Committee (9th Day)
Public Bodies Bill [HL]
3:38 pm

Schedule 4 : Power to modify funding arrangements: bodies and offices

Amendment 83

Moved by Lord Roberts of Llandudno

83: Schedule 4, page 19, line 9, leave out "Sianel Pedwar Cymru ("S4C")."

3:39 pm
Photo of Lord Roberts of Llandudno

Lord Roberts of Llandudno (Liberal Democrat)

My Lords, I remind the House of the great struggle to establish a Welsh-language television channel. A Member of the other place who was highly respected in Wales, Mr Gwynfor Evans, even fasted in order to ensure that we would have a Welsh-language channel. We owe a tremendous debt to my noble friend Lord Roberts of Conwy, who overcame many obstacles in order to make sure that S4C-S Pedwar C-went on to the statute book and became a reality. We say to my noble friend, "Thank you, again".

There are many English-language channels. You can switch from one to another and spend most of your evening doing it, but if you want a Welsh-language channel, there is only one, S Pedwar C. It serves the 600,000 or so viewers who speak Welsh, for many of whom Welsh is their first language. In an age of high technology and digital advances, it is a poor nation indeed that does not have its own television channel in its own language. We owe so much to this channel. The previous census recorded an increase from 18 per cent to 21.5 per cent of the number of folk in Wales who spoke Welsh; 28 per cent said that that they might not speak the language but had an understanding of it. We should look at what has happened for the past generation or two-the establishment of Welsh-language schools, major cultural advances in the Welsh language and S4C, the Welsh-language television channel. As a result, there has been a larger increase in the number of people who speak Welsh than there has been for many generations.

S4C, with its full range of programmes, is the natural channel for all who cherish living much of their lives with their own language. S4C starts with children's programmes in the morning and continues until 11 or 11.30 pm. If you are Welsh and live in a Welsh area, you can receive all your entertainment, information and news programmes on this Welsh-language channel. S4C is not so much the icing on the cake for us in Wales; it is very much the cake itself.

S4C is not a static but a developing entity. It has changed and needs continually to change. Including it in the Bill would very much undermine that change and would be a backward step. We do not dispute the fact that S4C has had a turbulent past couple of years, with resignations and oustings. It needs time and the breathing space to get itself in order again to create different and more modern structures to perform its task. It needs different people with different directions. If the Bill includes the Welsh-language channel, immense harm could be done. The channel needs time to develop in its own natural way.

I question whether the issue of the channel really belongs with the Department for Culture, Media and Sport. Surely its proper place today would be with the Wales Office. It is the Welsh channel and it serves the people whom the Wales Office also seeks to serve. Many others may also be uncertain and consider that this is the wrong time to give the last word on S4C's character and funding to a Minister here in Westminster. Before long, there will be a full consultation about the media in the United Kingdom. Surely that would be the time for us to determine the future of S4C, not today. The day before yesterday, I read a letter in which the leaders of the four parties in the Assembly in Cardiff all said that they needed breathing space and time before there was any change in the status of S4C. I am sure that they are right. If Plaid Cymru, the Conservatives, Labour and the Liberal Democrats all agree, surely this is the wrong place to say that Wales cannot take the avenue that it wants.

I was singing the "Hallelujah" chorus last Friday morning after the yes vote in the Welsh referendum. I hope that people will keep voting yes in referenda, because it is a good habit to maintain and develop. The result of the vote means that the 20 devolved areas do not now need to come to Westminster for any approval. Is this not another reason to move with great caution in making any change to the status of S4C? I know that noble Lords will agree with me and, if it comes to a vote, will vote with me to say that the future for S4C is in Wales. I urge the Minister to spend the time between Committee and Report on formal, meaningful discussions with the Welsh Assembly Government, so that on Report we will have the assurance regarding the future of S4C that the amendment seeks to ensure. It is my pleasure-mae'n bleser gen i-to move Amendment 83.

3:45 pm
Photo of Lord Morris of Aberavon

Lord Morris of Aberavon (Labour)

My Lords, I support the amendment moved so ably by the noble Lord, Lord Roberts of Llandudno. I hope that the House will forgive me if I elaborate a little on the matters that he raised. I never thought when I became a Member of your Lordships' House that I would take part in two debates on matters crucial to the nation of Wales and its nationality within weeks of each other. The result of the debate on the appropriate parliamentary representation for Wales was disappointing. Wales has every reason to believe that it was let down by the Benches opposite. I hope that when this Bill completes its journey through the House-and I take the hint of the noble Lord, Lord Roberts-Wales will not again feel let down and we shall see the withdrawal at some stage of S4C from the Bill.

The setting up of the fourth channel to meet the needs of the Welsh language is the jewel in the crown of the Conservative Party in Wales. After a ghastly and monstrous U-turn and universal national protests, including that of Gwynfor Evans, the Tory Government were persuaded to provide for Wales's needs. I was glad that the noble Lord, Lord Crickhowell, made the point a few weeks ago that the visit of the three wise men-Lord Cledwyn, the Archbishop of Wales and Sir Goronwy Daniel-came at a crucial moment. The resulting Act of Parliament, setting up an independent, properly financed body, S4C, is now to be thrown on one side. The Government protest that they wish to maintain the independence of S4C. If the BBC is to be its main financier, it will be the ultimate accounting officer and all S4C's expenditure will have the stamp of BBC accountability. If I am wrong, perhaps the accounting provisions can be explained.

Having paid tribute to the Tory Government's decision, perhaps I can reveal that for six years as Welsh Secretary I battled for the Labour Government to meet their commitments, despite the difficulties of the IMF crisis. Ultimately, on 6 March 1979, weeks before the election, Lord Merlyn-Rees was able to move the Second Reading of the Independent Broadcasting Bill permitting the setting up of transmitters generally, and particularly for Wales, so that broadcasting could commence by the autumn of 1982. This was the vital building brick that the new Government seized upon and operated.

All this work, of which we can all be proud, is now in real jeopardy because the Government, without any consultation, decided to offer this piece of saving to the Treasury. There was no consultation with the Welsh Assembly, and the plea of all the party leaders in the Welsh Assembly for an independent review, referred to by the noble Lord, was ignored.

S4C has not been without its faults. I happen to listen to some of its programmes most evenings, even in London. I have complained as far back as 2002 that the mix of programmes on any particular evening, the overdependence on cheap football matches in remote parts of Europe and the overreliance on some performers, good though they may be, are not enough. S4C has failed to realise that Wales is no longer an agricultural country. It was no surprise to me to discover that the viewing figures had dropped substantially, although they do not include people such as me in London, or those in Liverpool or elsewhere across the border. I do not think that the board of S4C has served Wales well in recent years. There are individual talents on the board but they obviously failed to work with the chief executive and agreed to an organisational structure much criticised in Sir Jon Shortridge's report on governance.

In 50 years in politics, I have had only one dispute with a broadcaster, which was regarding a major programme celebrating the 10th anniversary of the setting up of the Welsh Assembly. I fear that the whole programme had to be withdrawn. The conduct of S4C was pathetic. However, there is much to be done within S4C and I hope that, with the vision of a new chairman of standing in Wales and a new chief executive, we can see better things.

None of this exonerates the Government from the process employed in riding roughshod, and in the face of an Act of Parliament, by demanding and getting back £20 million from S4C, denying long-term financing to S4C in the future and transferring most of its responsibilities for finance to the BBC.

I was grateful to Mr Vaizey for seeing me twice last year, whatever his relations with the Welsh Assembly. He listened very carefully to what I had to say and seemed seized of the importance of the points that I had made. Reading his evidence to the Welsh Affairs Select Committee, I was a little disappointed. The Government's conduct in refusing a meeting with the Welsh Assembly and ignoring a plea of all the party leaders in the Assembly for an independent review is beyond the pale. The Welsh Assembly has the statutory duty under Matter 20 of Schedule 5 to its own Act of,

"promoting or facilitating the use of the Welsh language".

What of the future? How is the relationship to work? There is only a short-term guarantee of finance. How is the independence of S4C, as promised by the Government, to be fulfilled? The accounts that I get, though disputed, of a lack of input at present by S4C into the 10 hours a week of broadcasting provided by the BBC do not augur well.

The first requirement in the new relationship between the BBC and S4C is for firm guidelines as to who does what. Perhaps an independent person-someone such as Sir Jon Shortridge, who is much respected-should be asked to draw up the guidelines on the relationship between the two parties; otherwise, a much larger BBC will overwhelm the tiddler that is S4C.

Secondly, there should be proper and adequate financing over a longer period of time than is envisaged at present. After all, careers are at stake and individuals are entitled to know, with as much certainty as possible, what sort of S4C there will be and whether there will be jobs for them.

Thirdly, money for S4C must come direct from the licence fee and not through the BBC. The licence fee is not the property of the BBC; it is our money. The BBC in the past has strenuously fought against top-slicing and it might well do so again. Should it succeed, we are back to the accounting officer problems that I posed earlier. In any event, a question has been raised as to the legality of the BBC paying money to a body that is not a subsidiary company of the BBC. Can the Minister assure us that the arrangements proposed have been legally approved?

Lastly, in the absence of an effective Act of Parliament continuing to guarantee S4C's existence, I would seek to ensure that part of the BBC's new charter, coming about in a few years' time, should set out the terms and duties of whatever body operates Welsh-language television. The alternative is a separate charter for S4C. After all, it had a special Act of Parliament promising and guaranteeing it revenues each year, but all that has been brushed aside-so much for the rule of law. It would have been wiser and more prudent to have had a proper and more independent review first. If there was a case for change, it should have been evidence-based.

I close by saying that it is a matter of regret to me that the Welsh Assembly, when economic conditions were so much better, did not propose that Welsh-language TV should become part of its responsibilities. I fear that there were two reasons why it did not do so. First, it feared taking over financial responsibility, although at that stage, when we were in better economic climes, that could have been negotiated. Secondly, I think that S4C preferred to be answerable to a distant Whitehall, with very few Welsh speakers overseeing it, than to neighbouring Cardiff, which would see exactly what was going on. This may be part of the reason why so much has gone wrong in recent years. It was a missed opportunity. I advocated this as long ago as 2002, when I was installed as chancellor of the University of Glamorgan. Welsh-language broadcasting is intrinsically essential to the well-being of the nation of Wales. The time is ripe-if one understands what devolution is-for Welsh TV broadcasting to be devolved.

4:00 pm
Photo of Lord Wigley

Lord Wigley (Plaid Cymru)

My Lords, perhaps I may first declare an interest. Between 2003 and 2006, I was a member of the S4C authority, and my son, daughter, son-in-law, daughter-in-law and my wife-and I occasionally-receive some benefit from participating in their programmes. My great interest by far, however, is as a Welsh speaker and a television viewer in Wales.

I support Amendment 83 standing in the name of Lord Roberts of Llandudno. I also speak to Amendment 113D, standing in my name.

As has been said, this is a very sensitive subject in Wales. When I entered the Commons in 1974 the structure of television in Wales caused immense frustration to both language camps. Welsh language television programmes were carried by both BBC and ITV main channels in Wales, a small proportion of which were at peak viewing hours. Non-Welsh-speaking viewers were frustrated at having programmes they could not understand thrust upon them. Equally, Welsh speakers were frustrated that at best they received a fragmented service, with BBC and HTV duplicating news and current affairs programmes. The sum of the parts just did not add up to a comprehensive service. Most of the programmes were away from peak hours. There were protests; many language activists refused to pay their television licence fee; and some went to prison.

Before the 1979 general election, the Conservative Party promised a dedicated channel for the Welsh language. A few weeks after the election, the then Home Secretary, in a speech in Cambridge, announced that the Conservative Government had done their first U-turn, abandoned their election promise and were not going to provide a single-channel solution. This led to massive protests, which culminated in Plaid Cymru's former leader, Gwynfor Evans, announcing that unless the Government kept their word and provided a Welsh channel, he would starve himself, if necessary, to death. Thousands protested, including many senior people in Wales. Hundreds of us refused to pay our television licence; I myself went to court for so doing, as did many colleagues.

Cutting a long story short, the Government realised that they had badly misjudged the situation. People from all parties intervened. The noble Lords, Lord Crickhowell and Lord Roberts of Conwy, both Welsh Office Ministers at the time, pressed colleagues with the strength of representations they were receiving from figures such as the Archbishop of Wales, the former chief civil servant in the Welsh Office, Sir Goronwy Daniel, and the former Secretary of State for Wales, Cledwyn Hughes, later Lord Cledwyn of Penrhos.

It matters not for the purpose of this debate whose representations carried most weight or for what reason. Suffice it to say that the Thatcher Government recanted. Discretion was quite rightly the better part of valour. A further U-turn took place and the channel was given the go-ahead. The rest is history.

However, understanding the significance of that history is essential to understanding the situation which faces us today, which seems almost like a rerun of history. For the first time since 1979, last May we had a new incoming Conservative Government. The Conservatives had during the preceding election campaign made no reference whatever to their intention to restructure S4C. As in 1979, with no consultation in Wales, policy was reversed after the election. Need I say more?

As has been said, the Welsh language is spoken by 20 per cent of the 3 million people living in Wales, amounting to about 600,000 people. There are probably a further 100,000 Welsh speakers living in the rest of the UK. It has been estimated that 57 per cent of homes in Wales have at least one person who understands Welsh. S4C is watched by more than 600,000 people in the course of an average week.

That figure is less than the reach of almost 1 million people which existed six years ago, which has been mentioned. There are two reasons for the change, both associated with the changeover to digital television. First, while it undertook analogue transmissions, S4C broadcast English-language Channel 4 programmes during off-peak hours when it was not transmitting Welsh programmes. Clearly, when those were no longer available, many English monoglots no longer tuned in to S4C. Secondly, digital switchover led many viewers of all four old analogue terrestrial channels to migrate to explore the offering available elsewhere. S4C was not immune to that trend. The drop in viewers was predicted by the DCMS as far back as 2005. Having suffered those setbacks, I am glad to say that the graph has turned over the past 12 months, with an increase of 10 per cent in the channel's reach across the UK to an average level of 616,000 in 2010. In the week ending 23 January, almost 1 million people tuned in across Britain-no doubt aided by the fact that the Cardiff City against Stoke City FA Cup match was being broadcast live.

It is also worth emphasising that the average programme viewing figures have been affected by the setting up of the brilliant toddlers' space called Cyw, which provides programmes for the under-fives on weekday mornings between 7 am and 1 pm. Those programmes can never aspire to more than the few thousand viewers: the available cohort is probably no more than 15,000 and the likely viewership under 5,000.

Some people have poured contempt on figures as low as that, yet as a service it is critical for language transmission, particularly in households in English-speaking parts of Wales. I am glad that Cyw was awarded international recognition in New York earlier this year. The facile use of statistics by DCMS Ministers to denigrate S4C has been unworthy and reflects a failure to understand the reality of the Welsh language, the channel and its role.

I make one thing quite clear. There is no question of saying that everything has to stay exactly as it has been over recent years. Indeed, S4C has in recent years already cut back its central staff from 210 to 154 at present, and is committed to further reductions down to 114. Surely that is an adequate indication of its intent.

Everyone in Wales realises that, in the current financial constraints, all services funded by the public purse are likely to face cutbacks and S4C cannot be immune from these. To that extent, the funding formula of RPI, which has looked after S4C for two decades, cannot be regarded as sacrosanct. We did, however, note last weekend the emphasis of the Prime Minister, David Cameron, in Cardiff when he stated that Wales was being protected from the worst level of the cuts hitting other parts of the UK because of our difficult economic position, and that the average cuts would be 2 per cent per annum over the next four years. I am sure that S4C, however reluctantly, could live with cuts of that order, but not with the 24 per cent cuts in real terms that have been predicted-or more likely some 40 per cent in cash terms over that period.

The importance of securing guaranteed funding for the channel, removed from the annual political dogfight, was the reason it was safeguarded in legislation by the RPI formula. Unpicking that legislation, however inevitable in today's climate, is not something to be undertaken lightly. There is, however, a feeling that any cash cutbacks to be faced by S4C should be no greater than those faced by other public services.

The worst aspect of this saga is probably the way in which it has been handled by DCMS Ministers. Decisions were taken without any meaningful discussion with those in Wales who have a legitimate interest in these matters, and without any engagement with S4C itself, its audience, or its stakeholders in Wales. We should also remember that some 40 private companies are dependent to a greater or lesser extent on S4C and will be affected by the changes which were unilaterally announced by the DCMS last year. S4C, in fact, paid over £88 million into the Welsh economy in 2010-money that has been vital in building up the private sector television and film industry in Wales so that it can compete in world markets.

The initial discussions with the BBC were overwhelmingly at a UK level, with even BBC Wales out on a limb. Involvement with S4C itself has been less than open, with the channel finding out at second hand what DCMS Ministers had in mind. The DCMS seems to have studiously avoided engaging directly with the Government of Wales, despite the fact that both the Welsh language and education are fully devolved functions and that S4C has a significant contribution to make to both those portfolios. Furthermore, when the junior DCMS Minister in another place, Mr Vaizey, appeared before the Select Committee on Welsh Affairs on 18 January, he admitted-he almost boasted-that no, he had not ever watched a single S4C programme. This was despite the fact that he had ministerial responsibility for the channel and that 80 per cent of S4C's output could be watched with subtitles.

Your Lordships will hardly be surprised that over recent weeks there has been growing demand for responsibility for S4C to be transferred from the DCMS to the National Assembly. This has been augmented following last Thursday's referendum. To my mind, there appear to be three elements which are essential for a solution to gain support in Wales. First, there has to be an acceptance that S4C is currently an independent public body, set up by statute. It is not acceptable for such a body to be abolished at the whim of a Minister using Henry VIII-type powers to do so. That is why I included in my Amendment 113D a provision that the powers given to the Minister at Westminster can only be used with the consent of Ministers of the Government of Wales.

It should be noted that those in the Assembly recognise that there must be change. Reference has already been made to the letter sent to David Cameron dated 29 October 2010 and signed by all party leaders in the Assembly, which proposed,

"a comprehensive examination of all aspects related to the governance and regulatory oversight of S4C, including where political responsibility should lie, on the basis of ensuring a secure and sustainable funding stream for the Channel".

That was a very positive proposal, but it does not seem to have led to anything. Whatever new structure might eventually transpire, I would urge that the corporate and commercial independence of S4C should be guaranteed. I am not persuaded that this can be done by bolting S4C on to the structure of the BBC. If it was, the campaigning target in Wales will inevitably switch to securing that what is currently BBC Wales becomes more independent from the BBC in London. I know that there is sympathy for such restructuring in Scotland and in some quarters in Northern Ireland. However, such fundamental changes should be part of a comprehensive new communication Act, not matters that arise from the ill thought-out schedules to a rushed Public Bodies Bill.

Secondly, whatever the model of the constitutional governance of S4C, there is also the question of the editorial independence of the channel. If the corporate independence of S4C is guaranteed, then of course its editorial freedom should per se be implicit in such a solution. If anything less than full independence is provided, the editorial freedom of S4C becomes a pressing issue, and it would have to guarantee the right of S4C to reject the editorial line taken by the BBC or, indeed, by politicians.

Thirdly, and crucially, there is the issue of the guarantee of finance. I have no objection whatever to S4C being funded from the licence fee because the proposal has much logic. However, if it is to be funded from the licence fee, that must-it really must-be done through a route that is independent of the BBC, as has already been mentioned. Once S4C becomes a supplicant of the BBC, it is finished. He who pays the piper calls the tune. It is my belief that S4C should have a proportion of the licence fee safeguarded by statute, perhaps around 2 per cent of the total licence fee take for the UK. The present formula gives S4C £90 million a year from the DCMS budget. The department sees its contribution dropping from £90 million down to £6.7 million by 2013, a 90 per cent cut in its contribution. Perhaps the Government of Wales might be able to contribute a sum similar to that £6.7 million and thereby secure an equal voice in terms of the channel's future. Securing an acceptable financial deal is basic to S4C and to retaining any meaningful independence for the channel.

Whatever way things move forward, there is a pressing need for the Government to clarify how they see the channel being funded post 2015. At present, there is a vacuum and great uncertainty, and frankly that is unacceptable to the small private companies in the sector which may be reluctant to invest if they feel that there is no ongoing financial certainty. But it is not enough to guarantee funding for the independent producers, important though that is. S4C itself needs some £20 million a year to maintain essential services such as transmission costs of over £7 million a year, subtitling costs, programme and viewer research, promotion of the channel and its legal and administrative responsibilities.

Securing a stable, practical and sustainable model for the future of S4C is immensely complicated and not something to be decided on the margins by unamendable orders in Parliament. It is therefore my preferred option for your Lordships' House to cut S4C entirely from this Bill and, if necessary, for the Government to bring forward new proposals after proper consultation in Wales and elsewhere as part of the development of a communications Bill in a few years' time. I hope that the Minister will accept at least the spirit of Amendment 113D on such a basis, but if she is not prepared to give a commitment to explore these possibilities and to come back with the necessary amendments on Report, I hope very much that the noble Lord, Lord Roberts of Llandudno, will press Amendment 83 to a vote and that it is supported by noble Lords on all sides as an indication made by this Chamber that the Government really must give further thought to this matter. Whichever way, I urge the Government to think again long and carefully on such a sensitive issue.

4:15 pm
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Lord Roberts of Conwy (Conservative)

My Lords, first, I thank those previous speakers who have referred to my part in the birth of S4C when I was a Minister in the Welsh Office. Since we began our proceedings on this Bill, my noble friend Lord Taylor of Holbeach has tabled some very welcome amendments, in particular the new clause in Amendment 114 requiring consultation on any draft order proposed under Sections 1 to 6. The new clause set out in Amendment 118 specifies the detailed procedure to be followed. That differs, of course, from the normal procedure with orders, but is not quite the super-affirmative procedure in full. These new clauses and the amendments tabled to them are yet to be discussed, so they are not in their final form. But whatever the final outcome, these clauses allow ample opportunities for consultation on a proposed order by Welsh Ministers, interested parties and parliamentarians. The many organisations and individuals who have written to us about S4C will, I hope, have the chance to have their say on the future of the channel in the consultation on whatever orders may eventually emerge.

The inclusion of a body in Schedule 4, in this case Sianel Pedwar Cymru or S4C, means that the Government have the power to modify its funding arrangements by order. Its removal from the schedule would mean that the power was removed from government. I am not quite convinced at this stage that removal is in the best interests of the channel or its viewers. The reason for my hesitation is that I am not sure what the financial position of S4C will be if there is no order. Does the channel continue to be financed as prescribed in the Broadcasting Act 1990 as amended? I should be grateful if the noble Lord who is to reply would clarify the position.

It is well known to most of us that the Government have advanced quite far in their plans for the future financing of S4C. We know this from a letter, which has been made public, from the Secretary of State at DCMS, the right honourable Jeremy Hunt, to Sir Michael Lyons, chairman of the BBC Trust, dated 21 October last year. A subsection of the letter, headed "New partnership and funding model for S4C", states:

"The government remains committed to a strong and independent Welsh-language TV service".

This statement of principle is repeated later in the subsection in the context of future funding of the service after 2015 when the comprehensive spending review period has ended and the funding situation of S4C is again under review.

Quite frankly, the critics have not given the Government the credit due for this very clear affirmation of their commitment to sustaining the Welsh language service. It has been reiterated by Ministers on a number of occasions, but it goes unheeded by those who do not wish to hear. A reduction in funding for S4C is not an attack on the Welsh language, as some have alleged, any more than a cut in defence spending is an attack on our forces.

The letter makes it clear that the DCMS will continue to fund S4C in 2011-12 and 2012-13 at agreed levels. The current level is not sustainable because, under the Broadcasting Act 1990, the channel's annual grant increase is tied to the retail prices index. It is clear that that link must be broken to effect the deficit reduction programme which is fundamental to the coalition Government.

I understand that S4C will receive some £90 million from DCMS next year, plus £20 million of cost-free programmes from BBC Wales as well as some £3 million of revenue from advertising and commercial activities. It also has some £27 million in reserves. Therefore, S4C is not facing an imminent financial crisis. Indeed, it appears to have financial security for four years ahead, which is not to be deprecated. After this two-year period of DCMS funding, the BBC will contribute £76.3 million in 2013-14 and £76 million the following year, 2014-15, from licence-fee money collected from the public by the BBC. One must stress, as has already been done, that those moneys do not belong exclusively and as of right to the BBC, although it is responsible for them. DCMS will give a further £6.7 million and £7 million in those two years respectively. S4C will also have funding again from the sale of advertising and other commercial operations.

Why is all that spelt out in a letter to the BBC? It is because S4C is part of the new funding package negotiated between DCMS and the BBC whereby the BBC World Service, some local TV services and BBC Monitoring will be funded from the licence fee as well as S4C from 2013 on. It is worth noting that only DCMS with its extensive responsibility for broadcasting matters could have made this arrangement for S4C to be funded from the licence fee, which is collected by and so jealously guarded by the BBC. The National Assembly for Wales and their Government could not have done it. Besides, broadcasting is not a devolved matter anywhere in the United Kingdom.

All this provision for S4C funding-I stress that funding is all I am referring to-makes reasonable sense to me in our current, straitened national circumstances. Some have said that there is no provision beyond 2015, but four years of certainty as regards funding is not to be despised. Furthermore, we are promised a review in good time before that period comes to an end. There is also a thinly veiled threat to the BBC that if the new partnership with S4C does not work for any reason, the Government will not take the licence fee money themselves but nor will the BBC have it either, except to reduce the licence fee.

There is strong pressure on all sides to make the funding system work and it probably will. I cannot see any other satisfactory alternative being produced in time. Of course, if the final order to implement the new funding scheme is grossly unsatisfactory, both Houses have the power to reject it-rarely used though that power may be in your Lordships' House. Where the problems will arise is in the inter-relationships between the organisations involved, but these cannot properly be resolved in the context of a Schedule 4 order and belong more properly to another schedule, possibly Schedule 3, which relates to the power to modify constitutionally in the sense of internal arrangements of public bodies. Clearly, the Government have not yet decided the detailed arrangements for the governance of S4C, which has come in, as the noble Lord, Lord Wigley, said, for some hefty criticism recently from Sir Jon Shortridge, formerly Permanent Secretary of the National Assembly and the Wales Government. It is understandable therefore that the UK Government placed S4C in the pending tray of the purgatorial Schedule 7, now to be abolished with certain exceptions.

S4C may well need to adapt its internal organisation, not only because of the new situation that will result from its new funding arrangements, but also because of recent events and public concern about its governance, which is the subject of Sir Jon Shortridge's very thorough report. The present position, as it has developed, is that there is a supervisory authority and an executive team which manages and provides the day-to-day service. To put it mildly, this system has not worked satisfactorily in recent years, possibly because of the curious, and I believe wrong headed, separatist policy pursued since 2006 of keeping the authority and the management of the service as far from each other as possible. I shall not go into the painful consequences, which have become all too public, but I shall quote from the Shortridge report:

"Too many decisions were taken by management which should have gone to the Authority; there was too little transparency; when members of the Authority were invited to take decisions they too often felt that they were not given sufficient time and that they were denied the information they needed to enable them to make the necessary judgements; and they also lacked the information they needed to assess the decision taking and performance of management".

Clearly, that was an unhappy state of affairs and it is surprising that it was allowed to continue as long as it did. A new authority will, I hope, have learnt lessons from the past and will be constituted differently, with a fresh mandate, mission statement and declaration of duties and responsibilities. The foundations are clearly laid down in Sir Jon's excellent report. I am glad to say that some of his recommendations have already been acted upon by the existing authority.

I turn to the new partnerships scenario implied by the new funding arrangements agreed between the DCMS and the BBC Trust, incorporated in the same letter from the Secretary of State to the chairman of the BBC Trust, dated 21 October last. The key principles are clearly stated:

"The S4C service must retain its brand identity and editorial distinctiveness, as well as its special relationship with the independent production sector in Wales".

The Secretary of State goes on:

"HMG holds that a new partnership model with the BBC is the best way of securing the long-term future of the service",

and adds that the partnership would be,

"along similar principles to BBC Alba".

That similar partnership would not be acceptable in Wales. It is difficult to see how that could be reconciled with the independence of S4C. It is not that the BBC's extensive contribution to Welsh language programming on radio and television is not recognised and highly valued, but pluralism is all important in Wales as elsewhere, especially in news and current affairs. We do not like to see all our eggs in one basket.

The Secretary of State's letter describes a fairly complex bipartisan series of negotiations, beginning with the BBC Trust and the authority setting out the strategic goals and broad editorial requirements of the service. Then, a combined board of the authority and the trust would oversee delivery of the same and, finally, there would be a joint management board to operate the service with its own commissioning structure and composed with a majority of independent directors appointed by the trust and the authority. It is no wonder that the Secretary of State's next sentence is that,

"further discussion will be required about the exact form of the partnership, and the Government will play its part in those discussions".

It is a curious set-up which requires a lot of tidying up.

What is the alternative? If possible, the licence money which is to provide the bulk of S4C's money from 2013-14 should be allocated alongside the DCMS grant and be subject to the same accounting procedures. Could the Minister say whether this is possible now or in the context of the BBC licence renewal negotiations? It is crucial to split the BBC from the dispersal of the licence fee moneys that it gathers. At present, as Sir Michael Lyons, chairman of the BBC Trust, pointed out in a letter dated 10 November to the then-chairman of the S4C Authority, John Walter Jones, the trust is accountable to Government for the use of the licence money and that would extend to such moneys as were received from the licence fee by S4C in future years. This puts the BBC in a very dominant position vis-à-vis the S4C Authority.

The S4C Authority, on which the BBC-which, as I have said, contributes some 10 hours of free programming-and independent producers should be represented, along with the general public, should set strategic goals and broad editorial requirements within indicative legislative parameters. The management board should be the supplementary executive of the authority, with a chief executive and officers responsible to the authority for the provision of the service. Because of the substantial contribution of BBC programmes, it would clearly be advisable to have a BBC Wales programme liaison representative on the programme committee, which would be a subsidiary body to the management board. Of course, this bare structure that I have outlined would need further discussion and refinement, but it would make for a more cohesive, tighter, stronger, independent organisation capable of providing an attractive and worthwhile service for the Welsh people.

4:30 pm
Photo of Lord Rowlands

Lord Rowlands (Labour)

I support this amendment. The noble Lord, Lord Wigley, was right to remind us of the situation before S4C was first created. The bitter, divisive nature of the arguments that surrounded Welsh language broadcasting in my days as a Member in the other place were some of the most violent and angry ones that I had ever heard from constituents. They were split right down the middle. It ended up with people taking extreme positions. There were those who did not want to see a single Welsh language programme on either BBC or what was then HTV, and those who wanted to see a lot more and realised that these channels were not going to provide it. The creation of S4C has been an extremely important aspect in developing a consensus around broadcasting in Wales. Even with the best of intentions, we would be very foolish to break that consensus unnecessarily by one means or another. First of all, the consensus was built in establishing S4C, as has been described by my noble and learned friend Lord Morris and by others, and gained enormous cross-party support.

Despite all the problems that S4C has had since, I believe that one of its successes has been to maintain or sustain a degree of consensus around broadcasting and that we have not had the divisiveness that accompanied some of the broadcasting of earlier times. The Government ought to be very careful, in the way that they handle all these issues, that they do not break the consensus and reopen some of the old divisive arguments that were injurious to Welsh broadcasting as a whole. That is the first point that we have to get across to Ministers: that they cannot take a blunderbuss approach to this issue because it is too important that it be maintained. The consensus was created and developed as a result of careful consultation and bringing everybody along together. This has not happened so far in relation to the proposals now being floated.

I hope noble Lords do not mind if I mention, in a personal sense, that I had an opportunity for quite a period to watch closely the affairs of the S4C Authority because my wife was a member for a number of years. I realise what my noble and learned friend Lord Morris has said and what the noble Lord, Lord Roberts of Conwy, has said about the more recent problems of the S4C Authority. However, I remember, over the whole period of S4C's establishment, that independent members of the S4C Authority played a crucial role in developing the new provisions and making sure that the channel was trying to reach out to audiences and was not going to be an enclave just for Welsh-speaking communities. My wife and others spent a great deal of time promoting what the authority was about, what the channel was about and what the service was about in communities that were not Welsh-speaking, such as the constituents of Merthyr Tydfil, whom I represented. The consequence of that and, I believe, a factor that was promoted by the independent members of the authority was that people in Merthyr felt that it was just as much their channel as it was in Caernarvon or Ceredigion. That was the success of it. Members of the authority itself played a very important role in achieving that aim and purpose. It had amazing spin-offs, such as the growth of Welsh medium education in communities such as Merthyr. Ysgol Santes Tudful started out with 22 children. My eldest son was a founder member of the school, which now has more than 400 students. S4C's role in promoting and linking up through its children's programmes has been a vital part of that development. It is one of the most exciting things that has happened in the Welsh language scene-that in Merthyr we have such vibrant and thriving Welsh medium education arrangements.

All this is part and parcel of a very important situation. My fear is that, in an effort to try this or that solution, if the S4C Authority loses its measure of independence and is seen to be subsumed within the BBC empire in one form or another, that will do harm, not good, to the future of Welsh language broadcasting. I ask the Committee and Ministers to ponder on this: we created a consensus to establish the authority, and a consensus is needed now on essential changes that need to be made, but that consensus has to be worked at. A blunderbuss approach of this kind, trying to promote an order of this kind as a solution, is not the way forward. It is the most inappropriate process by which to develop the change necessary in Welsh language broadcasting. The Minister will not lose any face. He has already made amazing changes to this Bill, and I suggest that this could be one more change that the Government could accept.

Photo of Lord Elystan-Morgan

Lord Elystan-Morgan (Crossbench)

Everybody who has spoken in this debate already and very probably everybody present in the House would probably agree with the proposition that if the Government make a mistake in how they deal with this matter, a death blow could be struck at the very existence of the Welsh language. S4C is a unique body charged with a unique commission to safeguard the very existence of the Welsh language. Well, you may say, that is nothing very much-but I doubt whether many Members of this House would take that view. A living language with a living literature is a jewel in the treasury of human culture, and the Welsh language no more and no less than any other living language is such a jewel. It is 1,500 years old and was in existence at least 500 years before the French language came into being. The French language came into being only at the end of the first millennium; up till then it was a patois of Latin. That shows something of the pedigree of the language that we are talking about.

If anybody thinks that those of us who are Welsh-speaking or committed in some way or another to a loyalty to the Welsh language are overdoing the case, I ask humbly of each and every Member of this House whether, if the English language were in such jeopardy, they would not take up honourably and gallantly exactly the same position. If you thought that the language of Milton, Shakespeare and Chaucer was in jeopardy and that its very life was in doubt, I know exactly what you would do. We are prepared to say exactly the same of the Welsh language.

The next question is about how unique the circumstances were in which S4C was set up. They have already been dealt with in some detail. There was a very ugly situation in Wales; there had been massive civil disobedience, and I have no doubt that Gwynfor Evans would have given up his life. A very wise, statesmanlike Englishman who had great experience of conflicts not dissimilar to these, William Whitelaw, made an agreement with the Welsh people. He said that if they called off their protests he was prepared to give them this channel. That is exactly what happened, to his eternal credit. I think that we should be very careful with this legislation that we do not go back upon the word of that splendid statesman and gentleman.

Indeed it was an agreement. A very great jurist, many centuries ago, spelt out in Latin the principle of agreements: pacta sunt servanda-agreements are binding. This agreement is binding and I would have thought that is the strongest possible case that one could have for not including it in Schedule 4. There are two jeopardies that S4C faces: it could be starved of a sufficiency of funds so as not to allow it to be able to carry out its true purpose; and it could be so boxed in with any form of association with a greater, more powerful body, the BBC, that it would render its independence something utterly unreal.

We have heard regarding finance how a 24 per cent cut might very well reduce S4C to the point when its very existence is placed in jeopardy. I am sure I am not exaggerating the situation. The other side of it is what would happen if it was brought under the aegis of the BBC. I am not entirely sure under what authority the Government have in fact suggested that there should be such a merger-Clause 4 deals entirely with funding; nothing else. Clause 7(1)-I will not go into the detail of it-might touch upon that but I doubt it. Are there any other statutory authorities that allow the Government to do this? I doubt it. Maybe the Government are relying only on the financial pressures brought about-not in relation to S4C alone-by the general economic situation to box S4C into a corner that it would not wish to be in.

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Lord Elystan-Morgan (Crossbench)

I am sorry; I have not yet resumed my seat. I was only collecting my notes. I shall not delay that event very long.

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Lord St John of Fawsley (Conservative)

My Lords, I have been entirely convinced by the noble Lord's eloquence in support of Welsh as a living language which it would be a tragedy to have lost. However, I think I detected, in the middle of his eulogy to the Welsh language, a Latin phrase. Would he add his zest and enthusiasm to reviving Latin as a spoken language?

Photo of Lord Elystan-Morgan

Lord Elystan-Morgan (Crossbench)

It is very late in this debate but I wholeheartedly agree. A survey carried out about 100 years ago showed that of words in general common parlance in the English language, 75 per cent were of Latin derivation. In Wales, it was well over 85 per cent. I believe that Latin should be revived, not as a dead language and not as a part of history, but as part of the building blocks of the languages that we use from day to day. I am very grateful to the noble Lord for that intervention.

I wish to raise a very narrow lawyer's point. It would be ideal if the licence fee or an appropriate and guaranteed part of it could be diverted across to S4C straightaway without passing through the hands of the BBC at all, but I doubt very much whether that would be possible under the 2006 charter. I will not go into great detail about that now. If you try to deal with the licence fee then a price has to be paid. The Government, not cynically, but I think quite deliberately, are acting in a mercenary way. They are saying that they would be saving 94 per cent of the DCMS's expenditure on S4C by transferring it to the licence payer. That is exactly it. In so far as the effect of that is concerned I will refer only very briefly to Article 47 of the 2006 charter, which sets out, almost like the main clause in the memorandum of a company, the main purposes. Article 47(4) says:

"However, the BBC may use these general powers only for the purposes set out in articles 3 to 5".

Articles 3 to 5, of course, govern the situation completely in this connection. Article 3 says:

"The BBC exists to serve the public interest ... The BBC's main object is the promotion of its Public Purposes".

Then it says this:

"In addition, the BBC may maintain, establish or acquire subsidiaries through which commercial activities may be undertaken to any extent permitted by a Framework Agreement".

In other words, is the price of diverting part of the licence fee to S4C the fact of making S4C a subsidiary and slave of the BBC? As a lawyer, or an ex-lawyer, I have grave doubts that that is exactly the case; if so, it is a price that simply should not be paid.

I endorse what has been said about the lack of consultation. There was no consultation between Her Majesty's Government and the Welsh Language Board or S4C, or indeed the Welsh Assembly. This is not the first time that we have commented on such matters within the past few months. Were these snubs deliberate, or were they a mere lack of imagination and foresight? I do not wish to say this offensively, but the Minister will appreciate that the Welsh people have not been incandescently committed to the Conservative Party over the past 140 years since the passing of the Ballot Act. It may well be that they will not change a great deal now.

4:45 pm
Photo of Baroness Morgan of Ely

Baroness Morgan of Ely (Labour)

I support the amendment put down by the noble Lords, Lord Roberts, Lord Elystan-Morgan, Lord Rowlands and Lord Morris, on taking out any reference to S4C, the Welsh-language broadcast channel, from the Public Bodies Bill. I declare a slight interest, as the channel was the first organisation brave enough to employ me following my graduation from university, although its trust in me extended only as far as allowing me to photocopy the "SuperTed" scripts, which I am proud to say I did very well.

We are discussing a serious situation that, let us face it, has arisen due to some last-minute haggling before the comprehensive spending review was announced last year. That is why we are in this position. To place in question the future of a channel that had such a traumatic birth is naive in the extreme. We have heard how that came about; it was traumatic and divisive. The Welsh language in particular has been a divisive issue, but it has been put behind us with the establishment of S4C. I do not want to see that awful box reopened, but the danger of this action is that it could do exactly that.

We have to understand the historical context. The current proposal to include S4C in the Public Bodies Bill places a serious question mark over the channel's future. There are lots of reasons for that, not least the 24 per cent cut. That is a dramatic cut, more extensive than many of the other already extensive cuts that we have seen from the Government. People should be reminded that the number of speakers of the Welsh language had been on a substantial downward spiral over the past century. The stabilisation of the language has been due in part to S4C, not just in allowing the language to be perceived in a modern context through new media but in helping to keep young, talented Welsh speakers in Wales who have contributed to the economy and might otherwise have left, denuding the language of Welsh-speaking young families of the future.

The economic aspects of the channel should not be underestimated. This investment, which until now has amounted to about £100 million a year, has helped to establish Wales as a key cornerstone of the media industry in the UK. The knock-on impact on the economy has been immense.

Is it going too far to suggest that including S4C in the Public Bodies Bill will place a serious question mark over the future of the channel? I do not think so, largely because now there is no legal certainty for the channel, which there was prior to the spending review. There is the principle of the matter to consider. It is an extremely serious matter to decide via secondary legislation on the structure, budget and very existence of a channel that was established by statute. There is now no guarantee for the channel beyond 2015. I know that the noble Lord, Lord Roberts, suggested that four years gives an amount of certainty. That is typical of the short-sightedness of the view that the Government are taking on the economy. We must look to the long term; that is where our future is. If we do not invest now, we will be in serious trouble in the future. It is a serious situation for the autonomy and political independence of a TV broadcaster.

You have to remember that in Wales there is already very limited media plurality. The European Charter for Regional or Minority Languages, to which the Government are a signatory, notes under Article 11 that media provision should be made available in regional languages and that the independence and autonomy of the media should be respected. It is difficult to envisage how this can be respected within the proposed new structure.

Finally, it is worth noting that S4C has been poorly run of late. Comprehensive political oversight of the channel has been lacking over the past two decades of its existence. It is now clearly an anomaly that S4C's political oversight is based in London when Wales has its own political Chamber. The Welsh Assembly has clearly been concerned about being passed the responsibility without the budget in the past; that is why it has not asked for it. There needs to be a serious, comprehensive and detailed discussion about the channel and its future, particularly if the proposed new structure-whereby S4C's budget comes from the BBC licence fee-is to continue. It was wrong to rush this through because of a comprehensive spending review deadline.

I would like the Minister to assure the House that the channel's long-term financing, economic impact, editorial autonomy and independence, and political accountability mechanism were considered prior to the proposal that it should be included in the Public Bodies Bill, or is the treatment of the channel simply part of a slashing strategy which we saw as part of the comprehensive spending review and which was undertaken without any reference to these issues or the historical background of the channel? I would like the Minister to comment on that.

Photo of Lord Nickson

Lord Nickson (Crossbench)

I apologise for speaking in this debate. I did not come into the Chamber expecting to speak today. My sympathies are very much with the Minister for having to reply to a debate that has inspired such eloquence and passion and will inspire great feeling. When I listened to the first three speeches, I found myself persuaded by the noble Lords, Lord Roberts of Llandudno and Lord Wigley, and by the noble and learned Lord, Lord Morris. Had this amendment been put to a vote, which it may yet be, I was minded-with an open mind-to vote in favour of it. I then listened to the noble Lord, Lord Roberts of Conwy, and began to change my mind.

Now, why on earth should I wish to contribute to this debate? My contribution is emotional, rather than rational or economic. I live in Scotland and have been there all my life. I know more about the Gaelic language than I do about the Welsh language. However, I was brought up as a boy in the Conwy valley. My father taught himself to speak Welsh as a schoolmaster in middle age. He thought that, living in the Conwy valley, he should speak Welsh. The noble Lord, Lord Roberts of Conwy, may remember him. I should also say that my middle name is Wigley. For those reasons, I am deeply moved by this debate and feel strongly that the emotion inspired should-I hope-bring the Minister to dwell in her reply on the words "consideration" and "consensus", and to give careful thought to what is happening here.

I still have not made up my mind which way to vote, should the amendment be put to a vote, and will not do so until I hear what the Minister has to say. It is only one vote but I will listen with great care to what the Minister has to say.

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Lord Howe of Aberavon (Conservative)

My Lords, despite my Welsh ancestry and, indeed, my part-Welsh title, the House will have noticed that I do not frequently take part in debates on this subject. That perhaps uncharacteristic diffidence is because I do not speak Welsh. It does not mean to say that I have failed to take account of the language. I can add to the satisfaction of my noble friend Lord St John by saying that in my last year at Winchester College-I will come back to that later-one of the tasks that I undertook was to write a thesis on the influence of Rome on Wales and the Welsh language. That inspires me to enter this debate.

I am, indeed, Welsh. My father was Welsh and Welsh speaking. He had the wisdom to marry a Scottish/Cornish bride, so I am a completely Celtic creature. I speak in support of the amendment with that in mind. I understand, and have sympathy with, the arguments on both sides but my clear view is that-as the noble Baroness, Lady Morgan, said-S4C does not require, and should not have, a place in this legislation. I do not begin to understand the complexities of the discussions that have taken place with the authority in recent years, but to put it in a Bill of this kind, which is designed to sweep away organisations of broadly this kind by ministerial signature, is not the right approach.

Familiarity of Latin by the Welsh is demonstrated by the choice of the Welsh word for the Welsh Assembly. The Scots have been left with the Scottish Assembly but the Welsh word for the Welsh Assembly is "Senedd". If you look that up in a Welsh-English dictionary, you will find that it means a law-making body. That is a pretty firm undertaking on behalf of the independence of Wales, the Welsh language and, indeed, the Assembly.

Photo of Lord Elystan-Morgan

Lord Elystan-Morgan (Crossbench)

"Senedd" indeed means senate; it is one and the same. However, the origin of senate is "senex", meaning an old man.

Photo of Lord Howe of Aberavon

Lord Howe of Aberavon (Conservative)

I am not sure whether that learned classical intervention is designed to undermine the case that I am making or to demoralise me as I am an old man.

Considering my Welsh origin, I have not contributed a great deal to the structure and politics of the Principality. Tom Hooson was the cousin of the noble Lord, Lord Hooson, who, alas, is not with us and is unwell-we send him our best wishes. Tom Hooson was for some time-not long enough-the Member for Brecon and Radnor. In 1959, we together wrote what I think was the first booklet on the Welsh economy to be written by a political party, entitled Gwaith iGymru, or Work for Wales. One of the propositions that we rather tentatively put forward in that booklet was one that I was able to advance, together with Tom Hooson, at the Welsh area conference at Llandrindod Wells, when Mr Henry Brooke was the Secretary of State for Wales. It was that we should have referenda-we did not call them that-in Wales on a county basis to vote yes or no for the continued closure of Welsh public houses on Sunday. We had those referenda every seven years for 35 years until my noble friend Lord Howard-Michael Howard-was able to repeal that legislation because Wales had been completely liberated. That is the way in which to achieve an objective in this case.

It would be prudent to meet the sincerity and the concentrated position of all those who have spoken in this debate and realise that the inclusion of a body of this kind in legislation of this kind misjudges the legitimacy of the case and the way in which it should be dealt with. I say that-and it is a point that I have made previously-because when I became Chancellor the Exchequer a long time, although not 100 years, ago, I set out in search of a bonfire for the quangos. The other day, I discovered a letter to the Times, published on 28 January 1980, from a gentleman who said:

"As a member of two Quangos which have both been disbanded, I refuse to be made to feel guilty about being an expensive luxury or usurper of Ministerial powers. Indeed, until I began to read that I was a form of contemporary parasite, I was happily living in the mistaken belief of actually giving a form of service to my country".

I confess that the gentleman who wrote that letter, David Hobman, was complaining about the abolition of the Metrication Board-one of the quangos that I was able to put on my bonfire. To add insult to injury, he pointed out that it was I, as Minister for Trade and Consumer Affairs, who appointed him to the very quango that we were abolishing at that time. The noble Baroness, Lady Morgan, said that we might have to wait five years to see the consequences of what is happening. The point is that we have had to wait, and are still waiting, for the consequences of abolishing the Metrication Board. Nothing could have been more stupid, or done more damage to paralyse our country, in the context of almost every other country in the world. However, that is a by-the-way.

I seriously urge my noble friend and the Government to refrain from including S4C in any part of this legislation. It is manifest from the quality and nature of this debate that S4C is something more significant than a mere instrument. The matter could be readily resolved by a response to that.

I finally revert to my Wykehamist paradise. A fellow Wykehamist, who is, alas, no longer with us, was Lord Whitelaw. As we have heard, it was he who established the body about which we are talking. Others have wisely said that every Prime Minister needs a Willie. That was my noble friend Lady Thatcher. We need a Willie now who will take account of what the real Willie said not all that long ago. He created S4C and would be turning and revolving in his grave, whether speaking Latin or English, in his denunciation of this proposal. I am not very good at Latin, but he would repudiate altogether a decision by this Government to include this organisation in this legislation.

5:00 pm
Photo of Lord Richard

Lord Richard (Labour)

My Lords, I detect that the atmosphere in the House is that we are anxious to get on, listen to the Minister and hear what the Government have to say. I therefore wish to give her two or three sentences of advice and then sit down.

First, I say to the Government: do not underestimate the importance of this issue in Wales. Do not do that, because the whole idea behind Lord Whitelaw establishing S4C was to take the sting out of the argument about the position and the future of the Welsh language. Like the noble and learned Lord, Lord Howe, I was not brought up to speak Welsh but I was brought up in a very Welsh-speaking part of Wales. My father spoke fluent Welsh; his father was a Methodist preacher, as was his father. I come from a long line of non-conformist divines. However, the fact of the matter is that my mother came from Cardiff and we therefore did not speak Welsh at home, although we spoke Welsh in the village.

All that I can say to the Government is that this matters in Wales. It is not a question of pounds, shillings and pence or the cash. It matters to Wales that there is now a television channel that broadcasts in the natural language of the Principality and our nation and it needs to be preserved. The idea that in a Bill dealing with quangos the Government can come along and suddenly thrust in this proposal regarding S4C is frankly ludicrous. The Government should be ashamed of doing it in this way. If they have views about S4C, they should produce a Green Paper or a White Paper, or whatever, and consult the people in Wales who are interested-in particular, the National Assembly. To strike a potential blow at the Welsh language and its future in Wales in this way is absolutely disgraceful.

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Lord Sanderson of Bowden (Conservative)

My Lords, I had not intended to take part in this debate because I come from Scotland. However, I was encouraged by the noble Lord, Lord Nickson, putting his foot in the water. I appeal to the Minister, whom I know from times past has had a very successful time in party politics, to think very carefully before he jumps into this deep water. I remember only too well the times when Lord Whitelaw was dealing with this very tricky issue. Something about Lord Whitelaw that we all appreciated was that he would say: "Hold on a minute, let us see what the outcome is going to be. If there is a real case to be answered, let us hear it". He heard it and took his decision thereafter-and persuaded the Prime Minister, Mrs Thatcher, to take the same view. I urge the Minister, in the words of the Scottish anthem, "tae think again".

Photo of Baroness Finlay of Llandaff

Baroness Finlay of Llandaff (Crossbench)

My Lords, I will speak briefly. The history and complexities of the issue have been eloquently outlined by the noble Lord, Lord Wigley, and the noble and learned Lord, Lord Morris, and by others. As a non-Welsh-speaking person who adores living in Wales, I impress on the Minister that this goes beyond language. It concerns the cohesiveness of the people living in Wales. I watch S4C. I do not understand all the language but I love some of the programmes. They provide a unique opportunity for people to start and develop their careers. They provide a sense of community and society that you do not get in any other television broadcast in the UK. There is something quite special in the depth of the culture that comes through, which is far beyond language. My concern is that if we look only at the language, we will miss some of the essence of the feelings expressed in this debate.

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Baroness Gale (Labour)

My Lords, it gives me great pleasure to speak in the debate. I say to all noble Lords who have taken part a great big diolch yn fawr. I am not a Welsh speaker, unfortunately, and can only say little things like that. However, I am sure that the Minister will appreciate the strength of feeling in the passionate speeches that we heard from so many experienced noble Lords from Wales and elsewhere. It has been good to hear them.

S4C is a unique example of public service broadcasting devoted to representing Wales through the medium of the Welsh language. The status of the language and culture of Wales is of great importance to Welsh speakers and non-Welsh speakers alike. My noble friend Lady Morgan of Ely spoke of the importance of the Welsh language channel for young people.

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Lord Richard (Labour)

My noble friend is making a speech from the Front Bench. With great respect, the Minister ought to have the courtesy to listen to it.

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Baroness Gale (Labour)

I was commenting on what my noble friend Lady Morgan of Ely said about the importance of the Welsh language channel in respect of young people who speak Welsh, and children in particular. It is the only channel that caters for Welsh-speaking children. My noble friend Lord Rowlands spoke about the development of the medium schools in Wales. They have been a great success in Merthyr and in all the valley constituencies. I speak from experience as I sent my children there and I am proud to say that they are fluent Welsh speakers. Their children are, too. My children, grandchildren and great-grandchildren all speak Welsh, so, although I cannot speak it myself, I can say that I have done my bit for the language. S4C has also helped to develop their language skills. Many of the pre-school children's programmes are absolutely great, and children do not have to be Welsh speakers to listen to them. Therefore, S4C plays a very important role at all stages of a Welsh person's life.

From the views that have been expressed this afternoon, I think that the Public Bodies Bill is perceived as a threat to the very existence of S4C. That view can also be seen in the many letters that I, and I am sure many other noble Lords, have received from individuals and organisations in Wales. Of course, they have all been bilingual letters. Understandably, small businesses in Wales, particularly those in the creative industries, are very anxious about what this decision means for them. Therefore, there is much concern about the future of S4C in Wales.

In his evidence on S4C to the Welsh Affairs Committee on 18 January, the Culture Minister, Ed Vaizey, admitted that he had no specific Welsh-based adviser giving him a Welsh overview, although he said that he had had informal discussions with former Secretaries of State for Wales. He also admitted that he had not spoken on this matter to Nick Bourne, the leader of the Welsh Conservatives in the Welsh Assembly. When asked whether he had ever watched S4C, he said that he had watched "Fireman Sam". As this is a children's programme in English, I do not think he would have gained much knowledge from it if that was his only viewing of S4C. With the Culture Minister having so little knowledge about Wales and the importance of S4C to the culture and language of Wales, is it any wonder that we are having such a debate today, showing, as it does, the strength of feeling on this matter?

Does the Minister agree that there has been no consultation with the Welsh Assembly Government or with S4C itself? It has been mentioned that the four party leaders in Wales wrote to the Prime Minister in October calling for an independent review commissioned jointly by the UK Government and the Welsh Assembly Government. The four leaders were seeking a review into the future of S4C because, as we have heard this afternoon, there seems to have been a problem with the Government's approach. Such a review would examine all aspects relating to the governance and regulatory oversight of S4C, including the question of where political responsibility should lie, and it would seek to ensure that the channel remained independent. The review would also seek to secure a substantial funding stream for the channel. I do not know what has become of this letter or whether there has been any discussion with the Minister on it. Perhaps he will be able to tell us.

Surely there must be a much better way of going forward than the way in which the Government are dealing with S4C in this Bill. I think that there is general consensus around the Committee that S4C should not be included in the Bill. Can the Minister allay fears that these measures, if implemented, could mean the end of S4C as an independent broadcaster? Many have mentioned the funding issues. They will of course need to be looked at and some solution will need to be found.

I hope that the Minister has listened carefully to the grave concerns that have been expressed all around the Committee. I am sure that by now he will understand the strength of feeling that Welsh people have regarding S4C. It is seen as one of the national assets of Wales. Therefore, I hope that, as others have mentioned, the Minister will be able to have discussions with all of us between now and Report with a view to finding a solution to this matter.

5:15 pm
Photo of Baroness Rawlings

Baroness Rawlings (Conservative)

My Lords, I should like to make it clear that I am answering as the Minister from the DCMS, as this is the DCMS part of the Bill.

This has been an impassioned and eloquent debate. We all agree on the importance of Welsh-language television broadcasting. It is not in doubt, as we have heard from a very full debate this afternoon.

This Government remain committed to making certain that Welsh programming is a key part of the UK broadcasting landscape and that a dedicated channel for Welsh language broadcasting is maintained. The amendment of my noble friend Lord Roberts, Amendment 83, would remove S4C from Schedule 4. This would prevent us amending the funding formula. Following the point made by the noble Lord, Lord Wigley, that in the current economic climate it is not possible to have funding linked to the RPI, I say that the Secretary of State needs the flexibility to allow the funding settlements appropriate to the prevailing fiscal climate, so that all relevant factors are taken into account. The Government have had to make some difficult decisions about the organisations they fund directly, and S4C is no exception. The comprehensive spending review made a firm commitment to funding S4C. Subject to this piece of legislation, the funding levels are secure for the next four years, as I said to my noble friend Lord Roberts on 28 October 2010 in answer to his Question on funding for S4C, and to the noble and learned lord, Lord Morris. I give reassurance that there will be a review before the end of the four years.

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Lord Rowlands (Labour)

The noble Baroness mentioned the need for the particular order-making power to change the financial arrangements. Does that mean there is nothing in the original Act which would allow that?

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Baroness Rawlings (Conservative)

I do not think there is. That is why it is in this Bill.

In relation to Amendment 113D in the name of the noble Lord, Lord Wigley, it is right that S4C should remain a responsibility of the Department for Culture, Media and Sport.

My noble friend Lord Roberts of Conwy is absolutely right in his well argued speech. As he started S4C, he rightly said that no order can be laid without consultation. Broadcasting is reserved as part of the Welsh devolution settlement and is, therefore, not devolved. This Bill does not represent an opportunity to reopen what was agreed as part of the devolution settlement-

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Lord Howe of Aberavon (Conservative)

I wonder if my noble friend would allow me to intervene for a second? I understand that she may be making a very good point about the need for financial readjustment, but I should have thought that any sensitive Chancellor of the Exchequer or Treasury Minister, without needing to be Welsh, would recognise that relying on legislation of this nuclear kind to address the issues that she is rightly focusing on would be politically unwise and disastrous. I am quite certain that it would be possible to find a method of adjusting the financing without continually mentioning it.

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Baroness Rawlings (Conservative)

I understand the concern of my noble and learned friend Lord Howe, but we go back to the current economic climate. It is not possible to have funding linked to the RPI. The reason for doing this is to secure the funding through the DCMS and the BBC. If we do it in that way it will be secured; otherwise it will not.

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Lord Thomas of Gresford (Liberal Democrat)

Is the Minister ready to listen? Her Majesty's Opposition have suggested that there could be discussions between this stage and Report; indeed, some very important points have been made with great force and with great vigour, from all sides of the House. Is the Minister saying she is not prepared to move from this position? That would help my noble friend decide what to do.

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Baroness Rawlings (Conservative)

I appreciate what my noble friend Lord Thomas said, and I am getting there, but if I am interrupted all the way through, I will not be able to get there. I will come to that point.

The reservation of broadcasting is for sensible reasons. We have both European and international broadcasting obligations, and it is appropriate for those obligations to be secured on a UK basis, largely because of the nature of broadcasting itself. It is clear that spectrum does not respect boundaries, and we know that S4C can be and is viewed in parts of England. We are committed to ensuring that all the nations in the UK are properly served with broadcasts which suit their individual needs, but it is right that it should continue to be a UK function to do so.

The Secretary of State for Culture, Media and Sport works closely with the Secretary of State for Wales on S4C matters to make certain that a Welsh perspective is fully taken into account. The interests of S4C will be protected by the coalition Government and the new arrangements. In addition, to make certain that the Welsh aspects are fully taken into account, the Secretary of State for Culture, Media and Sport and the Secretary of State for Wales have agreed new arrangements whereby Wales Office Ministers will be involved in all ministerial meetings relating to S4C. Wales Office officials will be involved in the drafting of all submissions on S4C matters. I hope that that satisfies the noble Lord, Lord Rowlands.

In recognition of the importance of Welsh language programming and in the light of the changing financial situation, the Government believe that the best way for the audience to have a high-quality service is through a partnership with the BBC. My officials are currently in talks with the BBC and S4C about the arrangements for such a partnership. A review of the service, which should cover both its funding and output, will be conducted towards the end of the current spending review period. It is important that we give the partnership some time to grow and to deliver the efficiencies and increases in quality that we fully believe can be achieved.

I assure the noble Lord, Lord Wigley, and the noble Baroness, Lady Morgan, that DCMS is in discussion with the BBC and S4C to develop the new partnership arrangements. DCMS officials have engaged with Welsh independent producers as part of that process, and we continue to do so.

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Lord Wigley (Plaid Cymru)

I am grateful to the Minister. Can she confirm that the discussions that she mentioned-DCMS officials discussing with the BBC, S4C and the independents-took place before the decision was made?

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Baroness Rawlings (Conservative)

These discussions have been ongoing throughout. The noble Lord also asked whether there was prior consultation with the Welsh Assembly Government. Given the scale and pace of the spending review and the licence fee settlement discussions, it was not practical to have in-depth discussions with all the interested parties ahead of the announcement. The timeframe reflected the Government's desire to put the UK finances in order.

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Lord Morris of Aberavon (Labour)

If the sole or main problem for the inclusion of S4C in the schedule is the problem of the RPI formula, will the noble Baroness go back to consider by Report whether S4C should be withdrawn from the schedule and the Government table in its place a particular amendment dealing with the problem of the RPI formula?

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Baroness Rawlings (Conservative)

I am coming to that a bit later, but it is taking longer every time somebody interrupts. I will get to that point.

The noble Lord, Lord Roberts of Conwy, asked whether the licence fee money could go directly to S4C from DCMS. Discussions between S4C and the BBC are ongoing. However, the BBC Trust is the established guardian of the licence fee, as set out in the royal charter and the agreement, and we do not see this position changing.

Following the Government's decision to table an amendment to remove Clause 11 and Schedule 7 from the Bill, S4C will not appear in Schedule 7 as previously tabled and referenced in Amendment 164. Consequently, we are now exploring further options for how S4C's proposed constitutional arrangements can be given legal effect. I can reassure the noble Lord, Lord Elystan-Morgan, that it is the clear view of the Government that we have no intention of abolishing S4C.

In a letter to the Prime Minister on 29 October 2010 the leaders of all four major parties in the Welsh Assembly stated that they,

"recognise the difficult financial climate and ... no body that is in receipt of public money can be exempt from funding cuts".

These reforms simply reflect this reality in a way that will protect S4C's future and not undermine it, as my noble friend Lord Roberts said.

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Lord Elystan-Morgan (Crossbench)

My Lords, I hope I make this point sincerely and in an attempt to assist the situation. At the moment, the funding of S4C is tied to RPI under Section 61A of the Broadcasting Act 1990. That can be changed without putting S4C into Schedule 4. That is the short point. Speaking for myself and, I suspect, many others, I will be delighted to support such an amendment on Report. It can be done quite simply and effectively.

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Baroness Rawlings (Conservative)

I will come to the point made by the noble Lord. I appreciate the way in which the noble Lord, Lord Nickson has approached this debate; it is to be commended. He has arrived open-minded and will be persuaded by the strength of the argument. It is an example of your Lordships' House at its best and I hope that he has been persuaded. This has been an impassioned debate, but not on party lines, as the noble Baroness, Lady Finlay, said. It has been on the actual subject. We fully recognise, as the noble Lord, Lord Richard, rightly said, the iconic status of the channel and the contribution it makes to the cultural and economic life of Wales and to the Welsh language.

We have had a really good and interesting debate today. We are all united here in the Chamber in wanting a secure future for S4C. We have had lengthy dialogues with Cardiff to secure the future of S4C within the BBC partnership with DCMS funding. The problem lies, as had been mentioned by many noble Lords, with the index-linked funding, which is not viable anymore. Public service broadcasting is for all parts of the United Kingdom and it is not devolved. S4C's editorial independence and its distinct entity, as the noble Baroness, Lady Morgan, said, are of paramount importance. I share the passion of my noble friend Lord Roberts and all noble Lords who have supported the amendment. I understand it and of course I, along with my noble friend Lord Taylor, am fully prepared and willing to have a discussion next week to go through many of the points that have been brought up today. I therefore ask my noble friend to withdraw the amendment.

5:30 pm
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Lord Roberts of Llandudno (Liberal Democrat)

My Lords, I thank the Minister for replying to these points. I am in a dilemma. We could go to a vote today and we might win it for the amendment, but we might not. I understand that the Minister in the other place, Mr Vaizey, is in the United States and that he would have to consult Ministers in the upper House before giving authority to drop S4C from the Public Bodies Bill. Of the many speakers, we have had one and a quarter who were uncertain about the amendment, which means that something like 14 speakers have all spoken in favour of it.

If we wait until the Report stage, that will give Ministers time to consult Ministers in the other House and they themselves can then come forward and, I hope, remove S4C from the Bill. I would rather do that than press the issue to a vote today because it might be very close. We could also have discussions not only with Peers and those in the other House but also with the Welsh Assembly Government in Cardiff. We have two or three weeks in which to do that. We can all see that those who have spoken today would vote very strongly to drop S4C from the Bill. I am sure that if nothing has been done by the Report stage then we will be doing just that. I beg leave to withdraw the amendment.

Amendment 83 withdrawn.

Schedule 4, as amended, agreed.

Clause 5 : Power to modify or transfer functions

Amendment 84

Moved by Lord Hunt of Kings Heath

84: Clause 5, page 3, line 2, at beginning insert "Subject to section (Restrictions on ministerial powers),"

Amendment 84 agreed.

Amendment 85 not moved.

Amendment 85A

Moved by The Earl of Sandwich

85A: Clause 5, page 3, line 11, at end insert-

"( ) An order under this section may modify the functions of the Office of Fair Trading ("OFT") by-

(a) conferring the function of Groceries Code Adjudicator upon the OFT; and

(b) transferring that function to another person.

( ) In this section, the function of "Groceries Code Adjudicator" is to enforce the Groceries Supply Code of Practice as specified in the Groceries (Supply Chain Practices) Market Investigation Order 2009."

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The Earl of Sandwich (Crossbench)

My Lords, I can promise the Minister that we will move more swiftly on this amendment, which obviously has a much lower standing in the House. In moving Amendment 85A, I shall speak also to Amendments 174A and 174B in the names of the noble Lord, Lord Borrie, and the right reverend Prelate the Bishop of Wakefield, although I welcome the right reverend Prelate the Bishop of Exeter to this debate. I look forward very much to their contributions.

This is intended to be a helpful amendment, which is the first concerning the Office of Fair Trading in Clause 5 and Schedules 5 and 7, which I will come to later. It could be said to be a Cross-Bench amendment, since the proposal already has the approva1 of all political parties. It is simply a question of when and how the Government intend to act on this matter.

The background is as follows-I will be as brief as I can. A decade ago, in 2001, following a report by the Competition Commission, the four largest supermarkets signed up to a voluntary supermarket code of practice designed to encourage smaller suppliers and growers to enter the groceries market and to remove some of the obstacles in their way. However, those suppliers were unwilling to make formal complaints because of their effect on their relationship with the supermarkets and there was no means of enforcing the code. The Competition Commission was therefore asked to investigate further and, as a result of its report published in April 2008, the code of practice was updated last year as the groceries supply code of practice. All three political parties agreed to appoint an ombudsman, the groceries code adjudicator, as he is known, to monitor and enforce the revised code.

The new body, although independent of the Office of Fair Trading, is due to be housed within the OFT. Some confusion as to how this can be achieved if the Office of Fair Trading is to be abolished has already been expressed. I understand that functions of the Competition Commission and the OFT are to be merged. This has been confirmed to me by the Consumer Minister, Edward Davey, in a letter of reassurance. When he announced the Government's decision to go ahead with the legislation last August, he said:

"We want to make sure that large retailers can't abuse their power by transferring excessive risks or unexpected costs onto their suppliers. These sorts of pressures are bad for producers and bad for consumers-ultimately they can lead to lower quality goods, less choice and less innovation".

So it is clear that the Minister's heart is in the right place.

This is precisely why so many people would like the Government to go ahead immediately with the legislation. It has the backing of many organisations, which I shall not name today. It is also in line with the Conservatives' new philosophy of stronger trading links with other countries. The reason for my interest in this is that I have for more than 30 years supported the efforts of charities and others concerned with fair trade, whether with developing countries or with smaller producers and farmers in this country. I also speak as someone who was involved in a small business in a rural community.

Why cannot the Government move a little faster on this? Is there some hesitation because of the power of supermarkets, which of course will have to provide the funding for the new office? The British Retail Consortium has consistently opposed the idea, but I remind the Minister that three major supermarkets, Marks & Spencer, Aldi and Waitrose, have now accepted that there will have to be a degree of monitoring and enforcement. Another cause for delay, as I have mentioned, may be the siting of the new office within an organisation that is being dismantled.

It is more than a year since the new code of practice came into force; it did so on Thursday 4 February 2010. I realise that this amendment is not the appropriate vehicle for this important proposal, but it carries a message from a wide section of the business and farming community. I therefore suggest that today would be the right time for the Government to give an early indication of the timing of this legislation and, better still, to accept these amendments, which would establish a groceries code adjudicator. I beg to move.

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The Bishop of Exeter (Bishop)

My Lords, I am pleased to speak to this group of amendments. I do so in the absence of the right reverend Prelate the Bishop of Wakefield, who regrets being unable to be in his place today. Five years ago, after a debate in the General Synod of the Church of England in which wide-ranging concerns were raised about the problems being experienced by farmers as a result of the buying practices of supermarkets, the church's Ethical Investment Advisory Group agreed to investigate. In 2007, it produced the report Fairtrade Begins at Home: Supermarkets and the Effect on British Farming Livelihoods. I declare an interest because I wrote the foreword.

The report identified damaging practices around labelling, promotions, payments and contracts as well as other areas of dysfunctionality within the market. It carefully documented the harm inflicted on farmers and agricultural businesses by supermarkets' buying practices. Pressure on price was identified as a particular problem in the UK dairy industry, an issue that is still of primary importance today, with the cost of production of a wide range of agricultural and horticultural products remaining significantly above the price received.

The report was submitted as evidence to the Competition Commission inquiry on the operation of the groceries market and the EIAG called on the Competition Commission to mandate the creation of an ombudsman-the case for that appointment has continued to be made-while at the same time pressing the Government, the Opposition and supermarkets to address the wide range of issues raised in our report.

Since 2007, there has been continued and systematic engagement with the major supermarkets in an attempt to encourage better practice and a more imaginative response to proposed regulation. There have been some improvements, such as supermarkets paying a premium for milk, working collaboratively to improve the efficiency of farmers in the supply chain and developing local sourcing initiatives for small suppliers. However, there is much evidence that serious problems remain, with examples of barriers to new products coming to market, or to scaling up supply, such as prohibitive payments for listing. Squeezes on the profitability and viability of primary producers, who find it hard to get fair prices, remain a recurrent complaint. This is particularly relevant for the dairy sector, beef production and pigs-both pork and bacon-where the price paid is often below the cost of production.

When the Government announced in August 2010 that it would establish a new groceries complaints adjudicator, an ombudsman, in the Office of Fair Trading, to adjudicate complaints from suppliers of breaches by supermarkets of the new groceries supply code of practice, many in agriculture and the food supply industry were encouraged to hope. That hope was further strengthened when we were further told by the Department for Business, Innovation and Skills that a draft Bill would be published later in 2010; that the Bill would be introduced in the second Session of Parliament; and that it would have teeth, including allowing for the possibility of introducing financial penalties if the naming and shaming of supermarkets was not working.

As the noble Earl, Lord Sandwich, has said, we are still waiting for action. The groceries supply code of practice has been in force since February 2010 and there is still no enforcement mechanism for it. Contrary to the intentions announced last August, no Bill has yet been published to establish the GCA nor has parliamentary time this Session been allocated. The issue is slipping. The noble Lord, Lord Henley, will recall that when I asked a question about this on 7 February, he replied that,

"there is a good chance that it"-

a Bill to establish the GCA-

"will start in another place first some time this Session, but I cannot give any precise timing at this stage".-[Hansard, 7/2/11; col. 4.]

I am aware that the Consumer Minister has since announced plans to release a draft Bill on the groceries complaints adjudicator before the Easter Recess begins on 6 April, yet it remains a fact that difficulties in the groceries supply chain, which were identified more than a decade ago, are still waiting to be addressed as a matter of urgency. These amendments offer an opportunity for the Government to commit themselves to action and to put real flesh on the bones of their promises and to do so now.

I fully expect the Minister to resist these amendments but, should he do so, I hope that at the same time he will be able to give very clearly to this House further details of the nature and scope of the legislation that the Government have in mind and a clear statement of the timescale to bring such legislation into practice.

5:45 pm
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Lord Borrie (Labour)

My Lords, I have been very happy to put my name to all the amendments standing in the names of the noble Earl, Lord Sandwich, and the right reverend Prelate. I should declare that I was the director-general of the Office of Fair Trading for 16 years, but that was some time ago. There is a certain shadow over the Office of Fair Trading at the moment through other parts of the Bill.

Leaving that aside, for some years there has been concern about the growing power of major retailers, especially supermarkets, in relation to their suppliers. It is worth providing a bit of balance. Supermarkets have done a great deal for consumers over the lifetime of noble Lords in the Chamber. They have made available to consumers a wide range of groceries and other goods with the emphasis on good value, quality and a pleasant shopping experience. Yet this has often been at the expense of small retailers who cannot match the lower price of supermarkets. As these small retailers have gone out of business, other businesses in the high street suffer the erosion and reduction of the number of visits paid by shoppers. People have gone instead to the supermarkets, usually on the outskirts of town, with their substantial car-parking space.

The rise of supermarket power has also been, as the right reverend Prelate emphasised, at the expense of suppliers, particularly farmers, who lack the clout to ensure that they can secure a fair price for their products. Supermarkets can play off one supplier against another. The Office of Fair Trading and the Competition Commission have wrestled with this problem in a number of references and studies in recent years. In 2009, the Competition Commission first proposed the appointment of a groceries ombudsman to assist fair dealing between farmers, suppliers and supermarkets.

Both the Labour Government and the present coalition Government have broadly accepted the need for such an appointment. Consultation concluded on 30 April last year; Members of the Committee will appreciate the significance of that date, because the matter was clearly left for the coalition Government coming into office in May to determine. They determined-it is in the coalition agreement-that there should be a groceries ombudsman within the Office of Fair Trading to enforce the groceries code of practice, of which the earlier speakers have spoken, and to curb the abuses of power that undermine farmers and are against the long-term interests of consumers.

In response to the right reverend Prelate the Bishop of Wakefield, on 7 February, the noble Lord, Lord Henley, whom I am delighted to see in his place on the government Front Bench and who has already been quoted in part, said:

"It is important that large retailers cannot abuse power by transferring excessive risks or unexpected costs onto their suppliers. We therefore propose to establish a groceries code adjudicator to monitor and enforce the groceries supply code of practice".-[Hansard, 7/2/11; col. 1.]

That was the noble Lord a month ago. These amendments seek to put the Government's own propositions into legislative form. The Government may of course have plans that have not yet borne fruit for some other legislative vehicle to carry forward these proposals. The suggestion of those putting forward the amendment is that the Government might find it convenient to use the Bill before us now as a convenient vehicle already available to them. The amendments are here for the Government to run with as they wish.

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Lord Cameron of Dillington (Crossbench)

My Lords, I support this series of amendments. It is a pleasure to be speaking on this Bill in the early hours of the evening rather than in the early hours of the morning.

All three political parties have committed themselves to putting in place a groceries code adjudicator, and this seems to be a golden opportunity to do so. It would make the Government popular with farmers, consumers and at least three of the supermarkets, which have agreed the appointment of such a person or body if it was to apply across the board. Some of the free marketeers among you might question why an ombudsman figure is necessary in an open and free marketplace. You might say: surely in a free market where there is more than one buyer, the seller can go elsewhere. However, that equal balance of interest implied in the phrase "willing buyer, willing seller" simply does not exist where the buyers are so big and the sellers are so small.

More importantly, that balance of interest does not exist when the seller and supplier has to plan his or her cropping as much as 18 months in advance, within probably a five-year rotation, and organise the acreage by the seed, the fertiliser and the spray, often with the seed variety and the treatment being specified in detail by the particular buyer. The farmer has to have his whole farm often audited and inspected by the particular buyer. Without this audited inspection he cannot sell his crop, or the buyer will not buy it. Furthermore, each buyer or supermarket has a different auditing system in place, so the farmer cannot easily change the buyer; certainly not without a long notice period. The farmer also may have to invest in specified capital and machinery. All this takes place 18 months to a year before the crop is sold and before a price is agreed.

Unfortunately there is ample room for the big boy to manipulate the sale to their advantage when the little man has nowhere else to go when the buyer's terms or the buyer's price turn against him. If the farming venture has involved borrowing the large sums of capital for irrigation, for cold stores or for processing and the like, the smallholder farmer probably has nowhere else to go for the next year either.

The supermarkets may claim that an adjudicator is not necessary. In that case, there is no danger to them or to the consumer if one is put in place. In my view, it will be a great insurance policy for the farmer-and for the consumer-if one is put in place. Therefore, I urge all three parties to use this opportunity to fulfil their election promises. It is crucial for the future of UK agriculture and the fair balance that we need to achieve.

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Baroness Quin (Labour)

My Lords, I, too, welcome these amendments and am glad that they have been tabled. I welcome the comments that were made by the noble Earl, Lord Sandwich, in introducing the amendments and the helpful background that he gave us. I also welcome the comments made by my noble friend Lord Borrie and by the right reverend Prelate, who I know has taken a great interest in this issue. Like the noble Lord, Lord Cameron, I welcome the fact that on this occasion we are dealing with this important issue at a civilised hour rather than in the early hours of the morning.

I believe that the amendments are necessary to try to clear up the confusion surrounding where in government machinery the adjudicator, formerly the ombudsman, will reside. In answer to a question by the noble Earl, Lord Sandwich, on 7 February, the Minister said that he did not know where the adjudicator was going to be situated. That might have been a commendably honest reply, but now that we have had the chance to return to this subject today, I hope that we will be able to get more information about the Government's exact intentions.

My noble friend Lord Sewel on that same day asked if the adjudicator could be part of this Bill. That is another reason why I welcome the amendments. Given all the controversial inclusions in this jumbo Bill, it would have been good to have something in it on which there is such clear, cross-party support.

When the Government announced in August last year that they were going to establish the adjudicator, the original expectation was of a draft Bill coming forward this past autumn. Given the strong cross-party support for this measure, the delay is regrettable. However, the Minister has said that the intention is to bring in a Bill this Session. In the other place, in answer to a Written Parliamentary Question, mention was made of a draft Bill coming forward before Easter. Will there be a draft Bill first, and what will be the timing of the draft Bill and the full legislation to get the adjudicator's role and work up and running?

The establishment of a supermarket ombudsman was favoured and initiated by the previous Government following a recommendation from the Competition Commission. From these Benches, I reiterate our strong commitment to that, as the Minister will be aware. One issue that has surfaced in recent debates in this House has been the scope of the adjudicator's remit. I notice that the adjudicator is called the groceries adjudicator, and I assume that his main function concerns food. But I was interested that in a debate that we had a week or so ago in this House on the ethical clothing industry, the Minister said that consideration could be given to widening the adjudicator's remit. I welcome the fact that the Government are prepared to look at that, because supermarkets sell a great deal these days and have a strong position on their suppliers, whoever those suppliers happen to be. At the same time, while I welcome the Government's openness on this matter, I would not want to see that as the cause of any further delay in the establishment of the adjudicator, because a very clear message has come from this debate that speed is extremely important and uppermost in people's minds. Obviously, if there is a draft Bill, the scope and remit could be looked at-and perhaps the Minister could comment on that point.

The powers of the adjudicator, including naming and shaming and what further sanctions might be possible as a result, were mentioned by the right reverend Prelate. Again, any clarification from the Minister about that would be welcome.

This Bill must seem like a Christmas tree Bill to the many departments, with various items of business that they wanted to lumber on a jumbo Bill of this kind. However, while it might be a Christmas tree Bill for departments, it is a nightmare Bill for parliamentarians. I was very much taken with the phrase used by the noble and learned Lord, Lord Howe of Aberavon, who described it as a nuclear Bill. It abolishes and changes so many bodies, some big and some small, and rides roughshod over parliamentary procedures. However, this matter is one on which there is agreement between Parliament and Government and for which there is cross-party support, so I hope that the Minister will respond positively to the points that have been made.

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Lord Henley (Conservative)

My Lords, like other speakers, I am grateful that we are having this debate early in the afternoon. Sadly, I will also be doing the penultimate amendment that we are dealing with today, which might happen in the early hours of tomorrow morning-just as I did the penultimate amendment late on Monday, or early on Tuesday, a couple of days ago.

I should also say how grateful I was to hear quite such a large number of quotations from myself, from that relatively brief Question that we had on this matter on 7 February. It is gratifying to hear that so many noble Lords listened to what I had to say. I hope that I can add a bit to that in dealing with these amendments.

I start by repeating something that the noble Lord, Lord Borrie, said when he paid tribute to what the supermarkets have done for the consumer. That is very important to remember whenever we debate these matters; we forget it at our peril. They have given us greater choice, cheaper prices and, as the noble Lord, Lord Borrie, put it, possibly "improved the shopping experience", whatever that means, but I think I have quoted him correctly.

Nevertheless we all accept-and I think I made this clear when I responded to the question from the noble Earl-that there is an imbalance between the big four or the big 10 supermarkets, whichever way you want to count them, and the rest. Possibly something has to be done. I am grateful to the noble Earl for what he said in setting out his amendment and stressing that, as he put it, it was a Cross-Bench amendment in that he knew there was support from all sides including the Government and the Official Opposition, and it is one on which we can work. I am grateful to him also for setting out the history of this matter. I hope I can fairly briefly deal with this matter and say where we are at this moment.

We are committed to the establishment of a groceries code adjudicator to monitor and enforce compliance with the groceries supply code of practice. The main purpose of the groceries code adjudicator will be to ensure the code's effectiveness in stopping supply chain practices by retailers which transfer excessive risks and unexpected costs to suppliers, as set out in great detail by the noble Lord, Lord Cameron of Dillington. I am very grateful again for what he had to say. Its functions will include investigating potential breaches of the code as well as arbitrating disputes arising under the code. In this amendment the noble Earl and others seek to include this in the Bill. The noble Baroness, Lady Quin, said she would have welcomed this in the Bill. I have a sneaking feeling if we had put it in the Bill she would still have put down an amendment to take it out, but that is the nature of opposition and that is what Oppositions do. I have been there myself and I know. We will leave that and the noble Baroness need not respond.

I want to make clear that we do not think that it is appropriate for this Bill. What we will do is set out the roles, functions and powers in full, in a draft Bill. I stress that this will be a draft Bill, so it is something that can be considered and discussed and we can make sure that we get it right-not that we do not get other Bills right, but with a draft Bill there is a slightly longer process-and that it will be published around Easter. I must apologise to the right reverend Prelate that, in the past, colleagues in the Government from DBIS did say they hoped to get one out last year. I think earlier on it was said we might get one before Easter. My advice is now that we will get that published around Easter. Easter, as we know, is a moveable feast, but at least we know when it is this year and we are not constrained by any fixed date.

6:00 pm
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The Bishop of Exeter (Bishop)

I hope that I might just make the point that this year Easter falls as late as it possibly can do in the ecclesiastical calendar, and I hope that we will not have to wait very much longer after Easter for this particular Easter egg.

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Lord Henley (Conservative)

Some of us who have been here for some time remember the late Lord Airedale, who annually moved a Bill-my noble friend Lord Carrington will remember this-trying to fix the time of Easter. I accept what the right reverend Prelate has said about its being very late this year, but that will mean it will be even easier for my colleagues in the Department for Business, Innovation and Skills to get that draft right and get it on time. It will then be published, as I said, around Easter-the latest possible Easter. It will be introduced and debated in Parliament-again, this is all I can say-as soon as parliamentary time allows. There are certain things that Ministers discuss with some trepidation and one is the timing of parliamentary business without discussing it with the usual channels. Certainly, I would not want to make any commitment as to when that will be but as soon as time allows we will bring that forward. We will also be able to then consider a point that the right reverend Prelate made about what sort of teeth the groceries code adjudicator should have-whether it is just naming and shaming or whether naming and shaming might not be enough and whether one should move on to greater powers. I think that is something for Parliament to consider in due course.

I want briefly to comment on where the groceries code adjudicator will live on his creation. Again I cannot take the Committee much further than that, but we are considering all the options. We will set out our intentions on where he or she should be and that will be available when we publish the draft Bill for pre-legislative scrutiny around Easter.

I appreciate that the assurances-particularly in terms of time-have moved on somewhat from earlier occasions, but I hope that with those assurances the noble Earl will feel able to withdraw his amendment. I am certainly very grateful for having had the opportunity to offer those assurances to him on this occasion.

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The Earl of Sandwich (Crossbench)

My Lords, I detect that the House will not want to dwell long on this amendment but I will just take a minute or two to respond. It has already been said several times that there is some confusion about the location of the adjudicator. Although I am grateful to the Minister for his clarification, it does sound a little like musical chairs, so we shall see who sits where.

I am also grateful for the contributions of other speakers: the noble Baroness, Lady Quin, referred to the political consensus and that is important. My noble friend Lord Cameron reminded us of the precarious relationship between farmers and supermarkets at this time. The NFU, the CLA and the CPRE and others are all behind this idea because it is urgent. The fundamental point is that the legislation is needed now. A 2009 survey by Traidcraft showed that eight in 10 shoppers want a watchdog to monitor and penalise supermarkets which treat suppliers unfairly. They believe that an adjudicator would mark a step change in helping reassure consumers that all the goods they buy do not come at the expense of bullying tactics by retailers towards suppliers and provide a proper context where the working conditions for farmers and workers and can improve.

I thank the Government for their commitment, or their recommitment, to the adjudicator and for the noble Lord's promise of a draft Bill around Easter. I beg leave to withdraw this amendment.

Amendment 85A withdrawn.

Debate on whether Clause 5 should stand part of the Bill.

Photo of Lord Hunt of Kings Heath

Lord Hunt of Kings Heath (Labour)

My Lords, we come to an important group of amendments, which are in part probing but in part really urge on the Government to take a rather more transparent approach when an order under this Bill is used.

Clause 5 gives power to modify or transfer functions and on the face of it appears to give huge discretion to Ministers. I would really like to hear from the noble Lord, Lord Taylor, the circumstances in which he envisages the power being used. In our earlier debates on Monday in relation to Clauses 3 and 4, Ministers gave a great deal of comfort when they described the circumstances in which orders in relation to governance and financial arrangements were used and it would be helpful if the noble Lord were able to give similar comfort in relation to Clause 5. If this clause is used, will the Minister describe how that use of it will then be made transparent? When the order is used, what will happen to the functions; who will be performing them in future; why are the changes necessary; what about the future performance of the transferred and modified functions; and what do the Government intend to do to track the performance of those transformed or modified functions to ensure that the decisions made by passing the order were and remain appropriate? What assurance can the Minister give about the information that will be given to Parliament at the time of the order, if it is used? What further work will be done subsequent to the order in relation to performance scrutiny?

It is fair to say that some of these concerns were raised by my noble friends during the UK Film Council/BFI debate on Monday. My noble friend Lord Stevenson noted in that debate that while some functions of the UK Film Council were clearly marked as transferred to the BFI and Film London, there were other central functions, such as working film exports, upon which the Government remained rather silent until prompted. I would like to get some reassurance that if this order is used in future, there will be a way of providing Parliament with as much detail as possible about what has happened to those functions.

On Clause 7, I am looking for some comfort. We have been approached by the Royal Society for the Protection of Birds, which is concerned about the legal effect of Clause 7. While bearing the innocuous title, "Consequential provision etc", this clause appears to give Ministers the power to modify the functions of the transfer or the transferee organisations. What appears to be missing is a qualifying element of consent. Where, for instance, the Government would like a body such as Citizens Advice, in the case of Consumer Focus, to assume functions, surely it would be a requirement of the Government first to obtain the organisation's consent to the changes. It would also be nice to know that the CAB was in a condition to accept those responsibilities. I point out to the Minister the dire situation in the great city of Birmingham, with the potential closure of all the CAB centres. As currently drafted, the clause essentially makes it permissible for the Government to change the constitution or funding arrangements of a body that is to assume those functions without consent or even bothering to consult that body. I have looked for comfort there.

The Minister will know of the quality of the briefing provided by the RSPB, since he used it extensively during the wonderful days when we debated the Marine and Coastal Access Bill. It is quite extraordinary that officials have found a defect in that Bill, given the extensive briefing that we received from bodies like the RSPB.

The other two amendments in this group deal with the related subjects of data protection, freedom of information and privacy. We have tabled Amendment 102 to ensure that where public functions of bodies listed in Schedule 5 are transferred to another body, the public will continue to have assurances that the performance of these functions is transparent. They will be audited, the responsible body will report to Parliament on the exercise and expenditure of these functions, and the freedom of information and data protection provisions will still apply to the organisation to which the function is transferred.

Then we come on to Amendments 175A and 175B. They are in the name of my noble friend Lord Knight of Weymouth but unfortunately he is unable to be here. His amendments effectively prevent a Minister from making an order to share personal data. He was using these amendments to emphasise the complexity of these subjects and his doubt whether it is wise simply to include them in a statutory instrument. If he were here, he would speak of his own experience with data protection in the context of the Education and Skills Bill, which required further amendment through the Apprenticeships, Skills, Children and Learning Bill. The point that he wanted to make is that these are complex and sensitive issues and that, in relation to parliamentary scrutiny, it may be that secondary legislation is not really the most suitable vehicle. As we have learnt in the past, if you get this wrong you have to come back and try to put it right at a later date. I beg to move.

6:15 pm
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Baroness Thomas of Winchester (Liberal Democrat)

My Lords, I speak at this point wearing my hat as chair of the Delegated Powers and Regulatory Reform Committee. As the noble Lord, Lord Hunt, has said, Clause 5 contains perhaps the widest power in the Bill now that we no longer have Clause 11 and Schedule 7. Schedule 5 includes bodies exercising a very wide range of statutory functions. The abolition or transfer of some of those functions could completely alter the character of the primary legislation that set up the bodies in the first place-added to which, any Minister in future could add new functions or alter existing one considerably. Nothing in any amendments that the Government have so far proposed changes that fact.

That is why the committee of which I am chair has reiterated, in each of its three reports on the Bill so far, the inescapable fact that the powers in Clauses 1 to 5 and 13 are inappropriate delegations of powers. What we are looking for-and I hope that it may still not be too late-is that the Minister should consider amending the Bill to say briefly how these delegated powers should be exercised in relation to each body. The detail could then safely be left to delegated legislation.

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Baroness Andrews (Labour)

My Lords, it is a pleasure to follow the chair of the Delegated Powers and Regulatory Reform Committee, and I reinforce what she said. I declare an interest as the chair of English Heritage and as a member of that committee.

I will address the stand part debate regarding Clause 5, but it is difficult to do that without referring to Clause 11, Schedule 7 and indeed to Clause 8, which we will come on to later. I think that I am the first Member of this House-in this debate anyway-to congratulate the noble Lord on his success in getting rid of Clause 11 and Schedule 7. I know that as we proceed through the Bill today, he will be inundated with congratulations on what he has achieved regarding those clauses; it will be like his birthday. My thanks are very much a foretaste of joy to come.

I have always seen this Bill as more the product of William McGonagall than of Machiavelli in terms of how it had been put together and what it represented. Even for a Government who are fast establishing a reputation for recklessness, the Bill was a step too far. As I recall, the kindest thing that was said in our earlier debates about Schedule 7 was that it was "Kafkaesque"; it certainly created a feeling of victimisation without any sense of the crime that had been committed or indeed the sentence and the punishment that might follow.

I could end there, with unqualified praise, but I must pick up on the points that the noble Baroness, Lady Thomas, made. We are not yet done with this Bill-there are more changes that we have to press the Government to deliver. The problem that was widely recognised in this House, certainly at Second Reading and earlier in Committee, is that the whole Bill, frankly, is misconceived. It is an object lesson in making policy by prejudice. It demonstrates a failure to understand the nature, the role and the effectiveness of public bodies. It is an object lesson in how not to make legislation that will provide the substance of many a PhD thesis in future.

In recent days, the Committee has done its work very well by taking individual bodies and holding the implications of the Bill up to the light, defending their future and fate. The stand part debate allows us to say again to the Minister that it is not too late to recognise the fundamental problem that has been established in Clauses 1 to 5: that the powers in these clauses are far too wide. I echo what the noble Baroness, Lady Thomas, has said: Clause 5 is the widest power of all. We know where we are with Clauses 1 to 4; we know what "abolition" and "merger" mean. However, we do not know what Clause 5 implies and those bodies listed in the schedule certainly do not. It is very different in scope. It modifies or transfers functions, purposes and objectives, and could change the rationale for an entire organisation at a stroke-all by ministerial edict. Given the importance of the bodies that are listed in Schedule 5, this is a very serious predicament in which to put them.

It is no wonder, therefore, that the Delegated Powers and Regulatory Reform Committee reiterated in its 11th report on Monday that our original concerns were unmet. In our original report we were concerned about the inappropriate delegation of powers in Clauses 1 to 5. "Inappropriate" is a word that we have returned to time and again on this Bill. We are still concerned about those powers, which are still inappropriate. We said that the delegation of powers in Clauses 1 to 5 was "inappropriately broad in scope" and that there should be appropriate parliamentary scrutiny. That is still the view of the committee. We suggested in our earlier report that if Clause 11 were to be removed, it might make it easier for the powers in Clauses 1 to 5 to be better calibrated to matters that are appropriately left to delegated powers.

Clause 11 will, I am pleased to say, be removed. However, the powers in Clauses 1 to 5 are as yet unchanged. I say "as yet" because the Minister has said that he is considering these concerns. I certainly welcome that. I hope he will be as successful in dealing with that as he was in dealing with Clause 11 and Schedule 7. A crucial concern that we want him to consider before Report stage is spelling out more specifically the purposes for which the powers may be exercised. In Clause 8, the existing references are to matters to which the Minister may simply have regard. That is not strong enough. They do not deal with the fundamental problem of the Bill's silence on the general purposes for which Parliament expects the powers to be used. They need to be so specified. It is extremely important that the Minister should address that point, at the end of either this debate or the debate on Clause 8.

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Lord Mayhew of Twysden (Conservative)

My Lords, I, too, am a member of the Delegated Powers and Regulatory Reform Committee. I support everything that my noble friend Lady Thomas has said and much of what the noble Baroness, Lady Andrews, has said. She will not expect me, as a loyal supporter of the coalition Government, to endorse every epithet that she used- certainly not the word "reckless", for which I might substitute the word "courageous"- but I warmly endorse the grateful compliment that she paid to my noble friend Lord Taylor for the changes that he has been more than instrumental in securing. As somebody who contributed to a rather torrid debate at Second Reading, when tremendous dissatisfaction with the Bill was expressed, I am extremely grateful that the answers that my noble friend returned with have turned away wrath for the time being. However, as the noble Baroness, Lady Andrews, has just said, that wrath has not gone away. It may have been turned away but it has not gone away entirely. I am afraid there is still more to come, particularly on expressing in the Bill the purposes for which these powers are to be used.

I take it to be a principle of the rule of law that an executive power may be exercised only for one of the purposes for which it was conferred. A ground that appears frequently in court judgments on judicial review proceedings is that a power has been purported to have been used in a way that was not authorised by the legislation giving rise to it. There is a good way to go yet, but I am heartened by the letter that my noble friend Lord Taylor sent to the committee-in appendix 2 to the report-in which he says that he is grateful to the committee for its report and goes on to say that the Government,

"continue to consider, in particular, the committee's concern that the Bill should give greater clarity in clause 8 to the purpose for which the powers may be exercised".

I hope that his efforts in that regard will be just as successful as they have been in relation to the appalling Schedule 7 and the equally alarming provisions affecting forestry. I hope he will be able to tell us that there is work still to be done and that he is looking forward to doing it.

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Lord Walton of Detchant (Crossbench)

My Lords, I feel just a little guilty in speaking to this amendment. On several occasions over the past few years, in debates in your Lordships' House on the health service, I have said openly that I was deeply concerned about the National Health Service and health bodies being subject to control by "an intolerable quangocracy". Hence, when I learnt that the Government were planning a bonfire of the quangos, I felt a minor sense of relief. However, having seen the detail, particularly the provision in Clause 5 that the Minister may modify by order the functions of a body or the holder of an office specified in Schedule 5, I am afraid I still have considerable concerns.

I was greatly relieved when the Minister agreed to remove Schedule 7 a few days ago. Looking at two organisations with which I have a special concern and interest-namely, the Human Fertilisation and Embryology Authority and the Human Tissue Authority-I am deeply concerned. I know full well that these bodies will be the subject of individual amendments, which will be discussed a little later in our debates. However, the principle embodied in Clause 5 is one that causes me considerable anxiety. The Government's proposal that these two bodies should be merged with the Care Quality Commission, for example, carries all kinds of serious concerns and hazards. We may come to that later.

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Lord Taylor of Holbeach (Conservative)

Perhaps I can start by reassuring the noble Lord that we will be able to debate both the Human Fertilisation and Embryology Authority and the Human Tissue Authority later this evening. I thank noble Lords for their contributions to the debate, and the noble Lord, Lord Hunt, for probing several issues through the procedure of whether the clause should stand part. It gives me an opportunity to address those issues, for which I am very grateful. This group of amendments deals with powers in the Bill to transfer functions and the question of public accountability, particularly in relation to data and freedom of information. I accept that it is important to provide reassurance on these issues and thank noble Lords for the opportunity to do so through these amendments.

Clause 5 gives Ministers the power to make provision, by order, to transfer or modify the functions of any body or office listed in Schedule 5. This includes the conferral of new functions, the abolition of functions or changes to the conditions or purpose under which functions are exercised. When we talked about Clauses 3 and 4, I gave examples of such changes, so perhaps I could give the example of the body that we will debate next. The Government intend to use the Bill to transfer the functions of the British Waterways Board to a new mutual body, removing powers from Ministers and giving the users of waterways a far stronger voice in the management and development of the system.

The Government envisage that the powers contained in Clause 5 will be used to ensure that the right functions are carried out by the right body, creating a more efficient and effective landscape of government. The noble Lord, Lord Hunt, asked what post-legislative scrutiny-if I may use that phrase-of these changes might be carried out. All public bodies will continue to be subject to ongoing regular review. These reviews will be published. I reassure the noble Lord that copies of the reviews will be placed in the Library of the House. Ministers will be accountable to Parliament for government action following reviews and, indeed, for how public bodies conduct their public duties.

The noble Lord will recall that in Monday's Committee session I set out the safeguards that would apply to orders made under Clauses 3 and 4, and the important limitation on the scope of these powers which has resulted from the removal of Schedule 7. I assure him that the safeguards in the Bill will apply to orders made under Clause 5. I hope that this provides the reassurance that he seeks. Amendment 118-we will have the opportunity to discuss this at length-provides for consultation and sets out a procedure for enhanced scrutiny of statutory instruments. Perhaps most importantly of all, it provides that a Minister may lay before Parliament an explanatory document in which he is obliged to explain the reasoning behind the changes that he is seeking to effect and to explain why they satisfy certain conditions in the Bill. Transparency is being built into the process to enable proper scrutiny of the Government's proposals.

Amendment 102 is concerned with accountability mechanisms where functions are transferred following an order made under the Bill. The Government's public bodies programme is underpinned by the notion that Ministers should be accountable for public functions. For this reason the Government intend to abolish 192 public bodies and in many cases transfer their functions back into sponsor departments. As noble Lords will be aware, government departments and agencies are subject to regular audit through the National Audit Office and are already subject to the requirements of Amendment 102. This Government have also committed to increased transparency in their actions, as evidenced by the publication of detailed Treasury data on public expenditure and by the new departmental structural reform plans. Where public bodies have been retained, and where functions have been transferred from them to other bodies, I can assure the House that they will continue to be subject to the existing requirements on accounting and reporting as well as data protection and freedom of information law. Non-departmental public bodies are required to have in place robust governance and accountability arrangements, and both the Cabinet Office and the Treasury provide detailed guidance on the matter.

I reassure the House that where bodies already subject to the FOI Act are merged to form new bodies established by, and at least partly constituted by, appointments made by government, steps will be taken to ensure that they fall within its scope. Where bodies' functions are transferred to a party already subject to the Act, this will not change. The Government are committed to extending the scope of the Freedom of Information Act to provide greater transparency and have announced their intention to extend it to a range of bodies carrying out functions of a public nature. However, I should point out that amendments to the Freedom of Information (Scotland) Act may be made only by the Scottish Parliament or with the consent of Scottish Ministers. There may be instances where public functions are transferred to an eligible person not subject to an FOI Act, such as a company limited by guarantee or community interest company. In such cases, it will be the responsibility of Ministers to make sure the appropriate safeguards are in place to ensure that the body is properly accountable for its delivery of public functions, and, indeed, the Minister would be accountable for those functions.

All organisations processing personal data are subject to the Data Protection Act 1998. The use of powers under the Bill would not alter this requirement. As regards Amendments 175A and 175B, in the name of the noble Lord, Lord Knight of Weymouth-I am very grateful to him for speaking to these important amendments-I emphasise that the Public Bodies Bill is primarily about the rationalisation of existing public functions, not the creation of new bodies. I appreciate the spirit of the noble Lord's amendments and agree that a power to share personal data should be used with caution.

In limited circumstances there might be legitimate reasons for Ministers to wish to make an explicit power to share personal data in the context of this Bill. To give an example that relates to a public function, Her Majesty's Courts Service has a statutory data-sharing arrangement with the Driver and Vehicle Licensing Agency to facilitate the sharing of personal data where individuals convicted of a motoring offence opt for driver training instead of disqualification, and that information is transferred from one body to another. Such powers, which of course would be subject to Parliament's approval, and to the considerations in Clause 8 regarding individual freedoms, are sometimes necessary and can give public bodies and individuals a helpful degree of certainty about how personal data may be shared.

Occasionally, bodies also need to be able to share data in one-off situations. In such circumstances there is normally no explicit provision. I trust the noble Lord will understand that the Government would not be able to accept an amendment that might call into question the ability of bodies to co-operate on important issues relating to security or criminality, for example.

Clause 7 gives Ministers the power to make consequential, supplementary, incidental or transitional changes to public bodies as part of an order under Clauses 1 to 6. I should point out that the Government have no intention whatever of forcing arrangements on voluntary or charitable bodies, which may be partners in these transfers of functions. I think I made that clear in the debate we had the other evening. These are not wide-ranging powers; they exist simply to make the headline legislative reforms-your Lordships' House have debated those reforms and will do so again-work in practice.

For example, the statutory merger of the Pensions Ombudsman and the Ombudsman for the Board of the Pension Protection Fund simply formalises the current arrangements that exist between the two bodies. However, to make this merger work it is essential that existing statutory references to the two bodies are amended to reflect the name of the new merged body. By removing Clause 7, and with it the ability to make this sort of consequential and supplementary provision, the reforms taken forward by orders under Clauses 1 to 6 would be left incomplete. In effect, the legislation would be rendered unusable. In the context of the significant protections and limitations which apply to these powers, I do not believe that the removal of this clause from the Bill, or the addition of the amendments discussed in this group, would be-if I might use the word-a proportionate move. I think that we will come across "proportionate" in later discussions.

However, I might use this opportunity to anticipate the debates on Clause 8, because I have been invited to do so by the noble Baroness, Lady Andrews, my noble and learned friend Lord Mayhew and my noble friend Lady Thomas of Winchester, who is the chairman of the Delegated Powers Committee. I said in my letter-I thank my noble and learned friend Lord Mayhew for mentioning its penultimate paragraph-that we are considering ways in which we may use Clause 8 to define the purposes more tightly in these clauses. I hope that noble Lords will understand that this is work in progress and I would not want to prejudice that by saying anything further at the moment. However, I have used until now my best endeavours to meet the opinions of this Committee, and I hope that I can continue to do that.

I hope that I have been able to provide the assurances that noble Lords seek and I ask that Clause 5 stand part and that the subsequent amendments in the group are not moved.

6:30 pm
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Baroness Andrews (Labour)

My Lords, perhaps I may press the noble Lord on one point. I am very appreciative of what he said in his response about Clause 8, but the example he gave of what the powers would be used for was interesting. The example related to the British Waterways Board's transfer from the public sector to the charitable sector. The list of 14 bodies in Schedule 5 involves very specific uses of powers. Given the mystery-and, frankly, slightly sinister nature-of Clause 5, which we have addressed in different ways, can the Minister publish some sort of schedule that identifies the powers to be used in relation to those bodies? I do not think that that would be onerous, although it would certainly have been onerous if Clause 11 and Schedule 7 had survived. That would go a long way to meeting our concerns. I do not speak on the committee's behalf, but I suspect that such a schedule would help the committee and those who will read and use the legislation-as well as the public bodies listed in the Bill.

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Lord Taylor of Holbeach (Conservative)

I thank the noble Baroness for her intervention, because it reflects outside conversations and my discussions with the chairman of the Delegated Powers Committee on this matter. I should emphasise that we have found it possible-and I hope noble Lords will agree that it has been helpful-to produce the A4 briefing sheets that more or less provide a background for the changes we have been discussing. Those briefings have been explicit in describing the framework of the changes-not the detail, only the framework. To include such details in the legislation, given the large number of bodies involved, would lead to an extremely large Bill and would not necessarily be the way to deal with this matter.

We are discussing these bodies in principle in primary legislation because of the way that the debates and this Committee have taken the Bill. We know, because of the exclusion of Schedule 7, that there can no longer be the "stroke of the pen" that the noble Baroness, Lady Andrews, eloquently described when she expressed her anxiety about these issues. We know that that cannot happen and we know what the nature of the changes that will occur under the Bill will be. It is important to emphasise that no Minister can act under the Bill without a period of consultation or without explaining in detail the reasons for the change, its nature and consequences, in the explanatory document that will be provided alongside the statutory instrument that will effect change under any of these schedules. That is an effective way to ensure that Ministers do not act precipitately. If we are to try to meet the concerns of the Delegated Powers and Regulatory Reform Committee, we need to focus less on that than on the wording of Clause 8.

However, I make no promises-and I do not want to make promises-on this matter because it may be that I have stretched my run of good luck too far already. However, I believe that an explanatory document is a much more effective way of answering the Committee's concerns and those of the noble Baroness.

6:45 pm
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Lord Goodhart (Liberal Democrat)

I should like to add a few words in my capacity as the previous chairman, and a member for several years before that, of the Delegated Powers Committee. A strong case has been presented for further action on this matter. The final sentences in paragraph 20 of the committee's latest report state:

"Especially in the absence of a convincing explanation, it is not appropriate for an existing power to make subordinate legislation to be transferable to another, unidentified, body. This renders the powers in clause 5 in relation to these bodies especially inappropriate. The Committee draws the attention of the House to amendment 99A".

Schedule 5 lists a group of bodies that are among the most important to be covered by the Bill. They include the British Waterways Board, the Equality and Human Rights Commission, the Competition Commission, the Human Fertilisation and Embryology Authority, the Human Tissue Authority, the national parks authorities, Ofcom and the Office of Fair Trading. All are organisations of considerable importance. There is a very strong case for the arguments presented by my noble friend Lady Thomas of Winchester, the noble and learned Lord, Lord Mayhew, and the noble Baroness, Lady Andrews. This matter needs further consideration and I hope that my noble friend the Minister will use the period before Report to have a serious look at it.

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Lord Hunt of Kings Heath (Labour)

My Lords, first, I echo my noble friend Lady Andrews in paying tribute to the stewardship of the noble Lord, Lord Taylor. Clearly, he has listened to the House and we have made a great advance. We very much appreciate the briefing sheets from his hard-working officials.

It is good that the noble Lord, Lord Goodhart, has joined in our debates. I do not know whether the Government think the same, but the point that he raised underpins the remarks of his noble friend Lady Thomas, the noble and learned Lord, Lord Mayhew, and my noble friend Lady Andrews. They made pertinent remarks about how the powers in the Bill should be exercised. The noble Lord, Lord Taylor, and his noble friend Lord Henley have given us eminently reasonable explanations as to how Ministers intend to use the powers. The problem is that future Ministers may take a different approach. The noble Lord, Lord Walton, put forward the good example of the HFEA and the HTA.

We are looking for ways to build further reassurances into the Bill. We will have a later debate on what the noble Lord calls the enhanced scrutiny of orders and on my amendment proposing a super-affirmative procedure. That is one approach, but we should also pursue the suggestion of both the noble Baroness, Lady Thomas, and the noble and learned Lord, Lord Mayhew. I am glad to hear that work is in progress on Clause 8. The noble Lord said that he could not give any guarantees, but I encourage him in that direction.

I am glad that the noble Lord also said that reviews of these bodies will take place in future. We on the opposition Benches support that. It is right that these bodies and their functions should be kept under regular review. I was also glad to hear that accountability, reporting and FOI responsibilities will continue if the functions are transferred. However, does that apply only if they are transferred to a public body? What would happen in the case of Consumer Focus, whose functions will be transferred to Citizens Advice? What about the British Waterways Board when it transforms itself into a charity? What will happen to the accountability, reporting and FOI requirements?

I take the noble Lord's point about the sparing use of data sharing that is likely to occur under any order arising from the Bill. However, I issue a caution that past experience suggests that this issue is very complex and will demand the careful use of orders. The noble Lord may want to write to me on the issue of non-public bodies in relation to FOI and accountability functions. In the mean time, I am glad that work is in progress.

Clause 5, as amended, agreed.

Schedule 5 : Power to modify or transfer functions: bodies and offices

Amendment 85B not moved.

Amendment 86

Moved by Lord Bradshaw

86: Schedule 5, page 19, line 13, leave out "British Waterways Board."

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Lord Bradshaw (Liberal Democrat)

My Lords, I move the amendment on behalf of my noble friend Lord Greaves, who is ill. We will wait for the Government's proposals on the British Waterways Board. However, we are particularly concerned about whether a trust such as the National Trust would be able to shoulder the many burdens that will fall on it. Noble Lords who are members of the National Trust will know of the increasing number of appeals that it makes for extra funds to keep its portfolio of properties in good repair. They will also know that the National Trust is being offered more properties that owners cannot maintain. One of our major concerns about the British Waterways Board is that it carries a large burden of maintenance-maintenance of waterways not just as a recreation facility but as a facility for drainage and the conduct of water across parts of the country. There are also a number of public duties that the British Waterways Board undertakes and for which it gets government money. It is difficult to see how a charitable trust will carry out those duties.

I am particularly concerned to bring to your Lordships' notice the fact that a number of waterways administered by the board carry considerable quantities of freight. Obviously, the board does not administer tidal waters, but it looks after the Aire and Calder Navigation, the South Yorkshire Navigation, the River Ouse to Selby and York, the Trent to Newark and Nottingham, the Severn, the Weaver in Chester and the Union Canal and River Lea in London. It has a big portfolio of interests in the freight business. I am not sure whether the charitable trust that the Government have in mind will take over these freight interests. If the trust is concerned mainly with amenity waterways, it will have only a passing and diminished interest in freight. That is important because these waterways convey very heavy freight which, if transferred to the roads, would add greatly to congestion and road damage, visiting more expense on the Government.

When the proposals come forward for the board, we will expect plenty of attention to be given to the financial burdens that it will take over and a reasonable estimate of the amount of money that it will be able to raise as a charity from walkers, fishermen, boat users, birdwatchers and whoever else uses the canals. We will also want to know in particular how the Government intend to shoulder the huge burden, which has been underfunded in recent years, of keeping the waterways in good repair. I beg to move.

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Baroness Quin (Labour)

My Lords, I am glad that the noble Lord, Lord Bradshaw, was able to move the amendment in the absence of the noble Lord, Lord Greaves, who takes a great interest in these issues. I welcome the fact that the amendment allows us to ascertain in more detail the Government's intentions on this issue.

The future of British Waterways is very important. In many ways, the idea of a national trust for the waterways is exciting. The previous Government's plans for the future of the waterways were not dissimilar. However, the noble Lord, Lord Bradshaw, was right to raise a number of detailed issues and to seek necessary reassurances about how the system will operate in future and how the wide and varied responsibilities of British Waterways can be assured to a high and satisfactory standard in the interests of us all.

I note that the provisions in the Bill deal with England and Wales. Will there be any alteration, given the recent transfers of responsibility and strengthening of responsibility within the devolution system in Wales? Have there been any discussions with the Welsh Assembly Government on that? I note also that Scotland has opted not to go down the same route as the Government have proposed for England and Wales. Again, given the fact that waterways are an asset to all of us in the UK, I would like to know what discussions there have been with the Scottish Government on this and whether any practical problems were identified in those discussions. The co-operation arrangements between a new English and Welsh organisation and the devolved Administrations are an important aspect, which must be given proper consideration.

A consultation on these arrangements is about to take place, although the Government have already made quite clear their preference for the future of British Waterways. Therefore, what is the main purpose of the consultation? Will it be simply about how the new arrangements will work? If the consultation came up with different proposals for the future of British Waterways, would they be taken into consideration? Our waterways are obviously very important to many of our citizens and to a variety of users, whether they are people involved in boating or whether they are anglers, walkers and cyclists or those who simply enjoy the peace and quiet of many areas administered by British Waterways. I agree with the Government when they talk about the need for local involvement in the way in which the waterways are operated. However, the waterways are also an important national asset and it may be necessary to strike a balance there in the future.

I understand that the Government have decided to leave the Environment Agency's navigation responsibilities with that agency rather than transfer them to British Waterways or its successor body. I understand the reasons for that, which I think make sense. At the same time, I understand that navigation responsibilities were originally supposed to be part of the consultation process, which has not yet concluded. Therefore, I ask the Minister for clarification on navigation responsibilities and whether the Government are adhering to the decision to keep them with the Environment Agency, at least for the foreseeable future.

I should also like to pick up on the interesting point mentioned by my noble friend Lord Hunt. He asked what will happen to reporting and freedom of information requirements if the organisation becomes a charity. I understand that the noble Lord, Lord Taylor, is considering these issues, so the Minister who is replying to this debate may not be able to give us a reply here and now. However, it would be interesting to have such a reply before Report so that we are able to decide how to pursue this matter in the future.

Our waterways are involved in very varied and responsible work. They need to be kept safe and accessible, in good condition and maintained sustainably. Of course, they are subject to a variety of government legislation on accounting, employment, environmental planning, safety and so on. Those are all important issues to be taken into account and for that reason I very much welcome the chance that the noble Lord, Lord Bradshaw, has given us to debate these issues today.

7:00 pm
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Lord Greenway (Crossbench)

My Lords, I very much echo what the noble Lord, Lord Bradshaw, said in relation to freight carried on some of these inland waterways, as I do the concerns that he mentioned. How exactly will freight fit into a charitable organisation? I am sure that the Government have given this some thought, but we would be grateful if the Minister could give us an indication of how they intend to deal with that.

The Minister will be pleased to hear that the British Marine Federation, which is the representative body of the leisure marine industry, is broadly supportive of the Government's move to transfer the British Waterways Board into the charitable sector. It sees it as a great opportunity to place the running of canals and certain parts of navigable rivers on to a sustainable footing for years to come and to create the right conditions for the continuation of what is a thriving inland marine economy.

The federation's own members-boat operators and marinas-generate some £144 million a year and employ 2,500 people. However, many other businesses, such as pubs, hotels and boatyards, also depend on waterways for their livelihood. It is estimated that for every person directly employed in the inland marina sector an additional 10 jobs are generated from associated services. The overall related tourism spend on inland waterways is estimated to be in excess of the not inconsiderable sum of £1 billion a year. However, there are caveats, one of which is that the BMF thinks that the new body must be a completely new organisation, with a new board representative of those whose interests are concerned, and not simply a rebranding exercise. Navigation must be retained as its primary role.

We have heard concerns regarding funding, which I certainly share. Funding should not simply be sourced from boating and fishing licences. Other stakeholders who derive benefit from these national assets should also play their part, possibly even local authorities. I believe that the Government should provide some sort of contract or guarantee to ensure that the waterways are not prejudiced by commercial failure, which of course can happen to a charity. I hope that the Government are looking at that very seriously.

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Lord Henley (Conservative)

My Lords, like the noble Lord, Lord Bradshaw, I regret that we have been deprived of the pleasure of having my noble friend Lord Greaves move this amendment this afternoon, but I am very grateful that his noble friend was able to step in and move it, because it is important that the Government set out their case in relation to the waterways.

As the Committee will be aware, the British Waterways Board was originally established under the Transport Act 1962 to operate and maintain much of Britain's waterways network. In passing, I shall mention that we are dealing with England and Wales here; Scotland is another matter. I am not sure that any waterways go across the border, so there are not going to be any concerns there. However, I remember that with the passage of the Scotland Act we had problems with some of the rivers-

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Lord Henley (Conservative)

Indeed, because the boundary moves. If the noble Lord remembers correctly, that legislation allowed the Scottish Government to have an interest in English matters relating to some rivers' tributaries and vice versa. With England and Wales, the case is different. I do not know the answer to the noble Baroness's question about the powers of the Welsh Assembly Government but I shall certainly write to her in due course.

In the intervening years since 1962, the British Waterways Board has done an excellent job in transforming what was a very run-down industrial transportation network, with its roots in the industrial revolution, into a hugely valuable environmental, heritage and leisure asset, but it is one which still-again, I am grateful to the noble Lords, Lord Bradshaw and Lord Greenway, for stressing this-also carries some freight, so it continues to have a commercial operation. Its network consists of some 2,200 miles of historic canals, rivers and docks, and it is visited by some 13 million people a year. Again, as I think noble Lords have made clear, it provides benefits that range from not just freight, which has been mentioned, but flood relief and sanctuary for wildlife, as well as its users, through to employment and recreational facilities for walkers and others.

The intention behind setting up a new waterways charity-and I am grateful to the noble Baroness, Lady Quin, for stressing that the previous Government were thinking of something along very similar lines-is to give waterways users and the communities alongside them greater involvement in how waterways are managed, thus contributing to their sustainability in the longer term. Moving the powers, functions and assets of British Waterways to civil society through the creation of what we would like to think of as a sort of national trust-a phrase used by the noble Lord, Lord Bradshaw-for the waterways will allow key stakeholders the opportunity to play a role in their governance and allow them to bring their expertise and passion to the organisation. Providing greater engagement by local communities will, we believe, lead to a range of enhanced public benefits, including green travel to work, health and well-being, support for inner cities and rural regeneration.

As I have mentioned governance, it is worth stressing that the consultation includes proposals for governance on the charitable company model. Subject to the passage of this Bill through Parliament, there will be further consultation on the draft order or orders-I cannot remember whether there is one or more than one-required to transfer the duties and functions of British Waterways to that organisation. However, in relation to the questions that the noble Baroness asked, following on from the speech of her noble friend Lord Hunt in relation to Clause 5, I hope she will await a response from my noble friend which, I am assured by him, will come before we get to Report stage.

There are obvious concerns over funding, particularly in the light of what has been, as we know, a very tight spending review settlement-and I will not say again why it has been so. British Waterways' funding has seen a reduction in line with other bodies that are attached to Defra and to other parts of government. It is no greater because British Waterways is becoming a charity. We recognise, however, that the move to a charity will require a long-term contract for continued government support, and we have given a commitment to maintain levels in line with the spending review until 2022-23. That will obviously be subject to-

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Lord Phillips of Sudbury (Liberal Democrat)

I am most grateful to my noble friend for giving way. Is the Minister quite sure that the ambition that the Government will have for this new charity can be assumed by it under charity law? Charity law is singularly unsympathetic to external control and direction.

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Lord Henley (Conservative)

The noble Lord is somewhat more experienced in charity law than me, and I am going to be very careful when responding so as not to put my foot in it.

We believe that the charitable model-and this is, again, one of the reasons we will be consulting on governance-will be suitable and will operate in the right way. The Government are giving an assurance that they will continue to meet until 2022-23 the funding commitment I was stressing when my noble friend interrupted, and that is a commitment we can make. I very much hope that the charitable body that is created, after the appropriate decisions have been made and after the consultation, will meet the requirements that the noble Lord is addressing.

I hope I have given appropriate assurance to my noble friend. If I have not, I will write in greater detail in due course. I want to emphasise, however, that that spending review commitment is until 2022-23, which I understand is a pretty long time for any Government to commit to, but obviously it is subject to negotiation with the incoming trustees of the body when it is created.

In order to create a successful new waterways charity for the future, most of British Waterways existing statutory functions will need to be transferred to that new charity. For example, we would want British Waterways' duty to keep the waterways in good repair to be transferred. That is why we had to list it in Schedule 5. It is a matter I imagine my noble friend will be able to deal with in the letter he has promised.

Having dealt with most of the concerns that have been put by noble Lords, may I just say a little about Amendment 99A that will be formally moved later on? This amendment disapplies the provision in Clause 21(2) to enable the transfer of the statutory functions of British Waterways and the Environment Agency to this new waterways charity.

Clause 21(2) provides an important legislative safeguard to prevent the transfer of functions to commercial companies or privatisation by the back door. This important safeguard, however, also prevents the transfer of the British Waterways and Environment Agency statutory functions and assets to civil society and, hence, the creation of a new waterways charity. This amendment will, therefore, enable the new waterways charity to receive important statutory regulatory functions, such as the power of entry on land to enable the carrying out of works on inland waterways for repair, maintenance, alteration, renewal or protection, that will be required for the safe and effective operation of the waterways. It will also enable the Government to deliver their vision for that national trust from 2015, with the transfer of the Environment Agency's navigation functions into the new waterways charity after the next spending review.

The Government will fully consult on their proposals for the new waterways charity, as I have assured the Committee, over the next few weeks. That consultation will be supported by considerable stakeholder engagement. The Inland Waterways Advisory Council has indicated that it will respond to the consultation before it is wound down.

Finally, could I stress that it is a matter for the Scottish Government that they wish to maintain British Waterways across the border in its current form. One of the advantages of devolution is that different parts of the kingdom can behave differently; that is a matter for them. I reassure the noble Baroness that I will write to her about the Welsh Assembly Government and her concern whether they should or should not have these powers. I do not know whether they were a matter for the referendum that was completed some time ago.

I hope, with those assurances, the noble Lord, Lord Bradshaw, will feel able to withdraw his amendments.

7:15 pm
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Lord Bradshaw (Liberal Democrat)

My Lords, I thank my noble friend for that comment, and the other noble Lords who have contributed.

I would ask that in the forthcoming consultation paper there is a specific section on freight. The freight business is entirely industrial and heavy; the amount of freight carried on the rest of the waterways is infinitesimal by comparison. The big industrial interests using the freight facilities have reservations which they look forward to seeing answered in the consultation document.

Will the Minister also give his attention to the freight facilities grant, applicable both to waterways and railways, which has been discontinued by the Government due to spending constraints but reinstated by the Scottish Government, and give some indication of when this facilities grant may be reinstated?

With that, I have pleasure in withdrawing the amendment.

Amendment 86 withdrawn.

Amendments 87 to 88A not moved.

Amendment 89

Moved by Lord Dubs

89: Schedule 5, page 19, line 16, leave out "Competition Commission."

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Lord Dubs (Labour)

My Lords, the amendments in this group are to do with the Competition Commission and the Office of Fair Trading. These are among the most significant bodies covered in this particular Bill. They are fundamental to both competition policy and to consumer protection.

In passing, perhaps I may say that I regret that the BSkyB matter was not referred to the Competition Commission, but I appreciate that the topic is not one covered directly by this Bill.

I understand the Government want to merge most of the functions of the Competition Commission and the OFT, leaving some to go elsewhere. Clearly, these are matters of enormous concern but I am quite sympathetic to the idea of merging the two bodies. I have always felt there was surplus capacity in the two bodies, and they were not as sharply focused as they might have been in that one referred issues to the other.

It would be interesting to know, however, which of the functions of the two bodies will not be part of the new body. In other words, some of them are going elsewhere. I understand Trading Standards will have to take on some of the responsibilities. It would be useful to know what is in the Government's mind as regards what the new Competition Commission will consist of, and what functions will go elsewhere and why.

This not an occasion on which to go into the details of how the Competition Commission-or, indeed, the OFT-operates, but it is complicated, because the Competition Commission takes references from other bodies, such as the OFT and sectoral regulators. It takes appeals against decisions by sectoral regulators, and matters of public concern may be referred to it by the Minister. So it is a complicated issue and I would like to know what will be the basis for references to the new Competition Commission. Will they be similar to the old ones? They cannot all be the same because the OFT itself refers issues to the Competition Commission. Can the Minister throw more light on that?

Even if we are to go down the path of merging the two bodies, surely significant lessons must have been learnt from how they operate. We can do things better, a bit differently and more economically, and we should take experience to heart. I think that the Government are going to consult on this, and I would very much like to know the nature of the consultation, how full it will be, how long it will take and what opportunity there will be to make full representations to the Government on what they have in mind.

Having said that, the Competition Commission and the OFT were, I understand, both set up by primary legislation and subject to extensive debate in both Houses. They are significant bodies. I wonder what it is about them that makes them susceptible to the rather truncated procedure under the Bill. I know that that argument has been used about other bodies in the various schedules, but surely it applies with enormous force in the case of the Competition Commission and the OFT. Parliament-I am sure, most Members of this House-would like an opportunity to debate that in full and to be able to move amendments on the proposed new body: to consider the implications, for example, of transferring some functions to local authority trading standards authorities, when they are under severe financial pressure because of the cuts. What will be left of trading standards authorities after the cuts have taken place in local authorities? Will there be sufficient to take on the functions that have come from these two bodies into a local area?

This is an unhappy way to proceed. Even if everybody agrees that the two bodies should be merged-and I would guess that a lot of people would-there is still a need to consider how it will work out in detail. I am unhappy that we are doing something so significant on what is, more or less, the back of an envelope. I beg to move.

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Baroness Hayter of Kentish Town (Labour)

I will raise a couple of issues on the consumer aspects-although there may be no other issues, as that is the purpose of these two bodies. I have three questions on which I seek information from the Minister. First, in transferring enforcement of consumer law to local trading standards bodies, how can trading standards enforce significant breaches of consumer law at national level, such as bank charges or airline practices? My second question regards supercomplaints. Is the Minister satisfied that taking supercomplaints about competition direct to the new merged body-without, therefore, the two-stage process of checking on a case-has been carefully considered before the merger was proposed?

My third question is in respect of those supercomplaints which deal with consumer detriment which arises from particular features of a market. I have in mind for example, the current supercomplaint by Which? on payment method surcharging. It is not clear to me where those sorts of supercomplaints, which come under general consumer protection regulations rather than breaches of law on competition, would be taken under the new architecture.

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Lord Young of Norwood Green (Labour)

I have sympathy with the amendment; I think that it is a probing amendment. I certainly welcome the framework document, because I think that it is an attempt to explain what is going on, even if it does not deal with every detail.

The Government state in that document that the challenge in creating a single competition authority will be to help create a framework which is genuinely greater than the sum of its parts-for example, by streamlining procedures and processes to the benefit of those who use or are affected by them. There is doubt about whether that can be achieved. My noble friend Lord Dubs was right when he said that both authorities when they were initiated were the subject of large debate and primary legislation. Is this the right way to deal with them in future? That is a major decision.

I certainly concur with some of the concerns expressed by my noble friend Lady Hayter. Indeed, I was going to ask about the consumer functions that are being transferred. The Government state that the focus is to create a single strong point of information on education and advocacy and that citizens advice services will also take on responsibility for the Consumer Direct helpline. Strong concern has been expressed in the Chamber about the idea that Consumer Focus will be merged with the citizens advice bureaux-mainly because there have been examples around the country of local authorities cutting those services. There is genuine concern about that aspect of the Office of Fair Trading's activities being transferred to the citizens advice bureaux.

The document also mentions consumer credit functions being subject to a separate consultation as part of the HMT proposals for a new consumer protection and markets authority and that any subsequent transfer will be dealt with primarily through separate financial services legislation. It also talks about the possibility of the consumer functions being transferred in advance of the wider merger proposal. That only stresses our anxiety about whether there will be the ability at local authority level to deal with those aspects of consumer protection.

Those are our concerns about the proposals. I hope that the Minister will tackle the questions raised in his response.

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Lord Newton of Braintree (Conservative)

My Lords, before my noble friend replies with his characteristic clarity, perhaps I may be a seeker after truth. There has been reference to consultation. I am now left totally confused. I read the briefing note that I took off the e-mail only yesterday in respect of today's proceedings, which contains the following line:

"The Government will consult on its detailed proposals in the new year".

I am aware of the elasticity of seasons in respect of Her Majesty's Government, whoever forms it, but this seems to be getting ridiculous. Are we consulting or are we waiting?

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Lord Myners (Labour)

Will the Minister assure the House that nothing in the proposals made by the Government in respect of these bodies will in any way inhibit the freedom of recommendation of the Independent Commission on Banking? It is widely recognised that one of the key issues in banking is inadequate competition. That is evident in returns on capital and operating margins which most business sectors would die for. Banking is characterised by poor customer service, low standards of innovation and very little customer movement from one bank to another-although, on the whole, customers express themselves to be very dissatisfied with the service they receive from their current bank. To put it simply, they do not particularly like their own bank, but they have no confidence that any other bank is any better.

I fully commend the Government's proposals to establish the independent commissioner on banking. Together with the establishment of the Office of Budget Responsibility, they represent novel and important proposals from the Government which should enjoy the full support of the whole House. However, we cannot see the freedom of recommendation in some way enfeebled by the Government denuding the effectiveness of some of the responses which Sir John Vickers and the commissioners might recommend in terms of the process, should they also be seized by the inadequacies of competition in banking for individuals and small businesses in the United Kingdom.

7:30 pm
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Lord Taylor of Holbeach (Conservative)

My Lords, the noble Lord, Lord Young of Norwood Green, described the amendment as a probing amendment. In fact, I am in a position to accept one of the amendments so it is rather different from how the noble Lord might have perceived it. This is a concession on the hoof, so to speak. I am grateful to the noble Lord, Lord Myners, for his intervention. I am not an expert on banking. My noble friend Lord De Mauley is and has apparently just written a letter on this very subject which he is going to bring to me so that I can give some authority to the answer. Otherwise I think I would be waffling when I came to tackle the answer-waffling more than usual.

As the Explanatory Notes state, the Government are proposing to merge the competition functions of the Office of Fair Trading and the Competition Commission and are minded to transfer most of the consumer enforcement functions and resources of the Office of Fair Trading to trading standards, and advice, information and education functions and resources to Citizens Advice. Merging the bodies will eliminate duplication of effort in the competition regime, while transferring the consumer functions will improve consumer empowerment and protection by simplifying the bewildering array of overlapping bodies faced by consumers when they have a problem. I can assure the House that our proposals would remove no substantive consumer protections.

A merger between the Office of Fair Trading and the Competition Commission would create a single, powerful competition and markets authority with a dynamic competition culture and more flexible use of competition tools. It would eliminate unnecessary duplication of effort for business, as well as for the authority. It would be able to attract the best competition skills and would create a powerful and unified advocate for competition in the UK and internationally.

Competition enforcement is an important element in the growth and productivity of the economy. While the UK's competition regime already has many strengths, the Government believe that it is only right to consider where it can be further strengthened and rationalised in some way.

On the consumer proposals themselves, the transfer of most consumer enforcement functions will target resource where it is most needed-to support trading standards services, which the Government believe are best able to ensure robust enforcement against rogue traders, scams and businesses which abuse the law and their relationship with consumers. The resources that were available to the OFT would be transferred to trading standards. I assure the House that our proposals, on which we will consult, will include a range of options for keeping flexible powers for the new competition and markets authority to use consumer enforcement tools where they are the most appropriate remedy to cure a competition problem.

The transfer of the OFT's advice, education and information functions, including the Consumer Direct helpline, to Citizens Advice and Citizens Advice Scotland , along with the functions of Consumer Focus, would place all these functions in a single organisation well-equipped to represent the consumer. The appropriate resources would accompany this transfer of functions.

The Government believe that trading standards and Citizens Advice provide a first-class service and operate much closer to the public. Transferring functions to them would be wholly consistent with this Government's support for action and decision-making at local level. In particular, devolving key elements of consumer enforcement to a local level would target resource where it is most needed. It would reduce the potential for gaps and empower local authorities to find ways to address all threats which have a combined local and national dimension. Trading standards services already have experience of handling complex cross-authority cases successfully. We need to build on that and develop a body with the right capabilities, resources and prioritisation mechanisms.

Perhaps I may address this whole business of consultation. I think my noble friend Lord Newton of Braintree might have had an outdated briefing because the information on the local briefing makes clear that we are commencing a consultation process fairly soon. In fact, the consultation document may be available shortly, in the next 10 days or so, which means it will probably be available by the time we reach Report. The idea is that the consultation period should be completed within this year. The whole point of consultation is to address the detail of these proposals because it is in the mechanics of making this work that it happens.

We will consult on a model that ensures that money is targeted onwards towards national enforcement priorities, set and co-ordinated by a trading standards policy board made up of chief trading standards officers for England and Wales, with similar arrangements for Scotland. National threats could be addressed on the ground through one or more dedicated expert teams, either following the existing Scambusters model or through lead individual local authorities. The Government's consultation will also address the most economically complex consumer enforcement cases and will consider the case for the newly merged competition authority to retain some consumer law powers to supplement its competition work.

Given that the Government's proposal is to merge these bodies, noble Lords may query why they are listed in Schedule 5 to the Bill. I am happy to clarify the matter. At the time of the Bill's introduction, there was a proposal to use Schedule 5 to transfer some functions from these bodies and consequently to use Schedule 7 to move the bodies into Schedule 2, facilitating the proposed merger. Given the removal of Schedule 7, this is no longer possible. I therefore confirm that the Government intend to bring forward an amendment at a later stage of the Bill's passage to move these bodies into Schedule 2 to facilitate the merger.

The Office of Fair Trading will need to remain in Schedule 5, in order to facilitate the transfer of its consumer functions prior to the expected order to merge. Therefore, I cannot accept Amendment 97. However, the Government have concluded that it is no longer necessary to list the Competition Commission in Schedule 5, and on that basis, I am pleased accept Amendment 89 moved by the noble Lord, Lord Dubs.

I have received quite a lot of briefing on a number of issues raised by noble Lords and I will try to go through them. As we approach the dinner hour, I hope that the House will forgive me for doing so, but this is an opportunity to clear up some of these questions. The noble Lord, Lord Dubs, asked about consumer credit. It is subject to a separate consultation. In December, the Treasury and BIS issued a joint consultation on transferring the regulation of consumer credit from the OFT to the new Financial Conduct Authority. He also asked about trading standards resources, which of course will be addressed at the local authority level. But we are aware of the pressures on all services, including local authority trading standards. How local authorities allocate resources according to local priorities is a matter for them, but it is essential that any new money must be targeted on broader projects that respond to a national threat. It must complement work that is already being done rather than be seen as new funding for current projects. Nevertheless, there may be some positive benefits in the form of greater co-ordination and capacity building that would arise from these changes. Specifically as regards the future of the Local Government Group, it is our view that a board of chief trading standards officers, either as a successor to Local Government Regulation's Trading Standards Policy Forum or the Association of Chief Trading Standards Officers, would in practice lead on the co-ordination work.

The noble Baroness, Lady Hayter, asked about economically complex cases. As I mentioned in my main text, trading standards departments have demonstrated their ability and professionalism over many years, and I hope that I have indicated, by the construction of national co-ordination within the trading standards world, that we are looking to build them up in order to be able to tackle the more complex activities that have not only local impacts but also are of national significance. It is important that any changes can be addressed. In the same way, the noble Baroness asked about super-complaints. Competition elements would be part of the new Competition and Markets Authority, but the consumer, being sure of the issue, would go to the new authority for mixed market analysis, but where it is solely a matter of consumer interests, it would need to be part and parcel of the new co-ordination body within trading standards, as has been suggested.

The Government intend to consult and the proposed consultation will begin soon. No set date has been set for the consultation to be concluded, but it is expected to be finished during the course of the year. In reply to the noble Lord, Lord Myners, I am pleased to be able to say that as a result of the question that my noble friend had to answer, the Government's wider financial services agenda, the Independent Commission on Banking, chaired by Sir John Vickers, has been asked to look at the structure of banking in the UK and will consider how to promote financial stability and competition in the industry. This will include examining the complex question of separating investments from other matters. As regards the ICB, the Chancellor of the Exchequer said in the House of Commons on 9 February and my noble friend Lord Sassoon said in this House that the Government will not interfere with its independent remit.

I hope that I have managed to tackle the questions raised in the debate. I am grateful to noble Lords for bringing these issues to the attention of the Committee and I am happy to support Amendment 89, moved by the noble Lord, Lord Dubs.

7:45 pm
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Lord Dubs (Labour)

My Lords, I am grateful to the Minister and I am delighted that he has accepted one of the amendments, although I am not sure that it is because he has accepted the full thrust of the argument. I think that he has done so for a slightly more technical reason, but nevertheless one should take one's victories where one can get them. I am also grateful to my noble friends for the contributions they have made to this debate.

The Minister said that at a later stage the Government would be coming forward with further amendments. I hope that they will be tabled in this House. It would mean that I could say much less now than I would otherwise say if the amendments were not going to be introduced here. Does he know whether they will be brought forward in this House or in the other place?

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Lord Taylor of Holbeach (Conservative)

There have been early discussions on this matter and I should like to be able to bring the amendments forward at the Report stage in this House.

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Lord Dubs (Labour)

I am most grateful for that helpful response. There is only one issue that I am not clear about. The present process for referrals to the Competition Commission is quite complicated, and as I indicated, referrals can come from a variety of sources. Will the new Competition and Markets Authority be able to investigate issues on its own initiative or will it depend upon referrals? Will those referrals come from the existing arrangements or will they come from elsewhere? I am not totally clear about this.

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Lord Taylor of Holbeach (Conservative)

I think that I can reassure the noble Lord. The authority will not be entirely dependent on referrals. It will have the capacity, as does the current Competition Commission, to initiate investigations. This will be part and parcel of the consultation, which I hope will make the position clear for the noble Lord.

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Lord Dubs (Labour)

In which case, all I would say is that I still think it is too complicated an issue to be dealt with in this way. I understand that it is not of the Minister's own choosing, but if we had been having a Second Reading debate today on a proposal to merge the two bodies and deal with other consumer protection and competition matters, it would have been much easier for us to handle it. It is not for us to change the Government's approach, but I do regret it. However, I am grateful to the Minister for his response and I commend Amendment 89 to the Committee.

Amendment 89 agreed.

House resumed. Committee to begin again not before 8.48 pm.