, just as it must have exposure to the US dollar and, to a lesser extent, to sterling. This can be obtained by holding any eurozone sovereign bond. Moreover, the exposure can be maintained by switching between different sovereign bonds with no foreign exchange risk whatever. Hence the huge flows between eurozone sovereigns that have produced wild gyrations in interest rates over the past few months as uncertainty and rumour have fuelled massive capital flight. The point was made by the noble Lords, Lord Wolfson and Lord Flight: it is like walking along a rocky path carrying a large amount of water in a shallow pan.

Compare this with the situation in the US. The state of California, which represents 13 per cent of the US economy, is bankrupt. This has no impact on the US Treasury bond market at all. Similar problems in Greece, which represents 2 per cent of the eurozone economy, have produced a wave of destructive contagion. The creation of a eurobond market equivalent to the market of the US Treasury-no bailout, no austerity, no ECB as lender of last resort-will bring durable financial stability. Of course, creating a eurobond market is a formidable political problem, but it is not impossible to imagine that this could be solved. It is not necessary to have a United States of Europe, as the noble Lord, Lord Lawson, claims. It is conceivable to have a powerful central bank, a central bond market funding a monetary union with a centre that is still politically weak relative to powerful member states. Indeed, that is a description of the most stable monetary union in the world, the Confederation of Switzerland. Clear identification of the design flaws of the eurozone that have resulted in such appalling financial instability should finally dispose of the illiterate comparisons often made between Britain’s fiscal problems and those of the eurozone members.

Are the Government right to argue, as they do over and over again, that their austerity policy is necessary to maintain the confidence of the bond markets and keep UK interest rates low? Perhaps it is, but only because of their own political folly. The Government have repeated this mantra so often that the markets probably believe it by now, and in believing the Government’s pro-cuts propaganda, they demand a redoubling of austerity. We have financial stability, but it is the stability of the grave. We are repeating Japan’s lost decade in an economy that is much poorer and much more unequal. I warned at the time of the Budget that the Government’s austerity policy risked creating a vicious cycle in which expenditure cuts and tax rises would lead to lower growth, which in turn
would lead to falling tax revenues and rising costs of recession. This in turn has led to yet further higher deficits, and so on in a downward spiral. But there is another twist in the tail that I had not fully appreciated until I read the OBR report.

The austerity programme also reduces the medium-term productive potential of the economy and hence reduces the possible future growth rate that is supposed to restore the nation’s finances, so now we have two mutually reinforcing engines of economic decline-the merry-go-round of cuts that do nothing to cut the deficit, and the recession-induced fall in growth potential that is making the deficit bigger too. And what is the Government’s response? It is more of the same. That is not my verdict. As the noble Lord, Lord Hollick, pointed out, it is the verdict of the OBR. Reviewing the plethora of schemes to turn the economy around, the OBR concludes:

“We have not made any material adjustments to our economy forecast on the basis of these policy announcements”.

In other words, the OBR concludes that the Government’s much spun “growth strategy” will achieve a net result of precisely nothing. However, I believe that the OBR is being overly optimistic.

First, the OBR persists in being excessively optimistic about where future demand will come from. In March, it predicted that private sector investment would grow this year by 6.7 per cent. Now, eight months on, it admits that investment has fallen. In March, it predicted that investment next year would grow by 8.9 per cent, and it still thinks that that is almost achievable. It says that investment in 2015 will be roaring along at 12.6 per cent growth a year, up from the 8 per cent it predicted in March. Where do these fantasy figures come from? Where is the incentive to invest when household incomes are going to be as low in 2014 as they were in 2002? It does not matter if interest rates are low: if there is no demand, there is no reason to invest.

Secondly, the other component of the rebalancing of the economy referred to by the OBR is supposed to be net trade. Again, the OBR is being excessively optimistic. It admits that most of the beneficial impact of the devaluation of sterling has now been exhausted, and recognises that markets in Europe will be depressed for some time, and yet somehow conjures up a significant improvement in trade performance, so overall the OBR is far too optimistic. The situation is much worse than it thinks. The people for whom matters are really worse are the poorer members of our society. If the OBR’s predictions are correct-I think that they are over-optimistic-household real disposable income will fall by 4.7 per cent over the next three years. However, that is an average figure and well over 60 per cent of the population have below-average incomes. If we examine the impact of the Government’s policies on median income-that is, the level of income in the middle of the income distribution-then the fall in disposable income will be 7.5 per cent. The cuts in real income are concentrated at the bottom end. Indeed, as the IFS analysis of the Autumn Statement has shown, the measures taken this week will lead to further cuts in the real income of the bottom 30 per cent and give benefits to the top 30 per cent. Nothing is more disgraceful and distasteful than the savage pleasure that Liberal Democrats and Conservatives take in cutting support for the poorest in Britain.

There is one further chapter of this dreadful story that must be taken into account in any overall assessment of the state of the economy: that is the level of unemployment, particularly of youth unemployment. It is simply uncivilised to have more than a million young people unemployed and their lives blighted at just the time when they should be looking forward to building a future, careers, stable households and families. Yet the prolonged recession holds out that prospect not just for the 22 per cent of young people now unemployed but for thousands more. We can begin to solve these problems only if there is a return to significant rates of growth in the eurozone and in Britain. The austerity imposed on the eurozone by Mrs Merkel, and on Britain by the coalition Government, will achieve nothing but a lost decade, or more. Stable financial markets will not produce an automatic increase in business confidence. There is no confidence fairy; she was killed by the Government’s austerity rhetoric.

What is necessary is a radical rethink of economic policies and even economic institutions. We need a major increase in government investment to kick-start private sector investment. We need new funding for industry on a greatly enhanced scale-not just what the Financial Times called the “gimmicks” of the Autumn Statement. We need a realisation that demand can be boosted by redistributing income towards the poorest, because they spend every pound they get and their spending has a lower import content than that of the wealthier sections of the community. The Government must become an employer of last resort to tackle youth unemployment.

How should we pay for all this? First, we should realise that unless something radical is done, the deficit will go on rising; we will go on borrowing more as we cut more. Secondly, if there is to be quantitative easing, it should be far better directed than it is under the shotgun approach used at the moment. Thirdly, even small amounts of redistribution could have a significant effect on the rate of growth of demand.

It will be evident from what I have said that I am fearful for the prospects of the eurozone and of our economy. Of course our current economic circumstances are dreadful, but they are made by human hand and they can be unmade by human hand. The key is political: political will and political intelligence, allied to sound economic analysis. All three ingredients are notably absent from the Government’s policy.

In a few short words he set out an effective three point plan for the economy:

• A National Investment Bank to target the “quantitative easing” to where it will really make a difference - in business investment to deliver future jobs;
• A recognition that further cuts in the income of the poorest in society will have a disproportionate impact on demand; and
• The role of the Government in being an employer of last resort for young people.

It would make a real difference – a pity that the Government isn’t listening.

There was a Private Notice Question in the House of Lords this afternoon from LibDem Peer, Lord Dholakia:

“To ask Her Majesty’s Government what action they propose to take to ensure that the security of the United Kingdom is not compromised on 30 November.”

This produced the following response from the Home Office Minister, Lord Henley:

“My Lords, the security of the UK border remains our top priority. Contingency plans are in place and we are satisfied that security will be maintained. We started training additional staff for contingency arrangements in April and adequate resources are now available. Any staff deployed to the front line will have received the training required to operate effectively. Arriving passengers will remain subject to checks at the border by appropriately trained staff.”

There then followed a series of increasingly bad-tempered exchanges between the Minister and Labour Peers with the Minister demanding that Labour Peers condemn the strike, whilst admitting that the Government had been planning for a strike since April. Here are the exchanges with Labour Peers (one of whom was me):

“Baroness Royall of Blaisdon: My Lords, the Government have sponsored speculation about what they will, may or might do to maintain UK security, especially at the borders, on 30 November—everything from bringing in the Army to the idea of staff from the Prime Minister’s Office manning passport control points. However, people need and deserve stability. If they have booked a holiday that day, they need to know whether they can get away. If businesses have important customers coming to the UK, they need to know that their businesses will not be damaged. I should therefore be grateful if the Government would publish, clearly and fully, for the benefit of the country as a whole, what in detail they intend to do on Wednesday in relation to border security.

Lord Henley: My Lords, I am very sorry that the noble Baroness the Leader of the Opposition did not take the opportunity to condemn the strikes that are taking place on Wednesday, which would have been helpful. If all parties agreed that those strikes should not happen we would not have this problem. We shall be operating the appropriate checks with the appropriate people, appropriately trained to make sure that visitors—whether they are coming here as tourists, whether they are coming here for business or whether they are returning UK citizens—can get in without any disruption or with disruption minimised as much as possible. The noble Baroness will also be aware that this is an operational matter and for security reasons it would not be appropriate to comment in detail, as she wishes, on the arrangements.

Lord Tomlinson: Will the Minister comment on reports in today’s press that part of the police force is being drafted in to take over the role of the UK Border Agency at our borders and that their training is alleged to be merely 90 minutes? Is that adequate?

Lord Henley: My Lords, I would not believe—and I would recommend that the noble Lord should not believe—everything I read in the press. I can assure him and the House that everyone assisting on this matter will have the appropriate training necessary to do the job. Yes, some police will be involved but they will have the appropriate training to do the job that they need to do.

Lord Campbell-Savours: My Lords, the Minister said that staff started training in April. What were they training for in April?

Lord Henley: My Lords, any sensible organisation, knowing there was a risk of such things happening—something which has still not been condemned by noble Lords opposite and I am waiting for that condemnation to occur—would make the appropriate arrangements. The border agency started that last April.

…

Lord Grocott: Given that the Minister has repeated asked people on this side of the House to talk in terms of condemnation, can we take it as read that the Government condemn the cleaners, the dinner ladies, the low-paid workers and those threatened with a weakening of their pension entitlements and an increase in their contributions? Is the Government’s position that they condemn these people for trying in any way to defend their position?

Lord Henley: My Lords, I condemn the strike as it affects our security and the arrangements we are having to make. That is the condemnation I am still waiting to hear from the party opposite.

…

Lord Davies of Coity: My Lords, the Minister has repeatedly referred to this side of the House not condemning the strike. What I want to ask him is this—can he give a categorical assurance that the motivation of the coalition Government is security and not strike breaking?

Lord Henley: My Lords, as I made clear in my original answer, our first priority, our highest priority, our top priority is the security of the United Kingdom. If the noble Lord thinks that we are involved in strike breaking he should think again. We want to make sure that our borders are kept secure. We think that the unions are endangering that security by the actions they are taking. The offer is still open to talk to the Government and others and we wish they would take that up.

Lord Harris of Haringey: My Lords, of course our borders should be kept secure, but are the Government doing enough to negotiate with the unions on this point? Are the Government in fact making every effort to try to resolve this dispute rather than, as the Minister has told us, having been preparing since April for just this eventuality? Is it not that they actually wanted to provoke a strike, for whatever political reasons they may have?

Lord Henley: Come on, my Lords. The noble Lord knows perfectly well that the Government’s doors remain open and that the Government are prepared to negotiate. It is the unions who are being intransigent and it is the party opposite which is refusing to condemn an action that will possibly endanger our security. Because of the actions we have taken, and have been taking since April of this year, we think that we will be able to keep security at the appropriate level at the borders on Wednesday.

…

Baroness McIntosh of Hudnall: My Lords, given that the Minister is so fixated on the possibility of getting the kind of statement that he would like to hear from these Benches, does he imagine that the people out there who are contemplating going on strike are mostly or even to a small extent members of the party I support? I submit that not only are they not, they are members of all parties and none, and what is preoccupying them is not the question of whether the Labour Party supports them but their concern for their future pension rights.

Lord Henley: My Lords, the noble Baroness accuses me of being fixated on this issue and perhaps I am somewhat naive to be so fixated on this issue. I do not know in which way the members of the unions involved happen to vote. I happen to know that those unions support the party opposite. That is why we are still waiting for that condemnation from the party opposite.

Baroness Royall of Blaisdon: My Lords, does the Minister agree that any strike is a demonstration of failure? Does he further agree that the Government themselves have failed to resolve this strike?

Lord Henley: My Lords, I totally and utterly reject what the noble Baroness has said and again invite her, as the Leader of the Opposition in this House, to condemn this strike.”

 

 

In Question Time in the House of Lords a succession of Labour Peers (including me) pressed the Government on their attitude to the Health Lottery run by Richard Desmond of “Daily Express” and “Asian Babes” fame, which only pays just over the legal minimum of 20% of the money raised to the good causes it supports.

Here are the exchanges:

“Gambling Commission: Health Lottery

Question

2.41 pm

Asked By Lord Faulkner of Worcester

To ask Her Majesty’s Government what assessment the Gambling Commission has undertaken of the contribution being made to good causes by the Health Lottery.

Baroness Garden of Frognal: My Lords, the Gambling Act 2005 requires that at least 20 per cent of the proceeds of a society lottery go to the good cause that it supports. Each of the 51 society lotteries that are promoted under the umbrella brand of the Health Lottery must comply with this requirement. We understand from the Health Lottery that 20.3 per cent of the proceeds of each individual society lottery will go to the relevant good cause, addressing health inequalities in specific geographic areas of Great Britain.

Lord Faulkner of Worcester: My Lords, may I ask the Minister two questions? First, is she aware of the great concern that has been expressed by the beneficiaries of legally run society lotteries in the health sector, which have benefited immensely from those local society lotteries, about what is seen as the unfair competition from the Health Lottery? Is she aware that the hospice movement is particularly alarmed, because it depends very heavily on society lotteries? In Worcester, for example, our two hospices receive £70,000 a year from the South Worcestershire Hospices Lottery, which pays 50p in the pound—not 20p in the pound—to those good causes.

Secondly, notwithstanding what the Gambling Commission may have decided initially about the Health Lottery’s legality, how can it be legal to have 51 community interest companies linked to the Health Lottery which have no independent existence, but which all have the same three directors and all operate out of the same virtual office? How is that legal?

Baroness Garden of Frognal: My Lords, the noble Lord has great expertise in these matters. In his first question, he raises the concern about the hospices. We share the concern about the potential impact on society lotteries, although a number of existing health-related charities have been supported through the Health Lottery arrangements so far, and we will ensure that the impact on other society lotteries is monitored.

On the noble Lord’s second question, about the legality, he will also be aware that compliance with the requirements of the Gambling Act 2005 is a matter for the Gambling Commission, which has issued the necessary licences for the Health Lottery. As with any major scheme entering the market, however, it will work with the operator to ensure that what is delivered is actually compliant. We expect initial findings from that monitoring to be with us by next March.

Lord Addington: My Lords, would my noble friend give some thought to the idea that charities which are created to allow a lottery to be organised might be against the spirit that was initially taken on in this field? If that is right, will she undertake that the Government might look at the whole legal framework? If it is against the spirit, we can change the rules.

Baroness Garden of Frognal: My noble friend makes a very valid point that, so far, the legality has been in the matter of the fact of the law. However, as I have mentioned, there will be ongoing monitoring and, as he so rightly says, all these things can be changed if it turns out that the spirit of the law is not being respected.

Lord Brooke of Alverthorpe: My Lords, are the Government content with the system that they have in place for monitoring the operations of the Gambling Commission and, if not, what can they do about it? Are they content that Mr Desmond is a fit and proper person, given what was said at the Leveson inquiry last week and the failure of his organisations to associate themselves with the independent press commission, and that this is the way forward given some of the issues which now surround the operation of this lottery?

Baroness Garden of Frognal: My Lords, as I say, it is for the Gambling Commission to look at this. We recognise all the issues around Mr Desmond and his other organisations, but those are not perhaps directly relevant to this. One thing that the Government have done is to merge the Gambling Commission and the National Lottery Commission, which we expect will make regulation easier and create cost savings but also help to produce a more robust form of monitoring.

Lord Collins of Highbury: My Lords, may I press the Minister on the issue of what I consider, as I think many would, an apparent loophole exploited by the Health Lottery with its 51 separate companies? Will she give an assurance that this loophole will be examined and perhaps closed by the Government, bearing in mind that the Health Lottery has a turnover of £510 million a year and is in effect an alternative national lottery, affecting funding not only for other health charities but for the arts in general?

Baroness Garden of Frognal: My Lords, the noble Lord raises an important point about the issue of whether the Health Lottery will impact on the National Lottery. We are well aware of the vast amount of good work that the National Lottery does for the arts and a whole range of charitable organisations in this country. This is the first time that a lottery has been set up in this mode, with 51 society lotteries under an umbrella. It is a new model, which is why we are looking to the Gambling commission to report back to the Government on how it is going to operate. Of course, the Health Lottery has been going for only eight weeks so it is early days as yet to see how it will pan out, but I hope that the noble Lord will rest assured that the Government are monitoring the situation.

Lord Haskel: Following on from my noble friend Lord Faulkner’s question, should the Minister not be speaking up for those charities that give 50 per cent of their income rather than those that give only 20 per cent?

Baroness Garden of Frognal: My Lords, I am sorry if I was not speaking up loudly. One indeed commends the society lotteries that give on average 51 per cent to good causes overall, which is a much more significant proportion than 20 per cent. The question remains whether this will be a form of raising additional funding for good causes, and only time will tell whether that is the case.

Lord Harris of Haringey: My Lords, is it not the case that the public assume that a much higher proportion of the money that they put into these lotteries is going to the good cause concerned? Should the Government not be looking to raise the 20 per cent threshold to a more realistic figure? That may then squeeze out those who see setting up these lotteries as a way of making extra cash for themselves rather than for the charities that they are supposed to be supporting.

Baroness Garden of Frognal: My Lords, the raising of the threshold has been under discussion. We feel that at the moment, with the Health Lottery still so new, this is not the moment to change the thresholds for the lotteries as a whole. As I say, though, we are monitoring the situation since, as far as we are concerned, it is a new set-up in the lottery world. We shall wait and see, with the promise of a report of that monitoring early next year.

Lord Brooke of Sutton Mandeville: When I had the privilege of moving the Second Reading of the National Lottery etc. Bill in 1993, I gave way 28 times in the hour it took me to complete my speech. It was perfectly clear at that time that scrutiny of the lottery was being carried out extremely effectively by Parliament. I hope that the amount of time that we need to scrutinise this new development will be shorter rather than longer.

Baroness Garden of Frognal: I bow to my noble friend’s expertise over many years in this area. I share his hopes that the scrutiny will be shorter rather than longer.

Lord Faulkner of Worcester: If the Minister reads the prospectus of the Health Lottery, she will see that in order for it to meet its targets of paying money to the 51 community companies it will need to raise something in the order of £250 million a year from the British public. Where does she think that money is going to come from? Surely it will be from existing charity giving, existing society lotteries and the National Lottery.

Baroness Garden of Frognal: My Lords, this is one of the things that we shall need to look at. At the moment, the Health Lottery is raising £2 million to £3 million a week compared with the National Lottery which is raising somewhere between £150 million and £190 million a week. So the latter is still far and away the major source of public money in this area but, to pick up an earlier question, it is very important that the public are made aware of just how much of their money is going to good causes from the Health Lottery compared with how much goes to good causes from society lotteries and indeed the National Lottery.”

Apart from the Minister (Baroness Garden) and interventions from LibDem Lord Addington and Tory Lord Brooke of  Sutton Mandeville, only Labour peers seemed interested in the issue.

The Wall Street Journal reports that:

“British intelligence picked up “talk” from terrorists planning an Internet-based attack against the U.K.’s national infrastructure, a British official said, as the government released a long-awaited report on cyber security.

Terrorists have for some time used the Internet to recruit, spread propaganda and raise funds. Now, this official said, U.K. intelligence has seen evidence that terrorists are talking about using the Internet to actually attack a country, which could include sending viruses to disrupt the country’s infrastructure, much of which is now connected online. The official spoke on condition of anonymity and didn’t say when the infrastructure threat was detected and how it was dealt with.

Terrorists, however, are still more focused on physical attacks that lead to high casualties and grab attention. “For the moment they prefer to cover the streets in blood,” he said.”

I first started raising these concerns more than seven years ago, pointing out in a debate in the House of Lords on the 9th December 2004:

“As a nation, the systems that are essential for our health and well-being rely on computer and communications networks – whether we are talking about the energy utilities, the water and food distribution networks, transportation, the emergency services, telephones, the banking and financial systems, indeed government and public services in general – and all of them are vulnerable to serious disruption by cyber-attack with potentially enormous consequences.  Indeed, the Coastguard Service was laid low by the “Sasser” worm in May this year.

The threat could come from teenage hackers with no more motivation than proving that it could be done, but even more seriously it could come from cyber-terrorists intent on bringing about the downfall of our society. “

At the time, I was assured that there was no intelligence to suggest that such a threat was significant.  The then junior Home Office Minister, Lord Steve Bassam, now no less a person (if such a thing were possible) than the Opposition Chief Whip in the Lords, said:

“there are also terrorists who would challenge and seek to undermine democratic society using any methods within their grasp. It is not complacent to say this; but perhaps it should be made plain that at the moment they do not appear to be interested in attacking us electronically.”

Of course, in the intervening seven years there has been a burgeoning realisation of an increasing number of cyber-threats and, if there is now intelligence to suggest that international terrorists are thinking in that way, I take no satisfaction from having predicted it in 2004.

What is important is that the substantial resources provided to GCHQ under the Government’s new Cyber Security Strategy, published last week, are used effectively to combat the threat. GCHQ and the other intelligence agencies are to get 59% of the £650 million that the Government has allocated to cyber security over the next three years.  It is unlikely that there will ever be much detail published as to how the resources are used, so we can only hope ….

Yesterday also saw the first discussion of the role of HealthWatch during the Committee Stage of the Health and Social Care Bill.  HealthWatch is the proposed new structure to represent the interests of patients and the public in the new NHS.  It is potentially hugely important, as patients will need a strong voice to protect their interests.  However, the Government is proposing that the national body, HealthWatch England, should be constituted as a sub-committee of the regulator, the Care Quality Commission, and that local HealthWatch organisations should be run by local authorities (even though they will be responsible for some of the social care services that HealthWatch will be monitoring) without any protection of their budgets.

This is what I said on the subject:

“My Lords, I apologise to my noble friend Lord Patel if he in any sense felt beaten up by me. I absolve my noble friend Lady Wheeler from any involvement in that process. I also apologise to the long-suffering officials in the Government Whips Office. If my robust style is mistaken, they should really see what I am like when I am angry.*

I added my name to a number of amendments in the various versions of this group. I also proposed Amendment 305. If the noble Baroness whom I believe is replying to this debate is planning to highlight any technical flaws in that amendment, I should point out that I drafted it myself. Therefore, it no doubt does contain a number of technical flaws. But the purpose of the amendment is to assess the feeling within the House and the strength of feeling in the department about the extent to which it is important that HealthWatch England and healthwatch organisations at local level should be independent.

The principle underlying this group of amendments is straightforward-the centrality of the voices of patients and users in the NHS. That voice must be, and must be seen to be, independent of the various provider and regulatory interests. That is what underpins all of the different amendments.

I find it difficult to understand how the Government will oppose the amendments. They keep telling us that the voice of the patient and the user will be central to all these arrangements. They say that that is their intention. But they must be aware, because everybody else is, of the cynicism and doubt that is being expressed around the country about this whole package of NHS changes. Therefore, they should be able to reassure patients and users that their voices will be heard at every level within this complicated restructuring that will take place. That is extremely important.

What is more, it will be important for that voice to be seen to be independent. Members of the public will be concerned about what is happening. They will worry whether their doctors, who that they do not fully understand as being part of commissioning groups, will somehow be making judgments about their care, influenced by financial interests. They will want to be assured that they can go somewhere for proper advice and support, and that that place will genuinely be independent of all of those interests.

A huge expectation is now being placed on local healthwatch organisations. They are expected to provide that independent advice and information, to be able to monitor the nature of the service at local level and to be able to comment on the various changes that are taking place and on the proposals that are coming from the plethora of commissioning groups, senates and goodness knows what else we are going to have. They are going to be there to make recommendations. So, there will be enormous expectations on behalf of the public as to what these groups are going to do. Similarly, the national body, HealthWatch England, will have enormous expectations upon it. That is why it is so important to get these arrangements right. The

proposals for HealthWatch England and local healthwatch are an advance on what we have at present in terms of LINks. There is no question about that-they are a step forward. The record of successive Ministers and Governments in terms of patient representation in the NHS is not very good. This is a step forward from where we are at the moment. So, let us try to get it right. Why not deal with what are comparatively small issues in terms of how the system works?

The trouble is that, at the moment, the arrangements that the Government are proposing are flawed in two key respects: first, on the issue of independence, as the noble Lord, Lord Patel, has already indicated; and secondly, in terms of the resources available. Let us consider for a moment the position of HealthWatch England as a sub-committee of the Care Quality Commission. That might be a very neat way of not increasing the number of quangos by one; it may be that was the sole motivating feature. However, the reality is that it dangerously compromises the independence that I talked about as being so important. Often, HealthWatch England will have to say, on behalf of local healthwatch organisations, that the regulator should be doing something, has failed to do something or has been inadequate in the way that it has done that. In the last few weeks, we have seen the Minister’s colleagues in the Department of Health making quite critical comments about the way in which the CQC has fulfilled its remit. If Ministers are saying that-and Ministers are, after all, the paymasters of the CQC-what is it going to be like for those people whose remit is to raise these issues but are themselves subordinate to that regulatory body? It is going to be a real conflict and a very difficult position for them. The nature of that relationship-the fact that they are a mere sub-committee and are subjected to all of the panoply of arrangements that go with that-is going to be seriously limiting.

I am aware that the CQC is making enormous efforts to try and demonstrate their good faith in all of this. I am sure that the individuals involved have good faith as far as this is concerned. However, we are here considering legislation that will set those arrangements. Once those arrangements are set, the good will of the individuals who may be trying to make it work at the moment may not persist-not because those individuals will change their minds, but because, over time, those individuals will move on and others will take their place. Budgetary and other pressures on the CQC will rise. The feeling that they do not like being criticised by a body that is technically subordinate to them will increase. That is why that arrangement does not work.

There is an even stronger argument as to why local healthwatch organisations should not be subordinate to principal local authorities in their area. The Government’s flaws here are flaws twice over. Not only are they imperilling the independence of local healthwatch organisations by saying that-even though they are supposed to be independent-they are creatures of the local authority, the funds will be provided by the local authority and many of the facilities may well be provided by local authority but, because the funds will not be ring-fenced, it will be far too easy for local authorities to start to apply the screws if they do not like the criticisms that come from it.

A major conflict of interest is being created. HealthWatch cannot be accountable to, and at the same time funded by, local authorities because the bodies which commission and provide the services are the local authorities in many instances. However, the Government are saying that HealthWatch can advise members of the public about those services. How can HealthWatch organisations be funded by the same bodies that are commissioning and providing those services? This is precisely the area where the confidence of members of the public and of individual patients is so important. They have to go for advice to a body which is funded by the people about whom they wish to take advice. That hardly looks independent or satisfactory. If HealthWatch is made accountable to local authorities as the Bill proposes, the public will, frankly, have no confidence in that and all the efforts that the Department of Health and the Government have made to try to create a better structure will be wasted. That resource will be wasted because the public will not have confidence in these arrangements.

There is also a failure to protect the funding. I do not know how many hot coals Ministers in the Department of Health had to crawl over to get £60 million out of the Treasury for HealthWatch. I am not suggesting that the Department for Communities and Local Government is any more evil than any other government department, but if you hand the funding to that department, which then hands it on to individual local authorities without a label saying, “Not only is this money to be used for HealthWatch but it cannot be used for anything else”, my experience as a former council leader tells me that you cannot guarantee that the money will be used for the purpose that you wish.

I spoke earlier about localism and said how wonderful it was that the Government should devolve responsibility for this issue. However, it is not a wonderful example of localism if you expect something to happen, you pass the money on and then you are shocked if the money is not used for that purpose. If you want the money to be used for a particular purpose, you have to label it and ring-fence it. However, the Government will not do that. They say that they cannot do that as it would be inappropriate in the spirit of localism.

I have received numerous e-mails and messages from LINks on this very subject. Their experience of not having ring-fenced budgets this year is salutary. One message states:

“As a LINk our funding was reduced by the local authority by 65 per cent this year”.

Another states:

“I have spent 30 years as a senior business professional and business consultant and it is ludicrous to set an organisation targets to be funded by set criteria and then reduce those funds by 65 per cent. This makes a mockery of the organisation’s ability to carry out its public remit”.

That is what is happening at the moment. What guarantees can the Government give that it will not happen in the future?

There is a technical point here. The Department of Health has presumably secured these funds through the comprehensive spending review. Who will own those funds the next time that the comprehensive spending review is negotiated? Will it be the Department

of Health or the Department for Communities and Local Government? If it is the Department for Communities and Local Government, how will it rank given its other priorities which have nothing to do with HealthWatch? If it is the Department of Health, how will it answer the question from the Treasury, “How do you know that this money is being spent in the way that you intend?”. It will not be able to answer that question, as I suspect that the correct answer is that the money will disappear. LINks already have huge concerns about the resources question.

The other element of this concerns what sort of patient representative mechanism we want. Do we want something which is top-down or something which comes from local organisations? The amendment that stands in my name seeks to establish an arrangement whereby local healthwatch organisations have ownership of the national body which speaks in their name. I believe that that is essential. Even if you created HealthWatch England as an independent structure without the problems of it being a tool of the regulator, you will still not get the necessary buy-in at local level unless local organisations feel that they are part of it and have a say in its organisation. I speak as someone who was director of the Association of Community Health Councils for England and Wales for 12 years, and I know how important it was for the member organisations to feel that what we were saying as the national body reflected-not to the letter, but reflected-what they felt was important as local organisations. If you do not have that mechanism, if you do not have that process built into the legislation, I am afraid that you will create a gulf between the national body and the local bodies. That is surely unsatisfactory.

The Government’s proposals could make an enormous difference to patient representation in the new NHS, and patient representation is going to be enormously important in the new structure, because I think that many patients will feel disempowered and worried by what is happening. However, those arrangements are flawed unless the Government accept the spirit of the amendments in this group-and unless they accept that HealthWatch, both nationally and locally, should be independent, and that resources should be clearly ring-fenced and clearly identified and cannot be used by bodies that have no interest, necessarily, in patient representation used for other purposes.”

*This relates to a procedural manoeuvre instigated by the Government late the day before that I thwarted.

Yesterday was the seventh day of the Committee Stage of the health and Social Care Bill.  In theory this should be the half-way point of the discussions, but the Committee has only got up to Clause 20 and there are another 323 Clauses to go.

One of the debates yesterday centred on the “mandate” (crazy word, crazy Bill) that the Secretary of State will give to the National Commissioning Board (this is the biggest quango in the known universe and it will effectively run the NHS).  The “mandate” is essentially the Government’s instructions to the Board, but as they are claiming that they are giving away all responsibilities to the Board (and thereby absolving Ministers from taking responsibility for what happens to the NHS as the budget is cut) the content of this “mandate” is really rather important.  How detailed will it be and will it be subject to proper Parliamentary scrutiny?

I am afraid the Government’s attitude brought out the normally-hidden (!) cynic in me:

“My Lords, I confess that I am something of a cynic about some of the proposals in the Bill. I am a great believer in the principle of localism, the local determination of services and local decision-making. Therefore, in principle I would applaud any Government-even this Government-who desire to devolve responsibility for various things to local authorities and, in this case, local commissioning groups.

However, my cynicism kicks in because what I suspect is happening here-I suspect that it will happen in other service areas-is that Ministers are cynically saying, “We are leaving these responsibilities to you, the local bodies concerned. We are very happy for you to make all these decisions. The snag is that we will not provide you with the resources to meet all the expectations that the public, who rely on those services, might legitimately have hoped to be provided. However, we are not taking these decisions. We will not be involved. It is a matter for local determination”. To be honest, I think that is what underpins much of the localism, devolution or autonomy agenda that we are seeing.

However, the experience of all previous experiments of localism is that while Ministers say, “Yes, this is a wonderful idea. We want to do it”, pressure starts to be applied to particular things. They want to have a mechanism whereby they can say, “It is, of course, your decision. However, we want you to make sure that these things happen”. Gradually, the list of the things that must happen gets longer and longer and the list of areas of discretion gets shorter and shorter.

When I saw the proposal for a mandate to be in the Bill, I thought that that was the mechanism whereby on the one hand Ministers will proclaim that they have no involvement in these decisions and say that they are all local decisions, but on the other hand this will enable them to ensure that certain things still happen because they are being subjected, as elected politicians, to pressure to make sure that they happen. That is why the amendment of my noble friend Lord Warner, which would restrict the extent to which this could be done, is very important. If we do not have an amendment of that sort in the Bill, I can tell you now what will happen; every single pressure group, voluntary organisation and lobby will say, “We want included in the mandate”, which is being issued to the national Commissioning Board, “the following service. We will want to see it there.”

For any sensible Minister the simple answer to all this is to write an extremely long mandate that covers all those points rather than sticks to them. If they were

obliged to be limited to just five or six or another small number of issues, that would be extremely salutary. It would stop the creep that would happen. However, I suspect that the Government are not going to say suddenly, “My goodness, the noble Lord, Lord Warner, has come up with an excellent idea. Why didn’t we think of that? We must accept it, of course”, because unfortunately that is not always the way in which government Ministers react. They will stick to the letter of the Bill without those specifications. They will say, “Well, why five? Why not 10? Why not 12? What about three?”. All these different things will be argued as an excuse for not doing it. You will then get the drift and the pressure to say that more and more things must be added.

Amendment 100A is so important because there must be parliamentary scrutiny of what is happening, because this will be the mechanism that drives decision-making in the NHS. It is not going to be a pure version of devolution, localism and autonomy; this is going to be done through the mandate. The mandate is then going to be the most important document that drives the NHS at any one moment. That is why parliamentary scrutiny is essential. Parliament must have the opportunity not just to see it and to know what is being done in the name of the public but to comment, amend, or put forward amendments and have the Government respond to them.

I therefore hope that when the Minister responds he will accept not only the principle of my noble friend Lord Warner’s amendment but the principle of detailed parliamentary involvement in this process in the amendment of my noble friend Lord Hunt of Kings Heath.”

The full debate is here.

 

I see that the US Congress is to investigate Chinese equipment suppliers Huawei and ZTE to see whether they present a threat to US national security.  According to PC World, the House Intelligence Committee wants to:

“examine if Huawei’s and ZTE’s expansion into the U.S. market gives the Chinese government an opportunity to hijack the nation’s infrastructure to conduct espionage. U.S. lawmakers worry that the networking equipment sold could secretly contain Chinese military technology to spy and interfere with U.S. telecommunications.”

Huawei has many links to the Chinese Government and its security apparatus.  As Jeffrey Carr summarises the key facts as follows:

1. The company’s founder Ren Zhengfei was an engineer in the PLA prior to forming his company.
2. The company’s chairwoman Sun Yafang worked for the Ministry of State Security and while there helped arrange loans for Huawei before joining the company as an employee.
3. The government of China is Huawei’s biggest customer; specifically the State-owned telecommunications services.
4. Huawei equipment is used to intercept communications in China for state-mandated monitoring.

Nevertheless, despite this its products are already widely used in the UK’s infrastructure particularly given its role in providing key components to BT.  I have expressed concern about this before and back in 2006 Newsweek recorded the Conservative Party’s concerns, saying:

“Political conservatives in Britain expressed the same security concerns about Huawei last spring. In April, the company won a $140 million contract to build part of British Telecom’s “21st Century Network,” a major overhaul of its equipment. But when rumors began circulating that the Chinese company might then bid on Marconi, a landmark electronics and information technology firm that was being put up for sale, a Conservative Party spokesman sounded the alarm. The Tories asked the British government to consider the implications for Britain’s defense industry of a Chinese takeover of Marconi. In the end, Huawei didn’t make an offer, and the Swedish telecom giant Ericsson is in the process of buying Marconi.”

Huawei continue to try and expand their access to the UK infrastructure market – see, for example, their wooing of Mayor Boris Johnson with an offer to provide mobile phone infrastructure for the Underground in time for the London Olympics.  In August, they recruited the former Government chief information officer, John Suffolk.

Their latest move to gain respectability is to sponsor a charity Christmas concert in support of The Prince’s Trust at the Royal Festival Hall next month, to which they have invited large numbers of senior Government officials and Parliamentarians.

No doubt, Huawei will say they are much-maligned, but I do wonder whether a UK Parliamentary Committee shouldn’t be following the lead of the US House Intelligence Committee and launch an investigation into the company’s growing influence in the UK and any possible implications for security.

Tonight the House of Lords debated the Protection of Freedoms Bill.  This was my contribution:

“My Lords, I declare an interest as a member of the Metropolitan Police Authority. I fear I may be spoiling the consensus that seems to have emerged as to what a wonderful Bill this is. This is a very grandiosely entitled Bill: “Protection of Freedoms”, no less. I am sure that when the title was chosen the Deputy Prime Minister had visions that, like the authors of the Magna Carta, seven centuries on, his creature would still be seen as a cornerstone of British liberties.

Frankly, he can dream on. This Bill is a mish-mash of ill-sorted provisions, a mish-mash without any overarching or underpinning philosophy and, worst of all, a mish-mash that will bring about unintended and damaging consequences. Balancing the civil liberties of the individual against the security of the state and the protection of the lives and well-being of other individuals is never an easy task and I wish that I could be confident that that balance has been appropriately struck in this Bill. Let us take, for example, Part 5, which makes major changes to the Safeguarding Vulnerable Groups Act. The noble Baroness, Lady Walmsley, who is not in her place, will remember the time spent in this House trying to ensure that children and vulnerable adults were properly protected against those who might harm them.

When we hear from organisations, such as Fair Play for Children, that this Bill introduces,

“elements of serious risk to children”,

we need to consider the points with very great care. The Government say that the arrangements under the 2006 Act were too complicated and onerous for those who had to implement them. Yet the people who will have to implement this Bill say that its provisions do not reduce or simplify the current system and that it runs the risk of sowing considerable confusion and unnecessary complexity.

There is no evidential basis for these changes. There is to be no pilot and what is being done throws away the broad cross-party consensus on which the previous legislation was based. A major concern lies in the proposed definition of what constitutes supervision in respect of affected activities. This remains worryingly vague. One suggestion is that the definition of supervision should be “line of sight”. This is so vague as to be frankly laughable and out of touch with daily realities. If the activity stays in one or perhaps two rooms and there are two staff or supervisors to monitor all volunteers, perhaps that would be possible. But in a multi-feature environment where there is outdoor activity, and in many other situations, it will be next to impossible for many organisations to provide that level of supervision. It will result in increased costs and/or a restricted number of activities, and, no doubt, fewer volunteers involved and fewer children benefiting.

In any event, supervision misses the point. The supervised activities of a volunteer are one thing but it is precisely during those activities that the trust of the child with that individual is created. It is that trust that makes possible unsupervised contact and the risks that that brings with that trust being exploited and betrayed. Of course, the risk of such exploitation and betrayal taking place during supervised activities can be reduced by good supervision. But what of the contact outside the supervised activity? The child now trusts that adult because they have encountered them in the supervised activity. But that trust is where the potential for abuse is created outside that secure environment.

That is an example of where the balance is being struck wrongly. It is based on the false belief that the bureaucracy involved is stifling volunteering. Fair Play for Children surveyed its member groups and found that more than half believe that the existing vetting arrangements have improved their overall practice. In only one instance in 200 did a group report that the arrangements had made it more difficult to recruit volunteers. Most parents will say that when they hand over their children they want the reassurance that the adults who their children will encounter have been properly vetted. Do the Government really want to put the rights of the potential paedophile above those of the child? That is just one part of an ill-thought-out Bill.

Part 4 reduces the maximum period of pre-charge detention for terrorist suspects from 28 to 14 days. The periods of detention longer than 14 days have been used extremely sparingly and are subject to judicial approval, which has not always been given. The Government, moreover, acknowledge that sometimes a longer period—up to 28 days—may be necessary, presumably because of the nature and complexity of some counterterrorism investigations.

If circumstances require it, it is proposed that the Home Secretary comes to Parliament to introduce emergency legislation to reinstate the longer detention power. That has to be nonsense. It means that during—I repeat, during—a terrorism investigation, the police and security services may have to ask Parliament to be recalled to debate an issue that it cannot discuss without prejudicing a future trial. The remarks made by the noble Lord, Lord Armstrong, are extremely pertinent on this point. Ministers recognise that 28 days may be necessary to investigate or avert a serious terrorist threat, but none the less intend to remove the power, even though there is no evidence that the power has ever been misused.

Part 2 adds to police bureaucracy, which is another example of extra expenditure being incurred as a result of pressure from the Daily Mail. It will make it more difficult for the police and local authorities to use CCTV to prevent and detect crime. This no doubt reflects concerns about a surveillance society, although when I was a local government leader my experience was that communities always—I repeat, always—welcomed the introduction of new CCTV schemes. If that concern about a surveillance society was so important, why are there no restrictions on the use of private CCTV cameras? I do not want to labour the point, but this oh-so-cleverly-worked-out Bill makes it more difficult and more expensive for our already overstretched police service to prevent crime but does nothing to restrict the proliferation of privatised surveillance.

Finally, Part 1 restricts the retention of DNA samples and profiles taken during a criminal investigation. This will make it harder, not easier, for the police to catch and convict dangerous criminals. The Home Office’s own research produced last year contradicts what this Bill will do. It showed that, each year, 23,000 people who will be taken off the database under these proposals will go on to commit further offences. Of these, 6,000 will commit serious crimes, including rape and murder.

Whose civil liberties are we protecting here? It will certainly not be those of anyone like Sally Anne Bowman who was 18 when she was murdered close to her home in south London in 2005. The police investigation initially drew a blank. But a year later, Mark Dixie, a pub chef, was arrested following a brawl in the pub where he worked. No further action was taken for that pub brawl but his DNA was taken and subsequently loaded on the database. It produced a match to the DNA evidence retrieved from the murder victim and within five hours he was under arrest. He was subsequently charged, convicted and sentenced to life imprisonment. So what are we doing removing the ability to protect people like Sally Anne Bowman? There are plenty of other such examples.

This Bill repeatedly gets the balance wrong. Of course, we should protect freedom. But why is it that the only freedoms that this Bill seems to care about are the freedoms of the would-be terrorist, the manipulative paedophile and the serial rapist?”

The House of Lords likes to talk about itself and this afternoon is no exception.

The House has been debating a series of (modest) amendments to its own procedures. First off is the idea that during Question Time the Lord Speaker should be allowed to arbitrate between the political groupings in the Chamber as to whose turn it is to ask a supplementary question.  This is regarded as revolutionary stuff.  At present the House itself decides by growling whose turn it is and, if there is still a conflict with two (or more) Peers trying to speak at the same time, the Leader of the House intervenes and arbitrates.  The Leader of the House is, of course, a Government Minister and to most people it might seem odd that he should decide who should ask a question of one of his Ministerial colleagues.  But that is the way it is at the moment and after more than an hour of debate, the House voted by 169 to 233 to retain the status quo.

The House did agree that Peers could refer to the House of Commons as the “House of Commons” rather than the “Other Place”, but the idea of simplifying the forms of address proved much more controversial.  At present, former senior judicial figures have to be referred to as “The Noble and Learned Lord”, Field Marshals or holders of the Victoria Cross as “The Noble and Gallant Lord”, and Bishops as “!The Right Reverend Prelate”.  It was suggested that “The Noble Lord” or “The Bishop of _____” might suffice.  After lengthy debate, the House divided with 173 in favour of the proposition and 173 against and the proposed simplification was declared “not carried”.

For the time being, procedural reform will  have to wait.