Grand Committee
The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that it do consider the statutory instrument in question. I should perhaps make it clear that the Motions to approve the statutory instruments will be moved in the Chamber in the usual way.
Freedom of Information (Time for Compliance with Request) Regulations 2010
(14 years ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Freedom of Information (Time for Compliance with Request) Regulations 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, perhaps I may say to my noble friend Lady Harris what a pleasure it is to make my debut ministerial statutory instrument speech in the Moses Room under her chairmanship.
The purpose of these regulations is to allow academies more time to respond to freedom of information requests to take account of school closures, for example during school holidays.
The Freedom of Information Act gives any person the legal right to request access to recorded information held by a public authority. The Act applies to over 100,000 public authorities, and last year central government-monitored bodies received more than 40,000 requests, which is a 16 per cent increase on the number received the year before. Under the Act, freedom of information requests must be responded to promptly, normally within 20 working days. It is right that people making requests should receive a timely response.
However, there are limited occasions when the deadline is impractical. That is why regulations have previously been made in 2004 and 2009 to provide maintained schools in England and Wales, and schools and pupil referral units in Northern Ireland, with an extension to the usual 20 working-day time limit in dealing with FOI requests in certain circumstances.
Other organisations that have been provided with an extended time limit to respond to requests for information include: archives, to deal with requests for information contained in a public record that has been transferred from a closed file, because one of the freedom of information exemptions applies; operations of the Armed Forces requests, where information needs to be obtained from front-line units of the Armed Forces and they cannot be reached for operational reasons; and requests involving information that is held outside the UK and will take time to retrieve.
The Academies Act 2010 extended the Freedom of Information Act to proprietors of academies. Like other schools, academies can also face difficulties in answering requests received during periods of closure and other times when they are unstaffed. This is a particular problem during school holidays, which can be around six weeks long and therefore longer than the 20 working days normally permitted for a response.
Without this extension in place, academies may find themselves in a position whereby they will unavoidably be unable to comply with the time limits provided for under the Act, and I am sure that noble Lords will agree with me that this is neither fair nor sensible. These regulations will ensure that proprietors of academies have the same reasonable allowance in respect of the time limit for responding to requests as other schools in England, Wales and Northern Ireland that are subject to the FOI Act.
If the regulations are made, proprietors of academies would not have to count any day that is not a school day, such as during the school holidays, towards the period of 20 working days within which requests must be answered. However, under the regulations, requests must be answered within a maximum of 60 working days, including any period of closure.
However, these regulations do not mean that academies can delay responding to requests. They will be required to answer requests promptly. Where it is possible for an academy to respond earlier to a request, the response cannot be delayed until the end of the extended time limit. I beg to move.
Lord Campbell-Savours
My Lords, the Minister said that academies cannot delay; I wish to argue that they can delay, and I will set out the circumstances in which they can and which cause me concern about these regulations.
I am a regular user of the freedom of information legislation that applies to all public bodies—I have a number of applications outstanding with both government departments and local authorities at the moment—and I ask the Committee to recognise that while academies fulfil the same function as maintained schools in the state sector, they are different in that they comprise a greater element of independence, and it is that independence and the influence of that independence on the management of such schools that worries me.
Under existing legislation, educational institutions can be quite tardy in dealing with freedom of information applications. Unlike government departments and local authorities, whom I find fairly reliable, educational institutions can often be difficult. The problem with these regulations is that they are not accompanied by safeguards. In my view, this will lead to an abuse of the system. If evidence of abuse is needed, we need do no more than consider the report of the Campaign for Freedom of Information, which, when reporting on delays by the Information Commissioner in completing investigations, found that the completion of 46 per cent of the cases it handled were delayed by one or two years, 25 per cent by between two and three years, and 5 per cent by more than three years. When it wrote its report, one case showed a delay of three years 9 months after the Information Commissioner had dealt with the report. I understand that efforts are being made by the Information Commissioner to tighten up on these delays, but what we are doing today may hinder applications unless proper safeguards are introduced.
Let me give an example of what happens when educational institutions decide they want to delay and deny the public information they should have in the public interest. A maintained school within the United Kingdom, which could easily become an academy, decided upon a course of action which we will describe for the purposes of the debate as its project. The project was opposed by a number of expert organisations, one of which took the school to court, and huge legal fees were paid to fund the case of the expert objector. An MP took an interest in the case in the other House, advised against the action and used freedom of information legislation to unravel the affair. On 20 February 2008, the MP wrote to the school to establish the cost to the school of defending its action in proceeding with the project, the source of the funding, the role of the local authority, what legal advice had been given to the school, and the role played by the head and the governing body.
We should remember that these regulations will extend the period that schools have to reply to questions under freedom of information legislation. The school replied and refused to provide the information. On 15 March 2008, the MP applied under freedom of information legislation; the school still refused. On 15 May, the MP wrote to the school asking for an internal review of the decision to refuse to comply. There was no reply from the school. On 29 July 2008, the MP approached the Information Commissioner. On 11 September 2008, 44 days later, the Information Commissioner replied, saying that he had asked the school to issue a review within 20 days. On 23 October, a further 42 days later and eight months after the original request, the school revealed that it had spent £76,000 on legal costs to that date. The school carried on refusing to answer the other questions. Perhaps now the relevance of the 60 days may be dawning on Members of the Committee.
In March 2009, the MP made a fresh application, asking further questions under FOI. The school again refused to respond. On 16 April 2009, the MP wrote again to the school under FOI; the school later claimed that it had lost the letter. The MP sent a copy of the letter to the school; the school replied but again failed to answer the questions. In May 2009, the MP wrote to the school offering to extend the deadline by 20 days. On 27 May 2009, the school replied with evasive answers. On 9 June 2009, the MP wrote to the school, asking for an internal review of the decision to refuse to comply. On 6 July 2009, the school replied with evasive answers, hiding behind spurious exemptions.
On 15 July 2009, the MP wrote to the Information Commissioner to complain about the refusal to answer questions. Three months later, on 8 October 2009—one and a half years after the original application and three months after the complaint to the commissioner—the school wrote to reveal that £170,000 had been spent on legal costs. The school still refused to answer the other questions. The Information Commissioner then gave the school until 4 November to answer questions. On 23 November, the Information Commissioner stated: “Unfortunately, the authority”—that is, the school—
“initially struggled to understand the role of the Information Commissioner’s Office … as regulator of the Freedom of Information Act 2000 … I am, however, pleased to confirm that it now has a full understanding of our role and is working towards providing a full response by the 7th December 2009”.
A month later the Information Commissioner made a further statement, saying that,
“it appears that the authority still does not fully understand the role of the ICO. The Commissioner has today therefore issued an Information Notice to the Authority … compelling a Public Authority to provide the Commissioner with a copy of the disputed … information. The Authority has 30 days … from the date of the Notice to comply. Failure to comply may result in the commissioner making written certification of this fact to the High Court … I do however hope that that will not prove necessary”.
That was nearly 11 months ago.
In May 2010, the Information Commissioner revealed that a freedom of information notice to the school, dated 17 December 2009, had to be cancelled on legal advice because it had been addressed to the school, as against the governing body of the school. On 9 July 2010, the Information Commissioner wrote to the MP to state that the corrected information notice was being appealed by the school. In August 2010, the tribunal dismissed the appeal. The school then offered the Information Commissioner half-answers to the questions asked, which the Information Commissioner regarded as inadequate. The Information Commissioner then gave the school 14 days—as I understand it, to 21 October—to answer. So, it has taken two and a half years to get precisely nowhere on what I regard as perhaps the most significant piece of legislation of the Labour Government in the past 12 years. The school refused to answer the questions, making a mockery of the Act.
Today, we are considering giving institutions, which will be the subject of greater private sector influence, an additional 60 days without building into this new power for academies—at least, it is available in the maintained sector—any safeguards to prevent what I referred to happening again in the future. Although I am in favour of the 60-day period, I believe that the Government should now review this legislation with a view to reconsidering the powers available to the Information Commissioner for enforcement of the law. We cannot allow schools and other bodies to make a mockery of the legislation in the way that I have described.
Baroness Gale
My Lords, first, I congratulate the Minister on making his debut on statutory instruments. It is good to be working with him again. As he may recall, in the late 1970s when I was working in the Labour Party office in Cardiff and the Minister was in No. 10, we often had little chats about what the Prime Minister would be doing when he came to Wales. It is good to be working with him again, although I do not think that at the time either of us thought that we would be working on opposite sides of the Chamber.
I thank the noble Lord for his remarks and for his explanation of the statutory instrument. My noble friend Lord Campbell-Savours has raised some very interesting points, to which I am sure the Minister will reply. However, I believe that the safeguards are there in that academy proprietors remain subject to the obligation to respond promptly. If a request can be answered in less than the maximum period allowed, they must do so, and the SI can be reviewed by the Information Commissioner if there is a significant increase in the number of complaints from requesters.
With those assurances, I am happy to say that we agree that the statutory instrument is very sensible. It will make the workings of this section of the Act clear and understandable to all concerned. As it is so straightforward, we therefore have no objection to it.
Lord McNally
Oh yes, I remember it well. It was a very happy period indeed and a clear demonstration that Governments can get through very difficult economic problems.
I am very grateful for the intervention of the noble Lord, Lord Campbell-Savours, which was made with his usual thoroughness. I am unable to comment on individual cases but I shall read very carefully the Hansard report of this debate and send it to the Information Commissioner. As one who was very much a supporter of the Freedom of Information Act, I want to see it work. I am therefore very grateful for the noble Lord’s contribution because it is important that the Information Commissioner has the capacity to enforce the power.
On the backlog, I saw the Information Commissioner recently and he was able to assure me that significant progress was being made. I think that there was a period when his office did not deal with matters quickly enough, but a real effort has been made to speed things up and I think that we are now well on track. In addition, in November and December the Department for Education and Skills is holding a training event for academy principals and chairs of governing bodies to acquaint them with their responsibilities under the Act. Written guidance on handling requests will also be provided to the academies. I am grateful for the support of the Opposition and for the contribution of the noble Lord, Lord Campbell-Savours.
European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement) Order 2010
Baroness Wilcox
That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Central Africa Interim Economic Partnership Agreement) Order 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, the economic partnership agreements, or EPAs, with Cameroon and Côte d’Ivoire set in place a secure trading arrangement between these countries and the European Union to promote development-friendly trade. The arrangement is compatible with the World Trade Organisation’s provisions.
The agreements mean that Cameroon and Côte d’Ivoire will receive duty-free, quota-free access to European Union markets. Without them, these countries would face tariffs on up to 25 per cent of their exports, including on industries critical to their economies such as bananas and cocoa.
The EPAs allow Cameroon and Côte d’Ivoire to remove their own tariffs gradually, over 15 years, and each contains safeguards enabling them to protect infant industries and prevent import surges. However, in accordance with the wishes of Cameroon and Côte d’Ivoire, the EPAs do not include provisions on services, investment, procurement, intellectual property or other “deeper integration issues”.
Each agreement also contains a chapter on development, ensuring that Cameroon and Côte d’Ivoire receive the development assistance they need to make the most of the opportunities created by the EPAs. As a first step, in September 2009 the European Union signed off a €97 million package for Cameroon to accompany its EPA and to help boost its economy and trade activities. The UK is committed to monitoring this money closely to ensure that it is spent wisely and achieves the maximum impact on poverty reduction.
The benefits generated by duty-free, quota-free access to the European market and by improved rules of origin are the areas in which the EPAs will most quickly bring benefits. Without them, for example, the tariff on banana imports from Cameroon and Côte d’Ivoire would be €148 per tonne.
In the longer term, the biggest benefits will come from the increased trade and investment that will flow from Cameroon and Côte d’Ivoire removing their own tariffs and moving towards more open economies.
No nation can achieve prosperity by closing its borders to trade. Indeed, the World Bank’s 2008 Global Monitoring Report calculated that removing all trade tariffs could reduce the headcount poverty index by 5 to 6.5 percentage points over a 10-year period. A 1 per cent increase in Africa’s share of world trade would generate about $70 billion of additional income annually, which is about three times the total aid that Africa currently receives. So by removing tariffs and promoting free trade, the EPAs will deliver lasting benefits to Cameroon and Côte d’Ivoire, and to Britain.
To secure these gains for Côte d’Ivoire and Cameroon, we need to ratify these two EPAs. By agreeing to the orders today, the Committee will allow us to proceed without delay.
Lord Young of Norwood Green
My Lords, I welcome the Minister’s opening remarks on the orders. She will be reassured that we largely welcome the agreements. The trading agreements are designed to support parts of the African economy and should benefit workers in training and employment generally. In turn, businesses and workplaces will be made safer and more efficient. As the Minister said, economic partnership agreements are intended to be broad agreements that help to build regional markets and diversify economies in the African, Caribbean and Pacific regions, before opening up the international benefits of increased, balanced and sustainable trade between the regions. They will change our relationship from one that offers tariff preferences to one that builds lasting and more efficient regional and international markets for the ACP regions.
The ACP economies are too small to go it alone and regional integration has the potential to boost local trade and to create larger markets, which will attract trade and investment. Eliminating the barriers between neighbouring countries and creating real integration favours trade exchanges and boosts economic growth. It also creates bigger markets that are more attractive to investors, and facilitates trade with landlocked countries. We have already heard from the Minister about the benefits of trade with Africa overall.
I have no criticisms of these agreements, but I would appreciate clarification from the Minister on a number of points. First, on the central Africa agreement, noble Lords will note that Cameroon is the only central African country to have signed the document. Its strong links with the EU are well documented. It is estimated that 61 per cent of its exports go to the EU and 56 per cent of its imports come from the EU. Will the Minister confirm that the agreement will strengthen the quality of the Cameroon economy, which might benefit its trade dealings outside the EU? Does she expect the agreement to be superseded by one that includes the seven countries of the Economic and Monetary Community of Central Africa and, if so, when? Are there plans for the agreement, or any future agreement, to be extended to cover not only goods but services? The Minister has spoken of the specific requests of Côte d’Ivoire and Cameroon that these be goods-only arrangements, but are there plans for wider arrangements that include services?
Obviously there are gains to be had when the less developed members of such trading arrangements gain fairer access to larger markets such as the EU. However, that is not the only prize. There is an opportunity to improve access to the larger, more developed markets of fellow African continental members. Does the Minister agree that that in itself is a big prize in expanding the membership of the central Africa group?
Finally on this agreement, is the Minister satisfied that the gradual reduction of tariffs on goods entering from the EU, such as vehicles, chemicals and power generation equipment that are not manufactured in Cameroon, will reduce production costs and product prices in the Cameroon economy quickly enough?
Will the Côte d’Ivoire agreement be a stepping stone to securing a larger agreement that encompasses more of western Africa? Whereas the EPA covering Cameroon has been established in preparation for a possible expansion under the central Africa banner, I am concerned that the Côte d’Ivoire EPA is restricted to just the one country. Will the Minister update noble Lords on the progress of the discussions on securing similar agreements with Côte d’Ivoire’s neighbours, in particular Nigeria and Ghana, but also other members of the Economic Community of West African States? When might we expect to see further developments towards a regional-based agreement for west Africa?
Countries such as Côte d’Ivoire are using the agreements as a gateway to larger markets among their African neighbours, which will allow them to grow their national industries before looking to other international markets in a significant way. Does the Minister see such goals as significant in the domestic economy of Côte d’Ivoire? Are those goals hampered by this being a single agreement with Côte d’Ivoire, without any additional African benefit? As with the Cameroon agreement, will the Minister confirm whether he has ambitions for an economic agreement covering not just goods but services? Does she feel that the reduction in the tariffs over 15 years on certain manufactured products that could drive the Côte d’Ivoire economy is being done over an appropriate period? We have heard about the case of the central African EPA, and the Côte d’Ivoire agreement will be negligible in its impact on UK imports and investment.
It would also be useful to know when the Minister last met the relevant trade Ministers from each country to ascertain what assistance they need to make best use of these agreements. It is vital that the interests of Cameroon and Côte d’Ivoire are central to the legislation. I am keen to find out whether the Minister’s department works closely with colleagues in DfID on such matters.
Lord Dykes
My Lords, I, too, wish to thank my noble friend for presenting these orders for approval and join in the support for the two orders. I thank the opposition spokesman for his points and questions. I associate myself with some of them in respect of future arrangements.
The European Union is making process in doing deals that are equitable for these countries, which are still very poor, but it does take time. The Lomé convention had many imperfections, but at least some progress was made. It was succeeded by the Cotonou agreement, which made still further strides, but I think the EPA system is better, because it can deal with segmental differences and the isolation of a particular product in more detail, which is a good thing. I, too, would be interested to speculate with the Minister whether other countries, not just Cameroon, will join in the central African part of the first order. A large number of countries were involved, and it would be interesting, if the Minister had time, briefly to enunciate why those negotiations with other countries did not go ahead and why they decided not to pursue that. There is still some feeling in west Africa that these agreements are inherently unfair and unbalanced. That is an over-exaggerated impression; the European Union is definitely trying to do something more for these countries, genuinely and sincerely—but there are still those anxieties.
Will the Minister, if she has time, speculate a little, although not too long, on the political situation in both countries? Unrest can of course delay economic progress. On the Côte d’Ivoire order, I presume that having the same list of products that will come from the EU as imports into Côte d’Ivoire, as in the central Africa agreement, is a sign of making these negotiations uniform. Presumably in future there will be significant differences. In the mean time, we wish these countries well in their development. They are not really significant for United Kingdom exports, and for imports to them. We are very marginal in both those places. Whether that is a good idea or not I do not know, but there has been a habit for it to be dominated by the French and, to a lesser extent, the Germans, Dutch and Belgians. I hope that in future there will be more British business activity in these countries and the rest of west Africa. I agree with the opposition spokesman that an all-territorial agreement for all the countries would be a very good achievement in future.
Baroness Wilcox
My Lords, I am delighted to see the noble Lord, Lord Young, in the Room. I seem to follow him on all sorts of things that he has started, and which I finish. He hit me with a flurry of questions, most of which I will not be able to answer this fast, as he will know from being in this Room and trying to do so. However, I may be able to cope with one or two. He knows this subject very well, and most of his questions seemed to seek reassurance that we will follow the line that he has taken before.
In response to a question asked by the noble Lord, both the Cameroon and the Côte d’Ivoire EPAs are intended to be stepping stones to full regional EPAs. Côte d’Ivoire is part of the western Arica grouping, and, with the other nations in the group, it continues actively to negotiate a regional goods-only EPA. The negotiations are moving slowly, but some progress was made in 2010 and they could be concluded in 2011. Cameroon is part of the central Africa grouping, as the noble Lord will know. That grouping contains a large number of fragile states, such as the Democratic Republic of Congo, for which signing an EPA with the European Union is not a priority at this time. The Cameroon interim EPA is therefore likely to remain in place for several years, but the European Commission stands ready to negotiate a regional EPA, and, when the region indicates that it is ready, we will be able to move.
The services will come later, as the United Kingdom must negotiate at the pace of the developing countries. They must feel comfortable with the pace at which we are working and not intimidated or pressured by us, so that they have a chance to get used to systems that we ourselves find easy to use.
In response to the noble Lord, Lord Dykes, Cameroon and Côte d’Ivoire will liberalise gradually over 15 years. As to the political situation, the European Union has pledged more than £500 million to help to implement the agreements. This will help to overcome the difficult political situation and, we hope, will provide greater political stability. As I said in my opening remarks, this is the right way to develop with these countries so that they do not feel pressured by us but, at the same time, free trade is extended across the world, particularly with Côte d’Ivoire; Cameroon; the South African Development Community; the Pacific, eastern and southern African regions; and so on. It all takes a great deal of time, as the noble Lord, Lord Young, knows very well, but I think that it will be worth while in the end.
I do not think that I have picked up anywhere near as many questions as I have been asked but I know that we will reply to noble Lords in writing unless there is a very pressing matter that I have not managed to answer now. I thank all noble Lords for their contributions today and commend the orders to the Committee.
European Communities (Definition of Treaties) (Côte d’Ivoire Economic Partnership Agreement) Order 2010
Baroness Wilcox
That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Côte d’Ivoire Economic Partnership Agreement) Order 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
Disabled People’s Right to Control (Pilot Scheme) (England) Regulations 2010
(14 years ago)
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Lord Freud
That the Grand Committee do report to the House that it has considered the Disabled People’s Right to Control (Pilot Scheme) (England) Regulations 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I can confirm that, in my view, the statutory instrument is compatible with the European Convention on Human Rights. I am very pleased to take part in today’s debate and commend these regulations on right to control. This is a groundbreaking advance, which for the first time gives disabled people a legal entitlement to choice and control over the public services they receive.
When noble Lords debated the Welfare Reform Bill in this House last October, I noted just how important choice and control are to all our lives. There is an emerging thesis that happiness, quality of life and fulfilment depend on our ability to contribute on our own terms and be valued for that contribution. Like anyone else, disabled people need to be empowered to be in control of their own lives. They should have the same opportunity to be involved in a society that recognises them as individuals who contribute, rather than as people defined by disability. So I am proud that, with right to control, we have developed a policy that commands such broad support.
I am happy to congratulate the noble Lord, Lord McKenzie, for the work that he and his colleagues have done to bring the policy to this stage. I also pay tribute to the many people who have been involved in laying the groundwork for these regulations. A great number of organisations and individuals have expended a huge amount of time and energy in shaping this legislation. However, it would be remiss of me not to reserve a particular mention for the noble Baroness, Lady Campbell of Surbiton, who has been such a potent advocate for right to control. Her work, and that of the advisory group she chairs, has been critical in shaping this policy and advising the Office for Disability Issues. Even then, we could not have come so far without the support and co-operation of the many disabled people and user groups who have been crucial in ensuring that we get this right. This sum of knowledge and expertise is reflected in the clear insights and attention to detail that we see in the regulations under debate.
Right to control represents an important landmark but it is one stage in a longer journey. The coalition Government have a broad vision to decentralise, empower individuals and cut bureaucracy. Right to control fits well with our plans to allow local authorities, communities and individuals to manage their own destinies with less interference from the centre. By shifting the focus from what people need—or what somebody thinks they need—to what they want, we are working towards, first, services that meet the aspirations of disabled people, as well as their needs; secondly, services that are planned and designed around the disabled person; and, thirdly, a diversity of services that help disabled people choose the right package for them. In short, these are personalised and responsive services.
The right to a personal budget and, ultimately, the right to take the cash and buy services directly is the mechanism for empowering disabled people. Too many people are currently offered services that are designed for the convenience of the provider, not the customer. Too many people still find that their own complex needs are not fully understood and catered for, despite the best efforts of the local social care department. Right to control will put the people who are the experts in their own care firmly in the driving seat when it comes to putting together a package of support. I fully recognise that some disabled people will still need support and advocacy to discover what is available and what they can aspire to. But I want to be clear that right to control is designed for all disabled adults and our trailblazers will deliver the guidance and support needed to ensure that everyone can exercise that right.
Baroness Campbell of Surbiton
My Lords, I also really welcome the regulations. I, too, pay tribute to the noble Lord, Lord McKenzie, for introducing them; it was a very inspirational thing to do. It was risky and I think it will pay great dividends in the future. How nice that all sides of the Committee can support this initiative.
The right to control is, as the Minister said, a significant landmark for disabled people. For decades, disabled people have campaigned for the right to have choice and control over our lives. A small thing, you may say, but it is something that we have not been able to take for granted in the way that non-disabled people have. Now we have equality.
The regulations take us a long way towards the goal of choice and control. If implemented well—and they do need to be implemented well—they have the potential to transform the way we live. By exercising the right to control, disabled people will inevitably become more confident in taking personal responsibility for their role in the community and family life. It will enable greater freedom to plan and pursue educational, work or volunteering opportunities. In short, disabled people have at last been put in the driving seat of their own destiny. What is more, this is a legal right, enshrined in legislation—not a gift or a charitable favour, for which one must be grateful, but a right. This is a real step forward for disabled people.
As the Minister said, one of the key articles in the UN convention on the rights of disabled people is Article 19. It concerns the right of disabled people to live independently and be included in the community. As noble Lords will be aware, the UN convention states clearly that disabled people should have and enjoy the same human rights as everyone else. It sets out obligations on states to ensure that those rights are met. The right to control goes straight to the heart of Article 19 and provides a vehicle to realise this right and, consequently, goes a long way towards implementing the convention. That is terrific.
In addition, the way in which the right to control legislation has been conceived and developed accords well with the UN convention duty on states to involve disabled people in the planning and implementation of such rights. Both the previous Government and now the coalition Government have involved disabled people at every stage of developing the right to control legislation and now its implementation. I should know because I am the chair of the advisory group of disabled people and experts in independent living who helped to shape the legislation, proposals for the trailblazers and the evaluation. Everything about us was discussed with us during this process. The seven trailblazers are following the same model of co-production at a local level. This will ensure that the experience and knowledge of disabled people permeates how the right to control continues to be delivered and developed.
The way in which we have developed the right to control over the past two years, as an advisory group and on the ground with our buddies, has taken the personalisation agenda a step further and set a new dynamic support service culture whereby disabled people, who once had to apply to five or six different agencies for support, will now engage with one support planning process. This is something for which disabled people have been asking for a long time. A new public support service where disabled people will, again by legislative right, decide for themselves how best to use their resource allocation is at the heart of this process. We will be able to devise creative solutions of our own for our own support, and exercise as much control in the commissioning of the outcome as we feel able. If you do not feel that you can control everything, you do not have to; you can have a plurality approach.
I know that some noble Lords have concerns that some disabled people may not be able to take that kind of control over their lives in this way. However, I can reassure them that on the advisory group we looked at this issue and made sure that the right permits flexibility and will be well supported throughout the process. Flexibility, of course, is the key. Disabled people can ask for a particular service to be provided or take a mix of existing services and a direct payment, or, in my case, use a direct payment to purchase all their support themselves and be totally 100 per cent in control. However, I know that most disabled people are not control freaks like me.
There will be support and advice for those who want their payments to be managed by a third party, and advice, training and guidance for people who want to employ personal assistants. Advocacy and support will be an integral part of the right to control. I am particularly keen to see how well the trailblazers fulfil this important part of the right-to-control culture and keen that we scrutinise it as it develops.
Peer support is incredibly powerful in demonstrating to disabled people what can be achieved. It is another important part of trailblazer activity. Before I began employing my personal assistants more than 20 years ago, I needed to observe how other disabled people managed their employees and I learnt from their mistakes—as I am sure others have learnt from mine.
We all have dreams or expectations from life; disabled people are no different. Delivered successfully, a right to control will change for ever the way in which the state responds to our needs. I am confident that, by transferring power from the state to the individual in this way, we will overturn decades of low expectation and witness a transformation in people’s capability and well-being.
However, I recognise that this is an ambitious project. We are overturning a culture of dependency and philanthropy. There will be teething problems as we bed it down. However, I have been extremely pleased to be part of this transformative exercise. I have seen how people have grown, even during the two years in which I have had the privilege of chairing the advisory group. I am looking forward to seeing the success of the trailblazers and their eventual rollout across the country.
Baroness Thomas of Winchester
My Lords, as my noble friend said, it is just over a year ago that the band of Peers who speak on DWP matters welcomed the amendments to the Welfare Reform Bill, now Act, of 2009 which have triggered these regulations for pilots. I, too, can give them a hearty welcome.
I said a year ago that the amendments, now regulations, would herald a real shift in power from the state to disabled people, ensuring that they are in the driving seat when it comes to the support they need. I seek a few clarifications and have a few questions.
The amendments, which inserted a new clause, included a power for the Secretary of State to issue directions under existing community care legislation to deliver alignment under existing enactments. The then Minister, the noble Lord, Lord McKenzie of Luton, to whom I also pay warm tribute, said:
“Alignment means delivering the effect of the right to control to individuals in receipt of adult community care services”.—[Official Report, 27/10/09; col. 1114.]
My noble friend Lord Freud responded that it made far more sense to base the right-to-control approach on community care services, which are likely to be required on a sustained and long-term basis, than on the more transitory requirements surrounding support for disabled people to secure employment.
I should be grateful for clarification on that point. I think it means that adult community care is not included in these regulations because it comes under other legislation on direct payments, but that under these regulations authorities are enabled to share information about community care. Is this correct? Presumably this means that assessments will be shared so that disabled people do not have to undergo multiple assessments.
We all know how stretched local authorities’ financial resources will be. Will any support be provided to authorities to enable them to develop and implement a single assessment system? Will there be any practical support for organisations that provide information, advice, peer support and advocacy? There is an obligation for authorities to give to the disabled person information about organisations that provide advice and assistance, but there is no duty to sustain those organisations, nor is there a right to advocacy. Perhaps my noble friend can say what support there will be for the pilots.
Having read the document helpfully provided by the Office for Disability Issues, Making Choice and Control a Reality for Disabled People, I end by asking my noble friend one or two questions arising from that document. On page 20, I see that the Office for Disability Issues is working with the Department of Health to consider allowing, within the trailblazers only, third parties to carry out non-complex assessment reviews. Are we talking about people other than healthcare professionals? I was not sure. If we are, there is already a certain amount of controversy about those who carry out the work capability assessment, and it is important to get all these assessments right.
Another small point is the rule that a disabled person has to be informed in writing of various things. We are told that this means,
“in a format that is accessible to the person”.
If that is what the regulation means, why does it not say so?
Finally, have we got anywhere with the idea that the excellent access to work provisions might be guaranteed to a disabled person before the offer of a job, so that a potential employer would be more encouraged to offer that person employment? I hope that my noble friend can answer those questions—perhaps in writing, if not today. However, in general, I welcome the regulations most warmly.
Lord McKenzie of Luton
My Lords, I thank the noble Lord, Lord Freud, for his full explanation of these regulations and for his kind words. We certainly welcome the introduction of the right-to-control trailblazers, which, as all noble Lords who have spoken identified, flow from the Welfare Reform Act 2009. The Minister referred to them as groundbreaking; the noble Baroness, Lady Campbell, referred to them as transformational and overturning a culture of dependency. I very much agree with that. The noble Baroness was the driving force behind the development of the right to control. She described the legislative process as one of co-production. It would seem that this approach has very much continued in the development of the regulations before us. The right to control is predicated on the principle that disabled people are the experts in their own lives: and that their being passive recipients of whatever support is deemed appropriate, and how that support is delivered, is no longer acceptable. I agree.
I have one or two specific questions that perhaps the Minister can help me with. The Independent Living Fund is not one of the qualifying services, although it is one of the six funded services that are to be included in the right-to-control trailblazer areas. Notwithstanding that further applications are to be considered during the current financial year, my understanding is that the right to control can still apply to existing recipients. I should be grateful if the Minister could confirm that. Can he also explain the position for future years? What are the planned allocations over the CSR period? If he cannot tell us today, he might let us know when that information will be available.
Work Choice is one of the qualifying services. According to the DWP website, contracts have now been awarded for the delivery of that programme. Can the Minister say a little about how those contractual arrangements sit alongside the right to control? For example, will the duty of the responsible authority to provide information to the beneficiary under Regulation 7 remain with the Secretary of State or, by agreement, be passed to the third-party provider? In second arrangements with providers, what estimate has been made of the likely numbers of people who will opt for arrangements other than those available under these contracts? More generally, can the Minister say whether any of the six funding streams are likely to be inculcated in whole or in part into the universal credit when introduced, or if any of the relevant services within the meaning of Section 39 of the Welfare Reform Act would be so included? I understand that we may get more detailed views on that later in the week.
It is understood that the Work Choice programme, when introduced, will focus very much on an individualised approach to supporting people towards and into work. That is something that we should support. Can the Minister say something about the relationship between that programme and the right to control? As the noble Baroness, Lady Thomas, said, concern was expressed during our deliberations on the Welfare Reform Bill that expressly excluding adult community care services from the legislation would substantially diminish benefits from the right-to-control approach. The reason for the exclusion was that similar provisions exist under other legislation. We are told that the Department of Health will issue directions to local authorities to ensure that people assessed for adult community care services living in the pilot areas will have the equivalent facilities of the right to control. Given that the regulations have now been laid and that the pilots are due to commence shortly, have those directions now been finalised?
Supporting People is a vital, non-statutory programme that helps about a million of our most vulnerable citizens each year. It is a sign of the times that it is considered a reasonably protected budget, although it suffers a 12 per cent real-time reduction over the CSR period. It is a qualifying service for the purposes of these regulations, to the extent that it helps disabled people to live independently. Funding from the centre is no longer ring-fenced and there is great concern that local authorities, under extreme financial pressure because of budget cuts, will shift resources to other programmes. To the extent to which that happens, vulnerable people who are eligible to benefit from these and other regulations will suffer. Will the Minister say how this issue is to be monitored?
It is comforting that the DFG regime has been brought within the right-to-control pilots. Again, the budget will be under extreme pressure because local authorities typically top up their central capital allocation. Obviously, their scope for doing so is diminished. Will the Minister deal with one point? It is focused on the changes to buildings, but it should cover the provision of equipment as well. Do the processes envisaged here facilitate the recycling of equipment? I recall instances in the past such as when I was on a local authority and someone had a stairlift fitted. Sadly, within two weeks, they died, but it was pretty much impossible to get the stairlift taken out of that property and installed in another property with an equivalent need. I am not sure that I have my mind around all the processes envisaged here, so I should like to check whether that is facilitated, or not precluded. Obviously, that would damage the interests of disabled people.
Finally, could the Minister remind us of the basis on which the pilot areas were chosen?
In conclusion, these regulations are a hugely important step forward and a tribute to a lot of work that has been done by many people, particularly the noble Baroness, Lady Campbell. They give us a chance to test the proposals in practice and open up opportunities for disabled people to transform the quality of their lives. We give these regulations our full support.
Lord Freud
My Lords, I thank everyone who has spoken in this debate for their unanimous supportive approach. We are looking at a watershed moment—despite the level of consensus in this Committee, or maybe even because of it—in the way that right to control will enable disabled adults to have a real say in how services are provided and choose how to purchase those services. As the noble Baroness, Lady Campbell—who will, I think, be watching—said, these pilots need to be implemented well. While I could not possibly comment on her claim that she is a control freak, I know she raised the issue that some people who may not be quite as enthusiastic about taking total control will still be part of the pilot. Full support for them will be built into the pilot and will be a vital aspect of it.
I will now deal in no particular order with the questions that were raised. The noble Baroness, Lady Thomas, asked about the number of assessments required. We are working with all the local authorities involved to support them in undertaking just a single assessment, and have a field support team working with the different local authorities to share the approach. The noble Baroness asked why the regulations do not refer to accessible formats for the provision of information. These do not need to be specified in the regulations because there is a general duty under the Equality Act. The noble Baroness asked how community care will work. It is aligned with right to control. These regulations work alongside the legislative framework for community care. Indeed, the data-sharing regulations extend to community care.
The noble Baroness asked about the support provided to user-led organisations during the pilots. Trailblazers work with the local organisations that supply the support and advocacy. The representatives are members of local project boards, and the Government will provide support to trailblazers, which can include support for user-led organisations. The noble Baroness raised the issue of general support. The concept of right to control involves assembling the money that is already there and making it accessible in a right-to-control way. For the purpose of the pilots, we are putting resources in because there is clearly extra cost for the communities. From memory, the figure that we are adding to that package is £7.5 million, which will be a mixture of cash and practical support.
Asylum (First List of Safe Countries) (Amendment) Order 2010
(14 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Earl Attlee
That the Grand Committee do report to the House that it has considered the Asylum (First List of Safe Countries) (Amendment) Order 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
Earl Attlee
My Lords, the order adds Switzerland to the first list of safe third countries set out in Part 2 of Schedule 3 to the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004. This provision is concerned with situations in which an asylum seeker may be removed to a safe third country—that is, one of which he or she is not a national or citizen—without substantive consideration of the asylum claim. Countries in the first list of safe countries are presumed to be places from which an asylum seeker will not be returned in breach of the refugee convention or the European Convention on Human Rights.
Provided that the Secretary of State is able to certify, therefore, that the applicant is not a national or citizen of the state listed, the applicant may be removed to it and no right of appeal lies against the decision on the grounds of presumed or deemed safety. In other words, the applicant cannot bring an appeal arguing that the country in question is not safe.
Applicants may resist their removal on other human rights grounds in the usual way, although provision is made for such claims to be certified as clearly unfounded unless we are satisfied that they are not. If the claim is so certified, any appeal may be made only outside the United Kingdom. The Part 2 list currently includes all member states of the European Union, Iceland and Norway, all of which are bound by the arrangements for determining responsibility for examining an asylum claim set down in EC Regulation No. 343/2003, also known as the Dublin II Regulation. This regulation determines which member state is responsible for dealing with an asylum claim made within the EU or in another participating country. Dublin II combats the problem of asylum shopping in Europe by making one participating state—most often, though not always, the first one that the asylum seeker entered or the one in which he or she first claimed asylum—responsible for an asylum applicant and allowing him or her to be returned there if he or she tries to make a claim somewhere else. Since 2004, the Dublin regulation has allowed us to remove a net total of more than 7,500 people to other participating states.
Switzerland has signed an agreement with the EU allowing it to join the Dublin system and has been taking part in it since December 2008. The UK Border Agency has considered research from a number of sources, including UNHCR reports and the US State Department, and has conducted its own country research. We are satisfied that Switzerland has adequate procedures in place to ensure that individuals will neither be exposed to persecution in Switzerland nor be returned to their country of origin in breach of the refugee convention. We therefore believe that it is appropriate to make this order, which will allow us to operate the Dublin II Regulation with Switzerland as effectively as possible. I beg to move.
Lord Rosser
My Lords, as the Minister said, the order adds Switzerland to the list of safe third countries to which an asylum seeker can be removed from the UK without substantive consideration of the merits of his or her asylum claim. One effect is that there is no scope to contest removal to the third country on refugee convention grounds either before or after removal from the UK.
The Secretary of State has said that she is satisfied that removing asylum seekers to Switzerland will not be in breach of the European Convention on Human Rights and that any asylum seeker returned to Switzerland will be afforded the rights and benefits accorded to all asylum seekers under its domestic law. Paragraph 8.1 of the Explanatory Memorandum refers to:
“Extensive research into the treatment of asylum seekers in Switzerland”,
having been,
“carried out using objective material and information provided by the Swiss authorities”.
Can the Minister say a little more about what that objective material was? From what is said in the Explanatory Memorandum, one takes it that it is independent material, but it would be helpful if the Minister could say a little more on that score.
The list of safe third countries includes, as the Minister said, all member states of the European Union and states in the European economic area. The Explanatory Memorandum also states that since December 2008 eight asylum seekers have been removed to Switzerland. Can the Minister tell us in general terms something about the eight cases? Did the people involved seek to contest the decision to remove them? Have there been any cases of decisions to remove to Switzerland being successfully contested and, if so, on what grounds did they succeed? On what general grounds or basis was Switzerland considered in these cases to be the appropriate country in respect of those eight asylum seekers? Was it, as the Minister said in his introductory comments, that Switzerland was the first country entered? With the introduction of this order, is there expected to be an increase in the number of asylum seekers being removed to Switzerland if the process is simplified?
Paragraphs 10.2 and 12.1 of the Explanatory Memorandum state that adding Switzerland to the safe third country list and its associated procedures will reduce the scope for errors. What kinds of errors are referred to in these two paragraphs?
This does not appear to be a contentious order but, finally, there is a reference in paragraph 12.2 of the Explanatory Memorandum to the instrument being,
“subjected to internal review within the UK Border Agency to ensure that it has met that aim”.
When that internal review has been undertaken, will the results be made public?
Baroness Hamwee
My Lords, this is not a contentious order, but one phrase that the Minister used in his introduction caught my attention. He referred to the net total of those subjected to these orders since 2004. Is that the net total of those who have come into the UK? Net is not a term that I would have expected to hear in the context.
Earl Attlee
My Lords, I am grateful to all noble Lords who have contributed to this short debate on the order. The noble Lord, Lord Rosser, asked what constituted objective material: the answer is the US State Department reports that I mentioned and the experience of that country. Switzerland is clearly going to be a safe country as it is another European country, although obviously not part of the European Union, and so I do not see any difficulties. However, we had to go through a rigorous objective assessment of that state.
The noble Lord referred to the number of asylum seekers. Clearly, there are very few asylum seekers being sent back to Switzerland because it is not an obvious country for them to first arrive at. I was asked whether there would be an increase in removals to Switzerland. The answer is, no, the numbers are very low, but some asylum seekers will be subjected to this new procedure. The noble Lord needs to understand that procedures are already in place to allow removals but the Secretary of State must give each case a more difficult and protracted consideration. Once this order is approved, it will be easier for the Secretary of State to require removal.
The noble Lord touched on the scope for errors. It is sensible to have a universal procedure for all asylum seekers. Having different procedures for one very small proportion of asylum seekers seems unwise, and therefore it is better to approve this order and reduce the scope for errors. However, that does not mean that lots of errors are occurring.
The noble Baroness asked about the net total. I have not had any inspiration on that yet. The noble Lord, Lord Rosser, asked how many removals had been challenged. I shall have to write to him on that one, but there have been 12 removals since the Explanatory Memorandum was published.
Earl Attlee
My Lords, I shall write on the questions that I have not answered.
Lord Rosser
One question to which the Minister has not responded—and I can hardly imagine that it is a difficult one—is whether or not the results of the internal review will be made public.
Earl Attlee
My Lords, I am afraid that I shall have to write on that one as well.
Immigration (Biometric Registration) (Amendment) Regulations 2010
(14 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Earl Attlee
That the Grand Committee do report to the House that it has considered the Immigration (Biometric Registration) (Amendment) Regulations 2010.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.
Earl Attlee
My Lords, on 25 November 2008 the UK Border Agency issued the first biometric residence permits, through regulations made under the UK Borders Act 2007, to applicants granted further leave under student, marriage and partnership categories. In 2009, the regulations were amended to include students applying under tier 4 of the points-based system and other, smaller categories. January 2010 saw the rollout to skilled workers extending their stay under tier 2, and now I beg to move that the Immigration (Biometric Registration) (Amendment) Regulations 2010 be considered to incorporate the two remaining active tiers of the points-based system for migration.
In addition to those in migration categories who are already required to apply for a biometric residence permit, the regulations will introduce the biometric registration requirement for migrant workers applying to extend their stay in the UK for more than six months under tiers 1 and 5 of the points-based system, and for their dependants. Tier 1 covers highly skilled workers, investors, entrepreneurs and post-study work. Tier 5 is for certain types of sponsored temporary workers whose entry helps satisfy cultural, charitable, religious or international objectives. These permits enable the UK to comply with European regulation EC 1030/2002, as amended by EC 380/2008, which prescribes uniform residence permits containing fingerprints and photograph to be issued to third-country nationals staying in member states for more than six months.
Key to any immigration control system is the ability to establish that a migrant granted leave to enter or remain in the UK is the rightful holder of immigration status set out in the document that evidences that entitlement. The integrity of immigration control is threatened by those who seek to make multiple fraudulent immigration applications, to work illegally and to access public funds and services to which they are not entitled. By enrolling a migrant’s unique biometric information, we can establish a reliable link between the holder and the permit. We can link the biographical details they give us to their unique biometric identifiers and check a person against our existing records before deciding whether to grant their application to be in the UK.
Biometric residence permits make it easier and more reliable for the UK Border Agency, employers and public service providers to confirm a person’s immigration status and eligibility to entitlements in the UK. The infrastructure for these permits is in place and permits have been well received by legitimate migrants, employers and service providers as a secure and reliable way of confirming identity, immigration status, the right to work and the entitlement to access services. With more than 300,000 biometric residence permits now issued, the permit is now widely recognised and trusted as a secure immigration document. Guidance on checking the cards is available on the UK Border Agency’s website and a telephone verification service is available for employers.
To date, the rollout has largely run smoothly, with the majority of successful applicants receiving their permits within a few days of being notified that their application for further leave was granted. Enrolment provision has been expanded to meet customer need, with 11 Home Office biometric enrolment centres and 17 Crown Post Offices offering enrolment.
I will briefly set out the categories to which regulations already apply. Biometric residence permits are currently issued to those granted further leave to stay in the UK for more than six months as skilled workers applying under tier 2 of the points-based system, which is for people coming to fill shortage occupations or a gap in the labour market that cannot be filled by a settled worker and includes elite sportspersons and coaches, ministers of religion, missionaries or members of religious orders.
Tier 4 of the points-based system, which is for students is also already covered, along with a number of other categories of applicant extending for more than six months: spouses and partners of persons present and settled in the United Kingdom, representatives of overseas businesses, academic visitors, visitors for private medical treatment, domestic workers in private households, those applying on the grounds of United Kingdom ancestry and retired persons of independent means. Those transferring their conditions of limited leave from an old passport are also covered. Where the Immigration Rules allow dependants to join the applicant, the biometric regulations also apply to them, whenever they make such an application.
The 2010 regulations build from the previous biometric registration regulations and take us further towards complying fully with our obligations under EU regulations. To complete rollout to all tiers of the points-based system, we now seek to incorporate tiers 1 and 5. Tier 1 is designed to attract to the UK the brightest and best migrants from around the world who have the most to contribute to our economy and the Committee will be aware that the Immigration Minister recently confirmed:
“Those coming into the UK under the highly skilled migrant route should only be able to do highly skilled jobs—it should not be used as a means to enter the low-skilled jobs market”.
There are four sub-categories: general, for the most highly skilled workers, who are granted free access to the UK labour market so that they can look for work or self-employment opportunities; entrepreneurs, for those investing in the UK by setting up or taking over and being actively involved in the running of one or more businesses; investors, for high-net-worth individuals making a substantial financial investment—at least £1 million—to the UK; and post-study work, for the most able international graduates who have studied here, to enhance the UK’s overall offer to international students and providing a bridge to highly skilled or skilled work.
Tier 5 is for youth mobility and temporary workers who are coming to work in the UK for short periods for primarily non-economic objectives. There are two sub-categories of tier 5: temporary workers, for certain types of temporary worker whose entry helps to satisfy cultural, charitable, religious or international objectives, and the youth mobility scheme. Those coming to the UK under this sub-category are not able to extend their stay in the UK under the Immigration Rules so will not be affected by these regulations.
I am happy to try to answer specific questions about these regulations if noble Lords wish to raise them. I commend these regulations to the Committee. I believe they are proving to be a useful tool in tackling illegal immigration and illegal working. Employers have told us they welcome the documents as a secure and reliable means of confirming the right to work. When we intend introducing further categories of foreign nationals who are required to apply for a biometric residence permit, we will return to Parliament and seek further approval. I hope that I have explained the purpose of the regulations, and I beg to move.
Lord Rosser
My Lords, I thank the Minister for his explanation of these regulations which, as I understand it, continue the incremental rollout of biometric immigration documents to include groups of foreign nationals who are subject to immigration control and who have limited leave to stay in the United Kingdom. I understand that the biometric immigration document issued under the regulations is a card with a chip containing biometric data; namely, fingerprints and a digital facial image.
As the Minister said, these are the fifth set of regulations to be made under the biometric registration provisions of the 2007 Act and are intended to enable us to move closer towards complying with the EU requirement for member states to confirm leave to stay through the issue of a residence permit in the form of a card from May 2011, and with a biometric card from May 2012. Do these regulations mean that the UK will have fully complied with its legal obligations under the EU legislation by May 2012, or am I to infer from a comment the Minister made towards the end of his speech that still further measures need to be taken to enable us to fully comply?
The Minister said that under these regulations individuals applying for further leave to stay in the UK for more than six months under the immigration rules in tiers 1 and 5 of the points-based system for migration will now have to apply for a biometric immigration document, as will the dependants of such applicants. The changes apply only to foreign nationals subject to immigration control. Already covered by the scheme are those in tier 2 of the points-based system—who, as I understand it, include intra-company transfers—and tier 4, which covers students. Paragraph 7.4 of the Explanatory Memorandum states:
“Employers are also becoming increasingly familiar with the biometric immigration document as the numbers in circulation have increased following previous roll outs”.
I think the Minister said—I may well have misunderstood him—that there were 3,500 such documents now in circulation. Can he clarify whether that is the case? If it is not, what is the figure, and by how many will the number increase as a result of the order coming into force? In the light of the statement in the impact assessment that tiers 1 and 5 constitute approximately 16 per cent of the total projected numbers of biometric resident permit applicants, will the 3,500 be increased by roughly one-sixth?
To what extent are the numbers of people extending their stay in the United Kingdom under the terms of these regulations affected by the proposed cap on the numbers coming to this country each year? Will the provisions of these regulations or the earlier regulations covering tier 2—which I thought covered intra-company transfers, among other things—made under the biometric registration provisions of the 2007 Act apply to those coming to this country under intra-company moves, who, it appears, may now not come within the constraints of any intended cap on numbers coming to Great Britain.
Paragraph 8.1 of the Explanatory Memorandum states that there has been no formal consultation, but that the rollout strategy and policy have been discussed with internal and external stakeholders. Can the Minister indicate exactly who were the external stakeholders with whom discussions have taken place, if there were any in addition to those referred to in paragraph 9.1 of the Explanatory Memorandum? It may be that paragraph 9.1 covers all external stakeholders.
The impact assessment refers also to the social costs of £8.1 million which relate to the costs of travelling to enrol biometrics. Can the Minister say how the figure is calculated and broken down, at least in general terms? Likewise, the impact assessment refers to a reduction in benefits fraud and states that this could total £0.4 million over 10 years. Once again in general terms, how is that figure calculated? How does one come to the conclusion that that would be the figure after 10 years?
The Immigration Law Practitioners’ Association expressed concerns that processing times will increase when the volume of applications increase because applicants from tiers 1 and 5 will also need to enrol biometrics. The Explanatory Memorandum appears to reject these concerns. On what basis, and against what criteria, have the Government come to the conclusion that they have increased the capacity of enrolment facilities and options sufficiently, as is inferred on page 21 out of 56 of the Explanatory Memorandum documents?
Likewise, the ILPA expressed a view that the requirement for a biometric residence permit will adversely affect frequent business travellers because it adds an extra stage to the application process. The response was that, as part of the review of the front-office biometric enrolment service, the Government will be looking to further improve the service offered to applicants, including increasing the availability of enrolment offices and faster processing times. Since, as I understand it, the policy is to be implemented next month, what specific further improvements do the Government intend to make to address this point made by the immigration law practitioner service, and its further point that the range of locations at which biometric data can be enrolled, to which the Minister referred in his speech, is limited?
I appreciate that there are a number of questions there. I do not know the extent to which the Minister can respond today, but I would be grateful if he could write to me on those questions that he is unable to respond to.
Baroness Hamwee
I, too, am grateful for the explanation. I have given the Minister notice of some questions which, in fact, cover very much the same ground as those asked by the noble Lord, Lord Rosser.
On the question of compliance with EU requirements; to put it another way round—what more is outstanding on that score for the UK fully to comply? My other questions are practical in regard to enrolment and access by employers to the information. I am unclear how biometric information, as distinct from simply the production of the card, makes it easier for employers to check eligibility to work in the UK—something which the impact assessment tells us will be the case. Can employers check the position without having access to a reader? The Minister mentioned a telephone verification service. I do not know whether I am confusing the different bits of the mechanics of this, but I am unclear what that service will provide.
The Minister also talked about 11 centres for enrolment, plus 17 Crown post offices. This seems to have been an issue in the consultation. What further rollout will there be and what geographical coverage has already been obtained by the centres that are in place? They seem to be quite small in number.
Earl Attlee
I am grateful for noble Lords’ questions about this. The noble Lord, Lord Rosser, asked about the rollout and whether the UK would be fully compliant by 2012 as per the regulations. Yes, it will. Companies are becoming familiar with them, because there are 300,000 in circulation. Certain types of companies tend to use more migrant labour and are therefore more familiar. He asked how many more would be issued. We think about 80,000 per annum. He also asked about consultation. In the Explanatory Memorandum there is a very long list of people consulted, but I shall not weary your Lordships by reading it out.
The noble Lord touched on enrolment capacity and limitations. That is one reason why we did not introduce the BRPs in one go. It is a rollout programme, taking in new tiers.
I was asked how an employer can check a BRP without a reader. Guidance clearly sets out that the security features of BRPs are available to download from the UK Border Agency website. There is also a BRP verification telephone service, which employers can call to check whether a card has been cancelled—for example, because it has been reported lost or stolen.
I was asked where applicants can register their biometric identifiers. They can do so at one of 11 Home Office biometric enrolment offices around the UK, or one of 17 Crown post offices participating in a pilot. At present there are 28 venues located at UK Border Agency inquiry offices at Croydon, Solihull, Sheffield, Liverpool, Glasgow, Belfast and Cardiff. There are also biometric enrolment centres at passport service offices enrolling foreign nationals on behalf of the UK Border Agency at London Elephant and Castle, Birmingham, Derby and Brighton. The post offices are at Aberdeen, Beckenham, Beeston, Bracknell, Cambridge, Durham, Kingstanding, Battersea, Camden, Earls Court, Old Street, Middleton, Oxford, Redditch, Romsey, South Shields and Stamford. So there are plenty of locations.
We have also rolled out a mobile biometric enrolment service for those physically unable to attend an enrolment centre for medical or other reasons. This service is also available as an exclusive super-premium service whereby UK Border Agency officers will visit an applicant to enrol their biometric information—fingerprints, photograph and signature—and decide and conclude their application. This costs £15,000. The super-premium service is not currently available to customers applying for an extension of leave under a category that does not require a BRP, or applying for permanent residency or citizenships.
I was asked what we were doing to address the problems that applicants have experienced when applying for BRPs. Most have not experienced problems. The UK Border Agency takes any problems or issues very seriously, and is determined to learn lessons and continuously improve the service provided to its customers. It investigates any complaints received and aims to resolve them as quickly as possible and take steps to put things right if and when they have gone wrong. The vast majority of people find applying for a permit trouble-free. We have been collecting customer feedback and the vast majority of responses have been very positive.
I was asked why applying for a BRP delays applications. It does not do so, but the biometric enrolment must take place before the case is concluded, so that we can check the applicant against the existing databases and link their biographical details provided to the unique biometric identifiers.
The noble Baroness, Lady Hamwee, asked several questions. First, she asked what more was required for the UK fully to comply with the EU requirements. EU legislation requires BRPs to be issued to all non-EEA migrants, granting permission to stay in the UK for more than six months, by May 2012. We are on target to do that. She asked how biometric information, as distinct from the card itself, makes it easier for employers to check eligibility in the UK and whether that did not require employers to use a reader to check the information. Biometric information makes the link between the document and the holder more reliable, which in turn means that employers can have more confidence in the BRP than other less sophisticated documents. Currently, an employer can perform a visual check of the biometric facial image incorporated into the face of the card against the person present as well as checking the BRP’s security features and using the telephone verification service. We are currently developing plans for an automated online checking service. In time, readers capable of unlocking the data on the chip will be more readily available and will enable employers to check the biometric information of the person presenting the document against the facial image and fingerprints stored on the chip. They will also have the ability to authenticate the document electronically.
House of Lords
EU: Membership
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Pearson of Rannoch
To ask Her Majesty’s Government what is their latest estimate of the net cost to the United Kingdom of membership of the European Union.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the UK's net payment to the European Union budget is projected to increase from £3.8 billion in 2009-10 to £8.6 billion in 2014-15. The main reasons are the increase in the size of the budget and the disapplication of the abatement to non-agricultural spending in the new member states. Both were signed up by the previous Government for 2007-13. We are very concerned about those growing contributions, and we are working hard to moderate them.
Lord Pearson of Rannoch
My Lords, I am grateful to the noble Lord for his reply, which does not accord with the Treasury's spending review in October, which reveals that the net cash we are sending down the drain in Brussels this year is £8.3 billion, or £23 million a day, or the salaries of 750 nurses every day. Will the noble Lord confirm the other ruinous costs of our EU membership, which the Taxpayers’ Alliance has given as more than £100 billion a year? Also, what conceivable benefit do the British people get out of our EU membership? Do not the Government yet understand that we would create—
Lord Pearson of Rannoch
This is my second question. Do not the Government yet understand that we would create a great many jobs and be very much better off out of it?
Lord Sassoon
Now that the noble Lord has given up the strains of office of leading a party, we should allow him to be a bit more expansive—this afternoon, at least.
Of course, if we look at the wider benefits of EU membership, we can see that the UK gets much more out of it than it puts in, including in better access for British companies, whatever their size, to EU markets, cheaper prices and greater choice on our high street, more foreign investment, and a stronger voice for the EU in co-operation with countries such as India and China. The benefit of free trade with the EU alone has been estimated to boost GDP by more than 2 per cent—which, for the UK, would equate to benefits of about £25 billion to £30 billion each year.
Earl Cathcart
My Lords, as individuals, I do not believe that any of your Lordships would continue paying good money to the bank which looked after their money, their savings, and perhaps their mortgage, pensions, life policies and investments if the auditors refused to sign off the accounts because of fraud, theft, mismanagement and embezzlement, yet Britain continues to pay good money to Europe, although the auditors have refused to sign off on the accounts for 14 years for those same four reasons. Why do the Government not pay our great contributions to the EU into a bank account in London, draw down on that to make a payment to the British people as necessary and then pay only the net amount to Brussels if and when the auditors are happy to sign off the accounts? That might concentrate a few minds.
Lord Sassoon
I am grateful to my noble friend for that suggestion. Certainly I thoroughly endorse anything that concentrates minds in Brussels on the need for good housekeeping. I am not sure that his specific arrangement would quite meet our treaty obligations, but I shall bear it in mind.
Lord Clinton-Davis
My Lords, if we were to withdraw from the European Union, would not the costs be infinitely larger than the noble Lord, Lord Pearson, suggests?
Lord Sassoon
My Lords, I agree with the noble Lord and, as I have already explained, the huge benefit from our membership of the EU significantly outweighs the budgetary contribution that we make.
Lord Stoddart of Swindon
My Lords, is the Minister aware that we run a consistent trade deficit with the EU of about £40 billion a year? Could he say in relation to our net contribution, given the extra £450 million agreed by the Prime Minister at the recent quarterly meeting—or perhaps the £900 million which we will have to pay if the European Parliament has its way—how much we will then be paying?
Lord Sassoon
My Lords, in answer to the first part of the noble Lord’s question, 40 per cent of the UK’s trade goes to Europe, so it is a critical trading partner. On the potential increase of our budget contribution for next year, I should say that it was only thanks to the work of my right honourable friend the Prime Minister that the budget was put on to the agenda of the Council of Ministers and, thanks to the work he did with a number of other member states, the ridiculous proposal of a 6 per cent increase has been thrown out of court. The Council instead discussed the 2.9 per cent increase which we believed to be the absolute upper limit of what should be acceptable for next year.
Lord Dykes
My Lords, further to the Minister’s answer when he was referring to the enormous benefits in all sectors, would he agree that even the City earnings from being the largest euro currency trading centre in the whole world are enormous in comparison with the budget contribution we have to make? There are many other examples.
In view of the low quality of the characteristic questions of the noble Lord, Lord Pearson, should he not return to being leader of UKIP, the only party in Britain that wants us to leave, after 37 years of membership of the EU? If he were right, Richard Branson and many other businessmen would be wrong.
Lord Sassoon
My Lords, I suppose there was a question in there for me somewhere. I certainly agree with my noble friend that the City of London over a number of decades has indeed become the principal financial centre for the European Union. It is important that business across the European Union understands what benefit it gets out of the financing that goes through the City of London.
Baroness Symons of Vernham Dean
My Lords, the Minister said a moment or two ago that the only reason that the 2.9 per cent had been adhered to was because of the Prime Minister’s intervention. Indeed, the Prime Minister claimed he was “building an alliance” to “insist on the 2.9%”. Can the Minister explain therefore why it was that before the Prime Minister’s intervention 20 countries supported the 2.9 per cent cap, and after the Prime Minister’s intervention only 13 did?
Lord Sassoon
My Lords, the question of next year’s budget was not even on the Council’s agenda for the latest meeting. Therefore, getting 13 Heads of State to sign a letter on 29 October was critical to getting a sensible result out of the Council. Meanwhile, as I said in repeating the Statement by my honourable friend the Financial Secretary, Labour MEPs in the European Parliament were voting on an amendment to increase the budget next year.
Parliament Square
(14 years ago)
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Baroness Trumpington
To ask Her Majesty’s Government whether any agency is responsible for the removal of those occupying the pavement in Parliament Square.
The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, Westminster City Council is responsible for the pavements under its control and the Metropolitan Police are responsible for policing crime and managing protests in the designated area around Parliament. The Government share the public’s concern about the current state of Parliament Square and are working with all the relevant agencies to protect this place of national importance. The Government intend to introduce legislation shortly.
Baroness Trumpington
My Lords, I am terribly sorry, but I hardly heard one single word that the Minister said. This is therefore guesswork, and I apologise. Does she not agree that it is not a demonstration but a squat? Furthermore, does she not agree that this beautiful square is now a mess? Why cannot this Government get together with whatever authority is liable and, after all this time, do better than the previous Government to put this matter right?
Baroness Neville-Jones
The Government share my noble friend’s sentiments and those of the House. Let me say what the Government have been trying to do. My honourable friend in the other House, the Minister for crime prevention, has been working with the GLA, Westminster Council and the police—there are, of course, several authorities involved in Parliament Square—to bring about the situation we have now. As we know, the squatters have been evicted, the grass has been reseeded and the pavements have been repaired, so we are dealing with the mess. The problem is that the continuing demonstration is based on the existing law, which allows one person to attach 20 others to the application for a demonstration. That law, which was passed in 2005, has been abused in a way that Parliament most certainly did not intend. That is why we believe that it is necessary to bring forward legislative proposals, which we intend to do in a first Session Bill, to clarify this situation and to restore the balance between the right to protest and public enjoyment of an amenity such as Parliament Square.
Baroness Neville-Jones
My Lords, as many noble Lords may know, the problem is that no single authority owns Parliament Square. Westminster Council has responsibility for the pavements on the southern and western sides of the square and the GLA has responsibility for the pavements on the northern and eastern sides and for the grass. This means that we have to have partnership between these various agencies, and the Government have been involved in fostering that in order to bring about improvement in the square.
Lord Boston of Faversham
My Lords, does the Minister agree that the most effective agency to remove these people in Parliament Square would be the noble Baroness, Lady Trumpington?
Baroness Neville-Jones
My Lords, I think my noble friend Lady Trumpington has been very helpful in asking this Question.
Lord Waddington
My Lords, it is surely not necessary to spread litter around the place in order to exercise the right to protest. It would surely be perfectly lawful for any citizen to go along and remove all the unsightly litter and the tents without offending against any law whatever. I simply cannot understand why some of us are not enlisted to do precisely that.
Baroness Neville-Jones
My Lords, there are many public services that we could all perform in this area. My noble friend and this House are right to be concerned about the encampment, which is at the root of our problems. In the legislation that will be coming forward, it will be very important for Parliament clearly to express its will as regards what it sees as being the rightful use of Parliament Square. We are trying, while safeguarding the legitimate right to protest, to make it clear that encampment and other abuses of an amenity are not permissible.
Baroness Butler-Sloss
Will the Minister consider in the future legislation reducing the number of local authorities which run Parliament Square?
Baroness Neville-Jones
The noble and learned Baroness puts her finger on a real issue. In the short term, that will not be very easy to do. But, certainly, over the longer term it is something that might be looked at.
Lord Peston
My Lords, I speak as a member of the Joint Committee on Security, which has been looking at this for years and has got nowhere. At our last meeting, we were told something quite extraordinary; namely, that although what surrounds the square may look like a pavement and, if you fell on it, would feel like a pavement, the High Court has announced that, as it does not go anywhere, is not a pavement—which shows the idiocy of judges. That is one of the things that prevents anyone, including the Met, from doing anything about these squatters.
Baroness Neville-Jones
This is getting into territory on which I tread with some trepidation. I think that the noble Lord is referring to the judgment which stated that, given the circumstances of the pavement in front of Carriage Gates which, I think it was judged, “did not lead anywhere”, it was permissible for the two protestors and those who were attached to them to continue their protest there.
Baroness Hamwee
My Lords, will the noble Baroness accept that, while there are many—and I share this view—who see the value of Parliament Square as an open space which supports a site of world heritage importance, it is entirely natural and proper to allow protests in the vicinity of Parliament?
Baroness Neville-Jones
The Government accept my noble friend’s contention that it is right and proper for people to be able to protest peacefully within Parliament Square or its environs. The legislation will seek to restore the right also of the general public to enjoy the amenity of the square.
Coalition Policies
(14 years ago)
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Baroness Smith of Basildon
To ask Her Majesty’s Government how many responses they have had to their consultation on The Coalition: Our Programme for Government; and how many of those solely endorsed coalition policies.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, no fewer than 9,500 comments were received in response to the publication of The Coalition: Our Programme for Government. Departmental responses are still available to view online and I have asked for a copy to be laid in the Library. An exercise to count the number of comments which solely endorsed coalition policies could be carried out, but only at disproportionate cost.
Baroness Smith of Basildon
My Lords, I suggest that it would not take too long. Is the Minister aware that 9,500 people made comments, gave suggestions and put forward ideas, yet not one government policy was changed or even tweaked as a result? The responses are not on the websites—they have been taken offline—so we will be pleased to see them in the Library. Does the noble Lord accept that this was a disappointing PR exercise? Does he think that it should be done again? If so, will he assure this House that it will be a case of the Government not just noting the responses but actually listening to what people have to say?
Lord Strathclyde
My Lords, I cannot agree with the noble Baroness even though she puts it most charmingly. It was a useful exercise and we learnt a lot from it. Each department has given its thoughts and ideas on what has been said; those are available on departmental websites. But they have not gone back to each response, partly because, although it was a commentable document, it was not part of a consultative exercise. We learnt a lot and I am sure that in due course we will repeat it.
Lord Dholakia
My Lords, does the Minister agree that there have been fundamental reappraisals of government policy, particularly in the field of criminal justice and prisons? Was there consensus endorsement of that policy? Will he thank the Secretary of State for these profound changes in policy and make sure that they are converted into legislation before long?
Lord Strathclyde
My Lords, it is very good of my noble friend to point that out. The whole process of creating the original document, Our Programme for Government, was done extremely quickly, with maximum co-operation between the two parties, which is one reason why I believe that it was a success.
Lord Richard
My Lords, in his response to my noble friend the noble Lord twice said: “We have learned a lot”. What have they learned?
Lord Strathclyde
Would the noble Lord, Lord Richard, believe me if I said that the volume of correspondence generated far exceeded our expectations? The process of moderating these websites and sifting comments and ideas proved to be more resource-intensive than we had anticipated. However, we remain committed to canvassing the public’s views on a range of issues using on and offline channels.
Lord Hamilton of Epsom
My Lords, is my noble friend not concerned that, with the decline of religion in this country, consultation runs the risk of becoming the opiate of the people?
Lord Strathclyde
My Lords, not everybody is keen on consultation, but on the whole it is a good idea to give people as many opportunities as possible to comment on government policy, and I am rather pleased that 9,500 bothered to reply to this document when it was issued.
Lord Brooke of Alverthorpe
But if I heard the noble Lord correctly, he stated this was not a consultation. In those circumstances, is it not true that manifestos have now become a mockery and that the British people’s confidence in politics has been further undermined by having been presented with policies over which they have had no say? If this Government had been open and honest with the public when drafting their coalition policy—and if they had wanted to give a lead to the rest of Europe—should they not have put it to them in a referendum?
Lord Strathclyde
My Lords, when the noble Lord said that manifestos have become a mockery, he must have been talking about the Labour Party’s manifesto.
Lord Mawhinney
My Lords, bearing in mind the welcome initiative by the coalition, does my noble friend envisage that after future general elections each Government will publish their programme for the forthcoming Parliament?
Lord Strathclyde
Of course we do that already, vis-à-vis the Queen’s Speech, but we would not have needed to publish this document if there had been a clear majority by the Conservative Party. It was needed because we got together with our Liberal Democrat allies to create the coalition.
Baroness Royall of Blaisdon
My Lords, I thank the noble Lord for his utterly charming responses this afternoon. Does he believe—I do not—that the Salisbury/Addison convention should apply to policies which are outlined in the coalition agreement?
Lord Strathclyde
Broadly speaking, yes, I do, because they have the support of the majority in the House of Commons and were overwhelmingly and clearly pointed out in the respective manifestos. There are one or two exceptions where that is not the case but, as I said before, we will recognise them when we see them.
Lord Grocott
As it is not necessarily feasible to go through and analyse every single response, can the Leader of the House at least tell us how many people wrote in saying they thought it would be a good idea to spend £100 million on a referendum on the alternative vote?
Lord Strathclyde
My Lords, the noble Lord is of course right that it is far too short a time to look at each one but I flicked through the responses usefully over lunch and, for instance, here is one taken at random:
“We want referendums on national issues as we were promised”.
Another is:
“We want FAIR VOTES NOW!”.
Here is another one:
“I am concerned that having an elected upper house will mean that there is less accountability rather than more”.
I thought that one would go down well.
Lord Roberts of Llandudno
Will the Leader of the House confirm that, as the alternative vote was a manifesto pledge of the Labour Party, when we come to discuss it next Monday and following from then, that party will stand firm on its commitment to the alternative vote?
Lord Strathclyde
My Lords, I am looking forward to the Labour Party’s support on that Bill.
Health: Chronic Fatigue Syndrome
(14 years ago)
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The Countess of Mar
To ask Her Majesty’s Government what event precipitated the Department of Health decision to exclude all people who have or have had myalgic encephalomyelitis/chronic fatigue syndrome from donating blood from 1 November 2010.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, this decision by the UK blood services was prompted by a recent independent expert risk assessment of a possible link between a murine retrovirus and CFS/ME. Although the risk assessment found no evidence of a link or of a risk to transfusion recipients, the UK blood services recognised that practice for CFS/ME should be brought in line with other conditions where individuals are permanently excluded from blood donation to protect their own health.
The Countess of Mar
My Lords, I am grateful to the noble Earl for that reply. I offer my congratulations on the precautionary principle being called on in this instance, but ask him why the Department of Health did not say this in its press release. The notice said only that it was for the benefit of patients and no one, but no one, believed it. In the light of the findings on various viruses, not just XMRV, in the blood of patients suffering from ME, what new biological research as opposed to psychological research is being conducted into this terrible illness?
Earl Howe
My Lords, it is important to make clear to the noble Countess that no definite picture has yet emerged from the published literature on whether the virus in question, XMRV, is implicated in CFS/ME. The National Expert Panel on New and Emerging Infections has considered all the available evidence about XMRV and has reported that no public health action is required at this time. The Advisory Committee on the Safety of Blood, Tissues and Organs, on the basis of current evidence,
“does not recommend further measures at present, but wishes to continue to monitor the situation”.
As regards research into CFS/ME, the Medical Research Council is committed to supporting scientific research into all its aspects, including studies into the biological basis of the condition and evaluation of treatments. In 2009-10, the MRC spent £109,000 on research directly related to the condition.
Baroness Gardner of Parkes
My Lords, I am sure that everyone would agree that we would rather be too cautious, but can the Minister explain why anyone over a certain age is automatically excluded from being a blood donor?
Earl Howe
My Lords, this is a pragmatic decision by the advisory committee on donation. In the case of CFS/ME, which we are looking at at the moment, the committee recommended that the donation policy should be brought into line with other relapsing conditions, where the rule is that we do not take blood from people with such conditions.
Lord Alderdice
My Lords, given that there is no medical test that is pathognomonic for this disorder or group of disorders, how do the authorities propose to police its exclusion other than simply by hoping that people will come forward with the information themselves?
Earl Howe
My noble friend is right to say that there is no diagnostic test for CFS/ME other than a process of elimination and watching the symptoms. It is largely on a self-reporting basis that the blood transfusion authorities will be alerted to the condition unless, of course, a patient’s GP is involved and can report his or her opinion.
Baroness Finlay of Llandaff
My Lords, do the Government intend to ask NICE to evaluate pathogen inactivation, which is already used on fresh frozen plasma for children, for blood components as well because of new and emerging infections and the increased risk of infections in donors because of the increase in international travel?
Earl Howe
My Lords, I understand why the noble Baroness asked that question. I believe that platelets cannot be stored in refrigerated conditions and are therefore, in theory, open to more infection. I am advised that SaBTO, the expert committee, looked at this and advised that no action was currently necessary.
Baroness Thornton
My Lords, I took a look at the blood transfusion service’s excellent website over the weekend to see what it had to say about who should and who should not donate blood. Basically, it said that you should be in good health. People with CFS/ME often experience a range of symptoms that could be made worse by donating blood. Notwithstanding the problem of diagnosis and that the precautionary principle is exactly right, surely that is the point. There should be a common-sense approach that people with ME should not give blood because they are not well enough.
Earl Howe
My Lords, the noble Baroness has put her finger on it. On a precautionary basis, even though the risk is considered low to those with CFS/ME when they are without symptoms, it was considered appropriate to exclude them permanently from being blood donors in case it affected their own health.
Lord Skelmersdale
My Lords, my noble friend gave us the figure for total research into CFS/ME. How much was for biological research as opposed to psychiatric research?
Lord Turnberg
My Lords, is it not the case that we have not been able to discover the cause of this very unpleasant disease so far and we have no real effective treatments? While we are waiting for both of those, the best form of management seems to be cognitive behavioural therapy. Does he agree?
Earl Howe
My Lords, cognitive behavioural therapy is indeed part of the NICE recommendations, but only a part in so far as it is appropriate for any chronic condition to have such therapy. I am sure that the noble Lord agrees that the NICE guidance recognised a clinical and physical basis to this condition as well. Therefore, a multifactorial approach is appropriate.
Clerk of the Parliaments
(14 years ago)
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The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, the current Clerk of the Parliaments, Michael Pownall, who was appointed for a three-year term on 4 November 2007, has at my request agreed to an extension of his appointment until 15 April 2011. I am pleased to say that Her Majesty the Queen has agreed to such an extension. Mr Pownall has written to me in the following terms:
“Dear Leader of the House,
I am grateful to you for notifying me of the extension of my appointment as Clerk of the Parliaments.
In coming to the decision to retire next April, I have borne in mind that I will by then have served the House of Lords for nearly 40 years. There have, of course, been many changes and challenges over this period, not least during my time as Clerk of the Parliaments; and it has been a great privilege to have played a part in the development of the House as an effective second chamber. As Clerk of the Parliaments, I have been extremely well supported by the staff of the House who as you know, show great commitment to the House and its work.
Please would you convey to Members of the House my appreciation for their support and friendship over the years.
Yours sincerely
Michael Pownall”.
I am consulting the other party leaders in the House, the Convenor of the Cross Benches and the Lord Speaker on a process to appoint a successor to Mr Pownall. The timetable for that process should mean that the recommendation for a successor to Mr Pownall can be made to Her Majesty shortly after the Christmas Recess. As is customary, I will put before the House nearer the time of his retirement a Motion to enable Members to pay proper tribute to the services of Michael Pownall.
European Union Committee
The Chairman of Committees
That Lord Maclennan of Rogart be appointed a member of the Select Committee in place of Baroness Sharp of Guildford, resigned.
Budget Responsibility and National Audit Bill [HL]
(14 years ago)
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The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the Budget Responsibility and National Audit Bill makes provision to enhance the transparency and accountability of the public finances. The Bill has two main subjects: first, it establishes the Office for Budget Responsibility on a statutory basis as part of broader reforms to the UK’s fiscal framework; secondly, it modernises the corporate governance of the National Audit Office. I will speak to each subject in turn.
Fiscal discipline is perhaps the single greatest priority for this Government. We are all aware of the current fiscal climate and the situation that we are in. To address that situation, the Government are taking action on a number of fronts. In June, the Chancellor announced the Government’s intention to eliminate the structural current deficit in this Parliament and to put debt on a sustainable downward path. We set this out through our new fiscal mandate. Last month, the spending review comprehensively set out the spending reductions that will deliver this mandate. The plans are tough, but they are fair and deliverable. Now, through the Bill, the Government are strengthening the framework of the UK’s fiscal institutions.
The greatest single step forward is the establishment of the independent Office for Budget Responsibility, which will make independent assessments of the public finances and the economy. Up until the new Government’s first Budget, the responsibility for producing the official forecasts had rested with the Chancellor. The key judgments were made by Ministers, but the possible incentive to forecast optimistically, whether on lower borrowing or higher growth, led to scepticism over the credibility of the forecasts. Budget forecasts over the past decade consistently underestimated borrowing, compared to both its actual level and to what other independent forecasters expected at the time. The coalition Government intend to take a different approach.
We have removed the responsibility for forecasting from Ministers and given it to independent experts. The independence of the OBR’s judgments will ensure that policy is made on an unbiased view of future prospects. The establishment of the OBR is a reform that has been welcomed by both the IMF and the OECD. In its recent Article IV report on the UK, the IMF has said that the OBR is,
“a welcome step toward strengthening the budget process”.
The OECD has said that the OBR is an important initiative in improving public confidence. The UK is now one of the few advanced economies in which an independent fiscal institution produces the official forecast. It is worth emphasising this point because it influences many aspects of the legislation.
As I have explained, the establishment of the independent OBR will completely overhaul how the Budget is put together—indeed, it already has. The OBR was set up on an interim basis immediately after the coalition was formed. Led by Sir Alan Budd, in only a few weeks the OBR produced an independent assessment of the economy and public finances both ahead of and as part of the emergency Budget in June. It also scrutinised the Government’s assessments of the cost and yield of budget policy decisions and confirmed that we are on course to meet our fiscal mandate. Great strides were also made in transparency. More information was published than ever before—a fact noted by both the Treasury Committee and the IFS.
The final task of the interim Office for Budget Responsibility was to provide advice on how the permanent, statutory OBR should be established. I am happy to report to the House that the Bill is designed in line with the detailed recommendations made by Sir Alan Budd in his letter to the Chancellor. We are now moving to permanent arrangements and a new Budget Responsibility Committee is in place, to which Robert Chote, Stephen Nickell and Graham Parker have been appointed. Their appointments were subject to the confirmation of the Treasury Committee. The resources made available to the OBR have been increased. There has been a transfer of technical forecasting capacity from the Treasury to the OBR and a transparent, multi-year funding settlement has been agreed for the spending review period. Robert Chote has also announced a new location for the OBR’s offices, outside of the Treasury building.
I turn to the specific provisions of Part 1. The Bill will repeal the previous Government’s fiscal framework, including the Fiscal Responsibility Act 2010, and replace it with reformed and streamlined provisions. Clause 1 requires that the Treasury must produce a charter for budget responsibility, which will set out the Government’s objectives for fiscal policy, particularly the fiscal mandate. Clause 2 requires the Treasury to produce a budget on an annual basis. Clause 4 sets out the main duty of the OBR to examine and report on the sustainability of the public finances.
The Bill also makes explicit provision that the OBR has complete discretion over how it carries out its statutory duties. This is a broad remit and is not limited to forecasting. However, at a minimum the OBR will be required: to produce economic and fiscal forecasts at least twice a year; to make an assessment on the likelihood of the Government meeting their fiscal mandate alongside those forecasts; to publish a sustainability report at least once a year; and to publish a report on the accuracy of its forecasts at least once a year.
Clause 5 lays down a set of principles that will guide how the OBR goes about fulfilling its remit. The OBR must perform its duty objectively, transparently, impartially and on the basis of government policy. These principles protect independence and ensure a clear separation between analysis and policy-making. Analysis is rightly the domain of the OBR, but policy-making is the responsibility of publicly elected Ministers. The charter for budget responsibility will set out further details on the OBR’s remit and a draft will be made available to the House.
The establishment of the OBR takes executive responsibilities for producing economic and fiscal forecasts out of the hands of Ministers and entrusts them to an independent body. The OBR will report directly to Parliament on the public finances and the members of the Budget Responsibility Committee will be available for select committee scrutiny. The OBR’s forecasts and analysis will be laid directly before the House. On funding, there will be separate reporting of the OBR’s expenditure in the estimates that the Treasury presents to Parliament. In addition, the OBR will be able to submit an additional memorandum alongside that of the Treasury. Written Questions will be passed to the OBR to respond to. All these measures will enhance the ability of Parliament and the public to hold the Government to account for their fiscal policy. In terms of institutional status, the Bill establishes the OBR as an executive non-departmental public body. This status gives the OBR its own legal identity. Conferring Crown status allows appropriately skilled civil servants to move easily to and from the OBR.
The OBR’s executive responsibilities are to be undertaken by the three-person Budget Responsibility Committee. Its members will be appointed by the Chancellor, but the Bill provides the Treasury Select Committee with a veto over their appointment and dismissal. The Chancellor has said that he is giving the committee this veto to ensure that there is no doubt that the individuals leading the OBR are independent and have the support and approval of the committee. A chairman will lead the BRC and run the office. All staff will report to the chair, who will control the hiring and firing of the staff. In addition, there will be at least two non-executive members to provide support and constructive challenge.
For the BRC and its staff to produce the best possible forecasts and analysis, they will need access to the necessary resources and information. Clause 9 gives the OBR a statutory right of access to all government information that it may reasonably require. To facilitate close working, memorandums of understanding will set a framework for the working relationship between the OBR and other government departments. The provisions of Part 1 deliver the coalition’s aims of increasing transparency and enhancing accountability for the public finances; the same aims apply to the scrutiny of public expenditure, which is the subject of Part 2 of the Bill, to which I now turn.
Part 2 of the Bill modernises the governance of the National Audit Office. The NAO is best placed to assess the Government’s use of public funds, especially in the current climate. Effective independent oversight of spending is critical when public resources are under such pressure. The provisions of the Bill strengthen the resilience and integrity of the body. Noble Lords will be aware that very similar provisions were included in the previous Government’s Constitutional Reform and Governance Bill but that there was no time for the House to consider these provisions at the end of the Parliament, so they were lost at that time. This Bill represents the earliest possible opportunity in the new Session to bring them before the House.
The provisions in Part 2 implement recommendations made by the Public Accounts Commission following its review of the NAO’s corporate governance arrangements. Clause 11 confirms that the office of the Comptroller and Auditor-General will continue. The C&AG will be an independent officer of the other place who will be limited to a single term of 10 years. Clause 20 provides for the establishment of the new National Audit Office as a corporate body. Of course, the NAO already exists, but Clause 20 incorporates it formally for the first time as a body corporate. The new NAO’s functions include: providing resources for the C&AG’s work; advising him on that work; and approving certain services. The NAO will be able to support and challenge constructively the C&AG’s decisions, but it may not prevent him from carrying out his statutory responsibilities. The NAO will have a majority of non-executives and be led by a non-executive chair. The C&AG will be the chief executive but will not be an NAO employee.
I emphasise that those provisions do not compromise the discretion of the C&AG in forming audit judgments and in carrying out value-for-money studies. When the provisions were discussed in the other place during the passage of the Constitutional Reform and Governance Bill, both the then chairs of the Public Accounts Commission and of the Committee of Public Accounts supported them. Schedules 2 and 3 set out details on the new NAO and the relationship between the new NAO and the C&AG. Schedule 6 provides a framework power to enable the National Assembly for Wales to legislate for the governance arrangements of the Wales Audit Office.
The provisions in the Bill are a key part of the Government’s fiscal reforms. They will provide a strong institutional framework for the future and help secure the sustainability of the public finances. I beg to move.
Lord Eatwell
My Lords, I am most grateful to the Minister for his introduction to the Bill. I shall begin by referring to the second part of the Bill, which deals with the revised arrangements for the re-establishment of the NAO and its relationship with the Comptroller and Auditor-General. I am assured by the Treasury Bill team that, apart from minor drafting changes, this is the same Bill as that introduced by the last Government and lost at the end of the last Parliament. I can therefore begin this afternoon by congratulating the Government on having recognised the wisdom of the Labour Government’s proposals. I may have some small amendments to propose later, when I have had the opportunity to examine the Bill in more detail, but for the moment, with that part of the Bill, I am content.
I turn to the real novelty before us: the proposed legislation to establish an independent OBR. We on these Benches regard the idea of an independent Office for Budget Responsibility as a very good idea—perhaps the only good idea that the Government have had so far. We are therefore totally committed to ensuring that the legislation establishing the office is robust and fit for the purpose of establishing an independent office that will become an enduring and credible part of this country’s policy-making apparatus. To that end we apply the following tests to the legislation: first, independence; secondly, credibility; and thirdly robustness—that is, are the structures in place sufficient to maintain independence and credibility among the political storms that will invariably assail the office from time to time?
First, on independence, the comparison of the legislation establishing the OBR with that re-establishing the National Audit Office, conveniently contained within the same Bill, reveals that the OBR’s independence is a pale shadow of the independence of the NAO; and, correspondingly, that the independence of the chair of the OBR is a pale shadow of the independence of the Comptroller and Auditor-General. For example, Clause 17(1) makes it clear that the Comptroller and Auditor-General,
“has complete discretion in the carrying out of the functions of that office”.
Clause 6(3), by contrast, requires that the OBR must,
“in the performance of its duty … act consistently with any guidance … in the Charter”,
as described in Clause 1 of the Bill—which, by the way, incorporates Clause 1(6), stating that that guidance may be modified at any time. Let us remember that this guidance is guidance by the employer, since all OBR funding comes from the Treasury. It is not casual suggestions by a disinterested party. So the guidance of the charter is fundamental to the status of the OBR. It qualifies virtually all the supposed freedom and independence of the organisation. So, when will the charter be available for scrutiny by your Lordships' House?
In the absence of the charter, let us examine Clause 1 more carefully. In Clause 1 we read that the charter will outline,
“the formulation and implementation of fiscal policy and policy for the management of the National Debt”.
Notable by its absence from the charter is any reference to the economic health of the nation—the level of unemployment, for example. It therefore fails to provide transparent guidance to the OBR concerning the performance of its duties, as set out in Clause 4, to provide fiscal and economic forecasts. Will the Minister tell the House whether the catch-all clause, Clause 1(3), which states:
“The Charter may contain … other material as the Treasury considers appropriate”,
will contain guidance as to the economic variables to be included, or, perhaps even more important, those variables to be excluded from the activities of the OBR?
More broadly, Clause 1 makes it clear that the guidance of the charter will ensure that all activities of the OBR will be those that “the Treasury considers appropriate”, save one. At only one point in this whole Bill are independent powers provided to the OBR—that is, in Clause 6(2), which states that,
“the Charter must not make any provision about the methods by which the Office is to make any such forecast, assessment or analysis”.
That is it; that is the only independent bit. I do not want to suggest that that method of forecasting is unimportant—of course it is important, and I shall return to it in a moment—but I am certain that the phrase “an independent Office for Budget Responsibility” might be expected, in the understanding of ordinary people, to mean much more than that. However, the OBR does not have freedom over what it is to study. It does not even have the freedom apparently suggested by Clause 5(2), which was quoted by the Minister and states:
“The Office must perform that duty objectively, transparently and impartially”.
You would think that that was clear. However, that clause is qualified by Clause 6(1)(b), which mandates the provision of guidance as to what subsections (2) and (3) of Clause 5 entail. So the Treasury has to provide guidance on what transparency entails, and even what impartiality means. That does not sound very independent to me. If I have misinterpreted these clauses, may I suggest that the Government amend them to place their interpretation beyond all reasonable doubt?
One element of the guidance that we on this side agree with is that in Clause 5(3), which seems to confine the activities of the OBR to consideration of the impact of government policies alone. I am sure it is right that the OBR should not become embroiled in political controversy. However, will the Minister confirm that I have interpreted the clause correctly, because the clause qualifies the scope of the office’s consideration by the words:
“Where any Government policies are relevant … the Office may not consider what the effect of any alternative policies would be”?
I quite see that this may allow work on methodological issues or research into econometric technique, but what about circumstances in which the Government have no policy and hence the qualification no longer applies? Suppose, for example, that the Opposition put forward proposals to reduce the level of unemployment by means of schemes to be funded by the European Union. Could the OBR test these against a base-case scenario, as is the approach of the Congressional Budget Office in the United States? Or would it be prevented from doing so by Clause 5(3)? It is not at all clear. If the role of the OBR is to test government policies alone, why not say so explicitly?
Finally, on independence, paragraph 1(c) of Schedule 1 allows for the appointment of no fewer than two members of the office, who are not required to have,
“knowledge or experience likely to be relevant to the performance of the Office’s duty under Section 4”.
I suppose we should refer to these as non-executives. Schedule 2, on the other hand, establishes a National Audit Office with a majority of non-executives and a non-executive chairman. The NAO’s non-execs are appointed by the Public Accounts Committee and the OBR’s non-execs are appointed by the Chancellor of the Exchequer, so independence is eroded again. Moreover, the NAO’s non-execs have a clear responsibility, as set out in paragraph 10(2) of Schedule 2, to sustain the complete discretion of the Comptroller and Auditor-General. But a peculiarity of the OBR legislation is that it fails to place any responsibility on these non-execs, other than participating in the preparation of the annual report and in the audit. Since paragraph 12(3) of Schedule 1 explicitly excludes them from any role in the preparation of forecasts, what are these non-execs supposed to do? Make the tea? They certainly do not have the power to protect the independence of the OBR such as it is. Surely that should be the non-executives’ main role. The conclusion must be that this Bill neither establishes the independence of the OBR nor embodies procedures to protect the independence, save in one respect—the forecasting methods used by the committee.
Let us now turn to our second criterion, that of credibility. If the OBR were to be truly independent, as we on this side would wish, then it is inevitable that it will become a powerful brand. The access of the office to detailed government information, as described by the Minister, would make its reports the defining landmarks for those interested in economic and fiscal affairs—a very worthwhile achievement. As noble Lords may be aware, economic forecasting is a controversial discipline—an art not a science. Even widely used techniques do not command universal agreement or even respect. Forecasting models inevitably embody contentious theoretical assumptions, and econometric techniques are matters of often heated debate. It is therefore enormously important for the credibility of the OBR that its methods are subject to rigorous peer review and challenge.
The first component of this will be transparency. As already noted, the requirement of transparency is qualified by the provision of guidance as to what transparency actually means. However, some of my fears would be allayed if the Minister would guarantee that the data, methods and costings used in the preparation of forecasts will all be published simultaneously with those forecasts in readily accessible electronic form. This is necessary if there is to be informed review and challenge of the OBR's methods.
There should also be provision in the Bill for a peer review committee such as that provided in the structure of the US Congressional Budget Office. The peer review committee should be appointed by an independent person—perhaps the president of the Royal Economic Society—subject to the approval of the Treasury Committee in another place.
I turn finally to our third criterion: robustness. If the Bill were to establish a truly independent and credible OBR, future Governments would meddle with it at their peril. This is not a matter of the people involved. I have full confidence in the personal integrity and independence of Mr Robert Chote. I declare an interest as he is an active member of the Cambridge college of which I am master. However, the robustness of the OBR should not rest on personalities. That is why the severe limitations placed by the Bill on the OBR's independence, and the lack of any support for the credibility of its methods, indicate that the drafting fails the robustness test. Therefore the Bill fails all three of our tests. The OBR is not meaningfully independent, save in the methods that it uses—and those methods are not buttressed by the credibility of peer review. Failing those two tests, it is not robust.
I am prepared to accept that this outcome was not the Government's intention, and that the problems that I have identified are errors of drafting. If that is the case, I assure the Minister that I will be more than willing to work with him to produce a Bill that will establish an independent, credible and robust OBR. Of course, much of that work will be facilitated by sight of the proposed framework agreement between the Treasury and the OBR. Will the Minister confirm that such an agreement is being drafted, and will he tell me when I may have sight of it?
This part of the Bill is a failure. It need not be. I have a proposal to put to the noble Lord on behalf of my right honourable friend Alan Johnson, the shadow Chancellor. I propose that, at the end of Second Reading, the noble Lord, on behalf of the Government, should formally withdraw Clauses 1 to 10 of the Bill, and Schedule 1—that is, all material relating to the OBR. The Bill will then become the National Audit Bill, and will, I believe, receive support from all sides of both Houses. An all-party pre-legislative committee of both Houses should then be formed—or such all-party structure as the Government wish—to thrash out an independent, credible and robust structure for the Office for Budget Responsibility. This would be a major step toward increasing democratic accountability and transparency in our country. I hope that the Government will accept my right honourable friend's proposal.
Lord Newby
My Lords, I, too, welcome the Bill. When the proposal first came forward for the Office for Budget Responsibility, I regarded it as a gimmick. However, a number of things since then have persuaded me that I was wrong. First, when we discussed the statistics Bill several years ago, we discovered that only 17 per cent of the population believe any government statistics. Whether that is a rational view is irrelevant; the way in which politicians down the years manipulated official statistics left them with no credibility whatever. Therefore, a number of things needed to be done. Fortunately, the new structure of the Office for National Statistics is improving that figure, but it was a salutary reminder that, whereas we may take statistics seriously, politicians and Ministers have fallen so low in public regard that we are atypical.
Secondly, it became clear, not least from reading the book of the noble Lord, Lord Mandelson, that the previous Prime Minister and Chancellor believed that growth figures were a matter for political manipulation. It is absolutely clear that that is what Gordon Brown sought to do. This gives me another reason to believe that we have to take that power and oversight away from the Treasury. During Gordon Brown’s chancellorship, we had the delightful business of the golden rule and the way in which it was stretched, expanded and diminished to fit the requirements of the Chancellor. It is fascinating to hear the huge support of the noble Lord, Lord Eatwell, for these principles of independence. He shows all the zealotry of a convert. Certainly, while his party was in government, nothing was done to promote the principles that lie behind those parts of the Bill. That does not necessarily mean that his criticisms—
Lord Eatwell
My Lords, would the noble Lord like to make it clear that the independent structure of the Office for National Statistics was implemented by the Labour Government?
Lord Newby
My Lords, the structure was implemented by the Labour Government but, if it had not been for this House, the body would have been emasculated. The current structure is miles away from the feeble structure that came before your Lordships’ House. It required a cross-party coalition of former senior civil servants and Members from other parties to change virtually every aspect of that Bill, so that when it left your Lordships’ House it was almost unrecognisable. That is why the noble Lord is right to want to subject this Bill to careful scrutiny about whether it will achieve the aims that have been set for it.
Three areas deserve the scrutiny that the noble Lord has set out. It is important that the structure, the people and the role are right. First, the structure is slightly odd in some respects. The role of the chair and the way in which that person is appointed by a transparent appointment procedure obviously make sense. The other two members of the office are being scrutinised by the Treasury Select Committee and clearly must have relevant experience. Their roles are relatively clear, although it is not clear to me whether the Government envisage that these will be full-time or part-time roles. I find the context of the other non-executive directors strange in relation to this body and I am not sure what their role will be. I was slightly surprised by the use of the phrase “at least two”. If the chair decided that he would like half a dozen, would that be acceptable? More important, what role will they play? They will not be technical people, but much of the work of the office will be intensely technical. Will their role be to protect the independence of the office in some way and to proselytise about the role of the office? It would be helpful to have further clarification from the Minister on that.
Secondly, three positive aspects of the way in which the top people will be appointed will be crucial to the success of the body. First, they will be in place for five years, which is a long time. Secondly, unlike for members of the MPC, for example, the recruitment process will be open. It will not be a matter of the Chancellor ringing up someone on a Sunday evening and saying, “I’d like you to take this job and, by the way, I need to know by Monday morning”. Thirdly, the role of the Treasury Select Committee is important as regards the quality of the people involved. The Government have made a good start by their appointment of Robert Chote as the first chair of this body.
The third area where the noble Lord, Lord Eatwell, has demonstrated that there is room for further discussion is the remit and how it will work. I do not think that the word “independent” appears in the Bill, which is slightly surprising. There is some ambiguity about where the independence of the body starts and stops. We know from many other areas of public life that, if you give the Treasury an inch, its inclination is to take a mile. I look forward to discussions in Committee, where, I hope, we can clarify that slightly.
I do not think that the Government would be sensible to take up the generous offer of the noble Lord, Lord Eatwell, of a hugely long period of scrutiny on this. This body is of great significance and there has been a lot of public debate on it already. We have the opportunity in your Lordships’ House to debate all these technical issues carefully, as we always do, and so will those in another place. We need to get the formal infrastructure on to the statute book now, without further considerable delay. With those caveats, I am looking forward to the Committee stage and I support the Bill.
Lord Turnbull
My Lords, several justifications have been given to the budget responsibility half of this Bill. Originally there was talk of a fiscal policy committee as a mirror to the Monetary Policy Committee, but it soon became apparent that fiscal policy is quite different from monetary policy. The interest rate required to achieve a given rate of inflation is largely a technical issue, but the question of the size of the budget deficit and how the burden is shared between one generation and the next is political, as is the issue of the extent and distribution of public services. The fiscal policy mandate, therefore, must remain with the Chancellor of the day.
The current Chancellor has spoken of the need to prevent the Chancellor of the Exchequer from “fiddling the figures”. I do not think that that is an adequate explanation or that there is a true forecast but the Chancellor knowingly presents a false one. All forecasts are judgments, although some may be more plausible than others. The main problem is wishful thinking and a lack of objectivity about one’s own work—being judge and jury in one’s own cause. The problem has existed for a very long time and has affected some exalted people. We find it in chapter 1, verse 31, of the Book of Genesis:
“God saw everything that he had made and behold it was very good”.
A son of the manse might have been familiar with that.
To continue the religious theme, the previous Government were believers in the doctrine of what Stephanie Flanders of the BBC called the “immaculate recession”, in that it had no preceding boom and everything was on track and on trend until the world financial crisis hit us out of the blue. We must ask ourselves how it came about that after 60 quarters of consecutive positive growth—after boom and bust had been eliminated—we entered the recession with a structural deficit. Despite supposed adherence to the golden rule, there had been a cyclically adjusted current deficit in each of the six years to 2007-08. Public expenditure had been growing significantly faster than GDP, while the tax to pay for it stayed flat as a proportion of GDP.
We can now see that at least two errors were embedded in the fiscal policy of this period. It was claimed that the underlying rate of growth of GDP was 2.75 per cent per annum. That has now been revised down by OBR to around 2.25 per cent. Many observers believe that it could have been lower even before the recession. Had this more cautious rate been embedded in the public sector finances, as page 21 of this year’s Red Book explains, it would imply that the structural position of the public finances was worse than estimated at the time.
The second error was in assuming that a number of sources of revenue were sustainable, but the VAT receipts from credit-fuelled consumption, the various receipts from an overheated property market and the taxes levied on bank profits have all proved exaggerated. That point was acknowledged on page 201 off the April Budget document. In my view, all this makes a powerful case for introducing a greater degree of challenge and independent scrutiny into the fiscal framework. While it is true that, unlike monetary policy, the final decisions on the Budget will still rest with the Chancellor of the Exchequer, the political cost of departing from the OBR’s forecast is greatly raised.
Just as central bank independence was the big idea of the 1990s, greater scrutiny by independent financial councils is the current new idea, urged by both the IMF and the EU. It is ironic that this Government find themselves adopting a proposal supported by the EU, although the difference is that we want to construct our own mechanism rather than be subject to the scrutiny of the Commission or other member states.
Another benefit from the creation of the OBR relates to the fact that, even if the fiscal projections are basically sound, a number of tricks can be played in the presentation of the details: judicious choice of time periods, splicing different time periods together or switching between different definitions. In part, it will fall to the Statistics Commission to put an end to these and point them out, but the OBR can help by presenting its analysis on a consistent basis.
Like many others, I believe that the OBR is an idea whose time has come, but what about the detailed structure that is being proposed? In short, I believe that the Treasury Select Committee and the Government have broadly come to the right conclusion. I wonder whether the noble Lord, Lord Eatwell, considers that the Bank of England would pass the tests that he has set. After all, the Chancellor sets its mandate, chooses the members of the MPC and prescribes the mechanisms for accountability.
Some have argued that the OBR should be entirely independent of the Treasury, with its own staff, its own models and its own premises—this is what one might call the self-sufficiency model. The problem with that is what Sir Alan Budd has called “harvest time”: in certain months of the year around PBR and the Budget, it is all hands to the pump. Maybe 200 people are involved in preparing Budget forecasts, including experts on the North Sea, social security benefits or EU finances. At other times, they go back to their other duties. If these resources were transferred, the Treasury would need to recreate them for its own policy development work.
At the other end of the spectrum was what may be called the validation model—all staff stay in the Treasury but none of their work can be published unless it has been validated by the OBR. I was initially attracted to this but I believe that the Treasury Select Committee and the Government have correctly concluded that it would not carry conviction. What is proposed is a pragmatic and, in my view, well judged hybrid, with a core of around 20 staff being transferred but the work of all people involved in the Budget being validated.
The Treasury Select Committee proposed a non-ministerial department. The Treasury has responded by proposing a non-departmental public body. This is a distinction without a difference. The key issue at stake is the assurance that the OBR is adequately resourced and, if the funding coming from the Treasury is thought to be compromising its work, the chair is free to raise the matter with the Select Committee.
The real choice is between an OBR that is on the executive side of the fence and one that is an emanation of Parliament, like the NAO. Both the Treasury Select Committee and the Government have opted for the former, which I believe is right. The OBR is not just a commentator or expert auditor. It has an executive function: it supplies the Treasury with the basis for its projections. Another safety valve in the Bill, which I think should be supported, is the provision for two or three non-executives. Their role, I think, is to protect the OBR’s independence, to sort out tensions between the OBR and the Treasury and possibly to ensure that the chair of the OBR does not go off on an ego trip. I support both the structure and operating model that have been devised, but we have to recognise that these arrangements are experimental and, whether or not a review is provided by statute, we should certainly revisit the design in a few years’ time.
The other half of the Bill relates to the NAO, on which there is really only one issue, which is to provide that the C&AG should serve a single 10-year term. This prevents a repetition of what I consider to be gross mismanagement by the Public Accounts Commission in allowing the last C&AG to serve for 20 years, which was far too long. It was always ridiculous for the NAO to be urging best corporate practice and governance on departments while failing to practise it itself.
The new NAO leadership has an opportunity to develop the way in which the NAO operates. Historically, it has sought to extract the wisdom by examining one class of case—departmental spending that has gone wrong. However, best practice can be found in a wider universe—in looking at what has gone right, whether in departments, the private sector or abroad.
In conclusion, both parts of the Bill are worthy of support. In particular, the OBR can provide a valuable and hitherto absent degree of external challenge and so avoid the self-congratulatory tone of much of recent policy-making. We must also put an end to the cherry-picking used by the previous Government. It is ironic that when they wished to emphasise stability and growth, the cycle was written out of the script, but when they wanted to excuse the continuation of a current fiscal deficit, the cycle was miraculously reinvoked.
Baroness Noakes
My Lords, the Bill before us this afternoon is really two Bills dealing with the quite separate matters of the Office for Budget Responsibility and the national audit arrangements. The only thing that they have in common is their Treasury parentage, which in times past would not have been a good enough reason to have had only one Bill. I merely remark that it is a pity that the current Government have adopted the bad legislative habits of their predecessors.
Let me start with the OBR provisions. The OBR puts the UK leading the pack globally on fiscal transparency. We will now have a body that will issue independent fiscal and economic forecasts and give an independent verdict on whether the Government have achieved their fiscal mandate. I am sure that the Treasury civil servants who developed and manned the previous Treasury model over the years did an excellent job, but at the end of the day the Budget and PBR forecasts were determined by the judgments—or, as the noble Lord, Lord Turnbull, would have it, wishful thinking—of Treasury Ministers. The OBR is needed not to make the Treasury officials make better forecasts but to stop Treasury Ministers making bad ones.
In particular, I praise the formulation in Clause 5 that the duty of the OBR must be performed “objectively, transparently and impartially”. The noble Lord, Lord Eatwell, has tried to undermine that, but his criticism sounded more like sour grapes to me. When the Labour Party came to power, the then Chancellor claimed that he was committed to transparency, but I do not believe that he ever claimed to be objective or impartial—history will judge just how objective, transparent and impartial he truly was. I praise the courage of my right honourable friend Mr George Osborne in becoming the first Chancellor unambiguously to put judgments on the credibility of his economic and fiscal policies in independent hands. There will be no war of the Treasury's forecasts against those from outside the Treasury; there will be one clear, authoritative and independent judgment for the world to see.
That brings me to the first of my questions to the Minister. Another authoritative and independent voice in the land is the Bank of England, which also produces its own forecasts. Although those forecasts have a different aim—to support monetary policy—the forecasts inevitably cover much of the same territory. At present, there is a degree of co-operation between the Treasury and the Bank of England at working level, and a Treasury representative attends meetings of the Monetary Policy Committee. How is that expected to play out in future? Will there be any relationship between the OBR and the Bank of England as forecasts are developed? If so, how will this work in practice? If not, what is the Government's view of having two independent bodies that might have divergent views about the future economic path?
My second question—notice of which I have already given to my noble friend—concerns Clause 4. Clause 4(4) requires the OBR to produce two rather different reports each year, each of which seems to be similar to the reports that the Treasury has been producing since 2002. One of the required reports is to be on the sustainability of the public finances. The Treasury’s first Long-term public finance report: an analysis of fiscal sustainability in 2002 stated that the UK’s public finances are “sustainable in the long-term”, but by last year the equivalent report contained many references to challenges but no firm conclusions about sustainability. I have no doubt that, if the OBR had been in existence last year, it would have reported unambiguously that the public finances were not then on a sustainable footing.
The other report required under Clause 4(4) is rather different, as it will be an assessment of the accuracy of the OBR's own forecasts. My concern is whether it is right to give the OBR the responsibility to assess itself. Would that we had all been allowed to write our own school reports—how much easier life would have been. A parallel can be drawn with the Bank of England, which assesses itself each year on its forecasting performance. Earlier this year, the Financial Times said:
“Every August, the Bank does its own evaluation of its forecasting record and always pats itself on the back. This tiresome tradition arises since the Bank gives the forecasts extremely easy tests to pass”.
The FT's view was that,
“the Bank's forecasts are biased and have no information content at the forecasting horizon the Bank says is relevant for monetary policy”.
The Bank is judged ultimately on its monetary policy decisions and whether it delivers the inflation target set by the Chancellor rather than on the quality of its forecasts per se. However, the OBR’s core purpose will be to produce forecasts. Earlier, my noble friend reminded the House that the Treasury’s forecasting performance is poor, but that is not evident from the self-assessment that the Treasury produced each year. I hope that my noble friend will look again at whether the assessment would be better carried out by an independent person or body.
I have one final question on the OBR for my noble friend to comment upon. As other noble Lords have noted, tucked away in Schedule 1 are the detailed arrangements, which include having two members of the Office for Budget Responsibility in addition to the three with whom we are already familiar. The Explanatory Memorandum says that,
“These members … may assume the role of non-executives in the Office's governance”.
Why does the Bill not provide that they are to be non-executive members, as Schedule 2 does for the NAO’s members? I agree with the noble Lords, Lord Eatwell and Lord Newby, that their role should be better explained in the Bill. Can my noble friend also say why it is appropriate for the OBR to propose its own members? If the Government want them to be independent, why is there no independent appointments process? I have no problem with the Chancellor making the final formal appointment, but the important thing is that the process of selection must be demonstrably independent.
Lastly, my noble friend will be aware that the normal formula in the private sector is that the numbers of non-executives should be at least equal to the number of executive members. For non-departmental public bodies, it is generally provided that there is a numerical dominance of non-executives or that they are of an equivalent number, with an independent chairman. That is what Schedule 2 provides for the NAO. In the case of the OBR, there are to be three executives but only two non-executives. Can the Minister explain what model the Government are trying to create and why?
Although the majority of today's debate will focus on the OBR, we must not forget the changes that the Bill proposes to the Comptroller and Auditor-General and the National Audit Office. These clauses are a hangover from the previous Government's ill-judged Constitutional Reform and Governance Bill. I can quite see why the Government feel that it is necessary to press ahead with those reforms—not least because the substance of the restructuring has already taken place on a non-statutory basis—but I will offer a small commentary on the relevant clauses.
Before the National Audit Act 1983, there was a suspicion about the role of the Treasury in relation to the C&AG. The 1983 Act took the Treasury out of the picture, made the C&AG an officer of the House of Commons and created the Public Accounts Commission to oversee the NAO’s budget. When there was a fuss about the expenses of the C&AG more than 20 years later, the Public Accounts Commission commissioned a report from Mr John Tiner, who was then on gardening leave at the end of his service with the Financial Services Authority. Mr Tiner said that he was,
“not aware of the background to the C&AG being an officer of the House of Commons”—
that is, he did not know what he was talking about. As the Constitution Unit of University College London has pointed out, he made absolutely no assessment of the effectiveness of the Public Accounts Commission in carrying out its statutory role. Nevertheless, he concluded that the answer lay in the governance of the NAO and prescribed the usual formula of a board with a chairman and non-executive directors, which we have before us today. This was, of course, a convenient solution for those in another place to sign up to because it avoided any issues about the responsibility of the other place.
I recount that story to show how policy can be made at the highest level with relatively little real foundation. The failures of oversight of a component of the expenditure of the C&AG could have been dealt with relatively easily. Instead, the Bill will impose a costly and cumbersome superstructure of a board and non-executives. I have no criticism of the people who are undertaking those roles—they are excellent people—but do they add any real value to the process of public audit, about which there were absolutely no concerns? I doubt it. I hope that, before the Minister and his colleagues in the coalition Government pick up any more left-overs from the previous regime, they will in future examine critically whether changes are indeed necessary.
Lord Myners
My Lords, I will confine my comments to the Bill’s first 10 clauses, which refer to the Office for Budget Responsibility. Depending on the answers that the Minister gives, I may or may not be minded to propose amendments for the Committee stage. Clearly, a particularly important answer will be that to my noble friend Lord Eatwell’s suggestion that the Bill be divided and that the OBR part be subject to proper pre-legislative scrutiny.
I am broadly supportive of the intention behind the first 10 clauses, but I believe that the critical question must be around the independence of the Budget Responsibility Committee. As noble Lords have already noted, there is no reference to independence when describing the role and work of that committee. The OBR committee got off to a wobbly start—assumptions about the forecast for the economy were changed without full and proper disclosure and data were released early—but the fault, in my view, lay not with the members of the interim committee of the OBR but with the politicians who chose to use the OBR in the way that they did. That said, the Government have recognised the need to work hard to repair the damage done to the concept of the OBR, including by involving the Treasury Select Committee in the appointment of members of the OBR and in reviewing their resignations as well as in the appointment of what appears to be an excellent chairman of the committee of the OBR.
The tests that need to be set for the committee of the OBR relate to its independence, the transparency of its processes and the professionalism or objectivity of its work. It is clearly important that the committee of the OBR should be as independent of the Treasury as possible while recognising the reality—as described by the noble Lord, Lord Turnbull—of the need to work closely with people involved in the preparation of budgets and economic forecasts within the Treasury. The leadership and the membership of the committee are critical in that respect, as are the location and staffing of the OBR. I am delighted to see that the OBR is moving to premises outside the Treasury; I hope that at all times the staffing of the OBR will also be appropriately independent of the Treasury.
The independence of operations is covered in Clause 6(3), which deals with the processes of the committee of the OBR in respect of the guidance issued under the charter. My noble friend Lord Eatwell is absolutely right that there is considerable scope for mischief and hazard around the guidance process that is envisaged and the way in which the OBR is circumscribed. Clearly, the guidance given could potentially seriously limit the work and independence of the committee of the OBR. Indeed, Clause 6(3) seems to override the requirement under Clause 5(2) that the Office for Budget Responsibility—and, presumably therefore, the committee—should perform its work “objectively, transparently and impartially”. Perhaps, to be complete, that provision should also state, “but subject to any limitations that the Government of the day might wish to place in respect of those three criteria under the guidance that is issued”.
The Chancellor has described the OBR as creating a rod to beat his own back, but I suggest to the Minister that it will be less a rod than something that could be used gently to tickle the Chancellor if the guidance provided under the charter should be such as to limit the freedom of the committee. I do not believe that that is the Government’s intention, so I suggest that, prior to Committee stage, the Minister look again at the wording of the Bill. To his great credit, the Minister has shown a willingness in previous debates to look at the drafting of Bills, to listen to what the House says and to bring forward his own amendments—I think in particular of the Terrorist Asset-Freezing etc. Bill—so I hope that he will look at the way in which, in the hands of a different Government, the proposed charter and guidance could be used severely to limit the operations of the committee of the Office for Budget Responsibility.
I am particularly keen to hear from the Minister whether, under his interpretation of that wording, the committee of the Office for Budget Responsibility would be free to launch reviews on its own initiative or whether such reviews could be launched only with the prior approval of the Treasury and whether, if the OBR launched such reviews, it would need first to discuss their contents with the Treasury before they were published. As the Bill stands, I do not think that the committee of the OBR can be described as independent by virtue of Clause 6(2) alone, particularly to the extent that that might be inconsistent with Clause 5(2).
It would also be helpful if the Minister, in looking again at the drafting of the Bill before Committee stage, could reflect on the meaning of the term “sustainability” as used in the Bill. It seems to me that sustainability can be achieved at a number of different levels, particularly in relation to the size of the state. A sustainable fiscal policy might relate to a small state and a small government, but a sustainable approach might also relate to a much larger state and government. There is a danger that, in opining that a particular outcome is sustainable, the OBR might be construed as saying that that is the only sustainable outcome. My view is that there are multiple sustainable outcomes. There is some risk in suggesting that there is a simple test of sustainability that only one configuration of expenditure, tax and borrowing is capable of meeting.
Clause 4(3) refers to a need for a review of “fiscal and economic forecasts”, which is entirely welcome and has my full support. However, noble Lords previously have spoken about the language in which financial forecasts are proposed. We know from the Chancellor of the Exchequer’s recent Statement on the comprehensive spending review and from previous Statements by previous Chancellors of the Exchequer that there has been an increasing tendency to give partial, unbalanced or incomplete Budget Statements and Statements of a similar nature. I urge the Minister to add to the roles of the OBR by requiring it to comment on the completeness, objectivity and balance of such Statements. In the CSR Statement, we saw the right honourable George Osborne mixing up real data with cash data, inflation-adjusted data with non-inflation adjusted data and percentages with absolutes, all of which undermines the credibility of the budget process. We have seen how Sir Michael Scholar at the UK Statistics Authority has improved the presentation of statistics by Government; we need something similar in respect of Government financial statements.
Transparency is another important element in the effectiveness of the committee of the OBR. I remember that, when the House debated the establishment of a council for financial stability, the noble Baroness, Lady Noakes, was such a great believer in transparency that she wanted just about every meeting to be appropriately minuted and for those minutes to be published. I thought then—and even more so since I have had a chance to reflect on the matter away from the hurly-burly of office—that was rather a good idea. Will the minutes of the meetings of the committee of the OBR be published?
Thirdly, and finally, I come to what I might describe as professionalism, on which I believe a number of issues arise. First, on resourcing, we could clearly create the committee and the Office for Budget Responsibility but then under-resource the body so that it was incapable of doing the duties that we expected. It would be beneficial if paragraph 14(1) of Schedule 1 included an additional requirement that the chairman of the committee of the OBR should each year certify the sufficiency of its resources and the adequacy of its independence from the Treasury. That would give considerable comfort.
On the issue of its forecasting performance, I find the OBR’s role in that somewhat questionable. Forecasting is extremely difficult—as suggested by the noble Baroness, Lady Noakes, the Bank of England’s record in forecasting has not been particularly good—and I am not sure that we need another set of forecasts. Why not simply use consensus forecasts, which the Treasury frequently uses when it suits it and which the Bank of England also uses? The only basis on which we need another forecaster to add to the 40 or so credible forecasters—if such a phrase is not a contradiction in terms—is that the Minister can assure us that the OBR’s forecasts will be better than those of any other forecaster. I see even a degree of naivety in the drafting of the Bill, which requires that the committee of the OBR publish a commentary each year on its own forecasts, which implies that past mistakes can provide lessons from which it could learn. However, the reason why the OBR’s forecasts might be wrong in one year might give very little guidance as to why a forecast might be wrong in a future year. I endorse the view that the report on the OBR’s forecasts should be produced by a peer review group rather than by the OBR. Surely that is a sequitur to the whole thrust of creating an independent Budget Responsibility Committee.
Finally under the heading of professionalism, I want to mention the word “audit”, which appears a great deal in the subsequent parts of the Bill but not at all in the first 10 clauses. Nevertheless, the Chancellor of the Exchequer told the other place last week that the forecasts he made in the comprehensive spending review had been audited by the committee of the OBR. Can the Minister explain whether auditing is a proper function of the committee and how that function could possibly have been carried out in such a short period of time by such a small unit? Does that not place at risk the integrity of the language around audit? If audit is to be a function of the OBR, that should be properly specified in the Bill, including the methodology to be used.
Finally, I have two brief points relating to the UK Debt Management Office in relation to Clause 1(1) and Clause 1(2)(a). Can the Minister tell us whether those provisions imply in some way a change in the future operation and accountability of that quite excellent office?
Baroness Browning
My Lords, I support both parts of the Bill, but there are issues which I hope my noble friend on the Front Bench will be able to answer in Committee. To put the Office for Budgetary Responsibility on to a statutory footing is undoubtedly a good thing, but as we have heard, the office’s remit is ambitious to say the least. It is therefore important not only that it develops and maintains a reputation for trust, reliability and transparency, but also that the structure which is put in place resolves from the beginning some of the difficulties that have unfortunately arisen while it has been on a non-statutory footing.
I want to ask first about Clause 9 and the right to information given to the Office for Budgetary Responsibility. The Minister mentioned in his opening remarks that there is to be a memorandum of understanding between the OBR and the Treasury. I assume that such a memorandum will extend to other government departments such as the Department for Work and Pensions, which would almost certainly be another department where there will need to be a similar arrangement. Further, as my noble friend Lady Noakes pointed out, there is also the question of the Bank of England. There is a clear interface and how it is to be managed is very important.
More particularly, the word “reasonable” is writ large throughout Clause 9. That is a good thing. I am not a lawyer, but I am aware that lawyers love the word “reasonable” because it is open to many interpretations and is one on which many decisions are made. Can my noble friend advise the House today whether, in light of the reasonableness I have just mentioned and the detail of the subsections of this clause, the memorandum of understanding will be made available to noble Lords before we start our detailed scrutiny of this clause in Committee? It is always helpful when passing legislation, if something as important as this is going to come up, that we can anticipate that it is going to be available. It will be of interest not only to noble Lords but, I am sure, to another place. I am sure, too, that members of the Treasury Select Committee would also have an interest. I ask this because it seems to me that the future reputation and integrity of the OBR will depend on its ability to access and use information.
On that last point, Clause 9(4) quite properly states:
“This section is subject to any enactment or rule of law which operates to prohibit or restrict the disclosure of information or the giving of any assistance or explanation”.
I think we can all understand why the provision is there, but has my noble friend thought through how the OBR will deal with freedom of information requests when, for example, it is in receipt of information it has obtained from other government departments in order to carry out its own duties and fulfil its responsibilities? How will this interface with other government departments affect the OBR’s ability to respond to FOI requests before it publishes information and data?
I turn now to the second part of the Bill. Having for many years had the privilege of serving, along with a colleague on the Labour Benches of your Lordships’ House, on the Public Accounts Committee, I have a particular interest in the move to introduce corporate governance into the National Audit Office. I hold the National Audit Office in the highest regard. Its work is some of the finest that we produce in this country and it is an exemplar internationally. It was always a great privilege to be able to study its reports, although they sometimes seemed to come thick and fast.
The Tiner report in 2008 has already been mentioned. It was given a warm response by the Public Accounts Commission. By introducing this measure into this Bill, rather than picking up clauses from a former Bill which did not proceed, have the Government benchmarked this section against the Tiner report and, in particular, against the Public Accounts Commission’s response to the Tiner report? The commission made some important points and set out three particular issues that it felt should be looked at in terms of how corporate governance was introduced. The commission said:
“The C&AG must have the authority to form completely independent judgements about the audits and value for money and other studies conducted by the NAO and the presentation of these to Parliament”.
It went on to point out:
“The NAO must maintain systems of governance and internal controls consistent with best practice, applied in ways which do not fetter its independence from Government, and to report publicly on these systems in its Annual Report”.
The Public Accounts Commission pointed out that those two objectives are not quite compatible. I hope that my noble friend has struck the right balance in bringing forward these measures in the Bill. As the commission said in its third point, it is clear that:
“The NAO must conduct its work according to relevant auditing and professional standards and prevailing best practice”.
It is somewhat ironic that the NAO, which must be like Caesar's wife in the way that it conducts its own affairs, has for so long been without the protection of what I believe is put into the corporate governance of this legislation and which will be very helpful to it.
My noble friend Lady Noakes mentioned the board that would be introduced. The Public Accounts Commission, in its response to the Tiner report, expressed some concerns. It said:
“We have considered carefully the extent to which the C&AG should be constrained by the Board as regards the overall strategy of the NAO and control over resources. In our view it is important that the Board should not be able to prevent the C&AG conducting an audit which he or she considered necessary or oblige the C&AG to undertake an audit which he or she did not regard as of sufficient priority”.
I totally support that and hope that my noble friend will reassure me about the independence of the C&AG. It is the case that the NAO submits to the Public Accounts Committee lists of reports that it is engaged in. Those are debated in another place. It is at the discretion of the Public Accounts Committee which reports it uses for evidence sessions. It is also an important part of that flexibility and the responsibility of the C&AG that there have been times when the Public Accounts Committee itself has proposed to the NAO reports that it believes should be brought forward. For the independence of the Public Accounts Committee, it is important that it can collectively go to the Comptroller and Auditor-General and ask through him or her that the NAO should carry out certain studies that are deemed to be particularly important.
I support this legislation, but I hope my noble friend will reassure me that these matters will be addressed when we get to Committee stage and that he will bring forward more information on the sharing of information between particularly the Treasury—but also other government departments—and the Office for Budget Responsibility.
Lord Touhig
My Lords, I am delighted to follow the noble Baroness, Lady Browning. She and I served for a number of years on the Public Accounts Committee in the other place. She was a formidable inquisitor; woe betide any senior official from any department who came before us and who did not really get to the point and answer her questions. I am sure that the Minister will take note of that.
As your Lordships will be aware, the Public Accounts Committee works very closely with the National Audit Office and the Comptroller and Auditor General produces his value-for-money assessments for the committee. As a result of the experience which I had in serving on the committee, I have been able to witness at first hand and appreciate the tremendous work that the National Audit Office does and how important the audits carried out by the Comptroller and Auditor General are in keeping a check on how the Government spend taxpayers’ money. As a result, I am mindful that when we are considering reforming the way in which the National Audit Office and the Comptroller and Auditor General operate, we must ensure that we do not undermine the independence of their capacity to scrutinise public spending.
In considering the Bill, we must satisfy ourselves that the measures which it contains will strengthen the independence and internal governance of the National Audit Office and not undermine them at all. Crucial to that is the operational independence of the Comptroller and Auditor General. As the Public Accounts Commission noted in its 15th report, the Comptroller and Auditor General’s independence is an,
“absolute requirement for effective audit, and … is the cornerstone of integrity in public finance”,
in the United Kingdom. It is therefore vital that nothing is allowed to prevent the Comptroller and Auditor General from forming independent judgements and deciding what value-for-money assessments it is appropriate to make.
It would therefore be unacceptable if the NAO board were able to prevent the Comptroller and Auditor General from conducting certain audits or were to constrain his audit decisions, not least as this would lead to the relationship between the board and the Comptroller and Auditor General becoming untenable. I therefore welcome the fact that this legislation does not infringe on the Comptroller and Auditor General’s freedom to decide how to conduct value-for-money assessments of government departments. In that respect, the legislation preserves the vital operational independence of the C&AG, while seeking to improve internal systems of governance within the NAO.
However, while the Comptroller and Auditor General must have operational independence, he must still be capable of being held to account for his decisions. That is the proper role of the NAO board. In setting out how the board will carry out this function, the legislation sensibly separates the Comptroller and Auditor General’s statutory and non-statutory work. We should be rightly proud of the international reputation of the National Audit Office, which is such that it is asked to carry out work in other parts of the world and for organisations other than the Government. However, by giving the board the power to veto such work, the legislation places a check on the C&AG to ensure that the core function of the NAO and its public work are not undermined by any other activities. That is a sensible precaution and precisely the sort of function that the board should be carrying out.
It is entirely logical that the NAO board should set the overall strategy for the National Audit Office. This will allow the board to guide the balance of the Comptroller and Auditor General’s programme of work, which complements its power to veto non-statutory work and so ensure that the NAO properly fulfils its role in protecting the tax payer. It also allows the board to challenge the Comptroller and Auditor General if he departs from what has been agreed, and to call on him to explain why an audit has or has not taken place. Clearly, we hope that there will be a harmonious relationship between the Comptroller and Auditor General and the NAO board, but these arrangements make proper provision where such harmony is absent.
Protecting the independence of the Comptroller and Auditor General means not only preventing others from influencing which audits are and are not carried out, but ensuring that the Comptroller and Auditor General is seen to be independent. This clearly means that none of his decisions should be seen as being born out of self-interest. With the introduction of the 10-year term limit for the Comptroller and Auditor General there will be a real prospect that, on leaving office, former Comptrollers and Auditors General will seek alternative employment rather than simply retiring. If former Comptrollers and Auditors General were to be able to accept a position in any body that had been audited by the NAO or that was in the gift of the Government, then there would be a danger that some people could perceive such an appointment as being a reward for actions while in office. This would clearly undermine the integrity of the Comptroller and Auditor General and lead to actions in office being called into question through speculation about his future.
The Public Accounts Commission suggested in its fifteenth report that Comptrollers and Auditors General should be prohibited from accepting any post that the NAO has audited or that is in the gift of Government. It is proposed that, where conflicts of interest could arise if he were to accept any other position, the Comptroller and Auditor General should abide by the view of the Advisory Committee on Public Appointments on the appropriateness of his taking such a post.
The Bill, however, waters those two proposals down. It prevents the Comptroller and Auditor General from providing services to the Crown or to a body that is required to open its accounts to the NAO for audit only for a period of two years, rather than the lifetime envisaged by the commission. On some levels it is understandable that we should not wish to put such a restrictive limit on former Comptrollers and Auditors General, but I suggest that two years may be too short a period of time. If we accept that the greatest risk is of attempts by the Executive to influence the Comptroller and Auditor General, then the sensible course would surely be for the time limit to be of five years so that there was the real prospect of the Government having changed by the time that the Comptroller and Auditor General was eligible to be appointed to another position. Such a time limit would mean that the Comptroller and Auditor General would not be able to rely with any certainty on the then current Government still being in office at the time he was eligible to accept Crown appointments, and hence he could prevent any suggestion of political interference in his report.
The Bill also reduces the obligation that former Comptrollers and Auditors General must abide by the decisions of the Advisory Committee on Public Appointments. Instead, it states only that former Comptrollers and Auditors General should consult with such people as are specified by the Public Accounts Commission. The original, firmer objective is preferable, otherwise a former Comptroller and Auditor General could take up a post that was wholly inappropriate for him to do so. If the Bill is not amended to include such provisions, it would be sensible for provisions having that effect to be introduced in any contract of employment drawn up for a new Comptroller and Auditor General. With the exception of these reservations regarding the employment of former Comptrollers and Auditors General, I am broadly in favour of the Bill as it relates to the National Audit Office and I encourage the Government to address the concerns that I and others are expressing today.
I also welcome the measures in the Bill that grant legislative competence to the Welsh Assembly in relation to the Auditor General for Wales. The new competence would allow the Assembly to put in place new governance arrangements in relation to the Auditor General for Wales that could be similar to those which the Bill will introduce for the NAO and Comptroller and Auditor General. This is a sensible step, which will allow the Assembly to take the necessary action in order to ensure that there is a thorough and properly operating Auditor General in Wales, auditing areas that operate in Wales alone. The Bill introduces provisions to protect the Auditor General's independence from the Assembly. That, too, is to be welcomed. With such safeguards, we are enabling the Assembly to have a Comptroller and Auditor General fit for the 21st century.
Independence is vital for the Office for Budget Responsibility; we have heard a number of comments from noble Lords about that already today. Earlier this year we saw the reputation of that office being called into question when figures that assisted the Government were released before a session of Prime Minister’s Question Time. I therefore welcome the fact that the Bill requires the Treasury Committee of the other place to consent to the appointment of members of the Office for Budget Responsibility.
This is a good Bill in principle and it does many sensible things. However, our role is to question it and improve it where we can. I hope that the Government will listen to the views expressed today and will seek to amend the Bill accordingly. If they do that, we can be content that the legislation that is now being considered by your Lordships’ House will be fit for the 21st century.
Lord Burns
My Lords, I propose to address my remarks to those parts of the Bill that deal with budget responsibility. I, too, fully support the principle of publishing a charter for budget responsibility, including the objectives for fiscal policy and the means by which they would be attained. The challenge is to have a framework that both constrains fiscal behaviour in a responsible way and is capable of dealing with the range of surprises and unexpected events that inevitably occur. All attempts to frame budget responsibility in this way have at some stage met that particular problem—some have dealt with it better than others.
The main innovation in this Bill is the formation of the Office for Budget Responsibility. I agree that this has the potential to increase confidence in the projections and to reduce suspicion that they are modified by government to give the impression of a greater chance of success. I agree with the noble Lord, Lord Turnbull, that support for this independent scrutiny does not require a belief that there is widespread fiddling in fiscal projections. I also agree with him that there is a natural tendency for a Government to believe that their policies have a better chance of success than many sceptics will claim or, indeed, than often tends to be captured by the official forecasting process. Sometimes they are right. On other occasions, they are wrong. Sometimes, they are very badly wrong.
Given the natural degree of uncertainty and error in any projections of this kind, we should not overstate this problem. Interventions by government in projections tend to involve some bias towards optimism. However, it has to be recognised that some of that is to counterbalance a natural bias towards pessimism, sometimes among the officials in the department. We all agree that it is better to remove any doubts about this. I wholeheartedly support the idea of scrutiny and of having an independent office.
When the idea was first mooted, I, along with the noble Lord, Lord Turnbull, were rather attracted by the hope that it might be an audit process—or what he has called a validation model—and that its main role would be to test the validity of assumptions used in the forecast and to concentrate on the question of the prospect for the underlying public finances, taking into account the position of the business cycle. The Government have taken a different approach. This Bill involves outsourcing the responsibility for the published forecasts, including the main economic magnitudes as well as the public finances.
It is no secret that most of the Chancellors with whom I worked had the ambition to hand the responsibility for forecasting to someone else. That is not surprising, given the limitations and the inevitable range of error around any forecasts for output public spending and tax collection. For right or wrong, most Chancellors end up damning forecasts and the requirement to publish them. I will be interested to see whether this new arrangement ends that long history. Personally, I am not sure that having forecasts done somewhere else entirely solves the problem for Chancellors, but that is not the issue for today. The decision has been made. However, we should be in no doubt that forecasts are uncertain—sometimes very uncertain—and that any organisation that builds its reputation on the accuracy of its forecasts is going to have a difficult time on occasions, whether it is inside or outside the Treasury. I fear that that will also apply to the OBR at some stages.
This decision has some important implications for the structure and operations of the OBR. It is something that has to be considered when framing its remit and governance. Many of the details involved in preparing the forecast for the economy—particularly public finances—require a close working relationship with officials, particularly when it comes to public expenditure and taxation. Furthermore, as the Bill requires the forecast to be produced on Budget Day, the OBR has to be an insider as far as the Budget is concerned. Consequently, it will inevitably work closely with the Treasury, which I fear will make it more difficult to have a clear line of separation between the OBR and the Treasury. On occasion this will cause suspicion but I fear that it is a fact of life. Given the OBR’s responsibility in this regard, it is simply not possible to have the degree of separation that some people would like to see. It is an integral aspect of the decision to make the OBR responsible for the forecasts.
I emphasise the whole question of the OBR’s independence. I fear that this will not be secured by putting it into a different building, employing completely new people or giving it unlimited resources. Independence is much more about the quality of the people who are involved and depends crucially on the remit that is given, the clarity of that remit, the governance structure that surrounds the organisation and whether that enables us to see much more clearly the kind of job that it is doing.
To my mind, the biggest danger to the independence of the OBR is if it is dragged into the political debate through being asked to give an opinion on political issues or on issues that cannot be verified by outcomes. I strongly believe that, if these arrangements are to have any chance of working, the OBR should be required to limit its activities to assessing whether the Government’s objectives will be met. I am particularly concerned that it should not be involved in making judgments about hypothetical proposals or in making impossible comparisons with counterfactual outcomes. It should not be pulled into the political debate about the effects of alternative policy. Therefore, it is important that we should be clear not only about the things that it has to do but about the things that it should not be doing. For example, the OBR should not be asked to give a view on the effects of a Budget by comparing that with someone’s alternative Budget, or even with not having a Budget at all. It should not be asked to widen its remit or to give a view on the impact of packages of measures, whether framed by government or opposition. Therefore, like other noble Lords, I am concerned about the open-ended nature of Clause 6 and the ability to move the remit gradually over time, as clarity of remit will be crucial to the body’s success.
It was clear that the interim OBR was handed a virtually impossible task in presenting a pre-Budget forecast shortly before the Budget was published. That opened up the opportunity for analysts to try to interpret from the two what the effect of the Budget would be, which, of course, gets one into deep political debate. I hope that in the future this will not be the case. Therefore, I am anxious that there should not be remit creep. If there is any danger of this, it would be enormously helpful if it could be made clear by the Minister or in the Bill how far the remit can be stretched and what degree of discretion is left with the Treasury to change the remit given to the OBR.
My next point relates to governance. It is proposed to have a chairman and two additional persons who form the Budget Responsibility Committee and who are required to have relevant knowledge or experience. In addition, it is proposed to have at least two persons, who are described in the Explanatory Notes as “non-expert”, as part of that office. I do not find this distinction between experts and non-experts helpful, particularly in this area of forecasting and public finances. It is much more helpful to think of it in the terms mentioned by a number of noble Lords this afternoon—that is, the distinction between executive members and non-executive members of the OBR.
Clearly, the executive members—essentially, there are three experts—make up the Budget Responsibility Committee and are responsible for the published work. However, in my view the Bill should be much more specific about the role of the non-executive members. I suggest that they should not be involved with the published content but should be consulted if any issue of process emerges during the forecasting rounds. Similarly, they should be involved in post-mortems of how the process worked in relation to content and relationships with the Treasury and other relevant bodies. They can give guidance and support the independence of the OBR, if this question ever becomes an issue, and help the executive members to navigate their way through the inevitable issues that will arise from month to month in determining how the remit should work and how they should respond to pressures from the Treasury and to the whole variety of issues that people who have been non-executive directors know come before boards on a regular basis. They should also be involved in setting the OBR’s own budget and adding weight to any issues over resources that the OBR has. Along with a number of noble Lords, I would be grateful to hear from the Minister whether this type of interpretation accords with his view of the role of the non-expert members of the OBR. I agree with others that it would be helpful for the Bill to be much more specific about the role of the non-executive members.
This takes me to my final point, which relates to resources for the OBR. The main weakness of the proposed structure is the dependency of the OBR on the Treasury for resources, both financial and with regard to some of its people. I have no doubt that, in the early days, this will not be an issue, but it could become an issue. This could work either way. Public bodies that work without a budget constraint have a tendency to grow and grow. On the other hand, we know that one way of constraining the independence of any body is to leave it underresourced. Along with the noble Lord, Lord Myners, I agree that some transparency and safeguards need to be built in.
I would like a role to be given to the Treasury Select Committee in another place with respect to resources. For example, the budget for the OBR could be published and scrutinised by the Treasury Select Committee. The OBR should have the opportunity to set out to the committee whether it believes that it has the resources that it needs to meet its remit. If the chairman of the OBR thought that the OBR was being underresourced, there should be an opportunity to raise that question with the committee. Similarly, the committee could have the opportunity of testing whether the budget for the OBR was growing too rapidly. Simply having the finances of the OBR as a part of the Treasury’s expenditure programme may be all right on this occasion, but some years down the line it may not be quite such a comfortable process.
I end by noting that my former colleague, Alan Budd, showed typical wisdom and independence when faced with the difficult task of setting up the interim OBR. I have full confidence in Robert Chote’s ability to carry out this extraordinarily difficult role. The key to making a job of this type work is to be absolutely clear about its remit, the extent of that remit and the governance arrangements that surround it and to ensure the certainty of the organisation with regard to its resources. I fear that confusion in any of these areas will in the end be the biggest danger to independence and to the success of what otherwise I wholeheartedly support.
Lord Higgins
My Lords, the speakers list today includes a number of the usual suspects involved in Treasury and economic affairs. I suppose I also have something of a record as chairman of the Treasury Select Committee in another place for something like a decade and a half. I therefore begin by welcoming the fact that the Treasury Select Committee is to be given an operational role in approving or consenting to the appointment of the members to the OBR. This is quite possibly the first occasion a departmentally related Select Committee has actually had such a role embodied in legislation.
First, I want to say a word or two on the matters raised by the noble Lords, Lord Myners and Lord Burns, as far as forecasts are concerned. I am also not at all sure that we will gain much by having yet another forecasting body with all the staff that involves. The Treasury already publishes an almost comprehensive list of forecasts, prepared by various government and non-government bodies, and it may be that the data in those would provide a more impartial view than those produced by the Office for Budget Responsibility.
I certainly welcome the point in the Bill which repeals the proposal of the previous Government to have the National Audit Office auditing the assumptions on which the forecasts are made. It always seemed very odd that one could audit such things as assumptions. However, it is important that the OBR, if it produces its own forecasts, should also publish its assumptions. We all know that forecasts depend crucially on what the assumptions are, and that, unless they are published, we have no basis on which to appraise the situation.
I am sad that the forecast established by the Industry Act 1975 is to go. The previous Government built, on what used to be called the Red Book, a huge paraphernalia of propaganda. Now that the forecast has gone, I presume that the present Government will have some difficulty in finding a similar opportunity. However, the forecasting situation needs to be appraised very carefully, and no doubt we will have an opportunity to do that in Committee.
The OBR will have responsibility for not only forecasts but appraising, on the basis of a fiscal mandate, the extent to which the Government are achieving their objectives. I find the concept of a charter, set out in Clause 1 of the Bill, a little devoid of content. The charter must set out objectives in relation to fiscal policy on the one hand, and secondly, the means by which they are to be achieved—the fiscal mandate. It would be immensely helpful in Committee if we could be given some idea, or perhaps a draft, of what such documents—namely, the fiscal mandate and the charter—are likely to comprise. In that context, I worry about the fact that the Treasury is to have almost complete discretion, first in creating the charter and the fiscal mandate, and then, if need be, in modifying it. There is a case for Parliament having an opportunity to debate this in some form, and, if necessary and appropriate, to amend it. This, too, is something that we can reasonably pursue in Committee.
We are also involved here in creating significant changes with regard to the Comptroller and Auditor-General. Part 1 of the Bill makes preparation for looking forward in economic policy, and Part 2 for auditing what has actually happened, and in particular for considering the important issue of value for money, in which the National Audit Office has played an important role for some considerable time. However, I am puzzled by exactly what role the new National Audit Office board will fulfil; and by its relationship to the Public Accounts Commission—not the Public Accounts Committee, but the Public Accounts Commission, which I chaired until I left the Commons in 1997. It seems that, although the commission has subsequently recommended that an independent board should be set up, the relationship between the commission and the board is a little obscure. Perhaps the Minister will clarify the matter.
Overall, this is a forward step. We will have a more impartial approach to these matters than has hitherto been the case. However, I urge my noble friend to ensure that the present, albeit provisional, set-up for the OBR does, as soon as possible, get on with producing an accurate appraisal of what the situation is.
I come now to an entirely topical point with regard to the implications of the comprehensive spending review. We are currently in uncharted waters, and it is a very complex thing to try to work out the review’s effect on aggregate demand in the economy. Until we know that, we have no reason to say that further stimulating measures, particularly QE, are appropriate. I hope that the OBR will not delay until it becomes a statutory body in getting on with this extremely urgent task.
The committee of the OBR is to have three members, and I am not sure whether it will publish minutes in the same way as the MPC does. It increasingly appears from press reports that there is considerable division of opinion among the MPC members. We ought to consider to what extent the OBR will also publish minutes and to what extent it is appropriate for those to be in the public domain. Having said that, I look forward very much to the Committee stage, and I hope we can clarify some of the points that I have raised.
Lord Barnett
My Lords, I am delighted to participate in a debate which has been largely non-party political and in which we have heard from two senior ex-Treasury officials, the noble Lord, Lord Burns—I nearly said my noble friend—and the noble Lord, Lord Turnbull.
I am in favour of reform and change, but change should be for a specific purpose. While I agree with much of what has been said about the OBR, certainly as outlined by the noble Lord, Lord Sassoon, today, and in various documents before us, I am not as sure as my noble friend Lord Eatwell that there is a real purpose in having an OBR at all. I shall explain a bit more why I think that. I agree with my noble friend Lord Eatwell and others about the personalities of who we are told will be executive members of the OBR—Robert Chote, Stephen Nickell and Graham Parker, all three of whom have had great responsibility for preparing forecasts and are highly respected in this area.
The noble Lord, Lord Sassoon, told us—this also appears in many documents—that the whole purpose of the OBR is to provide independent assessments of forecasts. When he referred to the past, he spoke about Ministers being responsible for the forecasts. Theoretically they are, but we all know that the forecasts were prepared by the same Treasury officials who are now in place. It is very sad that the Chancellor said:
“The creation of an independent Office of Budget Responsibility has brought back honesty to official forecasts”.—[Official Report, Commons, 20/10/10; col. 949.]
To accuse your own Treasury officials of not being honest is frankly a dishonest thing to do. I hope that the noble Lord, Lord Sassoon, will apologise for that loose language, which we have had all too often from the Chancellor. I am not accusing the noble Lord, Lord Sassoon, of that, but it is an appalling thing to have said about the people who prepare those forecasts. Effectively that is what he was saying.
The forecasting by anyone, no matter how independent, is to say the least, as the noble Lord, Lord Burns, said, uncertain. We are now told that around that uncertainty we will have audited sustainability. In the past, I have done some auditing as a professional accountant. However, that was a long time ago as, when you become a senior partner, you no longer do any specific auditing. When auditing, you look at the figures on a balance sheet and in a profit and loss account, which is easier than forecasting and auditing sustainability. Perhaps the noble Lord, Lord Sassoon, can tell us how to audit sustainability, as we are told the Office for Budgetary Responsibility has done. We were told that by the Chancellor, but I have never been able to find a report of what the OBR said. Can that be published and can we be told whether that audit of sustainability and forecast was carried out without any qualification? Is that what we are being told? Frankly, I find it hard to believe.
On independent forecasts, we have a document issued by the Treasury called Forecasts for the UK Economy, within which there are 58 independent forecasts. I wonder how many of those forecasts the noble Lord, Sassoon, could tell us were totally right. I am not sure that the new chairman, the highly respected Robert Chote, who controlled the IFS—I assume that he audited the IFS as well—could tell us that the IFS never got a forecast wrong. Of course, he cannot. No one could ever say that they have never made a forecast that was wrong. That would be an incredible thing to do. Is the noble Lord, Lord Sassoon, telling us that the Bank of England, which has often got forecasts wrong, is dishonest? Are all those who issue truly independent forecasts, which have been wrong, dishonest?
There is no doubt whatever that independence is crucial here. I am not sure whether there is truly any need for yet another independent body. Unless, in Committee, we can amend this Bill substantially, as has been suggested by my noble friend and others, I do not think that we will have a body which will be of huge importance to us. We are told that the current OBR has issued forecasts and that, at the moment, it still has offices right next door to the Chancellor. Can we also be told how often the head of the OBR had formal and informal chats with the Chancellor when he was giving the office details of his comprehensive spending review, which no one else received in advance? We are told that these were better independent forecasts because they had been audited. You cannot audit a forecast or sustainability accurately. No doubt, in winding up the Minister will tell us how to do it. I shall be glad to hear it.
When all is said and done, what on earth are we really doing here? Are we setting up a new independent office which will be able to provide us with forecasts, without qualifications, that are better than many of the other forecasts now being made? My experience of a few years now is that, for every Budget, the Treasury lists the number of occasions when independent forecasts are wrong. No matter how good it is, I am not sure that the OBR—using excellent Treasury staff, no matter whether they are “dishonest” or not, to prepare the basic work—can, without qualifications, give us forecasts on which we can rely more than we have ever been able to in the past.
I turn briefly to the other major reform in the Bill—the National Audit Office. I suppose I should declare a past interest. After five years as Chief Secretary, I was chair of the Public Accounts Committee for a Parliament. I found that both the C&AG and the National Audit Office did a first-class job. As two former members of the Public Accounts Committee have said today, it could not have been bettered. However, we are now told that there are not going to be new value for money audits; it is all going to be done the same, presumably with the same staff. I take it that the Government are not going to change the whole staff of the National Audit Office. The Minister is shaking his head. I am happy to hear that. There is a better case for change because of what has happened in the past and I strongly support the recommendations for carrying this change through. For now, I would be glad to hear what “positions reserved” means. It is so often referred to in the Bill. If positions are reserved there, so are mine on the Bill itself.
Lord Tunnicliffe
My Lords, I thank the noble Lord, Lord Sassoon, for introducing the Bill so clearly—he confirmed that, fortunately, I have managed to read it with reasonable accuracy—but he also introduced a number of other points and promises in relation to a framework agreement and potential memorandums of understanding. It is very important that he should produce those, in draft at least, before the Committee stage.
I will touch on other contributions to the debate. Like the noble Lord, Lord Barnett, I was pleased that it was largely non-political or at least non-party political. The noble Lord, Lord Newby, had a little poke at us but made the important point that we all want to work together so that reports, as we have in the NAO, enjoy public confidence. He also brought out the whole issue of what the non-executives will really do.
The noble Lords, Lord Turnbull and Lord Burns, put the political interference issue in perspective, using the rather nice term “wishful thinking”, which is probably a fairer way of reflecting how politicians have been involved—in practice, somewhat reluctantly—with responsibility for forecasts. Broadly speaking, we support the OBR because of the extent to which it will take politicians out of that. The noble Lord, Lord Turnbull, made important points about the need to challenge and to have consistent presentation so that data are easier to use year by year, policy by policy and change by change.
A bit uncomfortably I even found myself agreeing with many of the points made by the noble Baroness, Lady Noakes. I, too, would like to see two Bills. Indeed, we are proposing that there should be two Bills. We take the point that writing one’s own school report has a certain lack of comfort about it. We will be probing and pressing strongly in Committee the whole issue of who audits the auditors—who does the peer review—to achieve an appropriate mechanism for a review of the whole thing. I think that her contribution was very useful. Many noble Lords came forward with the idea that we must have more clarity of what the non-executive directors do.
The noble Lord, Lord Myners, moved on to the issue of independence, which is key to this proposal. This is about the Treasury’s involvement. I know that the Treasury is a wonderful place, but when I was a public servant the word “Treasury” gave one a little cold feeling round one’s heart. It has an ability to permeate its influence through the staff and the charter. The general point made by the noble Lord, Lord Myners, about the Treasury, the staff and the charter is important. I am sure that it is not the Government’s intention to influence the OBR through the charter or the staff, but there may be another Government, with a different attitude, who may find those tools usable.
The noble Lord, Lord Myners, mentioned the word “sustainability”. The word “sustainability” is one of the most worrying things in the Bill, because it is presented as if it is a well defined term. It is not; it is very much a matter of what outcomes you want to be sustainable. We will need to probe that in Committee.
The noble Baroness, Lady Browning, and the noble Lord, Lord Touhig, clearly have enormous experience of the NAO and I thank them both for their contributions. We will be reading them with care to see whether there are points that we need to probe in Committee through amendments. I have to say that, at first look, the NAO part of the Bill seems fairly straightforward, but it is important that we have the experience of two such contributors to make sure that we get enough depth.
The noble Lord, Lord Burns, as well as putting the whole issue of politicians’ involvement in its proper perspective, raised the big question of how we solve this problem: what are the appropriate degrees of separation and what do we mean by “independence”? He called it “remit creep”; I would call it “mission creep”. It is important that we probe what the size of the mission should be in the Bill. I shall be reading Hansard with great care. The noble Lord started to flesh out what these non-executives might do and made the important point that, in the Bill, not only do we need the word “independent”—it happens not to be there, but at least the concept is—but we must have the resources, the money and people.
The noble Lords, Lord Higgins and Lord Barnett, both asked the real question: do we need this at all? We on these Benches think that we do, as a step forward, but there is the whole issue of what it adds and how it usefully contributes. It will have a good brand, but it also needs review, audit and debate involving those who have different points of view.
Lord Higgins
The noble Lord was right to say that that is what the noble Lord, Lord Barnett, said. I do not think that it was what I said overall; I just had a qualification with regard to particular parts.
Lord Tunnicliffe
I apologise to the noble Lord to the extent that I misinterpreted his words. I certainly agreed with two important points that I think he made—he may have to correct me again. I apologise; my note-taking may not be very good. I think that he strongly made the point about publishing assumptions. That is an important point, which we should have clear either in the MoU or in the Bill. I think that he raised at least a question mark as to whether the charter will be helpful or—I cannot think of a better word—sinister as a way in which to control the OBR. That needs to be clarified. Finally, the noble Lord made an important point about the OBR looking at the CSR and describing its outcomes. At least in those areas, we enjoyed some common ground.
The noble Lord, Lord Barnett, has his way of looking at these things and asked some questions of the noble Lord, Lord Sassoon, the answers to which I await with interest. He, too, asked about the word “sustainability”, which is in the Bill as if it has a clear meaning. That is a point that we will really have to mine.
We like the idea of the creation of an independent and credible OBR. It would be an important step forward in transparency and open government and an important addition to the democratic institutions. On this side of the House, we think that it is a good idea and we are prepared to co-operate to the full with the Government to achieve it. We are not prepared, however, to co-operate in the production of a seriously flawed institution. To do so would both ruin a good idea and potentially bring the whole project into disrepute. “Disrepute” is a strong term but that at least in part happened during the unfortunate events before the Summer Recess.
It has become clear in the debate that the Bill fails on this objective. We do not criticise the Government’s objective but we are critical of its execution. Perhaps Ministers were diverted from their laudable goal by their advisers; perhaps Sir Humphrey was meddling. What seems to come through is that the Treasury needs to hang on to its tools of control. Have the Government considered alternatives? Across the road, in Dean Trench Street, there is an internationally respected economic forecasting organisation, the National Institute of Economic and Social Research, a body that is already substantially publicly funded. The institute is recognised as being totally impartial and one of the best forecasting organisations in the world. A suitable contract could have handled all the confidentiality issues and much public money would have been saved. Instead of setting up a new quango, why did the Government not simply contract out the OBR to the institute? Are there good reasons for not doing that or is it because the Treasury would lose control? Why did the Government not consider going to the other end of the spectrum and placing the OBR under the control of Parliament, just as the Congressional Budget Office in the United States is under the control of Congress? The OBR would then be able to perform the range of services to Parliament and the Executive that the CBO provides in the US.
It is important to understand that the OBR is not and will not be a policy-making institution. It is therefore not part of the political process. The OBR is in the assessment business, not the making-policy business. Why, therefore, are so many control mechanisms built into the Bill? My noble friend Lord Eatwell compared the powers of the Comptroller and Auditor General set out in the Bill with those of the OBR. I compare the role of the two and their independence. Independence depends—as I said, I once worked in the public sector—on how one is appointed and how long for, how one is paid and how secure one is in that role.
The Bill strongly brings out the difference between the C&AG and the chairman of the OBR. With regard to status, one is appointed by the Prime Minister, while the other is appointed by the Chancellor. One is agreed to by the chair of the Public Accounts Commission; in the case of the OBR, it is just a matter of consent. The C&AG will serve for 10 years, while the chair of the OBR serves for two times five. Two times five is not 10, because a lot happens between those two fives. Termination is difficult in the case of the C&AG but, while it is quite difficult for the chairman of the OBR, it will not be difficult between those terms of office. At that point, the Chancellor and his concerns will come very much to the forefront of the individual’s mind when contemplating his further five years of employment. The individuals there now will be above these influences, because we know them as individuals, but we have to think in the longer term.
In matters such as pay, the pay of the C&AG can be indexed, whereas the pay for the OBR will be determined by the Treasury. The money for paying the C&AG comes from the consolidated fund; the money for the OBR comes through the Treasury. The terms and conditions of staff in the National Audit Office are determined by the NAO; in the OBR, they are determined by the Minister for the Civil Service. The finance in relation to the NAO and the C&AG comes from the public accounts commissioners—finance is pretty well independent when it comes to the National Audit Office. In the case of the OBR, it comes from the Treasury, which will have an influence on resources.
Finally, we have the staff of the OBR. I think that the Minister said that he saw them as civil servants coming in and out of the office. It is important to bottom out just who these people are going to be. Will they be an independent group, as, very clearly, the staff of the NAO are, or will they be people who, while doing their best to be totally independent, are influenced by their prior career and by where their career will be in future? All this needs to be questioned. We are not convinced that this organisation has sufficient independence.
We have looked at the work of the Treasury Select Committee and have suggested that the three tests are independence, credibility and robustness. The committee asked similar questions in paragraphs 126, 128 and 132 of its report on the OBR. Independence and credibility are crucial. We believe that the Bill as drafted fails these three crucial tests. However, we see the potential of this good idea, which is why we are prepared to work with the Government to create an OBR that passes the three tests. At the end of his speech, my noble friend Lord Eatwell advanced a concrete proposal on behalf of the Official Opposition. It would be a major step forward if the Minister could accept that proposal. The proposal remains on the table. We are ready to consult as to the particular all-party forum that is used to design the new OBR. It need not take time. It could well be done before Christmas. We are ready to accept that the OBR’s interim structure is satisfactory for the time being.
Lord Sassoon
My Lords, I thank noble Lords for their contributions to a stimulating and interesting debate on both parts of the Bill, although noble Lords focused more on Part 1 than Part 2. The debate has focused on the role of institutions and the part that they can play in ensuring transparency and accountability in the public finances. This is clearly a matter of much importance at the current time. At the beginning of the debate I explained the Government’s broader plans to reform the fiscal framework, and the establishment of the Office for Budget Responsibility is the most substantial aspect of this reform. For the first time, we are introducing independent and impartial scrutiny into the official forecast.
I should start by welcoming the confirmation by the noble Lord, Lord Eatwell, that the Opposition welcome the creation of the OBR, which was confirmed by the noble Lord, Lord Tunnicliffe, just now. The only substantial note among those who have spoken this afternoon questioning the purpose of change has come from the noble Lord, Lord Barnett. However, I think that the reason for change was very clearly set out in different ways both by my noble friend Lord Newby, who quoted from ministerial memoirs from the former Government, and by the noble Lord, Lord Turnbull, who made it quite clear—he referred to wishful thinking in the past—why, in his words, this is an idea whose time has come. I completely agree with that. I should as a rider say that I was not in what I said questioning in any way the work of Treasury officials. I would like to think that the noble Lord, Lord Barnett, recognises that. What I was questioning was precisely the way in which forecasts were put together—whether it was by way of wishful thinking or whether it was something more sinister in the past. That is precisely why I think that the overwhelming majority of speakers this afternoon have confirmed that the OBR’s time has indeed come.
I shall come back to the point about independence.
Lord Barnett
The Chancellor, in his comprehensive spending review speech, referred to the previous forecasts as dishonest.
Lord Sassoon
I think that the noble Lord was also quoting remarks that I made in my opening speech this afternoon. I have tried to make it clear that I am not in any way questioning the very fine work of Treasury officials, but questioning the overlay that was put on the forecasts whether as a result of wishful thinking or for whatever other reason.
Lord Myners
My recollection of the words that the noble Lord, Lord Barnett, used was “official forecasts”. So I think it is quite clear that the Chancellor of the Exchequer had in mind forecasts by the officials. Is the Minister aware of any case in which an official objected to an economic forecast that the Government presented to Parliament on the basis that it was incorrect? I certainly participated in discussions on economic performance and I saw no examples of officials objecting to the work which came from Mr David Ramsden and other members of the Treasury responsible for economic forecasting under interrogation by Ministers. Will the Minister make it clear that the use of the term “official forecasts” was not a criticism of officials? If it was a criticism, on what basis was it made, given that there were no objections?
Lord Sassoon
My Lords, I have made it completely clear that there is no question of my making any criticism of officials. I am making criticisms of the previous structure in which Ministers were able—whether from wishful thinking or, as I say, from more sinister motives—to decide on the forecasts. That is why we need an independent body. I am conscious of the game that is played here—that I have to sit down after about 18 or 20 minutes. I will do my best to answer as many of the points as I can but if noble Lords want to interject, of course I will listen to them but I may not get through as much as I otherwise would and will have to write to noble Lords afterwards.
In answer to the question from my noble friend Lord Higgins and others about the desirability of having a draft of the charter for the House to see—absolutely, that is what I intend should happen. We are working to that end. Related to that in terms of what happens next, the OBR will publish forecasts before the end of the month which will bring its forecasts up to date to reflect the decisions announced in the comprehensive spending review.
As we think that this is the challenge that has been set, the Bill absolutely takes away the responsibility for determining the forecast from Ministers and gives it to independent experts. It needs to be a new independent body, rather than a case of just asking one of the fine existing forecasting houses. At the critical times of the year when the forecasts need to be produced, particularly at the time of the Budget, it is essential—as has been explained in different ways by the noble Lords, Lord Turnbull and Lord Burns—to have a close relationship. We need to have an independent body of the sort that we have designed, rather than just taking consensus forecasts after the event. I think that the House would be rightly outraged if we did not at the time of the Budget immediately have forecasts available.
Ministers will retain the responsibility for making policy and for the OBR to shine a light on the state of the public finances resulting from those policy decisions. I can therefore confirm that it is the intention that the OBR should remain outside politics and should not, for example, be asked to cost alternative policies, wherever they come from, including from opposition parties.
We have heard a wide range of questions about the design of the OBR. On independence, without dwelling on it, I do not think that the comparisons in any way with the NAO are right. These bodies have very different objectives and come from very different starting points. In answer to other points, the fact that they are put in the Bill together is a result of the fact that the NAO provisions are sufficiently important that we should bring them forward at the earliest possible date. As noble Lords will understand, legislative time is hard to come by. So, in terms of the trade-off between two Bills and finding a slot to bring forward important provisions of the NAO, we have taken the decision to put the two sets of provisions in the same Bill. However, that does not mean to imply in any way that we believe that there is a comparison to be made between the provisions for the two very different bodies.
I take to heart the words of the noble Lord, Lord Burns, who said that complete separation would not be appropriate and pointed to the quality of the people as being particularly critical to the way in which independence works. The OBR’s independence will be judged on the quality of its analysis and on the ongoing scrutiny by the public and by Parliament. Our provisions have been informed by the NAO report published on 22 June which examined the forecast prepared by the interim Office for Budget Responsibility for the emergency Budget. It set out a number of indicators of independence which have informed the design of the Bill. These are set out in Clause 5(1), which talks about “complete discretion”; Clause 6(2), which talks about independence and the method of analysis; Clause 9, which talks about the “right of access” and assistance to “Government information”; and paragraph 8 of Schedule 1, which talks about staff being appointed by the OBR. The latter point was made a number of times. There are other matters not strictly in the Bill—“physical location”, for example, which has already been addressed by the OBR, and questions of funding, which can be raised directly with the Treasury Select Committee.
It was asked whether it could be argued that the OBR is independent when it is clearly working for the Government in its remit. I would describe the words “complete discretion” as the critical key here, and refer to the Bill preventing the Treasury from specifying the methods of the OBR’s analysis.
There was then a question about why the word “independence” did not appear in the Bill. Not only does the term “complete discretion” encapsulate what is intended by independence in this case but the same wording is used to empower the Comptroller and Auditor-General and the NAO, and nobody questions their independence.
Lord Eatwell
My Lords, before the noble Lord leaves the issue of independence, I wonder whether he can help me. Clause 5(2) states very clearly:
“The Office must perform that duty objectively, transparently and impartially”.
Everyone must applaud that wording. But then Clause 6(1) states clearly:
“The Charter for Budget Responsibility may include guidance to the Office about how it should perform its duty under section 4, including (in particular) guidance about … what subsections (2) and (3) of section 5 entail”.
So, is there to be guidance about what impartiality entails?
Lord Sassoon
My Lords, rather than discuss the primacy of the wording in Clause 5(2) in the abstract, it will be easier to return to these matters when we see the draft wording. I can, however, assure the noble Lord that the words in Clause 5(2), to which he rightly draws attention, are the keystone here.
Lord Sassoon
Indeed. While the Bill makes it clear that the charter may include guidance to the OBR on how it should perform its main duty, the charter must not make provision about the methods the OBR should use. That is absolutely clear and I am glad that we agree on it. Nevertheless, to provide the OBR with guidance on how it should fulfil its duties is not, in the Government’s judgment, inappropriate. While the OBR will need to act consistently with any guidance in the charter, any such guidance will have been approved by another House, so it will be wholly transparent.
The noble Lord, Lord Burns, asked how far the remit can be stretched by the guidance. It can relate only to the functions conferred by the Bill, so it cannot add to or in any way distort the remit and it has to be exercised consistently with the Bill. It cannot compromise, for example, the basic principles set out in Clause 5(2), but it can explain how they are to be applied. I do not think that the guidance should in any way lead to mission creep.
Questions were also asked about resources and whether the chair of the OBR should report each year on whether he has sufficient resources. There will be transparency of reporting through the Treasury Estimates and accounts. The non-executives will be expected to inform Parliament of any concerns they have over the independence of the OBR and its resources, and the OBR will present its annual report and accounts to Parliament through the Treasury. There will be ample opportunity, through direct contact with the Treasury Select Committee, to air any concerns on resources.
In answer to a question from the noble Lord, Lord Myners, I can give him an absolute assurance that the OBR will have full autonomy over its work programme, and within its statutory duties it will not be required to secure the Treasury’s approval of its work. On another dimension of independence raised by the noble Lord, Lord Myners, and my noble friend Lord Higgins, regarding whether the minutes will be published, that will be a matter for the OBR but I am sure that it is listening carefully to this debate.
Questions then followed about the accuracy of the forecasts and peer review. The crucial point about these sorts of forecast is that they will be wholly transparent. Each time the forecasts are published, the outcome will be clear. It will then be for all experts, economists and commentators, both Houses of Parliament and its committees to scrutinise the information. However, the Bill allows the OBR to establish expert committees if it so wishes to help it with analyses or for any other purpose.
The noble Lord, Lord Barnett, asked about meetings between the OBR and Treasury Ministers. This is something on which the OBR has been reflecting, and it has decided that in order to ensure that communications with the Treasury are transparent, the OBR will aim to publish a log of contact twice a year, each autumn and at the time of the Budget. This will begin with the autumn forecast on 29 November. I know that the noble Lord has tabled a Question for Written Answer on that point.
A number of questions were put to me about the functions of the non-executive directors. When I first saw the Bill there was a distinction between professional and non-professional. I hope noble Lords will agree that expert and non-expert improves the drafting a little, but I take the point that, equally, the words executive and non-executive could be used. For the moment I will say that the legislation follows what is common in other legislation establishing statutory bodies, including Natural England, Ofgem, the Office of the Rail Regulator, the Office of Fair Trading and the UK Statistics Authority. I will reflect on the points made about the non-executives, but the critical point is that it will be for the first meeting of the board to decide exactly what the remit should be. I think it was the noble Lord, Lord Burns—I hope I will be forgiven if it was not him—who described the remit and his description encapsulated it rather well.
Questions were asked about the relationship with the Bank. It is expected that the OBR will have a good relationship with the Bank and there will be a regular exchange of views. But it is critical that there should be no collusion between them in any sense in producing their forecasts. They should be completely independent.
Points were raised by my noble friends Lady Noakes and Lady Browning about the relationship with other government departments. Indeed, the MoUs will cover departments other than the Treasury.
Lord Higgins
Are we to understand that there will be two sets of forecasts? In that case, which will prevail?
Lord Sassoon
My Lords, at the moment separate forecasts are made by the Treasury and the Bank of England in the course of their inflation reporting. That situation will continue.
There were detailed questions about freedom of information, on which I will write to my noble friend Lady Browning. I can assure her that freedom of information legislation applies.
There will be no changes to the debt management arrangements. I agree with the noble Lord, Lord Myners, that the Debt Management Office does a fine job.
I want to spend one minute talking about the National Audit Office, because—
Lord Barnett
Before the Minister does that, he said that the Freedom of Information Act applies. The Chancellor referred to the audit done by the OBR on his comprehensive spending review. Will we see that?
Lord Sassoon
I have already said that the next forecast will be produced by the OBR before the end of this month. Clearly, that will include forecasts based on all decisions taken by the Government, including the comprehensive spending review. We have approximately three weeks to wait for that.
I want to spend one minute on the points made about the National Audit Office. The critical point is that credit is due to the Public Accounts Commission for its work that led to the Bill brought forward by the previous Government and on which we have built. In answer to the points made by my noble friend Lady Browning, the provisions enshrine the independence of the Comptroller and Auditor-General. A similar point was also made by the noble Lord, Lord Touhig, to whom I am grateful for his welcome of the provisions relating to Wales. I will respond in writing to his detailed point that the period should be five years rather than two years or what was proposed by the Public Accounts Commission. I am grateful to noble Lords for confirming our direction of travel on the National Audit Office provisions.
I conclude by thanking all noble Lords who have attended and spoken in this debate—
Lord Myners
Before the Minister concludes, would he like to have a second try at answering the question asked by the noble Lord, Lord Eatwell, about the terms of Clause 6(1)(b), which require the Treasury to give guidance on the meanings of the words “objectively, transparently and impartially”? Why would the Treasury need to give guidance on such matters? Surely it should be for the courts to determine that in any situation in which those words were subject to debate or criticism.
Lord Sassoon
My Lords, I am conscious of the time and of the conventions of this House. I have explained at some length—but clearly not with sufficient clarity for the noble Lord, Lord Myners—that guidance will be given. That does not override in any way or compromise the three critical tests set out in Clause 5. I do not for one minute think that it should be necessary to get into questions of interpretation in the courts or anywhere else.
Lord Eatwell
At the end of my speech I made a formal offer of co-operation on behalf of the Official Opposition. I would be grateful if the Minister would respond to that offer.
Lord Sassoon
My Lords, in my next sentence I was about to say that I will of course respond to the challenge from the noble Lord, Lord Eatwell, which was repeated by the noble Lord, Lord Tunnicliffe. I am sorry to disappoint the noble Lord, Lord Eatwell, if he thought that I was building up to a grand conclusion where I would propose to withdraw the clauses in Part 1.
We have had an interesting debate. I will reflect on a number of points and I have endeavoured to answer as many as possible. Nevertheless, the tone of the debate from the majority of speakers this afternoon confirms to me that we are absolutely on the right track, generally, and that we should press ahead. There has already been considerable scrutiny of and discussion about the OBR over the past few months. I look forward to the continued scrutiny by noble Lords as the Bill wends its way through subsequent stages, and I ask the House to give the Bill a Second Reading.
Bill read a second time and committed to a Grand Committee.