House of Commons
Prayers
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Speaker
I remind the House that Thursday is 11 November, Remembrance day. The House will meet at 10.30 am, as is the norm for a Thursday. At 11 o’clock, I regard it as appropriate that we should join the nation in observing the two-minute silence so that we might remember those who gave their lives for their country to help preserve our democratic freedoms. Instructions will also be issued to heads of House Departments so that those members of staff who wish to observe the two-minute silence may do so.
Oral Answers to Questions
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Andrew Turner (Isle of Wight) (Con)
1. What recent representations he has received on the procedure for amendment of EU treaties.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I refer my hon. Friend to the Prime Minister’s statement on the European Council on 1 November. The Council agreed that Herman Van Rompuy should consult member states about a limited treaty change connected with the establishment of a permanent crisis resolution mechanism for the eurozone. We also secured a clear agreement that any such treaty change, should it occur, would not affect the United Kingdom.
Mr Turner
It is said that the eurozone needs a new treaty to make it lawful to bail out Greece. It is claimed that that will not affect the United Kingdom as we are not part of the eurozone. Will the Minister confirm that the UK will not need to sign the treaty or, if we do, that the public will be given a referendum on the issue?
Mr Hague
It is my long-standing position—and, I think, that of my hon. Friend—that any treaty that transfers new areas of power or competence to the European Union should be subject to a referendum. Clearly, there are still consultations about what form a treaty change might take. It is clear beyond doubt that the United Kingdom will continue to be exempt from any sanctions under the stability and growth pact and we established at the last Council that any possible future treaty change would not affect the United Kingdom and would not transfer power or competence from the UK to the European Union.
Mr Wayne David (Caerphilly) (Lab)
Given the promises made in the Conservative party manifesto, will the Foreign Secretary tell the House whether the Government will be bringing forward proposals to repatriate powers from the European Union? Yes or no?
Mr Hague
The Government’s position is set out in the coalition agreement. What is also clear from that agreement is that one of our top priorities in Europe is to bring realism to budgeting in the European Union since the hon. Gentleman’s party gave away many billions of pounds of the British taxpayer’s money for nothing in return the last time the financial perspective was negotiated, in 2005. The answer to his question is that our top priority in seeking change in the European Union is to ensure realistic budgeting in the future.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Now that the German Chancellor is insisting on the amendment of European treaties, including Lisbon, will there ever be a better opportunity for Britain to renegotiate its relationships with the European Union and seek the repatriation of powers abandoned by previous Governments, or is that vetoed by the Lib Dem members of the coalition?
Mr Hague
It is certainly a coalition Government that we have here and my hon. Friend should bear that in mind. I would also ask him to bear in mind that instability in the eurozone, as he well knows, is a serious danger to the British economy. It is clear that the United Kingdom will be exempt from the provisions of any such treaty change. Where we have considerable negotiating leverage in the European Union, as we certainly will over the coming years, our first priority—as I said in answer to the previous question—is to change the way in which the budgets are determined so that, unlike the previous Government, we are not involved in spending billions of pounds extra of the UK taxpayer’s money.
Mr Denis MacShane (Rotherham) (Lab)
May I congratulate those on the Government Front Bench, and the Foreign Secretary in particular, on their new flexible approach on this issue? I understand that the new treaty change would happen under the passerelle clause. Clearly, the non-euro-using members of the EU—Poland, ourselves, Denmark and Sweden—and our officials and Ministers will be involved in this discussion, and there will be a small transfer of competences. I thoroughly welcome this and congratulate the Foreign Secretary on his new Europe-friendly approach.
Mr Hague
I am glad the right hon. Gentleman agrees with an approach that involves not joining the euro, transferring no more powers or competences to the European Union, making sure that this country will have a referendum if any future Government ever propose doing such a thing, and bringing the European budget under control—all things that he has never agreed with before and which his Government never did.
Mr Ben Bradshaw (Exeter) (Lab)
2. What assessment he has made of the effect on the BBC World Service of the proposed transfer of its funding away from his Department; and if he will make a statement.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The transfer of the BBC World Service funding from the Foreign and Commonwealth Office to the licence fee from 2014-15 represents a £212 million reduction in public spending. I will continue to set the objectives, priorities and targets for the World Service with the BBC, and no language services will be opened or closed without my agreement.
Mr Bradshaw
Is it not the case that in parts of the world the World Service can be a better ambassador for Britain than any number of embassies and diplomats? But does not the change raise some serious questions about its long-term governance and funding? Why should the licence fee payer in Britain pay for programmes that they cannot receive and probably would not be interested in receiving, and why, therefore, should the BBC continue to fund them?
Mr Hague
The BBC is very enthusiastic about the change. I have discussed it with Sir Michael Lyons and with Mark Thompson, the director-general of the BBC. They believe there is more that they can do, through bringing the BBC World Service and other BBC activities together, to develop the World Service in the future. Clearly, we would want them to do that, and I do not think that any future Foreign Secretary would allow them to run it down, given the powers that are reserved to the Foreign Secretary. So here we have an arrangement that can maintain or improve the World Service, has the necessary safeguards, and saves £200 million of public spending without increasing the licence fee. That is something that we should all be enthusiastic about.
Richard Ottaway (Croydon South) (Con)
The Foreign Secretary said that responsibility for the finance of the World Service is being transferred to the BBC, but can he say whether responsibility for the strategic direction of the World Service is also being transferred? In other words, who has the last word on editorial content?
Mr Hague
The responsibility for the direction of the World Service will remain exactly as it is now. What I agreed with the BBC Trust and the director-general of the BBC is that the key parts of the governance arrangements previously agreed in 2006 will be replicated in a new agreement, so the Foreign and Commonwealth Office, with the BBC, will set the objectives and priorities and, as I mentioned earlier, the Foreign Secretary will retain a veto over the opening and closing of services. So those arrangements stay the same as now.
Mr David Ward (Bradford East) (LD)
3. What recent discussions he has had on the blockade of Gaza.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I discussed Gaza with the Israeli Prime Minister, Foreign Minister and Defence Minister during my visit there last week. I stressed that economic revitalisation will best safeguard Israel’s security. Gaza’s dependence on aid will continue until there is progress on exports and a better framework is developed for enabling imports of reconstruction materials for UN-led projects.
Mr Hague
Yes, I do agree with my hon. Friend. I have said before in the House that I think the blockade of Gaza is unsustainable and unacceptable. The tunnel economy that has arisen in Gaza often serves the interests of Hamas, rather than the interests of anyone else, so it is important for Israel to continue to allow an improvement in the flow of goods into Gaza and, as I said, to begin to allow reconstruction materials in so that there can be a real improvement in conditions on the ground in Gaza. That will help the security of the whole region.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Is the right hon. Gentleman aware that in a briefing provided for me last week in Jerusalem by John Ging, the admirable head of the United Nations Relief and Works Agency in Gaza, Mr Ging said that the situation in Gaza now is worse than it was before the flotilla incident, that huge numbers of children are hungry and undernourished, and that the schools are not being built? Will the right hon. Gentleman take every action available to him to impress on the Israelis that persecuting the people of Gaza will not bring peace?
Mr Hague
As I mentioned earlier, I raised the issue with all the leaders of the Israeli Government on my own visit to Jerusalem and Tel Aviv last week. The right hon. Gentleman is right that the school construction that we wanted to take place is not yet taking place. The British Government have announced additional help for the work of Mr Ging and UNRWA—£23 million of new support for the Palestinian Authority, £8 million of that for UNRWA and £2 million to help 300 businesses in Gaza. Britain is doing a lot to help the situation there and we must continue to do so.
Bob Blackman (Harrow East) (Con)
I congratulate my right hon. Friend on an outstanding visit to the state of Israel last week, but Israel has clearly honoured obligations of humanitarian areas and aid for Gaza. Did the discussion that took place last week concentrate on the effect that Hamas has had in terms of its rocket capability and launching rockets and bombs into the state of Israel?
Mr Hague
It is important to bear in mind that dimension as well. The behaviour of Hamas obviously makes all those issues much more difficult to deal with. Indeed, I visited the family of Gilad Shalit, who is still imprisoned—held hostage—in Gaza, and I believe that he should be released immediately and unconditionally. So my hon. Friend is right that it is important to bear in mind that dimension to what is happening in Gaza, but I think that we are united in this House in making the case to Israel, as I did last week, that the best way to improve its security is to permit and encourage an improvement in the conditions in Gaza. That in itself will, over time, weaken Hamas and help to ensure that a new generation of Palestinians is not turned against Israel and against peace.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I welcome the Foreign Secretary’s recognition of the importance of lifting the blockade of Gaza. He will know the importance for the people of Gaza not just of lifting the blockade, but of being part of a viable Palestinian state alongside a secure Israel in a two-state solution. Therefore, what discussions did he have during his recent visit on the role of Gaza in the future peace process?
Mr Hague
Gaza plays, ultimately, a very important role in the peace process, because there cannot be a successful peace in the long term without its involvement and inclusion. The immediate priority is to get the peace process going again and the direct talks going, and of course I put the argument very strongly to Israeli leaders and on Israeli media that that requires a new freeze on Israeli settlement building on the west bank. That is the immediate issue, and in that regard the announcements that we have heard in the past 24 hours are extremely disappointing. The immediate priority is to get the direct talks going. A real settlement would have to involve Gaza as well.
Mr Matthew Offord (Hendon) (Con)
4. What recent discussions he has had with the Government of Turkey on the deployment of Turkish troops in Northern Cyprus; and if he will make a statement.
The Minister for Europe (Mr David Lidington)
British Ministers raise the Cyprus settlement process with our Turkish counterparts at every opportunity. I last did so with both Turkey’s Foreign Minister and Minister for Europe on 23 October. The presence of Turkish troops in Cyprus is one of the issues that will need to be resolved as part of a comprehensive settlement.
Mr Offord
I inform the House that I have registered an interest, as I attended the Morphou rally just a month ago. In addition to the religious and cultural destruction suffered by orthodox churches in the northern part of Cyprus, is the Minister aware of the desecration of graves in towns such as Morphou by the siting of army bases and the parking of fire tenders on Cypriot graveyards? What pressure can he bring to bear on the Turkish Government to stop such actions and return those sacred sites to their former use?
Mr Lidington
It is important that the Turkish Government lend their full weight to the negotiating process that is under way between the two Cypriot communities under the auspices of the United Nations special envoy, and the issues to which my hon. Friend has referred need to be considered as part of those discussions.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I hear what the Minister has said about the representations made to Turkey, but has he made any representations to either of the two community leaders, the President of Cyprus and the leader of the Turkish Cypriot community? What extra efforts are the British Government going to make, knowing that the UN has invited both leaders to go to New York? What extra efforts will be made to ensure that we have a proper, comprehensive peace settlement?
Mr Lidington
At both ministerial and official level, we are urging the leaders of the Greek Cypriot community, President Christofias, and of the Turkish Cypriot community, Mr Eroglu, to demonstrate leadership, flexibility and a willingness to compromise in the interests of everybody living on the island of Cyprus. We welcome the decision by both leaders to attend the meeting with Ban Ki-moon on 18 November. We remain in very close contact not just with the Governments of Cyprus and of Turkey, but with Mr Downer, the UN special envoy, and we will lend whatever support we are able to in the hope of bringing the negotiations to a successful conclusion.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Will the Minister for Europe make it absolutely clear that the British Government’s position is to continue to seek a united, peaceful Cyprus for both communities, and that as one of the three guarantor powers we, with Turkey and Greece, will lead that effort at the United Nations and in this country, and reject the idea that there might be an acceptable settlement that divides the island between the two communities?
Mr Lidington
Our treaty obligations, as the hon. Gentleman implies, require us to prohibit any action which might lead to the partition of Cyprus or its union with another country. We remain committed to a bi-zonal, bi-communal federation where there is political equality and respect for the human and cultural rights of all.
Sajid Javid (Bromsgrove) (Con)
5. What recent discussions he has had with ministerial colleagues on his Department’s promotion of trade and industry.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
The Foreign and Commonwealth Office is totally committed to the creation of a strong and open global economy, and we are working with Ministers and their Departments across Whitehall to this end. During visits overseas and in London, FCO Ministers are continually pressing the UK’s commercial interests. As we speak, my right hon. Friend the Prime Minister is leading a delegation of 50 business leaders to China.
Sajid Javid
The tectonic plates of the global economy are shifting from the west to the east, not to mention the resurgent economies of Africa. Fortunately, Britain is in a unique position to take advantage of this, given our location, our language, our culture and our legal system. Does my hon. Friend agree that to take full advantage of this change and to make Britain the gateway to the BRIC economies—Brazil, Russia, India and China—his Department has a critical role to play?
Mr Bellingham
I am grateful to my hon. Friend, and I agree with him entirely. Exports and an export-led recovery will play a key role in restoring Britain’s economic fortunes. That is why trade promotion is one of our top three priorities. It is also why my right hon. Friend the Prime Minister has instructed our diplomats to focus relentlessly, along with UK Trade & Investment, on seeking out and securing new trade and investment opportunities.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
I refer to my entry in the Register of Members’ Financial Interests.
I welcome the recent UKTI visit to the Kurdistan region of Iraq. May I press the Foreign and Commonwealth Office to ensure that its base in the Kurdistan region is effective and that it makes it clear to everybody that that part of Iraq is well and truly open for business?
Mr Bellingham
I agree entirely with the hon. Lady’s comments, and I will certainly ensure that what she says is implemented. She might be interested to know that UKTI was recently voted by its international peers the best trade promotion body in the developed world.
Dr John Pugh (Southport) (LD)
6. What recent reports he has received on the political situation in Burma; and if he will make a statement.
Tim Farron (Westmorland and Lonsdale) (LD)
11. What recent reports he has received on the political situation in Burma; and if he will make a statement.
The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
Elections on 7 November were neither free nor fair. The military regime is clearly using them to entrench its grip on power. No political prisoners have been freed, including Aung San Suu Kyi. An opportunity for national reconciliation has been missed. The Government will maintain pressure on the regime until there is progress on both democracy and human rights.
Dr Pugh
I congratulate the Government on a very public and scathing criticism of this bogus democracy, but I suggest that they keep calling the generals’ bluff and press the new Government to act like genuine democrats and release political prisoners who are committed to non-violence.
Mr Browne
I completely agree with my hon. Friend. I congratulate him on his consistent work with the all-party group on Burma. He is right to point out that there are more than 2,000 political prisoners in Burma. In those circumstances, it is impossible to see how the election can have been described as either free or fair by any observers. Although I very much hope that Aung San Suu Kyi is released, her release will not in itself wipe the slate clean.
Tim Farron
Given the absence of free and fair elections in Burma, how will our Government demonstrate leadership through Europe to maintain the arms embargo and ensure that the EU sends the strongest possible signals that the regime must release all its political prisoners?
Mr Browne
There is an agreed EU position on Burma set out in the European Council conclusions and decision of 26 April this year. The position of the British Government is entirely consistent with EU policy. EU sanctions on Burma are among the EU’s toughest autonomous measures against any country, and they make plain our determination to see change. Sanctions are designed to target regime members and their associates, not to harm the ordinary people of Burma. The regime’s complaints about sanctions suggest to us that they are biting.
Mike Gapes (Ilford South) (Lab/Co-op)
The key country with influence in Burma is China. Can the Minister tell us what representations the Prime Minister is making to the Chinese authorities about the human rights abuses in Burma and the need for it to move to democracy?
Mr Browne
We regularly raise our concerns with the Chinese Government, and indeed with other countries in the region, and they can be under no illusions about the strength of our views on Burma. In addition, the Deputy Prime Minister and I raised the issue of Burma with Asian counterparts at the October Asia-Europe meeting in Brussels, and I have raised the matter during recent visits to the Philippines, Thailand, Indonesia, Japan and China.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
Both sides of the House are united in condemnation of the Burmese regime for stealing this week’s election. I welcome what the Minister has said about China, but I wish to press him. Will the Prime Minister raise the question of Burma during his visit to China? Burma’s regional neighbours have a special responsibility to put pressure on the Burmese regime. Did the Prime Minister also raise the issue during his July visit to India, and if so, what was the Indian Government’s response?
Mr Browne
This is my first opportunity to welcome the hon. Gentleman to his Front-Bench duties. We have something in common, of which not everybody in the House may be aware. We both contested Enfield, Southgate at the 1997 general election, although that contest is remembered primarily for somebody who is not present.
We raise Burma with the Chinese on a regular basis, as I have already said, and yes, the Prime Minister did raise the matter during his recent visit to India.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
7. What recent representations he has received on the UK’s obligations under the nuclear non-proliferation treaty.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
We have received no recent representations about the UK’s obligations. We welcome the result of the review conference in May, and particularly the final document, which the UK played a leading part in negotiating. We were able to announce for the first time our nuclear warhead capability and a re-evaluation of the declaratory principle, which has now taken place.
Cathy Jamieson
I thank the Minister for that answer, but does he have any concern that the announcement of a 50-year Anglo-French nuclear deal undermines in any way our commitment to achieving nuclear disarmament at an early date, as outlined in article VI of the nuclear non-proliferation treaty?
Alistair Burt
No. I thank the hon. Lady for her question and am aware of her background in the matter. The arrangement with the French is entirely consistent with our obligations under the nuclear non-proliferation treaty. It is designed to ensure that we safeguard the reliability and maintenance of our nuclear weapons stockpile, and it makes sense. We are proceeding, through the non-proliferation treaty talks, towards a world of disarmament, and maintaining our nuclear capability and signing the treaty in no way belies that undertaking.
Dr Julian Lewis (New Forest East) (Con)
Given that article VI of the nuclear non-proliferation treaty does not require either France or the UK to give up their nuclear weapons while other countries remain nuclear powers, is it not particularly unfortunate that the Government have thrown the future of the British nuclear deterrent into doubt by postponing the vital main gate decision to the other side of the general election?
Alistair Burt
No. I do not think there is any doubt about the United Kingdom’s position on the nuclear deterrent, and in fact everything that we have done since the election confirms our intention to both maintain the security and defence of the UK and stake our international obligations on the future prospects for disarmament to the fullest extent.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
8. What his policy priorities are for the overseas territories in 2011; and if he will make a statement.
Yasmin Qureshi (Bolton South East) (Lab)
12. What his policy priorities are for the overseas territories in 2011; and if he will make a statement.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
My right hon. Friend the Secretary of State and I are passionate about the overseas territories, as they are an important part of the British family. We are developing a new strategy for them involving the whole UK Government, with the aim of bringing renewed focus to our relationship with them. We have a particular responsibility to ensure the security and good governance of the overseas territories, as well as to support their economic well-being.
Bridget Phillipson
Specifically on the Turks and Caicos Islands, will the Minister update the House on the progress of Helen Garlick’s investigation into corruption there and when he anticipates its reporting in full?
Mr Bellingham
I visited the Turks and Caicos Islands recently and had a couple of meetings with Helen Garlick. I also met her, along with my counterpart from the Department for International Development, the week before last. She assured me that the investigation is making good progress, and she is hopeful that she will be able to prefer charges early next year. That will be an important milestone in our plans to get the Turks and Caicos Islands back on their feet.
Yasmin Qureshi
Following on from my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), will the Minister tell the House how much money the UK Government have given to the Turks and Caicos Islands for the maintenance of their Government and public services?
Mr Bellingham
I am grateful to the hon. Lady for her question on the Turks and Caicos Islands. In a written statement in July, the Secretary of State for International Development announced plans for the provision of a temporary package of financial support. Work to put the package in place is currently under way. To address the immediate shortfall, the Department for International Development provided a loan of £9.7 million to the Turks and Caicos Islands between June and August, and provided a further loan of up to £10 million to cover the period from September to November. We are determined to get the territory back on a firm financial footing and to ensure that its finances are in order, and then we can announce elections. Hopefully, I will be able to make a statement on that later this year or early next year.
Andrew Rosindell (Romford) (Con)
I congratulate the Government on their new, refreshing and positive approach to British overseas territories. Will the Minister tell us something about the Pitcairn Islands? It has been a British territory since 1838—it was the first British territory in the Pacific. Will the Minister confirm that the Pitcairn Islands will remain British for as long as there is a Conservative Government?
Mr Bellingham
I am grateful to my hon. Friend for that question. He is an indefatigable champion of the OTs in this place. Let me assure him that both my right hon. Friend the Foreign Secretary and I are passionate about the overseas territories. I have waited 27 years, from first coming into the House, to become Minister with responsibility for the overseas territories. I have no intention of doing anything other than respecting their wishes and their right to self-determination and trusting them.
Bob Russell (Colchester) (LD)
No Minister has ever visited the island of St Helena. [Interruption.] I acknowledge that the former president of a European nation was once there. Will the Minister please discuss with his colleagues in DFID the construction of the airport on the island, with a view to bringing it forward as quickly as possible?
Mr Bellingham
I am grateful to the hon. Gentleman, my coalition colleague, for that question. I will do all that I can to facilitate his visit to St Helena, which is an important overseas territory. I am delighted that one of the first things that DFID did was to put an end to the prevarication and delays in the announcement of the airport. The project, which will cost a substantial amount of money, will hopefully go forward apace. Although I do not want to prejudge the commercial negotiations that will have to take place, the news is, none the less, good.
Emma Reynolds (Wolverhampton North East) (Lab)
The Chief Secretary to the Treasury recently said that tax evasion and avoidance were unacceptable, and he announced a crackdown on those hiding money offshore. Will the Minister explain to the House why his Government have abandoned the demands of the previous Government for the Cayman Islands to give up their tax haven status and introduce some form of direct taxation?
Mr Bellingham
I am grateful to the hon. Lady for her question, and I congratulate her on her appointment. Having been a special adviser at the Foreign Office, she will have a great deal to bring to her new Front-Bench job. The previous Minister with responsibility for the overseas territories, the hon. Member for Rhondda (Chris Bryant), approved last year’s Cayman Islands’ borrowings at £217 million with conditions attached. This year, I approved borrowings of £123 million, with the same conditions attached. For the Cayman Islands to get their economy moving again, we strongly feel that they need to maintain their offshore status, and we are following the policy of the previous Government.
Pat Glass (North West Durham) (Lab)
9. What recent assessment he has made of the political situation in Afghanistan; and if he will make a statement.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
We assess that steady progress has been made since the successful Kabul conference. The High Peace Council has been established, and it is working towards the political settlement. The UK is working with groups or individuals who are willing to accept the conditions that were laid down by President Karzai for a political settlement. Insurgents should cut ties with al-Qaeda, renounce violence and work within the constitutional framework.
Pat Glass
I thank the Minister for that answer. There have, however, been some differences between recent statements made by President Obama and the Prime Minister on troop withdrawal dates for Afghanistan. Can the Minister confirm that President Obama and the Prime Minister are talking to one another about these important issues, given that any discrepancies give succour to the Taliban and expose our troops to greater risk?
Alistair Burt
I do not think there is any discrepancy. The interests of all the international forces—48 countries are now represented—are the same: to ensure that the Afghans have a stable and secure country, and self-governance without outside influence. The work to ensure that that happens will be carried out by combat troops from this country until 2015, but the necessary work of development and governance will continue after that. The international forces are working together on these plans and proposals, are constantly in contact with each other and are working towards a series of political and military objectives in Afghanistan, with the full co-operation and activity of the Afghan Government.
Mr Oliver Heald (North East Hertfordshire) (Con)
There are reports that in Kandahar the Taliban are infiltrating the city, while progress is being made in the rural area outside. What is the Minister’s assessment of the political situation in Kandahar, and does he think that overall we are still making progress?
Alistair Burt
We do believe that progress is being made. It is a cautious process everywhere, and my hon. Friend is right to draw a distinction between provinces. Last week, we had a successful visit from Governor Mangal of Helmand, who was able to report on two years of progress in the economy and on health, as well as security. He also paid a moving visit to the national memorial to show his debt of gratitude to our troops who have given their lives, and met the mother of one of the soldiers who gave their lives in defence of Helmand. It is a complex process, but Kandahar is making progress. It will always be patchy, but it reminds us of the debt we owe to those who are making life safe and more secure for those in Afghanistan.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Following the sad death of Linda Norgrove in Afghanistan, her family have started the Linda Norgrove Foundation—the website is lindanorgrovefoundation.org —in her memory to help to raise funding for women, families and children in Afghanistan so that they can access education, health care and child care, as well as scholarships for women so that they can go to university. Her family were heartened by the attendance of the Minister with responsibility for Afghanistan at her funeral. I know that we have both been struck by the—
Mr Speaker
Order. This is an extremely sensitive matter, and I was aware of the interest of the hon. Gentleman, but he must bring himself to a question straightaway.
Mr MacNeil
Will the Minister support the setting up of the foundation and encourage and back its arrival on the public scene?
Alistair Burt
I am grateful to the hon. Gentleman for raising this issue. Attending Linda Norgrove’s funeral on the Isle of Lewis was one of the most moving and important things I have done as a Minister. I think we have all been struck by her family’s remarkable ability to respond to the situation without bitterness or rancour, but with deep appreciation of what that young woman achieved. It would be in the interests of the Foreign Office and all of us to support the aims and objectives of the foundation in memory of her and others who work so hard to bring development to the women and children of Afghanistan.
Mr John Spellar (Warley) (Lab)
In June the Prime Minister indicated that he was planning troop withdrawals from July 2011, which is reinforced in the business plan. Will the Minister outline his current thinking on troop levels for the next 12 months?
Alistair Burt
The Prime Minister made it clear that that was only a possibility, and of course it depends on circumstances. The major commitment made is to ensure that troop withdrawals are completed by 2015, and in that time, as I indicated earlier, the objective is to ensure that Afghans themselves have the opportunity to ensure that their country is secure, through the Afghanisation of the police and the Afghan national army. That work and training are going ahead. Last week Governor Mangal said that the province was becoming more secure, and that the training was on track. I am sure that the timetable that the Prime Minister has laid out will be adhered to.
Mr David Hamilton (Midlothian) (Lab)
10. What recent discussions he has had with the Secretary of State for Defence on the defence capabilities required to meet his foreign policy objectives.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I have had extensive discussions with my right hon. Friends the Prime Minister and the Defence Secretary, and other members of the National Security Council. The national security strategy and the strategic defence and security review set out our place in the world, our foreign policy objectives and the breadth of capabilities that we require to meet those objectives. Together they demonstrate the strategic and co-ordinated approach the Government are taking to advance our national interests and protect our security.
Mr Hamilton
I thank the Secretary of State for that answer. Does he agree that a robust foreign policy must, by its very nature, have a strong military capability to back it up, as we saw with the role that we played in Sierra Leone and Kosovo, for example? Is he satisfied that we still have that capability, following the defence cuts that are being made?
Mr Hague
I am satisfied that we still have the necessary capabilities. We have had to sort out a defence budget that was £38 billion overcommitted when we inherited it, but as Secretary Clinton of the United States said:
“We are reassured that the UK conducted its review in a thoughtful and clear-eyed manner, and that the result will be a UK military capable of meeting its NATO commitments and of remaining the most capable partner for our forces as we seek to mitigate the shared threats of the 21st Century.”
Rory Stewart (Penrith and The Border) (Con)
Will the Secretary of State please clarify the way in which foreign policy can really drive defence policy institutionally, and in particular, could you define the relationship between the National Security Council and the Joint Intelligence Committee?
Mr Speaker
Order. I cannot, but I feel sure that the Foreign Secretary can.
Mr Hague
Yes, I can. That is one of the objectives of setting up a true National Security Council, on which the Foreign Secretary sits with the Defence Secretary and the Chairman of the Joint Intelligence Committee—and, indeed, with the directors of all our intelligence services. Really for the first time on a systematic and weekly basis—sometimes more than once a week—we sit together and look at the issues of foreign and defence policy in the round. That is a huge step forward in the way British government works.
Pamela Nash (Airdrie and Shotts) (Lab)
13. What his priorities are for the European Union in 2011; and if he will make a statement.
The Minister for Europe (Mr David Lidington)
In 2011, our priorities for the European Union will be to ensure, first, that it can seek to deliver economic growth, through action to increase trade, competitiveness and jobs; and secondly, that it demonstrates effective control over its own spending.
Pamela Nash
I thank the Minister for that answer, but can he explain to the House why the European Parliament’s lead budget negotiator has stated that the EU spending increase is likely to be at least 4.5%, when the Prime Minister is still publicly stating that there will be a 2.9% cap?
Mr Lidington
I think the MEP concerned is demonstrating a certain amount of wishful thinking. Our position remains that we are not prepared to accept anything beyond 2.9%, and the Prime Minister was able to win the support of 12 other Heads of Government for that position at the recent European summit.
Chris Heaton-Harris (Daventry) (Con)
At a time when the European Commission’s accounts have not been signed off for the 16th year running, would that not be a decent priority for the Government to raise in the coming year?
Mr Lidington
It certainly forms part of the efforts that we need to make to ensure much more effective budgeting and expenditure control by all the European Union institutions. As my hon. Friend knows, part of the problem is not simply fraud; it is the over-complicated, bureaucratic nature of many European Union rules. That root cause needs to be addressed.
Kelvin Hopkins (Luton North) (Lab)
May I suggest to the Minister that our priority should be to seek the abandonment of the common fisheries policy, which is universally regarded as nonsense and has been a major factor in the depletion of fishing stocks in the North sea and elsewhere?
Mr Lidington
My right hon. and hon. Friends from the Department for Environment, Food and Rural Affairs will be trying to ensure in the forthcoming fisheries negotiations that we reform the fisheries policy in a way that delivers the proper conservation of fish stocks and the marine environment.
Mr Peter Bone (Wellingborough) (Con)
Could the Minister reconfirm that it is a priority of the coalition Government to veto any transfer of powers to Brussels by treaty, and thereby also confirm that there will never be a need for a referendum on Europe during this Parliament?
Mr Lidington
It is certainly the policy not just of my hon. Friend’s party and mine but of the coalition Government as a whole that there should be no transfer of powers or competence to the European Union by way of treaty change for the duration of this Parliament, up to 2015. We also intend to introduce legislation to ensure that any future British Government would need to seek the approval of the British people through a referendum if they ever sought to impose such a transfer of powers or competencies.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
14. What his most recent assessment is of the political situation in Moldova; and if he will make a statement.
The Minister for Europe (Mr David Lidington)
Early parliamentary elections will be held in Moldova on 28 November 2010. It is important that these elections are held to internationally accepted democratic standards. High standards of democracy, human rights and media freedom are essential for Moldova to continue to move closer to the mainstream of the European family of nations, and the UK is playing a full role in monitoring those elections.
Alun Michael
I thank the Minister for that reply, which is encouraging about the processes. Does he agree that it is important that we help to consolidate the democratic processes in Moldova, and help to resolve the problem of Transnistria? Does he encourage British MPs to engage with our counterparts in the Moldovan Parliament towards those ends?
Mr Lidington
I certainly encourage colleagues on both sides of the House to engage in the way that the right hon. Gentleman, who is vice-chairman of the all-party group on Moldova, suggests. When I visited Moldova recently, I was struck by the courage and determination of the democratic politicians there. I think it is important for all parties in this House to demonstrate our support for Moldovan democracy.
Mr Gary Streeter (South West Devon) (Con)
Is it not one of the great successes of the last 20 years that countries from the former Soviet Union in the east of Europe, such as Moldova, have moved from the dead hand of communism towards democracy? If Moldova ends up with a coalition Government after its forthcoming election, will the British Government have any particular expertise to offer them?
Mr Lidington
It is always dangerous for one country to try to export exactly its own way of doing things to a different nation, but we will do whatever we can to address the continued impasse with Transnistria, and to entrench democracy and the rule of law in Moldova.
Gavin Williamson (South Staffordshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I have just returned from Israel, the Palestinian Authority and Egypt, where I lent British support to efforts to restart the middle east peace process, and discussed vital security issues, including Iran’s nuclear programme. I look forward to discussing those matters further with Secretary Clinton in the US next week, when I will lead a special UN Security Council session to discuss the situation in Sudan. I will meet President Abdullah Gül of Turkey later today, and tonight I will give the Canning lecture in which I will emphasise the importance of building links and elevating our relations with Latin American countries.
Gavin Williamson
Will my right hon. Friend assure the House that he will continue to put pressure on the Iranian Government to stop their appalling abuse of human rights?
Mr Hague
Yes, I certainly will. I discussed the matter directly with the Iranian Foreign Minister, Mr Mottaki, when I met him at the UN General Assembly in New York at the end of September, and I made this country’s views on human rights in Iran absolutely clear. The Under-Secretary, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), and I have often made statements to the same effect, and we continue to lead and rally opinion in other nations to raise those issues.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
May I welcome the Government’s delegation to China and its work to strengthen economic ties? We wish it well. The Foreign Secretary knows that the strategic dialogue that was agreed with China before the election also provided a framework to pursue human rights and climate change, as well as trade and the economy. Given the importance of human rights, as well as economic ties, will he assure the House that the Prime Minister will raise the case of Liu Xiaobo with Premier Wen during his visit?
Mr Hague
I thank the right hon. Lady for what I think is support for the strong continuity of policy with China. The last Government pursued an expanded commercial and economic relationship but also raised human rights issues, and that is exactly this Government’s approach. When I conducted the strategic dialogue in Beijing in July, I raised Liu Xiaobo’s case, and I did so directly with Premier Wen. The Prime Minister will certainly be raising human rights issues on his visit, and we will give the details when he has had those meetings.
Greg Mulholland (Leeds North West) (LD)
T2. Now that legal routes seem to have been exhausted following the disappointing High Court judgment on investment scams in Northern Cyprus, will the Secretary of State confirm that the Minister will take up the matter, and will he meet me, my constituent Sandra Kacinski and other victims to discuss it?
The Minister for Europe (Mr David Lidington)
I am very happy to meet my hon. Friend and his constituent, as well as other colleagues, to discuss this issue, which we take seriously.
Mr Jack Straw (Blackburn) (Lab)
T7. Although I fully understand our treaty obligations on Cyprus, and I wish next week’s talks with Ban Ki-moon well, will the Foreign Secretary acknowledge the reality that there continues to be de facto partition, from which the Greek Cypriot side benefits and with which it is comfortable, but which leaves the Turkish Cypriots in isolated limbo? Does he agree that that situation cannot go on as it is?
Mr Hague
The right hon. Gentleman is right to recognise our treaty obligations. He will know that we want the forthcoming talks hosted by the UN Secretary-General to be a success and that, as my hon. Friend the Minister for Europe said earlier, we have been supporting the work of Alexander Downer, the UN negotiator. I read the right hon. Gentleman’s article in the newspapers yesterday, so I am fully cognisant of his views on this matter, but I am sure he will appreciate that, as the incumbent Foreign Secretary, I do not want to say anything at this moment that might make those talks more difficult.
Richard Graham (Gloucester) (Con)
T3. I am delighted that the Prime Minister is visiting China today. Will the Foreign Secretary join me in congratulating Renishaw and other fine Gloucestershire companies on the growth of their exports to China? Does he agree that other companies should be encouraged to follow their path of hard work and success in that crucial market?
Mr Hague
Yes, absolutely; I congratulate that firm and many others. The agreements signed during the Prime Minister’s visit to China could add up to about £1.7 billion of contracts. We have already seen the announcement of a huge contract for Rolls-Royce engines earlier today, and my hon. Friend has given us another excellent example of how British businesses can do much more in China.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T8. Does the Minister share my concern, following Richard Falk’s comments, that the Israeli occupation of Palestinian land is irreversible? Will he assure the House that the Government are doing everything they can to press for a Palestinian state and to support the Palestinian people?
Mr Hague
We certainly are doing that. I visited Ramallah last week and met Prime Minister Fayyad of the Palestinian Authority. I also met non-violent Palestinian human rights activists and other leading figures in east Jerusalem. During my visit, I restated the position of this country, and indeed of the whole European Union, which is that we want to see a settlement based on the 1967 borders with a just settlement for refugees and with Jerusalem as the capital of both states. That is the clear British Government position.
Andrea Leadsom (South Northamptonshire) (Con)
T4. May I applaud my right hon. Friend’s decision to focus the FCO’s attention on promoting British exports?
Andrea Leadsom
Thank you. Can my right hon. Friend also reassure me that, as well as promoting exports, the FCO will play its part in attempting to reduce the interminable red tape that is preventing a company in my constituency, Enterprise Control Systems, from servicing the award-winning defence products that it is successfully selling overseas?
Mr Hague
My hon. Friend is welcome to applaud that decision and anything else she might wish to applaud; we are grateful to her for that. Cutting barriers to trade is an important part of our approach to expanding British commerce. In many of our meetings with other Governments, we ask for improved market access. If she would like to give me the details of the difficulties that the company in her constituency is experiencing, we will look at that matter specifically.
Mr Speaker
Order. We have a lot of interest and little time, so I need short questions and short answers.
Mark Hendrick (Preston) (Lab/Co-op)
The Foreign Secretary will be aware of the multilateral surveillance procedures for EU budgets, which apply to all member states, whether they are in the euro or not. Is he aware of Com. (2010)526, which makes it plain that we have to provide more financial information to the European Union, whether we are in the eurozone or not?
Mr Lidington
When my right hon. Friend the Chancellor took part in the taskforce, he ensured that we would not need to supply anything to the European Commission that had not been given to Parliament first or that the Commission would be unable to find through the intelligent use of Google. I do not think that the hon. Gentleman has anything to be afraid of.
Dr Julian Huppert (Cambridge) (LD)
T5. I am pleased that the Prime Minister will raise human rights issues while he is in China. I hope this is a sign of a Government who take international human rights seriously and who want to have a truly ethical foreign policy. Will the Prime Minister also take the opportunity to talk to the Chinese about the sale of weapons to Sudan and ensure that they are not used there to cause human rights problems and further the conflict?
Mr Hague
I thank my hon. Friend for his support for the approach we take to human rights. As he knows, we argue that that goes hand in hand with the expansion of trade and business across the world because it is the rule of law and respect for human rights that help to assure businesses that they are able to do business across the world.
I very much take note of and agree with the point about Sudan. As I mentioned earlier, I will be chairing a special session of the United Nations Security Council specifically to discuss the situation in Sudan. One of our objectives is to show that the whole world is working together and that China—it is, of course, a permanent member of the Security Council—participates fully in the vision for the future of Sudan that we will set forth.
Phil Wilson (Sedgefield) (Lab)
If the inter-city express programme goes ahead, Hitachi will build the rolling stock in Newton Aycliffe, adjacent to the Foreign Secretary’s constituency. The Foreign Secretary said in Japan in August that Britain is open for business. I know that the British Prime Minister and the Japanese Prime Minister have spoken about this issue, but if it does not go ahead, what effect does the right hon. Gentleman think that will have on bilateral relationships with Japan?
Mr Hague
Of course we have had strong representations—to the Prime Minister, to me and to other Ministers—from the Japanese Government about that, as one would expect. This is a very important project. At the same time, as the hon. Gentleman knows, we have to get Government expenditure under control, so the decision is primarily one for my right hon. Friend the Secretary of State for Transport. The hon. Gentleman’s representations will, as ever, be conveyed to the Secretary of State.
Mr Sam Gyimah (East Surrey) (Con)
T6. Does my right hon. Friend agree that combating piracy off the coast of Somalia is vital to protecting the UK’s trading interests? Will we take a lead in finding a political solution inland, as opposed to dealing with what is happening offshore?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
I am grateful to my hon. Friend and I agree with him. The Royal Navy is playing a leading role in the counter-piracy operations. Once pirates are captured, they need to be detained, tried and imprisoned. That is why we are working with countries like Kenya, the Seychelles and Tanzania to provide this capacity. I agree that we must try to find a political solution on the land, as that is the only way to eliminate this evil crime.
Jeremy Corbyn (Islington North) (Lab)
Three people were killed yesterday when Moroccan forces clashed with Sahawi people in a refugee camp outside Layoun in occupied Western Sahara. Will the Foreign Secretary intervene urgently with the Government of Morocco and the UN to bring about a resolution to this crisis? It has gone on for more than 30 years, and people are wasting their lives in refugee camps when they should be allowed to return home to their own land and decide their own future—not under occupation.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
I appreciate the hon. Gentleman’s concerns; he came to see me last week to discuss Western Sahara. The circumstances of the most recent incident are still unclear, and we have asked for monitoring by our own people based in Morocco. The hon. Gentleman’s concerns are shared by many: Western Sahara is an issue that has gone on too long and the problem is very difficult to resolve.
Charlie Elphicke (Dover) (Con)
T9. Can the Minister tell us how the Van Rompuy economic governance proposals will help to ensure that European economic crises are better managed in future so that we are not all taken unawares again?
Mr Lidington
The taskforce conclusions are intended to provide a framework for stability and decent economic governance in the eurozone so that never again are all European economies taken by surprise by the sort of financial collapse that we saw in certain southern European economies about 18 months ago. It is profoundly in the interests of the UK that the eurozone should be strong and stable, given the interdependence of their economic interests and ours.
Richard Burden (Birmingham, Northfield) (Lab)
Does the Foreign Secretary agree that one of the less well known but most insidious aspects of the blockade of Gaza is that Israel threatens to shoot any Palestinian considered to be near the Israeli border? Israel defines 17% of the entire territory of the Gaza strip as constituting nearness to that border, while 17 of the 22 Palestinians killed have been killed in the area. What can the Foreign Secretary do to get Israel to see sense on that issue?
Mr Hague
There have certainly been shooting incidents in the area. That underlines the importance of what we discussed earlier: a different approach to Gaza. We need to ensure that reconstruction takes place to prevent, for instance, arguments and incidents involving people who try to collect building materials from near the border and are shot at. That is one of the controversial incidents that have taken place. An improvement in reconstruction and a general improvement in economic conditions would be at least a first step towards dealing with the situation that the hon. Gentleman has described.
Miss Anne McIntosh (Thirsk and Malton) (Con)
T10. I applaud the Foreign Secretary for obtaining the agreement of 12 other member states to a cap on any increase in the European Union budget. Can he square that with the EU treaty provisions which state that the budget must be set through co-decision between the institutions? What progress can be made in that regard?
Mr Hague
That is the position of 13 members of the European Council. They are therefore able to resist any proposal for a budget increase larger than 2.9%. As my hon. Friend has said, the procedure involves co-decision between the Parliament and the Council, and negotiations are now commencing. If there is no agreement, the 2010 budget will be rolled over into 2011. Everyone concerned had better bear that in mind.
Ian Austin (Dudley North) (Lab)
Does the Foreign Secretary realise how fed up people are with the foot-dragging over the universal jurisdiction issue? Instead of all these vague promises, why can we not have a simple, straightforward piece of legislation to sort the problem out once and for all?
Mr Hague
It is a bit of a cheek for someone who supported the last Government to ask that question. The last Government’s feet were not dragged; they were stuck solid in the cement of inertia that characterised their closing months in office. We have set out what we are going to do. We will introduce the relevant clauses in the next few weeks, and I hope that, given the support of Opposition Members, they will be passed in the current Session of Parliament. Where there was complete inaction opposite, there has been rapid action on this side of the House.
Jane Ellison (Battersea) (Con)
I am grateful to my right hon. Friend and the Under-Secretary, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), for the attention that they have given recently to the case of Shaker Aamer, who has been detained in Guantanamo Bay for eight years. He is a former resident of my constituency, and his wife and four children remain my constituents. Ministers are aware that this is a critical period. Will they undertake to press their United States counterparts hard, in person, for Mr Aamer’s early release back to the United Kingdom?
Alistair Burt
I met my hon. Friend and Shaker Aamer’s father-in-law only last week. This is a very difficult case, and it is not entirely up to the United Kingdom, but our position is that we are seeking the return of Shaker Aamer to the UK, and will continue to press the United States authorities to that effect.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I have just returned from Mexico, where I saw at first hand the human rights abuses of Los Mineros, the miners who have been on strike for four years. I understand that there is to be a ministerial visit shortly. Would it be possible for me to meet the appropriate Minister so that he can hear of the atrocities of which I heard?
The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
The hon. Gentleman is right: I shall be visiting Mexico the week after next. It would be good for us to meet beforehand to discuss the concerns that he has just raised.
Claire Perry (Devizes) (Con)
My constituency is home to many refugees from Zimbabwe, including 80-year-old Peter Seymour-Smith, who fled the country when his land and business were confiscated. He has said that he would go back if free and fair elections were held, which President Mugabe has intimated might be a possibility. What steps would the ministerial team take to ensure that if the elections were held, we would not see a repeat of 2008’s shameful practices and vote-rigging?
Mr Speaker
I am grateful to the hon. Lady. I hope that she will now take a breath.
Mr Bellingham
I am grateful to my hon. Friend for her question and for her special interest in Zimbabwe, which is due to the fact that a constituent of hers is an expert on it. I entirely agree with her. It is essential for any forthcoming elections to be properly monitored and observed. It is also essential for monitors and observers to be in place at an early stage to monitor the electoral registration process, to have full access to all the remote areas, to monitor the poll on the day and to monitor the count. We are working with the Southern African Development Community and other organisations to ensure that there is no repeat of 2008.
Mr Speaker
Let me just say to the hon. Member for Devizes (Claire Perry) that what I said earlier was a compliment.
I am sorry that I have not been able to call every Member, but there is a great deal of interest and no time.
Armed Forces Charter
Thomas Docherty (Dunfermline and West Fife) (Lab)
I beg to move,
That leave be given to bring in a Bill to give statutory effect to certain aspects of Armed Forces personnel’s and veterans’ welfare provision; and for connected purposes.
Let me begin by—[Interruption.]
Mr Speaker
Order. I ask the hon. Gentleman to resume his seat. It would be helpful and courteous if Members leaving the Chamber did so quickly and quietly. I certainly want to hear Mr Thomas Docherty.
Thomas Docherty
Thank you, Mr Speaker.
Let me begin by paying tribute to the armed services, at this time of all times, for the sacrifices that they have made and continue to make on behalf of our nation. It is also proper that we recognise the sacrifice made by their families, and I am sure that the House is at one in showing its support both for our brave service personnel and for their families.
It is right that the issue of the welfare of service personnel and their families should have crossed the political divide. In that spirit, I congratulate my right hon. Friend the Member for Coventry North East (Mr Ainsworth) and my hon. Friend the Member for North Durham (Mr Jones) on their work in the previous Government on producing last year’s Green Paper on the service personnel. The Command Paper brought together proposals from across Departments to support not only our armed forces and their families, but veterans of current and previous conflicts.
Although it is absolutely right that attention focuses on casualties from current conflicts, we must not forget that our veterans should expect a lifelong commitment from a grateful nation. We should also recognise the work done by service charities, and I wish to place on the record my thanks to the Royal British Legion for highlighting that important area and the need for an armed forces charter.
The House has recognised that many veterans face varied challenges on return from active duty, and the Royal British Legion is right to highlight the fact that returning personnel are more likely to develop psychological symptoms as a result of their experiences in Afghanistan and Iraq. This nation has a duty of care to them and their families. Opposition Members have to agree with the legion that the Ministry of Defence needs to introduce more effective prevention and treatment strategies to tackle mental health problems, binge drinking and drug abuse.
As the chairman of the Royal British Legion said recently:
“The legacy of the fiercest fighting since the Second World War will be the nation’s to meet for decades to come… politicians…have a…lifelong duty of care to protect and support veterans and their families. The Military Covenant must be honoured, both for those currently serving and those who have served.”
This House has heard and debated many of the challenges facing our veterans as they return from active service or leave our armed forces. Although we should acknowledge the steps taken by both this and previous Governments, the time has come to place on a statutory footing certain aspects of the welfare provision that should be offered by central and local government, and to take the issue out of party politics.
My right hon. and hon. Friends worked hard in the last Government to improve the standard of accommodation for personnel and their families. Under their plans, 75,000 single-bed spaces will be modernised or upgraded to a higher standard by 2013, and I pay tribute to their efforts in this area. However, there will still be a shortfall of some 35,000 bed spaces that are below the acceptable standard, and it is regrettable that this Government have no plans as yet for the upgrading of 25,000 bed spaces outside the current schedule.
For family homes in the UK, the situation is even worse, according to the Royal British Legion. Of the 50,000 service personnel family homes, two thirds do not meet the Ministry of Defence’s own definition of high quality. Under current plans, it will take 20 years to bring all family accommodation up to the higher standard. We bring forward this Bill today in recognition of the continuing sacrifices made by our brave men and women in the armed forces, and by their families, and in recognition of the fact that our nation must honour its debt of gratitude in a fitting and practical way.
Question put and agreed to.
Ordered,
That Thomas Docherty, Ms Gisela Stuart, Mr Michael McCann, Grahame M. Morris, Mr Ian Davidson, Mr Bob Ainsworth, Hugh Bayley, Ian Murray and Tom Blenkinsop present the Bill.
Thomas Docherty accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 11 November and to be printed (Bill 104).
Opposition Day
Housing Benefit
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:59 - The House having divided: - Ayes: 258 / Noes: 319 - Question accordingly negatived.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
I beg to move,
That this House believes that, whilst housing benefit is in need of reform, the Government’s proposals will mean significant losses for hundreds of thousands of working families and pensioners and risk spending an additional £120 million on the cost of providing temporary accommodation; and calls on the Government to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months, and which ensure that any proposals are implemented on a revised timetable which allows councils, tenants and landlords to adjust, allows the impact on rents to be observed and understood, and avoids additional spending on temporary accommodation.
It is common ground across the House that the deficit needs to be cut and that, as the motion states, housing benefit needs to be reformed. The shadow Secretary of State for Communities and Local Government, my right hon. Friend the Member for Don Valley (Caroline Flint), will speak later and I am sure she will reflect the views of many in this House in recognising that the issue of housing benefit cannot, and should not, be detached from broader issues of housing provision. However, it is important to start the debate by setting out some of the facts that explain the real and rising concerns that have been expressed from both sides of the House about the impact of the Government’s proposed housing benefit changes. I will address first the reach of the changes, then the reason for them, and finally their potential impact.
If we were to believe everything we read in the newspapers, we would have thought in recent weeks that housing benefit reform is solely a London issue and that it matters only to people who have large houses and should be, but are not, working. Broadcasts and newspapers have suggested that the key issues are workshy families in Mayfair mansions, so let us start with some truths, however inconvenient they are for the Opposition Front Bench. Some 4.7 million people in the United Kingdom currently receive housing benefit, 2 million of whom are pensioners on pension credit guarantee of just about £132 a week, while 500,000 are people on jobseeker’s allowance and 700,000 are people in work in low-paying jobs. From just one measure of the Government’s proposed changes alone—the cut in local housing allowance from the 50th to the 30th percentile—700,000 of these, many of the poorest people in our country in and out of work, stand to lose on average £9 per week.
Robert Flello (Stoke-on-Trent South) (Lab)
I am looking forward to hearing the rest of what I know will be a very passionate and important speech. Does my right hon. Friend agree that many people—not only in my constituency, but throughout the country—who have disabilities or who are carers for people with disabilities are terrified that these proposals might affect them?
Mr Alexander
To illustrate my hon. Friend’s point, one of the depressing aspects of the changes is that we have not yet had a comprehensive impact assessment; I will discuss that during the course of my remarks. We have had figures about the proposed changes from the Department for Work and Pensions, which confirm that they will hit every part of Britain, and from the smallest flat upwards. A poor pensioner living in a single-bedroom flat in Glasgow will lose £7 a week, and a family in a two-bedroom flat in Liverpool will lose £10 a week. Housing benefit recipients in Yorkshire and Humberside are most likely to lose out from this 30th percentile measure, with 90% of local housing allowance recipients seeing a reduction in their housing benefit.
Little wonder that Shelter’s chief executive, Campbell Robb, explained only yesterday:
“The focus of debate so far has been the cap to housing benefit and the impact on London, but this analysis shows that these cuts will affect hundreds of thousands of people across the country.”
That is why the Church of Scotland, a body with a long and distinguished tradition of work and witness in deprived communities across Scotland, on Friday wrote to every Scottish Member of Parliament, raising concerns and questions in advance of today’s debate about the impact of the proposed measures on the communities it serves. Today, Shelter in Cornwall raised concerns about the Government’s proposals, saying:
“The reality is that we are going to be facing much more homelessness and more evictions because of this. Cornwall’s low incomes mean that lots of hard working people do have to claim housing benefit.”
Mr Jim Cunningham (Coventry South) (Lab)
Does my right hon. Friend realise that many people not affected by the cuts are appalled that this Government sought out the poor and needy and attacked them with these cuts?
Mr Alexander
I am grateful to my hon. Friend for that question. I hope that the Secretary of State will take the opportunity to explain to the House and indeed to the country why, in the package of measures contained in the spending review, the Government decided to take more money from the nation’s families than the nation’s banks.
Calls for a rethink on these proposals have also come from the hon. Member for St Ives (Andrew George), whose constituency covers the Isles of Scilly. I hope that he will vote in support of the motion, as he has said:
“The impact on Cornwall is likely to be very severe indeed.”
He also said that the proposals
“will put a lot of families in extreme stress and ministers should think again.”
Concern is rising among those on both sides of the House and across the country, from Cornwall in the south to Shetland in the north. We have to recognise that when we talk about these rushed and ill-considered changes, we are talking about changes that will affect our constituents, no matter what part of the country we represent. The changes will affect many of our constituents, those in and out of work, as well as many of our poorest pensioners. This debate should be informed by that state of mind, rather than by the lurid headlines that Ministers have worked so hard and so shamefully to create in recent days.
Mr David Ruffley (Bury St Edmunds) (Con)
I agree with the following statement:
“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”
It came from this year’s Labour manifesto. Does the right hon. Gentleman agree with it?
Mr Alexander
I do, which is why I wish those on the Government Benches would spend less time reading our manifesto and more time changing their proposals.
Let me deal with the substantive points. [Interruption.] Hon. Members should have just a little patience—one of the virtues that I wish the Secretary of State had learned in relation to these changes. Two arguments are being advanced in favour of the changes, the first being that the housing benefit bill is out of control and the second being that reform will lower the rent levels paid by the state for private sector accommodation available through housing benefit.
Let us start by examining the facts and the merits of those arguments. First, as the Building and Social Housing Foundation points out:
“Housing benefit has remained remarkably consistent at around 14% of the benefits bill for many years and most of the increase over the last 18 months has been down to an increase in the number of claimants, which is exactly what we would expect to happen in response to a recession.”
Mr Alexander
I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession—that is undisputed—but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%. That was fuelled hugely by the Labour Government’s reform to local housing allowance. The figures show that today’s rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.
Mr Alexander
I am happy to come on to deal with exactly those points, which echo some that we have heard.
Mr Alexander
I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills—
Mr Alexander
I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department’s own statistics show that since 2000 more than half the increase in the housing benefit bill—54%—did not come from the few high claims. It came from poorer private tenants—those in low-paid work, and disabled or elderly people—claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.
Mr Oliver Heald (North East Hertfordshire) (Con)
Will the right hon. Gentleman give way?
Mr Alexander
I feel that I should give way first to the hon. Member for Colchester (Bob Russell).
Bob Russell
The right hon. Gentleman was a Minister in the last Government. He started his speech with a brief mention of “housing provision”, but he has not said anything about it since. Will he inform the House how many council houses were built and how many were sold by the last Labour Government?
Mr Alexander
The hon. Gentleman made that point in the debate in Westminster Hall. I will not pretend that our priority was council housing as distinct from social housing, because for Governments over many years there has been a move away from direct provision by local councils to broader social housing, principally provided by housing associations. We will happily stand comparison between the number of social houses that we built during our time in office and the number being trumpeted by those on the Government Front Bench. Incidentally, almost half of the 150,000 in the figure that is now being used by the Conservatives are houses that were initiated by the Labour party when it was still in office. Notwithstanding the fact that I do not think that that was a point worthy of the hon. Gentleman’s genuine concern, I hope that he will back up the words of the early-day motion with his actions this evening and join the Labour party in the Division Lobby.
Mr Heald
Does the right hon. Gentleman not agree, as all commentators have said, that since the introduction of the LHA the transparency of it has led to landlords putting up rent? Does he not think that there is a duty on Government in these difficult times to do something about it?
Mr Alexander
I have great respect for the hon. Gentleman, but there is a difference between having a duty to act—and we support the case for reform in housing benefit—[Hon. Members: “Ah!”] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the ’80s and ’90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.
The core of the Government’s policy is their belief that by cutting or capping housing benefit—this has been the substance of a couple of interventions—they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government’s regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.
In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?
Mr Alexander
I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.
Not only does the Government’s core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients—[Interruption.] From a sedentary position, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), says, “They would say that, wouldn’t they?” Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? “Yes,” I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.
Christopher Pincher (Tamworth) (Con)
The right hon. Gentleman is keen to use statistics. I wonder whether he is comfortable with the statistic that more than 50% of Labour supporters believe that housing benefit should be reformed. They support us. Is it not ironic that he is proposing such a motion today when his supporters support this Government?
Mr Alexander
First, I respectfully suggest that the hon. Gentleman reads the motion. Secondly, I suggest that he recognises that we introduced the LHA, which has already been the subject of an exchange across the Floor of the House. He might also want to go back and read the statement of the former Chancellor at the March Budget, when we suggested further measures for reform of housing benefit.
That is commonplace. There is a difference between the right reforms that will save the public money, and the wrong reforms that will potentially cost the public money and lead to higher homelessness, as we have seen so often in the past.
Matthew Hancock (West Suffolk) (Con)
Will the right hon. Gentleman give way?
Mr Alexander
I am keen to make a little progress.
According to a study commissioned by Shelter from the Cambridge Centre for Housing and Planning Research—I wonder if the Government will dispute the integrity of that body—more than four in 10, or 42%, of landlords currently letting to LHA claimants planned to scale back. Shelter estimates that that will equate to 100,000 landlords. Liz Peace, the chief executive of the British Property Federation, said:
“Landlords might decide to abandon the social sector.”
The Conservative Mayor of London—I wonder what the Government will say in relation to this evidence—says that the Government’s proposals will lead to
“the loss of the private rented sector as a major safety net for London boroughs”.
He continued:
“We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term.”
Those are the words not of the Labour Front Bench, but of Boris Johnson.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
Has my right hon. Friend seen the Daily Mail today? Under the headline “Archbishop is wrong about…welfare…says Iain Duncan Smith”, the opening paragraph states:
“Iain Duncan Smith has attacked the Archbishop of Canterbury’s claims that housing benefit cuts will lead to a cycle of despair that will socially cleanse the poor from Britain’s cities.”
The article goes on to quote the Secretary of State as saying of the Opposition and special interest groups:
“‘They have even tried to suggest that our real purpose is not just to cut the budget deficit but to remove poor people from the heart of our cities.’”
If that is not the purpose of the Government’s intentions, surely that will be the net effect.
Mr Alexander
I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.
Mr Duncan Smith
I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who think that our measures will socially cleanse London? Will he please answer that question?
Mr Alexander
I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.
Mr Duncan Smith
I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?
Mr Alexander
I have said that I think London will look very different in the years ahead if the Government’s proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government’s policies, not about my words.
Mr Dennis Skinner (Bolsover) (Lab)
Will my right hon. Friend compare the current position to the days when Lady Porter decided to take measures in this part of London to shift people out of certain areas for political reasons? Is not the Government’s current idea one that Lady Porter could only have dreamed of, because it is 10, 20, 30 times worse?
Mr Alexander
The cumulative impact of Lady Porter’s measures was in the hundreds or the few thousands. The impact on people being removed from their homes if the current proposals pass unchecked will extend significantly beyond that.
Emily Thornberry (Islington South and Finsbury) (Lab)
Has my right hon. Friend discovered which Conservative Minister described the measures as having such a high social impact in terms of moving people out of London that it would be greater than the highland clearances?
Mr Alexander
Alas, I cannot answer that question, but I hope the Secretary of State for Work and Pensions will do so.
Mr Alexander
No, I have been generous and I will make a little progress, although I will be happy to take further interventions. Given that the subject has moved on to the highland clearances, let us move from London to Edinburgh and take the example of Edinburgh to prove that the issue is not exclusively a London one.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Will the right hon. Gentleman give way?
Mr Alexander
I will give way in a few moments, because I am interested to hear what the hon. Gentleman intends to do later this evening.
Let us take the example of Edinburgh. About 20% of all households live in the private rented sector, and about 18% of housing in the private rented sector is occupied by people who receive some housing benefit. If landlords no longer wish to have tenants on housing benefit because of the lower local housing allowance, they will have ample scope to find other tenants in that city.
Perhaps we should move on from Edinburgh to the east midlands. In the other place, the Bishop of Leicester said:
“The present belief that cutting housing benefit will depress the market and reduce private sector rents might just work if there were more houses to meet the demand. As it is, all the risk is being born by the vulnerable, not the comfortable.”—[Official Report, House of Lords, 1 November 2010; Vol. 721, c. 1446.]
Simon Hughes
The right hon. Gentleman and his colleagues are perfectly right to raise this important issue, which is of concern across the House, but will he be his usual self and use careful language? There is no evidence to suggest that the implication of the policy is what his hon. Friend the Member for Rhondda (Chris Bryant) and his hon. Friend the Member for Bolsover (Mr Skinner) have suggested—or, indeed, what the Mayor of London has implied. Yes, there are issues, but the idea that people will be moved forcibly from where they are to somewhere else is neither necessarily the case nor evidentially the case.
Mr Alexander
I can assure the hon. Gentleman that I will be characteristically careful in my language. I hope that he will be characteristically careful in aligning his words with his actions. We will be watching carefully this evening to see whether this is another instance of the Liberals either being able to prove that they are willing to match their words with actions or, alas, not.
Mr Alexander
I am going to make a little more progress.
There is a substantive question, and that is: on what evidential basis do the Government assert that rents will fall? In the debate involving the Bishop of Leicester last week in the other place, the Under-Secretary of State for Communities and Local Government, Baroness Hanham, in response to being challenged directly on the evidence that the Government could adduce for a fall in rents as a result of the changes, said that it was a “suggestion”.
The Minister of State, Department for Work and Pensions (Steve Webb)
I think that the shadow Secretary of State is a measured and reasonable man who will not want to be hysterical but will want to look at the facts. Since November 2008 private rents have fallen by 5% and local housing allowance rents have risen by 3%. LHA is pushing rents up. Does he accept that?
Mr Alexander
I have already covered the point that LHA is calculated in relation to rent in the private rented sector. The Minister generously characterises me as a reasonable fellow, but the fact is that this is the second time in as many days that a coalition Minister has accused the Government’s critics of being hysterical. I think that it was the Secretary of State for Communities and Local Government who yesterday told London councils, when perfectly reasonable questions were being asked, to “grow up”. I hope that when the Secretary of State for Work and Pensions speaks in this debate we will have a more measured and reasonable account of why the policies have been decided on and of whether the Government are willing to reflect on the points being raised, and in turn change their mind.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Does my right hon. Friend recall the answer that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) gave less than one month ago, when he indicated that at the last count 48% of local housing allowance recipients received a sum less than the rent that they were due to pay? The idea that half of all local housing allowance recipients are forcing up rents, when they are not actually getting enough housing allowance to pay the rent, is an extraordinary proposition.
Mr Alexander
My right hon. Friend’s expertise is well revealed in his question. I have been told to avoid hysteria and be careful and measured, but any of us who recollect the impact of the community charge, when a number of poor people started with a small but rapidly accumulating debt and ended up owing significant arrears to local authorities—which ultimately had to write off those debts—have reason to be very cautious before endorsing these proposals.
Mr Alexander
No. I am keen to make a little progress, by looking at the individual measures that the Government are advancing.
When the Secretary of State speaks, will he explain why the Department for Work and Pensions is not producing an impact assessment on the whole package of changes to housing benefit before the House? An assessment has been made of the introduction of the LHA measures during 2011-12, as the Social Security Advisory Commission requires, but that is partial, and of course does not take account of the effect of the consumer prices index cap on LHA rates from 2013.
We would also expect a separate impact assessment of the jobseeker’s allowance measure and social sector size limits to follow once the secondary legislation is published. At this stage, however, it is unclear whether an assessment will be made of the CPI changes. The fact that no comprehensive impact assessment has been completed before the announcement does nothing to reduce the widespread anxiety about this package of reforms. I therefore hope that the Secretary of State will now accept the concerns of his colleagues and undertake to publish an assessment of the whole package.
Mr David Lammy (Tottenham) (Lab)
Will my right hon. Friend confirm that it is a statutory duty of the Secretary of State to undertake to give an impact assessment, on the basis that this greatly affects London’s ethnic minorities—and if there is a disproportionate effect, to do something to alleviate it? It is extraordinary that that impact assessment has not yet been published.
Mr Alexander
That is an outstanding point made by a tireless fighter for the people of Tottenham. I know that my right hon. Friend has already taken the opportunity to raise this matter directly with the Secretary of State, who I hope will be able to find an opportunity to respond to it.
Mr Slaughter
My right hon. Friend is right to analyse and dismantle the individual points made, but there is also a cumulative effect. The cumulative effect on my borough after these changes are introduced, if they are, is that 6% of neighbourhoods—seven out of 111—will be affordable to people in receipt of housing benefit. Mine is by no means the worst affected borough in London: all the central London boroughs are affected. If that is not forcing people out of London and making it impossible for people on low incomes to live in London, I do not know what is.
Mr Alexander
My hon. Friend speaks with force and knowledge about the impact of these changes in his own constituency. I hope that when Government Front Benchers reflect on the range of points that have been made about the impact on our communities and constituencies across London, they will take the opportunity to think again.
Mr Rob Wilson (Reading East) (Con)
It takes the entire income tax paid by seven average earners in my constituency, and by nine average earners in the right hon. Gentleman’s constituency, to pay one family’s housing benefit bill. Does he think that is fair?
Mr Alexander
I will come to the issue of the cap. The hon. Gentleman does a disservice to the importance and seriousness of this debate by simply reading out the questions the Whips have given him. In terms of the cumulative effect, which is what we were talking about, this package involves £1.8 billion-worth of cuts. The measure that he identifies accounts for £65 million of that £1.8 billion. One of the many attributes missing on the Government Benches is a sense of proportion.
Let us look at some of the individual measures. Labour Members do not have any objection in principle to asking younger single adults to live in a shared house or flat—after all, that is what has happened a great deal in the private sector. Yet it is revealing that the Chancellor, in his spending review statement to the House, described this as a chance to limit the ability to live on housing benefit as a lifestyle choice. So why have the Government not produced an impact assessment for these proposals? How can we be reassured that there will be sufficient supply to accommodate additional people and that the specific needs of young people in special circumstances, such as the disabled, will be addressed before this measure is introduced?
On the social sector, even the Government themselves seem to be struggling to understand some of the proposals. The June Budget promised to change housing entitlements for people of working age in the social sector. Can the Secretary of State explain what that means, and whether it will mean forcing people to move out of their council homes when their children turn 18? The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate, who has already contributed to the debate, recently said in an answer to a written question:
“The detailed policy design of this change is still being developed.”—[Official Report, 1 November 2010; Vol. 517, c. 565W.]
In that case, why are the Government so confident that it will save £490 million?
Let us move on to the issue of the CPI. The shadow Chancellor has made it clear that we would support changing the uprating of benefits for a time-limited period, but this is not what the Government propose in relation to housing benefit. Index-linking local housing allowance to the CPI, which does not in any way reflect housing costs, means that the LHA’s value will drop substantially against rising rent levels, and households will increasingly find themselves priced out of all but the poorest-quality accommodation.
The impact is clear if we view the decade from 1997 to 2007 and then project forward. During those 10 years rents increased by 70%, while the CPI—the new inflation index that the Government have chosen—increased by only 20%. On that projection, by 2020 housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10% of the available property. In Manchester it would cover only 5% of available two-bedroom flats, and in parts of Winchester, within 10 to 12 years not a single two-bedroom home would be affordable on housing benefit.
I ask Ministers in all seriousness whether it is coincidental that in evidence to the Select Committee on Work and Pensions last week, Lord Freud suggested that the coalition Government now saw it as
“quite valuable to rewrite the homelessness legislation”
Can the Secretary of State confirm whether that is indeed the case, and can he further assure the House that the Government are not simply seeking to rewrite the rules for those threatened by homelessness as they rewrote the rules for the unemployed in the 1980s and ’90s, parking a generation of people in the unemployment figures?
Matthew Hancock
The right hon. Gentleman is being careful not to set out the Labour party’s position on the cap. Does he agree with his leader, the right hon. Member for Doncaster North (Edward Miliband), or does he agree with the shadow Health Secretary, who said nine days ago:
“Those top level benefits do need to be capped”?
Mr Alexander
I will answer the hon. Gentleman’s question directly. The former Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh South West (Mr Darling), introduced an option for dealing with extreme cases in the March budget—excluding a proportion of the highest rents from the calculation of the median. I am sure that given his past employment, the hon. Member for West Suffolk (Matthew Hancock) will be aware of that change. As I have previously stated, I have no objection in principle to a cap, if it is introduced on a staged timetable. I commend to him the speech that I gave at the Institute for Public Policy Research as recently as Friday. However, we have to ask whether a national cap is the most appropriate plan, or whether a regional cap would target the very highest claims in all regions.
Mr Alexander
I am keen to make a little progress.
I rather fear and suspect that the focus on the cap in some interventions owes more to Andy Coulson than to the Secretary of State. As I have already made clear, despite the fact that it will yield £65 million, it is only one part of a package of more than £1.8 billion-worth of proposed housing benefit changes resulting from the cumulative impact of the June Budget and the spending review.
Perhaps the Secretary of State will be able to answer some specific questions. Why is it necessary to introduce a cap on rent levels from April next year, and the change in the maximum rate to the 30th percentile in October? Is there not a real risk that some households will be displaced twice within a short period, with all the costs and individual traumas that that would entail?
Let us look at the reality of the matter for a moment. Many households will be making their housing arrangements now without full knowledge of what the proposals will mean. They may be arranging for their children to go to a local school, to sign up for child care support or to buy a season ticket for travel to work. It must be right to give individuals enough notice and clarity about what the first tranche of measures will mean for them to be able to ascertain whether they will be able to avail themselves of the discretionary housing payments that the Government claim will be available.
What estimate has the Department made of the impact of the changes on homelessness? Does the Secretary of State accept the figures provided by London Councils, which expects that 82,000 households will be forced from their homes? What estimate has he made of the cost of the changes to local government? Shelter has said that the costs of introducing all the rushed changes will be as much as £120 million. Does he have an alternative figure that he would like to share with the House?
The Mayor of London’s own director of housing has stated that the introduction of the cap in London alone will lead to a 48% rise in homelessness acceptances, which will mean £78 million being spent in London on temporary accommodation. Yet the Budget Red Book estimates savings of only £65 million a year. Given those figures, why would the Government introduce a policy that could end up costing the taxpayer more than it is intended to save?
I now move from the cap, about which people have been so keen to talk in the newspapers for so many days, to the change to the 30th percentile, which is perhaps more deserving of that level of publicity. Liz Phelps of Citizens Advice UK has remarked that the change
“will potentially affect people across the country. It will mean lower rates…It is very crude, short-term thinking. It will cut the DWP budget but it will explode the homelessness budget. We will see a lot more rent arrears, a lot more debt and acute poverty, and then more homelessness.”
Mr Gordon Marsden (Blackpool South) (Lab)
I wish to put on record that however important the change is in London and the south-east, it is not simply an issue for that area. Does my right hon. Friend agree that the Department’s own figures, which show that some 5,500 local housing allowance recipients in Blackpool will lose up to £25 a month, are not acceptable in such areas, which have some of the highest rates of deprivation in the country?
Mr Alexander
My hon. Friend speaks with authority about not just Blackpool but a number of seaside towns where there are real communities that are suffering and afflicted by deprivation. That is why it is incumbent on the Secretary of State and the Minister, who is winding up this debate, to offer a clear and unequivocal answer to my hon. Friend. Why is it acceptable that people in Blackpool who are in work but low-paid, and who bear no responsibility for the global financial crisis, are now being asked to bear the burden?
Mr Betts
That is precisely the issue that affects cities such as Sheffield as well. The Deputy Prime Minister has objected to the word “cleansing” and other Members have objected to the word “clearance”. In a disparate housing market such as Sheffield, the effect will be to disperse families from the affluent part, the Sheffield, Hallam constituency—the Deputy Prime Minister’s constituency—to the rest of the city. That will lead to a more segregated city, and it is that sort of effect that the Government should address.
Mr Douglas Alexander
I shall resist the temptation of suggesting that the one person who should be dispatched from Sheffield is the Deputy Prime Minister. I acknowledge the fact that in communities such as Sheffield, and in cities across the whole of Britain, there is deep anxiety and concern about the impact of these changes. That is why the Local Government Group agreed that the move to the 30th percentile is
“ likely to increase homelessness costs,”
since it will diminish
“the willingness of private rented sector landlords to let to housing benefit customers. This will have hugely variable and disproportionate effects on different parts of the country.”
The Government’s impact assessment of the 30th percentile change goes into great detail to demonstrate that at least 30% of the market is available in every area. However, is it not the case that the inevitable consequence of the LHA cap and the CPI cap is that, over time, the proportion of the available market will shrink below 30%?
Finally, let me come to one measure that has absolutely nothing to do with welfare reform and everything to do with a welfare cut. The Government propose that someone who is doing everything that we would ask of a person on benefits—applying for jobs, going to interviews, and even getting on the Secretary of State’s famous bus from Merthyr Tydfil—will still lose 10% of their housing benefit if they cannot find a job within a year.
Let me unpick the statistics in two communities. Wolverhampton has six claimants for every job. If they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10% of their benefit. To take Norfolk, a very different community from Wolverhampton, the figures say that there are 5,000 jobs, mainly casual, and 15,600 claimants—and that under these rules, 1,254 families would be sanctioned tomorrow. How can such an approach be fair when there are five claimants chasing every vacancy in the British labour market?
On Sunday, the Secretary of State’s colleague, the Chief Secretary to the Treasury, stated:
“Sanctions in the welfare system only apply when people don’t take advantage of the help and support that is on offer.”
Such a statement is irreconcilable with the policy that the Treasury has now imposed on the Department for Work and Pensions. I have to say to the Secretary of State, for whom I feel great respect, that he is losing even old and dear friends as he tries to defend the measures that he has signed his Department up to. Indeed, when Bob Holman, the man who brought the right hon. Gentleman to Easterhouse in 2002, was asked why the Secretary of State had changed track, he said:
“It is hard to say. I think he has come very much under the influence of George Osborne, who is very much more aggressive, who is much more anti-working class and I think that Iain probably is looking at it—if I am to get my big reform through, the universal credit system, I’ve got to go along some way with the attitude of Osborne.”
Indeed, how does the right hon. Gentleman want the unemployed to answer the question originally asked by Norman Tebbit? The truth is that homes are cheaper where there are fewer jobs. Should the jobless from Middlesbrough move to London where there may be jobs but fewer homes, or should the homeless from London move to Middlesbrough where there are homes but fewer jobs? I hope that the Secretary of State will take the opportunity to answer that question in the course of his remarks.
The right hon. Gentleman once styled himself as “the quiet man”. I simply cannot believe why, given all the work he has done over recent years, he stayed silent in his conversations with the Chancellor when the latter told him that this was a progressive move to help people into work. It is the very opposite of a progressive move. The party that once said that unemployment was a price worth paying now wants to fine the unemployed if they cannot find a job. We were guaranteeing work for the long-term unemployed, but the Conservative party seems to be threatening them with homelessness.
Steve Webb
My eyes may deceive me, but I sense that the shadow Secretary of State is on the final page of his speech. He must have dropped a very long section in which he was to set out Labour’s alternative. Perhaps he will do that now.
Mr Alexander
It might help the hon. Gentleman if he recognised that as he has chosen to align himself with the Conservative party in government, it is now his responsibility to answer the questions. I know that, as a former professor of social policy at the university of Bath, he is a man of great erudition and deep thinking. May I commend to him the speech I made on Friday in which I went through each of the measures and set out our thinking, as I have done on a range of them today?
We disagree fundamentally about the balance between the cuts that have to be borne by the poor and the vulnerable relative to the contribution that should be made by the banks. So we disagree about the deficit. We also disagree with measures such as the 10% cut in housing benefit relative to jobseeker’s allowance—[Interruption.] What do we support? In the March Budget we made it clear that we wanted to take the top rental—forgive me, Mr Speaker. I should not get into a debate with someone who is sitting down. I shall address you, Mr Speaker. We have made it clear that we could support a phased approach to caps, and that we want to look into regional caps. We have made it clear that we are willing to consider the proposal—once we receive an impact assessment—on the deductions available for non-dependent individuals living in households that receive housing benefit. We have also made it clear that we regard the 10% cut in housing benefit for those who have been unemployed for a year as completely unacceptable—and in his previous persona, I fear, the Minister would have found them unacceptable as well.
I need to draw my remarks to a conclusion, as was kindly anticipated by the Minister. Let us be honest: this package of rushed, ill-considered and potentially devastating cuts has raised concerns beyond the debates in this Chamber in communities across the country. In the 1980s, the previous Conservative Government showed that higher homelessness, like longer dole queues, ends up costing the taxpayer more, not less. These ill-thought-through proposals have already led a number of MPs of conscience and concern, on both sides of the House, to register their disquiet. I do not claim a monopoly of concern about the proposals for any one party. Perhaps that is why the Government have run scared of putting an amendment to the House today endorsing explicitly each of the present proposals on housing benefit that they continue to advocate. Fortunately, however, there is still time for the Government to think again about these proposals. I urge Members on both sides of the House to take the opportunity this evening to reflect on these changes, and I commend the motion to the House.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I rise to oppose for a number of reasons the motion moved by the Opposition. I will deal with it quickly, and then move on to the rest of the rationale behind the speech by the right hon. Member for Paisley and Renfrewshire South (Mr Alexander).
In the past two weeks—particularly, in the past two or three days—the right hon. Gentleman has started trying to reset the tone in the motion. None the less, the facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. There is no policy in this motion at all. Despite the major deficit that we have inherited, and despite the fact that housing benefit is running out of control, he did not say a thing about what he is planning to do. Opposition comes with responsibilities, and one of them is to have some policies before criticising, but the Labour party has none.
The right hon. Gentleman is basically a reasonable man, and I look forward to dealing with him—[Interruption.] That is very kind. Thank you. So we are all reasonable across the Dispatch Box. But what is not reasonable is what has gone on over the past two weeks. I am pleased that in the past few days he has suddenly entered the fray, because he was suspiciously silent when a lot of his colleagues were running up and down the place trying to frighten the public about the changes. In many senses that was quite disreputable. Two weeks ago, the hon. Member for Rhondda (Chris Bryant)—the right hon. Gentleman’s hon. Friend—accused us of deliberately trying to “socially cleanse” London, and that is in Hansard. Furthermore, in the other place, one of the right hon. Gentleman’s great friends, Baroness Hollis, talked of
“Weeping children, desperate mothers, defeated fathers …carnage”.—[Official Report, House of Lords, 4 November 2010; Vol. 721, c. 1743.]
This has gone too far. I should also say that, encouraged by a nod and a wink from his Front-Bench colleagues, one of their great supporters in one of the national papers—a columnist—talked about our “final solution” for the poor. What they have actually managed to do—
Mr Duncan Smith
I will give way in a minute, but not right now, because I want the Opposition to chew on this for a little. The way in which they have behaved over the past two weeks has been atrocious and outrageous. They knowingly used terminology used to describe events such as the holocaust, making shrill allegations of bitter intent that they knew would frighten rather than inform. I say “rather than inform”, because until Saturday, when the right hon. Member for Paisley and Renfrewshire South gave his interview to The Guardian, the Opposition’s manic rabble-rousing had failed to tell the public a rather interesting point: that had Labour Members been re-elected, they knew that they would have had to take strong measures. I will read a few quotations that should explain to his Back-Bench colleagues just exactly what Labour was planning to do.
The first quotation that I want to give them is from somebody whom I hope they will identify: their right hon. Friend the Leader of the Opposition. He said:
“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”
In the run-up to the election, the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that Labour’s LHA—he was describing his own party’s reform—had discouraged employment and was unfair. He made it clear that the policy was set for a major change and that Labour was to blame.
Mr Duncan Smith
Before I do, I want to finish this one off. My predecessor, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), went even further before the previous election, hinting strongly at a much bigger change. She said that
“it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford.”
I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour’s flagship LHA reform was in an expensive mess, she went on:
“We will publish further plans…to make the system fairer, and to make sure housing benefit encourages people into jobs.”
Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public—the electorate—what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.
Mr Douglas Alexander
Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?
Mr Duncan Smith
I agree with Boris Johnson. What he said is that there will be no “Kosovo-style cleansing” of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.
Emily Thornberry
Will the right hon. Gentleman help us now? Which Front Bencher has been scaring my constituents by saying that the policy will be worse than the highland clearances? Which shameful Front Bencher has been telling the press that?
Mr Duncan Smith
I think that that is the case on the Opposition side. The reality is that they have been scaring the public, and they know it. I detect just a little dog whistle blowing from those on the Labour Benches, freezing and frightening everybody out there in the socially rented sector.
Mr Duncan Smith
I want to deal with some of the allegations. Opposition Members made the allegations, so let us get the record straight. The first was that London will somehow end up like Paris—socially cleansed so that people live only on the outer circle.
Mr Duncan Smith
Oh, it is true? Okay. Let me remind the House about one simple point. The proposed changes to the local housing allowance concern the private rented sector. London has nearly 800,000 social homes—by the way, the Labour Government built far too few in their time—and the changes do not affect them. London has social housing embedded in its heart, and that will not change. So Labour Members must have known that they were scaring people with a complete pack of lies and nonsense. [Interruption.]
Mr Speaker
Order. I apologise to the Secretary of State. I accept that there are strong views on this matter, and that the atmosphere is highly charged, but there are many subscribers to this debate, and for the benefit of Back-Bench Members, the Chair would like to accommodate as many as possible. The more noise there is, the greater the delay, and the more difficult it will be to accommodate them. Perhaps we can calm down a little.
Mr Duncan Smith
I am grateful to you, Mr Speaker. In the calmer mood, I will give way to the hon. Member for Hampstead and Kilburn (Glenda Jackson).
Glenda Jackson (Hampstead and Kilburn) (Lab)
Is it not also part of the right hon. Gentleman’s housing policy to ensure that rents in the social housing sector will rise to 90% of the median, and that the Government are considering abolishing secure tenancies?
Mr Duncan Smith
The answer is no for existing tenants. Our policy will apply to new tenants and new build, so the hon. Lady should check her facts.
Let us not forget that the private rental market is dynamic. That is the point that the Opposition fail to mention.
Angie Bray (Ealing Central and Acton) (Con)
Will my right hon. Friend give way?
Mr Duncan Smith
I will give way in a moment.
Around 40% of private rental tenancies are less than a year old, and 70% are less than three years old. What effectively happens in the marketplace is that there is a huge amount of movement. Another nonsense that Opposition Members have peddled over the past two weeks is that the sector is made up of a static group of people who have mostly lived in the same place all their lives and that we are about to uproot people who have a reasonable and rational reason to live where they are. In the past year, more than 100,000 people in the sector moved naturally. The idea that we will go in and raid all those homes is utter nonsense and scaremongering.
Mr Slaughter
The report referred to earlier says that independent research shows that 134,000 households will be evicted or forced to move when the cuts come in next year, and those are just the first set of cuts. It is the Government’s policy to get rid of new social tenancies and to raise rents for new tenants to 80%. Over a period, the exact effect of that combination of measures will mean that no one on a low income can live in the inner city. Will the right hon. Gentleman have the courage to admit that that is his Government’s policy?
Mr Duncan Smith
The impact assessment does not say that, and it is typical of the Opposition to take a figure for those who will be affected and assume automatically that they will be driven out of their homes. That is shameful.
Angie Bray
The scaremongering is a disgrace, and I am sure that many of us have had scared constituents coming to us having been worried unnecessarily by stories that they have heard from Labour Members. I have been looking online at some of the properties on offer in the private rented sector in Ealing and Central Acton. There are some remarkably good offers around that are well within the proposed caps—for example, a four-bedroom house with a garden at under £400 a week, and a flat for about £250 a week with access to a swimming pool. The situation is really not as dire as the Opposition are suggesting.
Mr Duncan Smith
My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say “have to move” because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.
Mr Clive Betts (Sheffield South East) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
I will give way in a moment.
I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.
Mr Duncan Smith
I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?
Mr Alexander
I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his fellow Minister Lord Freud said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government’s position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?
Mr Duncan Smith
We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better—he has an ex-housing Minister sitting next to him—and that they know full well that those definitions of “homeless” are simply not true. He should have disowned them early on, before we started this debate.
Simon Hughes
The Secretary of State is rightly trying to lower the temperature and to ensure that we deal in facts and not in hyperbole. Will he take this opportunity to deal with one other myth that has become common? Will he confirm that, if anyone in the private rented sector has to move because their property has become too expensive, it is not the Government’s policy that they should move to a far-off community with which they have no links, and that the intention will always be that they should ideally stay in the community or council area where they come from and where they have lived?
Mr Duncan Smith
That is exactly what we want and what we intend. That is what we believe, for the most part, will actually happen—and in smaller numbers than people think. In some cases, there will be short moves even within boroughs.
I was asked about impact assessments, and we are going to publish them. We are bound to do so by the legislation. I am not trying to hide from that. We published an impact assessment after the Budget, and we are going to publish them when the legislation is due. I have already said that we will do that.
Sajid Javid (Bromsgrove) (Con)
My right hon. Friend was right to point out that I was shocked to learn in the Select Committee that I had been homeless as a child. I believe, however, that the question is not so much one of the definition of homelessness as one of whether people living on housing benefit should be forced to make the same choices that other low-income working families are forced to make. Those low-income working families typically pay rent to the 30th percentile and their children are forced to share bedrooms, as they would be in any ordinary family. It should be no different for anyone on housing benefit.
Mr Duncan Smith
My hon. Friend’s exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.
Mr Douglas Alexander
The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?
Mr Duncan Smith
The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute—here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.
Mr Duncan Smith
I give way to the hon. Member for Colchester (Bob Russell).
Bob Russell
Will my right hon. Friend clarify a point? Is he saying that rents are too high in the private sector? If that is the case—I am sure that is what he said—should there not be, in the interests of fairness, other measures to deal with landlords whose rents are too high?
Mr Duncan Smith
Let me deal with that question. My Department pays for 40% of all rental housing in Britain—we pay 40% of the total bills—and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase—it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA to rocket to provide landlords with excess amounts of money for providing housing that would have cost less. How do we know that? [Interruption.] I am going to answer this really important question.
We know that for two good reasons. First, if we compare those who remained on what was there before—it did not change for them because it was new people who came on to LHA—we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made. That is the first thing. [Interruption.] Hold on a second. That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.
The second point is that there are many things we can do. We now know that, according to the Office for National Statistics, the private marketplace in housing—Labour Members are completely wrong about this—fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.
Andrea Leadsom (South Northamptonshire) (Con)
I have an excellent researcher who earns £22,000 a year. Just before I came to attend this debate, he pointed out that he has to commute into London because he cannot afford a room in central London. He remarked that his best chance of getting a flat in central London was to resign from his job and make himself homeless.
Mr Duncan Smith
May I answer my hon. Friend’s point first before I give way? My hon. Friend’s real point is that there is no fairness in this particular system when people who have to make decisions about their housing have to commute distances to get to work. That is the reality for them. The idea that people can live exactly where there is work is simply not the case. That is the choice that people have to make.
Mr Duncan Smith
Many of the colleagues of the right hon. Member for Paisley and Renfrewshire South want me to give way to them. Does he really want to take their place? Okay—
Madam Deputy Speaker (Dawn Primarolo)
Order. Members should not be constantly standing on their feet. The Secretary of State is indicating to whom he intends to give way. I would be grateful if Members resumed their seats.
Mr Alexander
I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker’s allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.
Mr Duncan Smith
We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures—
Mr Duncan Smith
I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.
Mr Marsden
The right hon. Gentleman is setting the cap and justifying the 10% cut for the long-term unemployed on the basis that people will be moved from welfare into work. Does he not realise that part of that process involves retraining and reskilling? If he does realise that, why has there been so little discussion between him and Ministers from the Department for Business, Innovation and Skills?
Mr Duncan Smith
I do not quite understand why the hon. Gentleman asks that question. I have been talking about the issue endlessly to Ministers from the Department for Business, Innovation and Skills. [Interruption.] The hon. Gentleman can take my word for it that I have spent a great deal of time talking to them, but if he would like to attend the next meeting, I should be more than happy to invite him.
Mr Duncan Smith
I will give way, but I want to make some progress first.
The fact is that we have heard a lot of this nonsense. We have put aside a large amount of money—some £140 million, and we have been keeping the position under review—so that we can deal with the hardest cases when we believe that it is necessary for anyone to be affected or moved. The Department for Communities and Local Government is assisting us with that.
Among the Opposition’s other charges was the charge that our changes were somehow not fair. The maximum rent following a cap—and the Opposition still have not said whether they agree with it—is £400, the weekly equivalent of more than £20,000 a year. Let me remind the House what someone who was out there earning would have to earn to pay that £20,000. That person would have to earn £80,000. The Government left us an LHA rate of £104,000 a year. Someone would have to earn £250,000 a year to pay that in rent. [Interruption.] I fully accept that we are dealing with the top end of the cases, who constitute by no means the largest number. The point is, however, that the previous Government were so slack with the system that they allowed abuses and excesses. Before the last election, even people on their own side were saying that they would have to change it. That is the reality.
Toby Perkins
I think that the Secretary of State is focusing excessively on the cap. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) has already made it clear that that is not the main focus of our objections to the Government’s proposals. The Secretary of State dealt with myths earlier. Will he now deal with the myth that housing benefit recipients are out of work? Many of them are working, but they are low-paid. More than 350 of them in Chesterfield will be badly affected, when they are trying to work their way towards a better life. Why are they the people whom the Secretary of State is attacking with his policy?
Mr Duncan Smith
There are people in work who receive housing benefit, but the worst aspect of the changes with which the previous Government left us is that many of them are now trapped in short working hours. They dare not work for more hours, because they would lose too much of their housing benefit and would lose their homes as a consequence. Setting housing benefit at the levels at which the previous Government set it was no kindness to people who really do want to get on and work longer hours, because they are faced with the invidious choice of whether to move. That is one of the reasons more than 100,000 people moved in the rental market last year. Many people have to move to find a house that is suitable so that they can go and find better work. That is the reality. The hon. Gentleman’s party left us with that situation, and it is his party that he should now blame for the mess and chaos.
Ms Karen Buck (Westminster North) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
I must make a bit of progress. I will give way in a second.
Although that was not the largest number, the fact is that the top 5,000 of those cases of housing benefit cost the Exchequer £100 million a year. Unless Labour Members think that £100 million a year is not a lot of money, I should like to know why the shadow Secretary of State does not say that he agrees with the capping system that we want to introduce. Will he perhaps tell me whether he agrees with the capping system? No, he will not. Yet again we have heard no policy from the Opposition, but the fact is that we inherited a chaotic housing system.
Mr Alexander
I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?
Mr Duncan Smith
The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?
Mr Alexander
Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.
Mr Duncan Smith
At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.
Ms Buck
On that point, will the right hon. Gentleman confirm that the Mayor of London’s housing adviser has stated that, in London alone, the cost of temporary accommodation for homeless households, arising from the impact of the caps, could exceed the total savings by £13 million in one region alone? Will he also confirm that the figure for working households on local housing allowance is almost half the total case load, including those on JSA with the 90% annual turnover that he has just confirmed?
Mr Duncan Smith
The reality is that the adviser said that before he even knew how much we were using for the discretionary allowance. [Interruption.] Hold on a second. He said “could”. The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.
Mr Duncan Smith
No, no; I am already answering the question. I do not agree and we do not agree with the statement that the adviser made. I have explained the issue to him personally, and he has accepted that.
Mr Duncan Smith
No, I am not going to give way. I also want to say to the hon. Lady that she includes in her figures those who are in work with those on jobseeker’s allowance. She must not confuse two different positions, yet again trying to merge figures that are not right.
Mr Duncan Smith
I am going to make progress. Labour Members continue to try to accelerate the figures to the worst level and then make ludicrous assumptions. That is what is going on. The fact is that we inherited 5 million people on out-of-work benefits from the Labour Government—the hon. Lady was in the Government—which they did nothing about at all. Two million people of working age are claiming incapacity benefit, of whom 900,000 have been claiming it for an entire decade.
The figures that lie behind this issue are astonishing. Today we spend £1 in £3 on British welfare, which that Government left us, yet youth unemployment is higher, inequality is greater and there are 800,000 more working-age adults in poverty than in 1998-99. That is the great record of the last Government.
Mr Duncan Smith
The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to the right hon. Member for Don Valley (Caroline Flint), who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.
If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair—
Mr Duncan Smith
No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, “We think it’s fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work.”
Andrew Griffiths
I thank the Secretary of State for giving way. He will know that one of the myths put about by the Opposition was that councils in London were already booking bed and breakfasts across the city to cope with the consequences of this policy. I draw the Secretary of State’s attention to a website called FullFact.org, which has made some freedom of information requests to local authorities in London. I shall pick just a few. In Kensington and Chelsea, no such bookings have been made; in Wandsworth, no bookings have been made in bed and breakfasts; Lewisham council confirms that it has not made any bookings—
Madam Deputy Speaker
Order. That was supposed to be an intervention, not an opportunity to read statistics on to the record. I am sure the Secretary of State is perfectly capable of doing that himself.
Mr Duncan Smith
My hon. Friend the Member for Burton (Andrew Griffiths) is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, “This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast”—another scare story put about by Labour. It is absurd.
Mr Duncan Smith
If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.
Mr Alexander
I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?
Mr Duncan Smith
There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended—[Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.
I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.
We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure—which they used to argue was too low—achieved by the previous Conservative Government, which was 39,000 a year.
The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.
Mr Duncan Smith
I will give way in a minute.
Nine tenths of the rise in housing benefit in the past 10 years is down to increased rents. To put that into context, if that increased spend in rents going to private landlords had instead been used to invest in social housing, we would have had 80,000 social homes being built per year. I therefore wonder who Labour Members think has squandered the money they had flowing into the Exchequer. Political short-termism was the reason for that.
Mr Duncan Smith
Okay, I will give way to the right hon. Gentleman as he was one of those responsible.
Mr Raynsford
Will the Secretary of State please now put the record straight and say that the increase in housing benefit attributable to rent increase covers both the social and the private sectors, and that the increase in housing association rents contributed to building the homes that were built? Will he now put the record straight and say it is completely wrong to imply that this is entirely going to private landlords when it is not?
Mr Duncan Smith
When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.
We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.
Mr Duncan Smith
Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.
Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year—Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.
Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords’ charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.
I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure—I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.
Mr Duncan Smith
I have said that I have given way enough, so I am going to complete this. For where problems do arise, we have tripled the discretionary housing payment to £140 million. We will keep that under review; I am prepared, where necessary, even to add to that. We will not shy away from the duty of care to provide housing for those who cannot house themselves. A safety net will not just remain; it will be improved for the most vulnerable. That will be done through an increase in discretionary housing payments and an additional bedroom for non-resident carers—the previous Government should have provided that, but never did. If we are prepared to pay, as we are, some £20,000, there is no reason anyone should be left without a home. Our choices are tough but right, and we are weeks from regulations to fix the broken system.
We are in touching distance of changing things, including through producing, later this week, a welfare Bill that will put all this into context and that could change the whole prospect for the next generation as we improve work incentives, secure fairness, and protect the vulnerable. We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.
May I remind the House of something that the Opposition did when they were in government? They made changes when they sorted out the pathway back in 2005. At that time, they made an assumption that those who were renting could cope with an £18 increase in their rent, which they duly did. It is not as if it was we who were hammering people in difficulty; the Labour Government were already doing it and then they took their eye off the ball. That is why, over the last week, we have witnessed Labour’s confusion. Some Labour Members, although not the right hon. Member for Paisley and Renfrewshire South, to be fair to him, but a number of his colleagues—he knows this, and I am looking him in the eye—started to blow very faintly and then louder on the dog whistle, just trying to scare people outside, winding things up until they became ludicrous and he finally had to try to draw the tone back down to a reasonable level. I believe that the right hon. Gentleman is a reasonable man and that what we need is constructive dialogue—I am ready for that. He should say to his colleagues that if they want to show what it is really like to be in opposition preparing for government, they need to put the dog whistle away, change what they are doing and behave as though they have a credible plan.
Madam Deputy Speaker
Order. I remind hon. Members that Mr Speaker has imposed an eight-minute time limit on all speeches. There are 36 or 37 Members who wish to participate this afternoon and the time limit starts now.
Tony Lloyd (Manchester Central) (Lab)
The Secretary of State began by making great play of the fact that there had been what he described as “scaremongering”. However, many of my constituents are very scared about his Government’s proposals. If they have taken the trouble to listen to his speech today, I regret to say that he will have done nothing to allay their concerns. Of those in receipt of housing benefit in my city of Manchester—70,000-plus—10,000 will be affected by the proposals. Some will be affected significantly, as I hope to make clear in a moment. That is the reality. People are scared because they see either a significant loss of income or the reality that they will be forced to move home. That is what the proposals will do.
I am delighted that the hon. Member for Bermondsey and Old Southwark (Simon Hughes) is in the Chamber. He was quoted in an election leaflet for his party in my constituency recently and it seemed to run almost totally counter to his question to the Secretary of State. I will be happy to give way to him on this point, but the words that were put into his mouth in that election leaflet were that it was “Labour lies” that people would be forced to move from their homes—Labour lies told in order to win an election. A few moments ago, he asked the Secretary of State to confirm that were people forced to move, they would be in a position to stay in the same neighbourhood. He clearly accepts that people will be forced to move under these proposals, and that, of course, is not a Labour lie but something that the Government are proposing.
Simon Hughes
For the avoidance of doubt, I am very clear that if people who are in the private sector have to move they should not be forced to move away from their communities, because community cohesion is very important, and that the proposal to knock 10% off people’s benefit if they have been out of work for a year and have not been able to get a job is not something I support.
Tony Lloyd
That is very helpful, but I hope that if the hon. Gentleman speaks later he will apologise to my constituents, at least for the words that were put into his mouth in a Lib Dem election leaflet that went out during the by-election that was won very successfully by the Labour party last week in Manchester. It was quite clear that he was quoted as saying that people would not be forced to move, but it is now clear that both he and I accept that the Government’s proposals will force people to give up their homes, and that is unacceptable and atrocious.
Simon Hughes
I do not think that we can anticipate exactly what will happen, which is why speculating and making people worried is unfair. We have to go on the figures that the Government have produced in their impact assessment and I hope that the local authorities and the Government, as I have said to the Secretary of State, will agree the figures. If we get common facts, we will reduce alarm considerably.
Tony Lloyd
I think that that was nearly the apology I sought, although it was not quite the apology that my constituents were entitled to hear from the hon. Gentleman, who supports this coalition. It was not quite the apology needed by those who will lose significant sums of money and will be forced to absorb that loss by not being able to spend their money on other things.
Steve Webb
I think the hon. Gentleman’s own manifesto pledged this precise policy.
Tony Lloyd
I am talking about the Minister’s policy. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) made it clear what a Labour Government would have done. That was clear also from the statements of the then Secretary of State, and it was very different from the current Government’s proposals. The proposed income loss is not something that I recognise from any Labour manifesto.
The income loss will be significant for those in one, two or three-bedroom houses. In my constituency, for example, 8,000 people face an income loss of £12 to £14 a week. That sum may be trivial to a Minister or Secretary of State, but £12 to £14 is a significant part of the disposable income of somebody on housing benefit or on benefits more generally. The House ought not to countenance taking away that amount of money. It penalises the most vulnerable people in our society to prop up the Government’s policies. That is not scaremongering; it is a disgrace. Ministers and their supporters should recognise that.
There is another aspect of the proposals that we should not countenance. The Secretary of State made a long and complicated speech, which gave no comfort whatever to those in my constituency who will lose money. It gave no comfort to those who will potentially lose their homes. It gave no comfort because the right hon. Gentleman is far more concerned with the polemic of his speech than with the reality of human beings who will lose out in respect of both housing and their finances.
I hope that the right hon. Gentleman and others on the Government Benches will think again, particularly about some of the most difficult aspects of their proposals. There are parts of them which, with proper care and attention, we could all begin to agree with. The problem, at least in part, is the ridiculous speed of their implementation and the lack of acceptance of the impact that they will have. Were the Secretary of State to stand at the Dispatch Box and say that the Government are prepared to look again at the speed of their implementation, we might have a basis for real debate.
The worry among my constituents is that the proposals are driven, first, by concerns of budgetary restraint—the battle that the Secretary of State fought with the Chancellor and lost—and secondly, although this is a claim that I do not make against the Secretary of State, by the apparent desire among some of his Back Benchers to penalise the poorest and most vulnerable in our society. That rhetoric has come through in some of the debate.
Tony Lloyd
The hon. Gentleman will forgive me, I have a limited amount of time and will lose some if I give way.
The speed of the changes raises real issues. Even if I believed that rents would adjust as the Secretary of State believes, they would not do so at the lightning speed required by his policies. People will not suddenly find their landlords voluntarily reducing their rents by £12, £13 or £14 a week. That will not happen for a number of reasons.
Tony Lloyd
No, I am sorry.
The first of those reasons is that there is no evidence that rents adjust at that speed. The second and more important reason is that in a city such as Manchester—a complicated city which is quite different from the London housing market, with different types of housing tenure and different types of housing cheek by jowl—the housing benefit system is not the primary driver of rental levels. Those are driven by other factors. If that thesis is right, the Secretary of State’s proposals are doomed not to succeed. If they do not succeed, rent levels will not adjust downwards and people will inevitably lose money. Even if rent levels were to adjust, they would not do that overnight. That is why, partly as a plea and partly as a demand on behalf of my constituents, I hope that the Secretary of State will think again about the speed with which the changes are implemented.
The Secretary of State’s argument about jobseeker’s allowance was rather confusing. He seemed to imply that no one would really lose 10% of JSA because nobody would find themselves in that position. Even in the relatively high employment times under the Labour Government, my constituency still had serious pockets of unemployment because it is one of those constituencies that are the repository of the longer-term unemployed. In those circumstances, it is fanciful to suggest that no one on JSA will be unemployed for more than 12 months and fanciful to say that nobody will be hit by that 10% penalty.
Ten per cent. of JSA is a huge amount of money for somebody in that situation to lose. I hope that the Secretary of State will look again at this issue, because, as my right hon. Friend the shadow Secretary of State has said on many occasions, those whom we regard as blameless—those who have conformed to everything that the Government and society have asked of them, sought work and gone out of their way to upskill and everything else—simply should not be penalised in the way that the Government propose. I hope that the Secretary of State, almost mirroring what he said—if he believes it—will say that if all the other changes that he proposes to benefits are to be effective, he will withdraw the 10% cut. To follow his direction of travel, it is an unnecessary 10% cut, and it simply should not exist.
People in my constituency who are in work, looking for work or disabled are going to lose out under the proposals. When Manchester city council considered the measures, it discovered that the people most likely to be hurt were single parents and those seeking work. They are simply not the people whom we should penalise. If Government Members’ ambition is to penalise, they should support their Government and these proposals. If their real intention is to reform the system, they should say to their Secretary of State, “Please think again.”
Mr Oliver Heald (North East Hertfordshire) (Con)
After the election the Government found themselves in a situation whereby it was necessary to curb costs in a number of areas, and housing benefit was one of them. However, it is important to do so fairly and to bear in mind the policy’s overall effect. We cannot get away from the fact that housing benefit rents went up faster than the private rental market from 2000 right the way through to 2007. That is the evidence that was given to the Select Committee on Work and Pensions. In 2008, the system changed, the local housing allowance came in and the situation became worse.
The National Housing Federation, in its evidence to the Committee, said that
“private sector landlords increased rents with the introduction of Local Housing Allowances… the average housing benefit reward for Local Housing Allowance cases is over £9 per week more than for people still on the previous scheme… the Local Authority Omnibus Survey…finds that Housing Benefit managers say that some landlords are using the transparency of the arrangements to raise rents to the Local Housing Allowance level.”
The British Property Federation said that
“rents in some areas have adjusted towards the local housing allowance rates and in markets where there are significant claimants this is seen as the ‘going rate’.”
Paddington citizens advice bureau in central London said that
“we understand the need to place a cap on rents paid by the tax payer, especially in central London where the LHA was spiralling out of control”.
I shall not cite any more evidence, but I remember that during the Committee’s previous inquiry into housing allowance earlier this year and before the general election, Blackpool, to which the hon. Member for Blackpool South (Mr Marsden) referred, was specifically mentioned, because the broad rental market area there included Fylde. As a result, all the rents in central Blackpool went up far faster and far higher than was expected, so it is not surprising that the change under discussion, which I hope will rectify the situation, will have an impact in Blackpool.
Karen Bradley (Staffordshire Moorlands) (Con)
In evidence to the Committee, the Royal Institution of Chartered Surveyors told us that the average returns for private landlords in the housing benefit market were 4 to 5%. Does my hon. Friend agree that that seems to be a significant return for any private landlord?
Mr Heald
My hon. Friend, who makes an important contribution to the Committee, makes an important point. If we look at the effect of the policy, we find no doubt that landlords will reduce rents, because all the evidence to the Committee suggests that they will.
There are arguments about how much effect the changes will have, but the British Property Federation and the Residential Landlords Association have said that 29% of landlords would reduce rents voluntarily. The Cambridge university research for Shelter shows that 29% of tenants will not be able to negotiate a rent reduction or make up the difference. It concludes that of the remaining 29%, 50% of the group will be in difficulties because landlords will not accept the lower rents paid and will not forbear. It says that some £42 million to £82 million a year will be needed to help those who do not get that forbearance from the landlord, are unable to negotiate a change, and so on.
Let us bear in mind, however, that the Government have set aside very substantial resources for exactly this problem. One might say that the mid-point is around £60 million, which is the figure that the Government are moving towards, although the Secretary of State said, very reasonably, that he will keep it under review and see what exact figure is needed. It is completely wrong to suggest that the Government have gone into this without realising that they must match hardship if it is found.
Mr Heald
To be fair, the hon. Gentleman should think occasionally about the hard-pressed taxpayer. Working people on the lowest incomes pay lower rents than housing benefit claimants. Surely the principle should be that we all want to help someone worse off than ourselves, but that the average taxpayer should not be expected to put a person into a better position than he himself would ever be able to afford.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Would not a better approach be to follow the regulatory reforms in the Republic of Ireland and 40 other countries, and in New York city, where rents are capped for benefit recipients and for normal working people? That would enable the Government to control their benefits bill as well as making rents affordable for normal working people.
Mr Heald
As somebody who believes in markets, I think that what really needs to happen is that we have enough social housing. As the Secretary of State said, it is woeful that the previous Government, who were supposed to want to help people in that situation, did so little over all those years. I am very hopeful that the proposals will improve matters.
Mr Heald
I am running short of time, I am afraid.
Let me turn to disincentives to work. The fact is that the Government’s welfare programme is all about trying to get people back to work. It is a big ambition to do something about the 3 million households where nobody works, even though there are people of working age.
Mr Heald
I have got only a few minutes left, and I have already given way three or four times.
It is a disincentive for someone to work if they know that they will never be able to earn enough to pay their rent. That is a ludicrous situation in which to have trapped people. We need to tackle that problem, and there is no other truly sensible way of doing so.
Ms Buck
Just before this myth takes hold too completely, will the hon. Gentleman at least concede that just under half the recipients of local housing allowance are either in work or on jobseeker’s allowance? The Secretary of State confirmed that 90% of JSA claimants returned to work within a year. Constantly repeating the idea that housing benefit claimants are not in work is misleading the House, frankly.
Mr Heald
But the hon. Lady must accept that the Secretary of State has a grand ambition, which is to get people into work. One of the ways of doing that is the universal credit, which tackles the very problem that she is talking about. We should be supporting the Secretary of State, as a Parliament, for finally tackling some of these dreadful issues that have pulled our country back for so many years. The hon. Lady really must not go around telling people that 50% of such people are in work or on JSA, because 13% are in work, not 50%. Someone who enters work on low pay loses housing benefit very soon afterwards. Addressing that issue is one of the great improvements that universal credit will bring. I support the policy, and I believe that the independent evidence supports it.
Mr William Bain (Glasgow North East) (Lab)
It is a pleasure to follow the hon. Member for North East Hertfordshire (Mr Heald) and the other right hon. and hon. Members who have contributed so far.
The Secretary of State likened his welfare reform programme to that of William Beveridge in the 1940s. I welcome his ambition, but I suspect that Beveridge would have major criticisms of the unnecessary hardship that the Government’s housing benefit proposals will cause. It is a matter of great regret that no member of Beveridge’s party has yet risen to their feet to criticise these unjust proposals. Beveridge supported a contribution-based welfare state and the Government doing more to stimulate job creation. That would represent the foundations of genuine welfare reform, and I hope that the Government will reconsider their plans, which will unduly punish those who have the least. They cannot in any shape or form be described as progressive.
There are three key issues of concern to my constituents: the proposals to slash housing benefit payments by 10% for those who find themselves on jobseeker’s allowance for 12 months or more; the restriction of local housing allowance payments to rent for properties in the lowest 30% of rental levels, rather than the median level; and the plans for a crude national cap on housing benefit payments.
The 10% cut hides the inconvenient truth for the Government that affected tenants will have to make up the difference from their jobseeker’s allowance. A single, childless person will therefore experience a drop of almost 30% in their disposable income, as the Scottish Federation of Housing Associations established in its briefing. For the 970 people in Glasgow North East who have been out of work for more than 12 months, the measure could mean a loss of £25 a week in their incomes. Across the UK, the proposals are expected to save £110 million a year from 2013, but at what price to my constituents and to 4.7 million constituents of right hon. and hon. Members throughout the House, who face being pushed into higher levels of poverty?
The SFHA underlined in its briefing that approximately 700,000 people in the social and private rented sectors would be affected by the new rule, losing an average of £9 a week. Overall, 5,445 people in Glasgow who have been on JSA for 12 months or more will lose out—some 22% of all housing benefit recipients in the city. The loss for the 2,750 Glaswegians receiving the allowance for a one-bedroom flat will be £7 a week, for the 2,390 affected people in two-bedroom houses it will be £10 a week, for the 590 recipients in a three-bedroom house it will be £15 a week, and for the 50 families in four-bedroom houses it will be £22 a week.
The Glasgow Housing Association has said that between 11 and 16% of its tenants will be affected by the changes to the rules on presumed under-occupancy of properties. Unable to make ends meet, tenants will suffer higher expenses and the prospect of substantial debts. At worst, they will lag behind on their rent payments and perhaps ultimately face eviction. People will be pushed out of prosperous areas where they have the highest prospects of finding work, and there will be an increase in unemployment and social tensions in areas that are already marginalised and suffer multiple deprivation.
Under the stricter medical tests that the Government have introduced, people will be moved off employment and support allowance, incapacity benefit and severe disablement allowance and on to jobseeker’s allowance. They will be at a greater disadvantage in the labour market, and will they not find it more difficult to find a job within 12 months? If healthy and fit people are unable to find work under the Government’s policies, what chance have the most vulnerable ?
In the June Budget, the Chancellor assured the House that he was aiming to protect the most vulnerable in our society, but the Government’s proposals will hurt the most vulnerable and those who are trying to find work, at a time when their fiscal policies will make that much more difficult with the loss of almost 1 million public sector and associated private sector jobs, as PricewaterhouseCoopers established recently. The truth is, as the Office for Budget Responsibility established in June, there is no guarantee that the economy will be in a state to secure the availability of sufficient jobs by 2013.
Singling out those who can least afford to lose money is neither fair nor progressive. The Government should consider investing in affordable housing rather than slashing the budget by half over the course of this Parliament. That would not only secure savings in the long term, but protect the vulnerable and incentivise work in the coming year.
I support welfare reform that ensures that taking a job will pay and that improves work and training opportunities for those whom previous initiatives have not reached. However, my hon. Friends and I cannot support plans that set out to punish the most vulnerable in our society, who make great efforts to seek work, and who deserve a Government who is on their side and not preparing to abandon them at their time of greatest need. These are the wrong proposals targeting the wrong people. I hope hon. Members across the House will reject them and support the Opposition’s motion in the Division Lobby tonight.
Jenny Willott (Cardiff Central) (LD)
For many years, housing benefit has acted as a barrier for people who are trying to get back into work. I remember many debates in the last Parliament in which hon. Members raised concerns about people being trapped in poverty, out of work and frustrated. If, for example, a constituent got a job and lost their housing benefit, they would not be able to afford their rent. To be fair, the previous Government put much effort into ensuring that people would be better off in work than they were on benefits, but the housing benefit rules often scuppered such efforts. I hope that these proposals, which are part of the wider reform of the benefit system of which universal credit is a part, will help people get out of that benefit trap and into work. They should also benefit people who are working and paying tax. As many hon. Members have said, it is unfair when such people see the Government paying for a home for someone else that they could not possibly afford themselves, even though they are working.
There have been some positive changes, including the proposals for people with disabilities. Previously, a person who had a full-time carer could not claim for a room for them. In the previous Parliament, as the hon. Member for North East Hertfordshire (Mr Heald) said, the Work and Pensions Committee recommended a change to that unfair system. I am very glad that such a proposal is now being introduced, as it rights a wrong.
I warmly welcome the long-overdue decision to reform housing benefit. Although I have concerns about some of the Government’s proposals, I have to say that much of the criticism of the plans has been extremely overblown. Much has been said in the media and in the debate today, and I am sure that more points will be raised later tonight. I will raise my concerns with the Minister, and I look forward to his response.
One problem with the local housing allowance that was identified in the previous Parliament concerns the broad rental market areas. Many BRMAs are very large and cover very different areas. Cambridge is often cited as an example. The BRMA covers the city itself, a large rural area and some smaller towns, including Newmarket and Ely. Shelter’s research found that in Cambridge itself, only 4% of rental properties were affordable to people on LHA, while in rural areas up to 70% were affordable. That has significant implications for people on local housing allowance who want to access work. They are pushed out of the city, which is where most of the jobs, particularly the low-paid jobs, are to be found. That is not a new problem. It arose as soon as LHA was introduced.
If the Government change the LHA calculation from the median rent to the 30th percentile—I am afraid that this sounds like jargon—BRMAs such as Cambridge or Blackpool, which already have a problem, could find things getting even worse. The Select Committee recommended an urgent review of the particularly problematic BRMAs, which I hope the Government will consider further in the light of the proposed changes.
I would also like some reassurance on the raising of the age limit for the shared room rate from 25 to 35. I understand the Government’s argument that it is often unlikely that young people in work could afford to rent on their own, and they are more likely to rent a room in a shared property. However, when the Select Committee considered that point earlier in the year, we found that the shared room rate led to an increased threat of homelessness, particularly for vulnerable young people. It is unlikely that those who have recently been made homeless, or those who are suffering from a mental illness or recovering from an addiction, will be able to organise living in a shared household, but they constitute the group most likely to face a shortfall between rent and local housing allowance. Increasing the age limit to 35 could broaden that pool of people and increase the number of people facing a shortfall and homelessness—and because plugging that gap is often left to discretionary housing benefit, this has implications for the Government’s plans in that area.
I welcome the significant increase that the Government have announced in the amount available for discretionary housing benefit over the next four years. That will be very important in determining how well the changes are made. However, discretionary housing benefit is usually used only for short-term payments—certainly, my constituency casework leads me to believe that that is how local authorities see it. Often, for example, it will be paid, following a change of circumstances, to tide people over until they can make longer-term arrangements. Some of the Government’s proposals for changing housing benefit will have more long-term implications there, including the changes involving the shared room rate, and so on. Local authorities need more flexibility in their use of discretionary housing benefit over the long term in order to plug the gap and ensure that we do not end up targeting particularly vulnerable people.
The biggest issue for my colleagues and me, however, is one that has been mentioned by hon. Members already—the proposal to reduce housing benefit for those claiming jobseeker’s allowance for more than a year. If we really are trying to help people off benefits and into work, this arbitrary limit makes no sense. It does not take into account the job market in a particular area or the effort that a claimant may have made to find a job, and it could have serious implications for child poverty, in particular. I hope that the Government can think through that proposal again. If we are applying the test that the reforms should support vulnerable people, help them into work and ensure they have a roof over their heads, while ensuring that work pays, reducing housing benefit for jobseekers after one year fails that test.
That is a shame, because most of the rest of the proposals are sensible. Overall, I welcome the reforms, and I am glad that at last the Government are doing something.
Clive Efford (Eltham) (Lab)
Will the hon. Lady confirm that her website states that the benefit cuts will hit the poorest hardest? If so, would she like to put that on the record in the House?
Jenny Willott
I have to confess that I am not au fait with every page on my website. [Hon. Members: “Oh!”] Having returned a few weeks ago from maternity leave, I am afraid that my brain is suffering somewhat. However, that is for a debate on the comprehensive spending review in general. This debate is specifically about housing benefit, on which I have made my views very clear.
Overall, I welcome the reforms, and I am glad that at last the Government are sorting out housing benefit. It has been of significant concern to Members on both sides of the House for many years. Government Members all have the same aim, and I hope that the Government can take my comments in the constructive spirit in which they are intended. We would all like housing benefit to be set up in a way that helps people lift themselves out of poverty and progress through work, and does not act as a barrier to people trying to show ambition and better themselves. I hope that by tweaking the proposals we can do just that.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Let me draw attention at the outset to my interests as declared in the register.
It is clear that the Government are pursuing a policy not of housing benefit reform but of housing benefit cuts—a policy based on assumptions that are wholly untested.
Mr Raynsford
No, I have only just started. I will give way in due course, but the hon. Gentleman is perhaps being a little impatient. He might benefit from listening for a moment before interrupting.
The policy is based on assumptions, many of which are wholly untested, premises that are, frankly, incredible, and an absence of detailed impact assessments of how the eight different cuts will cumulatively affect the 4.75 million households that currently receive housing benefit. In my view, it is that absence of a detailed and thorough appraisal of the impact of the cuts that is the most serious indictment of the Government.
We have heard the Secretary of State’s claim that the effect of the changes will be to reduce rent levels in the private rented sector. His noble Friend Lord Freud made a similar claim last week when, according to a report in The Guardian, he said:
“We are expecting a large number of people who see less housing benefit to be able to negotiate their rents downwards, and the landlords will move to the new lower rate.”
As the Secretary of State and Lord Freud are clearly not totally familiar with the rented market, let me remind them and their colleagues on the Front Bench what is actually going on. Yesterday’s Evening Standard reported:
“Widespread rental ‘gazumping’ has hit London for the first time as desperate tenants fight to secure homes. Rents have soared by up to 35 per cent this year, with as many as one in four landlords asking for sealed bids from applicants, according to one agent.”
The director of a lettings agency is quoted as saying:
“The exceptional demand for rental properties which we saw earlier in the summer is showing no signs of slowing down. If anything, the rental market is now more red-hot than a month ago.”
He said that
“one four-bedroom ex-council home was recently let in Camberwell for £500 a week—£150 above the asking price and more than 40 per cent higher than the previous rent.”
A partner at Cluttons is quoted as saying:
“occupancy rates stand at an unprecedented 95 to 98 per cent, as tenants opt to stay put rather than move and risk being frozen out,”
adding that
“the stampede for homes was at all levels of the market, from studio to family homes and is in all areas of London.”
She said:
“We had a studio let at Cinnamon Wharf in Shad Thames that had been on at around £225 to £230 a week. I suggested putting it on at £305 and we got that within half a day.”
The director of another agency said:
“The demand for rental property will heat up even further in the medium-term and gazumping will become even more common as tenants look for any way in which they can get ahead of the competition.”
Bob Russell
I was going to ask the right hon. Gentleman what interest he was declaring, but my question to him now is this: is he not talking about supply and demand? If the issue is supply and demand, why did the previous Government, in which he played a leading role for 13 years, fail with the supply?
Mr Raynsford
Let me say to the hon. Gentleman what I have said in many previous debates. When we came into government in 1997 we inherited a very serious problem caused by the condition of the existing housing stock, as he knows. He also knows that a great deal of money was put into the decent homes programme to improve the condition of millions of social homes throughout the country. Because that was a priority, perhaps not enough was spent on building new homes, but if he looks at the figures, he will know that during the later years of the previous Government, until the recession hit, there was a rising trend of new house construction in all tenures, including social housing. Had that been sustained, we would now be seeing levels approaching those set out by Kate Barker in her report.
Obviously there has been a recession in the meantime. It has hit the world—it has hit this country and everywhere else—but given that situation, we want to see policies that will improve prospects rather than make things worse. The problem is that the present Government have managed to destabilise every part of the housing market. House builders are in shock because of the ill-considered planning changes. The private rented sector is in difficulty. Landlords are worried about the proposed changes to housing benefit. The social housing sector has been pulverised by the Government’s proposal to remove security of tenure and to jack up rents to near market levels. That has created a serious problem of anxiety and lack of confidence in all sectors of the market. Not surprisingly, as the hon. Gentleman highlighted, there is therefore a problem with shortage of supply. That is precisely what is driving rent levels.
Mr Raynsford
No. I have given way once, and I must make a little more progress.
All hon. Members should realise that the Government’s hope that the changes will lead to a reduction in rents is delusional. It will not happen, and the consequence will be that many people who depend on access to private rented housing, and on a degree of housing benefit to support it—many of them are in low-paid work—will find it harder and harder to compete in an increasingly tough market. I am afraid that the Government are making things worse.
Simon Hughes
One factor over the past 13 years that affected supply was the number of right-to-buy applications exercised by tenants. Does the right hon. Gentleman support a discretion for local councils to decide whether to allow the right to buy? That has become the policy throughout Wales.
Mr Raynsford
The hon. Gentleman is going wide of the subject. The right to buy now has a relatively minor influence on the supply of housing, because most people in social rented housing are on incomes that make it impossible for them to buy. I would not change the current rules. I think it is right to have an option for people to buy, but in the current market there will not be many who take that up. I want the focus to be on securing a good supply of rented accommodation through social and private providers at rents that people can afford, supported by a proper benefit system.
We know that a substantial number of local housing allowance recipients are in properties where the rent is higher than the LHA. I have quoted the answer given by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), earlier this month that 48% of LHA recipients had to meet a shortfall because their rent was higher than the LHA. It is absurd for the Government to argue that the LHA is driving increases in rent, when the evidence that I quoted from the Evening Standard shows that it is the private market and the huge demand in the private market that is driving the increase. A very high proportion of LHA recipients will find it increasingly hard to compete, because their LHA is already below the rent that they are paying.
Mr Raynsford
No. I will not give way because I have very little time left. The Minister should remember that private tenants who are dependent on housing benefit may find that they are priced out of the market as a result of the Government’s policies. I am surprised that he and his party are prepared to countenance that.
The hard questions that Ministers must answer—they have not done so—is simply: where will the tens, and perhaps hundreds, of thousands of LHA recipients go when their allowance is cut to a level that makes it impossible for them to make up the shortfall, and their landlord declines to reduce the rent?
Steve Webb
The right hon. Gentleman cited a £500 rent on a four-bedroom property—he quoted that from a newspaper—which is above our cap. Is it his policy that taxpayers should pay someone £500 for a four-bedroom property?
Mr Raynsford
No, it is not, and the point has already been made that that is not a housing benefit letting; it is a market letting being driven by the market. The Minister finds that difficult to understand because of his extraordinary prejudice that the local housing allowance is somehow driving the increase. I would have thought that he understood that, because he has some grasp of economics. He should also understand the cumulative effect of a series of such changes: not just the cap, not just the local housing allowance, but the change in non-dependant deductions, the restriction of the entitlement of social housing tenants of working age who are deemed to occupy larger accommodation than they need, the extension of the shared room rate to single applicants aged 35—the hon. Member for Cardiff Central (Jenny Willott) raised that anxiety—the change to the uprating formula using the consumer prices index rather than the retail prices index, the 10% cut in benefits for those on jobseeker’s allowance for more than a year, and the overall cap on benefit entitlement. Cumulatively, those changes will have a devastating effect. Why has the Minister, with his distinguished background in social policy, not insisted on proper appraisals of the cumulative impact, and the impact over a period, of all the changes, which will have dire consequences for many people on very low incomes?
This is not evidence-based policy making; it is faith-based policy making, using assumptions that most of the commentators in the outside world who have a real understanding of these things believe to be seriously flawed. I put it to the Minister that unless the Government can give us evidence that their policy will reduce rents in the private sector—for which there is not a shred of convincing evidence—and that the cumulative impact of the changes will not have dire consequences for many vulnerable people, the only decent thing for them to do is to withdraw their package and say that they will look again at the measures and discuss with the Opposition agreed arrangements to deal with abuses of the system without causing vulnerable people to suffer. If they do that, they will have our support. If they do not, I hope that all hon. Members with open minds will vote for the motion tonight.
James Wharton (Stockton South) (Con)
I disagree with much of what the right hon. Member for Greenwich and Woolwich (Mr Raynsford) said, but he made one key observation that many Opposition Members would do well to heed. He referred to the legacy that the previous Labour Government inherited from the Conservatives, and many Labour Members forget the context in which so many of the decisions that the new Government are now taking must be understood—namely, the terrible financial situation that we inherited from Labour. I do not intend to dwell for too long on the national debt that is approaching £1 trillion, the deficit of £150 billion, or on the fact that we are paying more than £40 billion a year in interest, which is £120 million a day. That is more than we are paying for either our police or our universities.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Does the hon. Gentleman acknowledge that, when the Labour Government came to power in 1997, we had to pay more to service the debt based on borrowing to pay for tax rebates than the cost of defence and transport put together?
James Wharton
The hon. Gentleman is right to voice his concern about any level of Government debt, and I entirely understand the historic context in which the new Labour Government found themselves, and the one in which we find ourselves today. It is important, however, that we do not spend all our time looking back. We must look forward and consider what the Government are doing to address the challenges that we face, and specifically address the issue of housing benefit, which is just one piece of that much larger jigsaw.
Housing benefit today costs about £21 billion a year, and we have heard about the trend of housing benefit costs in recent years. Between 2000 and 2007, it increased by about 25%, and, in the past five years, it increased by about 50%. The shadow Secretary of State mentioned the difficult times during the worst of the recession when it was increasing at its greatest rate. That was true, and we cannot take those times as typical and project them forward, but we can identify a clear long-term trend of housing benefit costs increasing unsustainably and putting a burden on the Exchequer that cannot be maintained in this day and age. The Government therefore have to make some tough choices.
A word that we frequently hear on both sides of the House, in different contexts, is “fairness”. We are asked what it means to be fair. Opposition Members appear to dwell on outputs, rather than giving consideration, as is correct when considering any matter of fairness, to what people put in—that is, to inputs and outcomes. It is important to look at the proposed changes to housing benefit in the context of the national financial situation, and of the need for real fairness that takes proper account of what the Government can do to help people out of poverty and into work, and to take away the benefit traps that hold people back in poverty and on housing benefit. As my hon. Friend the Member for North East Hertfordshire (Mr Heald) said, housing benefit is one of the very worst benefits when it comes to encouraging people and helping to make work pay, because of the very steep rate at which it is withdrawn.
Ms Buck
The hon. Gentleman mentioned the impact of housing benefit during the recession. Does he accept that 250,000 households claimed housing benefit during the period between 2008 and 2010 because their earnings dropped? Does that not show that housing benefit has a critical role to play in sustaining people, both in work and in their homes, during difficult times?
James Wharton
The hon. Lady is quite right. That is why nobody on either side of the House would ever propose to do away with it. It is an important part of the welfare state in this country, but that does not mean that spending on housing benefit should be allowed to escalate out of control indefinitely. That is why the Government are introducing measures to bring it under control and to ensure that people are properly incentivised to find work, to earn and to contribute successfully to our economy. The hon. Lady is right to say that housing benefit is important, however; that is why it is being reformed in a way that will secure its sustainable future.
James Wharton
I will not give way again.
In the context of the understanding of fairness, let us look at what the Government are doing. We have heard talk about the cap, and it is abundantly obvious that it is not fair for a family or an individual to be able to claim more in housing benefit than an average family takes home in earnings in any given week, month or year. If we set the cap at £20,000 a year, that will still be a very high level. That is the equivalent of earning just over £26,000 a year, as that is what someone would need to earn to have the income to pay that amount of rent without claiming housing benefit support. That is more than the average wage of my constituents, and more than the average wage in the north-east generally. It is also more than the average wage in many of the constituencies of Members on both sides of the House. We cannot expect people who work hard but do not earn large sums of money to pay tax to subsidise individuals and families who are unable to work, for whatever reason, to live in homes that those taxpayers themselves could not afford.
This is an important issue, but there are many other measures involved. The shadow Secretary of State asked whether it was fair to use the 30th percentile to set the level at which housing benefit would be paid in any given area. The Department’s research has shown that, in any given area, just over 30% of properties would be available within that price band, and I suggest that that makes it abundantly obvious that this is not an unreasonable step. Given the difficult financial situation in which we find ourselves, this is a way of finding some of the necessary savings while ensuring that those who need help will still get it. It will ensure that support will be there for those who will benefit from it most, while not unfairly disadvantaging the people who work hard to pay their taxes to enable this to happen. It is important to look at these points in the round, and in the context of the world in which we live today.
Many Opposition Members are not keen to talk about discretionary housing payments because, for many of those who hit particular hardship, such payments will increase. This will help individuals who are in danger of losing their homes, who fall through the gaps between policies or who find themselves in difficulty through no fault of their own. The Government are increasing the provision to £140 million over five years to ensure that, when people are in particular need or when their circumstances are particularly difficult, help is there to ensure that they can stay in their homes and communities. People should not be made homeless by the steps that are being taken, and the Government are taking steps to ensure that that does not happen.
Another measure that Opposition Members often overlook relates to overnight carers. At the moment, the fact that someone has an overnight carer, because they have a disability or for any other reason, is not accounted for when calculating the amount of housing benefit they receive. The Government will change that, and 15,000 people who currently have overnight carers but are not entitled to have the need to provide accommodation for them taken into account in their housing benefit allowance will be better off as a direct result. Their needs will specifically be catered for in a way that, disgracefully, has not been the case for many years.
Lots of changes are taking place in housing benefit, as well as right across the Department for Work and Pensions and other Departments. Opposition Members are right to raise concerns, when they have them, and to call for a debate when that is appropriate. When I look at the motion today, however, I find it most striking that they have suggested no alternatives. This is not an Opposition who are here to put forward alternative proposals or an alternative plan to deal with some of the problems we face. It is an Opposition who are opposing for opposition’s sake.
Matthew Hancock
I compliment my hon. Friend on his extremely fluent speech. In talking about the tone of this debate, does he agree that it is important not to make scaremongering comments that make people ill at ease when the changes being made are very important to get a grip on this particular budget?
James Wharton
As ever, my hon. Friend makes an excellent point. The point has been raised a few times already—that the tone of this debate in public and in the media has not necessarily been as it should. When we are talking about people’s homes, people’s allowances and changes that will affect people’s lives, it is incumbent on all of us to ensure that we do so in a careful, measured and sensible way.
Gavin Williamson (South Staffordshire) (Con)
I am not sure whether my hon. Friend’s experience has been the same as mine, but many people I talk to in my constituency think that the proposals being put forward are sensible, logical and should have been made an awful long time ago.
James Wharton
I thank my hon. Friend for another excellent intervention. He is, of course, right about how right-thinking people look at some of these measures—I single out the cap of £20,000 on the maximum amount of housing benefit that can be claimed. As I said at the beginning of my speech, this is equivalent to earning more than £26,000 a year. These are reasonable steps taken to deal with a very real problem. If Opposition Members wish to continue to oppose what the Government are doing, I urge them to come up with proposals and solutions of their own, so that we can have a properly informed debate—rather than mudslinging, calling names and worrying all the people who rely on Members from all parties to represent them and do the right thing.
Miss Anne Begg (Aberdeen South) (Lab)
I am grateful for the opportunity to contribute to the debate. I am keen to make sure that we do not get bogged down in a debate about what is happening to the caps in London, which has been the tenor of the debate in much of the media and, indeed, here today. I understand why my hon. Friends representing London constituencies feel angry and annoyed about the impact of the changes on their constituents, but I would like to look further afield at the impact across the country.
The difficulty with the emphasis on the caps that might apply only in London is that we need to acknowledge that the real cap is the 30 percentile that will apply in each of the broad rental area markets. It is not right to look at four-bedroom houses that can be had for less than £400 a week in an individual constituency and then say, as did the hon. Member for Ealing Central and Acton (Angie Bray), “Well, that’s fine; you can get that if you are on housing benefit”. That is simply not the case.
We already know, as alluded to by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), that even at the present 50 percentile level many of our constituents still have to supplement their housing benefit to pay the rent. We know that people, even today, before any of these changes come into place, have to spend perhaps £10 or £20 out of their benefit to pay their rent. We know that because on a Select Committee visit, we encountered an elderly gentleman at a citizen’s advice bureau who had found it very difficult to get a house or a one-bedroom flat within the money afforded under the BRMA—broad rental market areas—level at 50 percentile. He already had to spend £10 a week out of his pension credit to supplement his rent.
Another point worth noting is that the people who receive housing benefit are not all of working age, so the Government’s purpose of incentivising work does not apply to them. What incentive does an old-age pensioner have if they stand to lose perhaps a considerable portion of their rent, and what incentive is there for such a pensioner to have to move home in order to find an affordable rent?
I hope that we can start to concentrate on some of the people who are not in the percentages quoted—the people who can move and can find somewhere affordable. For every 50% of the people who can move, there are 50% who cannot move; for every 50% who can easily find affordable rented accommodation, there are 50% who cannot. As my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) said, only £65 million of the savings on the housing benefit budget will come from the cap, which will apply predominantly in London, whereas the full savings amount to £1.8 billion.
I would like us to consider what is happening in Aberdeen—not a typical place and probably an exception, but it might help to highlight some important issues. Only 6% of housing benefit claimants—910—in Aberdeen are in the private rented sector. Of them, only 370 of them—about a third—are likely to be worse off. Moreover, only 9% in the private rented sector actually claim housing benefit. If we accept what the Government are saying, this 9% should find it easy to find a house within the 30 percentile—obviously, because only 9% of them are trying to find it. That appears to be a no-brainer, but that is not the case. The reason is that they are competing with people who are already on low pay but perhaps do not have housing benefit and are trying to find somewhere else to live.
We also know that there is a housing shortage in Aberdeen, as there is in many other places, so many landlords will not rent for housing benefit. That might not be true elsewhere, but it is true in an area where we have a buoyant housing market. If only 6% of housing benefit claimants are in the private rented sector, it cannot be true that it is housing benefit rates that are pushing up the rents in Aberdeen. We know that rents are going up. It cannot be true that landlords will therefore reduce their rent because we know that there are plenty of other people who will be willing to take these houses if the housing benefit person cannot afford them. There will be areas in which the market will not operate effectively, as my ‘hon. Friend’—I call him that, because he is on the Select Committee with me—the hon. Member for North East Hertfordshire (Mr Heald) said, but although it may be true in some areas, it will definitely not be true in other areas that already have a buoyant market.
Lastly, even if we accept the Government’s argument that landlords will reduce the rent, there will inevitably be a time-lag for all that to happen. I do not think that people will move all that often in Aberdeen. Constituents have come to see me because they cannot afford the deposit on their new house or they cannot afford their first month’s rental or they cannot afford the bond that they are expected to find—I believe that applies just in Scotland. The cost of moving is difficult for people to meet. Landlords, however, will not reduce the rent initially; they will need to be persuaded in some way that they cannot get that rental anywhere else. In the meantime, individuals will have had to move at great cost and it might be difficult for them to find somewhere until the market adjusts. Even accepting the argument that the market will adjust, we are still looking at a six-month period in which people will be either forced to move or build up a huge amount of arrears. It is going to be difficult for this group of people to negotiate lower rents.
I have tried to show that there are issues beyond what is happening in London. Different areas can have different problems. There is no single solution that will have the same effect across the whole country. I hope that the Government will listen to that argument.
Amber Rudd (Hastings and Rye) (Con)
Fairness is a constantly recurring theme today, and fairness has been the dominant feature of this reforming Government’s coalition agenda. I agree with my hon. Friend the Member for Stockton South (James Wharton) that we must also be fair to the people who pay the taxes that pay for the housing benefit and local housing allowance.
I know what I am talking about, because my constituents earn extremely low wages. In the past 10 years the average wage in Hastings, which used to be £30 below the average United Kingdom rent, has fallen to £100 below that figure. I know about low wages. The hon. Member for Glasgow North East (Mr Bain) spoke of people who were vulnerable. People on low wages are also vulnerable, and I feel strongly that they should not be charged with paying the housing benefit of people who live in houses and in areas where those on low wages could not begin to live themselves.
Caroline Flint (Don Valley) (Lab)
Does the hon. Lady agree with councillors in Hastings who have expressed concern about the additional pressures that the Government’s policies will impose on their local community, including additional costs for education and children’s services?
Amber Rudd
I am grateful to the right hon. Lady for making that point, because it is exactly the one with which I am about to deal. Earlier in the debate, we heard about sensational articles in newspapers and unrealistic reporting. I am afraid that Hastings has been on the receiving end of quite a lot of that. I have spoken to the councillors who made those comments and to our director of housing, Andrew Palmer, who has done excellent work. I asked him how many London councils had made inquiries of him, and he said none. I asked him whether he had had an opportunity to speak to the people who run the bed-and-breakfast establishments that he very rarely uses—although he has had to do so occasionally—and to the landlords whom he uses for the purposes of the local housing allowance. He said that he had spoken to all of them, and that not one of them had received such an inquiry.
I strongly believe that we have been reading sensationalist reports in the newspapers. There is an apocalyptic vision of a group of Londoners arriving on the south coast, but it simply is not happening. I think it important to repeat that so that people do not become fearful. They do not have to believe what is said by the right hon. Member for Don Valley (Caroline Flint) about extra pressure on education establishments, because that is not happening at the moment.
We hope that rents will fall. Members will not be surprised to hear that I agree with much that has been said by Conservative Members about reducing rents. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) spoke of the unrealistic aspect of falling house rents, and referred to an article in the Evening Standard that focused mainly on larger houses. In my constituency at least, between 80% and 90% of people who receive local housing allowance live in homes with one to two bedrooms. The larger house element does not feature so much, although it represents a large cost. I am told by Westminster council, whose representatives I have consulted, that house prices in its area are falling rather than rising.
Mr Raynsford
When the hon. Lady reads the record of the debate, she will see that among the quotations that I gave from the article in the Evening Standard was one from an agent who said that properties of all sizes were affected, from the largest to the smallest, and that all areas of London were affected.
Amber Rudd
I am interested to hear that London is affected. We will see the consequences, but at present I am receiving different answers and people are reaching different conclusions. It is not entirely clear how the private sector will respond, but one thing is entirely clear: we cannot continue with the cost as it is now.
Amber Rudd
The 40% figure is totemic in this debate. As we know, 40% of private rented properties are used by the Department for Work and Pensions.
Chris Ruane (Vale of Clwyd) (Lab)
Like me, the hon. Lady represents a seaside town. If Kosovo-style clear-outs do take place in the inner cities—[Interruption.] It was Boris Johnson who used that phrase. If that does happen, it is logical to assume that people will go where there is cheap available accommodation: houses in multiple occupation in seaside towns such as the hon. Lady’s and mine.
Amber Rudd
The hon. Gentleman obviously does not want to let the facts interfere with a good story. Some of the newspapers have taken the same view. However, he too should try to look at the facts. He should establish whether London councils are making such inquiries, and whether B-and-Bs are being booked up. There is absolutely no evidence of that. Rents are expected to fall, which will make things less costly for us all.
Ms Buck
My local authority, Westminster council, has written to me and to Ministers in the Department for Work and Pensions and the Department for Communities and Local Government, asking for changes in the homelessness legislation because of the potential impact of the cuts, and stating that it will expect substantial out-of-borough bookings for temporary accommodation if the proposals go ahead unamended.
Amber Rudd
That is an interesting comment, but I can tell the hon. Lady that I have spoken to the cabinet member in charge of Westminster council—which has the largest supply of houses at the top level above the cap—and she told me unequivocally that the council was not doing that.
Amber Rudd
I also have a letter. Perhaps we can exchange letters later, and see what the conclusion is.
It is impossible not to see these reforms of housing benefit outside the context of the overall attempt to carry out the reforms of the welfare system to which the Government are so committed. I commend to all Members a fascinating article in today’s The Times by a former Labour Secretary of State for Work and Pensions, in which he draws strong parallels between our efforts to reform the welfare system and the proposals on which he had been working for the past few years, until the last two years or so, when he was unable to obtain any traction and had to resign. He spoke of the line that Government must tread between the poverty trap and the welfare trap. That is exactly what this Government are trying to do, but let me add that there is not just a welfare trap or a poverty trap. The welfare trap is a poverty trap in its own right. It is not a good place in which to be, but our efforts to reduce housing benefit and introduce a universal credit will start to change the present position and make a fairer society for us all.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I must inform the House that I am going to reduce the speaking time to seven minutes, because so many Members wish to contribute and I want to ensure that all of them can do so.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Let me begin by referring the House to my declaration in the Register of Members’ Financial Interests.
I am grateful to you, Mr Deputy Speaker, for calling me to speak in this important debate, and I am pleased to follow the hon. Member for Hastings and Rye (Amber Rudd), although I beg to differ with her interesting interpretation of the word “fairness”.
The Government’s £1.8 billion cuts in housing benefit will push the most vulnerable families in our society into poverty and debt. It has been estimated that up to 12,000 households in the north-east could be made homeless. The Government are using extreme examples to justify their wholesale swingeing cuts, but the simple truth is that most housing benefit recipients are low-income, hard-working families, pensioners, carers, and people with disabilities. The housing charity Shelter estimates that only one in eight housing benefit recipients is unemployed. We should not lose sight of the fact that housing benefit is also an in-work benefit. In fact, the average housing benefit award to private sector tenants in Sunderland is just £93 per week, and for social tenants it is even less: £69 per week.
What concerns me most is that the cuts in housing benefit will affect not only hard-working, low-income families, but pensioners. In Sunderland alone, more than 20,000 housing benefit recipients are over 60. Those people have contributed to society throughout their lives, but in return—when they need help from the state at the time when they are at their most vulnerable—their security is threatened, and they are treated as mere statistics.
Steve Webb
I am sure that the hon. Lady does not wish to alarm pensioners in her constituency. The figures that she has given relate to housing benefit, which applies overwhelmingly to social tenants who will not be affected by this change. Will she correct the record?
Bridget Phillipson
What I will say is that many older tenants will move into different tenancies at different points, and will be affected by the changes that the Government are introducing. Many older people will, at times, vacate social homes and move into the private sector as their needs require, and may be affected by the Government’s changes. The only alarm being caused is coming from the Government Benches. I hope that the Minister will think again about some of these measures.
The Chartered Institute of Housing summed things up best when it stated that the Government’s motive
“appears to be reducing expenditure with little co-ordination or regard for the purpose of the benefit itself.”
This is not a genuine attempt to reform housing benefit and introduce a better system in its place; this is a Treasury-driven hit on the poorest and most vulnerable in our society.
Kwasi Kwarteng (Spelthorne) (Con)
I am grateful to the hon. Lady for giving way. The House is unclear about Labour’s position on the cap. Labour Members have accepted that there is a need for public spending restraint, but Government Members want to know whether they think the cap is fair or not.
Bridget Phillipson
I respectfully suggest to the hon. Gentleman that had he been here earlier, he would have heard some of the arguments articulated by my right hon. Friend the shadow Secretary of State. I also respectfully suggest that I am not referring to the cap. That is not the issue that I am discussing in relation to Sunderland; I am discussing the changes in respect of the 10% and the 30th percentile. That is my concern, and that is why this debate has to be on issues broader than London. I understand the concerns of my hon. Friends with London constituencies about the impact there, but the impact it will have in Sunderland will be different.
On average, claimants of local housing allowance in the north-east will see a cut of about 10% a week, or £468 a year, in what they receive. That will have a massive effect in the region, and in Sunderland it will affect more than 4,500 households. Furthermore, those out of work on jobseeker’s allowance for more than one year will be hit particularly hard, with a cut of 10% in their housing benefit. Currently, 2,500 of my constituents are claiming jobseeker’s allowance in an area of ongoing deprivation, where jobs are increasingly hard to come by. That will simply drive people into further poverty and drive up homelessness at a time when, no matter how hard people try, it is often difficult to find a job.
Sunderland city council prevented homelessness for 157 households in 2009-10, helping people to find accommodation, often in the private sector. Overall, the changes made in the comprehensive spending review will make it even harder for Sunderland city council to prevent homelessness. In the long term, the use of temporary bed-and-breakfast accommodation will inevitably drive up housing costs for local councils and have massive social consequences.
Changes in the calculation of housing benefit—pegging it to the consumer prices index—will lead to a dramatic rise in rent arrears, contributing to increased use of temporary accommodation and increased homelessness. It is not yet clear to me whether those who fall into arrears because of the cuts will be deemed to have made themselves intentionally homeless, which would mean that councils would not have a duty to house them. I would be grateful for some clarity from the Government on that issue.
Before I was elected, I managed a refuge for women and children fleeing domestic violence, and the city council supported these homeless families and got them rehoused, often in the private sector. The women would often pay a small top-up to their housing benefit, often to be near supportive family who could help with child care so that they could undertake training or return to the workplace. Such women will be doubly hit, and at the point when they are trying to get their lives back on track.
It is clear that the Government have failed to come up with an acceptable plan for housing benefit. They fail to recognise the long-term solutions to the underlying causes, and they are certainly not progressive.
Jim Shannon (Strangford) (DUP)
Does the hon. Lady agree that for a great many people the purpose of housing benefit is to get them out of low-income housing? The changes that the coalition Government are proposing will keep those people in poverty and low-income housing for the rest of their lives. That is my concern. Does the hon. Lady share it?
Bridget Phillipson
I do. It is clear that the changes will have a huge impact not only in England, but in the hon. Gentleman’s constituency.
While more social homes need to be built, the coalition is cutting investment and scrapping regional housing targets. When people are crying out for help on unemployment, the coalition Government are set to cut 23,000 public sector jobs in the north-east alone. Until we tackle unemployment and until the Government bring forward a credible growth strategy, the housing benefit bill will not come down. In the north-east, the situation has not been helped by the scrapping of One North East and the lack of a regional industrial strategy.
Finally, when we need a system to stop unscrupulous private sector landlords from profiteering from the local housing allowance, the coalition Government do not even consider it. Instead, they focus their programme of cuts on the defenceless, the elderly and the least well off in our society. That cannot be allowed to happen. Labour Members all agree that there is a need to reform the current system of housing benefit—but not at such a cost, and not with the plan that the Government are implementing with such ill regard for the consequences.
I oppose these rushed, punitive and divisive measures. I will do what it takes to protect the low paid and the most vulnerable people across the country, who rely on housing benefit, and I encourage colleagues on both sides of the House to do so too.
Bob Russell (Colchester) (LD)
The debate so far has made only fleeting reference to child poverty. The previous Government left 3.9 million children living below the official poverty line, so we need to think long and hard about whether this Government’s measures are going to make that figure worse.
According to Shelter, the average loss per family in my constituency will be about £9 a week. For a low-income family, that £9 now has to compete; if the rent is not paid, and a family lose their home, they are, in law, deemed to be intentionally homeless. Whatever faults there are in this country, one thing is for sure: the children of this country are not responsible. They must not be allowed to lose their homes. For that family in my constituency, having to find another £9 a week for rent means £9 a week less on food, clothing, shoes and utility bills. We know that fuel poverty has an adverse impact on low-income families. Others have mentioned pensioners and their points have been well made, but I am going to concentrate on the families.
The loss of £9 from such a family’s disposable income will mean that the local economy will lose out. That could affect what else is going on. Incidentally, I have come up with a novel saving for middle-England households. It is not compulsory to buy the Daily Mail or The Mail on Sunday, and not buying them will produce a saving of about £500 a year to a middle-England household. I recommend it.
The Local Government Association has kindly provided the following suggestion:
“a full and robust new burdens assessment should be made of the extra local authority costs that will be incurred as a result of these changes. This should not just include the expected homelessness costs, but also community safety, physical and mental health, social care, child protection and other services.
The wider impact of these costs should not be underestimated and will result in increased costs for councils.”
The LGA has suggested that local authorities should have more flexible powers, so that they can work with local landlords to negotiate rents downwards. That would fit in with the Secretary of State’s view that the object of the exercise is not to penalise families, but to force rents down. In a spirit of collaboration, coalition and fairness, I think that the Government should take equal measures—put a cap on the rent as well as on the housing benefit.
The problem is that we have had 30 years of successive Government failures to provide sufficient housing for rent. The last Government were as guilty as the previous Conservative Government, building fewer than 7,000 council houses in 13 years; even the dastardly Thatcher Government managed to build more than half a million. Indeed, the last Labour Government sold half a million council dwellings. I intervened earlier on the question of supply and demand because of the simple fact that for 30 years supply has not matched demand.
Mr Betts
I welcome the hon. Gentleman’s commitment to increasing the number of social houses built, but does he accept that under the comprehensive spending review the expenditure plans for new social homes have been cut in half? The only such homes that will be built on the current tenures and rents will be those to which the previous Government committed? All new homes built after that will cost 80% of market rents, and that building will be paid for by increasing the rents on re-let tenancies to that level as well, so this Government are committing to no new social housing at all.
Bob Russell
I was praying for an Opposition intervention because it gives me an opportunity to pick up and wave these pages containing the more than 50 questions on council housing that I have put in the last decade, including to former Prime Minister Blair, his successor and former Deputy Prime Minister Prescott, all of whom failed the Labour party. We should contrast what the last Labour Government did with what the real Labour Government of 1945 led by Clement Attlee did in the aftermath of the war.
Chris Ruane
I concur entirely with the hon. Gentleman. In my constituency I visited a lady who had an 18-month-old child and who lived in a house of multiple occupation. She had one bedroom. That cost £85 a week in housing benefit, topped up with £20 a week from her own dole money. That is £105 a week for a one-bedroom rat hole, whereas the council charges £60 for a three-bedroom council house with both a front and back garden. It makes both economic and moral sense to spend money on building new council houses and social housing, and that would also penalise the Rachman landlords and reward the local authorities and social landlords.
Bob Russell
I agree with most of that; and, of course, if the last Labour Government had taken note of what I said in those 50-plus parliamentary questions—if two successive Prime Ministers and a Deputy Prime Minister had listened—we would not be in the pickle we are in now. I might add that all of us know of former council houses in our constituencies that were sold and are now being let out at higher rents than those for the council house next door, and where the housing benefit tops that up. The coalition Government should address that.
“When social historians write the history of the 20th century, they will contrast the huge advances made in the living standards of the British people between 1900 and 1999. Even allowing for two bloody world wars and the years of economic depression, by the end of the century the quality of life had improved dramatically for the mass of the population, beyond the wildest dreams of those doughty pioneers of social change who sowed the seeds in Victorian Britain for better health, higher standards of education, longer life expectancy, improved working conditions, wider opportunities and vastly superior housing conditions for most people.
While the improvements in the overall quality of life spanned the 100 years, for millions of people it was in the middle 50 years or so of the 20th century—the second and third quarters—when the great advances were made in housing. Council housing did it.”—[Official Report, 11 June 2003; Vol. 406, c. 237WH.]
I know that Members are fascinated by what I have just said, and they can read the 2003 speech I made in Westminster Hall on the subject of council houses. Again, had the Labour Government listened and taken note seven years ago, things would have been much better.
For most people, the aspiration to home ownership cannot now be fulfilled. The resumption of council house building would have the twin outcome of supplying good quality houses for families to rent and lessening demand in the house buying market. There would be another bonus too: it would give a boost to employment in the building industry.
The conclusion of my speech is aimed at my coalition partners. When I was leader of Colchester borough council between 1987 and 1991, I attended a meeting of the Essex branch of the Association of District Councils at which I told the then Member for South Colchester and Maldon, now Lord Wakeham, that a combination of the large-scale sale of council houses and a failure to build replacement houses would result in thousands of people being forced into the property owning market who would not otherwise have been, and that the demand for lower priced houses would therefore be greater than the availability, and that that would lead to an increase in house prices throughout the housing market. I suggested that that policy did not make economic sense, and that it was not fair on those who would be deprived of a decent home in which to live. I have been proved right, but, tragically, the problem is considerably worse than I ever thought it would be.
For the homeless and those in accommodation that is less than ideal for their needs, there is no such thing as the dream of being part of the property owning democracy. Instead, there is the 24-hour nightmare of housing despair. That is particularly the case for the children involved. Big cities, towns and villages all have residents who are suffering because of the lack of council houses. In rural areas, young people are being forced to leave the villages in which they were born, and where their families may have lived for generations, because there is no housing for them, or none that they can afford.
I urge the coalition Government to think again. They are right to tackle the higher rents, but that has to be done with fairness. At the moment, however, their proposals are being aimed only at the tenants, and I am particularly concerned about the children of the families who will be affected.
Mr Clive Betts (Sheffield South East) (Lab)
From what the hon. Member for Colchester (Bob Russell) has said, I take it that he will be voting with us in favour of this motion, because it seems that that is where his heart lies, if nothing else.
The issue as presented by the Government is that we have a problem with housing benefit. Two explanations have been given for that. One is that local housing allowance levels are pushing up rents, and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) dealt with that very well. The other is that housing rents and housing benefit levels are rising because there is a shortage of houses in this country. The hon. Member for Colchester said that that was the case, and I have a lot of sympathy with his point about the need for more social housing.
Let us look at Government policies on housing provision to deal with this fundamental problem. The hon. Gentleman mentioned social housing provision, but he ought to understand that this Government’s policy is to withdraw from social housing provision, and that is what they are doing. Under the comprehensive spending review, the budget for new social housing is being cut in half, and the half that is left will simply fund the houses to which the previous Government were committed, which is about half of the 150,000 target. Where will the other 75,000 come from? The answer is that there is an assumption that social housing landlords will raise the rents on new lettings to 80% of market rents and that that increase in rental income will then fund the building of these extra 75,000 so-called social houses. They will not be social houses, however; they will be houses at 80% of market rents—or at intermediate rents, if we prefer that term. Effectively, therefore, the Government are withdrawing from the provision of social housing.
I know some Liberal Democrat Members will not agree that that is what the Government are doing—indeed, the Lib Dem Communities and Local Government Minister, the hon. Member for Hazel Grove (Andrew Stunell), said exactly the opposite in a recent Westminster Hall debate—but that is the policy. If it is not what they intend to do, the Minister who is currently in the Chamber should stand up and say so.
As the Government claim that their key policy is to reduce housing benefit costs, they must also explain how the two bits of their agenda join up. If getting housing benefit costs down is the right thing to do, will there not be an increase in housing benefit costs from these new 80% market rents they are going to introduce, and how much will they increase by? I have asked that question, but no one can answer it. Do the Government not know or have they not done the figures? Is this another consequence of the impact assessment that they have not done? The Minister has done a lot of jumping up and down in the Chamber today, but he is surprisingly silent and sedentary at present.
That is another major question to which we need an answer. Why are the Government intent on pushing up rents in the social housing sector? What will be the housing benefit costs of that, and is the fact that there will be such costs not an inherent and fundamental contradiction in the Government’s policy?
Mr Heald
I do not think the hon. Gentleman understands the scope of the ambition of this Government. They want to get people back to work. They do not want there to be 3 million homes where nobody works and everybody is on housing benefit. They want to change that, and that is how the costs of welfare will come down.
Mr Betts
I thank the hon. Gentleman for that helpful intervention. I am not sure how putting 1.6 million people in the dole queue is part of a grand strategy to get people back to work. At some point, somebody will add those bits of the grand strategy up and explain how they connect together.
On the lack of joined-up thinking, we have been taking evidence in the Select Committee on Communities and Local Government about the impact of the Government’s policy of abolishing the regional spatial strategies. Some people have told us that that is a good thing to do, others have been more critical of the inherent aim of Government policy, and some have said that eventually we will get policies in the localism Bill that explain the Government’s long-term strategy. However, almost every witness has said that in the meantime there is a complete vacuum in housing planning policy. The National Housing Federation has commissioned detailed research and it has been estimated that 160,000 planning permissions that would have been given under the previous planning regime have not now been given. That means that fewer houses will be built when eventually the housing market returns.
Richard Graham (Gloucester) (Con)
The hon. Gentleman mentioned joined-up thinking. Does he feel it is fair that so many families who are not working and who are not disabled receive more in benefits than families who are working and are on the average national salary or less? What would he say to my constituents about the joined-up thinking of the past 13 years that allowed that situation to continue unchanged for so long?
Mr Betts
As Labour Members have clearly said, those on the Government Benches are involved in a complete misthinking about the fact that not everyone on housing benefit is unemployed; many people on housing benefit are on low wages and they will be affected by these changes too. There is a real issue to address about disincentives to work and tapers in the housing benefit system. I would appreciate those tapers being flatter than they have been or are now, but we all have to recognise that if the steepness of housing benefit tapers, or of any other benefit tapers, is reduced, the cost is increased. That is a problem and I look forward to seeing how the Secretary of State will solve it when he introduces his universal credit.
I have alluded to the impact that these changes will have in Sheffield. It is not the cap that affects cities such as Sheffield; it is the 30th percentile change that affects us. That is the fundamental problem and it will cost the average family on housing benefit in Yorkshire and Humber about £7 a week. The total cost of the change for the average family in Sheffield will be more than £30 a month, and it will lead to dispersal. There are considerable differences in the rates that apply in different parts of Sheffield, and not only the unemployed, but those on low wages who are renting in the private sector will be dispersed from richer parts of the city, in the constituency of Sheffield, Hallam, to other parts of the city. I did not use the word “cleanse” or “clear”, because “disperse” is an accurate and proper word to use when describing what will happen. The city will become more segregated and more divided. The situation will get worse, because local housing allowances are linked to the consumer prices index but rents rise at a higher rate. Therefore, over time, people will be dispersed from progressively more parts of the city. That is what the impact will be on cities such as Sheffield—that is the reality.
At the same time, housing departments, such as Sheffield city council’s, will face pressure because unemployment will create more housing problems and more homelessness. The budgets of these departments will have been cut, yet they will have to deal with advising or re-housing people in desperate circumstances. What we have not had a clear answer to is whether people who have to move home because they cannot pay their rent as housing benefit no longer covers it will be considered intentionally homeless. That is a fundamental point, so can we have an answer on it please? Can we also have an answer on whether the Government really are going to change the homeless legislation as Lord Freud indicated in order to see their way out of this problem without local authorities having to have the responsibility of housing people? Those are fundamental issues.
Why is it necessary to punish the couple in their 50s who lose their jobs, whose family have left home and who are living in a three-bedroom council house? Why is their home at risk because they have lost their jobs and housing benefit will not cover their rent as they are deemed to be under-occupying? This is simply not fair. It is a vicious and nasty policy that is aimed at hard-working people who happen to be unemployed and who then need to be re-housed too. These benefit reductions are not part of any grand policy on welfare reform and they are certainly not part of any clear housing strategy. They are part of an unfair agenda driven by the Chancellor, who has simply cut the incomes of some of the poorest people in our communities.
Laura Sandys (South Thanet) (Con)
I thank the hon. Member for Sheffield South East (Mr Betts) for his speech, despite disagreeing with many of the things he said, not least the last one. This is an interesting debate because we are considering housing benefit change, but in many ways it has to be regarded as part of a much wider welfare reform programme. As such, we can ensure that some of the observations of Labour Members will be addressed by the universal credit benefits, the Work programme and many other ways in which the Government will make work reward and pay, by ensuring that we put the right value on, and give the right level of reward to, those who work.
It has taken a lot of political courage to address housing benefit. It has not been done early enough, but the coalition can now deal with what has become a ludicrous and highly inflationary system. Like my hon. Friend the Member for Hastings and Rye (Amber Rudd), I represent one of the poorest areas in the country—it has the second highest number of low-paid workers. These people earn less than £7 an hour and often hold down more than one job at a time; they work in the care sector, in our hospitals and in the low-paid retail sector. Before and during the election, my campaign with them focused on asking how we could show how greatly we valued them. I promised to do something about this issue and said that my Government would try to help those people who hold down one or two jobs, who put food on the table and who ensure that they pay their rent.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Does the hon. Lady acknowledge that the majority of housing benefit recipients are people in work, pensioners and disabled people, and that less than one in five of the recipients are unemployed?
Laura Sandys
First, it is 13% of people who work who receive housing benefits. It is good to see on the Front Bench the Minister who is responsible for disability, because in addition many provisions are made for people with disability. We need to protect those who are vulnerable, and they will be protected. It is crucial that we ensure that equity and justice are at the heart of the housing benefit structure.
Housing benefit is one of the key problems in Thanet. In an area of real deprivation, the rate of housing benefit has dramatically distorted the market, disadvantaging those on low wages while not delivering an improvement in the housing stock for those on housing benefit. I wish to highlight three blights that my constituency faces as a result of the level of housing benefit. As I said, it is unfair on the low paid, who do not claim housing benefit. The double whammy of inequity is compounded by the inflationary impact on the overall housing market.
Guto Bebb (Aberconwy) (Con)
I, too, represent a seaside constituency, so I know that my hon. Friend’s point is strong and fair. The average wage in my constituency is £21,800. People earning that will be paying about £4,500 in taxes, yet they often find themselves priced out of the local market by people who move into the area from other parts of the world.
Laura Sandys
My hon. Friend mentioned £21,000, but the average wage in the south-east is £17,000. The inflationary impact of housing benefit on those families has been huge.
My second point is that these rates have not seen an improvement in the housing stock. Some landlords are interested in the rental value rather than the capital appreciation because that gives them such a high return on their investment. Investing in the properties and in the fabric of them is therefore not a priority.
The third issue is the extreme concentration of housing benefit claimants in pockets in my constituency. That problem was brought up by my hon. Friends the Members for North East Hertfordshire (Mr Heald) and for Cardiff Central (Jenny Willott). We create micro-economies that attract a significant amount of housing benefit because property prices are so low and the return from housing benefit is proportionally high.
The current situation has fundamentally distorted housing in my area. The average wage in Thanet is £17,000 and housing benefits for the unemployed stand at more than £8,000 a year. Most working families cannot compete in that market.
Richard Graham
Does my hon. Friend agree that one of the bizarre uses of the word “fair” during the whole debate has been the assumption that it is somehow unfair to people who are not working for them not to have better housing than those who are working? The whole point of this reform is to enable a level playing field in which people can live in the houses that they can afford from their work.
Laura Sandys
Absolutely.
As I said, concentration is also an issue. Two wards in Thanet have 83% privately rented accommodation and 20% of all the benefits claimants in my district, but only make up 2% of the population of Thanet district. Some 30% of the activity of all our housing benefits department is taken up by those two wards. Why? The housing benefit has increased by more than 50% over the past 10 years. Some landlords are making a return on their investment of more than 12% through housing benefits whereas similar properties in Westminster would generate only 4 to 5%. These pockets are hugely attractive to landlords, particularly in coastal towns, and that can be very inflationary.
In certain areas across the country, these micro-economies have significantly lower house prices than areas within their broad market rental area. I urge the Government to consider the possibility of allowing local authorities to create sub-districts to ensure that they can exercise the localism that is at the heart of our agenda and the discretion to assess where low market values are creating a magnet for housing benefit claimants. However, that has to do with broader issues of welfare reform. I am sure that throughout the universal approach that the DWP is taking, we will be able to reverse the current situation.
Our system is broken. Those who want to work know that work does not pay. Those who work get less than those who claim and those who do not work often receive the most. I commend these measures and believe that many in my constituency and those areas that have lower income workers will welcome the reforms.
Phil Wilson (Sedgefield) (Lab)
I want to broaden the debate, because for me it is about not just housing benefit but housing in general. In particular, I want to talk about the problems that we have with private landlords. It seems to me that the Government are more than prepared to attack the tenants, whereas we need to look at the escapades and state of some of the private landlords we have to deal with—not just in the cities, but in ex-colliery villages in County Durham, such as those that I represent.
There seem to be three basic problems. We need to look at housing benefit and the LHA and to reform them, but we also need to look at the rented sector and at housing supply in general. There are three pillars to the problem, as I see it. If we do not control and manage the private landlord aspect, it will suck the community spirit out of some of our villages and communities up and down the country. I have had problems in places such as Chilton, Ferryhill and Trimdon Station, where the police have been involved. I have had to address large meetings and the problems have basically been to do with the behaviour of some private landlords and, indeed, the tenants too.
We should consider not only the reform of housing benefit but the depth of the problems in some of our communities. For example, we did a survey in some of the communities that I have just mentioned of just under 1,100 houses, 38% of which were in the hands of private landlords. More than half of those private landlords did not even live in the county and quite a few—a significant number—lived outside it. What kind of relationship with and understanding of the local community will they have if they do not even know where some of the properties they own are? That is something that the Government need to address.
The Labour Government started to address it with a selective licensing scheme sanctioned by the Secretary of State. I have two or three in my constituency and they are starting to happen around the country, too. Local authorities can implement these schemes and they go some way towards imposing rules and regulations on private landlords and on the behaviour of tenants. The only problem is that although we have the legislation, if the Government are interested in that aspect of housing they should give it some funding so that we can have stable communities where there are private landlords and a lot of people on housing benefit live.
Another thing that we wanted to introduce was a national register for private landlords. That was one of the things that I discussed with the then Secretary of State, my right hon. Friend the Member for Wentworth and Dearne (John Healey), before the election. However, the Government have said that they will not introduce it. I understand that they think that it is over-bureaucratic, but local residents who have to put up with some of the behaviour of the private landlords and their tenants do not believe that it is too bureaucratic. If there is a will, there is a way, and we will have to consider that in future.
I do not agree with those who think that if housing benefit and the LHA are reformed in the way that the Government propose, rents will automatically come down. The British Property Federation briefing that I have received states:
“Currently in areas across the country from Harrogate to Trafford to Brighton and most of the South West, for every LHA claimant searching for a two bedroom property to rent there are between five and ten individuals who are in work doing likewise. LHA”—
and housing benefit—
“claimants will be left behind as landlords naturally seek individuals who are looking for property to rent and are in work.”
That is what will happen. People on housing benefit and LHA will be priced out of some of their local communities because the first port of call for the private landlord is those people who have a secure income—people who are actually in work. As the federation has said, five to 10 people in work are chasing every let, compared with two or three people on housing benefit. That is one of the main reasons why rents will not automatically come down. A major survey by the Cambridge centre for housing and planning research has found:
“A majority of 500 landlords surveyed for the study believes the changes will increase arrears, and a large proportion of those who currently let to LHA claimants intends to reduce the number of such tenancies they offer.”
Those are some of the issues that we need to address. We should not focus on housing benefit and tenants and think that these people are just sitting watching the television all day long. Perhaps some of them are, but a lot of them are not. Some are pensioners, some are out of work because they have been forced out of work, and some are among the five people chasing every job vacancy. The Government must confront these issues. It is about not just sorting out the tenants, but sorting out the rest of the market, too.
Let me end on one point. I have with me a copy of a written answer from the Treasury. At the moment, about 100,000 tenants in the private sector are paying rents to private landlords—about 44,000 of them—who have not paid tax on that rental income. More than 50% of those landlords are receiving income from housing benefit claimants. The Government need to look into that. It is a case not just of tenants claiming benefit, but of many people in the private sector who rent out properties who are not playing the game. We need to look at both sides, not just one.
Paul Uppal (Wolverhampton South West) (Con)
I speak in this debate as somebody who has had experience in the commercial and residential property markets for more than 22 years.
I was heartened to hear the comments of my hon. Friend the Member for South Thanet (Laura Sandys). She highlighted the 12% return on some investments and the fact that that seems to attract a certain type of landlord. The hon. Member for Sedgefield (Phil Wilson) alluded to that as well. It is almost an open secret in the property business that that aspect needs reform. If truth be told, it seems to attract those who are not the best landlords.
The shadow Secretary of State, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), quoted Liz Peace, and the hon. Member for Sedgefield quoted the British Property Federation. Both quoted selectively. The context in which Liz Peace made that comment was much broader. She was making the point that many landlords do not receive housing benefit directly, so they prefer tenants who are working. Her comment was quoted selectively. As a member of the all-party group on urban renewal and regeneration, it is part of my remit to read such quotes comprehensively.
Phil Wilson
Those affected by the cuts will find it increasingly difficult to find a place to live. I quoted most of the paragraph. In the private sector there are good landlords and bad landlords. The problem is that many of them are amateur landlords who have one or two properties. That sector needs to be regulated, and a national register would be extremely helpful.
Paul Uppal
Brevity is always required of us, so I shall press on.
Throughout the debate, I have been saddened by one feature of it. All of us on both sides use partisan language. Let us be honest and acknowledge that some of us use politically partisan language, but the language used about the issue under discussion has been inflammatory and poorly judged. I refer specifically to the term “cleansing”. My family experienced partition in India in 1947. My father was eight years old when he saw people forcibly removed—Hindus, Sikhs and Muslims. My maternal grandfather had to protect his neighbours from a mob of Sikhs and Hindus who wanted to burn out his Muslim neighbours. It is particularly difficult for them to accept the sort of language that has been used in the debate.
As a new Member I say these words not through any pomposity or grand-standing, but because our words resonate widely outside the House. The advice that we received at the very beginning to use temperate language was impressed upon us by wiser heads than ours.
Mr Russell Brown
I am sure I recognise the background that the hon. Gentleman comes from. May I offer him a quote?
“A mark of any society is how it cares for the vulnerable. It is not possible for any society to guarantee equality of outcomes for all; it is however possible to achieve equality of opportunities.”
That is a quote from the convener of the Church and Society Council of the Church of Scotland. Can the hon. Gentleman explain to me and to the House how people being forced from their homes because of the rent levels and the actions of his coalition Government will produce equality for anyone?
Paul Uppal
I was going to respond to the hon. Member for Dumfries and Galloway (Mr Brown), but I am happy to give way to my hon. Friend the Member for Daventry (Chris Heaton-Harris).
Chris Heaton-Harris
I thank my hon. Friend. Perhaps I can add another quote from a Labour Front Bencher:
“This would lead to social cleansing on an unprecedented scale, with poorer people shipped out in large numbers”.
Does that bring anything whatever to the debate?
Paul Uppal
We could trade quotes, but the issue was eloquently covered earlier by my right hon. Friend the Secretary of State, who made a passionate and pertinent point about the inflammatory language that has been used.
Government estimates show that spending on housing benefit has risen from £14 billion 10 years ago to £21 billion at present. These figures self-evidently make the case for reforming the system and I, for one, believe that reform is long overdue. The central point of the proposed reforms is that people who receive benefits should have the same choices regarding housing as people who do not get benefits. To be balanced in these reforms, the Government have announced more support for the additional discretionary housing payment to help the most vulnerable cases, particularly where there are unusual difficulties.
In a nutshell, if we are prepared to pay, as we are, £20,000 in housing benefit, is it not reasonable to assume that we can meet the vast majority of housing requests? But with a massive deficit, tough choices have to be made. We need to push ahead with the changes to ensure that hard-working individuals and families will no longer have to subsidise people living in properties that they themselves could not afford.
Figures will undoubtedly be bandied across the Chamber today, and I have no desire to rerun arguments that have been put forward already, but it is always important to put things in perspective. The maximum rent following the cap will be £400 a week, which is equivalent to £20,000 a year. As the Secretary of State said, based on what people spend on average on housing, this would require an income of more than £80,000 a year. The current maximum local housing allowance rate is £104,000 a year, which would require an income of well over £250,000 a year to fund. Can that be right? Indeed, it could be argued that extreme LHA payments act as a barrier to mobility, trapping people in unemployment and benefit dependency. It is also grossly unfair to expect hard-working low-income taxpayers to fund these rates.
Recently a constituent of mine wrote to me about his experiences as a landlord. The tenant received housing benefit directly after the landlord had been advised that he could be paid directly only if the tenant was in arrears by two months. I say this to show that there are always two sides to the argument—the tenant’s perspective and the landlord’s perspective. I quote my constituent:
“Currently tenants are assessed for housing benefit and the amount paid is dependent on the tenant’s personal circumstances and size of house . . . However if the housing benefit awarded is over the amount of rent agreed on the assured shorthold tenancy, the tenant is allowed to keep the difference.”
If the tenant benefits under the existing assured shorthold tenancy agreement, the landlord would have to make up the difference in the rent agreed.
My constituent continued:
“If the tenant is not happy that the rent is being paid directly to the landlord then the tenant has the right to move to a new property and the whole process starts again.
My tenant advised the housing benefit department that she had left my property; they subsequently stopped paying the rent. In fact she stayed at the house for three weeks without paying a penny. When I advised the council that she was still residing at the property and provided them with evidence of this, they said they had to take her word for it”.
Although I welcome the broad measures in the housing benefit reforms initiated by the Government, I believe that significant savings could be achieved if the local housing allowance were paid direct to landlords instead of to tenants. That would remove a significant disincentive for landlords to provide accommodation to LHA claimants. Research by the British Property Federation has shown that as a consequence, 60% of the landlords surveyed do not offer tenancies to those receiving LHA, mainly for fear of rent arrears. At the very least, claimants ought to have the right to choose how their housing benefit is paid, and be able to choose that their payments should go directly to the landlord.
I reiterate that I wholly support the Government’s measures, not only because they mark a move away from dependency towards independence, but because under the Labour Government housing benefit was allowed to spiral out of control. However, it would be wise to revisit the issue of direct payment to landlords to prevent public money from being wasted, and to encourage landlords to continue to let property to those receiving housing benefit. All of us would agree that the welfare system should provide an effective safety net, but it should not pay workless families far more than most working families earn. As has been said, the 2010 Labour party manifesto stated:
“Our goal is to make responsibility the cornerstone of our welfare state.”
I wonder whether the shadow Secretary of State still stands by those words.
I appreciate the acknowledgement in today’s Opposition motion that
“housing benefit is in need of reform”,
but they mean “at a slower pace”, which in essence seems to apply to almost all the debates that we have. Government Members have decided to address the problems that face our country, and, although Opposition Members now talk of reform, under their stewardship housing benefit increased by more than 50% in one decade.
This debate is not just about reform; it is essentially about responsibility—and Government Members have taken on that responsibility for the good of the country and its financial future.
Frank Dobson (Holborn and St Pancras) (Lab)
I make no apologies for saying that as a Member of Parliament, before that as the leader of Camden council, before that as an individual councillor for Holborn ward, and before that as a human being, I suppose, campaigning locally, I have always been obsessed with trying to ensure that the beleaguered ordinary residents of the area be allowed to stay there. However, that does not mean that I believe that spending £20 billion on housing benefit is a sensible use of public funds. Not a penny of that £20 billion goes on building flats or homes, it is just used to subsidise rents that ordinary people cannot afford, and I remind Government Members from both parties that 100 years ago, Winston Churchill rightly said that rent is a preliminary tax on all economic activity. That was true 100 years ago, and it is true now.
In my constituency there is a gross shortage of housing for ordinary people at rents that they can afford.
Frank Dobson
No, I shall not give way. I do not have time.
When I say ordinary people, I mean nurses, street cleaners, bus drivers, shop assistants, people who clean the hospital, ambulance drivers, kitchen staff, waiters who serve Government Members, butchers, bakers, plumbers, electricians and builders. Those are the ordinary people who I want to be able to stay in my constituency, in decent housing and at rents that they can afford. That is not the case at the moment, and the Government now propose not just to cap housing benefit, but to slash the funding to build decent homes and flats that people can afford.
The Government are cutting housing investment. In Camden, certainly, private rents are very high, and in the south of my constituency they are very, very high. However, the ordinary people living there did not set those extortionate rents; grasping landlords did, and then they gave some of it to fund the Tory party’s election campaigns, election in, election out—[Interruption.] It is no good Conservative Members jeering; they know that the landlords help to fund their party.
Those profiteering landlords have set the rents, yet the Government claim that if they cap housing benefit the landlords will cut the rents. In my area, nine out of 10 private lettings are nothing to do with housing benefit, so if there is to be a reduction in housing benefit for one flat in 10, it is clearly not going to have an impact on the rest of the sector. There is unlikely to be very much impact at all.
Let us look at the cap. All hon. Members who live outside London rightly receive an allowance for a one-bedroom flat so that they can live in London. The going rate, according to the Independent Parliamentary Standards Authority, is £340 for a one-bedroom flat. According to this generous Government, the going rate for a three-bedroom flat if one is on housing benefit is also £340. Well, if it is the going rate for a one-bedroom flat, it cannot be the going rate for a three-bedroom flat, and that just shows how unfair the system is.
All the talk about the unemployed getting housing benefit is significantly misleading, because at least one third of the people on housing benefit in my constituency are in work. They struggle to make ends meet, they send their children to local schools, and they frequently rely on support, both financial and practical, from family and friends. Many were homeless, but then the Liberal Democrat-Tory coalition council in Camden urged them to rent in the private sector. They were told that that would be okay. It did not matter what the rents were, because housing benefit would cope with them—or, as the current Leader of the House of Commons said some years ago, housing benefit would “take the strain”. All those people were told that housing benefit would take the strain, but the Lib Dem-Tory coalition Government are now going to take away the money that would have helped them, and I believe that that is wrong.
Many people from my constituency will be pushed out to outer London where they do not want to be, and among neighbours who do not want them to be there, which does not seem a very good formula for establishing decent communities in outer London. It is also worth bearing in mind that some of those areas already have higher mortgage and landlord repossessions than inner London.
The situation will affect not just people in work, but those out of work. Three such cases were brought to my advice surgery last weekend, all by well-spoken middle-class people who had hit a bad patch. One had lost a well-paid job, another was suffering from a serious illness, and another was experiencing a family breakdown. They all faced being pushed out of their homes, because the housing benefit that helps out middle-class people going through a bad patch is to be taken away from them just to suit the Treasury. Money will be taken away from those in the greatest difficulty.
We have heard of the highland clearances. There are no highlands in my constituency, but what we face is the lowland clearances—a combination of grasping landlords and a malignant Government, as existed at the time of the highland clearances. We do not want those in London, and I hope that we never will have them.
Jackie Doyle-Price (Thurrock) (Con)
I am grateful for the opportunity to speak in this important debate. Many Government Members have said that at the heart of this debate about housing benefit is fairness—fairness for those on average incomes who face higher tax bills because of the size of our welfare budget. I remind the House that when £1 in every £3 spent by the Government is spent on welfare, the need for reform is acute and unavoidable. The need to control housing benefit is an important component of that.
The way in which housing benefit operates causes a major distortion in the way in which our housing market operates generally. As any A-level economics student will tell you, subsidies lead to higher prices, and the result is that as taxpayers we all subsidise the rents that even above-average earners would not be able to afford.
Neil Carmichael
In my constituency one of the biggest problems is that people cannot access houses. It is one of the biggest distortions of which we should be aware, and it is grossly unfair. My hon. Friend makes a good point, because we have to free up the situation so that people who really need a house have access to a house.
Jackie Doyle-Price
My hon. Friend makes a good point. It is easy for Opposition Members to say, “It’s all about those evil Tory reforms to housing benefit,” but the housing market is much more complicated than that. It involves a lack of supply and, under the failed regulatory system, the over-provision of credit by our banks. All of us together have a big job to do in tackling it, but I am glad that we have seen fit to grasp the nettle and do exactly that.
Jackie Doyle-Price
Let me address some of the specifics. We are talking about putting a cap of £250 a week on the proposed maximum for a one-bedroom flat. That would amount to £12,000 a year to be spent on rent. I am afraid that not many people who are working can afford to spend £12,000 on rent.
Sheila Gilmore (Edinburgh East) (Lab)
In the event that the problem is as the hon. Lady describes it, can she explain to my constituents why they are having their housing benefit reduced when the cap has no relevance whatsoever to people in Edinburgh because all the rents are well below it? Despite that, they will have their LHA reduced to the 30th percentile. Others, who are not necessarily in the private rented sector, will have non-dependants deductions from their housing benefit increased substantially, which is a serious problem for many low-income households. Why is that justifiable to solve the problem of high rents in London? Why not deal with London on its own?
Jackie Doyle-Price
It is justifiable because this country simply cannot afford the level of welfare benefits that we are paying out. It is all very well to say that this is all about London, but it is not; it is about the fact that people who are working hard are having to pay higher taxes to pay the bills that Labour left for us to sort out.
We have a system of housing support that is no longer fit for purpose. Housing benefit should act as a safety net to support people who need it—I think we would all agree with that—but it should not provide a subsidy for people to live beyond their means, by which I mean beyond the scope of what they could potentially earn. For those who are jobless, it is clear that this level of subsidy encourages benefits claimants to become trapped in dependency. If we are really going to reform benefits so that work is rewarded rather than penalised, we have to build in incentives that do not encourage people just to sit back and collect their benefits.
Mr Umunna
The hon. Lady talked about fairness, and she has mentioned the jobless. What does she think of the proposal to reduce housing benefit by 10% for JSA claimants who have been out of work for more than 12 months and have been doing absolutely everything they can to get work? I come across many people in that position in my constituency, and this measure is unduly punitive, in my view. What does she think?
Jackie Doyle-Price
The hon. Gentleman will be aware that the Government are increasing the discretionary allowances that can be used to tackle exactly that problem. My concern is for the people in part-time work who find that increasing their hours is punitive, because their housing benefits will be clawed back.
This measure is not an attack on the vulnerable, nor is it based on an assumption that all benefits claimants are workshy. It is my firm belief that most people do not want to be reliant on state benefits—that they want the pride and self-respect that come with providing for themselves and for their families. However, we have allowed a benefits system to emerge that sucks the self-reliance out of them by preventing work from paying. It is all too easy for self-respecting people to find themselves trapped in worklessness because the amount of support they get from the taxpayer exceeds what they could expect to earn. If we are going to get our economy back on track, that has to change.
Members in all parts of the House will have received many representations on this issue and its impact on vulnerable people. The National Housing Federation claims that those who rely on housing benefit to cover part of their housing costs will be forced to move away from higher-rent areas, and may as a result have to commute and have difficulty finding family care. Well, that is the day-to-day reality for many of my constituents. I consider it unfair that my constituents are having to pay higher taxes for people to live in places where they would like to live but cannot afford to.
Ms Louise Bagshawe (Corby) (Con)
My hon. Friend is talking plain common sense. Does she agree that there is a total lack of reality on the Labour Benches, because a YouGov poll in July on the Government’s changes to housing benefit found that 68% of the public supported them, including 57% of Labour voters?
Jackie Doyle-Price
I would say that Labour Members are in denial about how we are going to tackle the issues that will get the economy moving again. Many of my constituents say, when I go knocking on their doors, “Good for you—it’s about time people did this,” because they are heartily sick of having to keep putting their hands in their pockets.
Dr Whiteford
On the DWP’s own figures, nearly 27% of the people who currently receive housing benefit are pensioners. How are those people, who are mostly on a fixed income that has been squeezed hard during the financial crisis, supposed to be able to pick up the tab for welfare reform? That makes no sense, and it puts unbearable pressure on household incomes that are already very pressured.
Jackie Doyle-Price
I think that the hon. Lady needs to see that issue against our broader package of welfare reform. When we introduce the welfare credit reforms, that will be tackled. The Government have recognised that such fundamental reforms will generate difficult cases, and to that end they have increased the money available for discretionary payments. I wholeheartedly endorse that.
Let me reiterate what has been said about the impact that these changes will have on landlords. Removing subsidies means that landlords will change their behaviour. They are charging rents that they know the market will bear, and if we reduce the amount of support available they will have to stay in the market by reducing their rents, or get out of it. As the hon. Member for Sedgefield (Phil Wilson) and my hon. Friend the Member for Wolverhampton South West (Paul Uppal) said, those are exactly the kind of people we want to leave this marketplace.
I shall finish where I started, with the concept of fairness. Government Members want a fair deal for the taxpayer. We also want a welfare system that acts as a safety net and rewards work. Doing nothing, and allowing the current system to continue, would not be treating taxpayers or benefit claimants fairly.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I have to disappoint not only the hon. Member for Thurrock (Jackie Doyle-Price) but one or two others on the Government Benches who called for us to be passive and calm. To be perfectly frank, my constituents would be extremely disappointed, and rightly so, if I were anything other than angry as this debate proceeds. The plain and simple fact is that this debate is about cuts to the most vulnerable—and it is not new. We saw it in the ’80s, and in earlier days when the Conservatives had control. This time, we are telling them that enough is enough.
In my constituency, the response to people who talk about fairness is that this has nothing to do with being fair—that it is unbelievably unfair and unjust. There was an air of unreality in the speeches by Government Members, including, I am sorry to say, the Liberal Democrats. I hope to have time to deal with that in a moment or two. In my constituency, as against what we have been hearing, 7,965 households are in receipt of housing benefit, and probably more than 2,000 will lose £9 a week, with many losing more if they are in the private sector. What is beyond doubt is that the overwhelming majority will lose out: how can that be fair?
Neil Carmichael
There is one big unfairness, and that is the level of debt that you have left us to deal with. You are talking about cuts, but we are giving people opportunities as well, and that is what fundamentally underpins the changes to housing benefit. What do you say about that?
Mr Deputy Speaker (Mr Lindsay Hoyle)
We are not going to use the word “you” in future, are we, because I am not responsible?
Mr Clarke
I was about to deal with the hon. Gentleman’s point, and I will do so with the respect that it deserves—frankly, that is very briefly.
The hon. Member for Colchester (Bob Russell) rightly reminded us of the role of Lord Beveridge in dealing with these matters, followed, as he said, by Clement Attlee, who built the welfare state—and whose record on housing was outstanding—and who did so after the war, having dealt with one of the biggest deficits in history. So when it comes to deficits, do not blame it on my people—the people with whom I have grown up.
People have been complaining about the media. I am sick and tired of the media expression “workshy”. We have already been told by the TUC—I prefer its figures to the ones that we have heard from Conservative Members—that only one in eight people who make applications are unemployed. We are not talking about the workshy; we are talking about the work-starved.
Yasmin Qureshi (Bolton South East) (Lab)
Like you, I am sick and tired of the Tories blaming the need to make cuts on the ordinary working person, when we know that it was the bankers who caused the crisis. What do you think—
Mr Deputy Speaker
Order. Members are using the word “you”, but I am not responsible. I call Tom Clarke.
Mr Clarke
I repeat that we are dealing with people, including those with disabilities. They are going to be dragged along for tests, sometimes lasting 10 minutes, and then be told that their payments will be cut off. That happened in my constituency in the 1980s, when person after person told me about such experiences.
The Government tell us that there are hard choices, but there are no harder choices than those that have to be made by people living in high-rise flats who cannot afford electricity or gas given the increased energy charges that we are experiencing. They have to choose whether to eat or have heating, and whether to have any leisure activities at all or to stay at home. On top of that, something that is at the very heart of their income is to be attacked—housing subsidies, as they have been called. Nobody said anything about subsidies given to the bankers.
Ms Bagshawe
The right hon. Gentleman must be massively disappointed that an overwhelming 57% of Labour voters agree with the Government’s changes to housing benefit. How does he explain that to his supporters?
Mr Clarke
I am speaking for my constituents, and I have not found a single person in my constituency who supports what the coalition proposes. We will go into the voting Lobby at the end of the debate, and afterwards my constituents will look at how we voted. In particular, they will look at how the Liberal Democrats voted, because they know that the Liberals are propping up a Government in whom they simply do not believe, particularly in this field. Nor do my constituents. No wonder the Liberal Democrat Benches are practically empty, although I pay due respect to the two Liberal Members who have stayed.
We have not been without advice from other quarters. What Shelter has said is important, as is what Brendan Barber of the TUC has said. He has stated:
“Ministers want us to believe that housing benefit is going to what they would call work-shy scroungers, yet in reality only one claimant in eight is unemployed. The rest are mainly low-income working households, pensioners or the disabled.”
The homeless charity Crisis has said that the Government are “peddling myths” about housing benefit claimants. Its chief executive Leslie Morphy said:
“We are concerned to hear those who are reliant on housing benefit being described as making a ‘lifestyle choice’. Nearly half of those on LHA already face a shortfall between their benefit and their rent of an average of £23 per week, meaning tough choices between rent, food, heating or falling into a vicious spiral of debt.”
I could go on. My local associations, such as the citizens advice bureau and disability organisations, agree. We had an excellent meeting in one of the Committee Rooms of the House of Lords just a few weeks ago, with representatives of organisations of and for disabled people. Lord Rix made an outstanding speech, and the overwhelming view was that those people were representing those who are already disadvantaged and not fully recognised by society, and who are being asked to bear the brunt of what the coalition Government are imposing on them. How can that be fair?
How can it be fair to say that we have an economic problem, so we will ask the poor to pay for it? Are all the people who criticise the coalition—Shelter, landlords who have made it clear that they will not reduce their rents, the TUC, the Archbishop of Canterbury, the Church of Scotland and so on—wrong, and coalition Members right? I believe not.
The result of tonight’s Division will be extremely important. We have a choice about priorities and our commitment to people. It is a choice between what is decent, right and reasonable and what I believe is the arrogance of intellect and the exploitation of power.
Jenny Willott
On a point of order, Mr Deputy Speaker. I should just like to correct the record. Earlier in the debate, the hon. Member for Eltham (Clive Efford) quoted my website, suggesting that I had criticised the current Government for hitting the poorest hardest. I am sure it was a simple oversight, but in fact the quote that he referred to was from 2009 and referred to my criticisms of the previous Labour Administration.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I have to say that that is not quite a point of order, but you have certainly got the clarification on the record.
Mr Aidan Burley (Cannock Chase) (Con)
I congratulate the hon. Member for Cardiff Central (Jenny Willott) on her clarification. I am very glad that she has made it.
I heard so much that I disagreed with from the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) that I do not quite know where to start. I should probably take the opportunity to point out to Opposition Members, as I always do, that last year, of the £700 billion that the Government spent in total, only £40 billion went on propping up the banks, which is 6%. They can hardly go around blaming the bankers for the £170 billion deficit that they left us.
Mr Burley
No, I want to make some progress.
I wish to take head-on the accusation made by the right hon. Member for Coatbridge, Chryston and Bellshill that this is all about the cuts. Of course, a lot of the changes that we are making to housing benefit, and others matters that we are debating at the moment, are a result of having to make public spending reductions. It is broadly agreed by Members of all parties that we need to reduce public expenditure to pay off the deficit and start paying off the £1.4 trillion debt.
Mr Tom Clarke
Can the hon. Gentleman tell the House of one single television debate in which his leader referred to housing benefit cuts?
Mr Burley
I can tell the right hon. Gentleman that housing benefit expenditure ballooned from £11 billion in 1999 to £20 billion 10 years later, and is forecast to reach £25 billion by 2015. The Prime Minister would agree with me that the country simply can no longer afford that. We cannot go on like this, spending £25 billion a year on housing benefit.
I wish to leave for a moment the necessity argument and the fact that we have to make these changes. Even if we were in the boom years, they would be necessary purely on the grounds of fairness. They are all about fairness, but the problem with the word “fairness” in political debate is that beauty is in the eye of the beholder. There is no single agreed definition of what is fair. Everybody in the House defines it in their own way. For Opposition Members—I respect them for it—it is about redistribution of income. It is about taxing the rich more and throwing more money at the poor. For us, it might be about fairer taxes or rewarding hard work and playing by the rules. Fairness is about being able to keep more of what one earns.
What I wish to add to the debate is what we believe is fair when it comes to housing benefit. I will start with a few basic questions of principle. Is it fair that hard-working individuals and families in this country should subsidise people living in properties that they have no realistic chance of ever affording to live in? Is it fair that when the average salary in this country is £22,000 a year, some people, as we have heard, can claim more than £100,000 a year just for their rent? Is it fair that even under the proposed cap of £20,000 a year, a person would still need to earn about £80,000 just to have that disposable income for their rent? Is it fair that the cap is being set so high? If the average salary in this country is £22,000, the cap should actually be about £7,000 a year.
Sheila Gilmore
If the real aim is to reduce the housing benefit bill, will the hon. Gentleman explain why his Government propose to change the way in which houses, for both councils and housing associations, are built? The tenants will be paying for the cost of building houses and rents will rise to 80% of market rents, which will put up the housing benefit bill. If that is the hon. Gentleman’s key objective, how does that help us to reduce the housing benefit bill?
Mr Burley
The hon. Lady should have listened to what I said. Our point is that it is not just about reducing the housing benefit bill, but the issue of fairness. We need to go back to the first principles in this debate and decide what is a fair amount for the working majority to pay towards those who do not, cannot or will not work. What is fair? The average annual earnings in my constituency is £25,279 a year.
Michael Ellis (Northampton North) (Con)
On the subject of fairness, is it not right that Opposition Members persistently forget one of the first principles of fairness, which is the juxtaposition between low-paid hard-working families and those on housing benefit? Housing benefit claimants should not be better off than those who are hard-working and low paid. Is that not a principle of fairness?
Mr Burley
That is precisely my point. People in Cannock Chase who earn £25,279 a year would frankly love to have £20,000 to spend on housing from an equivalent annual salary of £80,000, because that is what it equates to. That is dreamland for them. They have never earned £80,000 a year, so why should they be paying out of their hard-earned taxes for some people to have the equivalent of a salary of a quarter of a million pounds so that they can live in parts of London that have some of the most expensive postcodes on Earth.
Sheila Gilmore
If the problem is about households with very high rents, why not tackle that problem? Perhaps we could build more affordable houses in London. Why not solve the problem in a phased way? Housing benefit changes will be made all over the country and 30% of housing benefit recipients in my city are at work. Why are they being punished because there is a problem? Why not just solve the problem? The hon. Gentleman has spoken very eloquently on it.
Mr Burley
I agree with the hon. Lady on the need for a regional cap. Funnily enough, some of the work that the Independent Parliamentary Standards Authority has done on regional caps for MPs should be considered. In my constituency, the IPSA cap to claim is £700 a month. That is what IPSA thinks is a reasonable rent for an MP and his family to claim to live in Cannock Chase. Yet under the housing benefit rules, a person can claim £1,600 a month, which is more than double what IPSA thinks is fair for an MP. How is that fair?
The charity Shelter, which has been guilty of some terrible scaremongering, has claimed that up to 80,000 people will be made homeless by the plans. It falls to it to redefine its ludicrous definition of homelessness, which includes two teenage children living in the same bedroom. That is hardly the definition of homelessness that most people in this country would understand. For most, homelessness is about someone not having a roof over their head. Even according to Shelter’s own briefing, the average loss in my constituency will be £30 a month—£7.50 a week. The total number of claimants in Cannock Chase is 10,278. Therefore, one eighth of my constituency—it is a very poor working-class constituency that used to have 52 coal mines—will have to adjust their weekly outgoings by less than a tenner. Is that really a reason to speak of weeping children, social cleansing, Highland clearances, or, worst of all, as Polly Toynbee said, a “final solution” for the poor? She somehow compared capping housing benefit to £20,000 a year to the extermination of 6 million Jews. The left has engaged in disgusting language and it should be thoroughly ashamed.
If anything, these reforms do not go far enough for me. Let me finish by saying that as a country we must start to live within our means. We need to even up the benefit that a person gets from working with the benefit that a person gets from the Government. Yes, the changes are about saving money, but they are also about fairness. It is simply not fair that people on low incomes in my constituency, in which the average income is 25 grand a year, should pay their taxes to subsidise those who want to live in some of the richest postcodes in this country, where a person would need a salary of £250,000 to afford them. That is not fair and neither is the Opposition’s motion.
Roberta Blackman-Woods (City of Durham) (Lab)
Let me begin by commenting on how the coalition parties seek to frame this debate, which was exemplified in the speech by the hon. Member for Cannock Chase (Mr Burley). They are trying to suggest that housing benefit claimants are workless, wasteful and feckless. They are using the most extreme examples of housing benefit claims to try to suggest to the public at large that that is the norm. They are trying to dress up cuts to benefits for some of the most disadvantaged people in this country as fair. If the hon. Member for Hastings and Rye (Amber Rudd) were still in the Chamber, I would say to her that the only sensationalising of this issue that is going on is in the right-wing press. The press is trying to lead the whole country to believe that everybody on housing benefit is getting £26,000 a year. That is absolutely scandalous and outrageous. I cannot believe that the Secretary of State, who has a social policy background, is presiding over such changes. Shelter suggests that the change to the JSA will mean that many claimant households will be shifted from around or below the 60% median income, which is the poverty line, into severe poverty. That will force an additional 84,000 households to live on less than £100 a week. Those are the sums that will apply to most people on housing benefit, which includes 54,000 children. We need to have a more balanced debate on the issue and to have some of the real facts talked about in this Chamber.
The hon. Member for Colchester (Bob Russell) made an interesting contribution. I accept that when we were in government, we did not build enough social houses. In my constituency, the Liberal Democrat council never implemented a housing policy that ensured that all developments contained 30% social housing. Such a measure was not implemented year on year, which is why we have such a shortfall in social housing. Tory and Liberal Democrat councils all over the country stopped, through the planning process, delivering houses. I am talking about not just social houses, but houses right across the whole spectrum. That is why we have a real problem with supply, and those councils should take responsibility for the situation.
Let me go on to explode some of the myths that have been put around about housing benefit claimants. Let us take the first myth that all claimants are workshy. Only one in eight of all housing benefit claimants is unemployed. Taking just those in receipt of local housing allowances across the country, 26% are in employment and only 19% claim jobseeker’s allowance. The rest include pensioners, carers, disabled people and others unable to work. In the north-east, 18% of people in receipt of local housing allowance are in employment, and that includes a number of people in my constituency.
A lot of people in receipt of housing benefit have very complex needs. I have an example from my local housing authority. A 21-year-old woman secured a tenancy through working with a family intervention worker, who helped her to move on from an overcrowded and difficult family situation. She has multiple social issues, so subsequently, in addition to her weekly rent, she had a tenancy sustainment officer working with her. Also due to her circumstances, she had no furniture and had to access a furnished tenancy. With the changes to long-term jobseeker’s allowance after 12 months, she will lose 10% of her housing benefit entitlement. With the additional services, that means £10.75 a week. Her JSA is only £51.85, which means that her income will drop by 20%, leaving her with just £21 to buy food and clothes, to pay for transport, and to get to job interviews and so on. That is the sort of change we are talking about, and that is the type of person who will affected.
I want to address issues applying specifically to my constituency. The risk analysis by the Department for Work and Pensions states that 99% of LHA claimants will, on average, lose £12 a week. With regional variations in the economy, some areas will bear disproportionate impacts, and Durham has been identified as one of those areas. It will take a bigger hit than many other authorities, which is made much worse by the fact that constituencies such as mine have artificially inflated private sector rents because of students. With the reduction in the amount a person can claim from the median to the 30th percentile, most people will be priced out of private renting in Durham. There are always a lot of students willing to come in and take their place, so this will not lead to a reduction in rent levels. Poorer families will be pushed out of areas such as my city centre and will have to move to outer areas, where they will find it much more difficult to access work opportunities. I ask the Minister therefore to think again about the proposals, and certainly to stop trying to suggest that this is part of the fairness agenda. It can be described only as an unfairness agenda.
Mark Pawsey (Rugby) (Con)
Any organisation facing an item of expenditure that has increased by 80% over 10 years would consider it a matter for attention, so it is entirely appropriate that the Government have been looking at housing benefit, given that expenditure there has increased from £11 billion in 1999 to £20 billion in 2009, and it is predicted that, without the reforms the Government are bringing forward, that figure would rise to £25 billion in 2014. As the Minister reminded us earlier, that is £1,500 per working family. Labour did nothing about the situation during 13 years in government, despite the anxieties of the right hon. Member for Holborn and St Pancras (Frank Dobson), although it was recognised by Labour in its 2010 Budget and is accepted in this motion. The question, therefore, is not whether we should act, but how we should act.
The situation today arose from the freeing up of the private rented sector by the Conservative Government in the 1980s. People were freed from the state as the only provider of affordable housing, and new, assured short-hold tenancies massively increased the private rented stock—a stock of property that was barely in existence up until that point. That measure gave greater choice to tenants and increased mobility, but it became clear that if people’s circumstances changed, or they were unable to remain in their homes, a new form of support would be needed. However, that support has got out of control. In addition, the system has introduced unforeseen consequences, because the payment of housing benefit has caused rents to rise higher than they would otherwise have done. There are 3.3 million rented properties in the UK, and 1.2 million tenants receive this benefit. That is more than one third of the total, and has a massive effect in the market for rented properties.
Sheila Gilmore
Is the hon. Gentleman not aware that according to two recent research reports—the Rugg report in England, and another conducted in Scotland for the Scottish Government—the proportion of those in the private rented sector on housing benefit was less than 20%. In Scotland, it was 17%. That report was published last year—not a long time ago. Of that 17%, only 8% were on full housing benefit, 6% had half paid, and 3% had less than half paid. Those are the actual figures from research. It is important that we have this published research, and that Government Members are aware of it.
Mark Pawsey
I am referring to the UK as a whole, and I will go on to show how the current system has driven rents up. When councils make their rates available, landlords use them as a benchmark for the rents they charge, knowing that a proportion of tenants will be able to pay and will not contest the level. The recipients of housing benefit are happy to accept whatever a landlord asks for, because they know that the state will pay. That contrasts with the position of private tenants, paying rent out of their earned income, who will be keen to negotiate the best rent they can. These higher rents might be good for landlords, but that does nothing to help people who are not in work to find work. In fact, the reverse can apply, because it can discourage claimants from taking low-paid employment or from working longer hours, because if they do so, their benefit entitlement might be lost, and the mobility introduced by the sector might be reduced.
It is worthwhile remembering—sometimes the Labour party seems to forget—that the benefits paid to recipients come out of the taxes paid by hard-working families. A number of my hon. Friends have drawn attention to that. Often, they are the kind of people who look with envy at the kind of housing enjoyed by some recipients of housing benefit. The new system will make things fairer.
We have heard a great deal today about the effect on people living in London, and some Government Members could be excused for thinking that this is a London-only issue. In my constituency, however, a terraced house costs £550 per month to rent, so some of the sums spoken about, such as the family cap of £26,000—more than many people in my constituency earn in a year—are out of this world to the average resident in my constituency. They fail to understand why such sums should be made available.
Concern has also been expressed about the effect of the new rules on availability of properties for people in receipt of housing benefits. I believe that landlords will have to become more realistic in the rents they accept. They will have to accept a lower return than they enjoy now. My hon. Friend the Member for South Thanet (Laura Sandys) spoke about landlords enjoying a return of 12%. There is no reason residential landlords should receive a disproportionately higher rate of return at the expense of the state. In order to improve returns, those who are committed to this sector for the long term and who continue to acquire properties in the future will not be willing to pay capital prices at the level they have done previously. That will exert downward pressure on the price of housing, making housing more generally more affordable, and, as a side effect, benefiting many people struggling to make a start on the housing ladder.
Increasing the supply of housing more broadly will be another important factor as the coalition deals with the Labour party’s failure to build enough homes. Last year, fewer homes were completed than in any time for a generation, and today’s housing reforms need not be seen in isolation when it comes to providing support for those in need of housing.
Andrew Bridgen (North West Leicestershire) (Con)
My hon. Friend should be aware that last year saw the lowest number of houses built since 1924.
Mark Pawsey
I thank my hon. Friend for that intervention. I spoke about a generation, but it is clearly two or three generations. Either way, we need to deliver more houses, as I think has been recognised by the Labour party, and the changes that the Government are introducing in the localism Bill will enable more houses to be built. It is that additional supply that will bring down prices for both rental and sale, giving occupiers a better deal. Progressive authorities, such as my local authority in Rugby, recognise the benefits of housing growth both for their local economies, by introducing new consumers into the area, and for the community as a whole, through the new homes bonus, which will enable the local authority to retain more council tax to develop new infrastructure.
I will draw my remarks to a conclusion because I know that other Members wish to speak. In my view, the housing benefit reform that the coalition is introducing is a necessary step in controlling the cost of the system of housing support to taxpayers, a saving that will yield £1.6 billion a year. In addition to that saving, the system being introduced will bring long-term benefits in the operation of the housing market.
Alex Cunningham (Stockton North) (Lab)
As a new member of the Select Committee on Work and Pensions, I have a keen interest in this topic. The Committee is undertaking an inquiry into the impact of the changes to housing benefit. We had an insightful evidence session the other day with the Minister for Welfare Reform. Conclusions will follow soon.
It is worth repeating that the statistics show that 4.7 million people receive housing benefit in the UK, two million of whom are pensioners, 500,000 are on jobseeker’s allowance and 700,000 work in low-paid jobs. The housing benefit total is clearly a huge sum, and I, too, am in favour of reforming housing benefit if the changes are fair and well thought through. We all agree that the deficit must be cut somehow, even if we do not agree about the pace at which the cuts should happen. However, the coalition is seeking to push through the changes to housing benefit on the basis of quick fixes and cheap headlines. I reject the approach of targeting and punishing people—that is what it is: punishing people—who cannot find work. Someone who is trying their best to get a job should not have 10% of the money that they need to pay their rent taken from them, thereby only adding to their miserable situation, imposing even greater stress, both financial and emotional, and doing nothing to improve their job prospects. Indeed, quite the contrary: doing so reduces their meagre resources still further, cutting the funds available to them to apply for jobs and attend interviews.
Dr Whiteford
Does the hon. Gentleman agree that those cuts will affect local authorities, which will have a statutory duty to pick up the pieces when people are evicted from their homes or forced on to the streets?
Alex Cunningham
I do agree. Indeed, my local authority has told me of its anguish in wondering how it will cope with the problem at a time when it is also facing 25% cuts in its budgets.
The cut to housing benefit is not the only disincentive to work. Those 700,000 people claiming housing benefit who are in low-paid work will incur greater travel costs to get to work if they are forced to move further from their places of employment. Indeed, they might not even be able to afford to do so, thereby losing their jobs. For those who are already working for the minimum wage or close to it, the change could make the difference between balancing the books each week and being unable to pay the bills and put food on the table. Certain sections of the media would have us believe that the vast majority of people who have been unemployed for 12 months or more are lazy layabouts who do not want to work—not so: in reality, very few people have that attitude. Most people who are unemployed want to work and provide for their families. The Government’s crude measure, however, will target all those people, regardless of their attitude.
Despite reductions in the number of people unemployed in recent years, in the Stockton borough there are still nine people unemployed for every job available. With 500,000 public sector and 500,000 private sector jobs set to go as a result of the coalition’s cuts, things will only get worse on Teesside. People should not be punished because of a lack of jobs. A few weeks ago, Connaught, a major building company, went into administration, and it was followed by another this week, Rok. Both were big employers in my area, and I doubt whether either will provide the private sector jobs that the Government seem to think will be magicked out of thin air. If people had those jobs, they would not have to access housing benefit.
As a result of the changes, people who claim housing benefit will lose £9 a week on average, or £468 a year, which is a lot of money to a lot of people. It is a big drop in income for people struggling to make ends meet. Much of the focus has been on the impact of the changes on London and the south-east, and understandably so, given the high cost of housing in those areas. However, Shelter estimates that some 45,000 people in the north-east will also be affected by cuts to housing benefit. In Stockton-on-Tees, the local authority has told me that from April 2011, 30 families will lose out by £36 a week on average, thanks to the removal of the five-bedroom local housing allowance rate. From April 2012, 400 claimants will be hit by the extension of the shared room rate, which in future will apply to people up to the age of 35. Another 1,800 households will also lose out in hard-cash terms. Clearly the impact of the changes will be felt by people across the country, and not just in London and the south-east.
We must also look at the associated costs of the changes for local authorities. The wider impact of the changes on families and communities will be significant, particularly in areas expected to see an influx of people who have been forced to move out of areas in which they can no longer afford to live. For example, some schools may see an influx of pupils, as families are forced to move to areas where accommodation is cheaper. I worry that uprooting families in that way will cause chaos and might end up costing more than it saves.
Others Members have talked about the shortage of affordable homes. A key reason for the increase in the housing benefit bill in recent years is the lack of affordable housing. I am passionate about the need to build more homes and ensure that young people in particular can get on the property ladder. According to the Council of Mortgage Lenders, more than eight out of 10 first-time buyers get on the housing ladder only because they receive cash from the bank of mum and dad. First-time buyers today typically require a deposit of 21%, compared with 10% three years ago. The problem will surely only get worse for those young people due to start university in 2012, who will graduate with huge debts, of £30,000-plus, making it even more difficult for them to save for a deposit for a house.
Thirty-five years ago, 85% of the housing budget went on bricks and mortar, building new homes. Today, more than 85% of the housing budget goes on helping people with their housing costs, because the lack of affordable housing has driven up rents and house prices so much. Under the previous Labour Government, many new homes were built, including 500,000 more affordable homes, but that was not enough. In addition, the right to buy gave millions the chance to own their own homes, but it meant that the nation’s social housing stock dwindled. Surely the long-term solution to the problem is to invest in our housing stock, to ensure that rents and house prices are sustainable, and that ordinary, hard-working people can afford housing without assistance from the state.
Since the coalition came to power, I am told that local councils have ditched plans for new homes at a rate of 1,300 every day. That is not the direction that we as a nation should be travelling in. I will be interested to hear just what the Government plan to do to reverse that decline and help us build the affordable homes that will help negate the need for such vast sums of public money in the benefits system.
Nick de Bois (Enfield North) (Con)
As an outer-London MP with the 13th highest proportion of LHA claimants, I very much welcome the opportunity to contribute to this debate, in preparation for which I met representatives from Shelter and other interested parties. I had looked forward to this debate, but I must say that as the afternoon has grown longer and I have grown a little wearier, I have been disappointed that, apart from some notable contributions, we seem to have heard a lot of cant, hyperbole and soundbites from many Opposition Members, which has done little to improve the quality of the debate.
I have sat here for so long that I started looking for some fresh ideas, and at one point the hon. Member for Sheffield South East (Mr Betts) said that there was no strategy. Well, strategy there is, and strategy is the point that has been missed by Opposition Members, because it is a mistake to look at housing reform in isolation. That is a mistake that we have seen all afternoon. To do so is to miss the point of what the Government are trying to do. This Government’s strategy is to try to lift people out of poverty, taking them from dependency to independence—something that the Opposition have neither embraced nor understood, but even at this late hour I hope that they might just reflect on it. They are missing the point of what the Government are doing, but by understanding my constituency they will see what we can do for our constituents.
Enfield North has 7% unemployment, higher than average youth unemployment, and pockets of poverty, mainly in the eastern area. Those are issues that I want to conquer, and that requires reform. Doing nothing is not an option, but constructive suggestions have been notably lacking from the Opposition. Of course the decisions are difficult—[Interruption.] I welcomed the conversion of the hon. Member for Dudley North (Ian Austin) to the cap for London, which was seriously missing from everything that the Opposition had said previously. Of course the changes are difficult, but that does not mean that they are wrong. They will drive out poverty by the most reliable means of helping people and contributing to getting them back into paid employment.
The Secretary of State is sensitive to many of the demands. He was quick to point out the discretionary funds that are available and to which due acknowledgment has not been given today. Is it right to have a system—
Nick de Bois
I will not give way until I have made some progress. I am sure the hon. Lady will understand that I have been here for many hours, and I am not sure whether there is anything new coming from the Opposition Benches.
Is it right to sustain a scheme that works against employment? No. What do I say to the employer who came to my surgery only last week and told me that people are queuing up for jobs, but they want to work for only a limited number of hours for fear of losing their house? How absurd is that? Whatever the Labour party’s good intentions when it was in government, its reforms produced a grotesque situation. What do I say to the people who come to my office and want to work, but are caught in the poverty trap—[Interruption.] I am sorry that hon. Members do not want to listen, but week after week in my constituency I see the evidence of a failed policy on my doorstep, and it is absolutely right to represent my constituents’ interests not only where there has been failure, but where there is an opportunity for success. That is what this Government are trying to do, and rightly so.
What will the changes mean? We are talking about the LHA, not social housing. Rents are high. There has been a 25% increase over seven years in the LHA sector compared with 15% in the private sector. It was interesting when an Opposition Member—forgive me, I cannot remember his constituency—said that the 40% share of the LHA market that the Government are driving is not influencing rents. It is utter nonsense to think that such a massive contribution can have no impact on the level of rents. Opposition Members may deceive themselves if they wish, but I assure them that in the real world that is definitely the case.
Nick de Bois
I will not give way at the moment. I want to finish my speech, but if there is time I will happily take a further intervention later.
A four-bedroom house will allow almost £20,000 of LHA, which is equivalent to a substantial amount of gross income. We talk about fairness, but it must work both ways. Hon. Members should come with me down the Hertford road in my constituency to meet those who are working hard to pay their rent and trying to look after their family on a low income. They should try to understand the frustration of living next door to people who may be living in a bigger house, subsidised by the state. We must bear that in mind when making judgments. We are all in this together, and we must reform and change.
The Labour Government believed that the answer to defeating poverty was to use targets and money—some £20 billion of our money in housing benefit. They rationalised that that was how to fix the problem, but it failed. It did not help; it hindered. Instead of releasing those in poverty and suffering inequality, it imprisoned many in a spiral of unwelcome state dependency. The time has come to change. Our proposals are part of a holistic, joined-up programme.
Caroline Flint
My understanding is that nearly 7,000 people will lose out as a result of the cuts in Enfield. What does the hon. Gentleman have to say to them?
Nick de Bois
The hon. Lady should change the end of the telescope she is looking down. She should look at what she can do to encourage employment and encourage people back to work, and start to take people out of real poverty. That is the contribution that she could make, and I hope that I can welcome her to such a conversion later this evening.
Our proposals are part of a holistic, joined-up programme to reform the Labour party’s policy of surrender to dependency to a future of independence free from poverty. I understand that hon. Members do not want to hear that, but they have heard and perhaps they will learn.
Mr Chuka Umunna (Streatham) (Lab)
Follow that indeed.
I want to pick up on some comments made by the hon. Member for Wolverhampton South West (Paul Uppal) and my hon. Friend the Member for City of Durham (Roberta Blackman-Woods). They referred to the tenor of the national debate on this issue, which I have found deeply worrying, and how our newspapers in particular show unemployed people being divided from employed people, benefit recipients being divided from those who are not claiming benefits.
We saw that division of rich and poor at the weekend with the headlines in some newspapers reflecting announcements from the Department for Work and Pensions. The Mail on Sunday said “New IDS blitz on the workshy”; the News of the World said “Work gangs for shirkers”; and The Sunday Telegraph said “Workshy will have to take unpaid jobs”.
Mr Umunna
I want to make some progress, but I may give way later.
Today, we read that the Department has released figures showing that every family will have to pay more than £1,500 a year in taxes to fund the housing benefit system. As ever, it seems that a particular section of society has become a target. Has the Treasury released figures to show how much each family in this country loses as a result of tax evasion and avoidance by wealthy individuals and companies? It is extremely important that we do not allow the tactic of divide and rule to succeed.
This is particularly pertinent to my community. The constituency that I represent is diverse not only ethnically but in regard to the socio-economic demographic of the people who live there. I spoke to one of my constituents about these issues last weekend. He and his wife live in one of the more leafy parts of Clapham common, an area known as Abbeville village, and he works for a private equity company. He is undoubtedly in the top 1% of earners. I asked him what he thought about the Government’s changes to the housing benefits regime. Given that they will not have a direct impact on him, I was surprised to find that he had strong views about them, and that he was horrified at their likely impact on his community. One of the reasons that he likes living in my constituency is the diverse nature of the streets and the different parts of the area. He said that he did not want to live in a street where all the people were like him. He liked the fact that there were different people living there.
I mention this because it is important to understand that these changes will be an issue not only for people claiming housing benefit but for the community as a whole. Given the impact that the changes will have on my constituents, I do not feel that I am whipping up hysteria or unduly disturbing my community. I am simply looking at the facts. There are 5,470 households in Lambeth that will face huge cuts in housing benefit next year. For example, 1,520 households in two-bed properties in Lambeth will see the contribution to their rent reduced by an average of £25 a week. That is £1,300 a year, and those people simply cannot afford it. The changes will undoubtedly cause an increase in poverty in my constituency. Shelter is predicting that they will affect many of the claimants who live just above the poverty line, and they will undoubtedly lead to deep anxiety and stress among people who are already struggling to get by.
Bob Russell
Does the hon. Gentleman agree that an unintended consequence of the measures will be that, if people have to spend more of their income on rent, they will have less to spend in local shops and on local services?
Mr Umunna
Absolutely; I would not disagree with the hon. Gentleman.
I have outlined some of the effects on my community that we are able to discern, but there will be others that it is difficult to quantify at the moment. We are going to be faced with people moving from inner London to our part of Lambeth, seeking private rented accommodation.
Pete Wishart (Perth and North Perthshire) (SNP)
We know that this is what the Tories do: they attack the poor and the vulnerable. But what about Labour? I could not make out from what the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) said whether Labour was for or against the cap. Does the hon. Gentleman know?
Mr Umunna
If the hon. Gentleman reads the motion, he will see no denial of the need for some degree of housing benefit reform. No doubt my right hon. Friend the Member for Don Valley (Caroline Flint) will give further details in her speech, in addition to the many details that my right hon. Friend the Member for Paisley and Renfrewshire South gave the House earlier.
I was talking about the effects of the measures that we are not yet able to discern. We have 22,000 people on social housing waiting lists in Lambeth, but we have no idea of the number who will seek social private rented housing in our area as a result of the changes. I mention that figure to demonstrate that we are already under huge pressure.
There has been a lot of talk about introducing these measures to reduce the benefits bill, but we are told that rents will inevitably fall as well. London Councils, a cross-party organisation, has carried out a survey of landlords in London. I make no apology for talking about London, by the way; it is my area, and it is where my constituency is based. The survey found that 60% of landlords letting properties to housing benefit tenants in London said that they would not reduce their rents, even by a small amount, to accommodate the changes, and Shelter has found that 43% of such landlords will simply scale back their operations in this sector.
I want to finish by mentioning a matter that I have already raised with the Chancellor of the Exchequer—the proposal to reduce by 10% the housing benefit of jobseeker’s allowance recipients who have been receiving JSA for more than 12 months. I challenged the Chancellor about this at a Treasury Committee hearing in July and asked him to provide me with evidence that that measure would produce increased work incentives, given that he said that that was why he was introducing it. Funnily enough, he quoted the Institute for Fiscal Studies back at me. It is funny how the coalition Government choose to ignore the IFS when it tells them things they do not want to hear, only to quote it back at me when they find it helpful.
The Chancellor quoted an IFS report that found that
“welfare benefits can have substantial effects on the work behaviour of unskilled and even for men with high school education”.
Be that as it may, I do not see how there can be an incentive for people to work when there are no jobs for them to go into. In the past few weeks, information from the Chartered Institute of Personnel and Development has shown that 1.6 million people are going to be out of work as a result of the measures being introduced by the Government. We already know that there are five people chasing every vacancy in the economy, and research shows that that figure is not going to fall.
Will the Minister tell us why the Government are seeking to punish people who are doing everything they can to find work? I have asked this question in the Chamber before, but I have not received a reply. There are many people in my constituency who have been on JSA for more than a year—the number generally hovers between 700 and 800—and who are struggling to find work. Why are the Government punishing them when they are already down on their luck? We must resist the divisions that the headlines are seeking to create in our communities. This is an issue for everyone, whether they are on housing benefit or not, and I plead with the Government to reconsider the measure on JSA recipients. As I have said, they are already down on their luck. Why kick them when they are down?
Andrew Bingham (High Peak) (Con)
I am a firm believer—I always have been—that people should be rewarded for hard work. I am also a firm believer that we need housing and other benefits, but that they should be there as safety nets. The willingness of the Labour Government to pay more than £100,000 a year to someone on benefits is not, to me, a safety net. It has to be said that £100,000 is an enormous amount of money, which is sufficient to fund a lifestyle beyond the budget of many hard-working families in my constituency of High Peak. [Interruption.] I am sorry, but that has to be wrong; it cannot be right.
Labour Members claim that this is fair. Do they think it fair that, under current arrangements, someone paying rent below the local housing allowance level will be able to receive the local housing allowance and keep the change? People can make a profit on housing benefit. Does that seem fair? Is that fair to someone working hard to pay their way? Labour Members look askance, but it is true.
Glenda Jackson
In my constituency, private landlords are increasingly reluctant to accept tenants who can pay only through housing benefit. For an increasing number of people, there is a shortfall between what the local rent office deems a property to be worth and what the landlord actually charges. Not one single claimant of housing benefit in my constituency—and they number thousands—has money to take home from the local housing allowance. In many instances, they have to make up the shortfall themselves.
Andrew Bingham
That may be the case in the hon. Lady’s constituency, but there are examples where people are keeping the money as change. I will pay slight tribute to Labour Members, as they were going to stop that in April next year. Fair do’s there. However, that needs to be compared with what the hon. Member for Manchester Central (Tony Lloyd) said, as he spoke about taking money away. I gather that £15 of weekly excess was taken away last year. How do they square that one?
The £20,000 to £21,000 cap on housing benefit is fair. Some people have claimed that that amount is too much, but I think it is about right. I also think that setting the local housing allowance at the 30th percentile point is fair. It means that people on housing benefit can afford three out of 10 rental properties.
From experience, however, I would like to sound a small note of caution about broad market rental areas. The determination and review of BMRAs must be done with great care. The Rent Service looked at the BMRA in my constituency. Glossop was covered as well, but because of the determination and conditions, there was a detrimental impact on some residents in my constituency. This issue was raised by my hon. Friends the Members for Cardiff Central (Jenny Willott) and for North East Hertfordshire (Mr Heald), and it is a slight concern of mine. One thing that came out of the Rent Service review was the Heffernan case, which went to the House of Lords—some Members may be aware of it, some not. It caused a long delay—hence my note of caution.
The increase in the discretionary housing allowance has not been much mentioned. It is increasing by £10 million next year, £40 million a year from 2012 to 2015, and £60 million a year from 2013-14. This is a huge amount. The DHA was used to deal with the difficulties of the BMRA in High Peak a couple of years ago.
The reform of housing benefit is long overdue. At present, we spend more on it than on the Army and Navy combined. It is right to offer people support when they need it, and it is right that the extra money is available through the discretionary housing allowance.
Andrew Bingham
I will not give way, as I have nearly finished and many others are waiting to speak. [Interruption.] I can talk as long as anyone wants, but I am conscious that some Members have been in their places a long time and are waiting to speak.
It is wrong that hard-working families in my constituency and others who are living within tight budgets—
Caroline Flint
The hon. Gentleman welcomes the announcement of a rise in the amount provided for the discretionary housing allowance. How would he feel if those payments were paid to the landlords of the very occupiers of homes that the coalition Government have demonised by letting them stay in houses that cost so much money? What does he feel about that?
Andrew Bingham
Excuse me, but I do not like the word “demonised” any more than I like “punished” or “cleansing”. I do not like the language used by Opposition Members.
Andrew Bridgen
Does my hon. Friend believe that the increase in the housing benefit budget from £14 billion to £20 billion in the past five years is a sign of the success or the failure of the last Government’s policies?
Andrew Bingham
I think that “abject failure” is probably a better phrase.
I end by saying that it is wrong for families who work hard to see families on benefit living in houses that are beyond their wildest dreams.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I was interested by what the hon. Member for High Peak (Andrew Bingham) said. I think that it had something to do with hard-working families and the impact of the present housing benefit system on people who wish to work hard. I was reminded of the first Thatcherite regime, when the hon. Gentleman’s party deemed a living wage to be 75p an hour. I also remember that during our term in government, his party voted against every single move to take people out of poverty, including the national minimum wage.
The most interesting thing to emerge from today’s debate is the fact that Government Members have swallowed hook, line and sinker the myths that were originally used in the proselytising of their Prime Minister, who stood on the Floor of the House and castigated housing benefit for paying people £1,000 and £2,000 a week. He attempted to present that as the median for people claiming the benefit, and I was so intrigued that I tabled a question on the issue. There are, in fact, no claimants receiving £2,000 a week, and there are precisely 90 families, in London exclusively, whose housing benefit pays them rent of £1,000 a week, because those are extremely large families.
The myth with which the Government have been successful in their proselytising is that most people on housing benefit live in four-bedroom properties. Nothing could be further from the truth. Most people on housing benefit live in shared accommodation or in one or two-bedroom properties. In my constituency, the amounts that those claimants will lose range from £21 a week for those in shared rooms to £246 a week for those who are fortunate enough to live in four-bedroom properties.
Fiona O'Donnell (East Lothian) (Lab)
The 10 families in my constituency who live in five-bedroom properties do so not because they have dressing rooms or extra en suites, but because of the nature of families nowadays. A mother and a father may bring in children from previous relationships. Government Members do not seem to be able to grasp that.
Glenda Jackson
That is a salient point, which can be replicated in my constituency. I know of a family with two children who are severely disabled and in wheelchairs, and two who are not so severely disabled. There are also a mother, a father and a grandmother, and they are all attempting to live in a four-bedroom property.
The other myth that has been propounded by Government Members today is that these changes are essentially fair. I distinctly remember the Prime Minister and the Deputy Prime Minister—who has proved himself to be the Maréchal Pétain of his generation—saying that the changes were not only fair, but made at a time when the Government were having to make extremely difficult choices to protect the most vulnerable members of our society. Throughout the afternoon, it has been clear that Government Members do not regard pensioners as vulnerable. Nor, apparently, do they regard them as being taxpayers. They do not regard people with disabilities as being vulnerable, and they do not regard people on low pay as actually working.
What I say about my constituency and my city of London is not scaremongering. We have been here before. As I said, some of us remember the Thatcherite regime, when people were forced out of their homes and some were sleeping on the streets because they could not afford to find anywhere to live. The bills for bed-and-breakfast accommodation were astronomical. I am sure that Government Members are smiling at that memory, because that, essentially, is what they wish to do.
Glenda Jackson
Let me finish the point. Government Members wish to get rid of social housing completely.
Anas Sarwar
I thank my hon. Friend for giving way, and I promise not to annoy her again. I just want to highlight the fact that Government Members are finding much of this funny. They like to portray this issue as being about workshy or unemployed people taking benefit from hard-working taxpayers across the country. Is it not true that only one in eight people who receive housing benefit are unemployed? Government Members should take this debate more seriously.
Glenda Jackson
My hon. Friend is wishing for the moon. Government Members are not interested in facts; they discount absolutely everything that emanates from this side of the House.
Glenda Jackson
No.
Government Members also discount the briefings that we have all received, from organisations such as Shelter, Crisis, the Chartered Institute of Housing, Citizens Advice and the National Housing Federation, about the real danger and damage that these ill-thought-out plans are going to inflict on some of the most vulnerable people in our society.
We have been here before. We have seen all this before. An earlier submission by Crisis pointed out that it will cost £60 a day for a room in a bed and breakfast. Let us look back to the earlier history of bed and breakfasts. The hon. Member for Colchester (Bob Russell) referred to the history of 1945; I was somewhat surprised that he did not take us back to the much more recent history of what happened to people in this country under the first Thatcherite regime. The hon. Gentleman was concerned about children then—
Glenda Jackson
No.
I was somewhat surprised that the hon. Member for Colchester is not concerned about children this time. As he knows, the greatest damage inflicted on children was when they were stuck in those abominable bed-and-breakfast set-ups. Not infrequently, families were turned out on to the street at 9 o’clock in the morning and not allowed to return until 5 o’clock in the evening.
This, apparently, is the coalition Government’s way of taking people out of poverty. I find it totally incongruous that they should believe that they will take people out of poverty by making them homeless. That, essentially, is what they are going to do.
Kwasi Kwarteng
I am much obliged to the hon. Lady for giving way. We have sat through her speech with varying degrees of incredulity. While we admire her histrionic performance, we are still at a loss as to what her position is on the cap. Does she think it is right that in her—[Interruption.] I am fully entitled to ask the hon. Lady a specific question about her view on the cap. There are people in her constituency who are receiving far more than £20,000 a year on housing benefit.
Glenda Jackson
If the hon. Gentleman had been here from the beginning of this debate, he would not have been as ill informed as he is ill mannered. There are not people in my constituency claiming housing benefit at that rate, as I have had occasion to say. The majority of housing benefit claimants live in one and two-bedroom properties. We have already said that we would certainly introduce a cap, but not by the method that his Government propose. There should be a regional element.
Glenda Jackson
From a sedentary position, the Minister is waving his hands in disbelief. This afternoon he was leaping to the Dispatch Box asking questions about what my party would have done if we had been in government. He knows, and I know, that if my party had been in government and his party had still been in opposition, and we had introduced the policies that he is supporting now, he would have fought them tooth and nail.
The Minister has absolutely no cover any more. As I have had occasion to say before in the House, his party has become the “30 pieces of silver” party, and nowhere is that more marked than in what it is proposing to do to some of the most vulnerable people in all our constituencies. I say to Government Members that the problem is not exclusively London’s; this will affect the whole country. When the second tranche of the Government’s approach to social housing comes in—the increase of rents to at least 80% and the removal of secure tenancies—the impact will run and run.
Michael Ellis
Are not hard-working people on low incomes also vulnerable, and do they not also need to be treated fairly by our society, as opposed to those on whom so many of the hon. Lady’s Opposition colleagues focus—people on housing benefit who are receiving more from the taxpayer than many of the working poor could dream of paying for themselves?
Glenda Jackson
I am intrigued to know how the hon. Gentleman thinks it will benefit low-paid hard-working families who are not claiming housing benefit if we make low-paid hard-working families who are on housing benefit both unemployed and homeless. They will then have to move from where they are currently living—and, I hasten to add, where they provide services that the hon. Gentleman and his hon. Friends would never dream of providing for themselves. We are all dependent on those services, and on the people who provide them. I know the hon. Gentleman and his colleagues do not like it, but when that happens in the centre of London we are going to see—
Bob Blackman (Harrow East) (Con)
Thank you, Mr Deputy Speaker, and I think I am right in also wishing you a happy birthday for tomorrow. I also wish to say that it is a privilege and an honour to follow the hon. Member for Hampstead and Kilburn (Glenda Jackson).
We cannot divorce housing benefit from the plethora of other benefits that have been allowed to build up over the last 13 years: jobseeker’s allowance, employment and support allowance, income support, and also council tax benefit, child tax credit and working tax credit. Contributory benefits and universal benefits will all play a part in resolving this country’s benefits problem.
These benefits are a bureaucratic nightmare. They are mainly paper based, and enormous amounts of evidence are required to justify their application. As a consequence, many individuals who claim benefits have to go to Jobcentre Plus, the pensions authority, the disability and carers service, their local authority and Her Majesty’s Revenue and Customs. If they are on jobseeker’s allowance they may have to swap between that and incapacity benefit, claiming the money from the same agency yet having to claim again. Clearly therefore, what we have inherited will be a nightmare to resolve. Housing benefits impinge on all those other benefits, and I have said before that housing benefit is a very bad benefit, because it is so complicated to administer.
Let us look at what has happened over the last 10 years. I will not repeat the figures for the increase in the total budget, but we should note that it costs £1 billion to administer that budget. For most local authorities in the country it is the biggest single item of expenditure going through their books. We are using it as a form of housing subsidy. That is right and justified, but the extent to which the costs have built up and been allowed to spiral is completely wrong. The one thing I agree with the Opposition about is the need to reform housing benefit, yet for 13 years they ran this country but did not reform it. Instead they made it worse. Now we have inherited that situation and we, as the new Government, must deal with it.
What must we do to reform it? First, we must look at the costs involved in housing benefits. As we have said, this is the first stage in simplifying the country’s benefit system, making it more effective, reasonable and transparent, and changing it into a system that encourages people to go to work. In my constituency people frequently say to me, “I can’t get a house for love nor money.” The advice given to them by the local authority is, “We can’t provide you with a council house, but what we can do is this: you go into private sector rental accommodation, and housing benefit will pay for it.” If people in that situation follow that advice but then have the temerity to get a job, they lose housing benefit pound for pound, which is, of course, an immediate disincentive to getting a job. What we have to do is make sure that any reform of the whole housing benefit regime transforms it so that work always pays.
Ms Buck
I am asking this for about the fourth time this evening. Does the hon. Gentleman concede that half of all local housing allowance claimants of working age in private rented accommodation are either in work or connected to the labour market through jobseeker’s allowance?
Bob Blackman
I will repeat the mantra that my hon. Friends have repeated, which is that 13% are in work and the rest are on JSA. The LHA has distorted the market even more, as my hon. Friends have said, by making it more beneficial in certain instances for people to be on housing benefit and pocket the difference. What nonsense! Rent levels have been distorted in many parts of the country.
The Opposition are claiming that the modest reforms being introduced will mean people being thrown out of their houses and suddenly being cleansed out of all proportion, but what will happen is exactly what is happening in the borough of which my constituency is a part. Its housing director has said that 3,040 families will be affected by the change, and the borough will seek to ensure that the rents fall and adjust to the levels of housing benefit that are applicable—although that still distorts the housing market. Some 3,000 properties out of more than 100,000 in the borough will be affected, so this involves a small percentage of people.
When I challenged the housing director to tell me what he would do about the families who might, sadly, lose their houses as a result of this change, the figure came down from 3,040 to 80. I have great sympathy for the 80 families who could be in that position, so I then challenged the housing director to tell me what he would do about it. My authority will do what every local authority in this country should do, which is challenge the landlords to reduce their rents so that those people are not made homeless.
Phil Wilson
How can the hon. Gentleman expect private landlords to reduce their rents when for every one person on LHA wanting a property, five to 10 people in work are looking for the same property? Who are private landlords going to go for? They are going to go for the person in work.
Bob Blackman
I thank the hon. Gentleman for his intervention, which leads on to the other key issue in this debate: the supply of housing in this country. That point is not really being answered by the Opposition. The Labour party had every opportunity to build houses over the past 13 years, but it failed to do so. At the same time, it failed to take account of the fact that this country’s population is increasing, so the need for housing increases all the time. We have a market for housing and housing benefit distorts it directly, which is why it is a bad benefit in desperate need of reform. One of the reforms that must take place is a change to the way in which housing benefit is withdrawn from people as they get work. At the moment that is a direct disincentive for people at a certain level to work, because they lose benefit pound for pound. Why should someone work if that is the position?
Fiona O'Donnell
Does the hon. Gentleman not realise that what this means for housing associations, on which we are going to rely to build homes, is that their cash flow will be interrupted, they will have debts and there will be an adverse impact on their ability to borrow to build those homes?
Bob Blackman
I thank the hon. Lady for her intervention. The housing associations throughout this country seek changes of tenure, changes of regime and an encouragement to develop the housing that this country desperately needs in every local authority area. I trust that that is what will happen. The coalition Government have set out their stall: we will build 150,000 new homes during the life of this Government. We agree that that is not enough, and we would like to see more. What we want to see is young people getting a foot on the housing ladder, moving out of rented accommodation and purchasing their own property. What has to change is that the applicable lending regimes of the banks, building societies and suchlike must enable people to get on the property ladder.
Rosie Cooper (West Lancashire) (Lab)
Will the hon. Gentleman comment on my local authority, West Lancashire borough council? It wanted to build a new civic centre, and in so doing said that it would build affordable houses and in the process knock down four good homes. While he is speaking about that—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I call Bob Blackman, who has four seconds left.
Nic Dakin (Scunthorpe) (Lab)
It is a pleasure to follow the hon. Member for Harrow East (Bob Blackman) and his “Just a Minute” remarks at the end—well done.
This is a Government in a hurry. We can all understand their sense of urgency and their desire to get on with the job. In many ways, that is creditable and commendable. However, the reality is that the plans for reforming housing benefit are ill thought out and ill considered. Only fools rush in—they rush in and make matters worse, and they gamble recklessly with people’s lives and livelihoods. In the Secretary of State’s speech at the beginning of the debate, it was unfortunate that he was unable to give any confidence to people who are worried and concerned about these issues. As my hon. Friend the Member for Manchester Central (Tony Lloyd) said, he did not allay the fears of constituents up and down the country.
As those of us who have sat through the whole debate have heard this afternoon, there has been cross-party consensus in favour of reforming housing benefit. That is clearly embedded in the motion. There is no use anyone’s shaking their head—it is there and it is on the Order Paper.
Kwasi Kwarteng
If there is the consensus that the hon. Gentleman talks about, does he have any idea why the previous Government did not address the problem in the 13 years that they were in government?
Nic Dakin
The previous Government made changes to housing benefit. As recently as a few months ago, the former Chancellor moved to change how rent entitlements were calculated so that big increases in house prices at the very top of the market no longer skewed spending on housing benefit. Things were in train, but they continue to need to be addressed. We could have a cross-party reform process that engages with all those who have expertise in this area, from Shelter to the National Landlords Association. Instead, there is a danger that the headlong rush into this basket of ill-thought-out proposals will threaten the fabric of our communities.
A key reason that the housing benefit bill has gone up is the lack of affordable housing in certain parts of the country, particularly London and the south-east, which has been exacerbated by the economic downturn, as people lost their jobs or reduced their working hours and needed the support available from housing benefit to prevent them from becoming homeless. The Rugg review of the private rented sector points out a possible way of addressing those issues. Those proposals, combined with real investment in more affordable housing, offer an alternative way forward. Unfortunately, the Government’s cuts to the housing budget and their squeeze on local authorities mean that it is unlikely that much new social housing will be built before 2015 other than that already commissioned by the outgoing Labour Government.
Comments by the Deputy Prime Minister and other Government Members show that they signally fail to understand how housing benefit helps people to stay in work. Only one in eight of all housing benefit claimants are unemployed, as my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) pointed out. If we take just those in receipt of LHA across the country, 26% are in employment and only 19% claim jobseeker’s allowance. The rest include pensioners, carers and disabled people who are unable to work. My hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) excellently exploded the various myths about housing benefit and housing benefit claimants.
The proposal to use the 30th percentile of local rents, rather than the median, to calculate LHA will have a wide-ranging and negative impact. More than 750,000 people will lose out as a result. They are people on low incomes who, the Government will say, can live on lower incomes. According to Shelter, Crisis, the Chartered Institute of Housing and Citizens Advice, the most brutal of all the housing benefit changes is the proposal to uprate LHA according to the consumer prices index, rather than local rents, as currently happens. If this change goes ahead, it will cause great distress.
Independent research by the university of Cambridge suggests that the cuts will push an additional 84,000 households below £100 per week per couple for all expenses after housing costs. Those households include 54,000 children. I recognise the concerns of the hon. Member for Colchester (Bob Russell) that the proposals may well end up increasing the number of children living in poverty. None of us in the House would want that to happen, I am sure.
The proposal in the universal credit idea to unify benefit tapers and make the system simpler have much merit, but the proposed changes to housing benefit in advance of the introduction of the universal credit will severely undermine the goal within it. Some will be forced to give up employment because they can no longer live within commutable distance. Some will be forced to move away from friends or family who provide child care or support.
The proposal to cut housing benefit by 10% for those on jobseeker’s allowance for more than 12 months seems dreadfully punitive. If the claimant has striven ceaselessly for 12 months to get a job but been unsuccessful, they are penalised for their misfortune. That is the world of Gradgrind and has no place in a modern civilised economy. Shelter, Crisis, the Chartered Institute of Housing, Citizens Advice and Mencap are just some of the range of organisations warning of the dire consequences that might occur if the proposals go ahead unamended. The Archbishop of Canterbury has expressed serious concerns that
“People who are struggling to find work and struggling to find a secure future are . . . driven further into a sort of downward spiral of uncertainty, even despair, when the pressure is on in this way.”
This Government are proud to say that they are listening to people’s concerns and will govern according to the new politics. The proposals represent a challenge to them to listen to those who know what they are talking about, and to those who make things happen on the ground and work with people day in, day out on such issues. The Government should step back from helter-skelter decision making and from a reckless gamble with people’s lives and livelihoods.
Tessa Munt (Wells) (LD)
I shall raise three quick structural points, which I hope the Minister will consider in his response and in his proposals going forward.
I come from rural Somerset, where house prices are high. There has been a great rise in house prices over the past 10 years, but people still have low incomes. The average income is £18,500 and many of the workers are part-time workers, with many jobs which they tack together, and seasonal workers.
I have three questions. First, once the existing housing is rented out, will the Government give housing associations the flexibility to build brand-new homes and let them out at the traditional social rents, or will all the new homes have to be charged at 80% of the market rent, which is high? The problem for tenants in my constituency is that they have very little capacity to save money towards their own housing, as such a large proportion of their income goes on housing costs.
The next two points are similar to those raised by the hon. Member for Hampstead and Kilburn (Glenda Jackson). Can the Minister clarify the situation for tenants who have mental health issues? There are two gentlemen in my constituency who use private rented accommodation. Because of their age—they are in their early 30s—they may be asked to move into shared accommodation. Will they be able to access that discretionary housing allowance? Those payments would ensure that they were able to remain in their existing housing, rather than having to move out for a year, two years or three years and into shared accommodation, such as a flat. I want to ensure that they are protected in some way against the disruption of a move, particularly when that might be extremely detrimental to their mental health.
My third point is about the alarming and increasing practice in one district council area of my constituency, where homes that have a dining room are classified as having an extra bedroom. Therefore, a three-bedroom house with a dining room becomes a four-bedroom house, a four-bedroom house becomes a five, a five-bedroom becomes a six, and so on. As a result, families, who are the only ones able to obtain such housing, end up with no living space. People normally retreat to their bedroom if that is the only space that they have in the house, but such a loss of family space is extremely detrimental. That of course has a subsequent impact on the private rented market, because the example that the local authority sets becomes custom and practice throughout the housing sector in my area.
John McDonnell (Hayes and Harlington) (Lab)
This debate has been enlightening in many respects thanks to Members on both sides of the House. I shall not be repetitious; I shall just concentrate on putting on the record the plight of my constituents and the implications of the policy for them. It will at least give me some peace of mind that someone has spoken up for them.
Like every other Member, I have a weekly advice surgery—about twice a week at the moment. We have an open-door policy at the office, and we are swamped with casework, as many Members are. Half my casework is housing-related, and my surgery is the most distressing part of my week, as I am sure the surgery is for many Members are. It is heart-rending.
Families, who come with their children, are living in appalling housing conditions: overcrowded, sleeping three or four to a room and often, as the hon. Member for Wells (Tessa Munt) said, using their living rooms and other parts of the accommodation as bedrooms. They live in unsanitary conditions, lacking heat and hot water, and often their premises are damp. They live a nomadic life in my constituency, with 12 to 18-month accommodation licences, and their children move from school to school, disrupting their education.
We have not seen a housing crisis on this scale since the second world war. In the borough, I have 1,500 to 2,000 families and more who are homeless at any point in time. The reason for that has been mentioned—the hon. Member for Colchester (Bob Russell) referred to it—and it is that the bulk of our council housing stock has been sold off. Little council housing has been built in 30 years, under both Governments, and the buy-to-let landlords have moved in to provide the accommodation. They fail in many instances to maintain the properties, and we also have Rachmanite landlords who abuse their tenants. They are profiteering from the housing shortage with high rents and, of course, through housing benefit, but I find it ironic that in this debate Members on one side of the House seem to be blaming the tenants and housing benefit for high rents, not the landlords themselves, who charge those high rents and exploit the benefits system.
Many families in my area already struggle to pay the rent, and many already make up the gap between benefits and rents. They receive some discretionary payments from the council, but they are few and far between, and the families get into debt and fall back on loan sharks. As a result, they often fall into rent arrears, get evicted and then become classified as intentionally homeless. We can see how people can get caught in a cycle of deprivation.
The new proposals will exacerbate the nightmare that many of my constituents already face. Some 3,000 families will lose out on anything between £6 and £27 a week. The London Councils survey, which has been quoted extensively, demonstrates that a large number of landlords have stated that they will evict families if the gap in rent is more than £20. Many families in my constituency will be evicted, and they are already rushed through eviction as it is. That means that there will be an increase in homelessness in my area and it will be extremely difficult to find accommodation. I already have families moving out of the area on different schemes who find it very difficult to find work elsewhere and then desperately seek to come back to be close to their family members.
The results of these proposals—I want to put this on record for my constituents—will be an increase in poverty, immense stress, and immense distress for many people, particularly at a time when unemployment is rising in my constituency, as it is across the country. I do not believe that cuts in benefits are the answer, or that people are incentivised to find work by poverty or by homelessness—in fact, it pushes them back into further depths of despair.
There is an alternative proposal for which many in this House have argued for a number of years. First, it is about building council homes again, and getting back to investing on a scale that meets the needs of our population. That means an element of redistribution of wealth and ensuring that people pay their taxes, particularly the corporations, so we must tackle tax avoidance and evasion. I believe that we need an emergency programme of house building to tackle the homelessness that we now have, particularly in London and the south-east.
Secondly, there should be rent controls. If benefits are high because rents are high, there is a simple solution that applies in many parts of Europe, where people have controlled the rents and thereby stopped the exploitation by landlords.
Thirdly, in areas such as mine we need a more radical solution to the level of homelessness. We should allow councils compulsorily to purchase empty properties so that we can put families into them. I find it a disgrace that a house will stand empty for a long period. Some 300,000 properties are empty for more than six months, while people are on the streets or living in housing deprivation. We have a housing crisis on our hands, and we need an emergency programme to tackle it.
I certainly do not believe that cuts in benefits will go any way towards tackling this problem—in fact, that approach will cause more homelessness, put more people into deprivation, and cause immense human suffering in our society. That is why I support the motion, and why I will do everything I possibly can in this House, in demonstrations, and in direct action on the streets to oppose these housing benefit proposals.
Yasmin Qureshi (Bolton South East) (Lab)
Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this debate. I want to support my party’s motion on the housing benefit cuts. We have heard contributions from many Members. I concur with everything that Opposition Members said, and there have been notable exceptions among Government Members. I will not try to repeat everything that has been said, but I would like to flag up three issues that have arisen regarding the Government’s reasons for wishing to introduce these housing benefit cuts.
First, there is the fallacy that the cuts need to be made because of the deficit. Yes, everybody agrees that cuts need to be made in different areas of Government activity and public services to balance the books. However, it is always said that because a Labour Government were in power, we somehow caused the deficit and the financial crisis, when everyone knows that that is not true. Up until 2008, the Government parties supported the public expenditure projects that we brought about in the past 13 years, such as the beautiful hospitals, the schools, and all the building work that had been carried out to improve the country’s infrastructure. Most of the money was spent on that. We created jobs and regenerated the economy. In 1997, when we came into government, we inherited a complete mess, with unemployment and interest rates at record levels, so let us not have any lectures from the Conservatives about financial mismanagement.
Secondly, it has been said that Labour was in power for 13 years and did not do enough about housing. I accept that my party could have done a bit more on building new houses. However, we tried to help vulnerable people by bringing 1.5 million social homes up to a decent standard. Those were homes that were substandard when the Conservatives were in power. We fitted 700,000 new kitchens, 525,000 new bathrooms and more than 1 million new central heating systems. Yes, it cost billions, and I remember the then Opposition begrudging it, but it made life better for the people who had lived in substandard houses. At the same time, it regenerated the economy and provided jobs. We will not take any lectures from Conservative Members who tell us that we did not do enough.
Mrs Mary Glindon (North Tyneside) (Lab)
Does my hon. Friend think it is a disgrace that the Conservative mayor of North Tyneside, when she was leader of the council, wrote to the then Housing Minister to oppose £104 million being given to North Tyneside for homes for older people? When she came to power, she also resisted money for building 800 council houses in the area. How can we trust the Tories on council housing?
Yasmin Qureshi
I thank my hon. Friend for that helpful intervention.
Even in the face of recession, my party supported home owners to stay in their homes. Because of our actions, the current repossession rate is half that of the last recession of the early 1990s, preventing about 300,000 families from losing their homes. In 2004, local authorities met Labour’s target that no family should be in bed-and-breakfast accommodation for more than six weeks. When we prepared to tackle the issue in 2002, up to 4,000 families were housed in such accommodation. Conservative Members say, “Well, you didn’t do enough”, but we did a great deal for people who were in substandard housing. About 55,000 affordable houses were also built.
I turn to the cuts themselves. The Government say that they have to be made to reduce costs, but contrary to the Secretary of State’s assertion that Labour Members are scaremongering and coming up with facts and figures that are not borne out, it is Shelter that has stated that £120 million more will have to be spent on families who are made homeless as a result of the cuts. It is not Labour party members or MPs who have said that.
The cuts will cause big cities such as London to become like Paris. I know that the Secretary of State said that that was another piece of scaremongering, but it is not. There will be dispersal—we all now accept that word, as we know that people do not want to use the word “cleansing”. It will inevitably follow the cuts that if someone lives in what is considered to be an expensive part of town, where rents and rates are higher, after the cuts they will have to move out of their accommodation. That will effect social engineering, because only well-off people will be able to live in good areas of big cities. It will basically get rid of poorer people to the outer margins of the big cities and towns, into the poorer areas.
Pete Wishart
The hon. Lady seems to be suggesting that she is against any cap on housing benefit. I am with her on that one, but can she persuade her Front Benchers to come with us? I still do not know what the Labour party policy is on a housing benefit cap. Does she have any clearer understanding of that?
Yasmin Qureshi
I understand what the hon. Gentleman says, but I am talking only about how the change will affect my constituents.
Of course, the increase in rents and rates is not the result of people choosing to live in expensive areas. We have to remember that many people have been living in their areas for the past 20, 30 or 40 years. It is not their fault that over the years house prices and rents have gone up. That does not mean that they should be sent 60 or 100 miles away where they have no family, relatives or friends and be completely disconnected from their community.
Shelter has stated that the Government have not examined the impact of the proposals on many claimant households that will be shifted from around or just below the 60% median income line into severe poverty. The proposals will push an additional 84,000 households below £100 a week per couple, and those households include 54,000 children.
Cutting the local housing allowance to the 30th percentile means that 700,000 of the poorest people, who are both in work and out of work, will be at least £9 a week worse off.
Yasmin Qureshi
I promise to allow the hon. Gentleman to intervene in a moment.
On average, the impact of the local housing allowance on my constituency of Bolton South East will be £52 per month for a two-bedroom flat, with an average loss of £39 on properties that have more than two bedrooms. That may not seem like a vast amount of money to some hon. Members here—
Mr David Lammy (Tottenham) (Lab)
I hope that all of us across the House can agree that the best kind of community is a mixed community—a community of young people, old people, people on middle incomes and people on large incomes; a community that is ethnically diverse. That is why, when we think about the proposals in relation to London, hon. Members have described them as something akin to what we have seen in Paris. Most London MPs will recognise that those claiming housing benefit in London largely come from the ethnic minorities. They are families from Somalia, Turkey and Africa. I am deeply concerned that the Secretary of State has not yet produced an equality impact assessment of how the proposals will affect those families. He should be able to tell us that the effects of his proposals are not discriminatory, but he cannot do that. He should also be able to tell us how they impact on women and disabled people, but he is not able to do that.
There is a real concern that the proposals will drive people from central London to outer London. My constituency has some of the highest homelessness figures in London. We have 19,000 people on the housing register and 5,000 people in temporary accommodation.
Members on both sides of the House agree that we have not built enough affordable housing. In the past year in London, under the leadership of Boris Johnson, the Mayor of London, many local authorities failed in that regard, and overwhelmingly they were Conservative. I have the list: 83 affordable homes built in the London borough of Kingston-upon-Thames; 100 built in Kensington and Chelsea; and 200 in Westminster. Given such a backdrop, an exodus from inner London to outer London will exacerbate the problem.
My father arrived in this country in 1956. Like most other West Indian immigrants at the time, he lived in a doss house. This was a London that was still experiencing the effects of the war; there was a shortage of houses and money. Many immigrants huddled together in bedsits. My father lived with four others in a small bedsit in Finsbury Park. He often talked about how he had to huddle around a paraffin heater because of the cold.
I am concerned that these proposals will lead to even more excessive overcrowding in London. I warn the Minister that what we saw in Paris was serious social unrest as a consequence of overcrowding. That is why it is unacceptable to hear the rhetoric about social cleansing, but not to produce an assessment of the effect of the Government’s proposals, which is now a statutory duty as a result of the previous Labour Government.
There is a caricature of the fecklessness that leads people into this situation. Londoners will find themselves in this situation largely for two reasons. The first is that house prices have gone up. For my constituents, they have gone up by over half in the past 10 years. A person needs to be earning £60,000 a year to afford a house in the London borough of Haringey, which is way beyond the reach of most people. Secondly, it is not to say that people are on welfare and that welfare is bad, as was said by one Government Member. Welfare is a safety net for people on low incomes. These are the people who will clean the Chamber long after we have left tonight, and these are the people whom we are letting down as a result of these proposals.
So of course we stand against this motion—[Hon. Members: “For!”] I mean we stand for the motion because of the paucity of evidence backing up the Government’s proposals. Given that the Minister has aligned against him senior members of the Church in this country and given the deep concerns in the city of London and, as we have heard, elsewhere in the country among ordinary, hard-working people, including the 2 million pensioners who rely on housing benefit, he should think again.
Jim Shannon (Strangford) (DUP)
I want to make some constructive comments, and I hope that the Minister will take on board some of the issues I raise. I will ask some questions from a Northern Ireland perspective, because the housing benefit changes will affect us as well—we cannot divorce ourselves or walk away from them.
I should set the scene, because Northern Ireland has some very particular circumstances: the Department for Social Development has responsibility for social security benefits, and the Department for Employment and Learning has responsibility for training and employment programmes, in contrast with the rest of the United Kingdom and the Department for Work and Pensions. DEL has significant differences with its steps to work programme, as against the job guarantee fund here. There are issues to be clarified, therefore, and I want to ensure that the changes in benefits will not impact adversely on the people of Northern Ireland.
Northern Ireland has had the local housing allowance since 2008, but it has not been formally assessed. I had hoped that it would be, because it would have given us an idea of how successful it has been. I am concerned, however, that the proposed changes to the allowance lack a firm evidential base. Will the Minister comment on that? I think that the proposals will adversely affect recipients in Northern Ireland.
I am gravely concerned about the Budget plans to reduce the initial award of the benefit by 10% in April 2013 to those claimants who have been receiving jobseeker’s allowance for longer than 12 months. I make that comment because the unemployment rate in Northern Ireland between April and June was 6.6%. Worse still, the working-age employment rate remained well below the UK average, and was the lowest of all the 12 UK regions. The changes put forward tonight will adversely affect the people of Northern Ireland because of our position in relation to benefits.
I have concerns about the introduction of a measure that utilises sanctions that are neither helpful nor beneficial. The proposal appears to be based on the assumption that a reduction in housing benefit will motivate working-age claimants to find work, but it is clear that even if every working-age claimant was so motivated, there would still be significant numbers of long-term unemployed people in Northern Ireland beyond 2013. Perhaps the Minister will comment on that. We have to find a balance. How do we distinguish between those who are genuinely seeking employment and those who perhaps are not?
I mentioned earlier that the focus of housing benefit has to be on providing low-income families with access to good-quality housing. The housing benefit cap rates may have a knock-on effect on the social housing sector, as private rented accommodation becomes harder to access for those on low incomes and the demand for social housing increases. A great many people are in a Catch-22 situation: they do not have enough money to rent a house privately, yet there is not enough social housing for them.
Sammy Wilson (East Antrim) (DUP)
My hon. Friend makes an important point, but does he accept that in the absence of cap rates—or, sometimes, where the rates are fairly generous—private sector rents become inflated? Landlords simply look at what the rate is, and if it goes up they put their rents up. It is almost like a perpetual cycle: the rates go up, so rents go up, and then the rates are pushed up again, and the only people who gain are the landlords.
Jim Shannon
I thank my hon. Friend for his information, which is helpful in focusing attention on what we are trying to aim for.
Members have mentioned fuel poverty. One of the spin-offs of losing housing benefit will be fuel poverty. In my former position, I sat as a Member of the Northern Ireland Assembly. One of the inquiries that we undertook was on child poverty. Fuel poverty and housing benefit both came up in that inquiry into child poverty, but all those things were part of the jigsaw of how people survive. Take away one part of it and we have a problem. I have some concern about that.
One Member mentioned the discretionary housing payment, and I would certainly be keen to find out from the Minister what he intends to do if the pool of funding that is set aside runs out. He said that it was impossible to separate housing benefit from housing and social development policy in general, and there are some examples of that in Northern Ireland where housing has been designed to bring mixed communities together, such as in Loughbrickland in County Down and Ballynafeigh in south Belfast, which are also examples of how we have moved forward. I would like to express some concern over the removal of housing benefit from people where it will drive them towards poorer areas. For some people who are already in poorer areas, they will not move beyond them, and I have concerns about that.
I am conscious of the time, but another concern of mine relates to applications by carers for disabled people—I do not think that the issue has been mentioned fully yet, although some Members may have partially touched on it. A carer for a disabled person might want to apply, but the only person who can do so is the claimant’s spouse or partner. Would it not be more beneficial to ensure that the rest of the family members, who are perhaps those who are more affected, may also apply? I look forward to hearing the Minister’s response to that. I also believe that some consideration needs to be given to single parents who have shared custody of children. I am not sure whether that issue has been addressed, so I would ask the Minister to look at that, too. Where custody is established, benefit entitlements should be granted to the parent to support the family unit. I do not believe that the proposals do that. Again, I ask the Minister to consider that point.
Other Members have touched on the issue of large families. It would not apply so much in the area that I represent, but I believe that it none the less applies right across the United Kingdom. Has particular consideration been given to ethnic families in other parts of the United Kingdom, where larger, multi-generational households are perhaps more common? I ask the Minister to consider that as well. There should be more innovative and positive incentives, which are far more preferable in making housing benefit entitlement reflect family size in the social rented sector from 2013. The Government position is bereft of detail, and I ask the Minister to consider my points.
Caroline Flint (Don Valley) (Lab)
We have had a good debate, and I congratulate my hon. Friends the Members for Manchester Central (Tony Lloyd), for Glasgow North East (Mr Bain), for Aberdeen South (Miss Begg), my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), my hon. Friends the Members for Houghton and Sunderland South (Bridget Phillipson), for Sheffield South East (Mr Betts) and for Sedgefield (Phil Wilson), my right hon. Friends the Members for Coatbridge, Chryston and Bellshill (Mr Clarke) and for Holborn and St Pancras (Frank Dobson), my hon. Friends the Members for Stockton North (Alex Cunningham), for Streatham (Mr Umunna), for Hampstead and Kilburn (Glenda Jackson), for Scunthorpe (Nic Dakin), for Hayes and Harlington (John McDonnell) and for Bolton South East (Yasmin Qureshi), and my right hon. Friend the Member for Tottenham (Mr Lammy) on their measured contributions to the debate. They focused on facts and their constituents, and they raised concerns about the impact of the policies and the lack of evidence to clarify them. They asked the coalition Government to consider how their policies may lead to unfortunate consequences for their constituents in many ways. They came forward with ideas for reform. They raised concern about ending up with more polarised communities, and they talked about equality. Most importantly, they tried to address the issue.
The hon. Members for Cardiff Central (Jenny Willott), for Colchester (Bob Russell), for Wells (Tessa Munt) and for Strangford (Jim Shannon) made meaningful contributions. They, too, raised their concerns about the effect of the policies on their constituents. I am sure that the hon. Member for Brighton, Pavilion (Caroline Lucas) would have made a similar point about the people she represents.
Pete Wishart
The right hon. Lady promised to say whether the Labour party is planning to introduce a cap. How much would that be, and how would a nice new Labour cap differ from a nasty Tory cap?
Caroline Flint
I assure the hon. Gentleman that I will come to that.
Those colleagues—I call them colleagues because the substance of their speeches suggest that they may join us in the Lobby tonight—may be interested to know that the Minister for Housing referred to the Hull city council leader, Carl Minns, who is a Liberal Democrat, as a “motormouth” when he raised concerns about the impact of some of the Government’s policies on people in Hull. Lord Shipley, a former leader of Newcastle city council, said that the private rented sector had been a “cornerstone” in stopping the use of bed and breakfast in Newcastle and that he did
“not wish to return to the days when we did…My concern is that the local housing allowance changes may restrict access to private rented accommodation and therefore limit the capacity of councils generally to resolve future housing need.”
Those thoughts echo many of the comments that have been made.
It is a shame that not one Minister from the Department for Communities and Local Government is on the Benches at the end of these proceedings. Clearly, the Minister for Housing does not believe that it is worth while sitting alongside his colleagues from the Department for Work and Pensions to consider how to address reform of housing benefit and housing supply, which many of my hon. Friends and a few hon. Members raised. That is a great shame.
We are not opposed to reform. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) made that very clear. We are not against caps in the housing benefit system, as long as they do not make people homeless or cost us more in the long run. We do not have an objection to asking younger single adults on housing benefit to live in a shared house or flat, but we must be sure that there is enough supply to accommodate everyone, and to recognise that some single people may have particular needs that require them to be accommodated in a different way. We will look at how non-dependant deductions can be made, provided they do not result in people suddenly finding themselves unable to live in their homes with an elderly relative, for example. We are willing to consider some temporary changes to the uprating of benefits so long as that does not permanently break the link between the rent that people pay and the help that they receive.
We also believe that cutting the local housing allowance to the 30th percentile will have a huge impact, which is not to be desired. About 700,000 of the poorest people, in work and out of work, will be on average at least £9 a week worse off. We recognise the need for reform but, as in other areas, such reform should be staged over a number of years and be more limited.
Bob Russell
During the 13 years of the previous Labour Government, I put forward various proposals to them in more than 50 parliamentary questions. Does the right hon. Lady accept that, had the Government in which she served listened to and acted on those proposals, we would not be in this situation now?
Caroline Flint
I am closing this debate on behalf of the Opposition and we want to consider some points that hon. Members have made. We also believe that housing should be looked at in the round, in regard not only to benefit reform but to housing supply.
Let us look at some of the other points that have been raised. We heard from the Government that housing benefit was out of control, but it was not. The housing benefit bill did go up as a result of the economic downturn because, as people lost their jobs or were forced to work reduced hours, they needed more help to prevent them from becoming homeless. In the past two years, there have been 250,000 new cases of people in work claiming local housing allowance. Overall, however, as a proportion of total Government spending on benefits and tax credits, housing benefit has stayed stable at 14% for the past 20 years.
Caroline Flint
No, I am going to make some progress.
We have also heard from the Government that their plans will save money. However, if they do not think their policies through and consider their impact on people, they could end up costing more than they save. The Government say that the cap will save £65 million. Others say that its consequences—uprooting families, forcing them out of their homes and into temporary accommodation—could cost nearly twice that. We have heard that the Government intend to increase the amount for discretionary housing payments, but I seemed to hear them say that they would use that money to pay the people who they say should not be in those homes to stay in them. Instead of using housing benefit for that purpose, they are going to use discretionary housing payments. That is a smokescreen too far.
The Government like to say that these reforms will help people into work, but pricing hundreds of thousands of working people out of whole swaths of the country, often where most of the jobs are, will make it more difficult, not less, for people to find work and keep their jobs.
Caroline Flint
The hon. Gentleman was not here for the debate, so I will not give way.
Reducing people’s housing benefit when they have been out of work for a year does not help them to get a job. It punishes them for not having one, and we reject that entirely. The Government say that reducing housing benefit will bring rents down. Landlords themselves tell us otherwise, however, with 90% saying that they will be less likely to take on people on housing benefit. That means that there will be more people chasing fewer homes, which will drive rents up, not bring them down.
Caroline Flint
The Secretary of State might say that, but I find it difficult to understand, given the question marks over the impact on rents of the Government’s plans, why they are not doing a more thorough job of getting the evidence to prove that their policies are right. I have heard the Minister for Housing—who is not here tonight; he obviously does not think it worth while—say on a number of occasions that he has evidence to back up his idea that rents will go down, but he has refused to provide that evidence. We have seen no sign of it.
My right hon. Friend the Member for Greenwich and Woolwich and my hon. Friend the Member for Sedgefield made strong points about the rented sector. They said that the Government’s policies on housing benefit reform and their lack of a plan for housing supply would do nothing to tackle the issue of rents. Let us be honest about this: the Government have completely rejected the findings of the Rugg review, which we initiated to tackle some of the problems in the private rented sector.
Much has been said about our record on housing, so let me say something about that. Two million more homes were built, there are now 500,000 more affordable homes and 1 million more homeowners, and 1.5 million homes have been brought up to a decent standard. Homelessness was cut by 75%, and no family spends longer than six weeks in a bed and breakfast. In the face of the global financial crisis, the worst of its kind for 70 years, Labour did not walk by on the other side. We took action and supported families to stay in their homes. We prevented 300,000 families who might otherwise have lost their homes—and who would have lost their homes had the Tories been in power—from doing so. That is the reality. That is our record, and it stands in contrast to the mess the Tories left us.
Many thought that bringing so many homes up to a decent standard in such a short space of time would prove impossible. It did not. However, it did come at the cost of not building as many homes as we would have wanted. I agree with the hon. Member for Colchester and some of my hon. Friends who have referenced that tonight. Let us not forget that the reason why we had to focus on decent homes and bring them up to standard was the desperate situation we inherited from the last Conservative Government in 1997.
Caroline Flint
The Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), who is not in his place, helpfully points out on his website that there were 400,000 fewer homes after the Tories’ 18 years in power. Of the stock that did remain, the last Conservative Government knowingly, wilfully and shamefully allowed so much of it to get into such a state of disrepair that when we came to office in 1997, we faced a maintenance backlog of £19 billion, with 2.3 million homes below a decent standard. Pensioners were unable to heat their homes, and children were made ill because of the damp, mouldy and overcrowded homes they were forced to live in. That is the Tories’ record, and we are not going to let them forget it.
Caroline Flint
Conservative plans today are no better. The Minister for Housing likes to say that his Government will build more affordable homes every year than we built in 13 years. [Hon. Members: “Give way.”] I will give way to the hon. Member for Spelthorne (Kwasi Kwarteng).
Kwasi Kwarteng
I am grateful to the right hon. Lady for giving way. I have asked this question six times in the course of this debate. What is your view on the cap? Would you have one?
Mr Speaker
Well, the hon. Gentleman ought to be able to get it right the seventh time. The Chair has no view on the cap.
Caroline Flint
The hon. Gentleman should look at Hansard. I said quite clearly that we are not against looking at caps, and we are prepared to look at regional variations as well, but that would have to be planned and done properly over time.
Let me tell the Housing Minister that last year, in the teeth of recession, we built more homes in one year than the Government will build in any of the next five years. Since this Government came to power, local councils have ditched plans for new homes at the rate of 1,300 every single day. In the comprehensive spending review, the housing budget was demolished by devastating cuts of more than 50%. As a result, according to the independent National Housing Federation, once the homes Labour started building are completed, no new social homes at all will be built in the next five years.
Mr Duncan Smith
In response to the right hon. Lady and the hon. Member for Perth and North Perthshire (Pete Wishart), she has said for the first time in this debate—her right hon. Friend the shadow Secretary of State has also said it—that Labour Members are in favour of a cap. Will they please explain something to us? We have put our proposals forward. What level of cap do they now favour?
Caroline Flint
We have said quite clearly—not just today, but in a speech my right hon. Friend the Member for Paisley and Renfrewshire South made last Friday and in an article that I wrote last week—that we will look at the issue of caps. What we have said is that whatever cap is chosen on whatever basis, it must be planned, phased in and must ensure that people are not turfed out of their homes, put into bed-and-breakfast accommodation or made homeless. The Tories have not been able to answer any of those questions.
The fact is that one part of Government is working on one track for housing benefit reform, but there is no joined-up thinking with the Department for Communities and Local Government on housing supply. That is not a plan of action for housing, but a recipe for chaos and it does nothing to help cut the housing benefit bill. It is not only Labour Members who say that; dozens of Tory MPs have been to see the Secretary of State to tell him why these plans will not work. We have heard about the Conservative Mayor of London and we know that Tory council leaders across the south-east have warned that the dispersal of people that these policies will create will place an unbearable burden on services that are already stretched to breaking point.
There is a better way of doing this. We want to reform housing benefit, but in a way that is fair and that does not end up costing us more than it saves. I urge Liberal Democrat Members and perhaps a few on the Tory Benches to join us in the Lobby and speak up for their constituents.
The Minister of State, Department for Work and Pensions (Steve Webb)
This has been a worthwhile debate. We have learned a number of things. Most of all, we have learned that no Labour MP actually read the manifesto on which they stood. [Interruption.]
Mr Speaker
Order. Hon. Members are in a state of almost uncontrolled excitement. I want to hear the Minister talking about his position, and about manifestos.
Steve Webb
Thank you, Mr Speaker.
Housing benefit will be reformed so that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford. When we do that, Labour Members are against it. When we propose a cap, they are in favour of it —until we set a figure, and then they are against it. When we propose to cut non-dependant deductions they are in favour of that—unless it actually affects anyone. The shadow Secretary of State said that he wanted regional caps, when the cap would principally affect central London, because he does not want a cap that actually caps anyone. What we need are credible Opposition propositions, not opportunism.
Three main themes have emerged from the debate. The first is that the impact of these changes has been grossly exaggerated. As my right hon. Friend the Secretary of State said at the beginning, talk of highland clearances and the final solution is a disgrace. My hon. Friend the Member for Wolverhampton South West (Paul Uppal) pointed out how offensive such language is to people, but even in this debate we have heard talk of highland clearances, and of Paris.
The right hon. Member for Tottenham (Mr Lammy) does not seem to appreciate that in substantial parts of central London—in the borough of Southwark, for example—48% of properties are in the social rented sector, and will not be affected by either the cuts or the percentiles. The suggestion that central London will be devoid of people on low incomes is complete nonsense. If the right hon. Gentleman wants to correct himself, he is welcome to do so.
Steve Webb
I do not think that the right hon. Gentleman has followed the proposition. It involves new houses and new build. People in existing tenancies do not face that change.
We have heard talk of the impact of these changes. I appreciate that it is a shame to introduce facts at 9.45 pm, but I shall give it a try. As was pointed out by the Chairman of the Select Committee, the hon. Member for Aberdeen South (Miss Begg), this is not just a London issue, but obviously the impact of the cap will be felt particularly in London. There are 400,000 people on housing benefit in inner London, which ought to be where the impact will be greatest. Of those, 313,000, or 77%, will be unaffected because they are in social tenancies, and a further 30,000, or 7%, will be unaffected because they are in the non-local housing allowance sector. That adds up to 84%. A further 6% receive local housing allowance, but will not be affected. That means that 90% of people on housing benefit in central London will not be affected at all, while another 3% will be affected by less than £10 a week.
The mistake made during the debate is that people have assumed that any shortfall is equivalent to homelessness. That is a ludicrous leap. We know that people experience shortfalls in a number of ways. Of all the people on housing benefit in central London, 7% will experience shortfalls of more than £10 if there is no change in rents.
Mr Raynsford
Will the Minister confirm that he has just misled the House? Tenants in social housing will be subject to increased non-dependant deductions. The housing benefit of those who have received jobseeker’s allowance for 12 months will be terminated or reduced by 10%, and the benefit of those who are deemed to be occupying accommodation larger than they need will be reduced as well. All those social tenants will be affected by the Minister’s changes. Will he now admit that?
Mr Speaker
Order. I think that the right hon. Gentleman intended to include the word “inadvertently” in his intervention.
Steve Webb
I am sure that he inadvertently forgot, Mr Speaker.
The impact of the cap, the impact of the 30th percentile and the impact of the removal of the £15 excess have been elided in the debate. The hon. Member for Houghton and Sunderland South (Bridget Phillipson) mentioned the figure of 20,000 pensioners in her constituency—most of whom will not be affected by any of the changes. As I was explaining, less than 10% of people receiving housing benefit in the area most likely to be affected—inner London—will experience shortfalls of more than 10%.
The exaggerated impact has been made clear. However, one point has not been made clear. It has been suggested that the private rented sector is somehow an oasis of stability and settled communities, but there is massive churn in that sector. I want to give an example of that. The people affected by the caps and the 30th percentile are on local housing allowance. Local housing allowance was introduced in April 2008, so pretty much all those people did not even move into their current properties until April 2008; in the vast majority of cases they have lived in them for less than three years. The idea that we are suddenly churning up some settled permanent community is complete nonsense.
Emily Thornberry
The hon. Gentleman is saying that a huge proportion of people will not be affected, but let us say, for example, that we are doing our best to move a woman in Islington from a three-bedroom house into a smaller flat. Would she lose her secure tenancy if she moved?
Steve Webb
When there are specific instances of vulnerable people about whom local authorities have concerns, those local authorities have discretion to do something about the situation. But when people might reasonably be expected to move, that, of course, is part of the equation. If everybody went on staying exactly where they were at the same rent, there would have been no point to the policy.
On the basis of the debate so far, Mr Speaker, you would imagine that this year’s £21.5 billion housing benefit budget was about to be slashed. [Interruption.] Labour Front Benchers are saying that it is.
Steve Webb
Sorry; the shadow Secretary of State is disowning the right hon. Member for Greenwich and Woolwich (Mr Raynsford), who got it wrong. In 2014-15 the housing benefit budget will have been “slashed” from £21.5 billion to £22 billion. We are not slashing. We are making changes.
It has been said that we are being too hasty. The Labour party has decided that after 13 years of making the problem worse, doing something about it is “hasty”. Labour was so unhasty that it never got round to doing anything about the problem before it lost office. We are getting a grip.
First, we have established that the impact of the changes has been grossly exaggerated. Secondly, we have established that rents will not stay as they are. During the debate it has been suggested that the fact that the British taxpayer is putting more than £20 billion a year into housing benefit has no impact on the market. We, the taxpayers, pay housing benefit towards 40% of private rented tenancies. It is a long time since I studied economics, but I reckon if we pay for 40% of the tenancies and we put £20 billion a year into the market, we might just be having some impact.
Sheila Gilmore
The hon. Gentleman is using the figure of 40%. Recent research done both in Scotland and England is completely different. It produces a figure of 20%. In fact, in Scotland it was 17%; the report was produced for the Scottish Government. Only 8% of that was for housing benefit. We need to see the evidence that differs from the research that the Government themselves commissioned.
Steve Webb
I am not sure what the hon. Lady is questioning. Some 40% of private rented sector tenancies have housing benefit. That is a fact.
As my right hon. Friend the Secretary of State pointed out earlier, people have said in this debate that rents will not fall. There is an assumption that rents have to go up. I have news for those people: since November 2008 private sector rents have fallen by 5%, while LHA rents have risen by 3%. So there is a void. That is further evidence. Opposition Members have asked for evidence, and here is clear evidence that LHA is driving up rents.
Steve Webb
Will the hon. Gentleman allow me? I want to respond to 35 different contributions; I hope that he will forgive me for responding to the debate.
My hon. Friend the Member for North East Hertfordshire (Mr Heald) pointed out how LHA is inflating the market. LHA rents are on average 10% higher than the housing benefit rents that have carried on from the previous system—more and more evidence that we, through our taxes, including taxes on hard-working families, are inflating rents. That is not benefiting tenants. During the debate it has been suggested that we are against the tenants, but we are actually against our taxes being spent on inflated rents, because that is not what the money should be for.
We have established that if we can get a grip on the rents, that will benefit tenants and help people in lower-paid work to pay those rents. There have been exaggerated stories about the impact, an assumption that rents will not fall, although we believe that our changes will have an impact, and thirdly—
Mr Slaughter
When the local housing allowance was introduced, the hon. Gentleman wrote on his website:
“Proposals of this sort risk creating ‘ghettos’ where low-income tenants are forced to move to accommodation in lower rent parts of town, whilst those who are better off continue to rent the best properties.”
When did he change his mind and stop worrying about that problem?
Steve Webb
That is interesting. I wonder whether the hon. Gentleman still supports the housing benefit cut taking away the £15 excess that the Labour party was going to introduce before the general election. If I remember rightly, Labour delayed that cut by one year—until after the election. Does the hon. Gentleman still support that Labour cut in housing benefit? I suspect not.
It is important that we have a discussion about fairness. My hon. Friend the Member for Colchester (Bob Russell) raised the situation of vulnerable people, particularly families with children. We are clear, first, that the impact of the changes as a whole is much narrower than has been assumed; secondly, that they will have an impact on rents, which will reduce the shortfalls and the number of people who will have to move; and thirdly, that there will be individual vulnerable cases. My hon. Friend is right to say that the position of families with children is very important. That is why we have trebled the money available to local authorities for discretionary housing payments specifically to help the most vulnerable. I recently had a conversation about a London authority that estimated that it would need to double its discretionary housing payments to cover these costs. We are trebling them, which we believe will enable local authorities to address the situation of the vulnerable households about which my hon. Friend is rightly concerned. I am grateful to him for raising that point.
The issue of fairness was raised by other Members too. My hon. Friends the Members for Hastings and Rye (Amber Rudd) and for South Thanet (Laura Sandys) rightly pointed out that many low-paid workers cannot begin to afford the sorts of rents we are paying for housing benefit recipients. The Labour party used to agree with us on that. Since they became the Opposition, however, they have stopped agreeing with themselves. There is a fairness issue therefore, and as we bring down rents we will improve the fairness of the system.
One of the key issues is housing supply, which my hon. Friend the Member for Colchester and others also raised. The shadow Communities and Local Government Secretary, the right hon. Member for Don Valley (Caroline Flint), rightly raised that issue as well. However, the housing shortage was caused by the Labour party, which failed to build sufficient numbers of houses when in office. Many Labour Members said that they wished the situation was different. Well, they had 13 years to make it different. It is no good their wishing in opposition that houses had been built. As they held the levers of power and they did not pull them, they have to accept and live with the consequences. That is why I welcome what my ministerial colleagues at the Department for Communities and Local Government are doing to generate new social house building so that there will be diversity in the social housing sector, with the most subsidised rents and also near-market rents—80% of market rents—which will provide the resources needed for the significant increase of 150,000 new social homes. We desperately need that increase during the course of this Parliament.
Many Members raised issues about the disincentive effects of the housing benefit system, and I want to draw attention in particular to the remarks of my hon. Friend the Member for Enfield North (Nick de Bois). He made some powerful points about the fact that once people are in work and on housing benefit—I do accept that there are people in work and on housing benefit—the benefits systems then traps them, because if they want to do extra work they face very high marginal withdrawal rates. My hon. Friend highlighted the situation of people who are in work and do not want to do more hours because they will just find that their housing benefit is withdrawn. That is a crazy system: we, the taxpayers, pay £21 billion a year to subsidise rents, and put inflation into rents, and then we expect people to do low-paid work, and as soon as they do more work we claw the money back.
That is going to change. This Government are doing to do something about it. On Thursday my right hon. Friend the Secretary of State will announce plans to take forward the proposition of a universal credit, whereby for the first time people will be guaranteed to be better off in work.
Ms Rosie Winterton (Doncaster Central) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.
The House proceeded to a Division.
Mr Speaker
I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.
Business without Debate
Clostridium Difficile
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Burrowes (Enfield, Southgate) (Con)
It was in January 2007 that I last secured a debate on clostridium difficile, or C. diff as it is commonly known. It was the first time that the House had debated the subject, and I recall how at the time Mr Speaker’s office questioned what C. diff was. Indeed, many hon. Members had never heard of it. Since that time, however, sadly the impact of this cruel and often unremitting infection has demanded the public’s and, indeed, the Government’s attention. All hon. Members will probably know of someone in their constituency or family who has suffered from C. diff. Indeed, in that regard I welcome the attendance of Mr Deputy Speaker, who has a deep and personal interest in the issue, following the loss of his mother as a result of C. diff.
I gladly acknowledge that there has been much progress in the three or so years since I last raised this subject. However, C. diff still leaves thousands of people each year suffering great discomfort, loss of dignity and, sadly, loss of life. The media spotlight comes on to the subject when there is an inquiry into a hospital trust and then moves on but, away from its glare, the terrible and often tragic effects of this infection have not gone away.
I know that the Minister will provide me with an answer, which is the primary purpose of this debate—namely, an assurance that the Government take C. diff very seriously and are working hard not only to reduce it but to eradicate it. Much has changed since 2007, not least with the Government’s plans to revolutionise the national health service and empower patients and general practitioners. I hope that this debate will help to identify the challenges and opportunities to tackle C. diff, not only in the hospital setting but in the community.
Some things, or rather someone, have not changed since the previous Adjournment debate in 2007. I refer to the active involvement and national leadership on the issue of C. diff of my constituent Graziella Kontkowski, who has attended the debate this evening, as she did back in January 2007. Tragically, Graziella’s grandmother died as a result of the C. diff infection. Graziella describes being
“helpless, watching my grandmother die a slow and painful death without being able to do anything to help her—it was the worst thing I've ever experienced.”
Since then, she has used her experience and remarkable passion and energy to ensure that other families are able to face and fight C. diff and its terrible effects. Alongside her brother Mark, Graziella set up the online C. diff support group, which can be found at www.cdiff-support.co.uk, to make it possible for people who have been infected by C. diff, or whose loved ones have suffered from its effects, to share their experiences and advice with one another. The C. diff support group has about 1,500 members and continues to make a valuable contribution to the public debate on C. diff and to the lives of many who are struggling in similar circumstances to those that Graziella and her family went through.
Graziella also helps to support the work of the Centre for Healthcare Associated Infections, which is based at the university of Nottingham. With the danger of bacteria mutating to become more resistant to antibiotics, its efforts towards the development of new vaccines and rapid diagnostic tests for the detection of the infection are to be commended. Its research can truly be described as life saving, and I encourage members of this House, and members of the public, to consider supporting its work.
Richard Harrington (Watford) (Con)
I congratulate my hon. Friend on the work that he has done on this very difficult subject. I would like him and his constituent to know that there is a device in America called Zimek, which I have observed. It is the most fantastic system that disperses disinfectant and has eradicated C. difficile in hospital wards. It is undergoing clinical tests in Northwick Park hospital, which is just next to my constituency and where many of my constituents are being treated. I urge the Minister to take note of this. I would be delighted to send him details showing the fantastic effects that the device has had in America, very cheaply and in a way that I believe could save millions of lives in this country.
Mr Burrowes
I am grateful to my hon. Friend. He makes the case for that proposal very well. Indeed, there are several innovative developments, not only in the hospital setting but in trying to look at prevention. Prebiotics is another area that is worth considering. I ask the Minister to look at supporting the centre I mentioned and at how we can support research in this field.
A C. diff infection exacts a great cost from the patient who suffers from it and the family who witness it. It is also financially expensive. In 2008, the Department of Health released a report called “Clean, safe care: reducing infections and saving lives”, which noted that treating one patient with a C. diff infection cost the NHS more than £4,000 per patient. By this estimation, and considering the number of infections reported last year, C. diff cost taxpayers close to £1 billion in the past 12 months.
It is true that C. diff has received a far more coherent and concerted response from the NHS in the past three years than it had previously. It is equally clear that this focus has had a positive effect on the quality of care and on survival rates in our hospitals. Last year the infection was noted on fewer than 4,000 death certificates and was considered to be responsible for deaths in 1,712 cases. That is less than half the rate in 2007, when more people died as a result of C. diff than as a result of road accidents. However, as the Secretary of State for Health has said:
“There is no tolerable level of preventable infections.”
I am grateful to his Department for making it clear that a zero-tolerance approach to health care-associated infections is a priority for the Government. During the week beginning 26 September, 190 new cases of infection were reported by hospitals in England and Wales—an average of 27 cases a day, or more than one every hour. There is no room at all for complacency.
One problem of which we need to be aware is the number of incidents of recurring C. diff symptoms in patients. I am greatly concerned that hospitals are releasing those who have suffered with the symptoms of the infection too early, which leads to many having to return to hospital with the same problem. I am glad that the Department has recently made it clear that hospitals are responsible for the care of a patient for up to 30 days after they have been discharged.
The Minister of State, Department of Health (Mr Simon Burns)
indicated assent.
Mr Burrowes
I am glad that the Minister fully shares my concern. It is good to know that hospitals cannot expect any additional payment for treating those who have suffered a recurrence during those 30 days. However, I ask him whether there could be any sanctions on trusts that sadly fail to reduce the rate of infection.
Along with the Department of Health, my constituent Graziella has produced a leaflet, which my hon. Friend the Minister helpfully distributed just before the debate. It is called “C. difficile—now you are going home”, and it sets out the best ways for patients to protect against the infection spreading. It is intended to be given to patients so that they can be aware of the risks and know how to prevent other vulnerable people from catching the infection. However, although both Graziella and I would like to see this leaflet distributed by every hospital and GP, there is no requirement that that happen. Many patients return home without the information in that fantastic leaflet about how best to protect themselves and others. Will the Minister consider requiring—or, in the more localising language that Conservative Members prefer, incentivising—hospitals to provide the leaflet or similar information to all patients leaving their charge who have had the infection?
Although improvements have been made in acute trust hospitals such as my local North Middlesex university hospital, it is important that we do not lose sight of the need to pay attention to what is happening in our primary care trusts. In fact, in every month of last year, PCTs reported far more cases of C. diff than acute trusts. Enfield PCT, which is by no means extraordinary in this regard, reported 144 cases in patients aged over two in just the past year.
Nick de Bois (Enfield North) (Con)
To pick up on my hon. Friend’s point about Enfield, as he knows, at our local hospital, Chase Farm, there has been an extraordinary improvement in recent months, particularly since August. That is essentially down to a massive concentration of effort on this one problem, and there, in part, lies the solution.
Mr Burrowes
I am grateful to my hon. Friend, and I support the work that has happened. It has very much been prompted by Graziella, who has been going from ward to ward to ensure that what people say is being done is, in fact, reflected in their actions.
We also need to get to grips with the problem of C. diff in the community. In the past, there has been too little interest in what happens to a patient once they leave the hospital walls, and too little attention to the problem of infection being spread between hospital and home, or worse, between hospital and care home. Sadly, many of my hon. Friends will have witnessed that situation. That two-way corridor of infection must be addressed, as must the associated lack of care that care home residents can sometimes receive, as they are sadly away from the public eye.
Given the clear danger of allowing infections to spread within an enclosed community of elderly and vulnerable people, I would be interested to know what the Department is doing to monitor cases within the care home setting, and specifically to monitor whether cases are being reported consistently and dealt with promptly and according to the most recent hygiene code.
As we move boldly to a health care system that puts the patient and their recovery at the heart of every decision, it is essential that health care-associated infections such as C. diff are on GPs’ radars, especially as they take on responsibility for commissioning in their area. There needs to be an assumption in favour of testing for the infection when patients are suffering from diarrhoea. GPs must also be properly aware of the need to check up on patients, and avoid prescribing them certain drugs that are known to increase the risk of infection and the likelihood of patients suffering from severe symptoms. The C. diff support group has identified a number of worrying cases of GPs prescribing antibiotics. I also ask colleagues to look on its website and check out Imodium, which is known negatively to affect patients suffering from C. diff.
In December 2008, the Department of Health’s report on C. diff strongly recommended that
“all cases of diarrhoea among people in the community aged two years and above should be investigated for C. diff unless there are good clinical reasons not to.”
Such good practice needs to be extended to all GPs. Does the Minister know what more the Government can do to ensure that GPs are fully briefed on C. diff and that they are responding to this knowledge efficiently and consistently?
Perhaps the Minister would consider enabling the NHS computer systems in both hospitals and GP surgeries to tag an alert to Imodium and other drugs that are known to increase the risk of C. diff in vulnerable patients. Doctors intending to prescribe such drugs would be reminded to consider whether the patient might have the infection before doing so.
As for the careful monitoring of patients in the community, I would be interested to know what, if any, guidelines GPs follow with regard to the treatment of patients with C. diff. Perhaps the Department would be willing to provide such advice to doctors. Doctors could perform a simple blood test on elderly patients in the community to provide an early warning against the possibility of renal failure.
I very much welcome the Health Secretary’s attendance today and his commitment to comprehensive, trustworthy and easy-to-understand information on how to look after patients’ health. The data on C. diff infection rates already exist and can be found online, but they are often inaccessible in their format. They can be sketchy and incomplete at best.
Yesterday, NHS Choices listed 12 hospitals within five miles of one of the postcode areas in my constituency. Of those 12 hospitals, data on the prevalence of C. diff cases within the last 12 weeks were available for only two of those hospitals—North Middlesex University hospital and St Ann’s hospital. On the same day, the Department published business plans with a focus on transparency. To ensure that we see even more marked improvements in the next three years, will the Minister tell us what he intends to do to ensure that “easy to understand” information is available, especially on those websites that patients are most likely to use and at those locations that they are most likely to frequent?
Finally, I look forward to the time when the Minister can declare to the House that preventable healthcare-associated infections such as C. diff can be eradicated. However, I am conscious, as the Minister will be, of George Bush’s regret when he prematurely declared “mission accomplished” and there is much to be done before we can get near to such a declaration. I hope that this debate, which supports the great work of campaigners such as my constituent Graziella Kontkowski, can move us closer to a time when we have no need to raise this important issue in the House again.
The Minister of State, Department of Health (Mr Simon Burns)
I congratulate my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) on securing this debate on C. difficile. He has shown a strong interest in this issue for a very long period. Let me make it clear that the NHS should aim for a zero-tolerance approach to all health care-associated infections. I hope that what I say in my speech tonight will reassure my hon. Friend that we as a Government regard C. difficile as a priority and we will use all the levers at our disposal to support further significant progress in reducing this problem in our hospitals, care homes and other health facilities.
For most of the last decade, we saw unchecked increases in the number of MRSA and C. difficile infections, causing misery for thousands of patients and their families. However, in more recent years, the NHS has improved its infection prevention and control practices, which has led to a significant reduction in both C. difficile and MRSA bloodstream infections. I should like to take this opportunity to congratulate all NHS staff who were involved in turning the tide for their hard work in achieving that. From a high of around 56,000 infections in 2006, C. difficile infection has fallen to just over 25,000 in 2009-10. From almost 8,000 infections in 2004, numbers of MRSA have also fallen substantially to fewer than 2,000 in 2009-10. However, despite the progress that we have made, we can go further.
Mr Burns
I would be grateful if my hon. Friend allowed me not to, because I have very little time in which to say a lot in answer to the questions from my hon. Friend the Member for Enfield, Southgate.
Despite the progress made, we can go a lot further to reduce infections, particularly of C. difficile. The previous Government’s approach was to introduce a rather crude national target for reducing infection rates that placed no specific obligation on individual organisations to improve their prevention and control systems or to reduce their own infection rates. We therefore find ourselves in a situation where, despite significant reductions at a national level, many organisations have made little or no improvement on their position years ago. The job of controlling C. difficile infections in the NHS is far from complete, and the NHS, in both secondary and primary care, must continue to prioritise reducing these infections. We will expose those poor-performing organisations that were able to ride on the coat tails of others, and force them to put their house in order.
My hon. Friend asked about monitoring care homes. I can assure him that, as part of our commitment to a whole-health economy approach to infection prevention and control, last month the adult social care sector became subject to the code of practice on the prevention and control of infections. Adherence to the code is a statutory requirement, and we expect to see improvements in infection prevention and control practice in the social care sector as a result of its introduction, in the same way as has happened in hospital settings. In addition, we have strengthened Care Quality Commission powers to ensure that, where required, appropriate action can be taken to address poor practice. Care homes should report single cases of suspected C. difficile to the resident’s general practitioner, and a suspected outbreak should be reported to the local health protection unit. I am confident that this additional strengthening of the measures will go some way to help reduce the problem in care homes.
The Government expect the NHS and social care organisations to take a zero tolerance approach to health care-associated infections, as I said at the beginning of my remarks. When patients have the relevant information, they can be the most powerful agents for change. In line with this, one of the first things we did was to publish weekly MRSA and C. difficile infection numbers by hospital, and the data are now available within weeks rather than months, giving a far more accurate picture of what is happening at a particular hospital. Patients can now clearly see and take account of this when choosing where to have their treatment.
My hon. Friend asked about making more information available. I can reassure him that one of the key parts of the White Paper on health reform in the NHS is on empowering patients by providing even more information relevant to them from independent sources. That means it will be reliable and accurate. It will also be provided in a way that is easily understandable, so that patients can see the areas of health care—in whatever shape or form—that are of particular interest to them. I would encourage anyone to respond to the consultation on the information revolution document that my right hon. Friend the Secretary of State published recently, so that we can consider all views on how to get this right and empower patients with information.
We also made it clear in the coalition agreement that we will use quality outcome measures, including HCAIs, to drive improvements in the areas that really matter to patients. In the near future, I want all organisations to be operating at the level of the best today. The challenge, therefore, will be greatest for those who have so far made the least progress. We have also decided to extend mandatory surveillance beyond MRSA and C. difficile, to provide a fuller picture of HCAIs within the NHS, which the previous Government resisted. As my right hon. Friend the Secretary of State announced last month, we will extend mandatory surveillance to include MSSA—meticillin-sensitive staphylococcus aureus—with infections such as E. coli to follow in due course, based on expert advice.
I know that my hon. Friend the Member for Enfield, Southgate has a strong interest in the different settings where C. difficile infections occur. For some years, such infections were essentially seen as a hospital problem, with hospitals being the focus for both central and local efforts to tackle them. However, that focus is not sufficient, as he mentioned. An unfortunate outcome of the previous focus on hospital-acquired C. difficile infections is a lack of awareness of the risks in primary care. Although we have seen substantial decreases in C. difficile infections in acute trusts, those occurring in primary care trusts—referred to as community-associated infections—have decreased at a far slower rate.
The origin of community-associated cases is not clear and needs further investigation. A significant proportion may be due to previous contact with previous health care facilities. In other cases there may have been no known links to health care, while others may be associated with antibiotic treatment in the community by GPs. GPs have a vital role to play in reducing the inappropriate use of broad spectrum antibiotics—those that attack a wide range of bacteria, but which can increase the risk of contracting C. difficile. GPs need to consider C. difficile when prescribing antibiotics, particularly to at-risk groups such as those who have recently been discharged from hospital or the elderly, as my hon. Friend rightly mentioned. Because such antibiotics can increase the risk of contracting C. difficile, prudent antibiotic prescribing is key. Although only a small number of C. difficile infections emanate from general practice, this is not an excuse to do nothing—not when the impact on individuals can be so great.
We will increase GPs’ awareness of the impact of antibiotic prescribing on contracting C. difficile infections and increasing antibiotic resistance. As part of that, we will use antibiotic awareness day on 18 November to focus attention on the need to reduce the unnecessary use of antibiotics. As my hon. Friend showed in his speech, we have produced leaflets and other materials that GPs, pharmacists and other professionals can use to raise the issue with patients and the public. Those materials make it clear that everyone has a role in improving prescribing and patient outcomes. To improve the evidence base, we are considering how to improve the monitoring of community associated cases. That links into our concern about the large number of readmissions to hospital within 30 days of discharge, which my hon. Friend also mentioned. The action that my right hon. Friend the Secretary of State took in the summer to alleviate the problem will, I believe, go a long way towards helping to find a solution to it.
Let me now turn to some of the questions that my hon. Friends have asked in this debate. I am grateful to my hon. Friends the Members for Watford (Richard Harrington) and for Enfield North (Nick de Bois) for drawing to my attention the equipment, which came from America, that is currently being tested in Northwick Park hospital. As they may be aware, the Department has established a mechanism, known as the rapid review panel, by which new products can be evaluated for their effectiveness against infections. As they said, the equipment is currently being tested at Northwick Park hospital. We await with interest the results of those tests, to see whether the equipment would be useful in the constant battle against such infections.
My hon. Friend the Member for Enfield, Southgate also asked what more the Government could do to ensure that GPs are fully briefed on C. difficile and respond to such knowledge efficiently and consistently. As I mentioned with social care, the forthcoming application of the code of practice to primary care will give a significant boost to improving GPs’ awareness and knowledge of infection prevention and control. We will publish the code shortly, and although primary care will not be subject to the requirements of the legislation until April 2012, the registration process with the Care Quality Commission will start much earlier, with all the benefits that this will secure, through increased focus and awareness. I trust that that will go some way towards reassuring my hon. Friend.
My hon. Friend also spoke about requiring hospitals to provide information to patients leaving their care. As he said, Graziella, with the Department of Health, has produced a leaflet on C. difficile, which he has seen. The best way to protect patients against the infection spreading is to provide them with information. The intention is to give the document to patients so that they are aware of the risks, and know how to prevent other vulnerable people from catching the infection. However, although both she and I would like the leaflet to be distributed by every hospital and GP, there is no requirement for that, and many patients are sent home without the information that they need to protect themselves.
We believe, as does my hon. Friend, that it is important for patients to have access to information. I certainly expect hospitals to provide that information to all relevant patients on their discharge. It is important to ensure that such leaflets are available for the NHS to use, and copies are available on the Department’s Clean, Safe Care website, but we must be careful not to be prescriptive on decisions about patients’ care that are best made at local level. I trust that many practitioners and hospitals at local level will recognise the importance of the leaflets and ensure that patients have them drawn to their attention.
Time is running out, and on the questions to which I have not had the opportunity of replying I will write to my hon. Friend so that he receives answers. I say again that we treat the matter seriously, and in the short time remaining I shall answer the final question about careful monitoring of patients in the community. Guidance, entitled “Clostridium difficile infection: how to deal with the problem”, has been published by the Department of Health and the Health Protection Agency, and provides evidence-based advice on how to treat C. difficile. We will take the opportunity in the forthcoming publication of the code to reiterate the value of that to GPs in their decision making, and I hope that my hon. Friend will find that reassuring and helpful.
When patients enter a health care setting, they expect to be taken care of and to be made better, not to contract a potentially fatal infection. I hope that I have reassured my hon. Friend that the Government share his deep concern and are determined to see significant progress in reducing C. difficile infections further.
Question put and agreed to.
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Vulnerable People (CSR)
(14 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Andrew George (St Ives) (LD)
It is a great pleasure to speak under your chairmanship, Mr Crausby. I am particularly pleased to have secured an opportunity to debate the effects of the comprehensive spending review on vulnerable people.
Some of the issues that I raise may well be raised in the more specific debate on housing benefit in the main Chamber this afternoon. For the purpose of this debate, I want to define the terms to which I have referred. The debate is, in effect, about the impact on vulnerable people of not just the CSR, but the Budget and the various departmental announcements that have been made and which underpin the context in which the CSR was announced on 20 October.
By “vulnerable people”, I mean not just those in need of specific state support who are unable, through a learning disability or other forms of disability, to manage alone, but those who may become vulnerable or find themselves in significant need, housing stress, homelessness, hardship or debt. The effects to which I refer cover a wide range of policy areas. Of course, I do not intend to cover all areas of government, although vulnerable people are likely to be affected by a wide range of policies, but I am keen to cover access to housing and housing benefit; welfare, including the support and benefits for unemployed and disabled people; care for adults and children; and public transport and access to it.
By way of background, it is worth noting that no self-respecting political party would have undertaken, in the lead-up to the last general election, the kind of measures that have been proposed since, because of how our political system works. However, we all knew as we went into the general election that Britain had the largest deficit in peacetime history, the largest structural deficit in Europe, that £120 million a day was needed to service the interest on that debt and that £1 in every £4 that the Government spent was borrowed money. We entirely understand the need to put right the public finances, which is the background to this debate and the CSR.
I would like to acknowledge a number of achievements. From the Liberal Democrat Benches, it is worth acknowledging that, despite the rather austere circumstances, we have secured outcomes from coalition agreements of which I believe the coalition can be proud. I am referring to the policies of taking the lowest earners out of tax altogether, which I know will be ratcheted up over the coming years until the figure is £10,000 before tax applies; restoring the earnings link for pensioners and a guarantee of uprating with a triple lock; the pupil premium and the early years premium, particularly for vulnerable children; the pay protection for low-paid public sector workers; capital gains tax for top earners; and the banking levy to help to pay for many of these measures. I was also pleased to hear of the Treasury’s intention to make a concerted effort to tackle tax evasion and fraud, which is essential to ensure that we get the balance right in where the finances are found.
Also by way of background, it is worth acknowledging that the Chancellor of the Exchequer repeated a theme throughout the CSR statement on 20 October—one that I entirely applaud. For example, he said at column 951 that
“those with the broadest shoulders will bear the greatest burden”.
Equally, he said at column 956:
“A civilised country… protects the most vulnerable”.—[Official Report, 20 October 2010; Vol. 516, c. 951-56.]
Protecting vulnerable people was a theme repeated throughout the statement, and I loudly applaud both those objectives.
The purpose of this debate is to ask whether that laudable and agreeable objective is achieved by the combined efforts of Government policy. If not, will the Government review their policies and make the necessary adjustments to ensure that those with the broadest shoulders do bear the greatest burden and that the vulnerable genuinely are protected? I doubt that, in the tribal warfare that often masquerades as debate in the House, we will do anything other than divide on pre-determined lines on the assessment behind those questions, but we can call on other commentators to contribute to the debate.
As we know, the Institute for Fiscal Studies disagreed with the Treasury’s claim. I am pleased to see the Minister in her place and I look forward to her response to the debate. I am sure that she will respond to the IFS assessment of the combined impacts of the CSR and the Budget. The IFS disagreed that the overall package of tax and benefit changes was progressive. Carl Emmerson, acting director of the IFS, said that
“our analysis continues to show that, with the notable exception of the richest 2%, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way.”
The IFS emphasised the problems involved in estimating the distributional effect of changes in public services. It welcomed the Treasury’s attempts to model those, but noted its finding that the public service spending cuts announced in the spending review were regressive.
Equally, the Financial Times described the spending review as
“a gamble given the continuing weakness of the recovery”,
but supported the decision to cut spending, provided that growth in the economy returns. The Times said that, broadly speaking, the priorities chosen by the Chancellor were correct but that the changes could be “very painful” for the poor. The Guardian also commented that the spending review was “a major gamble”—I shall return to that concept—at a time when economic conditions have deteriorated. It said that, furthermore, the cuts would be focused on the sick, the poor and working parents. The IFS commented that the cuts in overall public spending over the spending review period would be the deepest in real terms since the second world war and that cuts in spending on services would be the largest since the four years beginning in 1975.
As I said, housing benefit measures will be debated this afternoon in the main Chamber. Two primary changes are being made next year. The first is the capping of local housing allowance for each property, which will be implemented in April 2011. That has been a primary focus of political debate and comment in the House and elsewhere, although it will impinge on a relatively small number of properties and households. For example, just 139, all in London, receive in excess of £50,000 per annum; 11,233 are in receipt of more than £20,000 per annum, some 10,000 of which are in the London area. In Cornwall, which, as hon. Members might expect, I will discuss in a moment, 40 households are in that category. The measure would save £65 million.
What concerns me most particularly is the impact on rural areas such as Cornwall—but not just Cornwall. A focus of my comments will be the reduction in the percentile market rates used to calculate local housing allowance rates from the 50th percentile—the median—to the 30th percentile of local rents, which will be implemented in October next year. The Department for Work and Pensions estimates that that will secure annual savings of £425 million.
The nature of the debate in the media gives the impression that housing benefit is paid mainly to people who are unemployed. Because of the “tabloidisation” of the debate, the implication is that the work-shy are in receipt of housing benefit and need to be encouraged by stick rather than carrot to find work. In fact, only one housing benefit claimant in eight is unemployed. I should add that, in future, the effect of the uprating of housing benefit according to the consumer prices index rather than local rents will place further significant downward pressure on housing benefit and may well result in shortfalls between rent and the housing allowance that people are given.
The Secretary of State has made it clear that the intention of the Department is to use housing benefit to force rents down, and I can understand the logic behind that, which is that housing benefit, because of the sheer volume of those who receive it, has an inflationary impact on the rental market, particularly the private rented market. However, not all areas will necessarily respond uniformly. The changes may well work in some rental market areas, but I am not convinced that they will work in them all.
For example, according to figures published in The Guardian on 30 October, outside London, Cornwall will be the hardest hit by the changes. Indeed, 11,180 households —one third of all households with employed people in receipt of the benefit—will be affected. There will be a significant shortfall between their housing benefit and the rent that they will pay.
In Cornwall, there is a significant shortfall right now between the median rent as assessed previously by the rent office—now by the Valuation Office Agency—and what housing benefit should be in Cornwall, and therefore between the housing allowance that will be available to tenants and what is available in the market on a week-by-week basis. It is very rare indeed that a new property comes on to the market that is actually within—either on or below—the median rent as assessed by the valuation office. Most rents fall above it, and therefore the shortfall has to be made up by the tenant, who may be on a low income or on benefits.
In Cornwall, 57,109 people claim housing benefit; 12,972 are of working age but not working—they include those in receipt of income support or jobseeker’s allowance—and about 12,000 are of working age and are working, or are on a non-passported benefit or employment support allowance, previously incapacity benefit, or contribution-based jobseeker’s allowance. A similar picture is painted by one of the larger social landlords. Penwith Housing Association tells me that about 60% of its tenants are on housing benefit. More than half of those who are of working age are indeed working, and are in receipt of either partial or full housing benefit support to cover their rent.
Yesterday, Cornwall council published some information on the likely impacts on the local community of the various changes to housing benefit. Its assessment is that the reduction of the market rental from the 50th percentile—the median—to the 30th percentile is likely to have the biggest impact. It says that 10,500 households are experiencing a shortfall between housing benefit and the rental, and it is unknown what the likely impact will be on them.
The council has not yet made a calculation, but it believes that a larger number of households will experience a significant shortfall between the rent and the housing benefit available. It anticipates that tenants who will ultimately be evicted because they can no longer meet their rent payments as a result of the shortfall will be found to be intentionally homeless, according to statutory interpretations, and therefore not eligible for assistance from the local authority. There will be an increase in demand for social housing in some areas, and the impacts on local people will be significant indeed.
We are very lucky in Cornwall to have the Cornwall Residential Landlords Association, which is a responsible and well-organised band of private landlords who, collectively and individually, provide an excellent service to the local population. They look for clear signals from the Government. I believe that the Government are looking at increasing the availability of direct payments to landlords in certain circumstances. Where that is done, preferably on a voluntary basis with the agreement of the tenant, it may help to lever rents down because the landlord will have a cushion of reassurance that the payments will come to them. However, the pressures and difficulties that will be experienced between landlords and tenants will intensify as a result of the cuts.
The problem in a market such as Cornwall’s—this applies to many other areas where there is also a vibrant tourism economy—is that landlords have alternatives that, frankly, on many occasions, will give them a far better income and greater certainty that they can recover the property. Many take up those alternatives. Many landlords will leave the marketplace and go for the much easier option of gleaning their income from the tourism sector.
The situation in Cornwall is not quite like the urban or suburban situation that I believe the Government have envisaged, whereby the alteration in the housing benefit arrangements and assessments will result in a levering down—a crow-barring—of the rentals in the private rented sector. It is not anticipated that that will happen in a place such as Cornwall, so I hope that the Government will look overall at this measure and consider that having a roof over one’s head is absolutely vital for many families. We are talking about working families who are simply seeking security in life from which to get to work, school their children and establish some kind of family security. This is about penalising people not because they are unwilling to work but simply because they are poorly paid, and I am sure the Government have no intention of doing that. I think they would like to ensure that work does pay.
Looking at the situation in Cornwall, which is, I understand, the same as in North Norfolk and other such rural settings, most analysts consider that there will be few new properties coming on to the market in the 30th percentile or below. Opportunities will be restricted, landlords will be given other options, and there will be instability, overcrowding and a possible cutting of corners, with families having to move and working families under greater stress. The problem with the proposal in the housing benefit reforms to extend the single room rent to people under the age of 35 is that there is little of that type of accommodation available in many rural areas, and planning policies seek to restrict what is often referred to as “bedsit land” in some smaller towns. On the one hand we have the Government, through their planning policies, giving local authorities the right to restrict the extent to which parts of small market towns are, as they see it, ghettoised by these bedsit arrangements, and on the other hand they have a policy that seeks to encourage that, through the housing benefit system.
Annette Brooke (Mid Dorset and North Poole) (LD)
Does my hon. Friend share my concern that when there has been a partnership break-up, the option of only a single room allowance up to the age of 35 might prevent good quality contact with children?
Andrew George
My hon. Friend makes a very good point about one of the great difficulties that occur when there is family break-up. I fear that as a result of these kinds of measures we might get more family break-ups, because of the stress and pressure under which families might be placed. In our constituency surgeries, we all see families in that very sad situation. We see single parents “without care”, as they are sometimes rather unfairly described, who find themselves wanting to have contact with their child or children but being unable to do so because of their very constrained circumstances. This policy will only make that situation worse.
Mr Andrew Turner (Isle of Wight) (Con)
I wonder whether the hon. Gentleman could look at levels of pay. In Cornwall, and similarly on the Isle of Wight, there is a higher level of pay in the summer and a lower level in the winter. Is that catered for in his understanding?
Andrew George
Other than with people who live in uncertain accommodation—winter lets during the winter and very uncertain accommodation in the summer—I am not aware of any circumstance in which people have variations in their rents, with a landlord varying the rate of rent on the basis of the tenant’s income. My hon. Friend makes a very good point. I am afraid that the system does not allow or cater at all for seasonality in working families’ employment and income.
A further incongruous circumstance is the potential conflict between this policy and what the Minister’s colleagues in the Department for Communities and Local Government appear to be doing regarding the registered social landlord sector. The intention is to allow, and even encourage, registered social landlords to increase the rent on their properties up to a notional 80% of the market rate for a particular location. The net effect of that—it will apply, I understand, to future new dwellings and to re-lets—is to create a rather strange circumstance: on the one hand the Government appearing to want to get the housing benefit bill down, but on the other hand one of their Departments appearing to ratchet it up. Of course, a large proportion of people in social rented accommodation—60% of those living in the accommodation of one of my RSLs—are in receipt of housing benefit, and ratcheting up the benefit in those properties would result in an increase in the housing benefit bill.
There will be other strange circumstances. People who seek to downsize their properties—for example, an older person living alone who wants to move into a single-person bungalow to release a family house for a local family—will be discouraged from doing so because the re-letting situation will mean that their rent could go up significantly if they were to pursue that otherwise relatively selfless act. By pursuing a re-let—a transfer—their rental might go up and their housing benefit might not cover it.
Because of the time, I shall quickly canter through a few other issues. First, on the wider issues of welfare reform, many of us will have read in the newspapers and heard in the media over the weekend the comments of the Archbishop of Canterbury, the Chartered Institute of Housing, the National Housing Federation, the Child Poverty Action Group and Action for Children, all warning about the unintended consequences. I certainly exonerate the Minister and her colleagues from wishing to pursue an intentional policy of impoverishing vulnerable people; I think that it is entirely unintended.
Julian Smith (Skipton and Ripon) (Con)
I am sure that the hon. Gentleman is coming to this point, but will he talk a little about the impact on vulnerable people now and in the future of not dealing with the deficit? Will he also refer to the positive measures in the Budget for businesses in his constituency? There is the scrapping of the jobs tax, the national insurance holiday, tens of thousands taken out of tax altogether, the pupil premium and other initiatives. Surely, in any speech on this subject, all those factors have to be taken into account.
Andrew George
I am grateful for that intervention; I am sorry that the hon. Gentleman arrived late and therefore missed the part of my speech when I congratulated the Government on precisely those measures.
Clearly, we need to deal with the deficit, but the question of the speed and the extent is a debating point. I am not necessarily saying that the current speed and extent are wrong, but that judgment needs to be kept under review. Also, where do we find the money from? The hon. Member for Skipton and Ripon (Julian Smith) talked about the point that I am coming to; I will certainly come to a conclusion, which is that we need to question whether we have the balance right, so that those with the broadest shoulders bear the greatest burden. I am not certain we do have it right, which is why we should be taking a measured judgment on the impact of the proposals across all income ranges.
All the groups I mentioned, and many others, have been warning about the unintended consequences of some of the welfare reforms. The Chartered Institute of Housing anticipates that by 2025 most two-bedroom properties in the south will be unaffordable to those claiming housing benefit, whether or not they are working. That will force people into areas with less employment—in other words, an unintended consequence, not making work pay by forcing people into areas where they will find it much more difficult to get a job. It will also steepen the tapers, for example, by increasing the rents on social rented accommodation. As we all know, if someone takes a job or accepts higher pay, housing benefit is often withdrawn at a rate of sometimes 80p in the pound earned, and that is on top of other benefits that may be lost, such as council tax benefit. That places people in a poverty trap that discourages them from taking the very work they are keen to take up. All those factors will lead to social impacts on stability, family security, children’s education and other matters.
Other sanctions are proposed that have been mooted in the press over the weekend and will no doubt be part of the Secretary of State’s statement on Thursday. We have been presented with the prospect of unemployed people wearing tabards, picking up litter from our streets as a result of some kind of compulsion. Having worked in the voluntary sector, among others, for a while before coming to Parliament, I know that the one thing we do not need is to apply compulsion or humiliation to this matter.
It is clear that the many people I speak to in my constituency who are seeking a job are extremely keen to secure not only a job but work experience. The Government’s proposal to set up voluntary arrangements that enable people to undertake worthwhile voluntary work in their communities can only be a good thing. Unemployed people want well organised work and voluntary opportunities, and the voluntary sector want the willing, not the unwilling. At the weekend, the Disability Alliance argued that many people will be pushed into poverty by the changes to the employment and support allowance, previously called incapacity benefit. We await the outcome of that proposed change on Thursday.
Within the care sector, pressure on local authority budgets—26% cuts over three years—means that councils are routinely removing the discretion to give care support to those in moderate need. As costs, and no doubt charges, go up, the definition of “higher” and “severe” need could become more stringent. Budget pressures are likely to reduce early intervention for children, as Action for Children identified over the weekend, and the services available to the most vulnerable. There is a 20% cut in the bus operators’ grant and local authorities are already looking at cutting some services. The young and the old will be most affected by that—those without a car, and, therefore, the most vulnerable. Other cuts, such as in the education maintenance allowance, will also affect young people.
The questions remain: will those with the broadest shoulders bear the greatest burden, and will the vulnerable be protected? It is important not to forget that the gambling of the rich busted the banks, which did most to drop us in this situation. We must not allow them to get away with that while the poorest and public servants are made to pay the price; that is hardly justice. On the question of measures to get the balance right between cuts in services and benefits, and of where to obtain resources to maintain services, the banking levy, although welcome, is a relatively infinitesimal gnat bite on the banking sector, given the rate at which it is set.
Julian Smith
I am glad my hon. Friend has spoken about the banking levy, because the previous Government did not do that, and I presume he will give credit to the coalition for taking aggressive action on the banks, and for the three reviews on banking reform taking place over the coming year.
Andrew George
I again remind the hon. Gentleman that, had he been here earlier, he would have heard me mention that. I welcome the banking levy and have congratulated the coalition on it; it is a move in the right direction. However, I fear that some of the most vulnerable in society may be pushed further to the margins, and we need to keep that situation under review. Equally, we need to keep under review the question of whether the banking levy has been set at a level that retrieves from the banks the resources that we believe they should be putting back into the economy, having dropped us “in it” in the first place.
The Minister is an excellent Minister and I know she is listening to these concerns. I fear that the reforms, although well intentioned, may well miss the target: they may not necessarily push rents down in the way anticipated or protect the vulnerable, and they may fail to meet the Chancellor’s stated objective as given in his 20 October statement. A strong and self-confident Government can listen, reconsider, gracefully accept the situation, adjust and move on when things are not going quite according to their plan. In her winding-up speech, I hope the Minister will address those issues and reassure me that the Government are listening to these concerns.
Chris Leslie (Nottingham East) (Lab/Co-op)
As ever, Mr Crausby, it is a pleasure to take part in a debate with you in the Chair.
I congratulate the hon. Member for St Ives (Andrew George) on raising this important strand of an exceptionally complex set of announcements, which have come thick and fast from the Government and are only now beginning to reveal themselves to MPs, never mind to the wider public, as the implications begin to hit home. A lot of implications will not hit home until the next financial year and then into the next few years of this Parliament, at which point I would expect growing discontent and increased shock and surprise at how harsh the Government chose to be on the most vulnerable in society through their spending policies.
The hon. Member for St Ives is being exceptionally honourable in this matter, and he genuinely feels strongly about trying to speak up on behalf of vulnerable people, but when he says that certain consequences of the Government measures are “perhaps unintentional”, I suspect that he is being more than generous. Part and parcel of the political strategy that goes alongside the Government’s supposed economic approach is ensuring that the welfare changes and reductions in expenditure hit the poorest in society who, on balance, tend not to vote for the Conservative party.
The hon. Gentleman will have greater insight than me into the Liberal Democrats’ approach, although I suspect that even he might not know what is going on with those at senior levels, as they assimilate ever more closely with the leadership of the Conservative party. I still regret the choice that his colleagues made to prop up and provide the scaffolding for this harshly strategic and deliberate set of decisions. Those in the Conservative party have been planning such decisions for many years, and attempts to scale back the role of public investment in our economy have been part and parcel of their approach throughout. They are now able to unwind that approach with a certain degree of alacrity under the guise of deficit reduction.
Annette Brooke
I hesitate to interrupt the hon. Gentleman’s flow, but does he agree that much-needed welfare reform should be tackled? There might be questions about how to tackle it, but does he agree with the general principle?
Chris Leslie
Nobody disagrees that we need a level of welfare reform, but the question of how we do that is at the centre of the debate. We could shut down the Department for Work and Pensions tomorrow and not spend an extra penny. That would be a degree of welfare reform, but it would be so ridiculous that it would be off this planet. We could have a level of reform that was too slow and did not really bite. I believe that the trajectory of reforms pursued by the previous Administration sought to strike a fair balance.
The extent to which Ministers are reducing what is known as “annually managed expenditure” within the welfare budget has been designed around a political strategy. By taking that amount from the welfare budget, the Chancellor tried to come within spitting distance, as he saw it, of Labour’s plans for deficit reduction within the departmental expenditure limits. That political strategy rapidly fell apart, particularly because the Opposition accepted the need for a certain level of welfare change.
Let us look at the points raised by the hon. Member for St Ives. If the welfare changes are not handled sensitively and their implementation is blind to the human costs involved, some of them will affect the real lives of real people. Such people will be increasingly frightened and unable to cope with some of the changes, and that will create great harm. That harm might not have the quantifiable economic or econometric measurements that we traditionally look at when monitoring fiscal and monitory policy, but it is real and will have an indirect effect on our economy.
Andrew George
I am following the hon. Gentleman’s narrative, but before he strays too far from his point about the intentionality—or otherwise—of the possible consequences of the reform package, let me make it clear that I do not associate myself with his analysis. I do not believe that it is the intention of the Government or the Minister to impoverish people deliberately.
The point that I was building towards concerns the balance of risk. Taking a risk with the poor needs to be balanced by taking a risk with the banking sector, which I do not think that we are doing at the moment. If we are to probe policy so as to get the balance right between those with broad shoulders and more vulnerable people, we must put pressure on the top end just as much, if not more.
Chris Leslie
As I said, the hon. Gentleman is being more than fair—perhaps a little too fair—in his analysis of the Government’s intentions. I hope that I am wrong in saying that a measure of deliberate choice is involved. However, the weekends at Chequers during which the Deputy Prime Minister and the Prime Minister pored over the political stratagems that they could devise, having linked some of the measures in the spending review together, suggest that a balancing act was going on in the Government to think about who they could hit and get away with it, rather than the human consequences. That is a difference of opinion that we will have to accept.
Chris Leslie
I would like to make progress on the issue of housing benefit, but I happily give way to the hon. Gentleman.
Julian Smith
The comments that the hon. Gentleman made just now and at the beginning of his speech are insulting to Ministers and, certainly, to Back-Bench coalition Members.
Chris Leslie
I am sorry if I have hurt the hon. Gentleman’s feelings; that would be a dreadful thing to do. However, it is far worse to hit the poorest and most vulnerable people in society through the measures that he will support by walking through the Lobby. The warm words that he espouses are all very well, although so far he has not said much about vulnerability and the impact of the reforms. He is doing his job and wants to progress through his party—I wish him luck with that—but the measures that he will be supporting will be harmful, and I am sorry if he feels that that is insulting.
Let us look at some of the changes to housing benefit. As I said, housing benefit needs to be reformed, but not necessarily at the pace and with the harshness espoused by the Minister. Some of the combined, compounding changes will come in quickly, with some starting on 1 October next year. According to the Government’s own figures, the reduction from the median 50th percentile to the 30th percentile for housing benefit will affect 642,000 people. Many hon. Members, including the Minister, will be getting letters from their constituents about that. Those reforms will leave some people £39 worse off per calendar month. Some landlords might be happy to say, “That’s all right; we will bear the loss”, but others will say, “Sorry, that is unacceptable. Out you go.” What will be the consequences for homelessness? What will the pressures be on the indebtedness of individuals who are already stretched with credit card debts and so on? Will we see even greater pain at that level?
The National Housing Federation said in the newspapers today that the reforms were “brutal cutbacks.” Those are not my words, so if the hon. Member for Skipton and Ripon (Julian Smith) feels that such words are insulting, he should speak to the National Housing Federation. It said that the reforms risk the prospect of people
“falling into debt or hardship or being forced to move out of their home and away from their local community.”
That sudden drop in income and the rushed nature of reform are what the Labour party fundamentally disagrees with. Of course we accept that the deficit needs to be tackled, but we take a different view of how to do that.
The Economic Secretary to the Treasury (Justine Greening)
You do not know how to do it.
Chris Leslie
We have a set of strategies, but we do not have the phalanx of Treasury officials lined up behind the Minister.
Justine Greening
Perhaps the hon. Gentleman will outline three or four specific measures that his party would propose to tackle the deficit.
Chris Leslie
Given that we are talking about vulnerability, let us look at the impact of the spending review. The hon. Member for St Ives mentioned the banking levy but, as we debated last night, that is a puny and pathetic attempt by Ministers to let the banks off the hook while they are hitting families and children hardest of all—[Interruption.] I am sorry that Minister does not like my example, but she has made a choice and we would do things differently. It is important that the record shows that the Government have decided to let the banks off the hook lightly.
The Minister may well bleat and moan, but she should realise, for example, that cutting mortgage interest support for the most vulnerable will, as the Archbishop of Canterbury said, help to create a cycle of despair for many people. I do not think that the archbishop is a particularly partisan individual, and it would be a great pity if the remarks of those in civil society were dismissed.
I am interested in the Government’s approach to the universal credit, which they are looking to put in place as part of welfare reform. In many respects, it is a reasonable concept. However, I cannot understand why their approach is then to cut council tax benefit by 10% and to localise it, as has been announced. How is that consistent with the universal credit policy? Will the Minister elaborate on how the universal credit arrangement will come into place for the most vulnerable people when the council tax benefit is not part of it? I would like to understand the consistency, because that change will hit the poorest in society, as will many of the disability welfare changes.
We accept that disability welfare reforms are needed but, again, we must at least ask questions about the pace and harshness of some of those changes—as the hon. Member for St Ives has done. Taking out £2 billion by limiting the contributory employment and support allowance to the very disabled raises questions about how those who no longer have such support will cope. It is incumbent on those who are proposing the cut to explain where the support for those individuals will come from. Even pensioners will feel the impact of many of the changes, and they will lose out because of the four-year freeze in the savings credit element of the pension credit.
Public service reductions will have an indirect effect. This debate is not just about welfare, because the public service reductions announced in the spending review will also have a disproportionate impact on the very poorest in society. As the Institute for Fiscal Studies has said,
“modellable cuts to public services are regressive”.
There will also be a cut in health service spending. If we take away the social services element—it is being redefined as NHS spending, which it was not previously—and look at core NHS spending, it will fall by 0.5%. The IFS described that as the “worst settlement since 1951”. Again, those people using the health service are the most vulnerable and they will bear the brunt.
There will be local government reductions, in particular for support to the voluntary sector. For example, several welfare advice centres in my constituency will no longer be able to offer help and support to the very poorest in society because of the implementation of legal aid cuts. People will be left to fend for themselves, with far less advice—[Interruption.] The Minister is chuntering away, but she will get her opportunity to speak in a moment. I hope that she can give those people an explanation of the deficit reduction choices that she is making that deliberately addresses the speed of her measures. I understand that everyone in the House wants to ensure that deficit reduction is carried out sensitively, but I cannot quite understand the voracious speed at which the Minister thinks she has to do that. Her approach seems punitive and potentially risky.
There are education changes, too, and we have also talked about policing and crime. Those who tend to need the support of the policing services are those who are the victims of crime, and most of all the poorest and most vulnerable in society. The list goes on: reductions in the working neighbourhoods fund; no more future jobs fund; and, again, some of the welfare advice changes. Those things give rise to more worries and concerns.
The IFS was right to point out the regressive nature of the Budget. All the spin and warm words that the Minister will no doubt parrot again have been unravelled by the objective and independent analysis carried out by the institute, which the Conservatives were more than happy to cite in times past, but now seem keen to rubbish. The IFS says that the cuts are the
“deepest since the second world war”.
The Government have decided to hit families with children hardest, with the health in pregnancy grant going, the taxing and freezing of child benefit, the cuts to child care help through the working tax credit, and the scrapping of the education maintenance allowance. It is not necessarily those individual changes, but the compounding effect of them all happening simultaneously, with the speed of implementation chosen by the Minister, that makes them hit the most vulnerable very hard.
It was right that the hon. Member for St Ives raised the question of whether those with the broadest shoulders are bearing the greatest burden. The Chancellor keeps saying, “We’re all in this together,” but that is completely unbelievable and palpably not the case.
The puny nature of the banking levy is such that even the International Monetary Fund has said that it is a third of the size that it suggested. The banks will enjoy the corporation tax cuts, as well as their deferred tax benefits. There is also, of course, complete inaction by the Government on banker bonuses, which will be revealed when the bonus season starts in January or February.
All in all, the set of changes is exceptionally regressive and will hit the most vulnerable in society most of all. Perhaps the saddest fact is that many of those who will be affected do not yet realise it. The changes have not necessarily been reported in detail. People might well be completely oblivious to the changes that are coming but, for example, when the housing benefit change comes in on 1 October next year, they will be faced with great difficulties.
I have urged my local authority in Nottingham to find a way of communicating with recipients of housing benefit so that they can prepare themselves for the changes that are coming. Will the Minister at the very least—even if we disagree about the speed and nature of the policies—tell hon. Members how the Government intend to communicate with people and give them a bit of a heads-up so that they can prepare themselves for some of the changes? With a little preparation, the poorest in society might be able to try their best to brace themselves for what is around the corner.
I have set out my genuine concerns. There are political differences between us, but the story is a sad one that will unravel further in the years to come.
The Economic Secretary to the Treasury (Justine Greening)
It is a pleasure, Mr Crausby, to serve under your chairmanship of this important Westminster Hall debate. I congratulate the hon. Member for St Ives (Andrew George) and pay tribute to him for securing the debate. I remember that during the spending review debate and the emergency Budget debate held earlier this year, his presence in the Chamber was constant, which shows his commitment to and concern about the issues—he is right to point out that we should all be deeply concerned about them. I shall start by setting out the background to some of the measures, and then talk in more detail about the housing benefit measures the hon. Gentleman mentioned in particular.
I listened to the response from the hon. Member for Nottingham East (Chris Leslie). He clearly holds a different view, but I found his speech deeply irresponsible in many ways. As an incoming coalition Government, we have picked up a fiscal deficit without precedent not just in our own country, but across the developed economies of the world. His party handed over that deficit, which we and the Liberal Democrats are working to address.
Certainly, the situation we took over was grave. The hon. Member for Nottingham East talked about the speed with which we are tackling the deficit, but that very much underscores just what a serious position our country was in when we came into government earlier this year. In fact, had we not taken the steps we are taking over the coming years, our debt would be £100 billion higher and we would be spending some £5 billion more as a nation on debt interest—money we want to put into supporting our public services. Had we not taken those steps, there would have been the real risk of being unable to have as a good a chance as we now do of keeping interest rates low, which is critical for companies investing and creating jobs and for households across the country with a mortgage.
Clearly, therefore, we needed to take action. One of the key pledges that we made as part of the spending review was that fairness would be at the heart of our decision making. The hon. Member for St Ives was right to say that despite the challenging backdrop against which the emergency Budget and the spending review took place, they included important measures such as increasing the personal allowance, which saw 880,000 people taken out of income tax altogether. Interestingly, he also mentioned that the Government’s aspiration was to go further on that, which is important. The distributional analysis and the IFS modelling do not take those aspirations into account, because we have not yet announced how we will carry them forward. Nor do they take into account the benefits of the universal credit or the stimulus and support that it will provide to people who are getting back into work. It is important to bear that in mind.
As I said, one of our key pledges in the spending review related to fairness. By fairness, I mean that, across the entire deficit-reduction plan, those with the broadest shoulders should bear the greatest burden. There has been a lot of debate about the IFS, and it is interesting that we have published more distributional analysis alongside our comprehensive spending review than any Government have ever done before. There is, of course, a debate about how to do that analysis in a more refined way, and the TUC, for example, took a view in its own analysis about how to spread defence spending across income deciles. Clearly, therefore, there are methodological questions that it is worth while looking at to see how we can improve things. Hon. Members will be aware that Robert Chote, who was the head of the IFS, now heads the Office for Budget Responsibility. He is precisely the kind of person who can help us to have a more transparent, independent assessment of our policy. That will help not only the Government, but people who look at our policy to understand what it means for our country and our communities.
Fairness has underpinned our approach. Critically, we have to move to a welfare system that helps and supports the vulnerable, but does not trap them in the way the system we have taken over too often did. We need a system that supports people back into work, and that is affordable. That is important because my great concern is that we need a system that people across our country buy into. That means that the system must be fair not only to the people in it, who need the support, but to those outside it, who perhaps work and pay their taxes. Those people might be happy to pay into a system to support the most vulnerable, but they might feel that it needs to be fair to them as well as to those who get the benefit payments. They need to feel that the system improves the lives of those who receive benefit payments and gives them the chance to be independent that, for various reasons, they do not have at the moment. I will say a little more shortly about how we can do that.
We have had a test on fairness, and there is no doubt that we have had to make some difficult decisions about how to spend the small amount of money we have following the Labour party’s profligacy in government. Today, in its debate on welfare on the Floor of the House, the Labour party will have another chance to set out how it would approach welfare reform. We have heard an awful lot about the fact that there is a better way of doing things, although we have occasionally heard from Labour Members that they do not oppose all our reforms. However, if we are to have a thoughtful and constructive debate about this important issue, it is time for the Opposition to engage more meaningfully, rather than simply setting out what they are against. They owe that to Parliament, which needs a proper debate from elected representatives, and to our country. They should set out exactly how an alternative, if there is one, would look.
I want now to look at the welfare state in a little more detail. Under the previous Government, benefit bills soared by 45%. In some cases, the benefit bill for a single out-of-work family amounted to the tax bills of 16 working families put together. To return to my earlier comments, everybody would say that that was not just unfair, but unsustainable. Given the financial position that we inherited, protecting the welfare budget was not an option. If we had done that, it would have forced more drastic front-line cuts on services elsewhere, which so many of us, including those on benefits, rely on so much. We therefore tried to focus our support on the people who need it most—the long-term unemployed, the very young, the very old, the disadvantaged and those who, through no fault of their own, are unable to work or find it hard to enter the labour market.
The spending review announced reforms to tackle welfare dependency by delivering a simplified system in which it always pays to work. The hon. Member for St Ives rightly mentioned impoverishment, and at its heart is the fact that people do not have a job. We need a welfare system that supports people back into work, and that applies particularly to people who have been on incapacity benefit and employment and support allowance. In one of my first roles as a new MP in Parliament, I sat on the Work and Pensions Committee, and I clearly remember that one of our first reports looked at incapacity benefit. It was a real scandal that although jobs had been created over the previous decade, the overwhelming majority of those on incapacity benefit were left wanting to work. On Thursday evening, I met visually impaired people in my constituency who were desperate to find work and to be financially independent. Those are the people we are keen to support back into work, but they were languishing on benefits in way that was bad for not just them, but our country and communities. It was also unaffordable.
Andrew George
The Minister is making an extremely important point; in fact, it was one of the many that I made. We need to establish a bridge between dependency and securing work. That applies to the housing benefit system, and I mentioned tapers, or the rate of withdrawal of housing benefit. The previous Government did nothing about the problem, which has been going on for decades. The point also applies to incapacity benefit. There is a cliff-face between benefit dependency and being able to get work. Perhaps the Government need to look a little more at ways of establishing a bridge to help people into work, rather than impoverishing them, putting them at risk or worrying them about making the transition into work.
Justine Greening
The hon. Gentleman raises one of the key flaws that has existed in the welfare system, which is that it has trapped people. Going back to my time on the Work and Pensions Committee, I remember an inquiry that we did into Jobcentre Plus. The then Government had to introduce a better-off test to prove to people that they were better off going into work, because it was so complicated to work out what benefits people were receiving and what they would lose. It was not clear to people that moving into work would be the best thing for them financially.
The hon. Gentleman will be interested to read the White Paper that the Department for Work and Pensions will release in the next few days on the universal credit, which is intended absolutely to make sure that people who are currently on benefits know that they will be better off if they move back into work. We can move away from the situation faced by some of the worst-off people in our country, who have moved into work only to be penalised with some of the highest marginal rates of tax, which are simply eye-watering. We would not dream of putting even the highest earners on such rates, but the marginal rates of tax faced by some of the lowest-income people have been huge, and the universal credit is aimed at starting to tackle that situation.
Chris Leslie
For the benefit of hon. Members, will the Minister tell us what the marginal rate of tax will be for families that lose child benefit when they earn more than a certain amount? What will the percentage be? As I understand it, earning £1 could result in £2,000 of lost child benefit.
Justine Greening
I am sure the hon. Gentleman will want to consider those calculations in detail, but that brings us back to my concern about the Opposition’s engagement with the subject, which was typified by his intervention. Unfortunately, it was not at all constructive but deeply negative. At the heart of my concern about the Opposition’s lack of thoughtful strategy is the fact that he argues for a policy that would maintain child benefit for higher rate taxpayers.
Justine Greening
No; I want to make some progress.
The hon. Member for Nottingham East could have set out some better alternatives, but he failed to do so. That is a shame for our democracy. I assure him that we are tackling problems in the welfare system that the previous Government failed to tackle; I had hoped that he would welcome that. I know that the Opposition agree with some of our welfare reforms; it would help if we knew which ones, as we could then have a genuine political debate about areas of disagreement.
The universal credit will be a big step forward, and a good one. It will ensure that people are no longer trapped in welfare, as they have been. The hon. Member for St Ives said that one of our achievements as a coalition Government was to re-establish the earnings link. He is right; against the backdrop of a difficult fiscal deficit, we have maintained pensioner benefits on things such as free eye tests, free prescriptions, the free bus pass and free TV licences for the over-75s. We have also increased the cold weather payment award permanently to £25.
The hon. Gentleman also mentioned social care. Again, it is symptomatic of what we have in mind that we must protect the most vulnerable. That is why we have added £2 billion to the social care bill, with £1 billion from the NHS and £1 billion from the budget of the Department for Communities and Local Government. That is precisely to ensure that local authorities do not need to restrict access to social care. The fact that the money comes from the NHS and the Department shows that we need them to work more closely together. The reality is that health and social care are inextricably linked. Indeed, good social care can protect the vulnerable and help them maintain a healthy and independent life. As MPs, we have all seen people in our surgeries who are very keen to do that, and we have all worked to help people maintain the independence that so many want. We have therefore been particularly careful to ensure that funding for social care is supported.
I turn to the hon. Gentleman’s important comments on housing benefit. In the changes that we made to housing benefit, we tried to ensure that we tackle the underpinning of affordable housing and the lack of new affordable housing. One reason why housing has become so expensive is the gap between demand and supply, and the fact that housing starts over the last 10 years have generally been lower than in the past. That was so particularly for social housing, and especially for affordable homes in places such as London.
That is the backdrop and the key reason why rents have risen and housing has generally become more expensive. The previous model of affordable housing did not work. If Government money had been thrown at it during an economic boom, we would have seen the sorts of affordable housing that were needed, but it did not happen. We therefore had to think of different ways to do it. We are working far more effectively with housing associations and other investors that want to create housing, to ensure that we get back to creating the levels of social housing and affordable housing that are needed. That means investment—£4.5 billion for new affordable homes and £2 billion for the decent homes programme. We also need a more flexible system of affordable housing to help those who need to move for work and to protect the most vulnerable, and one that is also fair to the taxpayer.
Andrew George
I acknowledged earlier that £4.5 billion will be retained over the next three years for social housing. However, the Government intend funding the shortfall by allowing social landlords to increase their rents by up to 80% of the market value. That will result in more housing benefit. Within the Treasury’s modelling, to what extent does the Economic Secretary anticipate the increase in public-sector contribution resulting from the increase in the housing benefit to be paid to residential social landlords as a result of rent increases?
Justine Greening
It is important to say that the change relates to new tenants rather than existing ones. Existing tenancies will not be affected by such measures. On the question of market rates and affordability, we will want to see landlords, the Homes and Communities Agency, and the regulator, in conjunction with local authorities, talking about ensuring affordability. The hon. Gentleman is right to point out that housing benefit will still be available to support people.
The challenge is to move to a more sustainable footing for housing, and particularly for social housing. That is most important for housing associations, and the need for them to keep reinvesting. We have tried to strike a balance that is broadly fair to those on existing tenancies and to ensure that the new stock that we seek to create—the £4.5 billion will create about 150,000 affordable homes—is used more effectively to support people. At the same time, we want to work with people to ensure that rents are affordable. Nevertheless, housing benefit will still be there.
The hon. Gentleman also spoke about the cap on the housing allowance and setting the local allowance at the 30th percentile rate. The reality is that people who are working must ensure that they can afford where they live. It will be difficult to ask them to pay into a system in which people on out-of-work benefits are living in areas that they simply cannot afford. The 30th percentile change is about trying to strike the right balance between what is affordable and what is fair and reasonable.
Annette Brooke
I thank the Economic Secretary for her earlier comments, which were helpful in setting the scene for reform. However, I share the concern of my hon. Friend the Member for St Ives (Andrew George) about the fact that housing benefit will impact differently in different areas. For instance, in my area I obviously have winter lets, and people seem to be concerned about the smaller one-bedroom or two-bedroom properties. I know that the transitional fund has been allocated, but will the Economic Secretary explain how the problems of each individual area, as they relate to vulnerable people, will be dealt with sensitively?
Justine Greening
The hon. Lady is right: different parts of the country clearly have different housing needs and challenges. The Department for Work and Pensions will be working with local authorities through the transition period, and as she pointed out, we need funding in place for that as well. There will be £140 million of discretionary funding to support local authorities, £10 million of which is for London. It is worth pointing out that that is not the only support available for those affected.
For example, we still have many things such as the social fund, which includes budgeting loans, crisis loans and community care grants that are being maintained. We are considering how the social fund can be more localised, so we are working with the Department for Communities and Local Government and local authorities to see how we can best use the money we have to support people, in a way that works for them and at the local level. Interestingly, no London MPs are here, apart from me. Depending on where one represents in the country, there is a different group of constituents, facing a different series of challenges. Therefore, ensuring that the local aspect is fully part of how we work through the transition is vital. That is why the role of the Department for Work and Pensions, working with local authorities and the DCLG, is so critical. That is also why, as Liberal Democrats will recognise, localism is a theme that needs to run more broadly through our policy across Government. That is one reason why in this area it is important.
Andrew George
That is central to the point that I was making, and it has been repeated by my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke). I entirely understand that in a London setting, and perhaps in other parts of the country, this is a debate about the understandable sense of injustice among hard-working people, who feel that those who are not working have preferential, and indeed better, living circumstances than they themselves can afford. In my part of the country that does not apply. The key issue is that the rental properties coming on to the market are not getting close to even the median or below, which is the setting for housing benefit in my area. Understanding how the market works in our area, we know that the policy of ratcheting it down to 30% will not lever private rents downward. It will leave a large group of people—working and non-working—significantly impoverished.
Justine Greening
The hon. Gentleman has set out his concerns for his area. I go back to my earlier comment about the 30th percentile change. That is the right thing to do to ensure that people feel the system is fair. As for rents, interestingly, if one looks at the changes around local housing allowance, about 32% of people affected by the changes will lose money, but will still get enough to cover their rent. Because of the way that local housing allowance worked in the past—it meant that people got more than they needed to pay their rent—a third of people will not be left with a shortfall.
We talked about the discretionary fund and working with local authorities. The concerns that the hon. Gentleman has raised are precisely why we want to ensure that as much of that support as possible can be localised. The reason is twofold. Local authorities might feel that the best way they can support people is to keep them in the homes they are already in—that is the decision they take. In other cases, they might feel that the best long-term sustainable situation is to help people to move to something that is more affordable to them.
The hon. Gentleman is absolutely right to raise those issues, which are precisely why we have set aside £140 million to ensure that the support is there to tackle some of those on-the-ground changes through the transition period, as we move to a housing benefit system that feels fairer and more affordable, and that does not trap people in poverty and out of work, as we have seen in the past.
I thank the hon. Member for St Ives for securing today’s debate, which has raised some very important points, and I am grateful to hon. Members for their contributions. There is no doubt that the spending review will have an impact across our society—not just for the next four years, but for many to come. The decisions we have made will help to shape Britain’s future. That is something of which I am very conscious. That is why we have put such an emphasis on fairness, protecting the vulnerable and supporting the most needy.
That fairness is rooted in not only supporting people today, but giving them the opportunity of a better quality of life tomorrow. We know that cuts to public expenditure have to be made—even the Opposition would agree with that—but that should not come at a cost of a more divided society, where the poorest and the most disadvantaged suffer as a result of mistakes that were never theirs. Our actions in the spending review reflect that: we have delivered a fair settlement, demonstrated that we are a progressive Government and supported the most vulnerable in our society. That was our promise when we came to power, and it is one that we fully intend to keep.
Consumer Credit Regulation
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Stella Creasy (Walthamstow) (Lab/Co-op)
I have tabled this debate for a simple reason. As a new MP, it seems to me to be the best way to get some answers from the Government about a matter that I know is very important to many of us in Westminster Hall today: how we support the poorest consumers in society.
Despite the pressure applied by Compass, the End Legal Loan Sharks campaign, the Better Banking Coalition and myself and others, as yet Ministers have not made any commitment to act on the issue of consumer credit regulation. I hope we can change that today, especially after the show of support by the number of Members here for this debate. I want to show how and why the Government should act, through regulation of consumer credit. I want also to highlight how important it is that that be undertaken in conjunction with a range of other measures to support people who get into debt, and ultimately to help break the cycle of debt that blights the lives of too many people in Britain.
I have a lot of detailed evidence on these matters that I want to put on the record and I know that a lot of other Members also want to speak out. Nevertheless, I hope that in 90 minutes we can make progress and have a constructive debate, and I am keen to hear what other people have to say on this issue.
At the heart of this debate is a concern about debt and how it defines the financial situation of millions of families in our country. During the past 30 years, households have become more reliant on credit as a means to secure homes, invest in education and skills and smooth out the fluctuations in income and expenditure that everybody experiences. Let me say at the outset that this is not a debate about the wearing of hair shirts or a musing on the nature of contemporary consumer society. The uses of credit that I have just described can be a powerful driver for economic growth. Therefore, ensuring access to credit and confidence in credit markets is vitally important, especially when public spending is so constrained.
However, a growing number of people have problems using credit, and the ease of access to credit also makes it much more likely that people can end up using the wrong kind of credit for their needs or taking on more debt than they can service, so that their financial fortunes become far too sensitive to changes in their circumstances. That creates a toxic mix of the wrong kind of banking and credit services, the ups and downs of life, and a small amount of financial comfort with which to cover the difference between income and expenditure.
A study by The Observer newspaper earlier this year found that for 26% of men and 34% of women, living beyond their means was the cause of insolvency. However, for many more people—indeed, for 50% of women—insolvency was caused by unplanned changes to their personal circumstances, such as divorce or job loss. So, for many people the problem is being caught suddenly with an additional expense—replacing a broken-down washing machine or a car—that means a cost to their monthly budget that they cannot afford, or being unable to manage a sudden loss of income through redundancy or family breakdown. All these factors then lead to over-indebtedness, default and insolvency.
Just how bad is the debt problem? The UK now has one of the highest levels of personal debt in the world. In April this year, people in Britain owed more than £1.4 billion in private debt and in recent years personal insolvency has reached record highs, with more than 130,000 individuals entering a formal insolvency process this year alone. These official statistics can tell us about formal insolvency, but it is clear that that is just the tip of an iceberg. Industry estimates are that about 500,000 people are currently in a debt management plan, and independent research by R3—the Association of Business Recovery Professionals—shows that a further 600,000 people say that they have contacted their creditors for help as a result of struggling with their debts. R3 also estimates that another 960,000 people are struggling with debts but do not seek help.
Debt has become the norm in our lives in Britain, with most of us owing money on credit cards, loans and overdrafts. However, it is when those debts become unsustainable and overbearing that trouble happens. According to R3, as a result of the recession four in 10 people are now worried about their current level of debt, with 3 million people fearing redundancy and 2 million people having taken on more debt in recent months. One in 10 people frequently struggles to make it to pay day, with money tending to run out around the twentieth day of each month.
There is every indication that these problems will only get worse, especially for those who can least afford indebtedness. The Government’s deficit reduction programme will put millions of people who are on low incomes under severe financial pressure, as they face reduced public services, a greater threat of unemployment and public sector pay freezes. Family Action has identified how a total of 21 different cuts, from changes to the working tax credit to the rise in VAT, will hit low-income families hardest. Crucially for those of us who are concerned by these issues, many of those are people for whom debts are a daily fact of life and for whom unemployment and cuts in income will be even more likely in the coming years, with banks and building societies remaining out of reach as a source of credit.
So it is welcome news that the Government have announced a review of credit and insolvency, and that they have made firm commitments to considering capping interest rates on credit and store cards. However, this debate is about what is not in the credit review, what the Government have not done and what they have failed to make firm commitments about. It is the millions of the poorest consumers, who end up using the so-called home credit, hire purchase and pay day loan sector, whom I want to talk about today.
The Better Banking Coalition estimates that some 6 million people are in that position. Many of them are people for whom the illegal loan sharking industry may once have been an option, and the progress made by the previous Government in addressing loan sharking must be recorded. The work of the Department for Business, Innovation and Skills itself shows that about 300,000 individuals, representing about 3% of the poorest families in Britain, used to borrow about £120 million a year from illegal moneylenders, on which they ended up paying back £450 million. The work of the taskforce on illegal moneylending should be commended, and I hope it will be supported. Indeed, its work should be protected within the budget of BIS, especially as it has been judged as delivering value for money.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my hon. Friend on securing this very important debate and on campaigning so vigorously in this vital area. Does she agree with me that in combating the loan sharks, the work of local trading standards departments has been absolutely critical? Furthermore, does she agree that it would be an absolute tragedy if, as a result of the Lib Dem-Tory cuts that will affect local government, trading standards officers were held back from doing that vital work?
Stella Creasy
My right hon. Friend makes an incredibly important point. With local authorities facing cuts of 25% or more to their budgets, it is clear that those cuts could affect trading standards and that the action now being taken on illegal loan sharking could therefore be put at risk.
We should not free communities from one form of exploitation only to allow another form to grow unchecked. Indeed, as more effort is put into cracking down on the criminal activity of loan sharks, it is all the more vital that there be greater access to affordable credit, an issue I will return to at the end of my comments.
We are here today to talk about the growth of the high-interest legal home credit market—a relatively recent phenomenon in the UK, and an industry that originated in America. As a result, many of the companies operating here are “exporters”, either working online or in our town centres. A good example is Dollar Financial, a US-based lender that operates under the trading name of the Money Shop in the UK. The Money Shop has expanded from just one store in the UK in 1992, which dealt primarily with cheque cashing, to 273 stores and 64 franchises across the UK by 2009. Now, in communities such as mine in Walthamstow, these companies litter our high streets.
I want to set out the sort of products such companies sell. We are talking about pay-day lenders, organisations such as Oakum or Wonga.com. In August, the Consumer Focus group published research into the use of pay-day lending. It estimated this market to be worth £1.2 billion a year and that it was used by around 1.2 million people. Its report went on to forecast a significant growth in the market. Such loans are often short-term ones with technical interest rates of anything up to 3,500% for a five-day loan—another point I want to return later.
The Consumer Finance Association, which represents pay-day lenders in the UK, estimates that these companies’ customers have an annual income of between £12,500 and £30,000, with £18,000 being the approximate average. However, research for the Friends Provident Foundation found that one in 10 UK pay-day customers had incomes of less than £11,000 per year. These are the people who can least afford to borrow at such high rates, even if it is only for a short time. The price of such lending is often as much as £35 in interest for every £100 borrowed, which simply drives these people further into debt, especially as these loans are often rolled over, one after another.
Furthermore, these companies make a point of targeting those who are unable to access the UK banking market. Indeed, in my own constituency Oakum makes a point of hiring people who can speak two languages, so that they can target their services at communities who are new to Britain and for whom the British banking system is still alien.
In the “home credit” market, people are approached on their doorsteps and offered loans. Generally, such loans range from £200 to £500 and have to be paid back over the course of a year. Although the companies involved claim not to charge for missed or late payments, if someone borrows £300 they have to pay back about £10.50 a week, which adds up to some £540 over the course of a year. That means a typical annual percentage rate of 272%, compared with the 9% or 10% APR that is often offered by mainstream banks.
One of these companies, Provident, has 11,500 “agents” who visit some 1.8 million people a week to collect payments and offer credit. Agents work with each person they serve to judge how much credit they can buy. Some 70% of both customers and agents are women. Critically, agents are paid according to how much they collect, not how much they lend, creating even more pressure to keep people borrowing at such rates.
Or consider the antics of hire-purchase companies such as BrightHouse. Such organisations target those on low incomes who have been refused credit and offer goods for sale on hire-purchase terms. The goods, which often have a high mark-up already, are leased out at high interest rates, so that a computer costing £800 or £900 ends up costing £2,000 or £3,000. Should someone default on a week’s payments, the company often imposes high penalty charges and requires the following week’s or month’s payments straight away, making it even harder to catch up.
Opportunities to expand resulting from the comprehensive spending review have not been lost on many of those who work in the market. Indeed, Provident’s chief executive publicly stated that he expects growth in his target market as a direct result of the CSR. Another factor driving today’s debate is the failure in the credit market for such consumers. The lack of competition to serve them means that it is a seller’s market. Six lenders account for 90% of the home credit market—Provident accounts for 60%—so there is little competition to drive down interest rates.
Clearly, credit lent must be repaid. It is therefore inevitable and fair that interest should be charged to cover the cost of providing credit. It is not disputed that many of those on low incomes or with bad credit histories are a higher lending risk, so interest rates on products aimed at them will be higher than those for the mainstream. However, the terms on which such transactions take place are critical. It is right for both parties that credit should be affordable, which means that both sides must judge what is possible.
There are concerns on that point, because many companies, however ethical and caring they may profess to be, are not. They operate in ways that undermine that profession. A pawnshop in my constituency rings customers back to offer them unsecured loans. Some lenders make a virtue of the fact that they do not consider previous credit history or assess whether a household can afford repayments. Such lenders take high-risk customers not out of the goodness of their hearts but because they know they can hook families on their services, creating a long-term cash cow.
High-interest lending also adds to the difficulties faced by the public purse. Lending at high rates to people on low incomes serves only to deepen their poverty. Credit dependency, whereby such debts can never be paid off, results in debts elsewhere, such as on rent, council tax and fuel bills. It results in cold homes and people going without food. I am sure the Minister recognises that the public purse can end up picking up the pieces.
Andrew Bridgen (North West Leicestershire) (Con)
Some 10 years ago, I raised the crucial point of the capping of interest rates on loans to vulnerable households with the Office of Fair Trading, and my arguments were rebuked. The OFT maintained that, given the risk profile of the individuals involved, if usurious rates could not be charged, no credit would be available to those communities, and that some credit, even at usurious rates, was better than none. I was not completely convinced at the time that those arguments were valid, and I am not convinced at all in post-credit crunch Britain. I am pleased that the hon. Lady is raising the issue.
Stella Creasy
I thank the hon. Gentleman for his point. I will certainly come to that, as there is concern about how we might intervene in the market, but I am confident that we can and should, and that the Government should be considering it.
We are discussing, in particular, the mix of a lack of competition and a rising demand for credit, but it is better to consider the people at the heart of the issue. We can all talk about statistics, but many of us will have seen in our surgeries the people who get into such debts. There are women who get into years of debt at high rates because their next-door neighbour is a Provident home seller who tells them week after week that they need to borrow more. A constituent of mine had loans from Provident, BrightHouse and Oakam, as well as a purse full of store cards. She missed a few payments and her interest rates soared as a result. She tried to juggle all of them but did not have enough money, and ended up running up an expensive overdraft that accrued £10 a day in charges.
The costs affect not just individuals but our communities as well. A Centre for Responsible Credit survey of the Meadowell estate in 2001 found that more money was going out of the estate on payments to door-to-door lenders than the Government were putting in via regeneration budgets. Given the nature of the market and the evidence that I have put on record, will the Minister admit that many of the practices involved in high-interest, short-term money lending are exploitative and unacceptable, and that the Government should intervene to protect people vulnerable to loan sharking?
Fiona O'Donnell (East Lothian) (Lab)
Has my hon. Friend heard today’s news that the Government will not be proceeding with the people’s bank planned for the Post Office? Does she not agree that that is further bad news for people trying to access fair and affordable financial services?
Stella Creasy
I agree absolutely. It is a travesty. This debate is not just about cracking down on loan sharks; it is also about increasing access to affordable credit, as I shall discuss later. That decision will not help the people whom we are discussing. It is one thing to say that we are concerned about the market, but the proof of the pudding is in the eating: what are we doing to ensure that more people can access credit?
Given that and the concerns expressed by Members here, will the Minister make a firm commitment to consult on action to cap the total cost of all forms of borrowing—including the high-interest credit industry, rather than just suppliers of credit and store cards—in his Department’s ongoing credit review? I hope he will commit to so expanding the scope of the credit review, because it would make a difference to consumers.
Before the Minister makes that commitment, I will address an issue on which many MPs have been lobbied, and which the hon. Member for North West Leicestershire (Andrew Bridgen) mentioned earlier. It is possible to act on interest rates. I know that some of the companies concerned contacted Members before this debate claiming that such measures, although well-intentioned, would have unintended consequences. They use such arguments to justify the astronomical interest rates that they charge, arguing that any reduction in those rates would be impossible.
To tackle that point head-on, yes, concerns have been expressed not just by legal loan sharks but by organisations that work for those in debt, such as Citizens Advice. I am also aware of the work of the Office of Fair Trading and Consumer Focus, which have both expressed reservations about the impact of introducing a uniform cap on interest rates. They fear that it would close down or reduce pay-day lending, pushing people into the illegal loan sharking market.
Those difficulties—which, it must be said, are disputed by other organisations with counter-evidence—do not mean that we cannot act. We know from legislation dealing with dangerous driving, the introduction of a minimum wage and fireworks safety that there will always be people who point to those who will not abide by the rules. The arguments against a cap presume perfect consumers of the services in question who can make price-sensitive judgments about what loans they can access and their own credit situation, and competition for their custom. I hope I have shown that that is simply not the case. The problems with a rate cap do not mean that we cannot act. Rather, we must work harder and learn from others how best to act.
Susan Elan Jones (Clwyd South) (Lab)
Does my hon. Friend accept that other jurisdictions such as Canada and the American state of Ohio, where similar objections were raised, decided on balance to cap interest rates?
Stella Creasy
My hon. Friend is exactly right. There are many examples overseas from which we can learn, and I hope to put some of them on the record.
Mr David Lammy (Tottenham) (Lab)
Is not my hon. Friend trying to make the point that in communities such as ours—Tottenham is next door to Walthamstow, and it is very similar—people need to know who they can trust? We have heard today’s decision on the people’s bank. In years gone by, my mother felt that she could trust the national savings scheme with the Post Office. It is not just about providing poor people with more information; they need the state to step in and take a view on what is excessive and exploitative in that area of the market.
Stella Creasy
My right hon. Friend is absolutely right. We know that it is possible to intervene effectively in such markets, and I shall come to that next.
In the Consumer Credit (Regulation and Advice) Bill, which is my private Member’s Bill, I suggest not a blunt cap on interest rates, but a cap on the total cost of lending, which is vital. Given the experience in other countries, it seems likely that focusing solely on capping interest rates would lead some companies simply to recoup their profits through administrative and late repayment charges.
Also, as I said, the situation in the short-term loan market can be very different from the long-term compound interest that many people face. That creates perpetual rolling debts in which families get stuck. It is worth highlighting exactly what that difference is and what it means for interest rates. Some short-term loans have an annual interest rate of 2,000% or 3,000%. If I were to lend someone £100 and ask for £10 at the end of a week, it would equate over a year to an interest rate of approximately 3,500%.
We need more sophisticated tools than a blunt cap on interest rates to get around the maths and also to ensure that emergency loans are not rendered illegal or impossible when they are manageable, and that is why I propose two forms of intervention. The first is powers to intervene on the total cost of borrowing over the lifetime of a loan to set parameters within which any company can be expected to act. Such a process would examine the total lending charge and give the Government the power to stop a single loan from exceeding a certain percentage of the original value through all the costs associated with it. That could be done through the Office of Fair Trading or whatever remnant of Consumer Focus the Government leave as protection following their decision to disband it.
Secondly, within those parameters, the Government should consider caps on the interest rates that firms charge for different forms of loans—whether they are pay-day loans, longer term or for hire purchase. That would avoid inadvertently killing off the short-term emergency loan market and address the impact of compound interest.
As hon. Members have pointed out, these are not back-of-the-envelope proposals without any foundation. Just last week in Montana, alongside the mid-term elections, the public voted to cap the interest rate that lenders can charge. That makes Montana the 16th US state in which pay-day lending is effectively banned because of a 36% limit on the annual interest rate that lenders can charge. Indeed, 15 states in America have essentially eliminated pay-day lending altogether by introducing a ban or cap on the maximum amount of credit at a low level, which has driven such lenders out of business. Some 35 US states and eight Canadian provinces have introduced higher caps on the price of pay-day loans, which allows such loans to operate but protects consumers from extortionate lending. For example, in a number of Canadian provinces, caps have been set at between $21 and $23 per $100 lent.
Such legislative interventions have been put in place not only in America and Canada, as 14 European states have some form of ceiling on interest rates. Countries often have more than one ceiling because they are set according to the different type or size of loan. For example, there is a different loan category in Belgium for those under €1,250 and those over. Alternatively, ceiling levels are set according to the terms or nature of the loan, such as depending on whether they are mortgages, credit cards or auto loans. The number of parameters can make some ceiling designs complex and difficult to understand. Indeed, the most straightforward are the absolute ceilings found under the past tradition of usury laws, but their impact is not as effective as some of the more targeted ceilings. There are differences between what has happened in Greece and Malta, and in some of the other countries that have brought in more complicated caps, such as Belgium, Portugal, Poland and the Netherlands. Many of those are based on a reference rate, under which a multiple of average market rates can be used to set the ceiling. In France, the ceilings are set at 133% of the market average—in other words, one third above the average.
A report on the effects of rate caps in Europe is due to be published by the European Commission in February 2011. I understand that it will support the case for caps, provided that the form and level of the caps are carefully constructed. Those issues—what form the cap could take and where it could be set—need proper and full discussion. It does not take the debate forward to say that because some caps have not worked, we therefore should never have them. We should be asking where caps have worked well, how we can learn from that, and how we can apply them so that we effectively help people on low incomes in the UK. Frankly, what is the credit review for if it is not to examine how and if such approaches could work here?
The Government could learn from other countries about ways of preventing compound interest’s connection to debt dependency. Indeed, that is why it is all the more surprising that the credit review does not consider such matters. America and Canada have experimented with restricting the amount that can be lent—for example, Illinois and Nevada have put in place clear requirements that a loan should not exceed 25% of a borrower’s income. In Arizona, California, Colorado and Florida, the number of loans that can be provided has been limited to just one at a time. In addition, Indiana prohibits more than one loan from a single lender and limits the total number of loans to two. Alabama restricts the total number of times a loan can be rolled over to just one. Alaska allows just two, while Illinois, Kentucky and Louisiana prohibit the practice entirely.
The Minister for Universities and Science (Mr David Willetts)
The hon. Lady makes much play of the evidence from individual American states. Does she accept that one of the consequences of what happens in America is that lenders that are set up in other states are able to sell their services perfectly legally in the states in which such practices are banned? That increases the risk of illegal lending, so I am not sure that the fact that such things happen in some American states particularly strengthens her case.
Stella Creasy
The Minister expresses concern about the nature of federal government in America, but he ignores the evidence from European states with a national system of governance that have introduced interest rate caps effectively. The best possible comparison for the UK is European states, rather than states in America and Canada, although I mentioned those cases as examples of where caps have been introduced and differential rates have been used. Frankly, the Minister should be considering such issues in his credit review, rather than them simply being raised as part of an Adjournment debate. I hope that he will rethink the credit review and expand it to consider such issues and the way in which they might apply in the home context. I mentioned such detail to show that it is possible to legislate to deal with the worst excesses of the markets and that such an approach does not increase the market for illegal loan sharks, as that is not demonstrated in the evidence from other countries.
Andrew Bridgen
I am extremely sympathetic to the hon. Lady’s aims and cause. However, does she agree that some of the previous Government’s policies did not help people get out of debt but, in fact, trapped them in it? In the days of easy credit, the complex working tax credit system allowed people to get into debt. Given the withdrawal of benefits, and with marginal rates of taxation of 60%, 70%, 80% and 90%, people were trapped in debt because they could never work their way out of it.
Stella Creasy
I would be interested if the hon. Gentleman could produce evidence for that, as opposed to making a supposition. It is easy to claim that working tax credit put people into such dependency, but let us consider what the loan sharks themselves have said about the comprehensive spending review. They have argued that it will increase the number of people coming to them because those people will not have money to help their families grow. That is where I look for evidence.
Considering the evidence on how we tackle legal loan sharking in and of itself is not enough to help these families. We need to stop the exploitation of low-income households in the credit market and legislate on the cost of borrowing. As Labour Members will understand—they know these problems well because they have had to deal with them—we also need to increase access to affordable credit. Those two issues go hand in hand. We cannot expand access to affordable credit while millions of people are trapped in relationships of credit dependency.
Derek Twigg (Halton) (Lab)
I congratulate my hon. Friend on a powerful and excellent speech. When considering help for such families, we also need to think about credit and money advice. The previous Government provided significant amounts of extra money to deal with the consequences of the recession. Clearly, we must do that if we are to deal with the problems that have arisen as a result of the CSR. An important part of this process is to have more money advice. People need proper advice about how to manage their money, how to avoid getting into debt, and how to make the right decision on loans.
Stella Creasy
As ever, my hon. Friend makes an incredibly practical and important point on these issues, which I shall come back to at the end of my comments when I consider the third component of the action that we can take to protect the poorest consumers in Britain.
I shall quickly return to my point about access to affordable credit. We must learn lessons and consider how to increase affordable credit access through the existing UK market. We know that that can be done, because people are already doing it. Credit unions and social enterprises such as Fair Finance are demonstrating that it is possible to lend at reasonable rates, to provide money advice services, and to help people to make credit work for them.
Rachel Reeves (Leeds West) (Lab)
I thank my hon. Friend for securing the debate and I know that many of my constituents will be watching it closely. Does she agree that credit unions—including the Leeds City credit union, which has been operating for more than 20 years in my city, and the Bramley credit union—offer an excellent alternative to loan sharks? The Government could do more to support credit unions to grow, for example by enabling them to operate at all post offices and at local council facilities such as benefit offices and local libraries.
Stella Creasy
My hon. Friend is absolutely right and makes exactly the point I wanted to mention about how important it is to support and promote credit unions. There is certainly scope for British credit unions to grow, and we are behind other nations in that respect. In Ireland, 50% of the population are members of a credit union. In America and Canada, the figure is around 40%. In Australia and New Zealand it is around 25%, but it is closer to 2% in the UK. Despite that, at least 86% of people are eligible to join a credit union in England, Scotland and Wales on the basis of where they live and the working areas that are served by credit unions. That is not just in Bramley—my excellent Waltham Forest community credit union has more than 4,000 customers.
There is clearly interest in accessing credit through such bodies. Membership of credit unions in Britain increased by 35% between March 2008 and March 2010. The challenge we face is how to scale up credit unions extremely quickly, given the CSR and the level of debt that we are facing. The question of the future of the post office network provides therefore both an opportunity and a threat to some of the excellent work that can be done in this field, which several hon. Members have mentioned.
The previous Government proposed—this is being promoted by the Association of British Credit Unions—connecting up the credit union movement and post offices, which would allow the integration of both services. A one-off investment would be needed to provide the common back-office platform that would allow the technical integration of the two services. In turn, that would allow post offices to offer a wider range of services, including those vital instant small-scale loans, as well as access to a Post Office card account. Staff at post offices could carry out transactions in real time, checking account details and giving instant pre-approved loans that were affordable and convenient. Credit union customers would be able to access their accounts and make payments through the post office. In turn, a transaction fee would be generated by each transaction that would provide a new stream of revenue for the Post Office. That could open up access to affordable credit and help consumers by breaking down the monopoly on supply. It is no wonder that the Finance and Leasing Association has briefed against that proposal and argued that it could restrict consumer choice and hinder competition, which is something that many legal loan sharks seem to think is okay for their specialist services.
Does the Minister stand with the loan sharks or the credit unions? What commitment will his Department make to fund the back-office integration of post offices and credit unions so that the post office network can provide credit union services and increase access to affordable credit for consumers? Those problems require us not only to legislate, but to look at what we can do for the families involved. We must not only clamp down on the exploitation practised by the firms, but extend access to affordable credit through credit unions.
Neil Carmichael (Stroud) (Con)
Has the hon. Lady considered the implications of the Bill of Sale Act 1878, which effectively enables loan sharks to get away with much of their inappropriate behaviour? We all agree that we should not tolerate loan sharks—they are in my constituency as well as in hers and others.
Stella Creasy
The hon. Gentleman makes a fair comment. The point behind today’s debate is that there is overwhelming evidence that we can and should intervene, and there is certainly concern about the situation among Labour Members. The credit review offers us, if anything, an opportunity to look at how we can intervene and how the law could be amended. The fact that that is not happening is a travesty, so I hope that coalition Members will challenge the Government to expand the scope of the credit review so that it covers these issues.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I am grateful to my hon. Friend for securing the debate. Will she join me in asking the Minister to clarify the Government’s intentions on the consumer advocate? There has been some speculation that they are keen to go ahead with that position, which was first suggested in a White Paper by the previous Government, but there is still no actual detail. A consumer advocate could play a crucial role in that area, so it would be good to hear the Government’s intentions on that.
Stella Creasy
My hon. Friend makes an incredibly fair point. I certainly hope that the Minister will address that, along with the credit review and the role that credit unions could play within post offices.
I certainly want more direct financial support for organisations that provide advocacy services and support people who get into debt. The model that we can learn from is that of the drinks industry. In 2007, following public concern about alcopops and the need to address binge drinking, the industry responded by setting up and funding Drinkaware, an independent charity administering grants to tackle alcohol misuse. Each year it raises around £2.6 million from alcoholic drink makers and retailers, which is then used to raise awareness about alcohol and encourage sensible drinking. My Consumer Credit (Regulation and Advice) Bill proposes that a levy should be imposed on organisations selling credit, which would be used to fund a similar grant scheme. That could be accessed by a range of organisations providing debt management counselling or financial literacy services. Counsellors could give one-on-one sessions to families to help them get back on their feet by negotiating with creditors, helping them to navigate the support to which they are entitled and identifying how best they can live within their means.
Supporting those whose lives are ruled by debt requires more than informal advice. R3, the insolvency practitioners’ industry body, notes that one in five of their clients did not seek help earlier because they had no idea who to turn to for help. I welcome the Government’s continued support for the previous Administration’s work on a levy on dormant bank accounts for that purpose, but I hope that they will recognise the need for both financial advice services and specific advocacy services, such as the excellent work undertaken by organisations such as the Consumer Credit Counselling Service, Citizens Advice and Christians Against Poverty. The Moneymadeclear service, as it is currently set out, will not be the same thing, and we must ensure that both are available if we are to address these challenges. Does the Minister recognise the need to provide specialist financial advice and advocacy services to help people who get into debt, and will he commit to setting up a fund to support those services directly, as I propose in my Bill?
We have covered many complicated issues today. Just to be clear, I will end my remarks by repeating the three clear commitments that I want the Government to tell us, on record, whether they will make. First, will the Minister commit to expanding the credit review, to consulting on powers to cap the total lending costs, and to exploring caps on different interest rates for different types of loans? Secondly, will he commit to financing the integration of the post office network with the credit union network to enable them to share back-office technology and thus support each other? Finally, will he commit to a levy on those who sell credit to create a dedicated fund for debt advice and advocacy services?
Failure to act on those matters would not come at a worse time for many of Britain’s families. We know that if the Government are intent on pushing their Budget on Britain, they will raise the number of families in our communities living with the daily misery of debt. They therefore must take responsibility for their actions. They must give the same consideration to the needs of those for whom the never-never is a fact of life as they do for those who have Amex cards or a trust fund. I hope that the Minister will give us three yeses today so that we can make progress on those matters.
Damian Hinds (East Hampshire) (Con)
I congratulate the hon. Member for Walthamstow (Stella Creasy) on the clear, in many ways convincing and impassioned way in which she put her case. She has had quite a double whammy over the past few days, with her ten-minute rule Bill last week and now this important debate. It is particularly timely, given the review of consumer credit and personal insolvency and this morning’s statement by the Department for Business, Innovation and Skills on the future of the post office network, which, to be fair, contained rather more of positive interest to people who care about those issues than perhaps some Members have suggested today.
Like the hon. Lady, I will concentrate on instalment credit, rather than revolving credit, although both are relevant. I am sure that the debate will be positive, but I will start with three negative points—three not’s. First, this is not a party political debate. I pay tribute to the previous Government’s work with the credit union sector, for example, which at the time had all-party support. I am also sure that measures to address those problems and help the most vulnerable people will receive support from across the House. I know that that is the case among many of my colleagues in the coalition Government, and it is evidenced to a large extent by the number of Members from both sides of the House who have attended the debate.
Secondly, this issue is not new, although, to be fair, it is changing. The leader in doorstep home credit has been around since Victorian times, but every few years the nature of the market changes a little. There are changes over time regarding the importance of priority debt and that of consumer debt, and there might in future be some change back towards priority debt. However, it would be wrong to suggest that the home credit market has been created by the comprehensive spending review, and everyone who has ever worked in communities that have such issues knows that well. It is also a dynamic market, and there is always something new to worry about: whenever we think we have got our heads around the market, something new comes along, be it the increasing problems with fee-paying debt management agencies, inertia selling, payment protection insurance, the growth in pay-day loans, the appearance of pre-paid sub-prime credit cards or the appearance of so-called credit rehab cards.
Thirdly, it is not all bad. Every segment of the market plays some sort of role. Even pay-day loans can have a role—for example, in avoiding excessive current account penalty charges. We also have in this country, much more so than in the European markets to which the hon. Lady referred, a pretty competitive and diverse market. The effect is that very few people in this country are totally excluded from the legal and, therefore, regulated—one might argue that it is not regulated well enough—and regulable part of the market.
There are always three key aspects to any debate on this subject. The first is the disclosure of information; education, so that people have the wherewithal to do something with that information; and the whole surrounding culture, particularly what we as a society aspire to regarding the balance between savings and debt to help people get through the ups and downs of life, which everyone has. I will not talk about that this morning because there is not much time and many Members wish to speak. The second area, which is the focus of the hon. Lady’s ten-minute rule Bill, is smarter regulation, and the third is alternatives to high-cost credit. I will talk briefly about each of those aspects.
When it comes to regulation, we need to understand our objectives, of which there could be one or two. It might be either to reduce the cost of credit to people on very low incomes and who have great difficulties in their lives, or to reduce the prevalence of credit and debt for those people. That is an important distinction, because it might lead to one or two different things. For example, if one just wanted to reduce the costs, one might liberalise the rules on door-to-door canvassing for cash loans, because that would allow new entrants into the market more easily, which could undercut the existing players and cut the cost. However, not many of us would want to do that. If we are trying to reduce the prevalence of lending in those sectors, we might do the opposite and ban door-to-door canvassing even for non-cash loans—meaning voucher loans—because they are used, as the hon. Lady will know, as the way in to new customers, who can then be graduated on to higher value cash loans. My assumption is that the objective must always be both to reduce the cost to people who are taking on sub-prime loans, and to reduce the prevalence of such lending.
The second key question on objectives is whether we are trying to hammer a particular segment. As I said, each segment, if handled properly and responsibly, has a role. Therefore my assumption is that we are trying to target not a particular segment—for example, pay-day loans or home credit—but the principle of people paying sky-high rates for credit when they need it.
There are perennial problems when trying to make smarter regulation in this area. In particular, because it is such a diverse and organic market, as soon as we deal with one problem, another pops up. In fact, in some ways, it is because we deal with one problem that another pops up. Let me give a couple of examples. If we manage to bear down on cash lending, we will see—this is true in some of the American states to which the hon. Lady referred—an increase in rent-to-own, voucher lending and catalogue lending, with grey pricing. That is where the base price of the item is inflated such that at a 29.9% interest rate, to use a random example, the lender is making considerably more than that in terms of margin. If we bear down effectively on interest charges, there is the automatic tendency, it seems, for lenders to rely more heavily instead on behavioural penalties, which, in many types of lending, can end up costing far more than the apparent rate of interest.
With any cap that we put on the cost of lending, mathematically we will be disproportionately impacting on the highest-risk customers, which in this market means the lowest-income customers and usually the most vulnerable customers. At the extreme end, when we are talking about excluding those people, there is the danger that we will push them into the arms of illegal and unregulated moneylenders—the sort of people whose idea of a late-payment penalty is a cigarette burn to the forearm. Of course we all want to avoid that.
However, despite the perennial problems, there are still possibilities, many of which were outlined by the hon. Lady. APR is a widely misunderstood measure, and there is always the danger that anything we replace it with will also be widely misunderstood, but total cost of credit has more potential than APR to be understood.
On caps, I am a free-market Conservative, so in general I am not in favour of price controls. However, the hon. Lady made a good point in that regard. If we look throughout the European tradition world and the Anglo-Saxon tradition world, hardly anywhere has a market as liberal as ours in terms of the interest rate regime. Of course, before 1974—when there was a Conservative Government—there was a usury ceiling in this country. We have to ask the question: if we have got this so brilliantly right, how come other countries are not trying to copy us?
I do not think it will work to go after individual markets saying, “We’ll have this restriction on this product and that restriction on that product,” because new products will just be invented. I wonder whether it is possible to come up with a formula that does away with the market’s worst excesses, while not putting any individual segment of it entirely out of business.
I would love to hear the thoughts of my right hon. Friend the Minister on the regulation of rules and supplementary charges on loan roll-over, missed payments, minimum payments and so on. We also need to think about the way in which credit scoring works. By the time that people eventually seek help, many of them have run up eight, nine or 10 separate lines of credit. We have to wonder what the lenders of the eighth, ninth and 10th lines of credit were thinking. This is a matter of responsibility. Of course in terms of the maths, it might be perfectly rational for the lender to issue a lot of loans with relatively low credit-scoring hurdle points, in the knowledge that although they will have to write some off, that is still a more advantageous profit model than rejecting them.
Most of all, I would love to hear from the Minister on something the hon. Member for Walthamstow talked about at length—alternatives to high-cost credit, to which there are multiple aspects. For example, the social fund is probably due for a bit of root-and-branch reform. Here I am talking not about priority debts or emergency loans, but the discretionary fund. In addition, mainstream banks can be exhorted to develop bounce protection credit lines more quickly, which will stop so many people being forced into pay-day loans.
Above all, however, the opportunity is with credit unions. I welcome this morning’s statement on the post office network, which gives some positive indications. Credit unions have made great strides in the last few years. Historically, they had been very strong in the west of Scotland, Manchester, Merseyside and parts of London, but not in the rest of the country. In recent years, the situation has improved, but we are still not at the point at which everyone can access a credit union.
The range of services has also improved dramatically, with the credit union current account, cash ISAs and so on. When the legislative reform order that we all hope will come along very soon is passed, that will make further strides in liberalising the common bond—in being able to pay fixed rates of interest on savings accounts and being able to bank to groups as well as individuals, which fits well with the big society agenda.
Mr Thomas
I do not seek to make a partisan point, but will the hon. Gentleman join me nevertheless in asking the Minister to clarify the future of the growth fund, which is due to end in March 2011 and provided significant money to help credit unions and other community finance organisations expand, in order to provide the access-to-credit alternatives he has described?
Damian Hinds
I am sure the Minister has heard the question and made a note of it. What I will say about the growth fund is that of course, capitalising credit unions to expand their customer base has many positive aspects. Not all credit unions were fully geared up to make maximum use of some aspects of the growth fund, and particularly the speed of the growth fund.
I would also like to see other ways of further funds for lending going into credit unions. All of us, if we have not already done so, can open a savings account with a credit union. That is not a flippant point. We need to encourage more people at higher and middle rates of income to use credit unions as their place for savings, because then, of course, those savings become the source of loans to other people.
Credit unions do not yet exist on the critical scale at which there is mass awareness of the services available.
Mrs Jenny Chapman (Darlington) (Lab)
I particularly welcome the hon. Gentleman’s observation that this is not necessarily a party political issue and that there is support on both sides of the House for many of the elements in the Bill introduced by my hon. Friend the Member for Walthamstow (Stella Creasy). There is a renewed sense of urgency about the issue, perhaps more so among we newer Members who have come by a community-organising route and have seen at first hand the effects in our communities. One thing that prevents credit unions from expanding is that they are seen as operating in charity offices and church halls and they lack the high-street presence of organisations such as BrightHouse, which can spend a lot of money on marketing and targeting people. Integrating credit unions more with the Post Office would have given them that mainstream appeal and access in all communities.
Damian Hinds
I thank the hon. Lady profusely and will remunerate her suitably later for teeing me up for my next sentence. One of the problems for credit unions, apart from lack of awareness of them in some sections of the community, is that they lack a high-street network throughout the country. Marrying them with the Post Office offers amazing synergistic opportunities for both sides. It marries the financial expertise and product base of the credit unions with the presence and trusted brand of the Post Office. We talked earlier about trusted brands.
Henry Smith (Crawley) (Con)
The point was made a few moments ago that it is important that middle-income people also join credit unions. I am pleased to have joined my local credit union, as I am sure everyone in the room has joined their local credit union, as a place for savings. The point about a high-street presence is extremely important. My local credit union in Crawley operates out of a community centre, which as we have heard is the norm. I very much support the idea of making credit unions mainstream, and it therefore becoming much more the norm for people to save and transact with them.
Damian Hinds
My hon. Friend makes a fine point, which I do not disagree with at all. I should say, for the avoidance of doubt, that my own savings account is with the United Savings & Loans credit union in Bordon. That fantastic institution has a high-street presence, but because of the rents in my part of the world, it is not the most prominent high-street presence. The established network of the Post Office could make a big difference to that. Of course, this is not just a matter of saying, “We’ll work with the Post Office.” It is also about the infrastructure that goes behind that—the electronics and the systems. That is why it is necessary to build a robust back-office system and interface. That takes money, but it does not necessarily have to come entirely from the Government, and it would be a mistake to think so. Such activities do of course carry with them a future income stream, and as everyone knows one can borrow against a future income stream. There is certainly a role for the Government in financing such a thing, but not just grant funding is needed.
Overall, the provision of alternatives is the surest and most important initiative that can be taken in this area. Whatever the regulation, people will always find ways to get around it, and we must strive to make things better.
Stella Creasy
I take the hon. Gentleman’s point, and I understand and recognise his experience in the credit union movement. Does he agree that these are the very issues on which the credit review should be formally consulting? It should be looking not just at store and credit cards but at access to credit, and also the home credit market, pay-day lending and the many other products that may well be expanded, to try to tackle once and for all the needs of the poorest consumers.
Damian Hinds
I am supremely relaxed about the names that are given to reviews, discussions and discussion documents. The important thing is that members of the coalition Government take a keen interest in this area and are interested in making progress, and I know that they are. The name or title is of secondary concern.
The surest thing we can do is to provide a good, robust alternative, and thereby revolutionise affordable credit. We can also improve the savings culture in this country and provide a real alternative to the doorstep lenders about which we are all so concerned.
Mr David Crausby (in the Chair)
Front-Bench speakers will be called at 10 past 12, so it would be appreciated if Members kept their contributions short.
Pat Glass (North West Durham) (Lab)
I thank my right hon. Friend the Member for Walthamstow (Stella Creasy)—sorry, my hon. Friend the Member for Walthamstow, but soon to be promoted—for securing this debate. As a new Member, I am struck whenever I speak in Westminster Hall by the quality of the debates that take place here. It is such a shame that we do not have the same quality of debate on the Floor of the House, and I believe that that is recognised by all Members here.
Members on both sides of the Chamber have made good points. I know that many people wish to speak, so I intend to keep my remarks brief and largely to restrict them to the north-east and my constituency.
This problem arises in constituencies such as mine and many others because of a lack of affordable credit. People who work part-time and live on low incomes or minimum wage often find themselves with few options, which has resulted in an outbreak of high-cost credit. My constituency is large and made up of many small towns. I cannot walk down the high street of any of the small towns in my constituency without seeing an array of pawn shops that buy gold, cash cheques at exorbitant prices and generally prey on the poor in our communities who, like many hon. Members, I see in my surgery.
In the past seven years, the number of pay-day loan users has increased fourfold and the number of pawnbrokers has trebled. That is happening in constituencies such as mine and that of my hon. Friend. This is probably one of the best attended Westminster Hall debates that I have seen, so the problem clearly exists in other constituencies—not just in the north-east or poorer areas, but right across the country.
Irresponsible lending serves only to make things worse. Companies such as Oakam, which has been mentioned, and the Money Shop charge annual interest rates of more than 444%, despite a Bank of England base rate of just 0.5%. Borrowing at such rates can tip vulnerable people into a cycle of debt and poverty. High debt repayments are linked to rent, council tax and utility arrears, as well as other poverty indicators such as constraints on job-seeking behaviour, poor diet, cold homes, and mental and physical health problems.
The hon. Member for East Hampshire (Damian Hinds) said, rightly, that loan sharking has not resulted from the comprehensive spending review, but the review will simply make things worse. The Government’s plans to reduce housing benefit by 10% after a year will make things worse in constituencies such as mine. So far, the arguments in that debate have centred around what will happen in London, but the effects of the cuts will not be restricted to central London. In my constituency, they will mean people who are already struggling and in debt being forced to find another £15 a week that they simply do not have, and being forced to go to loan sharks and disreputable loan companies.
The north-east is a hot spot for illegal loan sharking. The North East Illegal Money Lending Team, which was set up by the previous Government in December 2007, has identified 1,083 illegal lenders—92 in the first quarter of this year; convicted 40 loan sharks; and saved borrowers more than £2 million. When loan sharks are convicted, the cases are publicised widely in the local press and on television.
Some people have argued that a cap on total lending will simply increase illegal loan sharking, but, coming from an area where it is prolific and is blighting the lives of the poor, I would argue that a cap on total lending, as well as investigating and jailing loan sharks, and publicising the cases widely, would improve the position for the poor in my constituency.
This is very much a gender issue. Fair Finance, a social enterprise bank that offers loans and debt advice, has seen clear trends in those seeking its help: 75% are women, 70% are single mothers and 80% are on benefits. The issue disproportionately affects women. In the north-east, there are recorded cases of women being forced into prostitution because of loan sharks.
All families—all of us—experience financial emergencies from time to time, but when a financial emergency hits a poorer household, it is often the catalyst that sets it into a downward spiral of debt. Many people in such situations are vulnerable at all kinds of levels. Many live on the margins and are preyed upon routinely. One of my constituents was forced to borrow £200—a relatively small sum—from a loan shark to fund a trip to Wales. His sister had been murdered by her partner, and he needed to make a trip from the north-east to Wales to organise the funeral and to settle her debts and affairs. His neighbours rallied round and paid off the loan, but many of them are also poor and vulnerable. If those people can see that there is an issue, surely we can, too, and the Government should act on it.
Andrew Bridgen
The hon. Lady speaks with great passion about individuals in her constituency, and I really feel for them. I hate the phrase, “This is not a partisan point,” because we all know what comes next, so I shall not say it. Does she think that the previous Government’s claims to have ended boom and bust encouraged or discouraged vulnerable people to gear up with more debt?
Pat Glass
I understand what the hon. Gentleman is saying, but I do not think that it is relevant to the debate, or helpful.
The current situation of allowing very high interest rates to be charged to the lowest-income households leads to greater wealth inequality and greater child poverty, and it constrains efforts to regenerate deprived communities. We have heard about Provident Personal Credit, a legal loan company that operates widely in the north-east. It controls 60% of the home credit and legal doorstep lending there. It mainly offers small, short-term and unsecured cash loans. The typical annual percentage rate on a Provident loan is 272.2%, and 70% of its customers are women. The Government can address those issues and make the lives of those living in the poorest households easier.
Richard Graham
On the three recommendations made by the hon. Member for Walthamstow (Stella Creasy), does the hon. Lady agree that the second, which was about the role played by credit unions in the post office network, is the most exciting opportunity for combating loan sharks that we have seen in this country for a long time? The Minister with responsibility for the Post Office has already made it clear that he welcomes a future role for credit unions in the structure and distribution network of Post Office Ltd. In my constituency, the new Gloucestershire Credit Union, which is partly funded by the Department for Work and Pensions, represents an important step forward for us all in our different constituencies.
Pat Glass
I thank the hon. Gentleman for making that point, which I was going to come on to. What I will say now is that this is not either/or, and we can do both.
The Government could provide a cap now on the total lending rate that may be charged for providing credit, and on additional interest on late payments and default charges, and that could be targeted on companies that charge excessive interest—and then interest again on that charge—to customers who borrow from them. That would be a popular move. A recent YouGov poll, carried out in April 2010 and highlighted on the “End Legal Loan Sharking” campaign’s website, found that 89% of the people polled would support such a move.
The Government could also provide alternative sources of affordable credit. Many organisations have called for such action on high-street loan sharking, including Compass, Citizens UK and the “End Legal Loan Sharking” campaign. The Government need to provide local authorities with powers to enable them to restrict the provision of premises for licensed consumer credit agencies within a local area, and to give locals a say over what happens in their high street. When people are asked, they say that they do not want these pawnbrokers and “gold for cash” or high-interest-rate companies on their high streets.
I am disappointed by this morning’s announcement that the people’s bank will not be part of the post office network, as it could provide affordable short-term credit. Using the post office network to provide back-office functions that integrated the network’s services with credit unions would help the poorest people to access credit unions, current accounts and savings accounts through post office branches. However, I welcome the announcement about bringing together the synergy of post offices and credit unions.
The credit review and a cap on interest on store and credit cards are both welcome, but in themselves will not help the poorest people in my constituency and in many others. A credit review would seem to be the right way to go, but I ask the Minister to look again at the terms of reference and to include some of the very strong arguments that have been made from both sides of the Chamber today.
The Government need to do something to stop what is happening. It seems that the only growth on high streets in my constituency and in many others is in charity shops and pawnbrokers. The Government have made a commitment to reducing child poverty and this would be a very good place to start.
[Mr Christopher Chope in the Chair]
Lorely Burt (Solihull) (LD)
I shall be very brief. I congratulate the hon. Member for Walthamstow (Stella Creasy) on introducing the debate on those very important issues. She has certainly done her research. The previous Government did some very good work on the regulation of consumer credit, with the Consumer Credit Act 2006. Coming down the line in February 2011 we have the EU directive, and the main thing that that will introduce is the provision that in any credit agreement the customer has to be given standard information. I hope that that, too, will be helpful.
The quality of the contributions to the debate illustrates how complex this issue is—there are other sides to the story. I was speaking to the Finance and Leasing Association this morning, and it is concerned that excessive regulation will shrink the market. The market is contracting at the moment, and that might polarise it.
Andrew Bingham (High Peak) (Con)
We could be in danger of using a blunt instrument here, and as has been said, if we knock an apple down, it will bob up somewhere else as an alternative product that cannot be legislated against, so we will continually be revisiting legislation. As was mentioned, the answer is more in education, so that people get the difference between the costs of credit.
Lorely Burt
I totally agree with the hon. Gentleman. As the hon. Member for Walthamstow said, it is very important to look at the whole cost of a loan rather than necessarily relying on an interest rate. The Finance and Leasing Association is concerned that if we cap the interest rate the market will migrate towards the maximum, with high-risk consumers being cross-subsidised by lower-risk ones because somewhere or other the risk has to be funded.
Stella Creasy
Does the hon. Lady share my concern that listening to the Finance and Leasing Association on how to protect the poorest consumers is a bit like listening to burglars telling us that muggers are not very nice because they take people’s property to their face?
Lorely Burt
A burglar might have a lot of expertise in telling us how to keep our homes safe, so it is important to keep an open mind and listen to everybody in the argument. The point is that the association is concerned that if we over-regulate, illegal loan sharks will fill the void left behind when other, more reputable lenders leave the market.
The Office of Fair Trading did a review this year of high-cost credit products, pawnbroking, pay-day loans and home collection credit. It concluded that capping price controls was not necessarily the answer:
“This is because controls such as interest rate caps can contribute to reducing competition in the sector and lead lenders to recover lost income through increasing charges for late payment and default.”
Were a cap introduced, there would be a risk of all lenders raising their interest rates to match their competitors, thus making access to loans more difficult for borrowers. The cost of loans is twofold—it is a combination of interest rate and length of term of borrowing—so although some interest rates are very high, that can be offset by the length of the loan. The variety of lending options ensures that the specific requirements of all consumers can be met.
I shall not go into the pay-day and home credit loans, or indeed store credit cards. The point is that they all have a role to play, provided that they are properly regulated. We have heard reference today to the review by the Department for Business, Innovation and Skills and the Treasury. I know that they are covering slightly more than credit and store cards; indeed, they are covering an issue that I have raised in my private Member’s Bill—unauthorised overdraft charges. I am very hopeful that we will now get a good resolution on that. I would, however, appreciate clarification from the Minister as to what we will be covering, because my understanding is that we could take the opportunity to consider that important and complex issue.
Finally, is not the answer to give deprived communities better access to mainstream debt? We have talked about the Post Office and basic bank accounts. Everyone has a right to a basic bank account, and that should be much better promoted. We have talked about credit unions, and some companies, such as My Home Finance, have reduced their APR to 29.9%. That might sound like a lot of money, but in the context of illegal loan sharks it is quite something. I look forward to the Minister’s problems—sorry, the Minister’s comments [Laughter.] He certainly has enough problems, that’s for sure. In all this, it is important that we take into account the fact that, somewhere, we have to price for risk.
Mr Christopher Chope (in the Chair)
Justin Tomlinson, you have two minutes.
Justin Tomlinson (North Swindon) (Con)
I will be exceptionally brief. My huge notes have been cut back dramatically, and I will focus on one point. First, I quickly pay tribute to the hon. Member for Walthamstow (Stella Creasy) for both this crucial debate and the ten-minute rule Bill, the thrust of the arguments of which I support. So, there is cross-party support.
I want to concentrate on the important element of financial education. It is essential to provide financial education to equip people to make informed decisions. Working with the national financial education charity, the Personal Finance Education Group, and Martin Lewis of www.moneysavingexpert.com, I am launching an all-party group on financial education, with a focus on securing compulsory financial education in schools. It will launch on 31 January. This is a very brief plea to all Members who are still in this important debate to come and join the group, so that we can help future generations to make informed decisions.
Andrew Percy (Brigg and Goole) (Con)
It is really important to get financial education into our schools because one of the big problems with things such as credit unions is that people do not understand what they are. Banks come into schools, but we do not know about the whole range of the market.
Justin Tomlinson
My hon. Friend makes a really important point. According to a survey carried out by the Nationwide Building Society, 91% of people who got into financial difficulty said that if they had had better financial education, they might not have made the decisions they did. The number of people who think that a higher APR is better than a lower one is worrying, and reinforces the point that financial education is absolutely essential.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I join others who have spoken in commending my hon. Friend the Member for Walthamstow (Stella Creasy) on securing the debate and how she introduced it, and for her ten-minute rule Bill of a week or so ago, which others also referenced. She has done a huge amount of research and has made a powerful case for smarter regulation. She and others focused on the impact on some of the most vulnerable in the various communities we represent of access to finance going wrong, and the associated issues.
My hon. Friend highlighted three specific issues that she wanted the Minister to include in his Department’s review. The first was to consider regulation of the total cost of borrowing and how much interest different financial products can carry. She pointed to experience across the European Union and north America, where similar measures have been introduced. She referenced the need for a levy on those who sell credit to pay for debt counselling and advice services, and she pushed for increased accessibility of credit union services and their integration with the Post Office.
Chris Evans (Islwyn) (Lab/Co-op)
I have just watched the “Jeremy Kyle Show”—I do not want to recommend that to anybody and I cannot believe that I have admitted it in a Westminster Hall debate. During the adverts, a company called Wonga was advertising same-day loans with an interest rate of 2,400%. Is it responsible for advertising companies to allow such adverts to run?
Mr Thomas
I will not comment on my hon. Friend’s television viewing habits, other than to say that I know he has raised concerns about the activities of Wonga, and I will come on to that. It is an interesting company in the consumer credit field for a slightly different reason, which I shall come to later.
I join my hon. Friend the Member for Walthamstow in asking the Government to consider including the issues that she raised within the review of the consumer credit sector, and I do so in a spirit of welcoming their review of consumer credit.
Damian Hinds
There seems to have been a tiny bit of confusion earlier about the nature of the review to which the hon. Gentleman refers. I think I heard suggestions that it was restricted to credit and store cards only, but the call for evidence was much broader, as he knows.
Mr Thomas
As the hon. Gentleman says, there has been a broader call for evidence. I hope the Minister will use the debate to call for further evidence about, and embrace, the areas that my hon. Friend the Member for Walthamstow championed in the debate and in her ten-minute rule Bill.
Stella Creasy
I am sure my hon. Friend will agree that it is one thing to ask the question, but the challenge is to set out that the answers will be listened to. The Government have, so far, only formally committed to looking at the cost of borrowing on credit and store cards in the remit of the credit review. They might be asking for evidence on the broader credit market, but there has been no equivalent firm commitment. The hon. Member for East Hampshire (Damian Hinds) is shaking his head, but I can show him the details on the BIS website; it is outlined clearly. The Government are looking at the interest rate cap on credit and store cards only, and I am specifically asking for the review to be expanded to cover all forms of lending, so that it looks at the market for the poorest consumers.
Mr Thomas
I trust that the Minister will clarify his intentions on that. The review should look at the three specific issues that my hon. Friend the Member for Walthamstow raised.
The hon. Member for East Hampshire (Damian Hinds) made an interesting speech extolling the importance of credit unions—as did my hon. Friend the Member for Walthamstow—as a crucial alternative to some of the most costly parts of the consumer credit industry. He said, rightly, that the issue is not new, but the market is continuing to change. He also raised the issue of the importance of education, as did the hon. Member for North Swindon (Justin Tomlinson), whose initiative in setting up the all-party group I commend.
The hon. Member for East Hampshire alluded, I think sympathetically, to considering how to regulate the worst excesses of the market. He made the important point that the consumer credit industry, as part of the financial services industry, plays a crucial role in helping our economy to function effectively; nevertheless, there is genuine concern about some activities of the most controversial part of the consumer credit industry, that which provides pay-day loans.
As others have touched on, it is crucial that we consider access to affordable credit beyond the consumer credit industry, such as through credit unions and community finance organisations. The issue is about not only financial education in schools but access to financial education and assistance outside the school environment through debt advice services, and about how we bear down on illegal activity such as loan sharking.
Justin Tomlinson
On giving access to debt advice, my constituency office is working with debt agencies to train our staff, and me, in how to give the right advice. We are also working with local media to communicate constructive advice ahead of the festive period, which is a particularly risky time for people making financial commitments.
Mr Thomas
I commend the hon. Gentleman’s work on that, and I hope he will bring his experiences to his all-party group so he can share that good practice with others.
There were important contributions from the hon. Members for North West Leicestershire (Andrew Bridgen) and for Crawley (Henry Smith), from my hon. Friends the Members for East Lothian (Fiona O’Donnell), for Clwyd South (Susan Elan Jones), for Halton (Derek Twigg), for Leeds West (Rachel Reeves) and for Darlington (Mrs Chapman), and from my right hon. Friend the Member for Tottenham (Mr Lammy). My hon. Friend the Member for North West Durham (Pat Glass) made an important speech focusing our attention, rightly, on concerns about illegal loan sharking, which I want to come back to in a second. The hon. Members for Gloucester (Richard Graham), for Solihull (Lorely Burt) and for North Swindon also contributed.
My hon. Friend the Member for Walthamstow and the hon. Member for East Hampshire drew attention to the work of the previous Government in reforming the Consumer Credit Act 1974 and introducing the Consumer Credit Act 2006. It is time to look again at the definition of “unfairness” that sits as the heart of the 2006 Act to see whether it addresses the concerns of those championing reform of the 1974 Act. We need further action to tackle loan sharks, who continue to operate despite the activity of teams across the UK dealing with illegal moneylending. We also need to look at how to expand access to credit unions.
Mr Thomas
Forgive me but, given the time, I will not.
The hon. Member for East Hampshire raised the question of access to social fund loans, which are another important source of short-term lending for those in difficulty. The previous Government decided to increase the amount of social fund loans available, and it will be interesting to hear what steps the Minister’s Government plan to take on that. The previous Government also acted to increase pressure on businesses regarding how debts were collected and interest rates levied, due to considerable concern about how they were operating.
I shall end with questions to the Minister. Consumer Focus, which I understand is to be abolished, has called for reform of the pay-day lending market. It has specifically called for the number of loans taken out or rolled over to be limited to five per household, and called for the development of an industry code of practice. My hon. Friend the Member for Islwyn (Chris Evans) raised the activities of Wonga. He may be interested to know that it has developed a code of practice, and I will be interested to know what the Minister thinks about it, and whether he thinks there is merit in the industry doing more in that area.
I hope the Minister will explain the Government’s intentions for the consumer advocate, and whether it will have a role in regulating unfairness. Will he explain how the Consumer Protection and Markets Authority will take over responsibilities for consumer credit from the Office of Fair Trading? Lastly, will he explain what the future holds for the growth fund and the financial inclusion fund? Both have done much to fund the expansion of access to credit unions and debt advice and, as a result, have provided substantial help to many extremely vulnerable people.
The Minister for Universities and Science (Mr David Willetts)
We all wish to thank the hon. Member for Walthamstow (Stella Creasy) for securing this important debate. She made clear her views about loan sharks—even more so when she tweeted a message to me which, if clicked on, plays the “Jaws” signature tune. We know where she stands, and during the few minutes available, I hope to respond to the specific points that she raised. I also want to comment on the excellent speeches made by my hon. Friends the Members for East Hampshire (Damian Hinds) and for North Swindon (Justin Tomlinson), and the hon. Members for North West Durham (Pat Glass), for Solihull (Lorely Burt) and for Harrow West (Mr Thomas).
Sadly, time is tight, so I will go straight on to some of the points that were raised. I am sorry that the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), cannot be present, but he is involved in the Committee stage of the Postal Services Bill. As part of the development of our policy on postal services, we have published a document to secure the post office network in the digital age. The hon. Member for Walthamstow will have the opportunity to pick up a copy from the Vote Office, but let me draw her attention to paragraph 53 on page 24, which states:
“We are firmly supportive of a stronger link up between Post Office and credit unions and are actively looking into ways the two can work more closely together. Credit union current accounts holders can already access their accounts at post offices through arrangements with the Co-operative Bank, and it is estimated that…almost 80,000 Credit Union transactions have been carried out in post office branches.”
We understand the importance of the links between credit unions and the Post Office, and we have made a commitment on that.
The hon. Lady also asked about a levy to fund credit advice, but that is not a straightforward matter because one would have to consider on whom the levy should fall. Should it fall on credit unions? The Consumer Financial Education Body is part funded by credit card providers and other credit providers, and before we go down the route of a levy, we should await the results of our wider debt review, which I shall say more about in a moment.
The hon. Member for Harrow West asked about the consumer advocate and the consumer landscape review. Following the changes to the consumer landscape announced by the Secretary of State on 14 October, we are still considering the options. The previous Government launched a consultation on that issue, so we are not able to provide a response to that point at present.
Given the level of concern among all parties, I would like to report on changes that are already under way, which go back to the previous Government. Those changes, which will offer significant new protections for borrowers, include a new cooling-off period that will allow the consumer 14 days to withdraw from any credit agreement, a need for adequate explanations to be provided to any consumer when taking out credit, and a requirement for someone to undertake a creditworthiness assessment before any loan is made. Those changes will benefit consumers.
Let me turn to the focus of the debate: the consumer credit and personal insolvency review. A call for evidence was launched on 15 October. My hon. Friend the Under-Secretary is leading on that review and working closely with the Financial Secretary to the Treasury.
The review focuses on three key issues, the first of which concerns helping consumers and lenders to make better borrowing and lending decisions because we think that more can be done in that area. Secondly, consumers and lenders should increasingly manage existing borrowing in the long-term interest of the consumer, so we want a regulatory regime that encourages consumers to manage their level of borrowing over time and limits the scope for people to be unfairly penalised for events beyond their control. Thirdly, people in difficulties should be able to access the most appropriate debt remedy.
Chris Evans
When I visited a branch of Lloyds TSB recently, I was told that a major problem was that if good customers get into a dispute, for example with a mobile phone company, and a county court judgment is imposed on them before the dispute is resolved, their credit rating can be messed up. Do the Government intend to review that situation?
Mr Willetts
Such abuse needs to be included in the review.
In the remaining few minutes available, I shall try to reassure hon. Members about the way in which the review is being conducted. First, we know that we must engage with specific issues, such as advertising. The existing rules on advertising do not address some of the softer issues concerning the way credit is advertised, so we wish to examine that. Impulse buying on store cards is another key issue that will form part of the review. In addition, the coalition Government are concerned that some charges levied by banks, particularly for unauthorised overdrafts, may make it difficult for consumers to keep control over their finances. The review will also cover interest rate caps, which we recognise as perhaps the most controversial issue touched on in today’s debate. We are concerned that the APR on some store cards can average 26%. Despite the fall in the base rate of interest since 2008, there seems to have been no comparable fall in rates on store cards.
The hon. Member for Walthamstow asked about other terms for the review. We have asked for evidence on a specific number of issues, so if people, including hon. Members, believe that we have not flagged up a problem that needs to be addressed, they should provide evidence of that problem to the review and state how it should be identified. The coalition agreement specifically mentions the issue of an interest rate cap on credit and store cards and that of a cooling-off period. Those are specific coalition pledges, which is why they are top of the list in the review, but there was no intention to exclude other subjects from the consultation should hon. Members, or other concerned people, wish to provide evidence of problems to be included.
Stella Creasy
Is that a yes? If we provide evidence that there needs to be action on interest rates charged across the board, including for pay-day loans, home credit markets and hire-purchase agreements, will the Government look at that evidence, act and include the matters in the credit review?
Mr Willetts
It is certainly an undertaking that if people, including the hon. Lady, come to us with evidence of a problem, we will consider that as part of the review. Obviously, we cannot commit the Government to act because that raises a host of further issues. If there were time, I might have repeated for the benefit of Opposition Members the details of at least three separate studies on interest rate caps that were commissioned by the previous Government. They all concluded that there were strong arguments against such caps, including the danger that people would become more dependent on loan sharks. We are aware of the evidence from the 2004 study, the 2006 inquiry into competition and, most recently, the OFT review. We are not committed to such measures because of our concern about people becoming dependent on loan sharks, but we will certainly consider the evidence. If the hon. Lady, the hon. Member for Solihull—who has a track record of being concerned about this issue—or any hon. Member would like their evidence to be considered, they should submit it to our review.
I assure the hon. Member for Walthamstow that I and the rest of the Government appreciate the many concerns about the availability and consequences of consumer credit. When used sensibly and responsibly, credit is a tool for coping with life’s uncertainties, but this is an area in which we must gather evidence before we introduce new rules, because we otherwise risk unintended consequences. That is why we have launched our call for evidence, and it is why I welcome today’s debate.
UK Film Industry
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Richard Harrington (Watford) (Con)
I am honoured to be here, as people always say, but I am honoured in particular because this is my first Westminster Hall debate—and under your chairmanship, Mr Chope, which is much appreciated. I thank Mr Speaker for selecting me for once. It is a great honour. I suspect that there was no one else for the lunchtime slot, but one never knows.
I am here today to talk about taxation, and taxation to do with the British film industry in particular. I have a specific film interest in my constituency, which is the base for Leavesden film studios—recently acquired by Warner Brothers and, even now, one of the most successful film studios in Europe.
As I am sure the Minister is aware, Warner Brothers announced yesterday an investment in excess of £100 million in finally acquiring and developing the site. For the record, most people in this country are highly delighted that what has been Watford’s little-known secret—the filming of the Harry Potter films in my constituency, which has been going on for quite a few years—is now formalised. I have not yet been offered a part in the films, but I have had a close relationship with Warner Brothers, as the Government have—the managing director has met with Ministers several times in the past few weeks.
The value of the film industry to this country is significant. People might not be aware, but it directly employs about 36,000 people. If we include the multiplier effect, which studies do, 100,000 people derive their income from the film industry. The taxation commensurate with that is significant. The industry provides about £1.6 billion in direct revenues to the country and £440 million in taxation.
The industry is very significant, with highly skilled and highly paid workers—everything we are looking for in an industry in this country. It has weathered the recession quite well, unlike many other businesses, and production activity is pretty good, I am told.
We rely extensively on inward investment, which is what I want to talk about today.
Andrew Griffiths (Burton) (Con)
My hon. Friend is a doughty champion for the British film industry and he has already articulated its importance culturally and economically. It is a vast employer that brings a huge amount of investment and a lot of jobs to this country. Will he, therefore, join me in expressing some surprise that not a single Opposition Member is present—no shadow Minister or Labour politician to speak on behalf of the British film industry.
Richard Harrington
My hon. Friend makes a good point, as ever. Given the importance of the industry to this country, I had hoped that Opposition Members would be present. However, avid readers of Hansard they may be, so I am sure that they will be able to catch up in the morning.
Mr Christopher Chope (in the Chair)
Order. It is important to point out that this is a half-hour Adjournment debate, and it is not normally possible for Members other than the Member who secured the debate and the Minister responding to participate without having gained the consent of those people. Therefore, saying that Mr X or Mr Y is not present is not really a good point, because in a half-hour Adjournment debate people who could not participate would not normally be expected to attend.
Richard Harrington
Thank you, Mr Chope, but I ought to explain that I mentioned to the Minister whom I thought would be present—my hon. Friend the Member for Faversham and Mid Kent (Hugh Robertson), who told me that he would be here—the fact that I thought there would be one or two interventions. I hope that has not caused offence to the Chair, and thank you for the clarification.
The first item of which people should be aware is the current taxation, which is a producer film relief for companies making films that qualify in the UK as British films. The relief is in place, and the industry supports it and hopes that the Government will leave it in place. My understanding is that the industry has made suitable representations to the Secretary of State and that that will be the case, although I hope for clarification.
The taxation position, however, has been complex. In 1997, when the Labour Government came to power, they decided to reward what some would say was the electoral help of media “luvvies”—but I am not one of those. Some would say that there was a lax film taxation regime, allowing high-net-worth individuals to get 100% tax credits for investing in films. That situation was, I think it is fair to say, abused by the tax avoidance industry, rather than by the film investment industry. To quote Charles Fry of Pinder Fry, a legendary accountant in this field:
“The fact that we’re investing in films is irrelevant. If we could get the same tax relief investing in cauliflowers, we’d do it.”
To mix my metaphors, there was a chink of light and that industry drove coach and horses through it. The end product was that in 2006 the previous Government pulled down the drawbridge—to use another cinematic analogy—and cut off the tax break for investor funding for high-net-worth individuals.
The vehicle left was the enterprise investment scheme, which is quite well used but very much on a small scale. The average investment through the EIS is between £5,000 and £10,000, so it is a good way to get small investors. However, small films are the type that tends to be funded. While they are very useful, the fact is that, while we have amazing facilities in this country and all the infrastructure, we are providing a vehicle mainly for foreign investors to do their production here while the profit, quite understandably, returns to the investors, who are abroad. Today, I am speaking to the Government about how we need to achieve a situation in which British investors can invest in British films tax efficiently.
What we need to understand about the British film industry is that the budget for a film is now about £1.5 million—the average, median cost of a British film. It was £2.9 million in 1993. With due respect to some fantastic operators, we have gone down to a kind of cottage industry.
To give an example, Mr Martin Carr, who has given me some excellent evidence from his company Formosa Films, explained to me that it is a question of finding many investors to do one film. Films have 600 or 700 investors putting in small amounts of money. While that is obviously useful in employment terms and in benefit to the economy, we have the facilities and capabilities to do much more.
Mike Weatherley (Hove) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree that one of the biggest threats to the film industry is piracy? While I welcome the Gowers report and the Digital Economy Act 2010, we could do many things to improve the Act. That should also be addressed by the Government.
Richard Harrington
The Oxford Economics study, which was commissioned by the film industry last year, proved that very point. Piracy and the infringement of copyright are the major reasons why money disappears from the system and why film makers are not getting the benefit of any of their films. In many cases, that is a criminal matter and the Government will have to make progress on it—like shoplifting, it is theft, and just like any other crime.
What I am really talking about, however, is how we create an independent film industry in which the vast number of high-net-worth individuals who will take risks can have a vehicle to invest in. What went wrong last time was that clever accountants came up with a device whereby schemes were risk free. People were doing sale-and-leaseback schemes. We are talking about not risky films—everyone knows that films are risky and that people either make or lose a fortune with a film—but series of television programmes that were pre-sold to television companies, so there was no risk at all. Accounting firms were making use of the provisions, which really ruined things for genuine film operators, who are now spending all their time making presentations all over the country to get investors to invest small amounts.
There is no question but that films are risky. In this country, we have a tradition of people investing in one film, which comes from the days of theatre angels, who would invest in a particular west end play. However, serious private investors need a vehicle that bunches a group of films together, because some films obviously work and some do not. People can make a very risky investment, for which they will get some tax relief, and there will be huge benefits for the country in employment and everything else. That is what I am asking the Minister for. A working party should be set up. I and people in the industry would be happy to take part, along with the Treasury and Her Majesty’s Revenue and Customs, to see whether a suitable vehicle could be devised.
Neil Carmichael (Stroud) (Con)
This is an important debate. Small businesses in my constituency are involved in film making. Like my hon. Friend, they have made the point that tax is the important issue, but there are other factors. One is simply creating the right environment for investment in the sector, and I would be grateful to hear what the Minister has to say about that. For example, there are the links that small producers have with the BBC and with other small producers. A feel-good factor encourages the right kind of investment, and we need to attract people to these high-profile industries, which also produce a lot of export work.
Richard Harrington
My hon. Friend makes a good point.
I should also mention lottery funding, although I am referring not to charitable or community-based assistance, but to a serious vehicle for serious investors. I know that my hon. Friend the Minister is besieged by people wanting handouts. I have spoken to the Treasury about this issue, and I am talking about not a handout, but something that would be hugely beneficial to the country economically—all the evidence is there.
Angie Bray (Ealing Central and Acton) (Con)
I am lucky enough to represent Ealing Studios, a very long-standing and famous set of film studios, and I agree with what has been said this morning. In America and Hollywood, there is so much money that people can afford to plan 10 years ahead. They know that a couple of the films that they take on will be duds, but they can afford to carry the duds because they know that somewhere in the mix there will be at least two or three films that make them a sensational fortune. What is it that they get so right over there that we need to look at so that we get it right here? We need a big enough investment and a big enough group of people who can plan ahead and take a couple of duds on the chin, but who can get the good films going as well.
Richard Harrington
My hon. Friend makes an extremely good point that goes to the nub of my argument.
For once in this country, we have all the infrastructure. We have studios such as Ealing, Pinewood, Shepperton and Elstree. Of course, no one would dispute that the Hollywood of the UK is Watford and Leavesden, which makes some of the lusher, more tree-lined roads in Watford very much akin to Beverly Hills.
Jason McCartney (Colne Valley) (Con)
I congratulate my hon. Friend on securing the debate. There has been a lot of talk about south of Watford, but I want to stand up for Yorkshire and the north. Probably one of the most successful British films of recent years was “The Full Monty”, which was filmed just down the road from me, in Sheffield, and I remember going to see it at Penistone picture house. However, my constituency has also hosted two long-running television series, which shows our expertise in film, with all the crew who were involved. We had “Last of the Summer Wine” in Holmfirth, which ran for more than 30 years, and the ITV drama “Where the Heart Is” in Slaithwaite. We have lots of wonderful skills—not just in the television industry—and it is important that we keep them employed in this country. Indeed, if we go on holiday to New Zealand or other English-speaking countries, we find that they also love our dramas, so this really is a good industry for us. Well done to my hon. Friend for securing the debate.
Richard Harrington
I greatly appreciate that point. Everything that is made in Colne Valley, and every television programme and film that is made, shows research and development working on the spot. A lot of the world-class facilities that this country has developed for graphic arts and special effects have come from films, rather than from laboratories or other fields.
There is a compelling argument here. The Government have done an excellent job on the film producer credit, which the industry is grateful for and which works, but we should look carefully at creating an industry that is British financed and British made, and whose profits remain in Britain. Thank you very much for your time, Mr Chope.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
It is a great pleasure to serve under your chairmanship for the first time, Mr Chope. This is perhaps a poacher-turned-gamekeeper moment for you, and I hope you will not take too many points of order during what remains of the debate.
I congratulate my hon. Friend the Member for Watford (Richard Harrington) on a stunning debut in Westminster Hall and on bringing the success of the UK film industry to the attention of the House. He talked knowledgeably about the film industry and some of its technical details, which does not surprise us at all, given that he is the vice-chairman of the all-party group on the film industry and the hon. Member for Watford/Hollywood.
I also thank all other hon. Members for their valuable contributions. My hon. Friend the Member for Hove (Mike Weatherley) talks so much about piracy that he should perhaps take a starring role in “Pirates of the Caribbean 4”—a £200 million film being filmed in the UK. He is extremely knowledgeable and has, indeed, worked in the film industry. My hon. Friend the Member for Ealing Central and Acton (Angie Bray) represents the highly successful Ealing Studios, which are run by Barnaby Thompson. My hon. Friend the Member for Stroud (Neil Carmichael) made an important point about film. My hon. Friend the Member for Burton (Andrew Griffiths) helpfully pointed out that not a single Labour Member could be bothered to come to the debate. My hon. Friend the Member for Vale of Glamorgan (Alun Cairns) has not spoken, but his presence simply illuminates the debate, and I take this opportunity to congratulate him on his strong campaigning on behalf of S4C, another broadcaster whose future the Government have stepped in to secure.
My hon. Friend the Member for Watford began by noting the investment by Warner Bros in Leavesden Studios in his constituency. The studios are quite a well-kept secret in the United Kingdom. They are the place where all the Harry Potter films have been made and have, therefore, been responsible for a massive amount of inward investment into this country. Yesterday, Warner Bros announced that it was going to invest £100 million in Leavesden to make it the only major US studio outside Hollywood, so my hon. Friend’s remark about Watford being the Hollywood of the UK was in no way facetious. That announcement is a real milestone and a fantastic vote of confidence in the UK film industry.
The success of the UK film industry is built on a number of factors. We are, for example, the third-largest cinema-going nation in the world, but we also have a huge range of technical expertise. When my hon. Friend talks about the number of jobs that are directly related to the film industry, it is worth remarking that we have built a highly successful film industry that is fit for the 21st century on the back of the success of the tax credit and the inward investment from Hollywood studios. That includes elements that we might not necessarily consider as part of film, such as the computer graphics industry and world-class companies such as Double Negative Visual Effects, which provide visual effects to the film industry. That is another reason why so many people want to make films in Britain. My hon. Friend also mentioned Pinewood-Shepperton, and it is instructive that the studios are full at the moment. People who want to bring films to the UK are having to negotiate for space with that highly successful organisation.
It will not have escaped the attention of my hon. Friends—I can say that, as all Members in the Chamber are Conservative—that the film industry has been somewhat in the news because of my Department’s decision at the end of July to announce the abolition of the Film Council. One film director said that it was akin to abolishing the NHS. However, as the dust has settled it has become apparent that we took that difficult decision because we wanted to ensure that as much money as possible went to the film industry itself and that we spent as little as possible on overheads.
We will shortly be making an announcement on the future structure of support for the film industry. However, the decision to abolish the Film Council in no way reflected on its leadership. It was superbly led, and is still led, by Tim Bevan, its chairman; and was superbly led by its recently departed chief executive, John Woodward. I pay tribute to John Woodward; having been on the front line of the British film industry for 15 years, both in the British Film Institute and the Film Council, he can take a large part of the credit for the success that we currently enjoy.
Nevertheless, there have been some bumpy rides along the way. My hon. Friend the Member for Watford pointed out that the film tax credit lost its way in the mid-noughties, and that it was seen more as a tax avoidance scheme than a way of investing in the British film industry. I am glad to say that it now works incredibly effectively, and is the main reason for inward investment. We have made it absolutely clear that we guarantee its continuation. The scheme has to be approved.
Alun Cairns (Vale of Glamorgan) (Con)
I am grateful to the Minister for giving way. I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. We are talking about inward investment in the UK film industry, but does the Minister recognise the fact that the industry is UK-wide and that we should not focus on any one region? Every nation and region of the UK can play its full part in film-making; it can be an effective way of spreading prosperity away from the south-east of England.
Mr Vaizey
My hon. Friend is quite right. His intervention further illuminates the debate by ensuring that I put on the record the huge success of the Welsh film industry, Welsh television productions and the Film Agency for Wales, and the way that Wales is forging ahead with its digital agenda—no doubt ably supported by my hon. Friend, who is a strong voice for Wales in the House.
The film tax credit is due to expire, on a technicality, on 31 March 2012. If anyone is worried by that statement I can tell the House that, as part of the European state-aid rules, we are required to re-notify the European Commission that we intend to continue implementing it. Officials have already begun the process of ensuring that the system continues beyond 31 March 2012 and is cleared again without a gap.
The film tax credit stands at the heart of inward investment, and I pay tribute to the team currently residing in the Film Council that implements the tax credit, dealing with the nuts and bolts and ensuring that the t’s are crossed and the i’s dotted. Those people do a superb job. I hear again and again from the film industry—this is perhaps for the team’s benefit—that instead of saying, “The computer says no,” it says, “How can we help?” That is to be commended.
There is another strand that supports British film, particularly those films with an essentially British content—national lottery funding. I am delighted that the Government decided to increase significantly the money available from the lottery for the production of UK films. The total sum available, which includes an element for training, will rise to £40 million in 2014; that is a 40% increase. Because of our decision to rationalise the bureaucracy that supports film in the UK, a far larger proportion of that money will go directly to supporting the British film industry.
It is worth pointing out that, as well as the £40 million that will eventually be available from the national lottery and the £100 million or so from the tax credit, the British film industry is supported by BBC Films and Film4. I was delighted to hear Film4 announce recently that it would increase its investment in film from £10 million to £15 million a year for the next five years; that is a 50% increase every year for the next five years. That decision, too, was taken after we announced the abolition of the Film Council. It is a huge vote of confidence in our film industry.
Sadly, one gap remains. I note that Sky now has 10 million subscribers. I hope this successful British broadcasting company will follow the lead of BBC Film and Film4 and establish its own film fund. I am sure that, in a 10-minute conversation with Sky, my hon. Friend the Member for Watford could explain that with the tax credit, the ability to leverage in private investment and possibly the ability to gain lottery funding, a small financial commitment could see substantial British films being made in this country.
As for direct grant in aid, the Government will be putting in about £73 million over the next four years. That includes our support for the British Film Institute. The institute is another important element in preserving our film archive and heritage, but it also promotes British film, particularly with the highly successful London film festival, which garnered a lot of attention this October and brought many film financiers and investors to London.
We also want to ensure that we are known in the world. We have a highly successful British film commissioner in Los Angeles, who helps with inward investment. He is aided by Film London, ably led by Adrian Wootton, and I put on the record my commendation of his work. Pinewood is expanding, with Pinewood Toronto studios becoming a leading production facility for film and television in Canada. We intend to work closely with UK Trade & Investment to ensure that British film has a presence throughout the world.
A side effect of our decision to abolish the Film Council is our wish to establish a more direct relationship with the British film industry. I was pleased to announce recently that we are to have a biannual ministerial forum on film, where all elements of the British film industry can discuss important matters with Ministers.
The key thrust of my hon. Friend’s excellent speech was that we need to build a sustainable British film industry. We want to take it, as it were, beyond the cottage-industry state. It is a highly successful industry that makes excellent films, but the perennial question—the gold at the end of the rainbow—is how to make it sustainable. It is difficult to replicate the US model, which integrates distribution and, with the huge amount of capital that is available, allows investment in a slate of films. However, we shall not take our eye off the ball.
We need to consider a number of the imaginative measures that have been proposed. The Producers Alliance for Cinema and Television proposes what it calls a lot-box; the key to its proposal is that producers should keep some of the intellectual property in their films. Too often, it is given up in order to raise private finance. We need to consider imaginative proposals on leveraging private investment on the back of the substantial money that is available from lottery funding. We must also keep close scrutiny on the need for a distribution model that works for British film, because without distribution the job of making a successful film is only half done.
The film industry in the UK is highly successful—one of the most successful in the world. We have a huge range of talent, not only in our brilliant actors but in our formidable technicians and fantastic world-beating companies. I am delighted to say that through our increase in lottery funding, our guarantee for the film tax credit and proposals that we hope to announce shortly, we intend to build on that success, maintaining and increasing it.
Food Security (Africa)
(14 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Heidi Alexander (Lewisham East) (Lab)
I will start my speech, although I am not sure that the Minister is yet here to listen to my remarks.
I am pleased to have secured my first Adjournment debate and to be speaking about food security in Africa. I declare an interest: in September, I was lucky to be part of a parliamentary delegation to Kenya that was organised and paid for by the all-party group for agriculture and food for development. I am pleased to say that one of my fellow travellers, the hon. Member for Calder Valley (Craig Whittaker), is in the Chamber. I plan to limit my remarks to 10 minutes in the hope that he and other hon. Members will be able to speak before the Minister responds.
My week in Kenya is undoubtedly one reason why I applied for the debate. I am not an expert on food security or on Africa, but I am, I admit, a child of the ’80s. The television images I saw as a 10-year-old of starving children in Ethiopia made a deep and lasting impression. I have called the debate because I never want to see those images again, because emergency food relief has to be the last resort, and because I believe that Africa has the ability to feed itself and that we in the UK should be doing more to help African agriculture to realise its potential.
I also passionately believe that at a time when much of our political discussion is focused quite understandably on the state of our domestic economy, it is important that we all remember that there are 265 million people suffering from chronic hunger in sub-Saharan Africa. That is the UK’s population four times over, and a third of the region’s total population. Sadly, that number is set to grow by 2020, when it is estimated that, if current trends continue, half Africa’s population will be affected. We must not let that happen.
I have come here today to ask the Minister to put tackling hunger and malnutrition for millions of Africans at the heart of his Government’s fight against global poverty. I also come to remind him—although I hope that I do not need to—that the primary aim of our overseas development assistance must be to tackle the basic needs of the poorest people in the poorest countries, and to help them help themselves. I also come to say that while maternal health, access to family planning and the fight against disease are all vital, so too is investing in smallholder farmers, most of whom are women. Ironically, it is those smallholder farmers who are most likely to face severe hunger and malnutrition.
I also wish to ask the Minister to increase the UK aid that we spend on helping African farmers so that they can improve their harvests and the productivity of their livestock, to increase the amount of agricultural expertise provided by his Department within African countries, and to use our influence within the international community to ensure that African Governments honour the commitments that they made at Maputo in 2003.
I know that I have set out a long wish list, so let me tell hon. Members why I am convinced that refocusing UK and international efforts in this area could make a significant difference. The availability of adequate food of the right nutritional quality is fundamental to people everywhere. Undernourished mothers give birth to underweight babies. Children who are malnourished in the first two years of life are at a much greater risk of ill health when they are older. How will a child learn if he or she is starving? How will the child’s mother fight off malaria if she does not have a decent diet? How will women be empowered if they cannot feed themselves?
When I was preparing this speech over the weekend, I came across reports of fishermen in Malawi using malaria nets to secure their catches in Lake Victoria. If ever there were an example of the way in which food security underpins so many other development goals, surely that is it. If there were a ready supply of food in Malawi, I would suggest there would have been much more chance of the nets being used for their intended purpose.
When the all-party group visited Kenya in September, we met family after family who told us that while their livelihood was their land, that land often did not produce enough for them to live on. They are not even subsistence farmers; they are sub-subsistence farmers, and there are millions of them in Africa. Given the effects of climate change and more irregular rainfall patterns, there are likely to be many more in years to come.
The sad thing is that it does not have to be that way. The use of better seeds, appropriate fertilisers and access to basic knowledge about planting and irrigation can have a dramatic impact on yields. The current agricultural output in Africa, measured in tonnes per hectare, is less than the UK’s wheat output in 1680. Better storage, cross-breeding of livestock and access to micro-finance can mean the difference between feeding one’s children or not, and the difference between having a small surplus to sell at market or not. None of that is rocket science, yet there is a huge challenge in getting the basics right, and getting the best seeds and right sort of agricultural knowledge to the farmers who need them.
There are fantastic projects, however, that have the potential to be scaled up in a way that could offer real results. Take FIPS in Kenya—Farm Inputs Promotions Africa—a Department for International Development-funded, not-for-profit company, which, through a network of village-based, agricultural advisers, works with the private sector to get new seeds and fertilisers out to the farmers who need them. Take Farm Africa’s dairy goat project in the semi-arid area of Kenya around Mwingi, which trains local people in the cross-breeding of goats to increase milk yields and resistance to drought. Better yields can not only feed the family but generate small amounts of additional household income, which creates a virtuous circle of economic activity.
As the recently published Montpellier panel report says, however, there is a “potentially dangerous gap” between a rich patchwork of on-the-ground activities, such as those I have just mentioned, and a “top-down global response” to addressing food security, which is characterised by much-lauded international conferences and big set-piece policy statements. Do not get me wrong: the pledges of large-scale funding at L’Aquila last year are welcome, but they must translate into real improvements in the lives of the poorest in Africa.
I hope that I have been able to explain why I feel that a focus on food security and agriculture in Africa is so important. I ask the Minister, in the light of what I have said, to consider increasing the proportion of bilateral aid spent on agriculture in sub-Saharan Africa to 10% of total DFID money spent there. According to a recent reply to a parliamentary question, the sum for agriculture in that area amounted to £51 million in 2008-09. I calculate that that is just 3% of UK bilateral aid for the region in that year.
Does the Minister agree with World Bank estimates that suggest that a 1% increase in agricultural GDP in Africa reduces poverty by three to four times as much as a 1% increase in non-agricultural GDP? Does he agree that agriculture would, therefore, fit neatly with his Government’s desire to get as much bang for their buck as possible from their overseas development assistance? Will he tell me the position that the UK will be adopting on food security at the G20 summit in the next few days? Will he tell me how much of the £1.1 billion commitment made by the UK at L’Aquila last year has been disbursed in sub-Saharan Africa? Does he know how many of the staff his Department has working in Africa have agricultural training or experience? I understand that there is only one DFID employee with such a background in Africa, who is based in Uganda. I ask him to consider how that might impact on the delivery of the £1.1 billion of commitments. Has he thought about how such a lack of in-country expertise might have affected the offer that each of DFID’s in-country teams have been asked to prepare as part of the bilateral aid reviews? If I were the Minister, I would not be too surprised if those returns were characterised by scant reference to agriculture as a route out of poverty, although perhaps he could reassure us. I appreciate that some of my questions are detailed and that the Minister might not be able to reply to all of them today, but these points are critical if we are to make 2010 the year in which we set the agenda for dealing with the fight against hunger in the decades to come.
If I may, I will leave the Minister with this thought. Investment in small-scale farming will help not only the rural poor. On the first day of our all-party group visit in September, we met a man called David, who lives with his three children in the Nairobi slum of Korogocho. His home is a two-metre by three-metre hut, edged by dirt tracks and foul-smelling gullies. David left the countryside because of family breakdown and because he was unable to feed his children. When he got to Nairobi, however, his life was no better. His saviour was, in fact, a cash-transfer project being run by Concern Worldwide and Oxfam. David’s dream is now to own a piece of land to provide for his family. I could not help but think that if the right type of support had been provided to him and his rural community when it was needed, perhaps he and his family would not be trapped in the Nairobi slum in which they are today.
For millions of Africans, food security is not a fancy concept—it is a matter of life and death. I urge the Minister to do all that he can to address the challenge facing Africa and to use the UK’s position as a world leader in overseas development assistance to ensure that this decade is the one when we really make a difference.
Craig Whittaker (Calder Valley) (Con)
I congratulate my colleague, the hon. Member for Lewisham East (Heidi Alexander), on securing the debate. I also congratulate her on her speech, which outlined the reasons why investment in smallholder farming underpins many of our country’s development goals and why greater investment in agriculture could yield much wider benefits.
At my last “meet your MP” public meeting in my constituency, I was asked why we are spending so much money on foreign aid when our own country’s financial plight seems so dire. The answer is quite simple: foreign aid not only brings untold benefits to the recipient country and its people—when we do it right—and untold long-term benefits to our own economy and country, but produces a sustainable, stable foreign country that helps and grows itself, which in turn helps to make a safer and more secure world.
I want to expand on my comment about “when we do it right”, because the hon. Lady highlighted several charities and non-governmental organisations that do some fabulous work in Kenya. I must also declare an interest, because on our trip to Kenya with the all-party group on agriculture and food for development, we saw not only the excellent examples to which she referred, but the fact that it is not always necessary to spend great deals of money to implement a change for the better. In the smallholder farming stakes, we saw an excellent project in Mwingi, where Farm Africa is doing some fantastic work with the cross-breeding of goats. We were told that a local goat produced a mere 80 ml of milk a day, but if it is cross-bred with one of the stronger breeds of goat, such as a British variety of goat or a German Alpine goat, it produces up to a litre of milk a day. If that cross-breed is then cross-bred further to 75%—that is a goat that is 75% of the stronger foreign goat and 25% of the local goat—the yield of milk goes up to a staggering 3 litres a day.
When that simple, low-cost exercise is carried out by local farmers, it helps them to become much more sustainable within the food chain, because they can sell their milk to hospitals for money that they can use to buy a variety of food to achieve a balanced diet. Furthermore, the resulting milk has tremendous effects by improving the nutrition of newborn children, and indeed their mothers. It is a real “win-win” situation, whereby a low-cost project empowers local people to strive towards sustainability and, eventually, to excel and become sustainable.
Our Government have a huge vested interest in the big society. We need look no further than British NGOs and charities to see examples of organisations that are living and breathing the big society on a daily basis. Through their volunteer programmes, they empower the people with whom they work to map out their own sustainable futures. The power, innovation, leadership and enterprise of our NGOs are absolutely second to none. The NGOs deliver with passion and genuine innovation for smallholder success, without the corruption and self-interest that we often see in national Governments. They are good at mapping out a sustainable future for smallholder farmers but they need help, both from ourselves and our partners.
For the first time in two generations, Africa has a real opportunity to achieve food and nutrition security through agricultural development. As the hon. Lady mentioned, the Montpellier report was published recently. It shows that, despite the fact that the international donor community started to pull out of agricultural development well over two decades ago, there is growing optimism in sub-Saharan Africa that the region can achieve its anticipated green goals.
Food security is a key intermediary outcome in the development process and we have seen a new and growing commitment from African countries to increase resources for agriculture and rural development to at least 10% of national budgets within five years. The challenge for our country, and indeed for our European partners, is how to help to co-ordinate those strategies and how to help to ensure that the momentum is sustained in terms of even greater commitment and funding by the key African and European partners.
The Montpellier report believes that we are well placed to take the lead and drive forward that change. It highlights three key areas that need urgent attention: sustaining the momentum, as I have already mentioned; reducing price volatility; and tackling chronic hunger. My main wish is that the Minister accepts the Montpellier report as a solid blueprint for real sustainable change and that the recommendations in the report, as well as the excellent work of our NGOs and charities in agriculture in particular, are incorporated within our aid programme to help eradicate chronic hunger in Africa for good.
One of the basic requirements in life is food. If we can drive forward our quest to empower people to become self-sustainable with food, the human instinct to survive, along with our aid to empower potential, will ensure that other basic requirements, such as education, health care and housing, will follow. It does not take a rocket scientist to understand that the key catalyst to a safer and more secure world is investment in agricultural development and food sustainability.
The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)
I want to start by congratulating the hon. Member for Lewisham East (Heidi Alexander) on securing this debate on a very important subject, and on the powerful and passionate way in which she presented her argument. She also presented the context for any debate on food security, recognising the enormous range of challenges, of which food security is one. The question is how we achieve the critical balance between determining what will be most effective, and what will have most impact in assisting Britain to partner countries to help them graduate away from aid over time, simultaneously meeting the needs of the very poorest people in those countries.
I was delighted that both the hon. Lady and my hon. Friend the Member for Calder Valley (Craig Whittaker) had an opportunity to travel to Kenya with the all-party group on agriculture and food for development—there is no substitute for seeing things for oneself in order to bring these issues to life. To some degree, I have seen these things for myself, as I was born in Tanzania and partly raised and educated in Kenya. The scale of this issue is immense. More than 200 million people in Africa—more than one in four of the continent’s population—suffer chronic hunger. Although Nigeria, Ghana, Rwanda and Ethiopia have all made significant progress in reducing hunger, many countries have made little or no progress and, frankly, some are going backwards. Levels of hunger in the Democratic Republic of the Congo have nearly trebled since 1990, and the levels in Burundi, Botswana, Swaziland, Zambia and Gambia have also increased due to conflict, rapid population growth, economic stagnation or HIV/AIDS. In the years to come, climate change and the scarcity of natural resources will add to the challenge.
The Government are determined to make faster progress in helping to reduce hunger. That is why, at the millennium development goals summit in September, we reaffirmed our determination to tackle malnutrition and to focus our efforts on “the first 1,000 days”—the period from conception until a child’s second birthday—after which intellectual and physical damage from chronic under-nutrition is irreversible.
In doing so, we agreed to work with six major donors to co-ordinate and accelerate our work in countries with high levels of malnutrition. Ghana, Malawi and Uganda are among the first countries to request assistance to reduce under-nutrition rates, which will please the hon. Lady as she referred to a very good example of this type of work in Malawi. It is also why, soon after taking office, the Government reaffirmed our commitment to the L’Aquila food security initiative, which was agreed at the G8 summit in 2009. The agreement aims to increase food production in developing countries, make food more affordable for the poorest and most vulnerable, create wealth and lift the poor out of poverty.
The hon. Lady asked how much of the £1.1 billion in L’Aquila commitments have been spent so far. Although that figure is not yet available, we will certainly write to her as soon as it is. However, I can tell her with confidence that the UK will have met its commitments, which I hope reassures her. Within the G20, we have committed to improving food security by making agricultural trade and markets function more effectively and reducing food price volatility in order to protect those most vulnerable to food price increases.
Jeremy Lefroy (Stafford) (Con)
I am grateful to the Minister for giving way, and I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate. Does the Minister agree that one of the most important things that can be done for food security is to improve food storage facilities? On the ground, I have seen food go to waste many times simply because appropriate food storage was lacking.
Mr O'Brien
I defer to my hon. Friend’s experience and expertise in such matters, as he has shown great commitment to them over the years. He is right. No supply chain can be managed without the ability to store foodstuffs and distribution points that make it accessible, particularly to the hardest to reach. He is right to emphasise that we should consider a well-designed, holistic approach to solving the big challenge.
Heidi Alexander
I would like to bring to the Minister’s attention a fantastic resource in this country, the Natural Resources Institute, which I was lucky enough to visit during the past couple of weeks. Its researchers are working on technical solutions to some of those storage problems. I urge him to look into the work the institute is doing, as it holds some good potential solutions.
Mr O'Brien
The hon. Lady is right to highlight that. There is nothing more important than an evidence base and designing in what works to ensure that the programmes and resources being supplied in partnership to other countries have the greatest impact.
The point is well made. It also ties in with the hon. Lady’s question as to whether Department for International Development personnel could include more agricultural technicians and professionals. I can confirm that we currently have more than one, which will come as some relief. A newly appointed senior economist in Tanzania used to be the head of the agriculture team in the policy division, and we are in the process of recruiting senior agricultural advisers for Rwanda and Mozambique. I am due to visit Mozambique before long and have been to Rwanda and Tanzania.
Early next year, the Government will publish a major new foresight review of the future of farming and food that will consider how the world can continue to feed itself sustainably and equitably over the next 40 years. I hope that the foresight review will have the opportunity to learn from the research and support that the hon. Lady mentioned. We expect its recommendations to influence a wide range of practitioners and policy makers.
I assure the hon. Lady that we are making a difference. In Rwanda, our work on land tenure reform is helping to underpin wealth creation and food security, particularly for women and girls, who drive it. In Malawi, our support for the Government’s agriculture programme has helped farmers produce a maize surplus in each of the last four years. In Ethiopia, our support for the productive safety nets programme has benefited nearly 8 million people previously dependent on emergency aid. In South Africa, we are funding work on zero tillage technology that conserves soil, reduces water losses and improves yields. This year, our immediate assistance in response to severe food shortages in the eastern Sahel—she will have read about them—helped avert a major humanitarian crisis.
Increasingly, African Governments are giving agriculture higher priority, with support from the comprehensive African agriculture development programme, which we strongly support. The CAADP is leading to increased budget provision in the sector. Above all—I think this is the point the hon. Lady was hoping to elicit from me—it is an Africa-owned and Africa-led initiative. It aims to increase productivity by 6% a year.
As the hon. Lady knows, however, farmers do not work for this or any Government. Agriculture is a private sector activity, whether it involves subsistence farmers, smallholders—as my hon. Friend the Member for Calder Valley mentioned—or large-scale commercial farming. The bulk of the investment needed to ramp up productivity will come from the private sector: from farmers’ own pockets, from banks and micro-credit agencies and from local and national investors.
That is why the Government are seeking to increase our engagement with the private sector. A new private sector department is being created within the Department for International Development, and we are working to encourage increased levels of responsible investment in all aspects of agriculture, including production, processing, transportation and retail. That will be recognised as the results of the bilateral aid review emerge. The results on food and agriculture are much more positive than was suggested, although the hon. Lady will not be aware of that, inevitably, as we have not yet been able to aggregate and publish them. We shall do so in due course.
Food security in Africa is high among my priorities. Since taking office, I have visited Rwanda, Uganda, the Democratic Republic of the Congo, Tanzania, and Sierra Leone, and I am off to Nigeria this evening. During my visits, I have seen what a contribution agriculture makes to combating poverty and hunger. It is also hugely important for empowering women, who provide much of the agricultural labour but control just a tiny fraction of the productive assets they need to support themselves and their families. That is why we have made it such a priority.
I am pleased that the hon. Lady was able to visit Kenya as a member of the all-party parliamentary group and to see for herself something of how food security works and should work. I hope she was able to see some of the projects that DFID, under the coalition Government, supports. Much of our work aims to ensure that new agricultural technology, which she was keen to highlight, is taken up swiftly by smallholder farmers, who make a substantial contribution to food production in Africa. Our cash transfer programme for Kenyan pastoralists has reduced the poverty of 376,000 people and had a clear impact on nutrition. That relates to the point about agriculture versus nutrition, which is often a false dichotomy but must be addressed. Increasing private sector investment is clearly important, but the ultimate prize is reducing hunger and malnutrition.
Roger Williams (Brecon and Radnorshire) (LD)
I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing a debate on an issue that would have justified an hour and a half of debate, had we been given more notice. The Minister has highlighted the role that science will play in many such programmes; I am pleased that the Government safeguarded the science budget in the comprehensive spending review. How will the Department for International Development, the Department for Environment, Food and Rural Affairs and other Departments co-operate on science and consider how it can be delivered in Africa?
Mr O'Brien
The hon. Gentleman makes an extremely powerful point. The commitment to science can lead to an evidence base that gives us the confidence and sustainability to design the programmes that will have the greatest impact over time. That is precisely why holding on to our precious science budget in the comprehensive spending review was so important. He makes an equally important point: this is not just about a single Department’s efforts, but must involve cross-Department working. We have a number of the inevitable committees and other initiatives. Importantly, I was talking yesterday to my counterpart at DEFRA about precisely such issues of food safety and how the expertise within DEFRA can be harnessed to ensure that the design of our programmes is even more likely to secure the impact and benefits of spending our money well, transparently and in areas of greatest need.
The hon. Lady asked for us to allocate a certain percentage to the issue. It is always more complex than calling for a simple amount within a budget to be allocated; clearly, trade-offs would have to be considered. I hope she will recognise that, as we go through the bilateral and multilateral aid review and, indeed, the humanitarian and emergency response review—coupled with the regional reviews, where there is a real opportunity to look at some regional sharing—she can look forward to seeing how we will aggregate the call for a greater emphasis on food, farming and agriculture with the nutrition elements.
I noted that the noble Lord Cameron—the leader of the all-party group on agriculture and food for development, of which the hon. Lady is a member—highlighted a particularly interesting point about Shujaaz FM radio, which I think all the team must have seen. Important evidence from such trips comes back to DFID, which we can incorporate into our thinking as we move forward, particularly as the foresight group will be reporting early next year.
I pay tribute to the hon. Lady for introducing the debate and raising the subject. I look forward to working with her and other hon. Members as we find the best way to support those concerned, particularly smallholder farmers, in playing a role in tackling hunger where it is most necessary to do so. We need to ensure that we do so on the basis of evidence and knowledge.
Government Policy (NEETs)
(14 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Tony Baldry (Banbury) (Con)
A number of right hon. and hon. Friends want to intervene during this debate. As I have told the Minister what I intend to say, I hope hon. Members will excuse me if I take my speech at a bit of a canter because that will, I hope, give colleagues the opportunity to intervene when they can. Given the interest in this topic, I slightly regret that I did not enter the ballot to have an hour and a half debate.
A report on young people not in education, employment or training produced earlier this year by the then Select Committee on Children, Schools and Families states:
“We accept that the term ‘NEET’ is imperfect. In particular, its use as a noun to refer to a young person can be pejorative and stigmatising. It is, however, a commonly used statistical category, and—in the absence of an appropriate alternative—we have accepted it as a first step in understanding the issues.”
A NEET is someone under 25 who is in employment for less than 16 hours a week and who is not in education or training. My constituency has two main towns, Banbury and Bicester. In September this year, 7.5% of Banbury’s 16 to 18-year-olds—approximately one in 12 young people—were not constructively engaged in education, employment or training. Nationally, the Prince’s Trust estimates that almost 15% of 16 to 24-year-olds in England are NEETs, which is around 874,000 young people. The Prince’s Trust estimates that the cost to the state of young people who are NEET is £3.65 billion per year.
As hon. Members may know, in recent years, I have helped to establish job clubs in Banbury and Bicester and, earlier this year, we set up a working party involving those running the job clubs—including Jobcentre Plus and Connexions—to consider what more could be done to help NEETs back into education, employment or training. We also considered how to improve the NEET situation in future years and assist the 142 or so existing NEETs in and around Banbury.
I know my hon. Friend the Minister takes the issue seriously. He inherited a skills system that he has rightly described as over-complicated, over-bureaucratic, incredibly micromanaged and top heavy. He has observed that the previous Government went wrong by basing their skills policy on target-driven bureaucracy, failing to provide sufficient attention to community-based adult learning and effectively abandoning a generation of NEETs. However, during the work I have been doing this year, I have become concerned that a number of policy changes might have the unintended consequence of worsening the opportunities for less skilled and disadvantaged young people to move into further education or employment with training.
We need to consider whether returning the contractual relationship to the Young People’s Learning Agency from councils has reduced local flexibility to provide what is needed post-16, and whether removing the ring fence from Connexions funding has put at risk the work needed to prevent NEETs. It is not possible for me to show in Hansard a diagram of what we are doing locally to try to prevent NEETs and to help existing NEETs. However, the simple fact is that Connexions is the gateway for existing NEETs and provides the signposting, engagement and intervention to help them. That is done through support with apprenticeships, engagement with things such as SKIDZ motor mechanics, work trials, personal advice, interventions, or through programmes such as the new projects in Banbury, including the very welcome new Prince’s Trust programme. We need to ensure that Connexions can effectively undertake that work, because we should be in no doubt that the long-term cost to society of a youngster dropping out at 16, 17 or 18 is far greater than the money that would be spent in ensuring they have educational or training opportunities.
Anne Marie Morris (Newton Abbot) (Con)
I am certainly grateful for the debate. The comments my hon. Friend makes about the costs are absolutely on point. I am sure he is well aware that the cost to the taxpayer is £97,000 per individual over their lifetime—some estimates put the figure at £300,000 if benefits are included. Does he therefore agree that such figures need to be borne in mind when the Government consider how to resolve this intractable problem?
Tony Baldry
I entirely agree with that point, which my hon. Friend makes extremely well.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my fellow Oxfordshire MP on securing this important debate and on the initiatives he is pursuing in our area—I would certainly be pleased to support such projects. Does he agree that what these young people most need is continuing support in the form of advice, mentoring and the monitoring of progress? They need ongoing engagement with work-focused practical experience that can lead to a job, and some modest incentives to reward their progress.
Tony Baldry
I entirely agree with everything the right hon. Gentleman has said; he puts the matter in a nutshell very well. Do the current targets for retention rates on courses for further education colleges mean that they may be tempted to turn away applicants with poor school attendance records? That would effectively write off the already disadvantaged, and potentially create a group of long-term disengaged and unemployed young people with little possibility of improving their position. My impression is that, locally, people are working very hard to try to engage NEETs and get them back into education or training. However, that is not easy. By definition, NEETs have mostly decided to opt out or they have other difficulties—although it is important to recognise that young people who are NEET are not a homogenous group with the same issues, and that they are not even necessarily at the same stage of disengagement.
We also need to recognise that some groups of youngsters clearly have particular challenges. Mencap has sent me a copy of the detailed submission that it made last December to the Children, Schools and Families Committee. In that document, it makes the point that three in every 10 disabled young people aged 19 are NEET, and that a youth cohort study found that young people who recorded themselves as having a health problem or disability are twice as likely to be NEET as others.
When a young person is without or not in education, employment or training they require—as the right hon. Member for Oxford East (Mr Smith) said—support in many different ways. Of course, ultimately that support may have little impact if an appropriate offer of employment or training is not available. I am concerned that the present system to provide further education perhaps does not provide a favourable environment for this group of young people. There seems to be a fundamental policy problem. If I understand matters correctly, that problem is money. Each youngster who stays on in school or goes to an FE college takes with them a pot of money by staying on at school or college to do A-levels or other training—their place gets funded. A NEET has effectively opted out of the system and receives no funding. Any organisation set up by the local authority or by anyone else to help NEETs get back into education or training also does not receive any funding. Those with the greatest need receive no funding and those trying to help them are left scrabbling around to find funding elsewhere. It might be worth considering some sort of system of NEET vouchers, so that if a youngster who is a NEET undertakes approved activity or enrols in an appropriate course, that activity or course receives some funding. Otherwise, it is difficult to see how we will break out of this NEET Catch-22.
It goes without saying that we need a name for programmes supporting NEETs that is sympathetic and has an overall project title—“Dealing with NEETs” clearly does not do it. We need a name such as “Youth Engagement,” and the subject needs a brand. There will be those who say that one of the reasons why there are NEETs is that such people feel that they will not find a job. However, there is something of a chicken-and-egg issue here. The Prince’s Trust has observed that the first concern for disadvantaged young people is often their need for money and a job, and the skills they want are those they need to give them a practical route to employment.
The Chartered Institute of Personnel and Development has observed that, despite financial difficulties and a reduction in vacancies, the majority of organisations remain enthusiastic about recruiting new talent. However, many organisations that require specific skills find that those are not being met by job candidates. The CIPD’s recruitment, retention and turnover survey of this year found that two thirds of organisations report that a lack of necessary skills is a barrier to recruitment. It also found that a lack of necessary specialist skills was a greater problem for the manufacturing and production professions—76% of that group—than any other. If young people do not acquire skills, the reality is that they are unlikely to be able to access jobs.
Julian Smith (Skipton and Ripon) (Con)
Does my hon. Friend agree with me that the Government’s recent decision to add 50,000 apprenticeship places this year, and hopefully more next year, is a step forward regarding some of the issues he is talking about? Moreover, the Government are committed to moving away from programme apprenticeships, in which most of a young person’s time is spent in the classroom, towards work-based apprenticeships, which are based around the workplace.
Tony Baldry
I think that the increase in apprenticeships is fantastic. The difficulty is that NEETs often need to improve their maths and English before they can access apprenticeships. There is sometimes a gap between where they are and where they need to be.
Ian Swales (Redcar) (LD)
Although the increase in apprenticeships is extremely welcome, in many areas, including my constituency, one of the problems is finding enough employers who will commit to them. Does the hon. Gentleman agree that further education colleges should be given more licence to start apprenticeship programmes, with a view to finding employers perhaps after one or two years?
Tony Baldry
Employers are crucial to apprenticeships, and we all have a duty to encourage employers in our constituencies to take on apprenticeships. Those who engage with apprenticeships realise that it is actually a really rewarding thing to do. That has been demonstrated by a number of employers in my constituency who have taken on apprenticeships as a consequence of their involvement with the Banbury and Bicester job clubs.
As it happens, a number of substantial construction projects are about to start in north Oxfordshire, and I suspect that it would be daft for the developers to rush to recruit people from eastern Europe when they start to run into skills shortages. It must be sensible to liaise with those doing the construction and development work locally, so that they consider the extent to which they would be prepared to work collaboratively with the local FE college, Oxford and Cherwell Valley college, the Construction Industry Training Board and others. By encouraging young people training in the construction industry, they can start to grow locally some of the skills they will need.
I also understand that the bizarre situation exists whereby youngsters, once they have completed their construction skills training, are required to buy a certificate demonstrating they have the necessary competences, which costs about £200, but if they are under 18 Jobcentre Plus cannot fund that. It is slightly bizarre that young people who have acquired skills are unable to demonstrate that because they cannot afford the necessary certificate.
I am glad to say that in Banbury, with the support of Cherwell district council and the national affordable housing programme, we are staring a self-build scheme at Miller road for young people who are NEET. The scheme is unique in providing a blend of education and learning opportunities, to level 1 diploma standard, in construction for approximately 20 NEET young people so that they can improve their employment prospects and life skills development. When the houses are built, the young people will be re-housed in the completed scheme. It is hoped that that pilot project will demonstrate a model that can be replicated on other affordable housing developments. There are several partners in the scheme, including Cherwell district council, Sanctuary housing association, Southwark Habitat for Humanity, Oxford and Cherwell Valley college, Connexions and the children, young people and families services at Oxfordshire county council. The college has designed a bespoke course to meet the requirements of the scheme and is in the process of recruiting young people to the course. The intention is that work will start this month.
In short, that new affordable housing scheme will provide 10 rented units for young people, who will all participate in the building process and receive training from the FE college, leading to a level 1 diploma in construction, and 20 young people, NEETs, will be involved in the building process. I am sure we would have no difficulty in filling more such construction apprenticeships, and there are other successful initiatives, such as SKIDZ, which encourages youngsters to learn motor mechanic skills that are now extremely difficult to fund.
There is clearly a need to keep NEETs engaged. They are often youngsters who, for all sorts of reasons, did not enjoy school or who do not want to try something new simply for fear of failing. As I understand it, Jobcentre Plus and Connexions run a red, amber and green coding system for NEETs: green is for those who are engaged and want to move forward, and red is for those who have simply dropped out. The predominant colour in my patch appears to be amber, verging on red, which suggests that for those who stay engaged there ought to be some incentive, such as the possibility of outward-bound adventure training, or even free swimming. They are young people, and research shows that if a youngster drops out as a NEET, over their lifetime in various ways they are each likely to cost the state and state agencies £1 million.
Jason McCartney (Colne Valley) (Con)
I thank my hon. Friend for giving way—putting an amber light on his pacy speech—and congratulate him on securing the debate. Last week, I was honoured to be invited to present the school awards for Moor End technology college at Huddersfield town hall. The school has faced many challenges in recent years. For example, 27 different languages are spoken among its pupils. What really stood out was that the head teacher, Jane Acklam, who provides inspirational leadership, was proud to tell me that only one of the 150 pupils who left the school last year is currently a NEET. Does my hon. Friend think there would be any value in keeping such statistics coming, so that schools can retain some interest in what happens to the children after they leave at 16? That would bring an added motivation and could then link in with the colleges and the wonderful schemes he has mentioned.
Tony Baldry
The right hon. Member for Oxford East made the point that young people need support, and hopefully they will receive that from their schools during their school careers, but youngsters become NEETs for all sorts of different reasons. Time has prevented me from giving details—I have given them to the Minister—of young people in my constituency who are NEET for all sorts of reasons. They can be young mums, or they might have become offenders when they were younger. The reasons are not necessarily the result of the school’s failure, but the fact is that a combination of different factors has caused them to disengage.
Rosie Cooper (West Lancashire) (Lab)
Skelmersdale and Ormskirk college in my constituency is seen as an example of best practice. It offers very flexible programmes for NEETs, starting with early interventions for 14 to 16-year-olds. The point I really want to make is that the college might very well be penalised for its investment in its NEETs programme by disinvestment in the county council and by the Government’s employment and support allowance regulations.
Tony Baldry
The point I made earlier, which I hope the hon. Lady heard, was that we must between us work out how NEETs who have dropped out get funded back into the system. There is a double whammy, because they have dropped out and are not getting money, so the organisations that are helping them have to find money from somewhere else, which is often difficult. That is the challenge for us all.
In north Oxfordshire, we are grateful that programmes such as that run by the Prince’s Trust are now getting involved locally. That programme will take 12 16 to 24-year-old NEETs through an intensive 12-week course, but funding has to be found locally to support the initiative. That is additional funding that we have to find from somewhere. If that is the situation in a constituency such as mine, and if we are looking at anything like one in 12 youngsters becoming NEETs, nationally that is a truly serious issue. We have to find a better and, I suggest, more positive description for that group of young people. We have to recognise that, by definition, they will be youngsters who will need encouragement and support. They will not necessarily always want to undertake mainstream activities. Indeed, they might find accessing colleges and courses difficult.
Rehman Chishti (Gillingham and Rainham) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree with me that there needs to be more emphasis on schools equipping youngsters for work, beyond the one or two-week work experience placements?
Tony Baldry
Yes, and the more one can engage youngsters in school, the better. Indeed, many of the schools in Banbury already involve youngsters not only in work experience, but, where appropriate, in programmes such as SKIDZ, because they want to keep them engaged.
There are clearly a number of pieces of the jigsaw that we have to get right. They include Connexions and its ability to support youngsters, and apprenticeships, as has been said. My understanding is that the Government want one in five school leavers to become apprentices by 2020, so we need to do more to encourage employers to provide opportunities, particularly in those areas where youngsters particularly want to work, such as construction. The Select Committee made the following observation in its report earlier this year:
“We recognise that future solutions to reduce the proportion of young people not in education, employment or training will have to be more cost-effective and will require efficient joined-up working at local level.”
In Cherwell and Oxfordshire, we are doing everything possible to ensure that there is joined-up working at local level. We all recognise the financial challenges that every sector faces, but clearly it is doubly hard to help young people if they are NEET and therefore receive no funding. With the Banbury and Bicester job clubs, we have made it clear that we want to do everything we can to support people in our community while they are out of work, and help them back into the world of work as speedily as possible. The desire to give that support applies just as equally to youngsters who are NEET.
However, there are some policy issues that need to be resolved if we are to make the progress that we should like. I appreciate that my hon. Friend the Minister inherited some skills and training structures that he clearly believes are flawed, and we are fortunate that his present ministerial post is the one he shadowed extremely ably for a number of years. Many Members are keen to know about the Government’s overall approach in trying to ensure that a far smaller percentage of youngsters between 16 and 24 are not in education, employment or training.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
As ever, it is a pleasure to serve under your chairmanship, Mr Chope. It is a particular delight to respond to this debate, secured by my hon. Friend the Member for Banbury (Tony Baldry), who I know cares deeply about such matters. I make it clear that I share his doubts about the label “NEETs”. For some reason, young people seem perpetually prone to being pigeonholed in unhelpful ways—from mods and rockers to hoodies. Of course such terms do not reflect reality and therefore do not do people justice. There is no such thing as a typical NEET; there are different groups of young people with particular kinds of challenges, different circumstances and different needs. As my hon. Friend said, it follows that we will be more effective in dealing with the problems and challenges they face if we have the flexibility to draw on a range of different options and build on best practice.
I intend, in the course of the all too short time that I have, to make nine points of substance and then move to an exciting peroration. My hon. Friend will forgive me if I rattle through those points, but I hope they are relevant to him. Along the way, I will attempt to answer some of the particular issues that he raised. Next week—I know that you, Mr Chope, and the whole Chamber, are waiting with bated breath—we will publish our skills strategy, which will set out the direction we intend to take regarding the funding and management of skills. It will be radically different from the assumptions that have underpinned policy over recent years, and will challenge much of the orthodoxy upon which that policy was based.
Let me deal with one point at the very beginning. I have asked officials to look at the issue regarding certification, which my hon. Friend raised. I agree that it does not seem appropriate—it is anomalous to say the least. We will look at that closely and deal with it.
The young people whom my hon. Friend mentioned, and those whom I meet, have ambition. They want to get on with their lives, and they recognise that learning can help them make something of themselves and can make them objects of admiration and respect. By attaining skills through learning, people gain a sense of value and are recognised by others as having worth. We believe that and care about it, and we will adopt policies that will enable young people to gain that sense of value. The investment we make in young people is our gift to future generations.
I do not doubt that the previous Government cared about such matters too—no party in this place has a monopoly on wisdom, and certainly not on compassion. The matter is one that understandably generates strong sentiment, and sentiment is not something we should disregard in politics; we are not dull utilitarians, are we? None the less, there were real problems with past policy. Many millions have been spent on a bewildering succession of schemes, but to what effect? At the last count, some 874,000 young people between the ages of 16 and 24 —or about one in seven—were not in any form of education, training or work. For a nation that cares about fairness and opportunity and about its own future, that is simply unacceptable.
Let me move to my nine points. The first is that we will certainly take a close look at job clubs such as those in Banbury and Bicester. They are good examples of what can be achieved by local people using prudent public investment, drawing together industry, local government, community groups and charitable organisations. I have discussed the matter with my hon. Friend, and I know they are examples that can be followed. I have asked my officials to look at them to see what can be done to share that good practice.
The second point is again implicit in my hon. Friend’s analysis. We need a more holistic approach to the way we deal with the problem of such young people. It ranges from the circumstances at school and their prior attainment, to family circumstances and the particular physical or mental health issues they may face, to simple matters of confidence born of inadequate skills—a lack of confidence that is inevitable for those who have poor literacy and numeracy skills. However, it is not as simple as that—indeed, it is not simple at all—which is why we need the joined-up approach that I think has been lacking in the past.
Thirdly, we also need to link the issue closely to our benefit reforms. I am speaking to the Department for Work and Pensions about those matters, and I assure my hon. Friend that part of the discussion is about funding. He made a good point about such people carrying funding with them and therefore being attractive to learning providers. We are on the case, and we will look once again next week—I do not want to give away any secrets—at the principles of learning accounts and the part they can play in driving the system through learner choice and employer need. I am mindful of those who are moving from disengagement to engagement in those terms.
Anne Marie Morris
There is certainly an attraction to that approach. South Devon college, in my constituency, goes out on to the streets to where the NEETs are to find them. It is a win-win situation. I think we need to go out to get them rather than waiting for them to come to us, which is the point the Minister is making.
Mr Hayes
My failure to respond to that point has nothing to do with its salience but with the time I have available. I will certainly take the matter up with my hon. Friend; it is a well-made argument.
The fourth point is about careers guidance. We need, as my hon. Friend the Member for Banbury said, to give such people the right advice and guidance. We will be launching an all-age careers service, which I spoke about last week in Belfast. Those who are interested may have a copy of my speech; those who are very interested can have a signed copy.
The fifth point is that raised by the right hon. Member for Oxford East (Mr Smith) about pre-apprenticeship training. As others have said, it is about getting people to the point where they can enjoy more formal training by the skills they acquire early on. We need a continuum of training, and I am working on that, too. However, it has to be progressive. I have said to the DWP that the offer must be authentic in terms of training and skills, and progressive—it must lead to further learning that makes people more employable, and then takes them into work.
The sixth point is the need for early intervention. When dealing with such multi-faceted problems, we need to look at disadvantage; let us be frank about that. It means using the pupil premium, announced by the new Government, in the most imaginative, creative and productive way possible, and seeing how that can leverage real outcomes for people’s subsequent progress in learning and work.
My seventh point is that the Government made a big commitment in the comprehensive spending review not just on apprenticeships, about which I will say a little more in a moment, but on community learning. Adult and community learning was protected in the CSR. I am passionate about the fact that there are different routes into learning. Some of them are informal and others formal, but we must not take the view that there is only one ladder to climb. People will return to learning, and people with a poor history in their prior experience will need a gentle approach. Small, bite-sized chunks of learning, highly accessible, very attractive and often linked to practical competencies can often be the way forward. That is why we protected both the basic skills and the adult and community learning budgets in the CSR.
Eighthly, I have already mentioned apprenticeships. I do not want to trumpet the Government’s achievements in that respect. People are right: we will need to get employers involved, which is why we sent out tens of thousands of letters last week to small businesses to get them involved in an apprenticeship programme and to back the £250 million we have put in, with a view to creating not just 50,000, or 60,000 but 75,000 more apprenticeships, which is more apprenticeships than we have ever had in Britain.
Ninth and finally, we certainly need to give institutions more flexibility. We need to make the system more responsive to the needs of such young people, and generally. A more dynamic and responsive system, shaped around employer need and driven by learning choice, can deliver the skills the country needs, and it can also change lives by changing life chances.
As a result of the initiative of my hon. Friend the Member for Banbury in securing the debate, I have done three things. First, I have asked my Department to develop a cross-departmental strategy to deal with the NEETs problem. Secondly, I am looking at simplifying the funding process for accessing the right money to run community-led projects to address NEET issues. Finally, in particular, I have asked officials to see what we can learn from job clubs in north Oxfordshire.
The issue is about the value we place on individual lives, and the value we place, too, on social mobility, social justice and social cohesion. When each feels valued, all feel valued. It is about building the big society from the bottom up—a brighter Britain where lives are illuminated by the power of learning, and a bigger Britain where all have their chance to grow.
Question put and agreed to.
Written Ministerial Statements
Debt Relief Orders
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
We are today announcing plans to amend the eligibility criteria relating to Debt Relief Orders (DROs) in order to allow access to those people who are currently excluded because they have certain pension rights that they cannot draw down for some years.
DROs were introduced in April 2009 following research that identified that there were people in long-term debt difficulties who had nothing to offer their creditors and who could not afford to make themselves bankrupt. Delivered in partnership with the professional debt advice sector, DROs provide low-cost easy access to debt relief for those overwhelmed by relatively low levels of unmanageable debt. They are designed to provide a fresh start for the most vulnerable people trapped in debt.
There are strict eligibility criteria of assets less than £300, debts no more than £15,000 and surplus income of less than £50 per month. Because a pension is treated as an asset, some people who would otherwise qualify find themselves unable to apply for a DRO because they have pension rights, even where the pension is of low value and not receivable for many years. The Insolvency Service issued a consultation asking whether changes should be made to make the system fairer for these people.
After considering the consultation responses, I propose to allow those with HMRC-approved pension schemes to have access to a DRO. This brings DROs into line with bankruptcy where debtors are able to keep their approved pensions, and will provide welcome assistance to many of the most vulnerable. I intend to lay a Statutory Instrument which, subject to parliamentary approval, would bring these changes into effect from April 2011.
I am placing copies of the summary of consultation responses in the Libraries of both Houses.
Exports to Iran
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
Iran’s nuclear activities continue to cause significant concern to the international community, and we are determined to stop it obtaining the material that it needs to pursue a range of proliferation-sensitive activities prohibited by UN Security Council Resolutions. The UK refuses all export licence applications where we believe there is an unacceptable risk that the goods would contribute to Iran’s nuclear programme.
The UK respects Iran’s right to a peaceful civilian nuclear programme as long as it meets its international obligations. But it has consistently failed to do so. Iran has continued to develop its nuclear programme in defiance of six United Nations Security Council resolutions, which call on Iran to fully comply with its international obligations, increase transparency with the IAEA and answer a range of outstanding questions about its overall intentions. The UK therefore welcomes the success of the EU in securing a strong EU Council decision in respect of new sanctions against Iran in July.
Until now, the UK has exercised discretion, on a case-by-case basis, to permit the export of goods listed in annex IV to Council Regulation (EU) 961/2010 of 25 October 2010 (previously annex II to Council Regulation (EC) 423/2007 of 19 April 2007).
However, these are dual-use goods which, by definition, may have utility to Iran’s nuclear programme. The UK therefore strongly believes that it should go further than the new measures agreed by the EU. With immediate effect therefore, we will no longer issue any licences for the export of goods or technology listed in annex IV of Council Regulation (EU) 961/2010 or for the provision of brokering services or technical or financial assistance related to those goods and technology, apart from the most exceptional cases—such as supplies for humanitarian purposes—where there is manifestly no risk that the goods will be used in connection with Iran’s nuclear programme. Furthermore we will not issue licences for investment in an Iranian person, entity or body engaged in the manufacture of goods listed in annex IV. Annex IV can be viewed at:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L :2010:281:0001:0077:EN:PDF
Extraordinary EU Competitiveness Council (10 November 2010)
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
My noble Friend the Parliamentary Under-Secretary of State for Business, Innovation and Skills, Baroness Wilcox has today made the following statement:
I will be attending the extraordinary EU Competitiveness Council on 10 November, where the Belgian presidency aim to achieve a unanimous political agreement to the approach they have put forward on the Commission proposal for an EU patent language regulation. The Belgian presidency has suggested amendments to the language proposal in an attempt to overcome the concerns of some member states.
The Government intend to support the Commission proposal, including the presidency amendments if necessary.
Post Office Network
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
On 13 October the Government published the Postal Services Bill. This Bill will safeguard the universal postal service and secure a sustainable future for Royal Mail and the Post Office. We promised at that time that we would shortly bring forward a more detailed statement on the future of the post office network.
At the Second Reading of the Postal Services Bill, we announced £1.34 billion of Government funding for the Post Office network over the spending review period. Today we are publishing a statement on our plans to secure the future of the Post Office network.
The funding we have announced will enable the Post Office to invest in the network, reaching out to new customers by refurbishing its branches, extending its opening hours and reducing queues. This will make the Post Office more convenient and an even stronger retail partner for Royal Mail. Securing the Post Office network in the digital age also sets out:
New opportunities for Post Office as the “Front Office for Government”, including examples of new pilots the Post Office is conducting in conjunction with Government Departments and closer working with local authorities.
An agreement between Post Office Ltd and Royal Bank of Scotland (RBS) to give RBS—including Natwest—customers access to their current and business accounts through the Post Office, making almost 80% of current accounts accessible at post offices.
Plans for potential future mutualisation of Post Office Ltd so that the interest of staff, sub-postmasters and even customers can be better aligned.
Copies of the document will be available in the Vote Office, the Printed Paper Office and will be deposited in the Libraries of both Houses. It will also be accessible online on the Department’s website.
Higher Education Funding and Student Finance (Supplement to Statement)
The Minister for Universities and Science (Mr David Willetts)
During the statement I made to the House on 3 November 2010, on higher education funding and student finance, and repeated by Baroness Wilcox in the other place, I regret that the description of the proposed maintenance package was incomplete.
The statement said:
“There will also be increases in maintenance loans for students from families with incomes from £42,000 to £60,000”.
The current maintenance support system is complicated. The maintenance grant is means-tested: when the maintenance grant was reintroduced in 2004 and 2006 it was in partial substitution for maintenance loan and hence the means-testing now involves a number of tapers by which maintenance grant is reduced with increasing family income. The result is that it is difficult for students and their families easily to calculate the support they are entitled to; and it adds to the administrative burden on the Student Loans Company in calculating means-tested entitlement.
It is in order to simplify the system that in the proposed maintenance arrangements for 2012-13 academic year and beyond, the multiple tapers for maintenance grants have been substituted by a single taper, and the reduction in total support (maintenance grant and maintenance loan taken together) as income increases is a more constant one.
As a result of the sum of these changes, almost all students receive an increase in their total financial support, but there is a very small proportion of students who will receive less maintenance loan than they would have if they entered under the old system. Students with a household income of around £49,000 to £53,000 will receive, on average, £120 less in maintenance loan. This equates to a 2.5% reduction for around 2.5% of students.
Improving Tax Policy (Finance Bill 2011)
(14 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (Mr David Gauke)
At the June Budget the Government set out a commitment to build a new approach to tax policy making1—one founded on predictability, stability and simplicity—with consultation on policy design and scrutiny of draft legislation as the cornerstones. The Government will therefore publish draft clauses planned for Finance Bill 2011 on 9 December. At the same time, the Government will publish a formal response or update on the following consultations that it has undertaken over the summer/autumn:
tax policy-making: a new approach;
simplification of corporate capital gains for companies;
pensions annuitisation;
furnished holiday lettings; and
a number of areas relating to HMRC’s powers review.
Ahead of this, the Government will publish more details on corporate tax reform, including interim improvements to controlled foreign company legislation and reform of foreign branches planned for inclusion in the Finance Bill 2011. It will also publish the outcome of consultations that have been carried out on a number of anti-avoidance measures.
1“Tax policy making: a new approach” HM Treasury and HMRC, June 2010
Government Olympic Executive (Quarterly Report)
The Minister for Sport and the Olympics (Hugh Robertson)
I am publishing today the Government Olympic Executive’s quarterly report—“London 2012 Olympic and Paralympic Games Quarterly Report November 2010”. This report explains the latest budget position as at 30 September 2010, and outlines some of the many wider economic and social benefits to the UK.
The overall public sector funding package for the games will remain at £9.298 billion following the spending review announcement on 20 October 2010. The funding package will, however, be reconfigured from April 2011 to make provisions for operational requirements, reflecting the changing focus of the programme from construction to operational delivery. Also from April 2011, Government funding for the programme—excluding security which sits with the Home Office and other Government Departments—will be held by the Department for Culture, Media and Sport.
The London 2012 Olympic and Paralympic games remain on time and within budget. The Olympic Delivery Authority’s (ODA) anticipated final cost has reduced by £29 million to £7.232 billion as of 30 September 2010. The majority of contingency remains unreleased and savings have also been made in the quarter through project and procurement efficiencies. The ODA continues to make strong progress in preparing the venues and infrastructure in the Olympic park, with over 75% of the programme to the 2012 games now completed. The Olympic stadium is structurally complete with the cable net roof covered and all 14 lighting towers in place. The aquatics centre permanent structure and roof are in place, while the velodrome remains on target to be the first Olympic park sporting venue to be finished early in 2011. The structures of the handball and basketball arenas are now completed. More than three-quarters of the residential plots on the Olympic village are structurally finished, with the structure of the Chobham academy education campus also nearing completion. At the Lee Valley White Water Centre, the 10,000 square metre lake is full and water is flowing through the courses, with internal fit-out works of the two-storey facility building approaching completion.
The London 2012 Olympic and Paralympic games are continuing to help businesses and people through the difficult economic times. Already, £5 billion worth of contracts have been awarded by the ODA, with 98% of the ODA’s suppliers being British companies, and many more winning work in the supply chains of its contractors. As of September 2010, over 10,000 people were working on the Olympic park and village.
The Olympic Park Legacy Company has announced that in legacy the Olympic park will be called “Queen Elizabeth Olympic Park”. It has set out new plans to help deliver family-focused neighbourhoods; to make the park a top visitor destination; to ensure the venues provide a lasting sporting legacy; to create commercial and job opportunities; and to help stitch together the area’s communities through new road connections.
I would like to commend this report to the Members of both Houses and thank them for their continued interest in and support for the London 2012 games.
Copies of the quarterly report November 2010 are available online at: www.culture.gov.uk and will be deposited in the Libraries of both Houses.
Northern Grouping Initiative
(14 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Defence (Dr Liam Fox)
The strategic defence and security review made it clear that alliances and partnerships would remain a fundamental part of this Government’s approach to defence and security. We will therefore deepen our multilateral and bilateral defence relationships with key allies. Last week, I informed the House about our deepened relationship with France. As the next step, tomorrow I will have a meeting with the new Northern Grouping which includes Nordic and Baltic nations, as well Poland and Germany. The Northern Grouping will help us build a closer bilateral relationship with Norway, which is one of our key strategic partners. It will create a further framework that makes it easier for Sweden and Finland to have a closer relationship with NATO, and through our involvement as a nuclear power it will reassure the Baltic states about the value of article 5 of the North Atlantic treaty. In a world in which there is a multi-polar power base, we need more different levers to act in the interests of our national security.
Political and Constitutional Reform Committee's Report on Fixed-term Parliaments Bill (Government Response)
(14 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
The Political and Constitutional Reform Committee published its report on the Fixed-term Parliaments Bill (HC 436) on 10 September 2010, immediately prior to Second Reading.
I am pleased to inform the House that the Government’s response to the Committee’s report has been laid before Parliament and published (Cm 7951). Copies are available in the Vote Office and Printed Paper Office.
The Government’s response to the Committee will assist consideration of the details of the Bill in Committee on 16 November.
Prevent Review/New Independent Reviewer of Terrorism Legislation
(14 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
I am pleased to announce today that the Government are formally reviewing the Prevent strand of Contest, the UK’s counter-terrorism strategy.
That we need a preventative approach to terrorism is not in question: we have to deal with the causes of terrorism as well as its symptoms. But we want to avoid the mistakes of the previous Government. The new Prevent strategy will follow the principles of our counter-terrorism legislation. It will be proportionate to the specific challenge we face; it will only do what is necessary to achieve its specific aims; and it will be more effective. It will be separate from work to tackle wider forms of extremism and to promote integration, which is being led by the Department for Communities and Local Government.
The review will, among other things:
look at the purpose and scope of the Prevent strategy, its overlap and links with other areas of Government policy and its delivery at local level;
examine the role of institutions—such as prisons, higher and further education institutions, schools and mosques—in the delivery of Prevent;
consider the role of other Prevent delivery partners, including the police and other statutory bodies;
consider how activity on Prevent in the UK can be more joined up with work overseas;
examine monitoring and evaluation structures to ensure effectiveness and value-for-money; and;
make recommendations for a revised Prevent strategy.
I am also announcing today a period of public consultation to enable delivery partners, front-line service providers and all other interested parties to participate in the review of Prevent. Contributions can be submitted by e-mail (preventreview@homeoffice.x.gsi.gov.uk) or online at: (http://preventreview.homeoffice.gov.uk).
I am pleased to announce that Lord Carlile of Berriew QC, the current reviewer of terrorism legislation, will provide expert, independent oversight of the Prevent review. His role is essential in ensuring that the review takes into consideration all the relevant information and looks at all the options.
I am also pleased to announce that I intend to appoint Mr David Anderson QC as the new independent reviewer of terrorism legislation. Mr Anderson QC is a specialist in European Union and public law and human rights and has been a QC for over 10 years. He is a Recorder and visiting professor at King’s College London. I expect him to take up this role early in the new year. Until then, I have extended the period of appointment of Lord Carlile of Berriew QC, as the current independent reviewer of terrorism legislation. During this period. Lord Carlile will also conduct a brief review of the arrests (and subsequent release) of six individuals under the Terrorism Act 2000 during the recent state visit to the United Kingdom by the Pope.
I am extremely grateful to Lord Carlile for his willingness to continue in his role, one he has performed with distinction.
High Speed 1
(14 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Mr Philip Hammond)
I am pleased to inform the House that the Government have approved the sale by London and Continental Railways Ltd of HS1 Ltd.
HS1 Ltd is the company that holds the concession to operate Britain’s first high-speed railway, running from central London to the channel tunnel. It also includes the stations at St Pancras International, and the international stations at Stratford, Ebbsfleet and Ashford. It is used by Eurostar and the Kent domestic high-speed services. Deutsch Bahn have also recently announced their intention, by 2013, to start running international services over the line to Frankfurt and Amsterdam, via Brussels.
The successful bidder is a consortium comprising of “Borealis Infrastructure” and “Ontario Teachers’ Pension Plan”, each with a 50% stake. The acquisition value is just under £2.1 billion. The sale receipts will be paid on completion of the contract, which is expected to happen later this month. At that point, the consortium will become the owner of HS1 Ltd which has a 30-year concession to manage the High Speed 1 line and stations. Under the terms of the concession, HS1 has the rights to sell access to track and stations on a commercial basis while having to preserve the nature and capacity of the high-speed railway and to maintain and renew it to modem standards. Compliance with these terms is overseen by the Office of Rail Regulation.
The Secretary of State for Transport will continue to own the infrastructure of the railway and the freehold to the associated land. On expiry of the concession, the Government will once more take unencumbered ownership of the railway with the opportunity to let a further concession. In addition, the Government retain a 40% stake in Eurostar International Ltd and development rights on the major associated regeneration sites at Kings Cross and Stratford.
House of Lords
India: Commonwealth Games
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Harries of Pentregarth
To ask Her Majesty’s Government what is their assessment of the assurance given by the Government of India that special funds for the support of Dalits and other scheduled castes were not used to finance the Commonwealth Games.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, I can assure the noble and right reverend Lord that we have been monitoring this situation carefully. Following earlier reassurances from Delhi that the Commonwealth Games were self-funding, the Indian Home Minister has subsequently acknowledged that some moneys earmarked for Dalits and scheduled castes were in fact used to contribute to Commonwealth Games infrastructure projects and that, in his view, this was both wrong and inconsistent with Indian Planning Commission guidelines. I understand that the Indian Government are now seeking to find ways of returning the sums involved to the scheduled castes plan and have appointed a task force to revise guidelines and their application.
Lord Harries of Pentregarth
I thank the Minister for his reply, and I am particularly grateful that he has made the House aware that the assurance previously given by the Indian Government was in fact unfounded. In the light of that recognition, will Her Majesty’s Government monitor the situation and perhaps also raise the question that, as has been widely reported, a similar diversion of funds has taken place in a range of states?
Lord Howell of Guildford
I will certainly follow the advice of the noble and right reverend Lord. I do not have any details on the other allegations but I will look into them. He might be interested to know that the sum diverted was £94 million. We are monitoring the situation very closely, and the British high commissioner is in discussion with the Indian National Commission for Minorities about these and other issues.
Lord Grenfell
My Lords, I declare an interest as a member of the All-Party Parliamentary Group on the Dalits. Now that the Delhi state government have finally acknowledged this diversion of funds which should have gone to projects such as schools, healthcare centres and, most importantly, the eradication of the demeaning manual scavenging which is the means of livelihood for so many of the Dalits, does the Minister—who I know has long been a great champion of the Commonwealth—agree that the Secretary-General of the Commonwealth should ensure that the lessons to be learnt from this very unfortunate incident should be placed on the agenda of the next Commonwealth Heads of Government Meeting in Perth, Australia, next October so that there can be a full discussion of whether it is correct and sensible for a country which has more than half its population living in absolute poverty and is a recipient of development aid to be seeking to host an enormous event at such colossal cost?
Lord Howell of Guildford
I certainly recognise the validity of the noble Lord’s introduction of the Commonwealth into this issue, and I think that the Commonwealth has a very valuable role to play. However, I am not so sure whether it is a question of drawing it to the attention of the Secretary-General and the Heads of Government Meeting or of drawing it to the attention of the Eminent Persons Group which is now looking at ways in which the Commonwealth monitoring and policing of human rights generally can be greatly upgraded. I suspect, on reflection, that it might be best to put it before the EPG. Either way, the concern of the Commonwealth in upholding, monitoring and strengthening human rights through all its member states, including the world power which India is, is very important indeed.
Lord Alton of Liverpool
My Lords, would the Minister agree with Manmohan Singh, the Prime Minister of India, who has said that the caste system is a blot on humanity? Is it not the case that the way to end things such as manual scavenging, which has rightly been referred to, is by the promotion of education for Dalit people? Can the Minister say what access to education is being given to the Dalit people, especially in areas such as information technology, as a result of support being given by Her Majesty's Government?
Lord Howell of Guildford
I am not sure I can say what has followed as a result of intervention by Her Majesty's Government, but one has to bear in mind that India is a sovereign, great and respected nation. Indeed, as I said just now, it is a world power. We must leave it to the Indian authorities to recognise pressures from outside, which certainly include pressures from us, and to respond accordingly. Generally, our high commissioner is in constant contact on these matters. The concerns of this House and the other place are constantly placed before our Indian friends, but in the end, we are friends, not lecturers, and we must have a good relationship with this great nation that is emerging as a major force in the world.
Lord Avebury
My Lords, now that the diversion of these funds from the special Scheduled Caste Sub Plan to the infrastructure of the Commonwealth Games has been acknowledged, will my noble friend ask New Delhi what is its response to the demands by the National Campaign on Dalit Human Rights including, particularly, the demand for an audit of the funds diverted by the Comptroller and Auditor-General of India?
Lord Howell of Guildford
Yes, we will certainly ask for that information to be put forward. I possibly did not fully answer my noble friend Lord Grenfell who implied that India was perhaps not the best place to hold the Commonwealth Games. The Government would disagree with him about that. There were some undoubted hiccups, but in the end the Commonwealth Games went ahead very successfully, helped cement relationships and carried forward the value of the Commonwealth network, which is the one of the most powerful platforms of the 21st century for the entire globe.
Baroness Symons of Vernham Dean
My Lords, the noble and right reverend Lord, Lord Harries of Pentregarth, is to be congratulated for his persistence in pursuing this question in the way that he has. Is the Minister aware of whether any money from DfID was involved in this unfortunate use of funds that should have gone to the Dalits? I wonder whether the Indian high commissioner has been asked into the Foreign Office to ascertain whether any DfID money has been involved and, indeed, whether he is satisfied that DfID money will be used for the purposes for which the British Government provide aid to India and not for other purposes, as was the case in this instance.
Lord Howell of Guildford
Yes, we are aware of the situation, which is that no money from DfID has been involved in this situation or, indeed, has been given to the provincial Government of Delhi, although obviously DfID money goes to the federal Government, which is a different matter. No money at all is involved in this issue. As for discussions with the Indian high commissioner, we all see him from time to time and hold very fruitful discussions with him. I am not sure when he was last in the Foreign Office, but the noble Baroness can be assured that we are in constant contact.
Lord Hylton
My Lords, can the Minister tell the House whether there was a proportion of Dalits in the Indian national team in these games, given that they are India’s largest single minority?
Lord Howell of Guildford
No, I am afraid I cannot tell the noble Lord that. The composition of the Indian competing teams is a matter for the Indian Government, and we must leave it to them to have a proper proportion and proper balance. I believe they recognise the validity of world concerns about the caste system, which is a part of yesterday’s world, as the noble Lord, Lord Alton, said, but we must leave it to them to choose who they have as competitors in their team for the Commonwealth Games and other events.
Employment: Cuts in Public Expenditure
Lord Liddle
To ask Her Majesty’s Government how they will generate the increase in private sector jobs growth in the north of England to offset the employment impact of the Government’s planned cuts in public expenditure.
Lord Liddle
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as the chair of Cumbria Vision, the soon-to-be-abolished sub-regional partnership with the North-West Development Agency.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, we recently published our White Paper on local growth, which sets out our approach to rebalance the economy and to drive sustainable growth. Initiatives will include local enterprise partnerships that will see local business and civic leaders working together to create new jobs in their communities and the regional growth fund, which will support communities currently dependent on the public sector, helping them make the transition to private-sector-led growth and prosperity.
Lord Liddle
I thank the noble Baroness for her Answer, but I sadly find her response inadequate to the challenge that areas like the north of England face. When will the Government understand that a combination of a growth fund worth £1.4 billion over three years, which is two-thirds only of what the RDA spent in each year, and an announcement of local economic partnerships, which so far do not cover, in the north, Lancashire and large parts of the north-east, and have no resources whatever from central government, at a time when the capabilities of the agencies are being abolished—
Lord Liddle
Is this not a totally inadequate response to what independent experts expect to be a rise in unemployment and 233,000 jobs lost as a result of the spending White Paper?
Baroness Wilcox
My Lords, the noble Lord, Lord Liddle, is something of an expert on this subject because of course he worked with the previous Administration to see how they could make the RDAs work. The RDAs spent £19 billion over 10 years and failed to make any impact on the imbalances in growth. Although I am delighted to hear what he has to say, I am not sure that I would take lessons from it. We do not yet know how significant the cuts in public sector employment in the north will be. As there is less money, it is important to ensure that our investments are well targeted. It is less money because we were left with no money.
Baroness Wilcox
Noble Lords may hear that many times, but unfortunately, it is what we have to base all our decisions on. Private sector growth is not just about spending money, it is about creating the right business environment—for example, cutting red tape—and making the United Kingdom an attractive place to do business in comparison to its international competitors.
Lord Razzall
My Lords, has the noble Baroness seen the recent statistic that home owners in the north-west have the highest percentage of negative equity of any UK region? Does she accept that that demonstrates the economic problems that could face that area and highlights the importance of attracting private sector jobs, particularly to the north-west?
Baroness Wilcox
I think that we are all aware of how difficult the situation is, particularly in the north. Over all these years, the previous Government were not able to bring together prosperity in that area. We believe that the new way of approaching this—moving power from central government down to local government, where people know what their problems are and what they will need—will mean that the regional growth fund will be available to support projects and programmes, which promote jobs and growth, and, in particular, to support areas that are currently dependent on the public sector to make the transition to private-sector-led growth. We hope then that things will improve regarding the ownership of homes.
Lord Campbell-Savours
Does the Minister believe that she has the support of Conservative and Liberal local authorities throughout the north-west region for the policy that the Government are undertaking?
Baroness Wilcox
My Lords, I am fortunate indeed to be part of a coalition. Because we are a coalition we are able to debate and discuss things between ourselves and to put together all the information that we have. Our economic ambition is to create a fairer, more balanced economy, which is not so dependent on the narrow range of sectors that were used in the past. We have great opportunities and this should be a good time to look forward to, if we can overcome the real problems we have in finance at the moment, which were left to us.
Lord Jenkin of Roding
My Lords, does my noble friend recognise that the ICT and digital part of our economy now accounts for about a fifth of our entire GDP? It is the fifth largest sector of the GDP. Can she assure the House that every effort will be made to build on this growing part of the economy in the north?
Baroness Wilcox
I agree with my noble friend and yes, of course, we want to aid and help wherever we can through the mechanisms that we are putting in place and through pushing power back down to the people who know what they want. I come from Cornwall and I know what it was like to be under an RDA that was run out of Exeter and Bristol—an incredible distance. We need to bring all the pressure to bear and all the help that we can to these areas as they would want it delivered.
Lord Barnett
My Lords, does the Minister at least accept that there is a distinct possibility that the private sector will not replace the jobs lost in the public sector and that, in those circumstances, growth will decline and so will jobs? Is she prepared to make the case for change with the Chancellor and to tell us what he says? She may have a better chance than me because she is a noble friend of his.
Baroness Wilcox
That was said so nicely that I got lost along the way. On support for the north of England, we have talked about the regional growth fund, local enterprise partnerships and the national insurance contributions holiday until 2013. There will be particularly strong new allowances to help these areas. I cannot emphasise that enough. There will be superfast broadband, the Green Investment Bank and, particularly, apprenticeships and support for science to take us forward into the jobs that we should be looking at all over the country. The north of England has a proud heritage of being able to adapt to changing circumstances and I am absolutely sure that it will do so this time too.
Tourism: UK Economy
Lord Lee of Trafford
To ask Her Majesty’s Government what is their latest assessment of the contribution of the tourist industry to the United Kingdom’s economy.
Lord Lee of Trafford
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Association of Leading Visitor Attractions.
Baroness Garden of Frognal
Tourism has huge potential for growth. It supports 1.5 million jobs with visitor spend of nearly £90 billion each year. Deloitte estimates a direct and indirect value to the UK economy of £115 billion and suggests that tourism could be the fourth fastest growing sector over the next 10 years, indirectly and directly supporting a total of nearly 3 million jobs by 2020.
Lord Lee of Trafford
I thank my noble friend for her Answer and welcome her to her first tourism Question. In a speech recently the Prime Minister said:
“Tourism presents a huge economic opportunity. Not just bringing business to Britain but right across Britain driving growth in the regions and helping to deliver the rebalancing of our national economy that is so desperately needed”.
That is all very laudable, but does my noble friend realise that tourism faces a double whammy? First, there is a 34 per cent reduction in the funding to our national tourist board, VisitBritain, and then—this has been referred to earlier—the abolition of the regional development agencies, which significantly supported many tourism projects in the regions, often on a match funding basis, and also supported the destination management organisations? There is no way that local enterprise partnerships will have the coverage or the resource to replicate this.
Baroness Garden of Frognal
My Lords, I thank my noble friend for his question and his kind words of welcome. I pay tribute to his expertise and to his support for the tourist industry. Some of the issues in this Question have been touched on already in the previous Question. The regional development agencies have made magnificent efforts to benefit the tourism industry, but they have been variable, with no two models alike. They are due to be wound up by March 2012 and we anticipate that, as their role recedes, the destination management organisations will be formed, to good effect, through existing local tourism support bodies. The future structure will be two-tiered, with Visit England providing public sector support in the transition period.
Baroness McIntosh of Hudnall
My Lords, does the Minister agree that the arts and culture contribute very significantly to the success of tourism in this country and that that is in no small measure due to the significant investment in the sector made by the previous Government? Does she also agree that the sector returns more to the Exchequer than it takes out and that the cuts being made in that area are likely to have a significant impact, not only on the arts and culture but also on the tourism industry that they support?
Baroness Garden of Frognal
My Lords, we agree that the arts and heritage play a very significant part in national life and provide a great draw for tourists to our country. We hope that in the run-up to the Olympics, when the country will be getting widespread coverage internationally, more tourists will be coming into the country and will be adding their support and their financial help to some of the treasures that we have in this country.
Lord Palmer
My Lords, will the Minister consider setting up a committee to look into the ridiculous situation of air passenger duty, particularly bearing in mind the forthcoming Olympics? It really is grotesquely unfair in relation to other European countries. I declare an interest as my home tries to be a tourist attraction.
Baroness Garden of Frognal
My Lords, the Treasury advises that aviation is relatively undertaxed, paying no fuel duty or VAT on tickets, so it considers that the reform of air passenger duty ensures that aviation contributes fairly to public services and strengthens the environmental signal of the tax. Of course, it falls more heavily on those who are not flying standard class.
Baroness Gardner of Parkes
My Lords, does the Minister think that a large amount of tourism at the moment is due to our weak currency and that those people who come for shopping particularly love to come because they think they are getting very good value? How will the Government ensure that when our currency strengthens, as we wish it to, we can still provide value for money?
Baroness Garden of Frognal
My Lords, I hope that people are coming here to spend money not just because the currency is weak, although I acknowledge that that may be an added attraction. We hope that as the economy picks up so the attractions of coming to this country will be even greater, even if it costs people a little more when they come here.
Lord Harrison
My Lords, how does it help the competitiveness of the United Kingdom tourism industry when VAT has been raised to twice the level of that in the other EU competitor countries?
Baroness Garden of Frognal
The noble Lord of course makes a very valid point on VAT. However, the UK applies a zero rate of VAT to most food and public transport and other parts of the spend of people in the tourist industry.
Lord Cameron of Dillington
My Lords, does the Minister agree that if tourism has a beneficial effect on the national economy, the £14 billion to £15 billion a year brought into the rural economy by tourism has proportionately an even more beneficial effect on rural communities and therefore deserves the special attention of the Government?
Baroness Garden of Frognal
My Lords, the rural economy is vitally important in this. There is a tourism strategy being developed by the tourism and heritage Minister—it is with the Prime Minister at the moment. We will be looking at all these particular aspects of tourism and hope to be consulting and reporting back very soon. Certainly, the rural economy will be one of the aspects that we would want to look at very carefully.
The Earl of Glasgow
My Lords, at the moment it seems that red tape and language insensitivity are actually discouraging Chinese tourists from coming to this country. In fact, about eight times more Chinese tourists go to France than come to Britain. Have the Government any plans to try to rectify this situation?
Baroness Garden of Frognal
My Lords, that is a very timely question given the deputation that is currently in China led by the Prime Minister. His current visit there will raise the profile of the UK as a tourist destination for the Chinese. We are looking very carefully at the barriers that may prevent Chinese tourists coming here. The visa system is one: the cost of £70 is a barrier and because we are not part of Schengen, if Chinese tourists go to other European countries they have to apply for a second visa to come to us. We are looking at a simpler online system and at accepting applications in local languages—currently all applications have to be made in English. We need to balance the security which the visa system gives the country with the attractions of trying to encourage more people from overseas to come here.
Drugs: Classification
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Taverne
To ask Her Majesty’s Government whether, in the light of the recent report from the Independent Scientific Committee on Drugs on the harmful effects of different classified and non-classified drugs, they will reconsider the present system of classification.
The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, the Government do not intend to review the drug classification system established by the Misuse of Drugs Act 1971. The criminal justice system expects—and the Government must provide—a stable and enduring system. The current system continues to serve that purpose.
Lord Taverne
My Lords, this recent report is perhaps the most thorough analysis of the impact of different drugs not only on users but on others in society at large. If the Government believe in evidence-based policy, is it not obvious that, in light of this report and of many other reports that have reached similar conclusions, the present classification—with ecstasy in class A and cannabis in class B—is in no way based on evidence of either the physical or social impact of drugs?
Will the Government further accept that they would be utterly irresponsible and failing in their duty to society if they did not provide much stronger disincentives to the indulgence of the abuse of alcohol, which comes top—by miles—of all other drugs in its impact on society as a whole?
Baroness Neville-Jones
My Lords, on the whole question of drugs classification, there is clearly no consensus about what constitutes evidence. The Government simply do not agree that a system of a sliding scale of harms, such as is suggested in the Nutt report, constitutes a good basis for government policy. We do not believe that structuring drug-harm classifications in the way that the recent report does would be better than the current basis for government policy.
Baroness Meacher
My Lords, is the Minister aware that Mr Fedotov, who is the new executive director of the United Nations Office on Drugs and Crime, is urging Governments to put away their policies that criminalise drug users and to replace those policies with health policies? In the light of that advice from the United Nations, what plans does the Minister have to review the Misuse of Drugs Act?
Baroness Neville-Jones
My Lords, the Government certainly take seriously the need to engage the community in reducing the level of drugs misuse. Later this year, the Government will produce a drugs strategy to reinforce that side of their policy, but they do not agree that it is right and proper to decriminalise all use of drugs.
Baroness Hamwee
My Lords, we tax alcohol, we regulate tobacco use and we criminalise drug use. The Minister may not want to use words such as “hypocritical” and “cynical”, but is there a consistency in this approach?
Baroness Neville-Jones
My Lords, we believe that all drugs that are classified on the list are extremely harmful to society; we do not believe that alcohol taken in moderation is harmful to society. Clearly, there is alcohol abuse, but the Government already have a strategy—and we will add to it—on reducing the possibilities of that abuse. This Government are taking measures that are rather more stringent than those of the previous Administration.
Lord Deben
Will my noble friend take very great care before she takes seriously the recent report of this independent committee on drugs? Its judgment is based on a methodology that to most of us, when looked at carefully, is shown to be entirely flawed.
Baroness Neville-Jones
My Lords, the Government have confidence in the independent advice given by their own statutory commission and we trust that advice. I am inclined to agree with the comments just made by my noble friend.
Lord Willis of Knaresborough
My Lords, does the Minister agree that the proposal that Professor Nutt and Professor Blakemore put forward in the Lancet and in the recent report is based not only on their own evidence but on peer-reviewed evidence? What evidence does the Minister have to say that the misuse of alcohol and tobacco, which appear in the top quartile of the list in that report, is less harmful and creates fewer deaths than the rest of the drugs in the classifications A, B and C?
Baroness Neville-Jones
My Lords, I suggest that there is a real difference between alcohol and tobacco, which taken in moderation are not harmful to society, and the drugs on the classified list. I am afraid that there is no consensus between the conclusions reached by Professor Nutt and the evidence that he took.
Lord Faulkner of Worcester
My Lords, would the noble Baroness care to reconsider that last answer and separate alcohol from tobacco? There is no safe use of tobacco; all government advice that has ever been offered on the subject is that, when tobacco is used in accordance with manufacturers’ instructions, it is a killer. Therefore, it is treated differently from alcohol.
Baroness Neville-Jones
My Lords, I accept the trend of that comment from the noble Lord. It is indeed the case that tobacco is harmful, as he has just said. I think the House would agree that alcohol taken in moderation is not so harmful.
The Earl of Listowel
My Lords, I thank the Minister and her colleagues for examining policy in this area, but will they consider very carefully the pricing of alcohol, particularly in consideration of the young people who binge drink and the association of criminality with the heavy intake of alcohol? Pricing might discourage that.
Baroness Neville-Jones
As the noble Earl may know, the Government are introducing policies that will prevent the sale of alcohol below cost, and will toughen the penalties for those who engage and persist in selling alcohol to underage consumers.
Lord Foulkes of Cumnock
What discussions is the Minister having with her counterparts in Scotland on all these matters to ensure some degree of compatibility, if not consistency?
Baroness Neville-Jones
I am afraid that I am not informed about discussions with the Government in Scotland, but I shall inform myself and I shall write to the noble Lord.
Finance (No. 2) Bill
Public Bodies Bill [HL]
23:29 - Division on Lord Hunt of Kings Heath’s amendment to the Motion. - Ayes: 151 / Noes: 188 - Amendment to the Motion disagreed.
Lord Taylor of Holbeach
My Lords, I beg to move that this Bill be read a second time.
This is an important Bill, as the Speakers List recognises, and this is an important day. I shall use this speech as an opportunity to introduce the Bill and to explain why we are bringing it forward.
The coalition Government, following manifesto commitments of both coalition parties, are committed to the creation of a more transparent and accountable system of government in the United Kingdom. As part of this process, we are committed to making substantial reforms to the public bodies landscape. These reforms are long overdue. While we recognise the excellent work done by public bodies and their staff, we equally recognise the widely held view that what is often referred to as the quango state can add unnecessary complexity to public life, diluting the proper accountability of Ministers to the electorate.
The quango state has in the past suited both government and politicians. It has never suited the British public, who expect clarity and, as taxpayers, insist, rightly, that Ministers ensure that every pound the Government spend is spent efficiently and effectively. In 2009, £38.4 billion of public money was spent by public bodies; it is our duty to ensure that this expenditure is properly focused and that all public bodies are fit for purpose.
To guide this vital reform process, the Government have conducted a review of 901 public bodies, making a coherent, cross-government assessment of whether their functions were still required, and where and how these functions could best be exercised. Technical functions and those requiring independence or the provision of impartial advice would continue to be delivered by a public body. That remains the yardstick for these reforms and will continue to be the means by which the Government assess their commitment to public bodies—technical functions, the need for independence and the provision of impartial advice.
As a result of the review process, my right honourable friend the Minister for the Cabinet Office announced in another place on 14 October that the Government proposed to abolish, merge, or substantially reform 481 bodies. The Public Bodies Bill is a crucial element of the delivery of this programme. It would create a transparent legislative framework that will allow many of these reforms to be implemented. In addition, it would clarify in statute those bodies which the Government intend should be subject to future review processes, and would create a power to enable subsequent changes. In summary, the Bill would enable the Government to deliver what the public rightly expect: a public bodies landscape which is accountable, effective, and efficient. I hope that these are principles on which noble Lords on all sides can agree.
The numbers speak for themselves. The speakers list shows why this Bill was not a Lords starter by chance. The expertise this House contains will be borne out by our debate today and by subsequent days in Committee. The Government are keen to take advantage of this expertise to scrutinise this Bill with thoroughness. This is why we cannot support the amendment in the name of the noble Lord, Lord Hunt of Kings Heath. This Bill is not overly complex or technical and does not seek to radically overhaul our constitution, in contrast to the last Bill to be subject to such an amendment in this House—only the second instance of such a procedure since 1917. On the contrary, a Committee of the whole House is precisely the venue for detailed consideration of this Bill. Many noble Lords have an interest from a variety of perspectives; we will hear many of these perspectives today. I do not see what a referral to a Select Committee would add to that process, beyond an inevitable delay to the passage of the Bill and a consequent delay to a series of reforms which, in many cases, are uncontroversial and enjoy wide cross-party and public support.
I therefore ask noble Lords to consider carefully the implications of obstructing the Bill in this way, particularly given the practical difficulties inherent in seeking to implement these reforms through primary legislation. I also remind the House that the noble Lord, Lord Hunt of Kings Heath, chaired a Labour working party on Lords procedure which criticised this House for referring the Constitutional Reform Bill to a Select Committee in 2004. He declared:
“The House has pushed at the limits of the convention that it must consider the Government’s business without unreasonable delay”.
Today, he asks noble Lords to push at those limits on this Bill which, while undoubtedly of significance, does not have the exceptional impact on this House that the Constitutional Reform Bill had. I do not need to remind noble Lords that that Bill substantially altered centuries-old constitutional arrangements and the composition and role of this House. The Public Bodies Bill would have no such effect, and there is no justification for treating it in an analogous manner.
I do not wish to imply that I am in any way dismissive of the concern of noble Lords. I have met noble Lords from all sides of the House, listened to their concerns and suggestions, and intend to continue to have an open door on this Bill during its passage through this House. I think noble Lords know me well enough to know that this is not an empty gesture. Specifically, the Government see some merit in the suggestion that an order made under the Bill could be published in draft to enable a period of consultation with interested parties. We intend to consider this further.
I have noted the report of the Constitution Committee on the Bill. I thank that committee’s members for their work on this report and assure those present that I will respond in due course and engage constructively with the committee to address its concerns. In response to their complaint that the Government have not made their case for the Bill, I ask them to consider today’s debate as the beginning of that process.
I turn to the Bill itself. It would confer on Ministers a set of order-making powers to make changes to public bodies and offices via statutory instrument, providing a coherent and efficient procedure for change across government. All the main powers in the Bill would be subject to the affirmative procedure, ensuring that Parliament is able to scrutinise the detail of all changes as they are brought forward.
I emphasise to the House that the powers in Clauses 1 to 6 are limited in their application to the bodies listed in the corresponding schedules. Similarly, Schedule 7 limits the bodies to which the powers in the Bill might apply in the future. The Government wish Parliament to have clarity about the types of change that the Bill can enable, and these mechanisms secure that clarity. It would not be possible, for example, to use the Bill to effect changes to a body not listed in Schedules 1 to 6. While it is possible to move a body from Schedule 7 to a different schedule to enable such a change, this move would itself require a distinct statutory instrument.
By way of illustration, I shall give the House a number of examples of the changes we propose to make, and why they are necessary. Clause 1 gives Ministers the power to abolish a body or office; this power is relevant where the functions of a body are no longer required, or can best be carried out elsewhere. In some cases, such as British Shipbuilders, functions have already been wound down or transferred, and an order made under the Bill would simply remove the legal entity and transfer liabilities. In other cases, this power would enable more substantive reform, such as the replacement of regional development agencies with local enterprise partnerships, providing more targeted support for economic growth.
The intention of Clause 2 is to allow groups of bodies to be merged, drawing together their assets to ensure that public functions are discharged efficiently and effectively. It is for this reason that the Government intend to merge the Pensions Ombudsman with the Pension Protection Fund Ombudsman, simplifying current arrangements under which the two bodies, which already provide a coherent service, exist as separate statutory entities.
Clauses 3 and 4 give Ministers the power to modify respectively the constitutional and funding arrangements for bodies. For example, the Government intend to improve the accountability of the Equality and Human Rights Commission to Ministers and Parliament by requiring it to lay its annual business plan before Parliament, and to emphasise the importance of effective internal governance by placing the EHRC’s Audit and Risk Committee on a statutory footing.
Clause 5 allows for a body’s functions to be modified, and for the transfer of functions to an eligible person. In the case of the Horserace Betting Levy Board, the Government plan to remove the Secretary of State’s role in relation to the annual levy determination, reducing the Government’s involvement with horserace funding by devolving greater responsibility to the parties concerned.
The final principal power is to authorise delegation. The Government envisage that this power would be used to give bodies the flexibility to improve efficiency by delivering some functions through a third party—for example, empowering citizens by delegating some functions to local groups.
These powers provide a targeted framework for the reform of public bodies in the UK, centred on principles of accountability, efficiency and effectiveness.
Lord Foulkes of Cumnock
My Lords, will the Minister clarify the position in relation to United Kingdom bodies like the Forestry Commission or the Security Industry Authority should the Scottish Government disagree with the United Kingdom Government? How would the matter be resolved?
Lord Taylor of Holbeach
There has been a dialogue with the devolved authorities throughout the course of the Bill. This is a continuing process. There is a separate chapter on the Forestry Commission; I will speak to that shortly. It is a matter of debate. There is no division of view between the United Kingdom and the devolved authorities on this at this stage.
Lord Foulkes of Cumnock
It is my understanding that the Scottish Government are of a different view from the United Kingdom Government in relation to both the Security Industry Authority and the Forestry Commission, so this is not a theoretical problem. I am asking the Minister not what discussions have taken place but, when there is a dispute, how it is to be resolved. It is not clear from the Bill how any resolution can take place.
Lord Taylor of Holbeach
The Bill has proceeded on consensus. I do not imagine that it will deviate from that course in the future.
To continue, the remainder of the Bill provides for several supplementary and associated functions. Clauses 13 to 16 would give Welsh Ministers specific powers to reform environmental bodies in Wales. These powers have been requested by the Welsh Assembly Government to enable changes following their current review of environmental regulation.
Clauses 17 to 19 concern forestry. The Government are exploring a new approach to the ownership and management of woodlands and forests, with a reduced role for the state and a bigger role for individuals, businesses, civil society organisations and local authorities. I assure the House that this Government will not compromise the protection of our most valuable and biodiverse forests, including our historic woodland. Measures will remain to preserve and enhance the vital public benefits that our forests provide. The Government will consult widely on their future plans and invite views from a wide variety of stakeholders.
Clauses 20 to 22 place specific restrictions on the use of the powers in the Bill. These clauses complement the additional protection in Clause 8, which prevents a Minister making an order that he or she considers will infringe an individual’s rights. Clauses 23 to 25 confer powers to create transfer schemes and provision about taxation in relation to the powers in the Bill. Finally, Clause 26 amends the Superannuation Act 1972, clarifying rights of participation in the Civil Service pension scheme for employees of some public bodies.
I know that Members of this House will wish to scrutinise the Bill thoroughly, with regard both to its structure and its implications for specific bodies. I recognise that there are understandable concerns among staff who work for bodies where reform is proposed. I assure the House that the Government are committed to doing all we can to make changes in a manner that is fair and consistent. I also reassure the House that the fact that a body is named in Schedule 7 to the Bill should not be misconstrued as constituting an intent to abolish or otherwise reform. It simply indicates that the body concerned was within the scope of this year’s review and may be within the scope of future review programmes reported to Parliament.
I would agree with noble Lords that many bodies named in Schedule 7 perform crucial public functions with which the Government have no wish to interfere. For example, we will not do anything to undermine the vital organisational and editorial independence of Channel 4, one of the country’s most highly valued broadcasters. However, as a public corporation with statutory functions, it is right that it should be listed alongside other bodies that have undergone the recent review process. There are certain functions that the Government intend should remain outside the scope of future reviews and the powers in the Bill. These include the economic and network regulatory functions of bodies such as Ofcom, Ofwat and Ofgem, where the Government wish to ensure that regulatory stability is maintained and the cost of capital is not adversely affected.
I look forward to the debates on this Bill and to the wide-ranging expertise which noble Lords will bring to these discussions. I have committed to consider the concerns of colleagues about any aspect of the Bill, and I say again that this is a sincerely held commitment. But in making this commitment, I ask noble Lords again to reflect on the vital and sensible purpose of the Bill. As my right honourable friend the Minister for the Cabinet Office stated in a Written Statement in another place on 14 October:
“The landscape for public bodies needs radical reform to increase transparency and accountability, to cut out duplication of activity, and to discontinue activities which are simply no longer needed”.—[Official Report, Commons, 14/10/10; col. WS 27.]
All the main parties have acknowledged that this is a necessary task and the Public Bodies Bill is an essential part of this process. By creating a framework to make changes to a broad range of bodies, the Bill before this House represents a real opportunity to make lasting reforms to the business of government, and I commend it to the House.
Lord Richard
Before the noble Lord sits down, I wonder whether I could ask him a question. He has given us his view on how proud the Government are and has said that this is a considered decision, about which they have thought a great deal. If my arithmetic is right, the Government have been in office for about 150 days. Taking out weekends and the Summer Recess, they were left with about—being very generous—120 days in which they could have considered this. They are supposed to have considered 900 instances in 120 days which, if my arithmetic is right, is seven and a half per day. Does the noble Lord really think that that is a proper consideration? Can he give us some inkling of the names of the people who are so remarkable that they can do that?
Lord Taylor of Holbeach
We will have plenty of time to discuss the question which the noble Lord has asked. It is reasonable for him to understand that this has been a cross-government review in which all departments have been engaged. It is a single, co-ordinated attempt by all of government to make a more efficient and effective public body sector.
Baroness Royall of Blaisdon
My Lords, I thank the Minister for his detailed exposition of the Bill and for the constructive discussions that we have already had on it, which I know will continue in the future. I do not doubt his sincerity one bit. I thank him, too, for the concessions that he has indicated, although I do not believe that they are sufficient for the Bill.
We need constructive discussions because this is a bad Bill. It is badly thought out, badly structured, badly executed, bad for the constitution, bad for public bodies and bad for government. We will oppose the Bill, and the lengthy list of eminent speakers wanting to debate it today suggests that we will not be alone in so doing.
At the beginning of the debate, I want to draw to the House’s attention the recent report on the Bill by the House of Lords Select Committee on the Constitution and add my thanks to the committee for its work on the Bill. The committee’s report is one of the most devastating critiques of a government Bill that I have ever seen a committee of this House deliver. I am sure that distinguished members of the committee who are down to speak in today’s debate will detail the committee’s report. However, for the moment, I should like to quote one of its most compelling conclusions. It is as follows:
“The Public Bodies Bill [HL] strikes at the very heart of our constitutional system, being a type of ‘framework’ or ‘enabling’ legislation that drains the lifeblood of legislative amendment and debate across a very broad range of public arrangements. In particular, it hits directly at the role of the House of Lords as a revising chamber”.
I believe that that is right, fair and accurate. In dealing with this Bill, it is a judgment of which the Government and indeed this House tonight in the Division Lobbies need to take full account.
We want to oppose the Bill constructively and reasonably. The amendment that we are proposing, which my noble friend Lord Hunt of Kings Heath will detail later, is both constructive and reasonable. It is not obstructive in any way. It simply seeks to refer the Bill to a special Select Committee of the House for fuller and proper consideration ahead of its Committee stage. This is exactly the approach proposed for the Constitutional Reform Bill in 2004, when my noble and learned friend Lord Falconer of Thoroton brought forward measures to reform the office of the Lord Chancellor and to create the Supreme Court. The noble and learned Lord, Lord Lloyd of Berwick, proposed putting the Bill to a special Select Committee of the House, and the House agreed that that was a proper and appropriate step. It is not telling tales out of school to say that we as a Government did not want to take that step. Perhaps that is the Government’s position today, but my noble and learned friend Lord Falconer was the first to admit that the Bill, after it had been considered by the special Select Committee, was improved—indeed, greatly improved—by the process. I urge the Government today to heed that judgment and agree that this Bill should take the same route. To do so would improve—indeed, greatly improve— the Bill.
We on these Benches believe that arm’s-length public bodies, the subject of the Bill, play an important part in our public governance and public life. Many carry out vital and sometimes essential functions. However, they must be effective and efficient, as the Minister said. Like the noble Lord, we do not believe that these bodies should be set in aspic; we do not believe that they should be preserved at all costs. In some instances, they come to the end of their usefulness or natural life. In some cases, other bodies or entirely different means are better at addressing the issues that the arm’s-length bodies were established to consider. That is why, earlier this year when still in government, we proposed and began our own review of arm’s-length bodies.
The Benches opposite like to present this party as a quango creator, but, in fact, when we came to power in 1997 there were some 1,230 arm’s-length bodies and, even by the time we began our own review, we had cut the number to some 750—a cut of 40 per cent. By contrast, since coming to office, the coalition Government have created 20 new bodies. We are not die-in-a-ditch defenders of arm’s-length public bodies, but we oppose what the Government are doing in the Bill and how they are proposing to do it.
The first point is that the coalition is proposing to abolish or change fundamentally any or all of the bodies listed in the schedules to the Bill. These are, in fact, largely statutory bodies, although some are constituted by royal charter. Many Members of your Lordships’ House will, I am sure, raise particular concerns about individual organisations specified in the Bill. I, too, wish to do so.
I share the concerns of many Members across the House about particular organisations, but my own concerns relate specifically to Clauses 17, 18 and 19, on the powers in relation to forestry. I grew up in the Royal Forest of Dean, an area of great beauty, history and heritage. I live there still. Foresters are immensely proud of their ancient rights and traditions, but also of the environment and the flora and fauna and of our contribution to being part of the solution to the problem of climate change. The forest is protected and well managed, but it is also a place where people have free access to walk, picnic, ride or swim in the ponds.
Clause 17(2) enables the Secretary of State by order to amend the Forestry Act 1967 to modify the purposes, objective or conditions by which the Forestry Commission disposes of land, manages and uses it or lets or grants rights or interests over it. The Secretary of State may exercise such a function for “any purpose or unconditionally”. Those are chilling words. This appears to allow the Secretary of State to order the disposal of any Forestry Commission land in England, or its use for some other purpose. It is hard to conceive why Ministers want such draconian powers, unless it is the Government’s intention to dispose of much or all of the Forestry Commission’s land. I have no idea why the Government would wish to do that. Perhaps the Minister could tell us.
Ministers may speak about the big society, as they do on the Defra website. I am in favour of the good society, but I do not want my forest, or other woodlands and forests that are well managed and cared for by the Forestry Commission, at a cost to the Exchequer of a mere £10 million last year, to be sold off. Mrs Thatcher’s Government, in accepting amendments to the Forestry Bill of 1981, recognised that,
“the Forest of Dean is unique and that its land should not be sold except … surplus cottages, small areas of the Waste in the forest and the like will be sold as in the past, but there will be no power to sell significant areas of forest land”.—[Official Report, Commons, 8/7/81; col. 502.]
I will do everything in my power to ensure that this situation continues. Friends of my local MP, who as a government Minister clearly supports the Bill, criticised my support for the Forest of Dean, as I am against a corporate buyout of the forest. The forests of this country are and must continue to be a national asset, where trees are managed, where biodiversity is protected and where public rights of access continue in perpetuity. If they are sold off with the weak voluntary safeguards mentioned in the Bill, how can the quality of access, management of the land, biodiversity and habitat be guaranteed for future generations?
The second point concerns how the Government propose to do what they seek to do. Through the Bill, they propose a fundamental shift in who controls these bodies. It will not be Parliament; it will be Ministers. The whole scheme—and a skeleton scheme at that—is built on the Government’s supposition that it is better to have a process where Ministers make the decision about the life or death of an arm’s-length body and fast-track the parliamentary process. As the Select Committee points out, the issues raised by this approach transcend politics and go to the heart of Parliament’s role in scrutinising legislation and deciding whether fundamental government proposals in respect of these bodies should be enacted into law.
The architecture of the Bill includes a series of Henry VIII clauses, which enable primary legislation to be amended by simple affirmative order. Henry VIII clauses are devices that Governments need to deploy with care. Some people see them as rare and unusual beasts that strike at the heart of parliamentary supremacy. The Constitution Committee clearly states:
“Departures from constitutional principle”—
such as the Henry VIII clauses—
“should be contemplated only where a full and clear explanation and justification is provided”.
I am sure that the House would benefit from a full explanation from the Minister of why this is the case and, for each body listed, why it is appropriate for Parliament to cede this responsibility.
As noble Lords will be aware, in the normal course of affairs this House does not overturn draft orders that are subject to the simple affirmative procedure. However, the procedure that the Government are proposing so overloads the practice and principle of secondary legislation that we give them fair notice that the circumstances of the Bill are such that it may well be right in this instance not to follow that approach. In this we are in line with the conclusions of the most recent examination of the convention carried out by a Joint Committee of both Houses, chaired by my noble friend Lord Cunningham of Felling. The Joint Committee’s report, approved by all parties in both Houses, states that the House of Lords should not regularly reject statutory instruments but that in exceptional circumstances it may be appropriate for it to do so. One exceptional circumstance mentioned by the committee is when a parent Act was a skeleton Bill and the provisions of the SI are of the sort more normally found in primary legislation. This is exactly the circumstance that we are in with this Bill. It is precisely this kind of provision in the Bill that a Select Committee would be best placed to consider.
A Select Committee would be best placed to consider the inclusion of Schedule 7 to the Bill, and the organisations covered by it, over which the Government propose to station permanently the sword of Damocles, throwing their current operations and future prospects into doubt and confusion. A Select Committee would provide the opportunity for a range of interested bodies to be consulted and to give evidence to your Lordships’ House. The lack of consultation on the Bill is woeful, and a Select Committee would provide the Government with the best means of correcting that. It would allow them to fill in the gaps in their provision, including the provision of a regulatory impact assessment, and it would allow them to bring forward the financial assessment and figures that they are currently withholding and that we are trying to obtain through our tabling to the Cabinet Office, in relation to every organisation instanced in the Bill, requests under the Freedom of Information Act for the financial and employment information to be provided. If we succeed, I promise that we in turn will provide the information to Members of your Lordships’ House.
I stress one point in particular. We are aware that it is being suggested that we are playing politics with the Bill and are proposing a Select Committee simply to make things politically awkward for the coalition. This is not so. Certainly, we are opposing the Bill and this includes political opposition. However, we believe that proposing that a Select Committee consider it is the best way forward for the Bill, just as it turned out to be the best way forward for the Constitutional Reform Bill when, to the great benefit of the Bill, this House sagely referred it to a Select Committee. This is not playing politics but simply trying to make a bad Bill better—a Bill of huge importance to the many organisations cited and to the people whom they serve, protect and employ.
Therefore, as my noble friend Lord Hunt of Kings Heath will detail, we are entirely content to accept the amendment proposed by the noble Lord, Lord Maclennan of Rogart, in the bipartisan spirit in which it is offered. We believe that, just as with the Constitutional Reform Bill, which was with the Select Committee for about the same length of time, three months is ample for the Select Committee of your Lordships’ House to consider and propose improvements to the Bill before it comes to the House for a Committee stage. I look forward to the debate that we are about to have—
Lord Martin of Springburn
Perhaps the noble Baroness will allow me to intervene to voice a big concern that I have about quangos. The east end of Glasgow is the poorest area of the city and the west end the wealthiest. Most people whom I know on quangos live in the west end, and I think that the same would be true for many cities throughout the United Kingdom. I am concerned that, when we wring our hands and say that we want to do more for the poor communities, we never invite people from those communities to be on our quangos.
Baroness Royall of Blaisdon
My Lords, the noble Lord makes a very valid point. I do not know whether such an issue would come within the scope of the Bill, and that is entirely a question for the Minister to answer. However, it is a very good point and one that we should take into consideration when thinking about the future of these non-departmental bodies, because they should reflect the needs and desires of the whole community.
Lord Lester of Herne Hill
The noble Baroness was talking about the Select Committee and the kinds of matters that it would deal with but, as she spoke, the list became quite long. Does she think that in three months it would be possible to look, for example, at all the bodies listed in Schedule 7? I could understand it if she were saying, “Keep it narrow. Keep to procedure and safeguards”, but is she considering something wider than that?
Baroness Royall of Blaisdon
My Lords, I think that it should be a fairly narrow committee and that it should meet regularly. I do not think that it would be appropriate or possible, for example, to invite people to give evidence in relation to every single body mentioned in Schedule 7, but it would be appropriate for the committee as a whole to consider the entire schedule. It is a vast schedule listing a jumble of different organisations and I think that some order needs to be put into it. The Select Committee would provide an opportunity to take evidence from some of the most important quangos, if I may put it that way, included in Schedule 7.
I urge the Government to heed the wise words that we are about to hear in the debate. I also urge them to take full account of the genuine and extensive concerns of this House’s Select Committee on the Constitution and to take the opportunity to improve the Bill, as is sorely needed.
Lord Maclennan of Rogart
My Lords, this Bill has immense importance and the House, in its committee structure, has not yet concluded its deliberations on it. I understand that the Human Rights Committee will be addressing it and that the committee on delegated legislation is also to produce a report. That is entirely appropriate, as indeed was the consideration given by the Constitution Committee of this House, which produced what was certainly a solemn report. I have not in my time in this House, or indeed in another place, seen such a trenchant argument about the constitutionality of legislation.
It is, however, the case that all parties have recognised that public bodies can reach the end of their usefulness and that the previous Government had also considered the winding up of a substantial number of public bodies. When the Minister for the Cabinet Office, Mr Francis Maude, announced his intentions on 14 October this year, Liam Byrne said that this was, in a sense, carrying on the work of the Labour Government. Whereas 20 per cent of the public bodies had been considered suitable for winding up by the Labour Government, 25 per cent were considered suitable by the present Government.
Consequently, it appears to me that we are talking not so much about the ends of this legislation as the means. As these bodies are widely recognised to touch on the life of the nation, and the life of almost every individual in the nation, we should not act precipitately or without due regard to the consequences not only for those who serve in such bodies, of whom there are at least a handful sitting in this House today, but also for how it will impact on the wider public which, up to this point, have not been invited directly to contribute their views. It seems to me that we ought to proceed with due deliberate speed.
I am grateful to my noble friend for indicating, when introducing this Second Reading, that the Government are thinking very carefully and deliberately about possible responses to criticisms which have been made and which, no doubt, will be made when the Bill goes into Standing Committee, as it undoubtedly will. It is not the practice of this House to reject government legislation at Second Reading and it is not even intended to put that to the test today. However, it is appropriate to give a proper opportunity to the public and to the bodies themselves to animadvert on the consequence of what is being done. It is also appropriate to consider how we would go about winding up these bodies. It seems to me that change to what is proposed in the legislation is necessary in that to deliberate for an hour and a half on the winding up, on the restructuring or on the refinancing of some of these bodies, with no choice about amending the proposals, is not really an appropriately democratic way to proceed.
The role of this House to proceed according to the terms of the Bill is also called into question. As the noble Baroness, Lady Royall, mentioned, the convention is that this House does not reject, except in the most exceptional circumstances, a statutory instrument passed in another place. I do not think that we would wish to see that principle seriously diluted. Time for deliberation is required. Already there have been so many representations made by those who have been directly consulted, no doubt, in the internal review which was conducted in many departments of state, which the noble Lord, Lord Richard, thought had taken too short a time. We have received representations from bodies such as the Law Society of Scotland about how it will affect the union when matters that are devolved or partially devolved come up for consideration. We have received representations from those who are deeply concerned about the independence of quasi-judicial bodies—tribunals set up to determine, without pressure or influence from elected representatives, matters on factual grounds—that the procedures advanced by this Bill are inappropriate.
In introducing the debate my noble friend referred specifically to Channel 4. Channel 4 is a body which now has an axe hanging over its head. It will no doubt be very gratified to have heard what the Minister said about it today, but it remains a rather strange entry in Schedule 7 in view of the fact that it is not a public body in the sense that it receives any public moneys. Why, then, should it be so considered?
All these issues and many more particular cases will inevitably be discussed in Standing Committee, and that is entirely appropriate, but I am most troubled about the position of the quasi-independent judicial bodies, which I believe will find it extraordinarily difficult to operate if they have to satisfy the Government about their existence. There is undoubtedly a case for rationalising competition bodies; no doubt that was in the minds of Members on all sides of the House. But while that process is going on, it must be a matter of acute difficulty to deliberate, for example, on the matters that this House debated last Thursday: the possibility of News Corporation acquiring the remaining 61 per cent share of BSkyB. Ofcom is one of the listed bodies. Ofcom is now looking at that matter as a result of a reference from the Secretary of State last Thursday.
In tabling the amendment to the amendment of the noble Lord, Lord Hunt, which would follow a Second Reading of this Bill, it has been my purpose to ensure not the frustration of the purposes of the Bill in rationalising, reorganising or bringing to an end public bodies which have passed their sell by date but a focused consideration and structured debate on how best to bring that about, bearing in mind the normal democratic procedures. Many of those bodies have been established by primary legislation and were subject to a great deal of argument before they were set up. Many of them are subject to scrutiny by, for example, the Public Accounts Committee or the National Audit Office—both of which exercises I played a part in over a period of more than 17 years in another place.
If we are to refer the Bill to a Select Committee—I have not made up my mind whether that is entirely necessary, although I think it is appropriate—a great deal depends on the attitude of this place. I look forward to listening very closely to what contributors to the debate say. If it is to be referred, if that is the decision of the House, it is appropriate that we should indicate very clearly what we are asking such a committee to do. We are not asking it to look at the merits of each of the 481 public bodies which are under scrutiny as a result of the publication of the Bill; we would be asking it to consider the broad ways in which different types of bodies could be considered. I suggest that we should ask the committee to recommend by the given date the appropriate ways to implement the objects and purposes of the Bill to ensure that public consultation takes place before the Government’s proposals are laid before this House. If the committee is set up by the will of the House, it should also have the power to recommend appropriate parliamentary proceedings to achieve those results. That is a quite focused inquiry, and it seems to me that it would not necessarily delay the consideration of the Bill beyond that which may take place if we go through it clause by clause, public body by public body. We will receive representations about many of them.
I conclude by saying that I shall listen with immense interest to the views of colleagues and noble friends around the House. I hope it will become clear during the course of the debate that a consensus can be arrived at which will make the task of reform very much easier.
Lord Woolf
My Lords, I regard this Bill as a matter of grave concern to the judiciary. Before the Constitutional Reform Act, the Chief Justice of the day would have been able to come to this House and to address it wearing his heavy responsibilities now as the head of the judiciary in England and Wales. He can no longer do so. He can however write to both Houses, and he may or may not choose to do so. He can also speak before Select Committees of the House, and I know that he proposes to do so. However, this Second Reading has come before this House before he has had an opportunity to do so. What I am going to say is not what he would say but what I would have said if I was still Lord Chief Justice and had the task of placing before the House what I regard as real concerns.
The real concerns arise because the bodies in Schedule 7 include bodies that are intimately and directly concerned with the administration of justice in this country—the administration of civil justice and the administration of criminal justice. The whole purpose of the great efforts that went into making the Constitutional Reform Act the great Act that it is was to achieve the division between the judiciary and the legislature, which was the prior purpose, and still is the purpose, of the concordat.
I hope your Lordships will forgive me if I ask you to look at Schedule 7 very quickly with me, and I can refer to the sort of bodies that I have in mind. The Civil Justice Council plays a huge role in recommending the improvement of our civil justice. I have to confess an interest in that because it was a report of my own that led to the establishment of the Civil Justice Council. Then we have the Civil Procedure Rule Committee, which is traditionally presided over by the head of civil justice, the Master of the Rolls. Next I refer to the Criminal Cases Review Commission, the body which has the very delicate task of referring back to the Court of Appeal Criminal Division cases of possible serious injustice. It performs that task with great care and achieves satisfactory results. Then comes the Criminal Procedure Rule Committee, which is presided over by the Lord Chief Justice of the day and determines how trials up and down this country take place. It is a body that is carefully framed to be able to perform that role.
I pass over quickly—although they are also involved in the justice system—the Chief Inspector of Prisons and Her Majesty's Inspectorate of Probation, and I go down to the Judicial Appointments Commission. If I were to pick one body in Schedule 7 that certainly should not be put in Schedule 7, it is the Judicial Appointments Commission. It is responsible for almost every judicial appointment that takes place in this country. It was the subject of very deep consultation between myself and the then Lord Chancellor, the noble and learned Lord, Lord Falconer. The provisions contained in the Constitutional Reform Act reflect the solution with which the judiciary was content because judicial appointments were no longer to be made directly, as in the past, by the Lord Chancellor and because it was agreed that the role of Parliament as well as the role of the Government of the day in respect of appointments should be substantially reduced and take on a different framework from that which had existed in the past. I do not say that it is not possible to improve the statutory framework of the Judicial Appointments Commission, but surely something so important as that to our constitution should not be the subject of a truncated procedure that would be possible under this legislation.
I go on to refer to the Legal Services Board and the Legal Services Commission and finally refer to the Sentencing Council for England and Wales. The Sentencing Council for England and Wales has recently been the subject of legislation that was considered in great detail in this House because it was appreciated how that body again goes to the heart of our criminal justice system. The membership of the body is important and the way it operates is important. I cannot say that it may not be necessary in future to amend the legislation that deals with it, but surely something of that importance needs proper consideration and not the truncated treatment that it gets under the Bill.
I do not believe—I hope I am right in saying this—that these bodies under Schedule 7 will ever be subject to the powers contained in Clause 11 because Ministers will be aware of their important responsibilities under the Constitutional Reform Act to uphold the independence of the judiciary. I have to say to the Minister that I do not believe that this Bill, in so far as it refers to the bodies that I have indicated, is consistent with the Constitutional Reform Act. I do not believe that there was any proper consultation before these bodies were included. They were included because they properly can be described as quangos, but it is not because they are quangos that they should be subject to the truncated procedure.
As is indicated here, we are not concerned with purpose; we are concerned with means, and I urge the House to say that the means that has been adopted is constitutionally wrong so far as the partnership between the legislature and the judiciary that we value so much in this country. It is wrong as to the partnership between the Executive and the judiciary, and I ask the Minister, who so wisely said that he will consider representations, to bear in mind the concerns that I have expressed, which are based on my experience of being a member of many of the bodies to which I have referred and, for example, of being chairman of the Sentencing Guidelines Council. These bodies have a difficult enough job without having the sword of Damocles, which the Constitutional Reform Committee referred to, hanging over their head. However, if I have not succeeded in persuading the House of the importance of this issue, I would strongly endorse the suggestion that this is a matter to be given special treatment, as has been proposed by the noble Lord, Lord Maclennan.
Lord Deben
My Lords, perhaps I may, on the second occasion on which I have addressed your Lordships’ House, start with a compliment on the procedures of this House compared with those of the House in which I sat for 35 years. I very much approve of the way in which this House deals with legislation and enables all its Members to play a proper part. That is why, when I listened to the noble Baroness, Lady Royall, introducing this matter, I had a wry smile, because at no time in the history of Parliament has there been such curtailment of speech, of discussion or of argument, than in the past 11 years in the other place. Very few Bills were ever discussed in their fullness and very few clauses were ever fully covered.
As a Member of Parliament, I found it increasingly difficult to explain to constituents that the reason why such-and-such a clause was so bad was because no one had discussed it. It had merely been pushed through. I found it difficult to hear the arguments put forward from that side of the House. But I agree with the noble Baroness that there is an important distinction, which I thought was most clearly put by the noble and learned Lord, Lord Woolf, between aim and means. Although I had to start by reminding the noble Baroness that no one on that side is in any position to talk about constitutional propriety after the experience of these years, there is an important point here which we must not forget.
It would be a pity if we missed the importance of the content of this Bill by not being able to come to an understanding about two mechanism issues that most of us see as important. One issue is to ensure that the simple method of affirmative resolution is given some substance, perhaps of a new kind, to enable proper discussion to take place and for a good deal of consultation to be gone through. It seems to me that that is not beyond the wit of those on the Front Bench to discern and put forward.
On the second issue, I take up the comment made by the noble and learned Lord, Lord Woolf. If one goes through this list of bodies, one sees that most of them hang together but some of them clearly hang separately. If that is the case, there must be a mechanism for being able to say about those bodies that something different happened. Indeed, my noble friend mentioned that when he talked about Channel 4. If that is true, I hope we will not miss the importance of this Bill.
There has become a real feeling in Britain that the ordinary people of the country are subject to the almost whims of a large number of bodies that are unelected and very often rather curiously chosen. I have some sympathy with the noble Lord who asked about the east and west ends of Glasgow. It is true that many people in the list appear to be sequential offenders. Some people seem to have spent the past 20 years sitting on different quangos. I find it difficult to understand how the qualities of a single woman should make her suitable for the organisation that looks after consumer interests. To be a deputy head of the Financial Services Authority, to run the Food Standards Agency and now to run the Civil Aviation Authority, she must be a remarkable person, for the choice has been continuous for what appears to be 20 years. I am not sure that the public quite understand that and I am not sure that I quite understand it.
Secondly, one has to face the fact of the outrageous behaviour of some of these quangos. I mention to noble Lords on both sides of the House a letter I received from an organisation that, at the time, looked after the supervision of boarding schools—a task that has now been passed on to Ofsted, another quango. This particular one wrote to me enclosing a stamped addressed envelope in case I wished to say something secretly to it about the school at which my daughter was head girl. I wrote back and said that if I wished to say anything about the school I would go to the headmistress and say it to her; that if she did not satisfy me on the matter I had the privilege of being able to take my daughter away from the school—a privilege that is accorded to those who are lucky enough, or who choose, to pay for their children’s education; and that I had not asked that quango to look after the education of my children. I had specifically chosen not to do that. I then wrote to the headmistress to point out that I had asked her to look after the education of my daughter and that if she took any notice of what the quango said I would decide whether I wanted to remain a parent at that school because I had not chosen the quango.
I wanted that part of the quango to go, but it has not: rather, it was transferred to Ofsted, which said that it would carry out investigations at the same time as the voluntary investigations of the Independent Schools Council or the Headmasters’ and Headmistresses’ Conference. Why is it doing it at all? Are we really saying that we have to have inspections of boarding schools when they have their own system and when the parents concerned are in a strong position to decide whether a particular school is properly run?
The Architects Registration Board is a body of no use and a great deal of interference. There is no reason why its responsibilities should not have been taken on by the RIBA—of which, I declare an interest, I am an honorary fellow—and for a special part of that to be made independent for the small number of architects who are not members of the RIBA. How have we left Natural England, with all its failings, in almost the same position as it was before? I have some problems about the substance of this because I do not think we have gone far enough.
However, there are some good things in the Bill that I would not like to lose. The suggestion that British Waterways should become a kind of third-sector body is extremely good and I hope that the Government will not destroy that by refusing to accept that the contract between it and the Government must be properly financed. I hope, too, that it will be able to overcome the reluctance of the Environment Agency to hand over its navigation role to British Waterways, where it is much more suitably placed.
Some independent non-governmental bodies ought to be seriously praised for the changes they have made, one of which is the Environment Agency. The noble Lord, Lord Smith, has done remarkably well in helping to show how a body that was increasingly thoroughly disliked in the countryside can be moved to one that is seen much more as an enabling body. Even given the tough line I take on this matter, none of us should ignore that fact.
The noble Baroness, Lady Royall, referred to the Forestry Commission. I was a Minister responsible for the Forestry Commission, which was the most difficult organisation I have ever dealt with in trying to move it in the right direction. I was desperate to make it more concerned with the environment but it has moved terribly slowly over many years. I object to those who say that within a proper legislative package private people cannot be just as good as nationalised bodies in looking after the environment. Indeed, the best examples of environmental protection come from private people.
Baroness Hayter of Kentish Town
Given his attack on Dame Deirdre Hutton, does the noble Lord accept that her advice when she chaired the Food Standards Agency was better than the Minister of Agriculture’s advice to his daughter about what she should eat?
Lord Deben
I rather purposefully did not mention the name of the person concerned as I did not want to make it personal. I merely suggested that she was a remarkable personage to have done so many things, and I made no comment about the advice that she gave in any of those circumstances, although, if I were choosing a head of the Food Standards Agency, I must say that the noble Lord, Lord Krebs, was absolutely exemplary in the role.
On the Forestry Commission, I believe that much of the best conservation in this country is done by private people over private land which they care about because they want it to continue to exist and improve. Why can the noble Baroness not conceive of parts of the Forestry Commission being better run by different people instead of it all being run by the same people?
Baroness Scotland of Asthal
My Lords, the Bill is of great constitutional significance. I listened with great care to what was said by the noble and learned Lord, Lord Woolf. He will not be surprised when I say I agreed with every single word.
This Bill is not a good Bill, although, as a number of noble Lords have said, there are many things about the substance with which we will all agree such as the need to change, the need to update and the need to ensure independence and probity. However, the process has caused a lot of concern. Indeed, there are those who would argue strongly that we should, at this stage, oppose the Bill going any further. I disagree with that view. I think it is important that we should debate this Bill, but at the end of today the Select Committee might be the better course.
I had the privilege, as many of your Lordships will know, to speak from the Front Bench for the last Government for 11 years. During those 11 years I heard the House’s abhorrence of Henry VIII clauses again and again. I was not therefore surprised to see, in the manifestos of both parties that now form Her Majesty’s Government by way of coalition, comments making it clear that they wished to, in their words,
“restore the balance between the government and Parliament, by … making the use of the Royal Prerogative subject to greater democratic control so that Parliament is properly involved in all big national decisions”.
That was echoed by both parties. Therefore, when I came to read this Bill, I read it not only with the grave concern that has been alluded to by the noble and learned Lord, but also a great deal of surprised disappointment.
I do not think that any of us have read a Select Committee’s report written in such trenchant and clear terms. Having read that report I found myself unable to disagree with one word of it. It therefore leaves me troubled as to how the Government believe that in a democratic country we could allow this process—we are talking about the process of review—to continue.
As well as being pleased that the Select Committee on the Constitution had an opportunity to look at the Bill before today’s debate, I was pleased that that committee is truly representative of this House. Members from all sides of the House sit on that committee. At this stage, it may just be important to remind ourselves that that committee’s membership comprises: the noble Lords, Lord Crickhowell, Lord Hart of Chilton, Lord Norton of Louth, Lord Pannick, Lord Powell of Bayswater, Lord Renton of Mount Harry, Lord Rodgers of Quarry Bank and Lord Shaw of Northstead; the noble Baroness, Lady Falkner of Margravine; the noble and learned Lords, Lord Goldsmith and Lord Irvine of Lairg; and the noble Baroness, Lady Jay of Paddington, who leads and chairs the committee. Those are among the most eminent and sound Members in our House, but they are all known for their ability to disagree—quite wholeheartedly—not only with us but with each other.
Yet, in that Select Committee’s report, Members of our House of such eminence say with one voice that the Bill is wrong, that the tests are wrong, that the process is wrong and that we should think again. I, too, ask the Government to think again. I also ask that, when the Minister replies to the debate, he tells us whether he agrees with the analysis in the Select Committee’s report on the tests that it applies and the conclusions that the committee comes to. If he disagrees with that analysis, could we please have the basis on which that disagreement is founded?
I had hoped that the Minister might have had the benefit of having sit beside him the noble and learned Lord the Advocate-General, who might be able better to assist him on how one can undermine the argument of the noble and learned Lord, Lord Woolf, and those who will speak later. We have an opportunity to pause, to think about process and to do this better. This is not a good Bill—it is a bad Bill—but it can be improved, and I know that this House will help the Minister to do just that. I strongly urge the Minister to consider carefully what is being said by those who rarely speak.
Baroness Finlay of Llandaff
My Lords, in his opening remarks, the Minister spoke about transparency of process, but I fear that the consequences of the Bill may in fact work against the transparency that is being sought. Having listened carefully to the words of the noble and learned Lord, Lord Woolf, and to his plea that we should maintain the principles of justice, I will focus on the concern in relation to the Coroners and Justice Act 2009. That Act was designed to bring justice, but I think that the proposed changes illustrate points that have already been made in the debate.
The Coroners and Justice Act was brought in because the coroners system was outmoded for the 21st century, yet the proposal to abandon the office of Chief Coroner has been subject to no consultation with stakeholders, no opportunity for parliamentary debate and no published evidence of cost analysis. The suggested costs of the setting up of the office were around £10 million, with operating costs of £6.5 million. I think that those costs could have been brought down by careful review.
I do not see how abandoning the office will bring about any real savings. Without such an office for appeals, the costs of judicial review—currently the most common route for bereaved families to appeal inquest decisions—will rise. The costing model never took account of the ongoing costs to the NHS and social care of those whose grief is compounded by a sense of injustice or of all the educational costs of those children who are disturbed in the web of family anger and unresolved grief.
Today we are wearing the poppies of the Royal British Legion, which campaigned long and hard for a fairer coroners system that we now risk throwing away as part of a schedule to a Bill. The Government have said that the charter for the bereaved will be pursued, but without the office of the Chief Coroner, set up independently as envisaged in the 2009 Act, the charter could be a hollow list of laudable claims that risk becoming platitudes.
The current system of post-mortems in this country is not fit for purpose. Coroners need medical advisers. The 2006 review showed that 26 per cent of all post-mortems had a standard that was poor or unacceptable. That means that more than a quarter were unfit to provide the information sought. We know that there are a few areas of good practice over tissue retention, such as Newcastle, but we know that in other areas families are denied the chance of an accurate diagnosis, especially in the cases of epilepsy or sudden adult death syndrome, with the implications for the relatives of the person who has died.
I cite those examples to illustrate briefly how justice is threatened when we abandon something that was long debated, particularly in this House, and was revised and improved and universally welcomed by those who have gone through the inquest process and by the professions involved, which wanted the coronial system modernised and made fit for purpose.
We are expected to grant these sweeping powers to Ministers to do as they wish with a long list of public bodies, all under Henry VIII powers. The report already spoken about from the Constitution Committee cites two tests that should be passed—first, whether Ministers should have the powers and, secondly, whether there are adequate procedural safeguards. It says that in their view the Bill fails both tests. This disregard for Parliament is of great concern.
Lord Liddle
My Lords, I support the call for more time for deliberation from the noble Lord, Lord Maclennan of Rogart, and I shall certainly support the amendment proposed by the noble Lord, Lord Hunt of Kings Heath, to refer this Bill to a Select Committee of the House.
A lot of the debate has focused on the grave constitutional issues that the Bill raises, but I should like to focus attention on what I regard as the worst of rushed decisions and bad public policy contained in the Bill. I take as my case study the abolition of the regional development agencies. I accept that there had to be cuts in public spending, but in a very difficult economic environment one would think that the Government would take especial care in refashioning the regional and local levers that they have to generate economic prosperity when they know that their spending decisions will result in loss of jobs. That kind of proper consideration has not taken place.
I freely accept that arrangements for regional economic development were not perfect. I speak as someone with an interest as the chair of Cumbria Vision, a body in a sub-regional partnership in north-west England. We were not granted authority or direct control over the money, and there was too much duplication, but arrangements could have been made to streamline delivery within the existing structures and save money. It would have been a much better course to have had radical reform of the development agencies rather than their outright abolition. So far as one can tell, that option was never seriously considered by the Government; instead, we go for the course of what I would describe as institutional vandalism, which this Bill contains. It is an example of bad governance and bad public policy. My suspicion is that it reflects the long-held prejudices of a former leader of Bradford City Council—the right honourable Eric Pickles, no less—against the more successful parts of the Yorkshire region. When government makes this kind of rushed decision, it is Parliament’s job to try to hold it to account.
There has been no evidence-based decision making in this case. A major study conducted by PricewaterhouseCoopers before the election showed that the RDAs generated £4 of benefit to the economy for every £1 that they cost. So where is the evidence base for public policy making in this decision? What is more shocking, in a way, is the way in which the Government have decided not to carry out any assessment of the impact of what they propose in the Bill. I have asked the noble Baroness, Lady Wilcox, on several occasions what the consequences for jobs and growth of the abolition of the regional development agencies are going to be. On 16 September, I got back the wonderful and depressing Answer:
“No such assessment has been made”.—[Official Report, 27/9/10; col. WA 553.]
Yet this dismantling of the economic capacity to promote regional development comes at precisely the moment when, because of the spending review, that capacity to generate private sector growth is needed.
The support infrastructure for economic development is being thrown into chaos. Most of the staff working on it have been put on 90-day redundancy warnings. At the time when the whole energies of government—national, regional and local—ought to be focusing on a priority task of what they can do most to stimulate new jobs, the government machine is going to be bogged down in wrangles about who owns the RDA assets of these bodies being abolished and what will happen to ongoing projects. There will be lots of work for lawyers and accountants but very few jobs created in the economy that will benefit ordinary people.
The RDAs, for all their faults, had built up an institutional capacity to assess projects and manage them effectively. I fear that that project management capability is being permanently lost as a result of the arbitrary decisions being taken in this Bill. Of course, the Government’s answer is that they have a policy; they are setting up something called local economic partnerships. The truth is that most of those are starting off with a blank piece of paper and very little capacity indeed to get anything done. It is a cover for the abolition of the agencies. There will be no central government funding of the economic development resource and my county, Cumbria, faces a very cruel choice between reducing care for the elderly and vulnerable, slashing school transport, or finding the funds to have a properly resourced local economic partnership.
As we heard from the noble Lord, Lord Shipley, in the public spending debate last week, the crunch facing local government will be especially severe with a 16 per cent cut in its grant in the coming year. There is really no alternative provision being made, which is why I oppose very strongly the institutional vandalism of the Bill. There is still time for the Government to think again and to allow a more rational and evidence-based approach to policy to be adopted. I hope very much that the House will provide the Government with that opportunity.
Lord Freeman
My Lords, I will not pursue the argument of the noble Lord, Lord Liddle, about assistance to industry and commerce at the local level. We will, I am sure, have another chance to debate the issue. Where I agree with the noble Lord is in paying tribute to what the regional development agencies have achieved over the past decade. However, I firmly believe—we will come back to this at another time—that the proposals from my noble friends in the Department for Business, Innovation and Skills and from my noble friend Lord Heseltine’s advisory board, on how regional economic growth can be provided, are excellent.
Like other noble Lords, I listened with great care to what the noble Lord, Lord Maclennan of Rogart, and the noble and learned Lord, Lord Woolf, said about the nature of the Bill and its influence on and control of judicial procedures. I have to say, though, that I do not think that this is a precipitous procedure. I shall try briefly to argue why I do not believe that the arguments against the Bill, which I strongly support, are not appropriate.
I want to say at the outset, having served a number of years in the other place, that over 30 years I have seen how in Parliament we deal with secondary legislation, particularly the affirmative procedure. We need to improve the procedure in two ways. I welcome what the Minister has said in suggesting that there might be draft orders, but I also believe that for affirmative orders a one and a half hour debate is not enough for certain important issues. The affirmative vote procedure has always been treated somehow as a procedural inevitability, and that is wrong.
I want to contribute by, I hope, reflecting accurately the views of the world of business and commerce. I declare an interest as chairman of PricewaterhouseCoopers’s advisory board, although that is not directly relevant. I also work with the South East England Regional Development Agency, which is not directly relevant to this debate either. The wider issues of the private sector are that we have had 30 years of almost inexorable growth of non-departmental public bodies. Her Majesty’s Opposition in this place and the other place have taken certain strides to try to reduce the number and improve their efficiency but very little has been achieved. We must now grip this opportunity firmly because over the past 30 years we have moved to well over 1,000 non-departmental public bodies and we need reform.
I am sensitive to the implications for justice, law and order and constitutional issues, but that does not affect the main thrust of my contribution. We are facing severe economic difficulties and the business community cannot understand the duplication and inevitable growth that we have seen over the past decade. It wants reform, and it is justified in doing so.
I see two advantages to the Bill. First, there is the importance of restoring ministerial responsibility. It is an anachronism that in this Chamber and in the other place one cannot directly question a Minister about the performance of a non-departmental public body, although obviously there can be correspondence. As a democrat I am in favour of improving that ministerial responsibility, and under the Bill that will happen.
Secondly, this is not a dramatic measure. I calculate that we are talking about one-quarter of more than 1,000 non-departmental public bodies that will either go or be merged. That is hardly a revolution. As far as I am concerned, with the obsolescence of some of them and the duplication and cost of others, sensitive ministerial decisions should come back to Parliament under the affirmative procedure. I would strongly argue for longer debates and debates on draft orders produced for your Lordships well in advance of those debates.
Do not let us have a Select Committee. We have been arguing about this for 10 years—in my experience, for almost 30 years. Let us get on with it. The Standing Committee procedure, in which many noble Lords who have spoken today will participate, and which I hope will be held on the Floor of the House, not in one of the committee rooms, should be a thorough debate. A Select Committee procedure would only delay matters, and would not be understood by the public. Let us have the courage to proceed. I support the Bill.
Baroness Andrews
My Lords, I declare an interest as chair of English Heritage and as a vice-chairman of the national parks authorities. Both these bodies are identified in Schedule 7 to the Bill—the pending tray of the Bill, as it were. It is on the implications of Schedule 7 that I want to concentrate. I also declare an interest as a member of the Delegated Powers and Regulatory Reform Committee, which will make its own judgment on the Bill in due course.
In the Bill before us, Ministers have simply asked your Lordships to agree to rewriting the constitutional balance between the Executive and Parliament. The Constitution Committee has been extensively quoted and it has made its position abundantly clear. What is at stake in this Bill is a testing point for this Parliament and this House. I was sorry to hear the Minister say—I believe—that he was unable to respond to the Constitution Committee’s report this evening and that he would get back in touch. I hope he will take advantage of my noble friend’s invitation to respond to the serious concerns expressed by that committee in its report.
The Bill is also extremely important because it will come to define the ambitions of a Government who seek to consolidate power in their own hands on an extraordinary scale, irrespective of normal parliamentary procedure. In the context of being an ex-Minister, I say that I stood at the Dispatch Box several times and tried to persuade the House of several modest proposals on powers to be given to Secretaries of State, usually to arbitrate in matters of policy. From both sides of the House there came cries of, “Too much power is accruing in the hands of the Secretary of State”. I was flattered by noble Lords who said that they trusted the Minister but would not trust my successors. I did not think we would ever debate a Bill that would require an accumulation of ministerial power on a scale that would not have been conceived of in the previous Parliament.
The Bill is about public bodies and they are just that. Over the past few months, in the frenetic atmosphere of the comprehensive spending review, all the virtues of public bodies and the public service they represent seem to have been denigrated, along with the integrity and astonishing commitment of the majority of people who serve on those bodies. Of course, we can all make a case for efficiency and rationalisation; we have and we should, and we should deliver on that. However, there has been no public debate on how our public bodies should best adjust to new challenges and no proper consultation. There is little dignity in the situation that many good public bodies now find themselves in. I regret that, not least on behalf of their staff, more than I can say.
Now we have before us a Bill that proposes to alter not just the present and predictable status and governance of organisations but their future status, existence, powers, functions and governance. It is as though the legislation that brought them into being—often detailed, hard won and hard fought, not least in this House—had never been introduced, and as though their purposes were not worth debating. It suggests that the time we spend scrutinising, correcting and improving legislation in this House is rather a waste. That is not something your Lordships agree with; we know how many hours we have spent debating the regulation of everything from child protection to energy security. We know how important it is and we know that the problem often rests here, where we solve it.
Worse still, we now have a Bill that brings with it a threat of future changes that are as yet unknown, either to the institutions identified or to the Ministers in place. For the first time a Bill proposes to hand powers to Ministers without requiring them to make clear what their intentions are or might be, without giving power to Parliament to challenge or change that. While I agree with much of what the noble Lord, Lord Freeman, said, affirmative orders do not allow this House to make changes. I sympathise with the Minister. The Bill is not of his doing; I am sure he wishes he had never set eyes on it. However, it is now for him to answer the questions that this House is putting to him. The Constitution Committee has said clearly that the Government have not made the case for why the vast powers in the Bill are needed. I am sorry to say that I do not think the Minister’s opening speech did so either, but he will have another chance at the end.
What lies behind the sweeping powers in the Bill? What is the problem that the Bill is intended to solve? Can the Minister give me any precedent for a Bill that attempts to give Ministers powers to legislate for the future without clear purpose or intent? The Minister has taken refuge in a raft of protections lifted from the legislative reform orders legislation, but I for one have absolutely no confidence in the ability of loose terms such as freedom and efficiency to protect vital bodies and their functions, especially when the rest of the protections offered in the legislative reform orders legislation have been left out of this Bill: for example, that it is not constitutionally significant. Why have those powers been left out? I invite the Minister to respond to that point.
My image of Schedule 7—its impact and the implications of unjustifiable uncertainty—is of a sort of ghastly waiting room where public bodies await some form of operation. They do not know what kind of operation it will be, whether it will be performed, whether the right limb or any limb at all will be amputated, or whether they will survive. The bodies in Schedule 7 may be abolished or changed without the democratic challenge and accountability of primary legislation, notwithstanding that in many cases their existence and purposes were decided by Parliament, and it is to Parliament that they are accountable as well as to government. These bodies may be altered in their name, powers or ability to employ staff. They may be transferred to another body or their functions delegated. In short, their functions can be dismissed, diminished or distorted without Parliament being able to lift a finger to help them. This is what government secondary legislation provides—no powers for this House to protect, challenge or change.
Let me turn to the list itself, which is the first challenge to common sense and comprehension. Can the Minister tell the House how the list for Schedule 7 was drawn up? The Explanatory Notes do not help. They say that the schedule contains bodies where there is currently,
“no policy intention to make changes to their status or functions”,
and that the justification for their inclusion is that they had been,
“subject to the review process”.
However, the review of public bodies that has just taken place could not have been more thorough. Each of the bodies reviewed has already passed the three critical tests, posed by the Prime Minister, of independence, expertise and accountability. Why should there now be any indecision over their future? If, as a result of that review, there is no policy intention to make changes, why are these bodies on the list at all? Why does the list exist?
The corollary question is: why does this list not consist of bodies that have not been reviewed and therefore might be reviewed in the future? If the Government have a definite intention to review a body again and make further changes, why do they not declare their own tests null and void? Why do they not openly say that more changes are needed and deal with that process honestly and transparently? Why should a body that has been through the rigours of the review and been found to be serving a proper and necessary function not be left now to get on with a difficult job of managing massive changes, often involving serious redundancies and redefining structures and jobs in very difficult circumstances?
A further clarification is needed. The Explanatory Notes suggest that bodies are on the list because any changes that would follow any future review process would require legislation. However, my understanding is that not all public bodies that would require legislation for changes to be made to them are in the schedule. Why are some bodies here and others not? We have a schedule that is neither consistent nor inclusive in its coverage, leaves some bodies out when others with similar requirements are in, and includes bodies where there is no intention to change but excludes others that have not been reviewed for the purpose of change. At best, this is dreadful drafting; at worst, it raises serious issues of motivation.
There is a compounding factor—a further twist—that reduces opportunities for scrutiny even further. To effect a change to a Schedule 7 body, there will have to be two orders; I refer to Clauses 11 and 12, both of which will require a resolution of both Houses. However, there is no requirement that they be laid at the same time. Noble Lords might therefore be faced with a debate on moving a body to one of the other schedules, with all the implications that that involves but without sight of the order that really matters—the one that will make the changes that will affect the organisation. Of course, policy intentions can change. A second order to effect the change may be for an entirely different purpose than was expressed to be the intent when the order moving the public body from Schedule 7 was debated. Can the Minister tell me why we need two orders? Why would a single instrument describing the effect of the change on the public body not be sufficient?
The Minister said that he understood the concerns of public bodies and the situation they face. These good public bodies are now living with a totally uncertain future, when at any time another review, another change, another structure, could be put forward—not for public debate, but by way of an order that invites this House to decide that future without knowing what it will mean. I believe that to be profoundly unethical, unwise and unconstitutional.
What about the impact on staff? Does the Minister agree with me that independence becomes something of a fiction when he appears to be constantly looking over his shoulder? This is not so much the big society as Big Brother. How can one remain independent of judgment? How can one retain freedom of action? How can one be prepared to innovate and take risks—all the things that public bodies do well and successfully—while living with the constant fear of more change?
I think the Minister already knows that the House finds this Bill unacceptable, if not deeply offensive, to its sense of constitutional propriety and democratic responsibility. I have never read anything quite as excoriating as the Constitution Committee’s report or heard a speech of the nature made by the noble and learned Lord, Lord Woolf, this afternoon. I know that the Minister is a good and thoughtful man, and I was grateful that we had the opportunity to meet. I hope that he will have the courage to acknowledge the deep flaws in the thinking behind the Bill, and in the Bill itself, and will join us in supporting the amendment in the name of my noble friend Lord Hunt.
Baroness Meacher
My Lords, I shall make one point and refer to two examples of bodies facing questionable abolition. The first and overwhelmingly important point of this debate is the constitutional one. I speak as one who will probably provide some support to a number of the Government’s reforms. Indeed, I supported the merger proposed by the previous Government of specific public bodies, when such a view was not altogether popular on various sides of the House. Along with other noble Lords, I am therefore not speaking as one who believes that public bodies are always useful and must be saved—not at all. However, alongside some good ideas is the most extraordinary breach of this country’s democratic traditions and constitution. I speak, of course, about Clauses 1 to 6 and Schedule 7.
I want to add my support to the most eloquent remarks of my noble and learned friend Lord Woolf and the noble and learned Baroness, Lady Scotland. It is entirely unacceptable for any body established by primary legislation to be abolished or merged without the proper consideration afforded by the normal legislative process.
An issue of particular moment concerns the public bodies among those listed in Schedule 7 which have a specific role to hold government to account. The essence of these bodies is, surely, that they should be independent of government and of Ministers. Without that independence these bodies cannot do their job. How can an organisation hold the Government to account if that Government, without even proper parliamentary scrutiny, can turn round and punish that public body by reducing its powers? I hope that the Minister will, at the very least, remove from Schedule 7 those public bodies with a clear remit to provide independent oversight of the discharge of public functions.
Also, along with other noble Lords, I ask the Minister to think again and amend the Bill to ensure that no organisation created by legislation will be abolished by statutory instrument. I refer to just one example of the bodies listed in Schedule 1, which, under Clause 1, may face abolition by a Minister without using the legislative process. I refer to the Security Industry Authority, which regulates the security industry. I raise this example because it illustrates the lack of care for the protection of individual citizens which, I fear, is reflected in some elements of the Bill.
Having been the first chairman of that body, I am aware that the industry includes many honourable and effective organisations. However, it also attracts villains who set themselves up as security guards working from home, use only a mobile telephone number and cannot readily be identified. These people are hired by unsuspecting landlords to prevent parking on private land, for example. Without regulation, these security officers fail to provide proper notices warning the public of the controlled parking; they clamp vehicles and, as the price of releasing them, charge exorbitant fines. I have had reports and letters sent directly to me about these guards terrorising members of the public into paying utterly unacceptable and exorbitant fines.
This is just one example of why I feel that some of the Bill has been put together in far too great haste. Have the Government undertaken a full impact assessment of abolishing this regulatory body and indeed all the others referred to in Schedule 7? Can the Minister assure the House that this body, established by legislation, will not be abolished under the Bill? The consequences are far too serious for such a decision to be made by ministerial order.
Secondly, I draw the attention of the House to the fact that the bodies listed in Schedule 7, as the noble Baroness, Lady Andrews, pointed out, are not the only public bodies up for abolition or transformation. I know of at least two others and fear that there are probably many more. I will refer to just one because of lack of time. I understand that an announcement was made in July that the General Social Care Council will be abolished and that some of its functions will be taken over by the Health Professions Council. There was no warning of this, even to the chair of the Social Work Reform Board. There has been no consultation. The abolition will be dealt with in another Bill, not in the Public Bodies Bill. I should be grateful if the Minister could explain why some bodies are included in this framework while others are dealt with by other means.
In his opening remarks, the Minister said that the Government are not including bodies such as Ofcom and Ofwat in this exercise on the grounds that the Government do not wish to interfere with important regulatory functions. Therefore, how does the Minister justify abolishing the regulatory body for social work? We understood that the Government were concerned to raise the standards of social work—and, most particularly, of child protection—in this country. Is the abolition of the regulatory body the right way to achieve this? Surely not. I give this as an example of the apparently destructive actions being taken by the Government in some cases.
I reiterate that I will support a number of elements of the Bill as long as the procedural issues can be resolved. My worry is that this example is indicative of the way in which other public bodies will be dealt with under the Bill unless we manage to resolve the problem. I hope that the Minister will be able to reassure the House today.
Baroness Blackstone
My Lords, I will make general and specific comments on this bad Bill. The sweeping powers contained in what amounts to a Henry VIII clause should raise profound concerns of general principle for your Lordships, not least in terms of increasing further the authority of the Executive over the legislature. My specific comments relate to Clause 11 of the Bill, and to Schedule 7—the list of bodies subject to the power to add to other schedules.
I declare an interest as chairman of the British Library, because the British Library Board is included in the schedule. The considerable disquiet felt by the British Library is clearly shared by many other bodies listed in Schedule 7. As others have said, the Bill grants extensive powers to Ministers to abolish, merge, modify the constitutional arrangements of, modify the funding arrangements of, modify or transfer the functions of, or authorise delegation in respect of, many public bodies listed in its schedules. The Government have simply not made a case for why the vast range of statutory bodies affected by the Bill should be abolished, merged or modified by force only of ministerial order, rather than by ordinary legislative amendment and debate in Parliament.
Other noble Lords have already referred to the report of the House of Lords Constitution Committee. The committee noted that most of the public bodies to which the Bill applies were created by statute or royal charter. The committee stated that the Bill vastly extends Ministers’ powers to amend primary legislation by order, and that such Henry VIII powers need to be clearly limited, exercisable only for specific purposes and subject to proper parliamentary oversight. The committee went on:
“Departures from constitutional principle should be contemplated only where a full and clear explanation and justification is provided”.
Furthermore, many of the bodies for which the Bill was designed have been the,
“product of extensive parliamentary debate and deliberation”,
and, as such, the committee could not see,
“why such parliamentary debate and deliberation should be denied to proposals now to abolish or to redesign such bodies”—
an issue raised by the noble Baroness, Lady Meacher.
The Institute for Government has also raised serious concerns of principle about what it calls the crucial catch-all provision included in Clause 11, where any body named in the comprehensive list of organisations set out in Schedule 7 can, by ministerial order, be moved into a schedule to be abolished, merged or modified. Like the noble and learned Lord, Lord Woolf, the institute notes that the schedule includes bodies with quite delicate public functions which require them to act, and be seen to act, independently of government with self-confidence. To quote the institute:
“The worrying feature of this clause is how it is likely to affect the dynamic of the relationship between the government and those bodies which have been established to be at some distance from Ministers, because they need to be able to perform their functions in a way that puts them beyond suspicion of Ministerial interference ... The danger is that these bodies will become more circumspect in exercising their duties”,
and that is a very serious danger. The House will, I think, readily recognise that the granting of such wide-ranging powers carries inherent and profound dangers. Perhaps the Minister will now take this opportunity to provide the House with a clear and convincing justification for such sweeping powers. I do not believe that he gave that justification in his opening speech.
I turn to my specific comments. If the Bill were enacted, it would, in extremis, grant Ministers the powers, at the stroke of a pen and without parliamentary scrutiny, to abolish the British Library and other bodies listed in Schedule 7. Noble Lords who are familiar with the British Library—and I am sure that many are—will know that it was established as the national library for the United Kingdom by Act of Parliament in 1972 following the White Paper of 1971 and in response to the recommendations of the 1969 report of the National Libraries Committee, and that it brought together a number of national institutions, including perhaps most notably the library of the British Museum, which itself was founded by Act of Parliament in June 1753. To grant Ministers powers potentially to abolish by order an institution created by statute with such a very long and illustrious history would, ipso facto, damage the sovereignty of Parliament. Although I am sure that this is not the current intention behind the powers proposed in this Bill—and I am sure that the Minister will tell us that in his closing speech—it cannot be sensible to open up such a possibility.
I now turn to the criteria for the inclusion of the bodies in Schedule 7, and I urge the Minister to take this opportunity to set out, in the interests of transparency, what those criteria are. They are completely opaque. Again, I declare my interest as the chairman of the British Library Board. Noble Lords will be aware that in the statement of the Minister for the Cabinet Office of 14 October, the British Library was identified as a public body to be retained on grounds of,
“performing a technical function which should remain independent from Government”.
It is, I believe, of some interest that the national museums and galleries were similarly designated by the Minister for the Cabinet Office in that statement, yet the British Library is included in Schedule 7 to the Bill on grounds not stated, whereas the museums and galleries are not.
The British Library is one of the UK’s national collections and in most important respects it stands alongside the other national collections. This is reflected in statutory terms in the Museums and Galleries Act 1992 and, in its drafting, the British Library Act reflects elements of the British Museum Act as a result of the incorporation into the British Library of the unique riches of the collection of the BM library. Taken together, that serves further to underline the inconsistency in the application of criteria for inclusion in Schedule 7. I would also be grateful if the Minister could explain why the Arts and Humanities Research Council is included in Schedule 7 but the other research councils are not. Again, it seems inconsistent.
To conclude, I urge the Government to reconsider Clause 11 of, and Schedule 7 to, the Bill. There are very powerful arguments against the wisdom and parliamentary propriety of granting such sweeping powers.
Lord Borrie
My Lords, last Thursday, all sides of this House very much welcomed the Government’s statement that they were referring to Ofcom the acquisition by News Corp of the remaining shares in BSkyB which it did not own. In the course of my remarks, I ventured to raise the issue in regard to the Bill. I said, “What if Ofcom, which is listed in Schedule 5 and in Schedule 7, no longer exists?”. I was very glad that the noble Baroness, Lady Rawlings, who is in her place today, said that I need not worry on that score. She said:
“Ofcom, with all its responsibilities, will stay”.—[Official Report, 4/11/10; col. 1811.]
What did she mean by “stay”? If she meant that it will stay until 31 December, which is the date by which it has been asked to complete its present inquiry, that is not a very substantial promise. If she meant that it will stay indefinitely, the question arises, why is it in Schedule 5 and in Schedule 7?
There is uncertainty upon uncertainty. I use that as an example and it is applicable to so many different bodies. This Bill is not simply causing anxiety, although I need not develop that point because it has been mentioned several times. As the Constitution Select Committee of this House has said, in effect this is an unconstitutional Bill; it is very rare for us to see such a critical and condemnatory statement as has been made by the Select Committee relating to this Bill.
Questioning the work, questioning the costs and questioning the purpose of many public bodies is perfectly legitimate and justifiable and a very proper objective of any Government. Quangos may have outlived their purpose and outlived their usefulness but an attempt to condemn to oblivion or to change, in an enabling Bill, a whole host of bodies across the whole spectrum of government, without consultation, seems wildly unjustified. Involving so many bodies, the Bill leaves huge uncertainty and, as my noble friend Lady Andrews pointed out, uncertainty among all those bodies listed on the five pages of Schedule 7.
One set of bodies mentioned is the Office of Fair Trading and the Competition Commission, listed under Schedule 5. The Government have said, ex cathedra, that these two bodies are to be merged. The uncertainty here is not about whether there will be any change but about what it will mean to merge such bodies in terms of the investigatory functions. Are those functions of the Office of Fair Trading to be performed by the same people as are to perform the quasi-judicial functions of the Competition Commission, or is this new body arising from the merger to be newly constituted? The Government have said that the Office of Fair Trading is to lose its consumer protection role, which has so often helped to inform the office in its investigatory competition work. In any case, where is the competition protection work to go to? It cannot go to the National Consumer Council because it, under the name of Consumer Focus, is being abolished. Apparently, the Office of Fair Trading’s consumer role is to go to the trading standards offices of local authorities and the citizens advice bureaux—both excellent bodies which do excellent work.
None the less, this is an important shift in the world of consumer protection to local and charitable organisations. The chief executive of the Trading Standards Institute, a splendid man called Mr Ron Gainsford, described this as a,
“huge leap of faith. I just hope it isn't a leap in the dark”.
There must be a question whether a local trading standards office or citizens advice bureau will have the resources, the expertise, the training and all the rest of it to deal with international companies such as big banks. The organisation Which? has pointed out a tremendous weakness if everything is transferred locally and there is nothing left for consumer protection work nationally.
Lord St John of Fawsley
I agree with much of what the noble Lord, Lord Borrie, said. I think that these bodies should be examined in particular. However, where did the precedent come from? I point out to the noble Lord what happened to the Royal Fine Art Commission, of which I was chairman for 15 years, and which cost £750,000 to the taxpayer, as opposed to the £15 million which CABE now costs the taxpayer. How were we abolished? Not by constitutional discussion in this House; we were abolished by fax by the Minister concerned. That was a disgrace and we do not want that to happen again.
Lord Borrie
I do not know the subject to which the noble Lord is referring, but if what he says is the case, that was a disgrace; this Bill is a disgrace. It is doing it in a different way, but it is a disgrace and unconstitutional.
When the noble Lord, Lord St John, intervened, I was just about to refer to the excellent speech by the noble and learned Lord, Lord Woolf, who has just returned to his place. Those of us who were here when he spoke will know that he cited a large number of bodies connected with the judiciary listed in Schedule 7, and said that if the Lord Chief Justice of the day could be present in this House, as used to be the case before the Supreme Court was set up, no doubt he would have been very critical.
One of the bodies to which the noble and learned Lord did not refer was the Administrative Justice and Tribunals Council. I think that the reason why that was not referred to is that there are no ifs or buts about that council: it is to be abolished. The other bodies to which he referred are in the pending tray, the uncertain tray, of Schedule 7. I hope that he would agree that the Administrative Justice and Tribunals Council—its forerunner was known as the Council on Tribunals—has always done an excellent job in surveying the field of administrative tribunals and now has the rather larger job of the whole area of administrative justice. Without a word of explanation, the Government put it in the schedule for entire abolition. Can the Minister give us an explanation?
Lord Mayhew of Twysden
My Lords, it is a great pleasure to follow my friend and fellow Middle Templar. Perhaps I may begin by declaring what may be thought to be an interest in that I am a member of your Lordships' Delegated Powers and Regulatory Reform Committee, which will be considering this Bill tomorrow.
Since this is a rather torrid debate for my noble friend the Minister, I should like to begin by offering him not simply a word of support for himself but a very warm measure of support for the Government's objectives in this Bill. Like other noble Lords today, I distinguish the objectives from the means. I refer, as others have, to what was said on 14 October by the Minister for the Cabinet Office and it is worth saying again:
“The landscape for public bodies needs radical reform to increase transparency and accountability, to cut out duplication of activity, and to discontinue activities which are simply no longer needed”.
I find this entirely commendable, and it is probably rather long overdue in some instances. It finds expression in Clause 8, which says that a Minister in,
“considering whether to make an order under sections 1 to 6”—
which are the effective, some might say the killer, sections—
“must have regard to the … objectives [of] … achieving increased efficiency, effectiveness and economy in the exercise of public functions [and of] securing appropriate accountability to Ministers in the exercise of such functions”.
There is an additional statement of policy which I do not think has been referred to today, again in a Written Statement, which says:
“All remaining public bodies will be subject to a rigorous triennial review to ensure that the previous pattern of public bodies often outliving the purpose for which they were established is”—Official Report, Commons, 14/10/10; col. 27WS]—
brought to an end. I am sure that that would be salutary, too, and in these straitened days can hardly, I should have thought, be reasonably opposed.
The Government's objectives cause me no problem at all: I welcome them. What upsets me, as with other noble Lords today, are the means by which they are going about achieving them. We have heard today some profoundly important speeches—important and troubling speeches. All Governments are attracted by the lure—some are seduced by it—of legislating more summarily than the procedures of primary legislation would permit. All Governments are attracted by that for rather obvious reasons.
What are these allures? It is worth our having them in mind, although of course they will be familiar to so many of us. However desirable a debate on the policy or effect of the order may be thought to be, debate will be limited in either House to one and a half hours save in the most exceptional circumstances. I shall come back in a moment to what my noble friend Lord Freeman said about that, something with which I warmly agree. But that is the rule at present. The order will never be amended because there is no power to do so, and in practice by convention it will hardly ever be rejected. I believe—I have not checked it myself—that this has happened only twice in your Lordships' House in the past 45 years.
All Governments find these allures seductive, but I am aware of none who have succumbed on the industrial scale of the Bill before us tonight. Of course there are myriad occasions when to make use of subordinate legislation is entirely proper, wholly reasonable and for the public good—where, for instance, the order-making power is tightly circumscribed by the statute from which it derives; the Minister’s discretion is closely defined and not left, as in this Bill, entirely at large; and the use of parliamentary time in primary legislation would be quite unnecessary. Those are the sorts of occasions where the use of subordinate legislation is entirely sensible. But that is not this case.
On the contrary, this case has attracted the most trenchant condemnation. We have heard it repeated several times today, so I shall spare your Lordships, and the Government in particular, the pain of hearing it again. It is the most extraordinary thing that a Bill should be brought forward with that blast, as it were, ringing in their ears. I should think it is unprecedented, but it is not entirely surprising. Most of the public bodies to which the Bill relates, some 340, have derived their existence and their functions from parliamentary authority. It is an absolute certainty that in the vast majority of them the process by which that authority was secured included lengthy debate preceded by substantial consultation and probably involved quite substantial amendments time and again accepted by the Government. This is the cut and thrust, the to and fro, of parliamentary democracy, and it leads to acceptable and practical legislation.
These debates could now be removed by order in what the Government will consider a proper case without the benefit of anything like that. They are all absent from any requirement upon the Minister seeking to make an order in respect of any public body listed in Schedules 1 to 6. When one considers the character and calibre of many of those bodies, this is wrong in principle. I never thought to see power taken that some of the functions of the DPP for England and Wales could be transferred by order to a Minister, subject only to a short debate on an affirmative resolution.
If the Bill is to prosper, my noble friends should think hard about, as a minimum, introducing a requirement for a form of super-affirmative resolution. I know that the Minister referred encouragingly to this when he introduced the Bill. This was illustrated in the Legislative and Regulatory Reform Act 2006. It would require Ministers first to lay an order and then to take account of the consultation that follows it and committee reports received about it and only thereafter could they bring the order back for approval. That is really important. It is also extremely important that my noble friends should consider very carefully what my noble friend Lord Freeman said about enlarging the standard period of an hour and a half. Why should there be such a restriction? I agree entirely with what he said.
In addition, the Bill needs to specify the functions that might be abolished or amended and who the desired transferees of functions might be. At present, ministerial discretion is quite unconfined. These improvements seem to be a minimum.
Lastly, I come to the worst bit of all. By Clause 11, which we now know so well, Ministers are permitted by order to bring any of the 150 bodies listed in Schedule 7 into the ambit of the preceding six schedules. We heard the sort of judicial bodies that are caught by that in a compelling speech by the noble and learned Lord, Lord Woolf, which was endorsed entirely by the noble and learned Baroness, Lady Scotland. The Explanatory Notes rather engagingly confess at paragraph 87 that at the time of going to press there was,
“no policy intention to make changes to their status or functions”.
In other words, Clause 11 is included in the Bill on a “just in case” basis. That is no basis for taking Henry VIII powers or, indeed, many other powers. The clause is inappropriate for subordinate legislation, and it should be removed from the Bill.
Baroness Warwick of Undercliffe
My Lords, I must declare an interest as chair of the Human Tissue Authority, one of the bodies affected by this Bill. As part of my intervention, I hope to be able to elicit from the Minister some answers to questions about the way in which the proposed legislation will affect the authority and its work. I also have some general concerns about the Bill, which reflect many of the concerns expressed by Members across the House during this debate, and which I hope the Minister will be willing to address when he replies.
The desire to improve public services and to deliver them ever more efficiently and effectively is common to all Governments. Earlier this year, my own party, when it was the Government, set out its own plans for streamlining public administration, which included reducing the number of arm’s-length bodies. So there is no real difference, it seems to me, in the objectives of the current and the previous Government in this field. It is clearly the case that such bodies should be regularly reviewed, their functions and continuing relevance questioned, and their effectiveness assessed. But the way in which this is done can have far-reaching effects.
The Government have determined that the functions of the Human Tissue Authority and those of the Human Fertilisation and Embryology Authority will come under the aegis of the Care Quality Commission and, possibly, other bodies. We have begun already working to that end. We have moved with speed to initiate discussions with the other bodies involved and to work with the Department of Health to ensure that the ground is properly prepared for any such transfer of functions.
It will scarcely surprise noble Lords that when I read the sixth report of the Select Committee on the Constitution, the venerable Select Committee of your Lordships’ House charged with examining all public Bills, I became alarmed. The Select Committee raised serious concerns about the way in which the Government were proceeding on this Bill. It stated—other noble Lords have referred to this—that the Government are,
“pushing at the boundaries of the constitutional principle that only Parliament may amend or repeal primary legislation”.
It sets two tests against which this extension of powers should be judged and clearly states:
“In our view, the Public Bodies Bill [HL] fails both tests”.
This is not a good start to the winning of public confidence.
The Human Tissue Authority was set up because of a crisis in public confidence. The Human Tissue Act was the response to the Alder Hey and Bristol hospital scandals where, noble Lords will recall, there was unauthorised retention of babies’ organs and tissue. It was the response to overwhelming grief, as well as outrage from parents and parent groups. The Act was not a knee-jerk reaction. It took many months of parliamentary time to get right, and it introduced clear rules which continue even now to allay public concerns about tissue retention.
While huge progress has been made since the HTA’s regulations came into force, and the sectors we regulate have now, on the whole, a good record of meeting safe and ethical standards, it is clear, when I talk to families who were involved, that the Human Tissue Act, and the existence of the authority, have been a guarantee that those concerns have not been ignored. Such issues are, and remain, deeply sensitive. We have seen such fears raised again in last weekend’s media. If the authority is to be changed or merged, it must be done in a way that does not destroy the public confidence that has been so hard-won. I hope that the Minister will reassure the House that the primary legislation which generated that confidence will not be undermined by the use of what your Lordships’ Select Committee clearly regards as a parliamentary manoeuvre.
I turn to some specific questions for the Minister about the impact of these changes on bodies such as the HTA. The HTA has built up considerable professional expertise in relation to the sectors it regulates. This has helped to build the confidence of the public and professionals. Recent data show that this confidence continues to increase. This is largely due to the clear focus of the Human Tissue Authority in the highly specialised area of tissues and organs. Therefore, my first question to the Minister is this: how will the Government ensure that the clear focus on this “extraordinarily sensitive and complex” area—the Government's own words—will be maintained in any transfer of responsibilities? My understanding is that the Government do not intend to use the Bill to change the substance of the regulatory framework within which the HTA operates, nor that of the Human Fertilisation and Embryology Authority. Indeed, I believe that this would not be within the scope of the Bill; it would be good to have the Minister's confirmation of that. But if that is the case, the body to which functions are to be transferred—the Care Quality Commission—would have to operate under its own current legislation, as well as that of the HTA and the HFEA. How will the Government ensure that this does not compound the likely loss of focus on the safe and ethical use of human tissue and organs? Of course, the Government may intend to legislate to harmonise the legislative frameworks under which the CQC will operate, but if there is to be primary legislation in this extraordinarily sensitive area, when will it be brought forward and what effect will this have on the timetable for changes?
On organ donation, last year the HTA approved well over 1,000 living organ donations and I am delighted to say that the numbers continue to increase. However, the ALB review acknowledges that this responsibility would not sit well with other bodies. How can the authority be assured that its respected role in relation to organ transplants will be maintained? The HTA has to make sensitive, ethical decisions about organ donation. Its lay and professional authority members bring great wisdom to these questions; how will that wisdom be maintained and retained?
Perhaps these and other questions that I have can be resolved in discussions with the Department of Health and with the other bodies. However, many of them seem to be matters that ought to be of concern to Parliament, as they were when the legislation was introduced. The Government are quite clear that they want the work of the HTA to continue; the authority is committed to ensuring that public confidence will be maintained. It would be a betrayal of the work that produced the human tissue legislation and of the thousands of families that the legislation has served well if the Government took any action that undermined confidence that human tissues and organs are used safely, ethically and always with consent.
Lord Lester of Herne Hill
My Lords, I am grateful to Ministers for having met us on several occasions to listen to our concerns and to indicate their intention of improving the Bill by introducing essential safeguards and proper parliamentary procedures.
Everyone agrees with the objectives declared in Clause 8 of,
“achieving increased efficiency, effectiveness and economy in the exercise of public functions”,
whether those functions are performed by public bodies or government departments. Everyone agrees on the need for,
“securing appropriate accountability to Ministers”,
by the various public bodies within the Bill’s reach. What causes concern about the Bill is not its policy but, as the noble and learned Lords, Lord Woolf and Lord Mayhew of Twysden, and the noble Lord, Lord Deben, have said, the means chosen to give effect to the Bill’s legitimate aims. Legitimate ends do not justify unconstitutional or disproportionate means, especially where they erode Ministers’ accountability to Parliament and put at risk aspects of the rule of law and fundamental rights and freedoms, whereas the Bill as it stands—I emphasise “as it stands”—contains inadequate safeguards against the misuse of Ministers’ delegated powers.
The Constitution Committee has explained some of the main objections to the Bill as it stands and I agree with the analysis and conclusions of that powerful committee. The modern test of Henry VIII clauses, reproduced in the Constitution Committee’s report at paragraph 5, is whether Ministers should have the power to change the statute book for the specific purposes provided for in the Bill and, if so, whether there are adequate procedural safeguards. For the reasons given by the Constitution Committee, the Bill as it stands fails both tests—again I stress “as it stands”.
The safeguards in Clause 8(2) operate “if the Minister considers” the matters in Clause 8(2)(a) and (b). However, the Minister is not required to act with a sense of proportion and the exercise of discretion under Clause 8 as it stands would not be readily susceptible to effective judicial review. Whenever I see the phrase, “if the Minister considers”, I am reminded of Lord Atkin’s comment about the language of Humpty Dumpty.
The useful Library notes on the Bill record the reaction of the Institute for Government, now led by the noble Lord, Lord Adonis, as giving a cautious welcome to the Bill but emphasising, in the words of Sir Ian Magee, that the Government have to,
“develop more robust criteria going forward with a better framework, so that each quango’s role, purpose, funding and accountability are clear to all who come in contact with them”.
He continues by saying that,
“there needs to be a robust business case behind each of the decisions to ensure that money won’t be wasted through the merging process, and to ensure key skills are not lost, if the function is to carry on elsewhere”.
That is plain commonsense, but the Bill’s design and the process envisaged for its implementation do not yet ensure that this will be put into practice.
In his Statement in the Commons, the right honourable Francis Maude, the Minister in charge of the Bill, explained that:
“A body should only exist as a quango if it meets one of three tests, to which my review has subjected all existing bodies. These tests are:
Does it perform a technical function?
Do its activities require political impartiality?
Does it need to act independently to establish facts?”.
He concluded:
“This is a work in progress”.—[Official Report, Commons, 14/10/10; col. 27WS.]
Those tests are not included in the Bill, are not mentioned in the Explanatory Notes and there has been no taxonomy of the bodies affected by the Bill—that is, there has been no proper analysis or classification of their similarities and differences. Instead, the Bill seeks sweepingly broad executive powers and the inclusion of a long list of all the quangos which might become subject to ministerial interference, control or abolition. Schedule 7 lumps together bodies both which do and do not satisfy the Government’s three tests.
Yet it is a principle of the common law that like cases should be treated alike and unlike cases should be treated differently, but that basic constitutional principle has not been followed in relation to Schedule 7 or the Bill as a whole. For example, the Judicial Appointments Commission, the Children’s Commissioner, the Legal Services Commission, Her Majesty’s Inspector of Prisons, the Independent Police Complaints Commission and the Equality and Human Rights Commission are included in the schedule, even though all of them perform technical functions, their activities require political impartiality and they need to act independently to establish facts.
It is interesting to recall that those not in the schedule—thank heaven—include Her Majesty’s courts and the Parliamentary Commissioner for Administration. Presumably someone in the Cabinet Office recognised that it would be even more outrageous to include those but, as a matter of principle, one wonders why the Parliamentary Ombudsman is not there whereas the Local Government Ombudsman is. As many have said already, their inclusion in Schedule 7 would weaken their independence and the willingness of qualified people of independence and integrity to serve on them as they would be vulnerable to ministerial interference if they acted in a way causing displeasure to Ministers or civil servants. For the reasons given by the noble and learned Lord, Lord Woolf, the Bill as it stands weakens the rule of law and the independence, indirectly, of the judiciary.
The Equality and Human Rights Commission has been singled out for different forms of ministerial interference in a big way. The power to modify constitutional arrangements under Clause 3, to modify funding arrangements under Clause 4 and to modify or transfer functions under Clause 5 may all be applied to that commission. I have a particular interest in those provisions because I helped Roy Jenkins to create equality agencies in the 1970s and worked closely with the previous Government to include in the Equality Act 2006 safeguards to prevent unnecessary ministerial interference with the commission’s independence. The Equality Act 2010 gave the new commission a more extensive remit and greater enforcement powers than its predecessors. In order to be able to challenge the actions of Government, as well as those of the private sector, that commission needs to be independent and the UN Paris Principles require that. The 2006 Act puts the Minister under an obligation to have regard to the desirability of ensuring that it is under as few constraints as reasonably possible in determining its activities, timetables and priorities.
The Joint Committee on Human Rights, on which I serve, has commented on this and I will not detain your Lordships by repeating what it has said about it. However, there is a widespread view that the commission has been poorly led and managed and that Ministers and civil servants in the previous Government are responsible for having permitted that. What are needed are not legislative constraints included in subordinate legislation but the appointment of a well qualified chief executive, new commissioners and at last some administrative controls now lacking to ensure value for money and the effective discharge of the commission’s important functions. That can be done without amending legislation. I hope that it will be done and be done soon.
Instead, what the Bill does is to include powers to enable Ministers, if they wished, to hobble the commission and to jeopardise its independence. That would be a retrograde step—I am sure it will be disclaimed—but it would if done be deplored here and abroad. The Minister has stated in his view that the provisions in the Bill are compatible with the European Convention on Human Rights and the Explanatory Notes state:
“The Government does not consider that the Bill directly engages any convention rights”.
That is literally true. However, the Bill does undoubtedly indirectly engage convention rights, as I am sure the Minister will accept. The public bodies within the Bill’s reach include many such as the EHRC whose functions secure and promote the UK’s obligations under the convention and the other international human rights covenants and conventions by which the UK is bound. Those bodies are listed quite indiscriminately in Schedule 7 as bodies and offices which may be transferred to other schedules, including some performing judicial or quasi-judicial functions and upholding the rule of law in ways that are, and can be seen to be, independent and impartial. The Joint Committee on Human Rights has asked the Government for a full human rights memorandum and I have raised this with the Government. We need it by 23 November when we will meet, and I am sure, give some kind of report.
Finally, it is essential for the necessary safeguards to be included in the Bill at the earliest opportunity and avoiding any unnecessary delay. That should enable the Bill to complete its passage through this House with all deliberate speed. I would favour a reference to a Select Committee if, and only if, its terms of reference were strictly confined to process and safeguards, and strictly time-limited to report not later than, as my noble friend has indicated in his Motion, 28 February 2011. I say not later than and I would hope earlier than that, and only if the Minister were unable at the conclusion of the debate to give the necessary assurances as to how he would achieve the same objective at the first meeting of the Committee of the Whole House by tabling a series of amendments that would do that job if necessary and do it more quickly. We should try to avoid what is necessarily happening in this debate, which is that special interest groups and special concerns would be raised one by one in Committee endlessly, day after day, because the Bill itself did not contain the necessary safeguards or machinery to be able to refer this forward.
When I saw Ministers, I reminded myself and therefore mentioned to them two things that I learnt from Roy Jenkins—that very wise Minister—when I worked with him. The first was when I asked him, “What advice can you give me about how to do my job?”. He said, “Anthony, I would like you to argue to solutions and not to conclusions”. I believe that is what we should be doing today—we should not be arguing to conclusions but to solutions. The second thing he said was, “Always dig a trench in a defensible position”. The worst thing you can do is to dig a trench in an indefensible position, be flushed out, dig another one and then be on the run. I believe it is essential today that this House digs a defensible trench which the Government and the House can hold, rather than going through a series of further debates like this quite unnecessarily.
Lord Kennedy of Southwark
My Lords, I thank the noble Lord, Lord Taylor of Holbeach, for the introduction of this Bill. I also declare to the House that I am a member of a public body. I am a member of the Electoral Commission but that particular body does not feature anywhere in this Bill.
I must add that I am not very happy about the Bill. Noble Lords will be aware that I am a relatively new Member of this House. However, that does not stop me having considerable concerns as to how the Bill is constructed; how it seeks to make major changes to bodies or abolish bodies that were set up following detailed individual pieces of legislation passed by Parliament and avoid the rigours of parliamentary scrutiny in doing so; and how it proposes to hand considerable power to Ministers to abolish or make wide-ranging changes to bodies through the statutory instruments process.
This is not good government. This is the Conservative Government seeking to force through a skeleton Bill that gives Ministers wide-ranging powers: powers to abolish; powers to merge; powers to modify constitutional arrangements; powers to modify funding arrangements; powers to modify or transfer functions and powers to delegate. However, in the case of Schedule 7 we have no idea what the Government are planning because they are not telling us—all they are getting in Schedule 7 is power. All we have got in Schedule 7 is the heading: “Bodies and offices subject to power to add to other schedules”. I would suggest a better heading to Schedule 7 would be: “Power to possibly do some of the above, we are just not saying yet and will only tell you when this Bill is law”.
That is not good government. That is rushed government. That is ill-thought-out government. That is Government without the confidence to come to the Floor of this House and argue the case properly. What is so depressing is that this is just the sort of Bill that cries out for pre-legislative scrutiny. I will be interested in hearing the Minister’s response as to why that has not happened. It certainly cannot be because of pressure of time in this House. There has been a marked lack of legislation in this House since the general election. I have no problem with the Government saying we need to look at public bodies. We need to ensure we are getting value for money. We need to make sure what they are doing is necessary. We need to change their arrangements, refocus them or if the function is no longer required, abolish them. What is wrong here is the way it is being done.
One of the things that strikes you when come into the House for the first time is the level of expertise and experience on all Benches and all sides of this House. There are people who have served in a whole variety of fields. I sure if the Government had looked, they would have found an abundance of talent they could have drawn on to form a proper consultation, a proper pre-legislative scrutiny, but instead we get this.
I think we have lots of questions, lots of worries and very few answers. What is Schedule 7 about? I am very unhappy with the explanation I have had so far from the Minister and I fear that my noble friend Lady Royall might be right and the coalition want to have the sword of Damocles hanging over these bodies. If not, why cannot the coalition as a bare minimum get rid of Schedule 7 and state what it is considering doing with these bodies? If as the noble Lord said, in many cases there is no intention of doing anything to these bodies, then remove them from the list completely. I hope the Minister can respond to that point as well.
Where the Government are not saying what they propose do with specific bodies but want such wide-ranging powers you begin to wonder what is going on and what the agenda is. For example, the Low Pay Commission was established in 1998 as an independent body to advise the Government about the minimum wage following the passing of the National Minimum Wage Act 1998. Why is that on Schedule 7? I hope this is not some attempt by stealth to stop the minimum wage increasing, by abolishing, or changing the remit or having the function transferred into the hands of Ministers. The minimum wage has been a great success and has helped people go out and earn a living and earn a wage, and be confident that there is a minimum rate of pay and if their employer seeks to pay below that action can and will be taken. The Government need to be clear what they are proposing to do.
Another body in Schedule 7 is the Gangmasters Licensing Authority. It was established in 2005 and regulates those who supply labour in areas such as agriculture and food processing. I note the noble Lord is titled “Lord Taylor of Holbeach”. If that is after Holbeach in Lincolnshire, I am sure he will be fully aware of gangmasters in Lincolnshire. If there was a proposal not to cut back on these bodies and maybe to merge these two bodies, that should appear in Schedule 2, not in Schedule 7. We could then have a sensible debate about the merits of that proposal.
Not knowing the intention of the Government while they ask the House to agree these proposals is the problem. I hope that the Minister will ensure that, as we consider the Bill, all his colleagues come to the Dispatch Box to explain the intentions of their departments. The House deserves no less from the Government.
Under Schedule 1, the only body that I wish to mention is the Security Industry Authority, which came into being following the passing of the Private Security Industry Act 2001. The Security Industry Authority licenses the private security industry, which covers security guarding, door supervision, close protection and cash in transit among other things. The authority has raised standards and driven out criminality. What a change there has been in clubs, where all the door staff are displaying their credentials. You can be assured that they are fit and proper persons. Who wants to go back to the time before the industry was regulated? I hope that the Minister can explain who will take over those functions and responsibilities and that he can assure the House that the industry will continue to be properly regulated. Can he further explain what will happen if the devolved Administrations do not agree with the proposal, as my noble friend Lord Foulkes asked earlier? Having different systems in place in different parts of the UK, especially in respect of the security industry, seems to me a recipe for disaster.
In conclusion, I look forward to the contributions of other noble Lords, as there is great concern not only on these Benches but on other Benches in this House. The Minister and his colleagues have a considerable task ahead of them.
Baroness Whitaker
My Lords, I was the departmental minder—otherwise known as ministerial adviser—for two quangos, the secretary to a third and adviser on the creation of a fourth and on the disbanding of a fifth. During that time, it certainly occurred to me that all non-departmental public bodies should be required to redefine themselves every so often, so I have some sympathy with the Government’s feelings.
The Government put forward, in Clause 8, two sets of principles that should govern changes to such public bodies: efficiency, effectiveness and economy—that familiar trio—and accountability, which is certainly no less important. En passant, the Minister also mentioned independence, which is not in the Bill. Independence should be one of the chief grounds for a function to be non-departmental, as the noble Baroness, Lady Meacher, said. Many public interests must not be subject to the party-political ebb and flow or to the opinion of the Minister of the day nor should they be captured by well funded lobbies, as was touched on by my noble friend Lady Blackstone and by the noble Lord, Lord Lester. Why have the Government not included independence in the criteria? Perhaps it goes without saying that another rationale for an arm’s-length body is expertise, which is usually included in the rules for appointment to such bodies. Where do the Government cite expertise in their criteria?
I will focus on some bodies that contribute significantly to the citizen’s quality of life and well-being. They inhabit a place where the market, as it now works, does not deliver, so there is a need for a public interest framework. I mean primarily: the Design Council, which has already been redefined outside the Bill; the Commission for Architecture and the Built Environment; and the Homes and Communities Agency. At present, the market does not deliver good design in those fields, not because good design is not effective but because design effectiveness produces externalities beyond the market arrangements of selling products. For example, a well designed housing estate produces benefits in enjoyment of amenity, health, educational attainment and reduction of crime—in short, well-being. Such benefits can be, and indeed have been, measured, but they require a longer-term and more extensive analysis than the market likes and they often accrue to a different budget from that of the purchaser. The Government’s impact analysis for the Bill takes no account of such things. It states that the Bill has no impact on human rights, no direct impact on rural communities, no direct impact on sustainable development and no impact on competition. Just look at the externalities of bad design, and there will be impacts on all of those.
The Government have put forward different ways of redefining the three organisations that I mentioned. The proposal for the Design Council was potentially an acceptable solution. Its new charitable status means that it will retain independence. It remains free to draw on expertise. Its tasks will remain the essential ones. The proposal should indeed be acceptable, as the changes follow on from wide consultation and carry out the recommendations of the Temple review. However, not all the recommendations have been implemented. For instance, the Design Council needs funding for the transition and, without that, the Government’s solution will miss the boat. Will the Minister assure the House that there will be full implementation of the Temple review? I know that the noble Lord, Lord Bichard, who is unfortunately unable to be here, shares my view both on that and on what I will say about the Commission for Architecture and the Built Environment.
The Commission for Architecture and the Built Environment is another body whose function is irreplaceable in our current context, in which planning authorities have very varied comprehension of good design, powerful developers build, sell and move on and citizens have little access to expert help. However, the Department for Culture, Media and Sport has decided not to renew CABE’s funding—a very small £4 million—after the current financial year. What will the cessation of CABE cost, including the externalities to which I referred? I might add that the abolition of the regional tier of government will exacerbate the crisis in housing development, so something like CABE will be all the more necessary. If we lose that function, even outside its present form, our citizens risk having dreary and insecure places in which to live, work and learn. They deserve better from those whom they voted for.
The Homes and Communities Agency will still exist, although it sits under a sword of Damocles in Schedule 7 to the Bill. The agency is to be redefined with the purpose of becoming a more strategic body. To do that properly, the agency will need to retain its core duties, including the obligation,
“to contribute to the achievement of sustainable development and good design”.
Will the Minister confirm that that will remain an objective? How will he ensure that a reduced HCA has the resource to enable good design for ordinary people’s homes, bearing in mind that such things must be done locally, in local circumstances?
Another inhabitant of Schedule 7 is the Architects Registration Board, which others have already mentioned. Surely the Government know that there must be a register. Registration is not only a European requirement but is necessary for the protection of customers. It would be wrong if anyone could set up and practise as an architect without credentials. I hope that the Government will tell us what their solution is.
Finally, the Bill does much more than provide implementation powers for redefining functions. As the Select Committee on the Constitution said, the Bill will take powers away from Parliament for participating in those redefinitions in an unprecedented way. Noble and learned Lords have spoken eloquently on the serious constitutional deficits of Clauses 11 and 12 and so I will not rehearse those arguments. However, I very much agree with what they have said. Where is the accountability here, let alone the effectiveness? I am with those who think that there is much more work to do on the Bill.
Lord Blackwell
My Lords, before speaking, I should draw attention to my interests as a non-executive board member of Ofcom and as a former board member of the Office of Fair Trading, although I will speak this evening only about the general principles of the Bill rather than about the specific proposals that will affect those organisations. I am also a member of the Delegated Powers and Regulatory Reform Committee, which will discuss the Bill tomorrow, but I stress that my remarks this evening are my personal views at this stage.
Having said that, let me say to the Minister that I am a strong supporter of the Bill, both on the substance of its proposals and on the form in which those have been produced, albeit with the appropriate safeguards that I hope that the Minister will be able to offer to the House in his concluding remarks. I am a strong supporter, because the reality is that there has been an unacceptable and unaffordable progressive rise in the costs and burdens of these kinds of bodies and their impact on the economy. It is easy to set up new bodies as a knee-jerk reaction to the latest concern and, once established, it is very difficult to get rid of them. What is more, the very worthy people who take up roles in these bodies with all the best intent will always find additional things that they can do whereby they can add—they believe—to the social welfare of their fellow citizens. On the margin, they are probably right but, when you add that up collectively, the collective burden becomes unaffordable. We are not talking only of the direct costs—the £38.4 billion that my noble friend mentioned—but of the indirect costs, because every individual sitting in a regulator creates work for four or five people in the private sector who respond to their e-mails, telephone calls and consultation. This becomes, with all the best intentions, a huge burden on the wealth-creating part of the economy.
These bodies should be properly subject to a zero-based challenge on a regular basis; they should be challenged to justify why they are there and whether what they are doing continues to be relevant. The reason we need this Bill is because we have not done that effectively. We have a backlog because no Government have had the courage to address the problem and I applaud this Government for picking up that challenge. Past attempts at deregulation have often failed because Governments have attempted to do them in small steps, step by step, and have run into the barriers of vested interests and long consultation periods, which means that they inevitably run into sand. So we need a bold approach if we are going to deal with this problem. The Government need to get on with it. In the process, some decisions may be imperfect, but I hope that we can minimise those during the passage of the Bill. Delay or indecision would be even more damaging.
I turn briefly to the form of the Bill, which I back in terms of implementing decisions in orders subject to a number of safeguards. When one thinks of the alternative, many man-years of Bill time went into creating these institutions. If we were to introduce primary legislation for every institution to make the amendments considered in this Bill, we would tie up Parliament for a decade. It is just not feasible. This is an exceptional circumstance and we need exceptional measures. Of course, Henry VIII powers should be used sparingly, and I am the first to be hawkish when looking at their abuse when they are inappropriate. However, this is an exceptional scale of reform, and delay and uncertainty are unacceptable, not only because of the cost but because, in many cases, the Government have announced what they intend to do. The longer we drag out that period of uncertainty for the institutions involved and those working for them, the harder we make it for them to continue to do an effective job.
I propose an additional principle that we might adopt when looking at the Henry VIII convention—a presumption in favour of deregulation. In other words, I suggest that we might look more tolerantly at the use of Henry VIII powers when they are used to remove or reduce regulations than when they are used to increase or add new functions or powers. This Bill is about reducing bodies, functions and regulations. On that basis, with appropriate debate in this House through its passage, I believe that delegated powers are acceptable as a practical way in which to achieve the ends. One caveat is that it is unclear from a strict reading of Clause 5, which talks about modifying functions—although I know that the intention of the Bill is deregulatory—whether that explicitly excludes the power to increase functions or create new functions. It would help me if the Minister could confirm that the Bill will be used only to reduce functions or transfer functions that already exist under primary legislation. If the Bill needs amending to clarify that, it might be helpful to do so.
The other point that has been raised repeatedly is on Schedule 7, which implements Clause 11. I share concerns that if economic regulators are in that schedule or bodies exercising judicial functions, uncertainty over those functions is unhelpful for those being regulated and exercising those judicial functions. My noble friend in his opening remarks implied that the powers under Schedule 7 would not be used in those circumstances, but it would help the House if he could confirm that the intent of the schedule would not be applied to the functions that have an economic regulatory function or a judicial function. Again, it might be helpful if the Bill was amended to clarify that.
I turn to the form of debate and the proposed amendment. Most of what is proposed with these bodies has already been set out by the Government in one place or another in the past few weeks. I cannot think of a better place in which to debate those various bodies and the proposals for them than the Floor of this House. If the Bill is passed as amended, individual affirmative Motions would then be brought back on every individual proposal, and I agree with those who have suggested that there may be opportunities to strengthen that affirmative process where it was called for. But nothing has been said in this debate to suggest that the passage of and debate on this Bill would be improved one jot by sending it off the Floor of this House to some small Select Committee. Let us spend more time on the Floor of the House, with the expertise of the House, rather than trying to create some delaying process.
To conclude, this is a bold Bill but I believe that it is an essential and necessary one. If we believe in the importance of removing the costs and bureaucracy that have grown up through excessive regulation, Parliament should not lose its resolve in giving the Government the powers that they need to get on with the job.
Baroness Hayter of Kentish Town
My Lords, reticent as I am to depart from the conclusions of the Constitution Select Committee of your Lordships’ House, which first considered this Bill akin to Henry VIII powers, I respectfully suggest that at least the dissolution of the monasteries brought much needed finance to the Crown’s coffers, whereas this Bill fails lamentably to achieve even that. In all other respects, I concur with their conclusions.
I have three points—first, on the lack of public and parliamentary scrutiny; secondly, on the potential move of functions from independent to political control, with the exclusion of any lay, consumer or user voice in decision-making; and, thirdly, to point to some examples of the dangers in the Bill, primarily in Schedule 7.
First, this Bill gives legislative powers to Ministers, including powers to merge or abolish bodies, without the rigours of parliamentary scrutiny let alone public debate. It gives Secretaries of State powers to change organisations simply by secondary legislation. Parliament plays a vital role in safeguarding rights and freedoms, and it is parliamentary scrutiny that allows Bills to be amended and gives interested parties, the public and the press time to consider the implications of proposed laws.
Many bodies in the Bill were the product of extensive parliamentary debate, as has been said, yet such parliamentary deliberation would be denied to proposals to abolish or to redesign such bodies. Clause 11 is a particularly pernicious clause, giving Ministers powers to add any of the 150 Schedule 7 bodies to the schedules permitting their abolition, merger or modification, simply by statutory instrument, as outlined by several noble Lords. The Bill effectively renders these bodies liable to abolition or restructuring at the behest of the Executive. The Bill fails to allow Parliament to consider the suitability of the Schedule 7 groups to be moved into a list of organisations which are then subject to such wide powers. As the Constitution Committee emphasised, many of those bodies, as has been said earlier, were created by primary legislation and therefore by the will of Parliament. It is entirely inappropriate for such bodies to be scrapped or fundamentally reformed at the imperative of a Minister without due regard to parliamentary process.
Secondly, the Government have made it clear that they expect Ministers to take responsibility for what is done in the name of us all, and not leave it to unelected bodies. Yet there are many decisions taken on behalf of civil society which should not rest in the hands of elected politicians but be taken with a degree of detachment and independence, balancing competing and, often, individual interests for the good of the whole. Just as we would all flinch at the idea of electing our judges, so we should flinch at measures which potentially interfere with decisions on the rule of law, ethical decisions and other legal, personal and intimate social matters.
The Government’s presumption is that any state activity should be undertaken by democratically accountable bodies, with a quango existing only if it meets one of the three tests already alluded to—including whether its activities require political impartiality. The Minister used “impartiality” in opening this debate. Yet the very purpose of most quangos is to take issues out of politics; thus, they do not come under direct ministerial control but operate at arm’s length from Ministers. That, surely, is their very strength.
As your Lordships know, many of the affected bodies have a mandate to provide not just impartial but independent oversight of vital areas of public sector activity. The wide-ranging powers in the Bill may lead to the abolition of organisations and offices which play a vital role in holding public bodies or central government to account, as suggested by the noble Baroness, Lady Meacher, and other speakers. The Bill makes no provision for safeguarding the continued independence of such bodies, as emphasised by my noble friend Lady Whitaker. There is a big difference between independence and impartiality: it is the independence to be able to say, without fear or favour, what decision you have reached.
Thirdly, therefore, I turn briefly to some examples of the bodies over which the axe will not fall but, perhaps even worse, potentially hover for years. There is the Homes and Communities Agency. As the noble Baroness, Lady Eaton, of the Local Government Association said elsewhere, the acid test will be whether Ministers allow decisions to be taken at the front line by locally elected people who know their neighbourhoods or simply replace unaccountable quangos with unelected civil servants in Whitehall. There is Ofsted, a non-ministerial government department reporting directly to Parliament. That constitutional basis protects the role of the chief inspector, whom neither the board nor the Secretary of State can remove, thus ensuring that her reports and actions are protected from accusations of undue influence. Ofsted’s remit includes advising the Secretary of State, such advice being provided without fear or favour exactly because of the organisation’s constitutional position. Given that Ofsted’s actions can have serious consequences, its protection from allegations of undue influence is vital. Ofsted inspection has a key role for schools operating with greater autonomy, where independent inspection becomes central to enabling services to be accountable.
I turn to NEST, which is a pension scheme established under the Pensions Act 2008. Its trustee board—I declare a recent interest, as until last month I was a member of it—has a fiduciary duty to its pension members, whose money it holds on trust, not to the Government, save in regard to any loan from government. Yet the Bill would enable the Government, with two clicks, to abolish, merge or alter this pension scheme without so much as new legislation, consultation or proper parliamentary scrutiny. Its resources belong to its members, not the state, yet the members would have no say in any such move.
The noble and learned Lord, Lord Woolf, mentioned the Legal Services Board; here I declare another interest as chair of the Legal Services Consumer Panel, which that board funds. The Legal Services Board is, of course, funded not by the Government but by lawyers. The board’s creation in the Legal Services Act 2007 was the product of extensive parliamentary debate. Your Lordships will recall the importance given to the independence of the Legal Services Board—independent from government—in the passage of the Bill. That was particularly emphasised in the Joint Committee examining the Bill that was chaired by the noble Lord, Lord Hunt of Wirral. The independence of the regulator overseeing barristers and other lawyers is key to their reputation, both here and abroad, for independence before the courts, to the rule of law and to its separation from government. Yet with a couple of statutory instruments this robust, independent board could be swept away.
There are many worrying powers in the Bill that fly in the face of normal lawmaking. “Think again, Government”, is the best advice I can proffer.
Lord Harries of Pentregarth
My Lords, I believe that there is widespread support in this House for the Government’s desire to cut public spending. There is also much support for a hard look at all public bodies, with a view to abolishing or merging them where justified. What worries many of us, and certainly concerns me, is the indiscriminate way in which all public bodies are being considered in the one long, fierce slash of this Bill. A list has been drawn up by the Government of what is to be done: this one to be abolished, that one to be merged and so on. All right—one has to start somewhere and that is a starting point, but it is only a starting point for the serious work that must surely then begin, which is the sober, rigorous examination of each proposal on its merits.
First, what is needed is, at some point, some careful costing. The aim of the Bill is to save money, but will it in fact do that? Reorganisations are notoriously expensive. To take the HFEA, the body that I have been most familiar with in recent years, under the proposals in the Bill there will not even begin to be any savings until the next Parliament, even if there are any then, which is highly doubtful. This highlights the need to examine alternative ways of saving money. The HFEA is in the process of moving to lighter-touch regulation. It has its own firm proposals to make savings in both running costs and staff. I believe that, if we are to do our job as a House, it is essential that there is serious examination of the cost implications of each proposal together, where applicable, with the alternative proposals for saving money, not just in the short term but for the long term. I do not see how we can be said to have done our job without such a financial cost-benefit analysis.
Secondly, we need someone other than the government officials who drew up the original proposals to test the criteria that have been used against every individual public body affected by the proposals. These proposals are, again, a good starting point, but someone wants to ask about each public body, “Does it perform a technical function? Do its activities require political impartiality? Does it need to act independently to establish facts?”. It is necessary to have a serious and impartial look at each public body in the light of those questions. The answer to them cannot simply be left to the people, however worthy, who put forth the original proposals for abolition and merger.
Again, I can speak only from first-hand experience of the HFEA, which came about, as most of your Lordships know, as a result of the report that the noble Baroness, Lady Warnock, published in 1984. After days of parliamentary debate, it was established as part of the legal framework of the Human Fertilisation and Embryology Act 1990. Then, again, after days of debate its existence was reaffirmed as part of the legal framework for work in this area that was provided for by the 2002-03 legislation. That is without including the Select Committee, days of debate on embryo research and other aspects of the work. If Parliament has thought this area so critical that it was worth weeks of its time to set up a regulatory body with very tight regulation in place, it hardly seems responsible to dismember that body with one quick snip and without serious consideration of the implications of so doing. As the Select Committee on the Constitution put it in paragraph 14 of its report, many of the bodies are,
“the product of extensive parliamentary debate and deliberation. We fail to see why such parliamentary debate and deliberation should be denied to proposals now to abolish or to redesign such bodies”.
The HFEA is not alone in being concerned with ethical issues. In my view, every area of life has an ethical dimension. However, the ethical dimension of the work of the HFEA, concerned as it is to preserve the special moral status of the early embryo, is of particular sensitivity and of acute concern not just to Roman Catholics but to the wider public. As we know, the issues that it has had to consider in recent years have been highly controversial and there is every reason to think that there will be new issues in the future that are no less controversial. Almost every committee meeting of the HFEA has to have a lawyer permanently in attendance to ensure that the Act is being strictly adhered to, while a number of the decisions made in recent years have been challenged up to the highest court in the land.
It is the integrated work of the HFEA that enables it to do the work that has been entrusted to it by Parliament. The clinics, the researchers and the vast and complex database are held together under the law to ensure that the will of Parliament is carried out. If the HFEA is dismembered, regulation will become fragmented and much weakened and the likelihood of slip-ups and accidents is likely to increase. There is no reason why there should not be a closer alignment with the Care Quality Commission—the HFEA has in fact developed its own proposals for that—but the circumstances of infertility licensing are so specific and individual, and that work differs so fundamentally from the work undertaken by the CQC, that the two cannot simply be merged.
I apologise for speaking only about the HFEA in relation to a Bill that concerns so many other bodies with which your Lordships are concerned. However, the general principle that I have applied to the HFEA should be brought to them all, one by one, with careful and detailed consideration. That cannot be done simply by the House in Committee; it needs a Select Committee. As it stands, the Bill is so sweeping in its scope that it is difficult to see how it can have the confidence of the public. However, I believe that careful examination by a Select Committee would mean that people were confident about its final proposals. The Minister is concerned about undue delay, but the amendment tabled by the noble Lord, Lord Maclennan of Rogart, to the amendment sets a clear limit on that delay and, in my opinion, should be supported.
A number of your Lordships have raised the question of how such a Select Committee should go about its task. It has been widely recognised that there is already an overlapping consensus about a good number, perhaps the majority, of public bodies. The Select Committee could quickly note these and then move on to give detailed consideration to those where there is real concern about the proposals in the Bill. While I know that the Committee stage in this House will be invaluable, that process would be greatly helped by work done first by a Select Committee meeting under a strict timetable.
Lord Warner
My Lords, I declare an interest as the architect and first chairman of the Youth Justice Board, which is one of the bodies listed for the chop in Schedule 1 to the Bill. I should also confess to my past as a quango culler, originally as a civil servant after the 1979 election and, more latterly, as a Health Minister in 2003-04, when I conducted my own pruning exercise on Department of Health arm’s-length bodies. I have a bit of previous in this area but, even in my most hubristic ministerial moments, I never thought that I could get away with as sharp a piece of legislative practice as this Bill, with its inconsistencies, lack of impact assessments and granting of sweeping powers to Ministers to dismember what Parliament has authorised.
The Labour Government recognised that the periodical pruning of arm’s-length bodies was needed, both in my arm’s-length body review and indeed in the Smarter Government document published in December 2009. My own exercise reduced the number of Department of Health arm’s-length bodies from about 40 to 20 over three to four years and the annual cost of running them by over £1 billion. We were not afraid to be radical, but the changes were made with appropriate parliamentary scrutiny of all the legislation involved, including the proper use of primary legislation, and there was little by way of expensive compulsory redundancy, which, in the Government’s haste, may turn out to be a rather expensive aspect of some of their changes.
At the end of last year, the previous Government committed to merging or abolishing another 120 arm’s-length bodies across government, which would deliver at least £500 million. In fact, I thought that their estimate was quite conservative. Again, that would have been done in a measured way. The coalition Government have simply taken what Labour proposed but added some bigger fish, with little justification for their decisions and with no proper public consultation or parliamentary process involved. The issue before us today is not whether the pruning of arm’s-length bodies is needed but how it is done.
Many arm’s-length bodies have an important role to play in the government of a complex society such as our own, even if they are too often unfairly demonised. They are particularly necessary when we wish to secure special technical knowledge and skills, the objective gathering of data or the securing of political impartiality. This was largely recognised by Francis Maude in his Written Statement on 14 October and, indeed, again by the Minister today, but when you look at the way in which this collection of bodies has been assembled in the Bill, it is not terribly clear that these criteria have been applied to them. The Government do not seem to have clearly lived by their own rules.
As I recall, the Government started this exercise with the perfectly respectable aim of saving money, but they seem to have found that a bit more difficult to do than they expected. We now seem to have moved to a different set of justifications—of, I suggest, a slightly more dubious nature—about taking functions back inside government departments and improving transparency and accountability. As someone who worked as a civil servant for a quarter of a century in government departments, I advise them to think of some better arguments than that. We still do not know what the costs and savings are of the Government’s proposals and we need to get a better handle on that issue if it is at the core of some of the proposals.
Having been rather unkind to the Government so far, I compliment them on their approach in the Department of Health, where in July Andrew Lansley produced a pretty coherent review of health arm’s-length bodies. I suggest that other departments would have done well to emulate that. I do not necessarily agree with all the changes that he proposes in that document; I will particularly want to challenge and probe further areas such as the Human Tissue Authority and the Human Fertilisation and Embryology Authority, to which the noble and right reverend Lord referred. However, at least I can understand the Government’s thinking on the health arm’s-length bodies. That coherence of thinking seems to be lacking in many of the other departments and I am left with an uneasy suspicion that often they were asked to produce a quota by the Cabinet Office. Even in the Department of Health proposals there is the risky proposition of tampering with the world-leading Human Fertilisation and Embryology Authority, which was set up after enormous parliamentary scrutiny. We are also going to tinker again with the Human Tissue Authority, which was a matter of great sensitivity, as I know to my cost because I had to take it through your Lordships’ House.
A casual handing over of power to Ministers in areas as sensitive as these is neither good nor efficient government. This House’s own Constitution Committee has set out why this Bill is such a constitutionally unsound way of doing what the Government quite reasonably want to do—reduce the number of arm’s-length bodies. I have no problems of principle with that intention. It is fair to say that, in my experience, some arm’s-length bodies outlive their usefulness and need a decent burial. Many engage in mission creep because their sponsoring departments have been too weak to prevent their doing so, financially or otherwise. Some rather obstinately decline to merge their back-office services. Ministers too often set up a new body without proper consideration of the costs or the option of giving new functions to an existing body. All this is part of the cut and thrust of government; it goes on under successive Governments. From time to time it is perfectly reasonable to get out the secateurs and do a jolly good prune.
However, that does not mean giving Ministers carte blanche to reform, merge or abolish nearly 500 bodies without more parliamentary involvement than this Bill provides for. It also seems extremely odd to have another 150 bodies listed under Schedule 7 and kept in a state of unending uncertainty as to precisely what may happen to them. This seems to me, as a long-standing public sector manager, hardly a recipe for encouraging good performance by a stable and secure staff. The noble and learned Lord, Lord Woolf, and others have done a pretty good demolition job on Schedule 7, without needing much more from me.
Finally, I refer quickly to the issue of bodies that we know the Government have it in mind to change but which do not appear in the Bill. I will take just the high-profile example of the Audit Commission, which appears on page 5 of the Cabinet Office’s list for abolition, dated 14 October. I was surprised when the Bill was published, given the criticisms of the Audit Commission by Eric Pickles, that it did not appear. This would have given us a chance to ask the Minister to share with the House his boss’s no doubt carefully considered ideas on how he was going to have the commission’s functions discharged even more cheaply than through the commission’s own proposed reductions in expenditure and how he was going to ensure cost-effective audit of local government. I was looking forward to hearing about these things. I am happy to table an amendment in Committee to add the commission to Schedule 1 so that we can hear from the Benches opposite how they will deal with some of these other bodies that they have in their sights.
It is clear from speeches so far that the Government have a lot of explaining to do on this Bill. Many of us will want to give them ample opportunity to do so with amendments in Committee and at later stages. If the Government want to use the approaches in the Bill, they need to reduce what the noble and learned Lord, Lord Mayhew, has described as the industrial scale of the enterprise and make sure that Ministers’ powers are subjected to proper parliamentary scrutiny.
Lord Howe of Aberavon
My Lords, it is curious for me to reflect on one body, listed in Schedule 5, which I played some part in creating some 37 years ago—that is, the Office of Fair Trading, of which the noble Lord, Lord Borrie, became the second chairman. He is no longer in his place. The extent of the attention paid to the creation of that body at that time, when we were moving in a deliberate and thoughtful way, is striking. It was the subject of an amazing television documentary, produced in three two-hour instalments and taking up 23 miles of film. There were fly-on-the-wall cameras at all our transactions in the department and everywhere else. That showed a certain degree of attention and respect being paid to this body, which now wonders what will happen to it under Schedule 5. Another striking feature is that a star emerged from that television programme—the young woman who was in charge of seeing that we all managed the thing properly. She was Elizabeth Llewellyn-Smith, who went on to become president of St Hilda’s College, Oxford. There are side-effects and by-products if you handle such things properly.
More seriously, I understand the broad purpose of the Bill, and I understand and respect my noble friend the Minister’s approach to it. He has already indicated that he is prepared to listen to what we say today in his handling of the Bill. It is of the utmost importance that that should be so. He must understand the anxiety of this House, which is serious and well founded, partly because of our experience under the previous Administration. There were some remarkable examples of ill considered legislation; I suppose the classic one was the destruction of the office of Lord Chancellor. The committees of this House, which have worked in proper study, as the Constitution Committee has done in this case, are made up of people to whom attention should be paid. I am sure the Minister will be careful to do so.
For example, after several years of that treatment, the noble Lord, Lord Butler of Brockwell, called a debate in Grand Committee in 2008 on how a good Government should deal with bodies’ recommendations and the attention they should pay to preparing legislation. The summing up in that debate should be respected by the Government. It is striking that the most compact summary of the advice from that debate is offered to the Government in the representations made by the body that is listed first in Schedule 1—the Administrative Justice and Tribunals Council. It says, quite sharply, “Right first time”. It has emphasised the importance of improving government decision-making in the first instance, thereby avoiding costly appeals and other procedures. It is important to note that some of the wisest advice given to the Government comes from one of their first candidates for ruthless examination. That is a serious point. I do not believe that advice has been followed, despite the efforts being made by my noble friend.
What is striking is the foundation of assumptions by the appearance of the different bodies in these several schedules. Four hundred and eighty one organisations are on trial and 192 of them are already condemned to death. That is a remarkable choice to make. I make no comparisons with any other country. All the others face trial and are at least under threat of being convicted of something just short of murder or manslaughter. It is a remarkable state of affairs. That is why I see the force of the recommendations of the Constitution Committee. As it is now designed, the Bill strikes at the very heart of our constitutional system.
I see that some bodies are already protesting about their prospects as they find themselves facing trial in the months ahead. The coroners’ representative body, for example, protests understandably at the jettisoning of key elements of the Coroners and Justice Act 2009 by abolishing the office of chief coroner. It seems very hasty to put an organisation that was created in the past two years in that position. That is not the only example of what might be seen as such unduly hasty management of the decision-taking. One therefore asks quite how the general policy is shaped for taking these decisions. The objective in some cases is said to be to take away power from the quangos in question and hand it back to the Executive for managerial supervision. I think this is driven by the feeling that if it is under the control of an elected body, it is thereby better protected. An elected body sounds benign in that context, but a less benign description of an elected body is the Executive, which has to take account of the legislature and the judiciary. That is why one is again anxious about the decisions being taken and whether the precise steps of conviction but not execution are being properly taken. That is why I join the procession of former law officers—people can hardly remember me as a humble Solicitor-General, who last wore his wigs in 1972—my roommate, the noble and learned Lord, Lord Mayhew, and the noble and learned Baroness, Lady Scotland, and applaud enthusiastically the former Lord Chief Justice, the noble and learned Lord, Lord Woolf. His presence here, incidentally, illustrates the value we get from such senior judicial figures. Whatever we may find ourselves doing in relation to this House, the input of such people is enormously important. The noble and learned Lord’s representations should be taken fully into account by the Government.
That is the substance of my evidence save one forthcoming point on which I wish to close. The emphasis of what I say is that, yes, the Bill can be justified as a vehicle which we need to have on the ground moving forward, but it needs to have considerable treatment of a conscientious kind, taking account of the constitutional and substantive matters discussed in this House. I know that my noble friend will take serious account of that. The Bill is legitimate but needs a lot of improvement.
I give a warning of a different kind as I did at a different stage play a different role in relation to an operation of this kind when in 1979 I was Chancellor of the Exchequer and scraping around trying to save money. One of the decisions I took in that regard was to provide for the abolition of the Metrication Board. That board had been unwise enough to include in its latest report that it was near the completion of its task. I declare an interest here in that I am—and have been for a long time—the patron of the UK Metric Association. One starts from the premise that the Magna Carta, to which we should pay respect in this context, requires specifically that there should be only one set of measurements throughout the kingdom, whether of weight, distance or anything else, so that is a foundation which we ought to respect. When the House of Commons considered the question in 1862, the Select Committee unanimously recommended the completion of the metrication process. In 1904, this House passed a Bill proposing to achieve that and in 1965 a decision was taken to go ahead and finish the task in 10 years. That was supported and accepted by successive Governments under Messrs Wilson, Heath and Callaghan, but none of them—not even the Heath Government in which I was the Minister for Metrication—took the precaution of securing primary legislation in order to complete that task. We had all agreed that it would happen and that we would do it. Remarkably, the CBI and the Retail Consortium were urging us to finish it quickly. I was president of the Consumers’ Association until a few weeks ago but I think that senility justifies my departure. However, in 1978, the Consumers’ Association also said, “Metrication, get on with it”.
I am really pointing out that my noble friend might do terrible things. He might be destroying something as important and potentially valuable as the Metrication Board, so he should take care. Had we not destroyed it, we would not have fallen behind every English-speaking nation in the world, barring perhaps the United States although it is half metric. The Pentagon, NASA and most of the automobile industry are fully metric. NASA has lost one mission to Mars at the cost of $125 million because one imperial measurement was inserted into a machine at the wrong time. We are suffering hazards of that kind because of my folly in 1979. I confess that continuously in the hope that people will agree with me that we ought to put it right.
However, I hope that my noble friend will take this matter seriously. This is an important Bill but it requires to be examined in the light of the criticisms that have been made. It is a legitimate Bill but it is very important that that legitimacy should be firmly established. I leave open the question whether the Bill should be examined by a Select Committee or a Committee of the Whole House but it requires care and attention.
Lord Beecham
My Lords, it seems to me that the Government are approaching the Bill in the spirit of Alice in Wonderland. I do not mean to imply that they are emulating the mad hatter’s tea party, although it is possible to discern occasional current Tea Party tendencies on the government Benches. I am reminded of the trial scene in Alice, where the cards cried, “Sentence first—verdict afterwards”. No doubt if the Minister had been at Lewis Carroll’s elbow, we would have had the trial last of all because that is really the way in which the Government have proceeded. They have decided on abolition first. They are looking at the cost of abolition and the estimates of savings afterwards and they will consider functions last of all.
I have the greatest respect and, indeed, affection for the noble Baroness, Lady Hanham—she is not in her place today—partly because she comes from the north-east, having been born and bred in South Shields, and partly because she was a very good colleague in the Association of Metropolitan Authorities and the Local Government Association. However, I have had a surreal exchange with the noble Baroness on some of the issues raised in the Bill in the form of Written Questions and what purported to be answers to those Questions. I asked particularly about the costs of abolition of the Audit Commission and of government offices, which are not quangos but part of government. Nevertheless, the same sort of process—if it can be called a process—seems to have been applied. I asked what the Government’s estimates were of abolishing the Audit Commission. I received a reply from the Minister that “a range of options” was being considered, that this would necessarily take time and that the process was continuing. I was given to understand, however, that actual estimates had been provided to the Government by the commission itself. I asked in a subsequent Question,
“what estimates of the costs of abolishing the Audit Commission were supplied by its chief executive … when they were received”,
and whether the Government intended to publish those costs. The reply referred again to the ongoing work of estimating the costs. It acknowledged that the chief executive of the commission had in August, and again in October,
“provided my department with information on certain of the commission's potential liabilities”.—[Official Report, 2/11/10; cols. WA 378-79.]
Curiously, the Answer did not identify the figures that had been supplied, despite the fact that the Question explicitly sought that information.
Similarly, in relation to government offices, there was again an indication that,
“broad estimates of closure costs”,
had been reached in the spending review process. The Answer continued that there were,
“no detailed costs related to Government Office North East”,
in which I have a particular interest. More relevantly perhaps, it stated:
“Departments have been considering which functions need to continue … but no department has made a decision on continuing functions”.—[Official Report, 2/11/10; col. WA 386.]
No one in this House disagrees that reform is necessary, but this is a curious way of reforming bodies of that kind.
I have in my time had some issues with the Audit Commission. I recall a chairman of the Audit Commission ringing me up and complaining in very strident terms about the attitude of the Local Government Association on one occasion. Nevertheless, it seems to me that the commission has a significant role. It is not included in the Bill, of course, but we expect to see it included in the decentralisation Bill which will presumably come to this House fairly soon; it is a manifestation of the Secretary of State’s particular animus against the Audit Commission that perhaps he wants to be sure to claim paternity of its abolition in his own Bill. However, there is actually a serious question about the role that has to be carried out; it is not a question of just auditing councils’ books and costs. The Audit Commission has a wider role; it performs an invaluable service in looking at services across a range of functions, including health. It is particularly relevant at a time when Total Place, or community budgeting as it is now being called, is coming into being—that there should be a body independent of the service providers not only looking at individual areas of what is happening across the range of services, but doing so in such a way that you can draw comparisons from one area to another and evaluate how policy is being developed and implemented across the country. That is unlikely to happen and it certainly does not seem to have been identified as an issue thus far.
Among the wide range of other bodies that have been identified, some of which have been touched on, I want to refer particularly to the regional development agencies. In the 1980s, as leader of Newcastle City Council, I worked with other local authorities, local and national politicians from all three main parties, and both sides of industry—private sector and trade unions—and we formed the Northern Development Company, which was the forerunner of what became the statutory regional development agency. It made a significant but limited contribution, because it had little in the way of resources. Now the RDAs are to be abolished—all of them—despite the fact that, certainly in the north-east and I think in other areas, there is a strong view from the private sector, as much as anyone else, that these bodies should be continued. Incidentally, in the north-east there is already a significant impact on tourism, which was the subject of a Question and helpful answers from the Minister this afternoon. However, the agency will go and it is already clear that there is a significant impact. What we will be left with in the region is a local enterprise partnership, which will have no resources and be powerless and penniless, as my noble friend Lord Liddle, pointed out. There will be more than one such body in the region, probably competing with one another; that is hardly conducive to the kind of regeneration that one would like to see, but which is unlikely to be achieved with the rather pitiful allocation of £1.4 billion over the next few years.
There are therefore serious questions about the implications of what is being done, not least in terms of the two key principles which many of your Lordships have referred to—accountability and independence. It does not seem to follow, even if functions are transferred to charities or other organisations of that kind, that accountability is necessarily thereby enhanced. That certainly does not follow if those functions are left with departments and civil servants. Of course, if the proposals of the Secretary of State go through, a vast body will be created to administer a very significant part of the National Health Service nationally—a super-quango, if ever there were one.
Some charities may be tempted by the prospect of obtaining resources alongside new functions. Like many of your Lordships, I have received a briefing from the national Citizens Advice. I join a previous speaker in expressing some doubt as to whether that organisation, which does enormously valuable work on the ground locally—I was once involved in forming a CAB and at other times acted as an adviser—is the right one to take on the serious and major issues of consumer protection and advice across the whole piece. That matter will no doubt be developed.
There is clearly a case for periodically and thoroughly reviewing the role of organisations of this kind. We do not need to join the late Screaming Lord Sutch, who inquired, “Why is there only one Monopolies Commission?”. We do not have to encourage the continuation of unnecessary bodies, but there is the constitutional point which many noble Lords have raised with considerable eloquence and force. That relates to the use of Henry VIII powers. I was never sure whether the relevant analogy was his recourse to decapitation instead of marriage guidance, or whether, as my noble friend Lady Hayter said, it was the dissolution of the monasteries. Neither is a suitable precedent for making the changes that the Bill seeks. I hope that the Government will think very carefully indeed about the way they are proceeding. I hope that they will accept the amendment of my noble friend Lord Hunt in the spirit in which it will be moved, so that we can have a practical discussion of how best to improve the situation on the basis of a proper discussion and consultation with those affected, with a view, above all, to preserving those essential elements of independence and accountability without which the system cannot serve the nation.
Baroness Stern
My Lords, I, too, share the concerns expressed around your Lordships’ House about the principles of the Bill. They have been very well expressed by many noble Lords, so I intend to concentrate on what can broadly be called the human rights and rule of law area. I am most grateful to the noble and learned Lord, Lord Woolf, for his extremely compelling exposition of the implications of Schedule 7 in particular for the independence of the judiciary.
I want to make a few remarks about bodies such as the prisons inspectorate and the independent monitoring boards. I must declare some interests as the president of the Association of Members of Independent Monitoring Boards and a trustee of the International Centre for Prison Studies. We have in this country over the past 20 years developed a range of independent bodies that ensure that those who have power over others exercise it lawfully and proportionately. This is an important element of the institutional arrangements of any civilised society. Our arrangements for this form of control and accountability are admired around the world. Delegations come here all the time to see them and learn from them.
Therefore, to see listed in Schedule 7 Her Majesty’s Chief Inspector of Prisons, the independent monitoring boards of prisons, the Independent Police Complaints Commission and the visiting committees appointed for removal centres under Section 152 of the Immigration and Asylum Act 1999 causes enormous concern. It seems as if so many protections for so many vulnerable people and so much effort to ensure that the law is kept and ethical principles are observed can be swept away simply by a body being moved from Schedule 7 —the pending tray, as the noble Lord, Lord Borrie, described it—to Schedule 1, the action tray, with scant safeguards to slow down that progression. This streamlined procedure is in stark contrast to the many years of painstaking work, deliberation and commitment that went into the creation of these bodes.
The independent monitoring boards, which are composed of volunteers—cost, therefore, cannot be a huge consideration—attached to each prison, and now each immigration removal centre, go back to Tudor times, when magistrates of the county Quarter Sessions had a hand in the administration and regulation of local prisons and appointed visiting committees for specific responsibilities. Since then, they have developed and been subject to many changes, which have gone through Parliament in primary legislation. The Minister, in his helpful opening remarks, claimed that the Bill aimed at more accountability and transparency, but these bodies are there to increase the accountability and transparency of all custodial establishments.
I return for a moment to the Chief Inspector of Prisons. The position emerged from a huge amount of deliberation and consultation and is now a requirement for the United Kingdom to be able to meet its obligations under the optional protocol to the convention against torture. Many noble Lords will remember an attempt by the previous Government in the Police and Justice Bill to merge the prisons inspectorate into a super-inspectorate and to put it under ministerial control. Many will remember the stand taken in this House against the proposal and the work done by the noble Lord, Lord Ramsbotham. The proposal was defeated by 211 votes to 98. Members of both current governing parties in the coalition were among the 211, as were a number of noble Lords from the current opposition Benches. Clearly, any Government can take their decisions as they wish, and change is necessary and often for the good, but the decisions should be made democratically by Parliament in a proper way, with proper consideration and debate.
The bodies that I have mentioned appear in Schedule 7. I note the Minister’s assurance that their presence there does not mean that any action will be taken. However, if that is so, why are they there? I would be grateful if the Minister would explain exactly what being in Schedule 7 means. I am sure that from now on the bodies in Schedule 7 will feel a sense of dread hanging over them. This is a threat to their independence and their standing as proper oversight mechanisms for the actions of those who work for the Government, exercising onerous responsibilities in our name.
Finally, I will say a word about the chief coroner, who is already, as the noble and learned Lord, Lord Howe of Aberavon, suggested, in the execution chamber. The Minister described all these bodies as quangos that the public do not like because they are unaccountable. However, I am not entirely sure that the public, and especially any member of the public who has been connected with a death and an inquest, will feel that way about the chief coroner. With the abolition of the post of chief coroner, we will lose another element of oversight in the vital area of the right to life and the rights of families of victims of deaths where the state is involved. It should be no surprise that Inquest and the British Legion are very concerned about the abolition of the post of chief coroner. The post was introduced to ensure accountability and judicial oversight—to deal, for instance, with situations where the delay in holding an inquest is much too long, which causes enormous distress to the families of the deceased. It deals with appeals by bereaved families against coroners’ decisions and ensures that the recommendations made by coroners about changing practices to avoid further deaths are taken up.
The Government have made many encouraging statements about their commitment to justice, human rights and the rule of law. These have been warmly welcomed. Sadly, at the moment, the Bill does not exemplify that approach. I am very encouraged by the Minister’s assurance that the concerns expressed here will be listened to and I hope that we shall see substantial changes to the Bill.
Lord Knight of Weymouth
My Lords, like my noble friend Lady Royall, I think that this is a bad Bill. We could describe it as the Donald Rumsfeld Bill, as it deals with known knowns, known unknowns and, in Schedule 7, unknown unknowns. This was best put in the RSPB’s excellent briefing, which states:
“In summary, the Public Bodies Bill is an enabling Bill framed along the lines of, ‘We’re going to change lots of things, some of which we know now, some of which we will work out soon and some of which we can't tell you anything about because we haven't thought of them at all yet, but please give us the power to do all of this’”.
Suffice to say that the RSPB—a big society with more members than all the political parties in this country put together—is very unhappy with the Bill. It is worried about the environmental consequences of the disposal of public land, it worries that environmental considerations will be secondary when these powers are used, and it is very concerned about the consequences for biodiversity of the measures against the Forestry Commission. It is among many organisations that have contacted noble Lords, urging opposition to the Bill.
Like so many noble Lords, I disagree with the Minister’s assertion that this brings in a transparent legislative framework. Rather, this skeleton Bill is an insult to parliamentary scrutiny—and I am afraid that the insult is doubled by Ministers claiming to act in the name of increasing accountability. It also feels so unnecessary. As has been said, few people disagree with rationalising the number and scope of arm’s-length bodies. The first Bill that I took through Parliament as a Minister became the Natural Environment and Rural Communities Act, which among other things culled a large number of arm’s-length bodies—the agricultural levy boards—and also merged English Nature, the Rural Development Service and the Countryside Agency into Natural England and the Commission for Rural Communities. Section 8 of that Act also includes powers to transfer functions and powers between any of the arm’s-length bodies, including the Forestry Commission, within the Defra family—but with consent.
Therefore, I have my own track record in this area, and the possibility of cross-party consensus is there, if only the Government stopped rushing everything to get headlines and photo opportunities for their personal photographers. The previous Government published proposals for considerable rationalisation in their Smarter Government White Paper last December, and in the Treasury paper last March entitled Reforming Arm’s Length Bodies. My argument is not with the principle, but, as the noble Lord, Lord Maclennan, said, with the application. Yes, I disagree with some of the detail relating to individual bodies such as the RDAs. We can also learn from the excellent report from the Institute for Government on how we as Ministers manage arm's-length bodies better. However, we need the Select Committee that I will tonight vote to establish to agree an acceptable process, because the principle of scrutiny must be respected.
As a Minister in the other place, I took five Bills through Parliament that included changes in primary legislation to 16 of these bodies, and the setting up of seven of them. This meant spending hours being scrutinised on the scope and functions of the bodies, which forced me to think clearly about what we were doing. In one memorable case, which concerned transferring to Ofsted functions relating to the inspection of independent schools, it forced the noble Lord, Lord Adonis, and me to change our minds on the whole thing. That would not have happened if we had done it by regulation. I got a battering in the Commons, my noble friend faced a battering here, we discussed it and realised that neither of us disagreed but both thought the other one thought it was a good idea, we disagreed with the officials and we changed it. The Bill proposes jettisoning that scrutiny. It will mean, for example, that if the Young People’s Learning Agency were moved from Schedule 7 to Schedule 1, all the data-sharing powers that were debated at great length during the passage of the Bill to set it up would be transferred with no more than cursory scrutiny. Personal data is an issue of great sensitivity and importance. How many of these bodies have powers over personal data that may be redistributed in a cavalier fashion through the Bill?
The principle of independence must also be respected. Schedule 7—the zombie list, the list of the living dead—includes Ofsted, Her Majesty's Chief Inspector of Education, Children’s Services and Skills, Ofqual and the School Teachers’ Review Body, along with many other bodies with which I am less familiar. These bodies, by definition, must be independent of government. The publication of Ofsted’s annual report, for example, was always a very difficult day for me as a schools Minister because of Ofsted's authority born of its independence. My noble friend Lady Andrews made some powerful points about Schedule 7 bodies. How will they retain their independence when a Minister can abolish them by order thanks to the Bill?
Then there is the haste. Why have the bodies concerned barely been consulted? The national park authorities have contacted me to make important points about their special status and to tell me how little prior notice they had before this measure was announced. In his response to the noble Lord, Lord Foulkes, earlier, the Minister claimed that the devolved Administrations had been properly consulted. I gather that the Welsh Assembly Government were given one week’s notice of the abolition of the Agricultural Wages Board and that the nature of the consultation was simply to ask what they were going to do now that the decision had been made to destroy the protection of low-wage workers in England.
Not all the bodies that are being abolished are on this list. Becta, for example, which is not on any of the lists, was given 24 hours’ notice of its demise and, true to the recent catalogue of shambolic decisions by the Government, the Secretary of State for Education was keener on headlines than on probity. Becta is a charity. The Secretary of State has the power to cease funding it but he has no power to close it altogether. As it was, he put the charity’s chief executive and board in a dreadful position, with their staff waking up to hear about their redundancies on the news.
Earlier, I mentioned the abolition of the Agricultural Wages Board—a body that has continued successfully without any strike action in this country since 1923. In Schedule 7 is listed a similar body on which Mr Gove has already made a decision. The Minister claims that it is okay to bring in that schedule, but what about the School Support Staff Negotiating Body? That body was established after a huge amount of negotiation and trouble by me as the Minister and by many others, and its establishment was debated at length just over a year ago in this House. Like the Agricultural Wages Board, it protects some of the lowest-paid workers in this country, such as dinner ladies, school crossing patrollers, teaching assistants, caretakers, laboratory technicians and administrative staff, most of whom are women. Thanks to this body, people were given the chance of a career, not a one-off job, but that has now been lost at a stroke of Mr Gove’s pen.
We do not have to do this. If Schedule 7 were deleted, if another Bill, such as a localism Bill, were used to deal with bodies such as the RDAs, and if other powers, such as those over the Defra family in the Natural Environment and Rural Communities Act, were used, we might begin to have a Bill worth proper scrutiny. Until then, we should give it to a Select Committee to try to lick it into shape.
Lord Marlesford
My Lords, this Bill is clearly flawed. It may even be deeply flawed. However, we have heard much about the flaws and I want to focus on the purpose of the Bill, which I believe to be urgent and important. It is nothing less than to improve a great swathe of state activity by making it more relevant, less intrusive and more cost-effective. The Bill reflects the 2010 manifestos of both coalition parties.
First, I declare my own interests. Declaring interests can reveal the experiences which tempt one, perhaps even qualify one, to comment in debate. I was for 12 years a countryside commissioner and for eight years a rural development commissioner. Those two quangos—the Countryside Commission and the Rural Development Commission—were long ago absorbed into Natural England. I was subsequently, for five years, the chairman of the Council for the Protection of Rural England, which is not a quango but a pressure group, and unashamedly so. For the past 10 years, I have been president of the Suffolk Preservation Society, which is a county branch of the CPRE.
The basic purpose of quangos, and indeed other bodies with delegated powers, is to advise government on public policy and improve their administration. There are four elements to it. The first is to hive off to separate management some government functions, as authorised by Parliament. This is to ensure that scarce Civil Service talent, normally recruited for policy advice rather than management of resources, is not diverted to managing special and often very technical functions. The second is to support and inform the political judgment of overburdened departmental Ministers by bringing in part-time appointees as the governing bodies of the quangos with sensitivity to the political perspective of the elected Government. The third is to identify and, where possible, anticipate particular problems within the remit of the quango and to advise Ministers on how to deal with them. The fourth is to be the recipient of, and to evaluate, the views of pressure groups in their field and to advise Ministers how they should react to the demands of those pressure groups. That is a crucial role for the governing bodies of quangos.
I say at once that a number of quangos are doing a very fine job. However, the problem is that some have grown to have a culture, ethos and agenda of their own, often quite different from the aims and policies of the Government of the day. They have become empire-building special-interest groups, and members of the governing body have sometimes “gone native”, no longer exercising proper control over their staff or the use of resources.
In making its case, a pressure group overstates that case—in as covert a manner as may be expedient. It does this to get the appropriate action and resources to implement its objectives. It is not there to have a balanced view on what should be done. Its legitimate role is to get the biggest share of the cake that it can and to negate other interests, private or public, if they get in its way. Therefore, it is obvious that if a quango gets too close to a pressure group or, worse still, behaves as a pressure group either in administration, expenditure decisions or, most of all, in advice to Ministers, it can become counterproductive and lose all sense of proportion. The imposition of disproportionate compliance costs on either other government agencies or the private sector is an example.
A weak Minister—and all Governments have them—will have little hope of bringing a deviant quango under control. Resources will be misused and policies distorted. Quangos can be harder than government departments for Parliament to control because their governing bodies are not directly answerable to Parliament. Thus, quangos can add to the democratic deficit.
This Bill is one of the measures that the Government are taking to deal with the budget deficit, so let me stress a point which should be obvious to all, although I have found it to be generally unrecognised by the quangos themselves. However, once it is made it is not denied. It is that the cost to any business, whether corporate or private, of compliance with the mandate of quangos is a business cost and therefore tax-deductible. That means of course that a proportion of that cost—up to 28 per cent if it is corporation tax or up to 50 per cent if it relates to a sole trader such as a farmer—comes directly from the Exchequer. Compliance costs therefore reduce the tax collected by HMRC and make the balancing of the budget that much harder. Therefore the Government of the day have a shared interest with both business and the public in ensuring that regulation, and thus the cost of compliance, is minimal and, above all, proportionate.
It has become increasingly apparent that some quangos, and some of the specialised departments of both central and local government, have been behaving, especially in their regulatory role, in a disproportionate, intrusive and sometimes insensitive manner. At times this seems to reflect the systemic arrogance of bureaucrats; sometimes it is simply the jobsworth attitude of rather second-rate individuals who have been nestling in the protective cocoons of their organisations. More recently, some of them have behaved as though their function, or at least their opportunity, is job creation. With the credit crunch, job preservation at all costs has become their priority. These are some of the things that explain some of the opposition to measures in this Bill.
I shall illustrate my case with one quango which has, in my view, behaved with scant regard for the public purse and with little sensitivity to public opinion. Proportionality is quite absent. To it, the life of one bat or one great crested newt is worth expenditure without limit; the opportunity cost, in terms perhaps of kidney machines for humans, does not occur to it; and it acts as the instrument of its pressure group clients such as the RSPB. I refer of course to Natural England. The story of how that quango imposed on another quango, the Highways Agency, a cost of £600,000 to build two bridges for bats over the new Dobwalls by-pass in Cornwall caused indignation on a national scale. That was cash which came straight out of the Exchequer. I am sure that we have all heard of the cases where new public buildings such as schools and hospitals have to pay thousands of pounds to cope with the possibility that their plans might interfere with great crested newts. In Suffolk, Natural England proposed, in cahoots with the RSPB, to introduce to our coastline white tailed sea eagles, whose natural habitat is the islands off the Scottish mainland, to the fury of local pig farmers, of which I hasten to say I am not one. That particular nonsense was halted by the new chairman, a sensible farmer, Paul Christensen. I hope that he will welcome the much needed cut in the budget of Natural England.
The amalgamation of quangos may not be a solution. Those on the governing body, especially if they are to apply their wisdom and experience, have limited time available. They have busy outside lives. If they are to be fully effective the scope of the quango must not be so wide that they cannot follow, monitor and control the quango. Smaller more focused quangos, perhaps sharing administrative overheads with others, may be more cost effective. Thus a reduction in the number of quangos is not necessarily a good test of this Bill.
I am sure that we have to improve this Bill, but I believe that the intentions behind it are sound and action is well overdue. I support the intention of this Bill and I support the need to improve it, but I shall not support proposals to delay it.
Lord Clark of Windermere
My Lords, the noble Lord, Lord Marlesford, has quite rightly reminded us that the proposal to cull quangos was in the manifestos of both coalition partners. Therefore, I accept the purpose of the Bill. However, like so many other noble Lords who have spoken today, I am concerned about the means by which the Government propose to do this. I accept immediately that this is not an easy solution but, on the other hand, I do not apologise for reiterating how damning and how devastating the report of the Constitution Committee is. We all know that one can find reasons and explanations for actions such as introducing a Henry VIII clause. That may seem good at the time but a principle is involved, and that principle is almost sacrosanct.
I find it ironic that when the Minister in charge of the Bill in the other House, Mr Francis Maude, introduced it, and justified the need for the Bill, he argued that it was needed to increase political accountability and more accountability to the legislatures. I think we would all go along with that. However, it is ironic that the means by which it proposes to do this is probably one of the most antidemocratic moves that there has been in either House in recent years. The Constitution Committee said that,
“the ordinary constitutional position in the United Kingdom is that primary legislation is amended or repealed only by Parliament”.
It went on to say:
“Departures from constitutional principle should be contemplated only where a full and clear explanation and justification is provided”.
In no way will that happen in this case.
It might be worth reminding the outside world what is being proposed. I accept that this is not just the whim of the Minister. Orders will be laid before both Houses of Parliament but they will be only an hour-and-a-half duration and there will be no means of amending them. We all know that, but I am not sure the wider world knows that. I am not sure that is democratic, when originally hours and days may have been spent in both Houses coming to the decision. That is why there is so much concern in this House, although we appreciate the good will and intent of the Minister—I appreciate that straightaway.
I want to turn my attention to something which I know a little about. That concerns Clauses 17 and 18 which relate to the Forestry Commission. Until just under a year ago I chaired that body for eight years and I thoroughly enjoyed doing so. I am a great supporter of the Forestry Commission. If I felt that the forests and woodlands in this country could be maintained to the same standard as they are maintained at the moment by a different form of ownership, I would look at it. I feel that challenge is not met in this Bill. However, I think that the Forestry Commission is different from 99 per cent of the other arm’s-length bodies in that it is a government department. It is a non-ministerial government department and every single employee of the Forestry Commission is a civil servant, which goes directly against the definition by the Cabinet Office of the non-departmental public bodies, quangos. I am a little confused about why there are two clauses specifically concerning the Forestry Commission. That jars a little. Only the Forestry Commission has so much of the Bill devoted to it.
As I say, all the employees of the Forestry Commission are civil servants, which means that the Forestry Commission is at a disadvantage compared with 99 per cent of the other bodies in that it is neutral and it cannot discuss anything with Members of Parliament or Members of this House. Would the Minister consider looking at the possibility of allowing the Forestry Commission’s senior officials to provide factual information to Members of this House and Members of another place? If we are to make considered judgments on this matter on the two clauses specific to the Forestry Commission, it might be helpful to get factual information—not opinion—from the Forestry Commission’s senior civil servants. I hope that the Minister will look into that and be able to give us an assurance in due course.
One of the difficulties we are wrestling with—it may be why the two clauses are there in the Bill—is the rather complicated structure of the Forestry Commission, which was created as a GB body in 1919. In 1998, in essence, forestry was, apart from plant health and research, devolved to the Government of Scotland, to the Welsh Assembly and retained here at Westminster. But the three Governments then decided that if forestry were to be effective in those countries, it would benefit from having a critical mass. Having been devolved by Westminster, the two Parliaments and one Assembly came together on that matter. One of my first jobs in 2001 was to try to devise a system so that we could run the Forestry Commission and, given devolution, attempt to give power to the nations but at the same time retain that critical mass. We managed to establish national committees with forestry commissioners chairing them and sitting on them and the system has worked very well.
That concerns me, because Clause 18 talks about the powers of the commissioners and the Minister having the authority to change the power of the commissioners. Will that be only English commissioners, or will he have the authority—is it the Government’s intent—to change the powers of the Scottish and Welsh commissioners? If we are trying to retain a GB body, it would concern me if different commissioners had different powers.
I have another couple of questions that I would like to ask the Minister. The Wildlife and Countryside Act 1985 specifically requires the Forestry Commission to balance its economic powers—to produce timber, et cetera—with environmental concerns. Am I right in thinking that the Minister could make an order under Clause 17 or 18 which would remove that ministerial, or governmental, requirement to have a balance? Following on from that, the Forestry Commission has granted access on foot under the Countryside and Rights of Way Act on almost all its freehold land. Is that now at risk? I know that the Minister has said that there will be no threat to the access agreement currently in force, but will the Government give us an absolute assurance that the CROW Act provisions giving access on foot in perpetuity will be carried out, despite the fact that it may mean that they will not get quite as much money for the sale of any land? Also, the Forestry Commission has a very generous interpretation of access for bicycles and horses. Can the Minister give us any assurance on that issue?
There are many other issues to which one could allude—the Crichel Down principle when it comes to selling off, or the attraction to rich people of no inheritance tax on forest land. I end with this point. The net cost of the Forestry Commission estate was £10 million—30 pence per person in this country. I do not think that we could get that value for money from any other organisation.
Baroness Scott of Needham Market
My Lords, perhaps I should start in the spirit of the confessional, because I am a reformed quangocrat. It was a habit that started innocently enough with the occasional meeting of a small regulator. Then I went on to the Commission for Integrated Transport and, hopelessly hooked, went on to the hard stuff and became a member of the board of the Audit Commission. I have to say that everyone I worked with in those bodies—the staff and non-executives alike—was extremely committed to their tasks and genuinely cared about serving the public, so I am very pleased that the Government have moved away from a rhetoric of demonising those public servants.
However, we must all admit that we have been too quick in the past—and I fear we will be in future—to reach for the quango as a policy response to every problem that comes before us. I heard an expression in another context which covers it, which is, “If you have a hammer, all problems look like nails”. I fear that that is where we are with quangos—we just create them. It is time to have a serious debate about how we deliver certain public functions. Should they be done by civil servants with ministerial oversight or do we genuinely need outside expertise? Can voluntary organisations do the job at least as well, if not better, particularly where there is a large campaigning element? Are the public better served in some areas by independent oversight, or is accountability more important? What we do about the use of patronage in making the appointments? How do we deal with the growing costs of the burgeoning number of arm’s-length bodies, all of which require offices, headed notepaper and all the other corporate paraphernalia? How do we deter those bodies from a slow extension of the task for which they were originally set up? We have all seen the tendency for mission creep. Who oversees the overseers, audits the auditors and regulates the regulators?
We need a fundamental review, and one that moves beyond a numbers game. I know that the Government are very focused on the need to reduce costs, and that is understandable, but many of these organisations do not spend very much money. Although there may be very good reasons for looking at them, it will not save much money. The National Audit Office has estimated that 80 per cent of NDPB expenditure is located in just 15 organisations, so you might want to start there. But then, 75 per cent of their costs are grants, which are just passed on to others, so they will not be saved by the act of either abolition or merger—you would need a change of policy direction.
There is no doubt in my mind that departments need to look at the beam in their own eye. Many of them micromanage the bodies which report to them and create unnecessary administrative burdens. In other cases, departments just lose interest in their bodies. Then you get poor communication and organisations completely out of touch with what the department and the Government are seeking to achieve. In other cases, those arm’s-length bodies end up as a kind of sandwich between competing interests. I know that when I was on the board of the Audit Commission, at one point we were engaged in a process of reducing the regulatory burden, in line with the wishes of our sponsoring department, while civil servants and Ministers in other departments were constantly coming to say that they wanted this performance management scheme, or some other regulatory burden, added. We need to look at that.
The great range of organisations contained in the Bill, from the Wool Marketing Board to Channel 4 and from the Theatres Trust to the Equality and Human Rights Commission, is a demonstration of the complexity of arrangements that have developed over the past 30 or 40 years. In the case of some of them, for example, Channel 4, it is questionable whether it is even a public body and should be in the Bill. Other noble Lords have highlighted cases where there are omissions for no reason that can be understood at the moment. This is where I begin to have a problem with the Bill. It seems to me that creating a Bill like this—an enabling Bill which simply puts together this vast array of bodies and then subjects them to reform, change and abolition with minimal parliamentary scrutiny, is just asking for trouble.
Many of these organisations were formed only after intense parliamentary scrutiny of primary legislation and, in many cases, were better for it. The fear here is that change imposed by Ministers after minimal consultation will result in imperfect statutory instruments coming before Parliament and Members—particularly in this House, with all their expertise—will see all the flaws but be pretty impotent to do anything about it, given that the orders will be unamendable, that there will be a 90-minute guillotine, that they will be grouped together and that, finally, we have only the nuclear option of voting the whole thing down.
It is already apparent from the range of organisations that has been in touch with me and other noble Lords that, whatever the Government's intention, the creation of Schedule 7 has resulted in a sort of death row for quangos. They know that the short timescale required to impose change by statutory instrument will create a climate of uncertainty which will affect their operational management and recruitment and make long-term decision-making virtually impossible. It will also have a very negative effect on the relationship between the departments and the organisations. Where those organisations have a primary function of holding the Government to account, it will compromise that very function in the eyes of the public by having such an impermanent relationship. Some of the consequences are absurd. The Office of the Commissioner for Public Appointments, set up to ensure a fair and unpartisan appointments procedure, could itself be changed as a result of the Bill.
It is funny how people tend to think about constitutions as dry things that do not affect the stuff of everyday life, because here we have a constitutional issue which demonstrates how the constitution is inextricably linked with good governance. I am dismayed that, over the years, Whitehall fails to learn this. I quite enjoyed the outrage from noble Lords on the Labour Benches, and I gently remind them that the Constitution Committee notes:
“The House will recall various occasions in recent years on which Parliament has sought to resist executive proposals for Henry VIII powers”.
In its briefing, Liberty comments:
“This Bill follows a trend popular with the last Government of avoiding the necessary rigours of parliamentary scrutiny”.
Let us not pretend that this is a problem which has just emerged since May. This has been many years in the gestation and is a classic Parliament versus Executive problem.
These bodies—quangos, arm’s-length public bodies, whatever we call them—have become a fundamental part of British public life. Reform is certainly necessary, but as the excellent Institute for Government report is so aptly titled, we should Read Before Burning. Its report sets out the case for reform, but it is thoughtful, rooted in reality and sets out a road map for bringing these bodies into a more rational framework over time. The danger of the Bill is that it sets out a legislative framework for a reform process which is itself deeply flawed.
I welcome the Minister's words at the start of this debate that the Government will be prepared to look at improving the Bill. I urge them to take a look at the super-affirmative procedures which will improve consultation and improve the ability of this House particularly to scrutinise. We need to remove the provisions for omnibus orders to come to this House, and we need to allow this House to use the expertise that it undoubtedly has.
Baroness Henig
My Lords, I declare an interest as chair of the Security Industry Authority and president of the Association of Police Authorities. I share the great concern of colleagues at the constitutional implications of this Bill, but my main concern this evening is to speak on behalf of those who work with and in the private security sector throughout the UK, but especially in Scotland and Northern Ireland, and to convey their disbelief, their dismay and their anger at the Government's uninformed and high-handed attempts to deregulate the industry by abolishing the Security Industry Authority.
The 350,000 or so individuals who work in the private security sector have to undergo criminality checks and basic training before gaining a licence which costs them £80 per year. So it is those who work in the industry as security guards, in close protection or as door supervisors, or their employers, who pay for the regulation of private security, not the Government. The SIA is completely self-financing and the Government will save nothing by its abolition. You might therefore have thought that before deciding to deregulate the industry, a Government avowedly concerned about transparency and accountability might have consulted the people who actually pay for regulation, or those industry bodies which strongly pressed for it in the 1990s. But not a bit of it—the Cabinet Office decided to press ahead with the abolition of the private security industry regulator with no consultation whatever, totally disregarding the fact that companies working in the industry had invested upwards of £300 million in regulation and in what they call the “SIA brand” and that they reasonably wanted a return on their investment. Even more seriously, those sitting in the Cabinet Office paid no heed to any of the dangers which deregulation would pose to the public.
In the past five years, the Security Industry Authority has worked with the police, local government and other partners to identify 175 companies and nearly 300 individuals with links to organised crime groups. The associated criminality was at the most extreme end of the spectrum of harm to the public—dealing in class A drugs, organised immigration crime, gang violence, domestic terrorism and laundering the proceeds of crime. Since 2004, 47,000 individuals have been removed from working in the industry because they were identified as not fit and proper to do so, and of these nearly 1,500 had their licences suspended in response to a clear, serious and imminent threat of harm to the public. The SIA itself has successfully prosecuted 24 cases and nine companies because of suspected links to organised crime, and through collaborative working with the UK Border Agency it has revoked about 8,000 licences of people with no right to work in the United Kingdom.
When front-line policing is going to be cut, and when the threat from both domestic and international terrorism is so strong, you would have thought it was hardly the time to announce the deregulation of private security and run the risk of encouraging criminals and untrained people to return to the sector. This runs completely counter to such schemes as the highly successful Projects Griffin and Argos, which bring together private security guards with the police, who use them as their eyes and ears to detect any suspicious goings on in the streets and in the buildings where they work, schemes which have been widely adopted both in the UK and further afield. These schemes rest on the foundation that those who work in private security have been properly vetted and have received basic training, a situation which the proposed deregulation of the industry is about to put in jeopardy.
It was in Scotland in October that the news first leaked out that the Government were intending to abolish the regulatory body for private security. The Scottish Government were appalled; the chief constable of Strathclyde condemned the proposal as a “disaster”. Licensing started in Scotland in 2007, and since then Strathclyde and other forces in Scotland have worked closely with the SIA to disrupt crime gangs by attacking their legitimate fronts, such as security businesses. Without a doubt, regulation was making a significant contribution to tackling serious and organised crime, particularly in the Glasgow area, and there was no way that the Scottish Government would agree to drop it. In fact quite the contrary: Scottish Justice Minister Kenny MacAskill made it clear he wanted more regulation, covering more sectors; and following a visit he made to Northern Ireland, the Northern Ireland Administration gave strong backing to this view, making it clear that regulation had worked extremely effectively there in the year since it was introduced and that, like the Scots, they would insist on retaining it under their devolved powers.
I was very surprised to hear the Minister say earlier that there had been no differences of view between the Government and Scotland on this Bill. I would like to ask him perhaps to reconsider the accuracy of what he said earlier and to make it clear to the House in his summing-up that very strong divisions of opinion exist between the Government in London, the Scottish Administration and the Northern Ireland Administration in relation to the SIA and its role.
It was indeed the Glasgow Herald which pointed up the total inconsistency in what was happening. It said that not only was the effectiveness of the SIA being measured by its ability to curtail and disrupt criminal activity, but that licensing had inculcated a new culture among stewards on licensed premises, whose training in reducing aggression and violence had contributed to crime reduction in city centres. It then observed that the SIA was apparently doomed in England because it had failed the Cabinet Office's tests for survival: performing a technical function, impartiality and establishing facts transparently. Yet, as the Herald wryly observed, it appeared to pass those tests with flying colours in Scotland.
Perhaps the Minister could answer a question that I have been asking for some time: where is the consistency in this Bill? Why is the regulator for private security singled out for abolition, but not other regulators such as the Gangmasters Licensing Authority or the Gambling Commission? Did all government departments answer the three questions differently? What is the common factor which binds together all the bodies in Schedule 1? To me, they appear like a completely random collection, almost as if they had been drawn out by lottery balls on a Wednesday evening.
The leak in the Daily Telegraph, while it completely demoralised staff working in all the listed organisations, did at least give the leading associations and individuals in the private security industry the opportunity to start organising and telling the Government what they thought. The British Security Industry Association, the International Professional Security Association, the Security Institute and the UK chapter of ASIS International, plus all the leading industry online sites and publications, expressed their opposition to deregulation loudly and unequivocally. A new industry umbrella organisation, the Security Alliance, took shape and resolved that regulation should stay for the protection of the public and to continue to drive up standards in the industry; that compliance and enforcement of licensing was very important, and could be undermined by what the Government were proposing to do; and that those working in the industry should be allowed to continue working with the regulator, as they had since the summer, to work out ways of moving to smarter, lighter-touch regulation.
The irony of all this is that had the Cabinet Office done any research at all, it would have learnt that the private security industry and its regulator had agreed on a blueprint for the next few years to move to greater industry involvement in the regulatory regime, particularly for companies achieving high standards in annual independent inspections, so that regulation could focus more strongly on the not so good, not so highly performing companies. The Home Office had already been approached to introduce business licensing alongside the licensing of individuals to make it easier to set minimum standards which could then be progressively raised, and to ensure compliance. Eventually, even Ministers in the Cabinet Office, I am happy to say, heard the message and heeded it. They agreed that, while the SIA should no longer be a non-departmental public body, there should be a phased transition to a new regulatory regime. This was endorsed last week in a letter to me from the Home Secretary, and I am happy to accede to her wish to ensure that,
“any transition to a new regulatory regime is phased in smoothly and takes into account the needs of the industry as well as the priorities of the Government including the devolved Administrations”,
and that there should be no,
“significant changes prior to the Olympic Games”.
However, I am aware that none of that is in the Bill. Can the Minister explain to me, please, and to all those working in the industry, what statutory force the Home Secretary's intentions will have?
One or two issues still worry those working in the industry, and major buyers of private security, such as Tesco, the big City banks and companies with big sites to protect, do not want the transition period to be rushed. They want to ensure that any new regime, even if it includes self-regulation, builds firmly on the existing one, is not a poor substitute for it and, in particular, continues to have government-backed enforcement powers. The Scottish Government, who are already planning for the Commonwealth Games in 2014, will undoubtedly be in strong agreement with these concerns, as will Northern Ireland.
So the regulator will try its best to set out a timetable and to construct a transition to a new regime which satisfies the Government on the one hand and the industry, buyers, Scotland and Northern Ireland on the other. It will not be easy, and our task has been made inordinately more difficult by the way the Cabinet Office has operated in the past few weeks, with a total lack of transparency, consistency, logic or evidence-based policy-making. We will go ahead and try to make the best of what is happening, and all our partners are very supportive, but it hardly inspires confidence in the Government's avowed mission to eradicate waste and inefficiency or to apply with any consistency the objectives listed in Clause 8(1). The Bill is hugely contentious, and I hope I have shown some of its shortcomings in the detailed analysis that I have just put forward. It needs to be considered extremely carefully before we proceed any further, which is why I shall certainly be supporting my noble friend’s amendment later this evening.
Lord Crickhowell
My Lords, the noble Baroness has given us a preview of the speech that she will no doubt make again in Committee. The problem that I have had to confront is that, while I completely agree with the aims of the Government in preparing this much-needed legislation, I am a member of the Constitution Committee, which produced the report that was laid before the House on 4 November. Bearing in mind the importance of that report, I suppose that it is as a punishment that the two members of the committee who have put down their names to speak tonight have been placed at 32 and 41 on the speakers list. That may have been a mistake, as Ministers knew that I for one would be bringing forward proposals, which they said that they would welcome, designed to address the very criticisms of the Bill contained in our report and which the House might have found helpful to be informed about early in the debate rather than during the dinner hour.
The Whips understandably believe that the members of a party or parties that form a Government have a duty to support them, but we have other duties as well. In this case, they are to ensure that constitutional conventions are not abused, to defend the right of Parliament to scrutinise and, if necessary, to amend the legislation brought before it and to see that the ability of this House to carry out its most important job—the proper scrutiny of legislation—is not undermined.
In the impact assessment that they have published, Ministers tell us that they considered proceeding by means of separate pieces of legislation but decided that that would have made it difficult to deliver the Government’s policy intention and would have been,
“an unnecessary burden on parliamentary time”.
It is not at all surprising that Ministers decided to bring forward a single Bill so that they could,
“effect the changes they need, through the less time-consuming process of secondary legislation”.
The drawbacks to that approach have been clearly identified by the Constitution Committee. With 910 public bodies in the scope of the review and 481 selected for some kind of change, I think that the Government, the House and, especially, Members on these Benches should try to work together to find ways of solving the very real problem that exists without wrecking the Bill, the aims of which are very widely supported.
At a meeting last week with Ministers and the Bill team, I was concerned by their repeated references to what they described as safeguards. The trouble is that the affirmative resolution procedure is not a safeguard, for the reasons so eloquently described by my noble and learned friend Lord Mayhew of Twysden and others, and other so-called safeguards are equally insubstantial. The words,
“the Minister must have regard to”,
and “if the Minister considers”—I quote from Clause 8 —do not provide any kind of reassurance.
So how do we resolve the difficulty? I have made a number of suggestions to Ministers, and my right honourable friend Francis Maude, the Cabinet Secretary, seemed sympathetic to all of them. First, there are several bodies listed in Schedule 5, such as the Human Fertilisation and Embryology Authority and the Human Tissue Authority, on which the Government are awaiting reports and have not yet decided how to proceed. The reform of some of those bodies raises sensitive issues. I believe that the Government would be well advised to take them out of this Bill and, when they have decided how to proceed, to produce separate Bills or include them in other legislation that the departments are almost certain to bring forward.
Secondly, there are some bodies included in the Bill with quasi-judicial or judicial functions where the changes raise legal and human rights issues, which were eloquently referred to by the noble and learned Lord, Lord Woolf, and by my noble friend Lord Lester of Herne Hill. I think that Ministers would be very wise not just to consider carefully and accept what the noble and learned Lord and the noble Lord said but to accept the recommendations that they made.
Thirdly—and this proposal does not by any means apply in every case or even in a very large number of cases—I say to my noble friend Lord Taylor of Holbeach that if he wants his Bill, as I do, he would be very wise to offer the super-affirmative resolution procedure used in the Legislative and Regulatory Reform Act 2006, which requires Ministers to take into account any representations, any resolution of either House and any recommendations of a parliamentary committee in respect of a draft order, laid for 60 days, particularly where, perhaps quite recently, there has been lengthy scrutiny of the legislation that brought the bodies into existence. Would it also not be wise to follow another precedent established by the 2006 Act, which is that there must be consultation with affected parties and that, following the consultation, the order must be laid in draft accompanied by an explanatory document? Those steps would provide substantial reassurance that the more controversial changes can be adequately examined, which would be further strengthened by an undertaking from Ministers that the legislation would be used never to increase but only to reduce the powers of public bodies.
Fourthly, a large number of public bodies, as we have heard, are included in Schedule 7. A Minister may by order transfer any of these bodies to one of the other schedules so that they may be abolished, merged or have their constitutional or financial arrangements modified. I realise that Ministers intend to hold regular reviews and that from time to time it will be clear that a public body has fulfilled its functions and is no longer required, but it is important, as a number of noble Lords have pointed out, that all public bodies that continue to function can do so with confidence and can use their independent judgment in carrying out their duties and in giving their advice to Ministers. If a public body faces the prospect that, by means of one order debated for an hour and a half, it can be transferred to a different schedule and by a second order merged or abolished, its confidence and its independence are likely to be undermined.
Many bodies on that list are important: the Environment Agency, the Health and Safety Executive, the Chief Inspector of Prisons, national park authorities, Ofcom and the OFT are there, just to pick a handful almost at random. Surely, at the very least, before moving a body from Schedule 7 Ministers should have to publish a paper explaining their intentions and allow an adequate period for consultation before any order is prepared. In some of these cases, Parliament may feel that the super-affirmative resolution procedure should be used. Some bodies, as the noble and learned Lord, Lord Woolf, has suggested, should be removed from the schedule entirely—some might argue that it should not be just a few.
The opposition amendment asks us to refer the Bill to a Select Committee. It does not require an instruction from the House for the Constitution Committee to consider the Bill. We have already done so. We stated that we will closely monitor the progress of the Bill and may report again to the House. What we could not do is carry out a detailed examination case by case of the large number of bodies covered by the Bill.
To send the Bill to a committee to carry out a full pre-legislative scrutiny would be to disguise an attempt to throw out the Bill at Second Reading without breaching the convention that this House does not reject Bills at Second Reading. I have served on two pre-legislative scrutiny committees. They are suitable mechanisms for dealing with Bills covering a limited number of changes in law, practice or principle. In this case, if the committee was drawn into scrutinising 481 separate cases, it is clear that it would be swamped by the weight of evidence, written and oral, and the Bill would effectively be killed.
For the Opposition seriously to obstruct, let alone kill, this Bill would be very odd politics. Mr Byrne, the shadow Cabinet Office Minister, has argued that the Government are carrying out the work of their Labour predecessor, in that two-thirds of the 192 bodies that are to be closed are those that he announced in March, that the tests proposed largely confirmed his approach and that he welcomes the principles of a sunset clause for quangos and triennial reviews.
My noble friend Lord Maclennan of Rogart offers a more tempting option, but I am extremely doubtful that even with a limited brief a committee could complete a useful job by the end of February that could not be better done by the House. I much prefer the proposal of my noble friend Lord Lester of Herne Hill. I hope, like him, that the Minister will, in the wind-up, give a clear undertaking that the Government will, at the start of the Committee stage, bring forward amendments to improve the process—it is on the process that most of the criticisms have concentrated—and include the adequate safeguards that have been suggested by noble Lords who have immense knowledge and experience in their own fields. I think that that is what the whole House demands.
My noble friend Lord Lester of Herne Hill referred to a comment made by the late Roy Jenkins about not digging trenches. I served for many years on the legislation committee under Lord Whitelaw. I have to say that I do not think that this Bill would have had a cat’s chance in hell of proceeding if Lord Whitelaw had been around. He would at this stage have made some pretty rough remarks to my noble friend on the Front Bench about not digging holes unless you can get out of them. I suggest to my noble friend that he quickly gets out of the mud before it becomes too deep. If he can do so, and if he can give us some reasonable undertakings—his right honourable friend Francis Maude has told me that he is sympathetic to much of what I have been saying—I will have no hesitation in voting for the Bill and against both amendments.
Baroness Pitkeathley
My Lords, I make it clear that, although I have been a member of and have chaired a considerable number of public bodies in my time, I am speaking without prejudice in this debate. Perhaps I may offer in evidence the fact that I currently chair two public bodies, neither of which is the subject of this Bill. One is to be wound up in March 2011, while the other is to be renamed, reformed, funded differently and given extended powers.
My role as chair in both cases is the same. I will work in a professional, consultative and considered way to deliver the outcome that the Government are aiming for as effectively and efficiently as I can—in one case, to wind the organisation up and, in the other, to deliver what will in essence be a new organisation. I hope that this illustrates that I am not in any way opposed in principle to the reform of public bodies. As further evidence, in my time I have participated in the merger of two public bodies and have closed another down. It is entirely right that review and reform should happen on a regular basis and for rational reasons.
As the Institute for Government reminds us in its report, Governments must seek to achieve a clear and sensible division between arm’s-length bodies, their sponsor departments and the public. However, I remain to be convinced that there are any rational reasons for some of the proposals in this Bill. There is no vision, no narrative and very little logic to suggest that this Bill represents forward movement or planned progression. On the contrary, the phrase that most readily springs to mind as I contemplate it is, “The urgent drives out the important”.
There is a desire to be seen leading the cull of quangos, which is promised by most incoming Governments, to simplify what by its very nature is the messy middle, as the Institute for Government terms it, between Whitehall and citizens. Also, of course, there is an urgency at this time to cut costs, if that was the aim, although we have heard from several noble Lords that this simply will not be achieved. For me, two important factors, which I thought were central to the coalition Government’s agenda and to how they intended to proceed, have been driven out by this rush to be seen to be culling public bodies.
The first is localisation. Is it not essential to the concept of the big society that power should be decentralised and devolved to the most local level possible and be free of political interference? How does that accord with taking so much power back into Whitehall through the abolition of arm’s-length bodies and with taking so much power back into government itself? Quangos were almost always set up with the aim of being clear about divisions of responsibility and making clear to voters where accountability lay.
The other principle that seems to have been abandoned is that of ensuring that the voice of the consumer, the user or the patient is strong in the development and implementation of government policy. I quote from the Cabinet Office paper, Building a Stronger Civil Society. One of the core components of the big society agenda is said to be,
“encouraging and enabling people from all walks of life to play a more active part in society”.
Almost all quangos in the list have lay representation on their boards—indeed, many have lay majorities—and were set up precisely to provide that strong consumer voice to which the Government say that they are committed. The lay representation provides not only a counter to professional interests but also strong grass-roots opinions about how policies work for those who are subject to them, as opposed to how a policy wonk in Whitehall or a parliamentary draftsman might expect them to work. Moreover, when people in charge of institutions and departments of state change so frequently, the lay representatives are often the longest-serving members of any body and provide the institutional memory. That memory is important, because those who do not observe history are doomed to repeat it.
I hope that the Minister will be explicit in his reply about how my two concerns are to be addressed: first, the commitment to localism versus the centralisation of power implicit in the Bill; and, secondly, the Government’s commitment to the consumer versus the threat to lay representation.
Like other noble Lords, I have two more serious concerns—the manner of introducing this legislation and the nature of the legislation itself. Even if the proposals in the Bill were sound, which I dispute, the manner of its introduction—with no consultation to speak of, with staff finding out via leaks and newspaper reports that their organisation was to be abolished, with chairs being given 10 minutes’ notice of the changes and so on—is absolutely insupportable. Staff in public bodies are not luddites, whatever the Minister thinks; they are devoted, skilled and committed people who want to do their best. You do not motivate staff or boards to co-operate by behaving in this way and I hope that the Minister will take the opportunity today to apologise to those staff and boards who have been so offended and distressed. In these troubled times, we are all dependent on the morale of staff in public bodies. Have the Government begun to consider the effect that the way in which this has been handled has had on that morale?
I must also mention, as others have, the draconian nature of parts of the Bill. It is no less than abuse of power and I know that noble Lords on all sides of the House will do their utmost to amend its more outrageous parts as the Bill passes through your Lordships’ House.
Lord Elystan-Morgan
My Lords, I appreciate that I am the 34th speaker and that much of what I might have said in relation to the issues has been said with great force and eloquence by other speakers, so I shall confine myself to a few matters in relation to the generality of the Bill.
The starting point, of course, is the condemnation at the highest possible level that has been levelled at the Bill by the Select Committee. It is not a slap on the wrist; it is not a case of saying, “We doubt whether your judgment is correct in this matter”. The Select Committee is saying—although not using this exact term—that the Henry VIII clause, which is used as the heart, core and kernel of the Bill, is a monster. One therefore asks whether you can redeem a monster. Can you so curb the functions of a monster that it would be safe for Parliament to proceed?
The Select Committee put it in this way:
“When assessing a proposal in a Bill that fresh Henry VIII powers be conferred, we have argued that the issues are ‘whether Ministers should have the power to change the statute book for the specific purposes provided for in the Bill and, if so, whether there are adequate procedural safeguards’”.
It is saying that, when you are dealing with 481 out of more than 900 quangos, you are doing something that is antithetical to the very purpose of legislation. It is as fundamental as that and I do not think that I am doing an injustice to the Select Committee in saying so. I therefore again ask the question: is it redeemable?
Every speaker in the debate so far has assumed, in one way or another, that it is either redeemable in Committee or on Report, if it proceeds in the ordinary way, or redeemable having gone through the procedure of a Select Committee and returning to the House in about five or six months’ time. However, I ask the fundamental question: if the Select Committee is correct, and it seems to me that it is—it is a body of the highest possible distinction, with great experience, great understanding and great wisdom—how can this Bill possibly be redeemed in its present form? If I am wrong and it is a matter of devising a schedule of safeguards so severe and specific that the Bill can cease to be a monster, I would like to know exactly how that is going to be done.
Only the noble Baroness, Lady Scott of Needham Market, has referred to the question of how many bodies will be contained in each order that is made. The Select Committee put it in this way:
“Furthermore, the Bill as drafted appears to allow for the rolling up in a single ministerial order of changes to a number of diverse public bodies. Such bodies may even operate in unrelated policy domains. We are concerned that ‘omnibus orders’, covering a disparate range of institutions, pose yet more difficulties in terms of effective parliamentary scrutiny”.
Will the Minister who is to reply give an unreserved undertaking that it will be only one order for one body? That question can be dealt with by a monosyllabic answer in one way or another. It is of the utmost importance. As every Member of the House will know, moving orders en bloc can be done only with the unanimous consent of the House. This is not, of course, a matter that would transgress paragraph 10.13 of the Companion, but it would transgress the principle that you deal with one issue in one order. If you have an order that deals, for example, with 10 bodies, you are dealing with 10 issues. Therefore, such an undertaking is crucial.
There is also the question raised by the noble and learned Lord, Lord Woolf, of the inclusion of a number of bodies—I would have regarded them not as quangos at all but as independent judicial bodies—that have an invaluable and utterly priceless part to play in the administration of justice. The idea that they should have been included in the legion of the damned, as Kipling might have called those bodies listed in Schedule 7, is horrifying. It shows total insensitivity on the part of the Government that they should even consider that the independence of these bodies, which is so central to the very concept of the administration of justice, should ever be questioned.
I turn now to the specific matter of the inclusion of Sianel Pedwar Cymru—S4C, the Welsh language channel—in Schedules 4 and 7. It is my contention that this body is wholly unique. It is unique because it was set up with a commission. That commission was that it should do everything within its power—indeed, its existence is based on this—to preserve the life and future of the Welsh language. It is unique also in relation to the scene that existed 28 years ago when it was set up, when there had for many years in Wales been a long, bitter campaign of civil disobedience and lawlessness against those opposed to a Welsh channel. William Whitelaw, a man of immense understanding, diplomacy and integrity, ultimately came to a compact with the Welsh people and said, “You will have your channel”. A legislative framework was set up that guaranteed funds for the channel that would be adequate for it to carry out its commission. Indeed, its independence was guaranteed by statute.
The viability of that channel is now challenged and jeopardised by the fact that that financial guarantee disappears. The independence is jeopardised by the fact that it is contemplated that it should be merged with the BBC as a very junior, meagre partner. Its independence cannot possibly be real in those circumstances; indeed, the major decisions may well be taken by the broadcasting trust in London.
I do not believe that I overstate for a moment the anxieties that are felt in Wales concerning that loss of independence. Indeed, if one looks at the statements made in the last few days by Channel 4 as to its grave anxiety with regard to its own independence, one can well understand why the Welsh body is so afeared of what might happen in this situation. The continued viability and independence of S4C is crucial to the very existence of the Welsh language. The Welsh language is spoken by some 580,000 persons, including three or four of us in this House. It is one of the oldest living languages in Europe—it stems back to its Indo-European origins about 1,500 years ago. It was a living language 1,000 years ago, when French was only a patois of Latin. In those circumstances, I ask the House to consider that it is part of its trust in relation to the Welsh language to regard the situation of S4C as being wholly unique. Parliament has the sovereignty to amend all the legislative structures but, in so doing, it would be reneging on the solemn compact that was made between a very honourable gentleman and the people of Wales 28 years ago.
Lord Judd
My Lords, if there were no other reason for the Government to think again, the observations of the Select Committee on the Constitution and the observation of the noble and learned Lord, Lord Woolf, in our deliberations today are reason enough. Henry VIII clauses do not make good democracy and the independence of the judiciary is the cornerstone of our system of law and justice.
Of course we need to keep the number of quangos and public bodies and their effectiveness, cost-effectiveness and purpose under review. If they are no longer relevant, if they have fulfilled their purpose, they should be wound up. However, there are real and widespread concerns at the sweeping, precipitate and ill-considered nature of the Government’s proposals. For a Government committed to empowering the people, there has been a quite extraordinary lack of consultation.
There are puzzling contradictions in the Government’s overall position. The Government keep emphasising that they want to improve the quality of democracy and to reduce the size of what they like to call the state. They say that they want to bring power and decision-making closer to the people. How such concentration of wide-ranging powers in the hands of Ministers will help to achieve those objectives is to me—and, I think, to most people—a total mystery.
Another disturbing contradiction is how, if it is to be argued that Ministers and the Government will be made more democratically accountable to Parliament, that can be reconciled with the proposals that will come before the House next week that seek to reduce the number of MPs and introduce what, in many cases, will be larger, less-community-based constituencies, in which MPs will inevitably become less accessible. In many ways, MPs are already overloaded. How will those new sinister proposals help them better to fulfil their responsibilities of scrutiny and holding the Executive to account?
I tremble at the danger that years of experience and dedicated service that have provided profoundly significant contributions to the quality of our society, ranging from our system of law to our heritage and environment, will be all too rapidly trashed and thrown away as centralised bureaucracy or crude profit making take over. The Forestry Commission provides an outstanding example of such service. At this point, I unreservedly pay a warm tribute to my noble friend Lord Clark of Windermere for the outstanding contribution that he made as chairman of the Forestry Commission. Those of us who know him as a friend in the county of Cumbria appreciate that few people understand the countryside better than he does.
The Forestry Commission has learnt from 90 years of experience and has become a model example, with highly motivated staff at all levels. The commission is dedicated to the nation’s needs—not least to combating climate change—to biodiversity and to the quality of our scenic heritage as well as to the spiritual uplift and public enjoyment that forests can provide for the nation. The commission’s imaginative work on public accessibility to woodland and to adventurous experiences has been outstanding. Why put a question mark over all that? Have the Government looked at what has happened in New Zealand, Papua New Guinea, Indonesia, Nepal or indeed—closer to home—Sweden?
I have the honour to be president of the Friends of the Lake District and vice-president of the Campaign for National Parks, and I know that the Bill has considerable implications for the national parks. If I dwell for a moment on the national parks, I do so because the concerns that arise in that context have direct relevance to many other bodies that are covered by the Bill. It has been suggested that the national park authorities have been included in the Bill as a precaution, in case the imminent review of national park authority governance results in proposed changes that might require a revision of existing legislation. However, if that is true, it is surely a highly questionable way of developing legislation to include powers that may not be necessary or appropriate and that have not been subject to consultation with the affected bodies.
Clause 3 will give the Minister the power to make provision by order to
“modify the constitutional arrangements of a body or office specified in Schedule 3”,
which includes national park authorities and the Broads Authority. The term “constitutional arrangements” refers to a wide range of arrangements relating to the structure, governance and functions of such bodies. The provision appears to allow Ministers the power to change many aspects of the national park authorities’ work, including their name, their accountability to Ministers, their powers to employ staff, the number of their members, the procedures for members’ appointments and the appointment of a chair. For example, rather than being elected by the national park authority members, the chair could be required to undergo a pre-appointment hearing before taking up the post.
Clause 5 will give the Minister the power to make provision by order to,
“modify the functions of a body, or the holder of an office, specified in Schedule 5”,
which includes the national park authorities and the Broads Authority. The clause will also give the Minister the power to,
“transfer a function of such a person to an eligible person”.
An “eligible person” is defined as,
“a Minister, … any other person exercising public functions, … a company limited by guarantee, … a community interest company, or … a body of trustees”.
National park authority functions include preparing and publishing a national park management plan. In their role as local planning authorities, national park authorities determine planning applications and prepare a suite of planning policies to cover each park. So this clause would appear to allow Ministers to transfer the national park authority’s planning function to a third party, including the Ministers themselves.
Clause 6 gives a Minister the power to make provision by order to authorise the national park authority or Broads Authority to dedicate some or all of its functions to an eligible person. These are the only bodies listed in Schedule 6; while not explicitly relating to an authority’s planning function, it is hard to imagine what else this could be about. National park authorities may choose to enter into agency agreements with other authorities on the delivery of their development control function. This ensures that the authority remains ultimately responsible for the delivery of the function and is able to monitor and when necessary amend arrangements so that they do not prejudice the delivery of park purposes. Full delegation would arguably not give the same ability meaningfully to monitor arrangements, as it would delegate responsibility for them to another body.
Clause 7 provides that an order under the above clauses may include consequential or supplementary provisions—for example, the funding arrangements of the transferring authority. Presumably that would mean that when a national park authority transferred some of its functions to an eligible person, the appropriate funding would be transferred along with it.
It is frankly unconvincing that national park authorities and the Broads Authority have been included in the Bill and that Ministers are apparently seeking to give themselves power to exercise control over almost every aspect of national park authority operation and governance. As I have said, that seems to conflict with the rationale being deployed elsewhere in government to devolve as much decision-making as possible down to the local level and not to constrain local flexibility and choice. It seems inevitable that increasing the scope of government involvement and scrutiny to the level proposed would undermine the national park authorities’ independence. That appears in stark contrast to the position that the Conservative Government, to their credit, took when the Environment Bill passed through Parliament in the 1990s, when they demonstrated a strong commitment to establish independent authorities for the national parks.
The current model of national park authorities originates from an independent review in 1991, the Edwards review, whose priority was to establish bodies that could effectively tackle the challenges that face the parks, meeting the nation’s aspirations for them while being accountable and sensitive to the legitimate needs of park communities. The review recommended independent national park authorities, citing the principal advantages as including clarity of vision and self-confidence, which would allow the authorities to set their own agenda and pursue it resolutely. The Government accepted those recommendations and agreed that independent authorities would provide those benefits—and that was a Conservative Government. By including national park authorities and the Broads Authority in the Bill, the Government seem to be taking a significant backwards step, which would undermine the authorities’ independence and their ability to deliver their functions on behalf of the nation. They would constantly be looking over their shoulder and become risk averse, as any faltering innovation could be seized on by Ministers as justification for functions to be transferred or delegated to another local authority, charity or public body.
Altogether, this is not a reassuring future for those charged with protecting and enhancing one of the most precious assets of our civilised UK. My noble friend is right to insist on his amendment. Much of what I have said about the parks applies very directly to other parties.
Lord Morris of Aberavon
My Lords, Parliament has always been rightly jealous of granting Henry VIII’s powers to Ministers and, where sought, it has ensured that there are safeguards. The Legislative and Regulatory Reform Bill was considerably amended in 2006 to ensure such safeguards and I support the suggestion, made time after time, that the Government should seriously consider the super-affirmative resolution procedure and the consultative proceedings therein enshrined.
The Select Committee on the Constitution—on which I used to serve—has, in a very short time, produced trenchant criticisms of the whole architecture of the Bill. Its conclusions are couched in some of the strongest terms that I have read. This House owes the committee a great deal for its industry. It seems to me that the desire of the Government to reform, in all, 481 bodies and their rationale of which bodies are in or out is not always easy to follow. The Government have thrown the whole kitchen sink at the bodies mentioned in the schedules, steamrollering through parliamentary processes without adequate consultation and expedited consideration. My noble friend Lord Richard spelled out the extraordinary speed that taking the considerations must have had.
It occurs to me that this is a reversal of the,
“openness and transparency in public services that this Government seek to achieve”.—[Official Report, Commons, 14/10/10; col. 27WS.].
That was the rationale of Mr Francis Maude, the Minister responsible in the House of Commons. The Select Committee refers to the Government,
“pushing at the boundaries of the constitutional principle that only Parliament may amend or repeal primary legislation”.
Since we are governed in the main by conventions, there is nothing illegal in what the Government are doing. Yet is it proper or right to do it in this way? Many of these public bodies are set up by statute or by royal charter—I have set up quite a few myself—but all after prolonged parliamentary debate in both Houses. The committee observed that the Bill fails two tests, on propriety and the adequacy of procedural safeguards. The committee has not overstated its observations but, as my noble friend Lady Royall quoted, this is the kind of Bill that “drains the lifeblood” of our consultative processes.
My criticisms apply to the procedures proposed by the Government and are not diminished in any way because of any sympathy that I may have for the need to reform the quango system and for making decision-making more accountable to Ministers and Parliament. Quangos have their purpose. They can operate freed of the more bureaucratic processes of the Civil Service, but once they have achieved their objectives there is a need to scrutinise their effectiveness and, on occasion, their very existence. I do not oppose in general the Government’s objective on this point. The danger of quangos is that, once set up, they have an organic life of their own. Some become oversalaried and overmanned.
We will hear a lot of special pleading in these debates. I doubt if I will take part in them, but I listened with great care to the powerful speech dealing with the judicial or quasi-judicial bodies—those dealing with the judicial system—by the noble and learned Lord, Lord Woolf. I would certainly be tempted to support him on those occasions. If I may be so bold as to advise the Minister, I suggest that, before we start the Committee stage, some of those bodies that the noble and learned Lord mentioned should be taken out of the Bill. That will make the proceedings much easier for the Government. His was a powerful speech and one that we should listen to. What is wanted, and here I am encouraged by some of the Government’s thoughts, is a proper and considered root-and-branch appraisal of each quango and its functions, particularly how much control there is by central government over its staffing and what appraisal there is by the Government of the salaries of its officers.
How have things got so out of hand with the salaries now paid to the heads of quangos? The Prime Minister is probably paid at much too low a level, but it is a useful yardstick for what is an appropriate payment for others in the public service. Where there is a proposal to pay more, and there is sometimes a case for that, there should be a clear justification for that kind of salary in the public sector. Where have the words “with the consent of the Treasury” gone in legislation? Who now controls the level of the remuneration?
It was quite a shock to me, after only a few months as Attorney-General, to be asked for my views as to whether a very senior government lawyer should be paid a bonus. He was indeed a good man, but by what standards was I to judge his suitability for a bonus? In fact, I had never heard of the word “bonus” for the Civil Service before. Salaries for those in public work should be at the right rate for the job and there should be no question of a bonus.
I have a particular point regarding the published proposals to cut Ofcom’s manpower by 25 per cent. I hope that the need for the proposed manning has been properly assessed, along with its effectiveness, in the time that it takes to deal with complaints and indeed the importance of its remit. During the Recess, I was concerned about a press report on the expenses claimed by some officers of Ofcom for hospitality running into thousand of pounds. I have referred this to the Minister already. It is the principle of paying out of the public purse for hospitality of officers of a body of this kind that concerns me.
Should a regulatory body either offer or receive significant hospitality? When I used to sit as a Crown Court recorder, I would be very wary of accepting any hospitality in any shape or form. It would have been unsuitable and inappropriate—even more so when I was Welsh Secretary for six years, exercising important planning powers. I would certainly run a mile from accepting any significant hospitality, and I would hope that my Permanent Secretary would have protected me from such a mistake. Is there any reason why a regulatory body should be either receiving or paying out for hospitality?
There are a number of clauses referring to the National Assembly for Wales. In the absence of a proper briefing, the idea of enabling legislation bringing together the functions of the Countryside Commission, the Environment Agency and Forestry Commission Wales appears very appealing, since agriculture is already a devolved matter. My specific question for the Minister is: am I right in presuming that these proposals are at the request of the Welsh Assembly? In a recent comment in the Assembly on 12 October, the First Minister stated that he was not consulted on some of the proposals in the Bill affecting Wales. Was he consulted on the section dealing with the powers of Welsh Ministers? These are important matters for the Assembly. In the time available, all I need say about the powerful speech by my noble friend Lord Elystan-Morgan is that I support every word that he has said.
These examples of the lack of consultation and the hurry in the preparation of the Bill may well be significant and may apply more generally for many more organisations that are affected by the Bill. I therefore support my noble friend’s amendment.
Lord Roberts of Conwy
My Lords, I found myself on the horns of a dilemma as I read the Bill, and that was before I read the Constitution Committee’s report. Much as I wish for a diminution of the state’s role and approve of the wholesome objectives, spelt out in Clause 8, of,
“increased efficiency, effectiveness and economy in the exercise of public functions”,
and,
“securing appropriate accountability to Ministers”,
the means by which they are to be achieved are not easily justified, even by the noble ends in view. That point has been made by several noble Lords in the course of our debate this evening.
Among the options that the Government considered, according to the impact assessment document referred to by my noble friend Lord Crickhowell was,
“not bringing forward a Bill and making the necessary statutory changes to the bodies in separate pieces of legislation”.
Although the approach represented there was obviously the proper way to proceed, the impact assessment states:
“It was decided that this would make it difficult to deliver the Government’s policy intentions and be an unnecessary burden on parliamentary time. Changes would either have to wait until appropriate departmental Bills were introduced or wait until time could be found for separate Bills”.
Clearly time was of the essence for the Government, rather than parliamentary propriety. Indeed, the Government decided to bring forward a single Bill to enable the changes to be made through the less time-consuming process of secondary legislation—mainly, it seems, in the form of orders subject to affirmative procedure. Certainly, secondary legislation has all the advantages, in terms of speed, that the Government claim for it, but orders cannot be amended in either House, are subject to time-limited debates and it is not our practice, in this House, to vote on them. There are severe parliamentary drawbacks to this procedure.
Nevertheless, it is proposed that public bodies that have, for the most part, been established in the past by well considered statutes be abolished, merged or modified in their internal constitutional or funding arrangements by the speedy processes of secondary legislation. If only some allowance was made for the possibility of primary legislation being required for certain important changes involving lengthy, complex orders and difficult issues, this might have softened the Government’s approach and won some more friends for the Bill. However, it seems to be ruled out. I ask my noble friend on the Front Bench for an assurance when he winds up that I am wrong about this and it is still possible for primary, rather than secondary, legislation to be used in this context. I still commend the thought of an amendment to allow primary legislation and I hope this will find favour with the Minister.
When one looks at individual bodies that one is familiar with, in my case there is the Welsh-language channel, S4C. I appreciate much of what the noble Lord, Lord Elystan-Morgan, said. I remind the House that my noble friend Lord Crickhowell played a prominent part in the establishment of S4C so many years ago. It is quite properly listed in Schedule 4 as a body subject to funding changes. Under the Broadcasting Act 1996, S4C’s annual budget increase is linked to the retail prices index, and that link is to be severed. It has also been announced that S4C is to be part funded from the TV and radio licence fee from 2013. We tend to regard that as the BBC licence fee but that is technically incorrect.
The Welsh channel authority is also included in Schedule 7 as a body that may be shifted to another schedule, possibly relating to a change in its constitution. Again, the essence of that change, and what it is hoped to achieve, has been spelt out by the Secretary of State for Culture, Media and Sport. Of course, at the end of the day such changes as are made will be by secondary legislation, with all its parliamentary limitations, to a body established and developed by primary legislation over some years and after a great deal of discussion. Such extensive discussion may again be necessary, judging by the ferment in Wales at present, but that would be possible only with primary legislation.
It has been suggested by a number of noble friends that some orders might be subject to the super-affirmative resolution procedure, but having read the relevant paragraphs in the Companion to the Standing Orders and the Constitution Committee’s comments, and having seen the dilatory complexities of that procedure, I cannot see a Minister volunteering an order to be subject to it because there is a very clear danger that he would lose control of his legislation. Therefore, it is no wonder to me at any rate that the procedure has not been frequently used.
A wise man once told me that in considering legislation one should always think what the Opposition might do if they inherited the powers sought in the legislation. It occurred to me that, at their worst, some future set of noble Lords on the Front Bench opposite might include your Lordships’ House in Schedule 7 as a possible candidate for modification, if not abolition. However, that is a very extreme scenario which would, I hope, be thwarted by wiser noble heads on the Back Benches.
Nevertheless, the precedent established here of a massive subjection of public bodies, largely established by primary legislation, to possible change by secondary legislation is not a happy one. I hope that some amendments can be passed in Committee on the Floor of the House to tie the possible changes to public bodies even more firmly and exclusively to the excellent objectives set out in Clause 8 and the principles and values that we cherish.
Lord Soley
I am a member of the Delegated Powers and Regulatory Reform Committee, which will meet tomorrow to consider the Bill. However, I wish to make it clear that I am speaking for myself tonight. I think the Minister will have already realised that the structure of the Bill is not wildly popular on either side of the House, and that he may have some difficulty with it. Yet it is odd that there is widespread agreement on the need to reform and review from time to time the functions of quangos. That widespread agreement applies in this House and in the House of Commons. We know that we need quangos, but we also know that from time to time we need to review them and sometimes wind them up. Indeed, the previous Labour Government had a very impressive record on winding up quangos. This Government will be hard put to live up to that record, despite this overwhelming attempt to do so.
I do not wish to repeat all the arguments that many noble Lords have made so well, but it is clearly wrong to use powers of this nature. The first six clauses start with the words,
“A Minister may by order”.
When you see those little words grouped together in an Act of Parliament, you need to say, “And what comes next?”. All six clauses spell out Minister’s powers to wind up, change, change the constitution, and change the staff and personnel of the many quangos listed in the Bill. As has been pointed out ably, including in the previous speech, he can do that despite the fact that these bodies were set up by primary legislation.
That brings us to the deadly issue of the Henry VIII powers, which we look at from time to time on the Delegated Legislation and Regulatory Reform Committee. If you have Henry VIII powers—and I am one of those who take the view that in recent times we have probably used them more than we should—we need to look at them very carefully. The Bill takes the situation way beyond that. It is as though Henry VIII has risen from the grave disguised as a parliamentary draftsman. It is a Henry VIII Bill. He would have been very happy with it. He did not want to be a total and absolute dictator; he would have been quite happy to hear the debate, as long as it ended up with the position he wanted. That is what the Bill is doing and is why the Minister has so much trouble on it. It will go on being trouble for him, because it cannot possibly go through in its present form.
The noble Lord, Lord Crickhowell, said that we could introduce some ways of softening it with a super-affirmative resolution procedure. I am inclined to say that, given the agreement across the parties in both Houses on the need to look at the way we run quangos and how we adjust them over time, we might look at something more adventurous which enables us to review their work over time. What better role for this House? It could be rather good at that, and we ought to be considering things of that nature.
At the end of the day, as has been ably said, what is so troubling about the Bill is that the Executive are giving themselves enormous powers over parliamentary procedure. That is what we are rebelling against—all of us, I think, on both sides. We are saying that this is a dangerous encroachment on parliamentary procedure by the Government. It cannot be allowed to go on like that. All of us are saying that, with a couple of exceptions. About three people so far have given outright support to the Minister. He has three strong friends there, but if I were him I would not be listening to them too carefully. They may not represent the majority. It would be worth while him taking that on board.
I want to end with a question, which has run through several of the speeches and is referred to in paragraph 13 of the report of Select Committee on the Constitution. How can this House, whose primary role is as a revising Chamber, possibly revise if the Bill goes through in its present form? It cannot do so, as far as I can see. If the Minister has something up his sleeve which will enable us to revise and review this work after the Bill is passed, he has a duty to tell us tonight. If, as I suspect, the Government have not really thought this through, it would be better if they took it away and tried to get some cross-party agreement on a need for some form of constant review of quangos, which looks at what they do, how they do it, and how they are structured and funded. This reinvention of Henry VIII powers as a Bill is profoundly unhealthy to parliamentary democracy. I say to the Minister, please take the Bill away, if only for the sake of his own Back-Benchers, who look increasingly uncomfortable with it.
Baroness Warnock
My Lords, at this time of the evening brevity is the only virtue. I will make three points—two general and one particular. The first general point was ably put by the noble Lord, Lord Soley. This is by far the most important issue before the House this evening. We have heard this from the most learned and authoritative Members of your Lordships' House, and from the Sixth Report of the Select Committee on the Constitution. This is, constitutionally, a bad Bill that should not go through in anything like its present form. It needs further detailed and careful scrutiny, which will be difficult in Committee on the Floor of the House. Therefore, I feel strongly inclined to support the amendment of the noble Lord, Lord Hunt of Kings Heath.
I feel rather like a good headmistress—of course, I was a headmistress. Along with the noble and learned Baroness, Lady Scotland, I am disappointed that the Government have brought before us a Bill that exemplifies the worst features of some of the Bills that we have faced in the past decade or more. It is mistaken and must be put right. That is my first and, I should think, most commonly agreed general point.
Secondly, it is a mistake to assume, as some parts of the Bill seem to, that all arm’s-length bodies, quangos or whatever we choose to call them, are the same kind of body. They differ widely, both in their relations with government and, importantly, with the Civil Service. As we have heard, they are often extremely useful, effective and genuinely non-political. The fact that they are not elected is irrelevant if the people who serve on them know what they are doing and are committed to being non-political, dispassionate and impartial. They also have time to devote to their particular subject matter and to considering evidence. The membership of these bodies is known and accessible to the general public. As I know well from my days as a quango member, one can be reached by the general public: they know who is trying to solve a problem. We need to take into account the very different nature of these bodies. Therefore, as has been said many times, we need time to go through, one by one, what it is that they do and whether they are out of date or are working.
Lastly on the particular issue, I ask for a stay of sentence on the HFEA. I would probably be expected to say that. I do not have time now to put forward a proper defence of this body. It is a highly specialist body that offers a form of protection against exploitation—this is what is most valuable about it—to a group of highly vulnerable people who are trying and failing to conceive. These people are liable to exploitation, which is why the regulatory and supervisory functions of the HFEA are so important. Apart from that, it has now become a unique research tool in a branch of medicine where research is still badly needed. As we have heard from other noble Lords, its database must be kept up and properly managed by a specialist body. I make a special plea for it: after all, it is one of my babies.
Lord Stevenson of Balmacara
My Lords, given the tenor and content of many of the excellent speeches that we have heard in the debate so far—particularly those from the noble and learned Lords, Lord Morris, Lord Woolf and Lord Mayhew, the noble and learned Baroness, Lady Scotland, the noble Baroness, Lady Scott, and the noble Lord, Lord Lester—the Bill, in its present form, seems to be in trouble. I hope very much that when the Minister replies to the debate, he will accept that it needs significant changes and that we need more time, more detailed scrutiny and less confusion as to its purpose.
As others have said, this is a seriously important constitutional measure. We should, in the interests of good governance over the long term, take whatever time is necessary to get a creditable and workable solution to the problems that we all recognise affect the good governance of our arm’s-length bodies. Our aim should surely be to build into our constitutional arrangements in this country a well-thought-through system which sets out clearly how, and under what conditions, arm’s-length bodies can be created, funded, reviewed and, where necessary, dissolved. If we get it right, it can surely form another piece of the codified constitution which we really should be creating for this country and which, indeed, is the sub-text to this Bill.
Most of the noble Lords who have an association with a quango named in the Bill have argued—in some cases, rather persuasively—that it should be removed from whichever schedule it appears in. Rather perversely, and rather like the noble Lord, Lord Roberts of Conwy, I should like to argue for a quango to be included in death row in Schedule 1 to the Bill. I refer to the UK Film Council, which, as your Lordships will be aware, was summarily abolished by the Secretary of State for Culture, Media and Sport in July 2010. The Secretary of State must have known that this Bill was in preparation but, for some reason, he did not see fit to include the UK Film Council and therefore it does not appear in Schedule 1. Given that it is to be abolished, I respectfully suggest that it is not too late for it to be added to Schedule 1.
Abolishing the UK Film Council threatens one of the success stories of the past 10 years, as UK films have reached out to British and overseas audiences, and film has become a dynamic part of the creative industries and the creative economy. If the UK Film Council were included in Schedule 1 and the Bill were amended along the lines of the discussions that we have had today, we would have a chance to discover why it is being abolished and what plans the department has to ensure that the hard work and success of the past decade continue.
Today of all days, we should be celebrating with our film industry Warner Brothers’ very welcome decision to invest in Leavesden film studios, the home of the “Harry Potter” films, but instead we are excluded from the process. We know nothing about what is in mind and we do not know how and under what conditions the vital functions undertaken by the UK Film Council, and the expertise that is currently employed there, will end up. Naturally, I hope that good sense will prevail and that they will eventually go to the British Film Institute, of which I am a former director. However, whichever body it is, it is vital that it is fit for purpose and can serve the needs of audiences and the British film industry.
I hope that my rather counterintuitive example of the UK Film Council has demonstrated that we lack a proper process—a matter about which other noble Lords have spoken. We need a properly constituted Bill and we need it now.
The Minister has been given a whole slew of advice today and, in the event that the amendment proposed by my noble friend Lord Hunt of Kings Heath falls, I hope that the Minister will listen carefully to the advice that he has received so that we can in future, and in the public interest, deal properly with arm’s-length bodies.
Lord Norton of Louth
My Lords, like others, I have no problem with the declared ends of this Bill, but I have a fundamental objection to the means.
I declare an interest as a member of the Constitution Committee, like my noble friend Lord Crickhowell. Many speakers have already referred to our report but perhaps I may remind the House of paragraph 13, which has already been mentioned by the noble Lord, Lord Soley:
“The Public Bodies Bill … strikes at the very heart of our constitutional system, being a type of ‘framework’ or ‘enabling’ legislation that drains the lifeblood of legislative amendment and debate across a very broad range of public arrangements. In particular, it hits directly at the role of the House of Lords as a revising chamber”.
We go on to say that the Bill,
“is concerned with the design, powers and functions of a vast range of public bodies, the creation of many of which was the product of extensive parliamentary debate and deliberation. We fail to see why such parliamentary debate and deliberation should be denied to proposals now to abolish or to redesign such bodies”.
My noble friend Lord Blackwell thinks that we should be denied such opportunity because it would take too much time. That does not follow at all. One Bill can make specific changes to a number of Acts.
The crucial point is one of principle. Our report makes clear the objection to the Henry VIII provisions contained in the Bill. I am conscious that Parliament has variously granted such powers before, but that is not an argument for extending their use and certainly not for accepting them on the terms embodied in this Bill. If they are to be used, there has to be a compelling case; if they are employed, they need to be subject to rigorous parliamentary scrutiny. Neither condition applies in this case.
As Liberty notes in its briefing on the Bill, amendments to legislation should be properly debated and considered by Parliament with the ability for amendments to be proposed and implemented. As it says, secondary legislation should not amend primary legislation in relation to anything other than the most minor details. We are not dealing here with the most minor details. We are dealing with a measure which directly affects bodies established by statute. We are dealing with a measure which not only creates the basis for some of those bodies to be abolished, merged or have their functions modified, but also provides for a great many to be subject to a form of living uncertainty. The principal argument for drafting the Bill in this way is not one of principle but rather one of convenience in that government may not have the time to get individual measures through in the future. That is insufficient to overcome the basic problems inherent in this measure. My noble friend Lord Blackwell described it as a “bold Bill”. I regard it as a lazy Bill.
The safeguards that it embodies are inadequate. For orders made under the Human Rights Act and the Legislative and Regulatory Reform Act, there is at least some degree of parliamentary supervision. There is no such supervision provided for in this Bill. As we have heard, orders are subject to the affirmative resolution procedure. In other words, as my noble friend Lord Roberts of Conwy explained, they are subject only to short debate, are not amenable to amendment, and are not usually rejected by this House. There is no provision, as with super-affirmative resolutions, for consultation or to take into account representations made on a draft order. If an order is introduced to transfer a body from Schedule 7, Parliament will be in the dark as to what is then likely to happen to it. It has to await an order made under the schedule to which it is transferred.
There are also limited safeguards in respect of Ministers contemplating orders under Clauses 1 to 6. The presumed safeguard in Clause 8(2), itself limited, has to be read in conjunction with Clause 8(1) under which Ministers must have regard to the need to achieve increased efficiency, effectiveness and economy in the exercise of public functions. In short, change may be driven by executive assessment of effectiveness. There may be a case for that, but it should not come under the rubric of a safeguard. Various safeguards included in the Legislative and Regulatory Reform Act are omitted.
Given the debates we had on the Legislative and Regulatory Reform Bill and before that on the Regulatory Reform Bill, it is remarkable that the Government have sought to rely solely on the affirmative resolution procedure. Also, given Section 3(6) of the Constitutional Reform and Governance Act 2010, it is surprising that officials appear unaware of the constitutional import of what is proposed.
I turn to Schedule 7. I was going to say more, but many noble Lords have dealt with it in some detail. Again, constitutional principles are engaged, not least, as the noble and learned Lord, Lord Woolf, said in his powerful speech, the constitutional separation of the Executive and the judiciary. The schedule includes bodies that the Institute for Government refers to as independent public interest bodies, bodies which require statutory independence from government to fulfil their duties with public confidence. They fulfil roles where impartiality is not only required but needs to be seen to be exercised. The institute gives various examples, as indeed does Justice in its briefing on the Bill. These bodies have to operate at arm's length from government and may indeed have to adjudicate in cases to which the Government are a party.
Let us take the Information Commissioner. He may have the strength of character not to be influenced by the prospect of an order being brought forward to transfer his office to another schedule. Yet imagine what may happen if in a particular case he finds in favour of the Government and decides information held by a department does not have to be disclosed. Critics may then say, “Well, he would reach that conclusion, wouldn't he? He's worried that otherwise the Government may move to abolish his office”. So long as the Information Commissioner is listed in Schedule 7, that danger will always exist. I know that the Government have no intention that such functions should be affected by government review. However, for a Minister to say that that constitutes the Government's intention is inadequate. Current intentions do not bind future Governments. As long as the Bill continues as drafted, Schedule 7 has the potential to have a chilling effect on the bodies listed.
I very much agree with the noble Lord, Lord Lester of Herne Hill, that we should be looking for solutions to problems, not simply identifying problems. The prime mischief in the Bill is to be found in Clause 11 and Schedule 7. The Government need to consider as a matter of urgency the use of super-affirmative resolution procedures, utilising other safeguards embodied in the Legislative and Regulatory Reform Act and, as recommended by the Institute for Government, removing independent public interest bodies from Schedule 7. I regard those as the minimum necessary changes. I am not yet persuaded that Clause 11 and Schedule 7 should remain in the Bill.
There is an alternative to the Schedule 7 approach. The Government plan to have a triennial review of non-departmental public bodies. The more appropriate approach would be to have a public bodies Bill in each Parliament, thus enabling concrete proposals to be put before Parliament and given proper scrutiny by both Houses. That would avoid the objections that attach to the Bill.
Baroness Thornton
My Lords, the Minister will not by now be surprised or unaware that many noble Lords and, indeed, many organisations, believe that there are some fundamental problems with the Bill. There are two main problems. One is the constitutional issues, which have been referred to by many noble Lords today. The Minister has to satisfy the House as to why the Government need such draconian powers to abolish or alter so many organisations that Parliament has spent time scrutinising at length over the years. The Bill allows any Minister to abolish or alter any arm’s-length body without proper recourse to Parliament. Secondly, apart from the constitutional limitations of such a course of action, there are very serious implications for the independence of many of those organisations.
If the Bill proceeds, I think that the Government will need to explain to the House with some evidence why—to use as examples—the HFEA and the HTA and other health and social care bodies are included on the lists in the schedules, particularly when we already know that at least one, if not two, health Bills are coming down the track in the next year. The HFEA and the HTA are very good examples of where the Bill fails. When the Human Tissue Authority was being discussed by the House, my noble friend Lord Warner said, when he opened the Second Reading debate:
“This Bill will provide a comprehensive statutory framework needed to ensure the appropriate use of human organs and tissue”.
The Bill was remedying and brought forward as a response to the scandals revealed by the Alder Hey and Bristol inquiries. The noble Earl, Lord Howe, who was then the Opposition health spokesman said:
“I have no hesitation in welcoming the Bill; and I welcome in particular its emphasis on informed consent and on unambiguous regulation of the uses of human tissue” —[Official Report, 22/7/04; cols. 366 and 422.]
The Bill spent almost 50 hours on the Floor of both Houses, and that does not involve pre-legislative scrutiny, Select Committee and other debates which we know took place around that emotive issue. The HTA was created to deal with hugely sensitive issues, and ones in which the public need to have confidence. What has changed since the Bill came into being?
The HFEA was mentioned by the noble Baroness, Lady Warnock, and others. The two Acts which created the human fertilisation and embryology framework clocked up between them a total of more than 100 hours on the Floor of both Houses of Parliament—again, not counting any pre-legislative scrutiny debates or Select Committees involved in that, and the most recent HFEA Act had pre-legislative scrutiny. In the Second Reading debate, the noble Earl, Lord Howe, said:
“While the opinions expressed by noble Lords have been wide-ranging, we can all agree that as a House of Parliament we have been tasked with addressing issues of the utmost gravity, which the British public rightly expect us to examine forensically and with due sensitivity”.—[Official Report, 21/11/07; col. 862.]
He was, of course, completely correct. In both these cases Parliament was doing its job properly. This Bill does not allow us to do our job. I agree with my noble friend Lady Pitkeathley that it is, indeed, an insult to this House.
Most recently I was involved in the Equality Act, and again we created extra time to discuss the Bill on the Floor of the House, with agreement across the House. As a result we gave the Equality and Human Rights Commission many new duties for the disabled, for women and for other groups. I cannot think how the Government can think it acceptable to try to alter or abolish parts of the UK equality framework by affirmative order which cannot be properly debated or discussed. I know the Minister has said that there will be consultation with interested parties on any of the proposed changes, but that is to be expected—that is a minimum. It is not a substitute for parliamentary scrutiny.
I realise that it is customary to welcome Bills and to look forward to discussing and improving them in their passage through your Lordships' House, and like other noble Lords I acknowledge the need to look at arm's-length bodies and to ensure that they are fit for purpose. But this Bill does not do that. If it did, we would not actually have a Bill; we would be having a series of reasoned discussions. Some of it might require legislation and some might not. Some of it might lead to changes or the cessation of work of some of these bodies. That is a sensible, democratic and reasonable way to proceed. Unfortunately, the Government have decided to take, as it were, the flamethrower approach.
Like other noble Lords I have every respect and affection for the Minister, but I regret that I do not welcome this Bill. It is deeply flawed. Along with other noble Lords, I shall be supporting the amendment to be moved by my noble friend Lord Hunt. When we get the Bill back from the committee, or indeed if we proceed to the next stage after this evening, I shall be joining others to challenge the principles in the Bill, and I shall be asking for a full discussion about all the arm's-length bodies about which I have a particular interest and knowledge.
Lord Greaves
My Lords, in the 10 years that I have been a Member of this House I have been used to seeing Bills, some of them good, some of them bad and quite a few of them what I call curate's egg Bills. I wish that this was a curate’s egg Bill. It seems to me to be at the very end of the spectrum, and it is not the good end. Like my noble friend Lady Scott of Needham Market, I support the Bill's aims in many cases. I am not a fan of quangos. Where they are needed, they should be as lean as possible, and they should be kept to areas where they are necessary But the way in which this Bill proposes to deal with quangos is undemocratic and entirely unacceptable. It requires very substantial changes if it is to go through its parliamentary process.
It now seems quite a long time ago that the noble Baronesses, Lady Meacher and Lady Blackstone, questioned why some organisations are in the Bill while others are out. In many areas it does seem to be quite arbitrary. The noble Lord, Lord Beecham, pointed out that the Audit Commission—which has been told that it will be abolished with great alarums, which I support, unlike the noble Lord—is not mentioned in the Bill. I have been through the Bill time and again looking for it; I am astonished—it is not there. I can only assume that that is because there is primary legislation coming along, in the form of the localism and decentralisation Bill that we are expecting in Parliament soon, in which it can be included. So it seems that the question of which of these organisations will be subject to proper democratic parliamentary scrutiny, as will be possible in that case, and which will not—as it stands at the moment, these will be plonked into Parliament in an entirely unsatisfactory and unamendable way—is arbitrary and random.
I was interested in the amendment to be moved by the Labour Party about sending the Bill to a Select Committee. Again, in the 10 years that I have been here, I have not come across a Public Bill Select Committee, although there have been one or two, so I looked in the Companion to see what it says. Paragraph 8.119 reads:
“A public bill … may be committed to a select committee … when detailed investigation is considered desirable or when the hearing of evidence is considered necessary".
There is a strong case to be made as far as this Bill is concerned, particularly in view of the reaction all around the House that this might be a good idea. Paragraph 8.121 reads:
“When the committee has completed its deliberations, it makes a report to the House on the provisions of the bill, recommending whether or not it should proceed … If it considers that the bill should proceed, the committee reports it with such amendments as it thinks fit, and the bill is then recommitted to a Committee of the whole House in the form in which it has been reported”.
The suggestion made by my noble friend Lord Lester of Herne Hill that such a committee might confine itself to the constitutional and procedural aspects rather than going into every detail of every organisation listed would be a way forward because, even if it did that, I believe, unlike my noble friend Lord Lester of Herne Hill, that there is no way in which a great deal of debate on a lot of the organisations can be avoided when it comes to this House because this will be our last chance to debate them properly if they then go through into this Bill.
If the Bill goes to a Select Committee, it will provide a period of time before it comes back to this House—not too long, one hopes—which will give the Government a chance to explain and, as some noble Lords have suggested, to set out in the case of each of these organisations, what they believe ought to be done about it, what they intend to do if the Bill is passed and why that is necessary. That has not been done, and if it is not set out in this way by the Government, I can see the Committee stage in this House taking many weeks because people will naturally want to consider in great detail what might happen to national parks, for example, or to Natural England or the proposals for British Waterways, which are interesting and, in my view, desirable, and deserve debate. I remember many hours in this House debating the Home and Communities Agency when we set it up not very long ago. There is also the Environment Agency. These are not piddling little organisations that can just be changed, modified, merged or closed down at the whim of a government Minister; they are major parts of the governance of this country that demand proper debate and proper scrutiny. We also require the ability to make amendments and, at the very least, to ask the House of Commons to consider them.
It has been suggested that the super-affirmative procedure might be a way forward. It is a rare procedure and I think that, so far, it has been used only in the case of one Act, and the noble and learned Lord, Lord Mayhew, said we should build on it. The opportunity, certainly in the case of organisations such as the ones I have listed and many others, to consider amendments to what the Government are proposing, which will inevitably be complex and complicated in some cases, is absolutely necessary. It seems to me that some hard thinking needs to be done to look at the super-affirmative procedure as it exists in one case to see how it might be amended if it is to be used in the case of the proposals in the Bill, including the opportunity for this House to amend it. We need something between the present procedure for affirmative resolutions and the present procedure for Bills, perhaps a one-level system in which amendments can be moved and where true scrutiny and true changes in Bills can take place. It seems to me that this is not something that should be left to the Government. Again, I take the view of my noble friend Lady Scott that, in many ways, this is an issue of Parliament as opposed to government and who has the right to decide parliamentary procedure. Perhaps this matter might be sensibly considered by the Procedure Committee of the House in parallel to whatever other discussions and changes are taking place.
I am particularly concerned about several of these organisations. There is not time to detain the House any longer, except to say that I agree entirely, I think, with what the noble Lord, Lord Judd, said about national parks. From memory, the only proposal in the coalition agreement in relation to national parks is to make them more democratic and to have elections. I should say that the national park authorities— national parks are extremely democratic organisations—should be made more democratic by direct elections of the, at the moment, indirect council representatives. If that is a serious government proposal, it can be put in the localism and decentralisation Bill. It might be there for all that I know. But the rest is very worrying.
I substantially agree with the comments about forestry made by the noble Lord, Lord Clark of Windermere. It is very odd that there is a separate section in the Bill just about forestry. It is not clear why that is there. When one reads it, it is also not clear what it means in terms of outcomes. No one who has been trying to find out what it means seems to know either. As regards forestry and Henry VIII, Henry VIII was pretty good at setting up royal hunting forests. It would be sad if Henry VIII powers were used now to do away with some of the national forests.
In relation to regional development authorities, it is absolutely right that there should be a proper debate. I agree substantially with the narrow points made by the noble Lord, Lord Beecham, about RDAs in the north of England where what is happening is seriously worrying. The other area about which I am quite concerned is the abolition of the Agricultural Wages Board, a very important body in protecting the conditions and wages of agricultural workers. If that happened, simply relying on the national minimum wage would result in many agricultural workers’ wages going down. There will be plenty of time to discuss these matters as the Bill progresses, however it progresses.
If my noble friend puts his amendment to the vote, I shall certainly support him. It seems to me that whatever view you take on the Labour amendment, it is a sensible safeguard to add to it before the vote takes place. I have never in my 40 years on public authorities voted against instructions from my party, not least—but not always—when I have been giving the instructions. I have never done that. I am minded to vote for the Labour amendment because it is common sense. I do not regard it as being disloyal to the coalition Government. Sometimes Governments have to be rescued from their own lack of common sense. In being minded to vote for that amendment, I hope that some members of my party will join me in doing so.
Lord Whitty
My Lords, I am beginning to feel very sorry for the Minister. When I came back to the Chamber I thought that perhaps he would have gone for a sustaining meal or, even better, to consult his business managers and was advising them to accept my noble friend Lord Hunt’s amendment. But he has stuck it out, for which I commend him. However, he must understand that the range of opinions and concerns over different organisations in this House make it impossible to proceed with this Bill in the normal way. The sooner we agree to my noble friend Lord Hunt’s amendment, the better it will be for the coalition Government, as well as for the authority of this House and its ability to scrutinise properly.
At the beginning, the Minister said that this Bill came out of a “coherent, cross-government assessment”. I am afraid that he is wrong on all three counts. There is no assessment, no rationale and no mechanism for establishing value for money. It is not coherent. Alphabetical lists, with some bodies appearing on several lists, is not particularly coherent, let alone the reasons behind them. The process was not really cross-government. It was done department by department in silos. Then they had a head to head in a Star Chamber procedure with the Cabinet Office. The number of quangos in the departments to end up on these lists depended on the enthusiasm of the individual department or the degree to which they were battered by the Cabinet Office. For example, leaving aside the RDAs—the abolition of which I deplore—of the 36 other bodies on the abolition list, no fewer than 14 are Defra organisations and another seven are from the Ministry of Justice. Effectively, two-thirds of the bodies that this allegedly objective process abolishes come from two small departments. That cannot be right. We must have a better process for this because the normal process of the House is not correct for it.
I declare an interest as a member of the board of the Environment Agency, which appears in the list in Schedule 5 and the list in Schedule 7, and also in Clauses 14 and 15 in relation to Wales. More pertinently, I am also the chair of Consumer Focus, which is for abolition—although it is not really abolition according to the officials of our sponsor department, BIS, because abolition is a technical term and our powers will pass elsewhere. It does not feel technical to the staff and those who support it. However, it is an example. I retire from the chair at the end of this year and therefore I will have no pecuniary benefit from it lasting longer than the Government envisage. However, I am concerned that a body that was set up only four years ago and which came into being only two years ago with the merger of the National Consumer Council, which went back to Lord Young of Dartington in the 1970s, and the bodies that were set up to look after energy and post when they were privatised and liberalised, is going to disappear.
Most or some of its powers—it is not clear—will pass to Citizens Advice. As the noble Lord, Lord Beecham, said, Citizens Advice is an effective body but is different from the kind of body that goes in for consumer advocacy at the policy level and engages in depth with the regulators and the companies in, for example, the energy sector. It may be able to deliver that expertise but you will not find Citizens Advice on this list.
Nor will you find some of the bodies which went into the assessment by BIS dealt with in the same way because they are in other departments. There ought to have been a coherent approach across government to both competition and consumer affairs to produce a rationale which was clear to the House. We would probably have ended up with fewer bodies, but certainly with clearer remits for those bodies. My noble friend Lord Borrie reported on what was happening on the competition side of that equation—we probably will end up with one Monopolies Commission—but it is also clear that some of the things taken away from the OFT cannot be dealt with at a local level, either by Citizens Advice or by trading standards.
That is a microcosm of what is wrong with the Bill. Taken sector by sector and organisation by organisation, the reason why particular quangos are in particular boxes is not at all clear. If the Bill goes to a Committee of the Whole House and we go through it line by line, that means we will go through it body by body, organisation by organisation. In the Minister’s own best interests I suggest that that is not a sensible procedure for him. If the Bill goes to a Select Committee, the Select Committee can begin to make sense of it. It could group organisations; it could look at all bodies, on whatever list they are, in the health area; or at all scientific advisory bodies; or at all bodies dealing with consumer affairs, competition or the environment. It could establish a clear pattern and call witnesses, which, as the noble Lord, Lord Greaves, said, a Select Committee has the power to do. We cannot call it pre-legislative scrutiny because we have started the legislation today. However, it would have some of the same benefits. It could provide a clear, coherent principle and suggestions about how we could better deal with parliamentary scrutiny of quangos in the future. A Select Committee procedure can do that; a Committee of the Whole House cannot.
If we were starting again on a matter of such constitutional importance, as the Constitution Committee has pointed out, I would have advocated a Joint Committee of both Houses. To be faced with such a clear Henry VIII Bill is a unique experience, and the wording in the Constitution Committee’s report, as other noble Lords have said, is unprecedented. We need to take that very seriously and we need as a result to take this Bill through a different procedure. Like other noble Lords, I am not opposed to reducing the number of quangos, I am certainly not opposed to finding value for money from them and merging and reconfiguring them. I think there ought to be a process whereby we review them from time to time.
Lord Phillips of Sudbury
I am grateful to the noble Lord for giving way. He made a powerful point about Citizens Advice and the consumer body of which he is chair. Is it not also the case that Citizens Advice is a charity? It is quite outside the control of the state and it is not actually open to any Government to require an independent charity to do this or not to do that.
Lord Whitty
My Lords, this is an added difficulty. I think Citizens Advice was as surprised by the decision as we were, from the other end of the spectrum, as it were. It is possible that you could do this. I am not in principle opposed to the functions that Consumer Focus currently carries out being done in the third sector but I think it is difficult. We have very substantial powers, particularly powers to require information from commercial companies. There are questions as to whether it is appropriate to transfer those powers outside a government body. I have great respect for Citizens Advice and we may find a way of doing it, but we have not got there yet. There are other bits of the jigsaw we need to get in place before we do.
This is, in effect, a Henry VIII Bill. However, when Henry VIII actually proposed the dissolution of the monasteries he asked his mate, Thomas Cromwell, to produce a report on each individual monastic house. He needed to do that in order to convince the barons and the powers that be that it was a sensible policy. Those reports were, on balance, pretty prejudicial and the level of debauchery that these people found certainly would not have been found in Consumer Focus. However, it is sensible for Parliament, before it takes a decision on this, to look at each individual body in detail and the context in which it works and the interrelations with the other bodies concerned in that sector and take a decision, sector by sector, type of body by type of body—not to have a whole list presented to us on which we can have only an incoherent debate using the normal procedures of this House.
Even Henry VIII went further than this. We can at least do as well as Henry VIII did. I am not saying that a Select Committee or a super-affirmative resolution would necessarily have prevented the dissolution of the monasteries, but it would have been worth a try. I think it is incumbent on this House to try to find a way in which we can make sense of this procedure. At the moment we are not there and I plead with the noble Lord to accept the alternative procedure and take us down a more sensible road for dealing with this Bill.
Baroness Smith of Basildon
My Lords, this has been a long and interesting debate and I am sure that the Minister, who has listened patiently and carefully throughout, understands why your Lordships feel so strongly on this issue. I hope that his business managers have been listening carefully as well. Maybe they ought to offer him some support.
What I think is so surprising about tonight’s debate—I am sure that the Government have recognised this—is that the principle of reducing the number of arm’s-length bodies or quangos is one with which few people would disagree. The last Government published Smarter Government in December 2009 and, in an announcement made, I think, in March before the last election, two-thirds of the bodies that this Government are now proposing to abolish were proposed for abolition by the previous Government. The principle of abolishing bodies and of streamlining or amalgamating them is not one that many of us in this House can disagree with. Successive Prime Ministers and Governments have merged and abolished quangos, but they have also brought in new ones. Despite the Government’s rhetoric on this issue, they plan to do exactly the same. It is a fact of life that some quangos will come to the natural end of their life and others will be needed.
The Minister made me feel a little overwhelmed with good advice. There is little to be gained by repeating the concerns that have been expressed time and again from all sides of the House. This is not opposition for opposition’s sake. This is a genuine desire to improve the Bill. I think that Members of your Lordships’ House are genuinely shocked by the Government’s efforts to ride roughshod over parliamentary scrutiny.
Rather than dwelling on the specific issues and matters of principle that have already been raised—we are all clear, I think, about the views of your Lordships’ House—I want to raise specific concerns and questions in relation to Clause 11 and Schedule 7. For example, among the bodies that report to the Department of Energy and Climate Change, the information published by the Government on 14 October includes three examples of bodies that will be retained. On the Committee on Climate Change, the document states:
“Retain on the grounds of the need to act independently”.
On the Nuclear Decommissioning Authority, the document states:
“Retain on the grounds of performing a technical function”.
On the Civil Nuclear Police Authority, the document states:
“Retain on grounds of impartiality”.
All those crucial organisations deal with energy policy, which we are told is at the heart of the Government’s aim to be the greenest Government ever. All those bodies have great expertise, and the Minister told us on 14 October that they would be retained. Why are all three now listed in Schedule 7 to the Bill? If Ministers cannot make the case now for the change, merger or abolition of such bodies, they should bring the legislation back to the House when they can, so that proper scrutiny can take place.
For those bodies that the Government have said need to be retained on the grounds of their impartiality or independence, to leave this sword of Damocles hanging over them, whereby the body could easily be swept away, challenges that very independence and impartiality. Are Ministers now having doubts about the ability of those organisations to fulfil their stated functions? I worry that there is a touch of Sir Humphrey or Mr Jim Hacker in Schedule 7, which is there so that Ministers can, in certain circumstances, in the fullness of time, notwithstanding any other considerations, decide that they wish to abolish the bodies listed. I would be grateful for any enlightenment that the Minister can give—I see that he is champing at the bit to respond—and I look forward to his answer. Furthermore, on the Minister’s opening comments about Channel 4, which I know were intended to be reassuring, whatever he might say, if the Bill becomes law the bodies listed in Schedule 7 will be far easier to abolish without reference to this House. Those bodies will also feel under threat the entire time.
One body mentioned in Schedule 1 is Consumer Focus, to which my noble friend Lord Whitty and the noble Lord, Lord Phillips, have referred. One of the biggest issues for consumers is the cost of energy, whether of gas or of electricity. Consumer Focus was created as the voice of the consumer to protect the consumer in energy and other areas, including postal services. Consumer Focus saves consumers 15 times the amount that it costs to run. As we have heard, Consumer Focus, which has an eminent and esteemed chair, is a statutory body with a board and a chair appointed by the Secretary of State. It is answerable to Parliament and is audited by the NAO. Consumer Focus has legal powers contained in statute. As we have heard, that is a very different kind of organisation from Citizens Advice, which is a charity.
I raised these issues a week ago in a debate—I know that the Minister was present at it—but I have not yet had answers. Tonight, let me raise just one of these points, to which I hope the Minister will be able to respond. Given that Citizens Advice is a charity, does the Minister intend that Consumer Focus’s legal powers should be transferred to a charity? I raise that point not particularly for the sake of that organisation but because the example highlights the flaws in a Bill that has been made in haste. The issues seem not to have been thought out, given that I have been unable to get an answer for more than a week.
Many questions remain unanswered about the Bill. I find it disappointing that a policy that in principle should have the support of your Lordships’ House is the subject of such debate and concern today. It is really quite an achievement on the part of the Government that they have managed to unite such opposition to their policies. I think that tonight’s debate has shown the real value and strength of your Lordships’ House. The expertise, the knowledge and the concern that have been expressed have shown genuine scrutiny in the best traditions of this House. The Minister would delight your Lordships’ House tonight if he accepted the amendments before us, given not only the issues involved but the genuine strength of feeling about the value of your Lordships’ House.
Lord Pilkington of Oxenford
My Lords, I wish to raise problems relating to the charity commissioners. I am encouraged by the fact that my noble friend talked about their impartiality and integrity, which has been mentioned by other noble Lords. However, I worry about the charity commissioners because I feel that they have shown prejudice and partisanship, particularly with regard to independent schools. I confess to an interest, in that I spent all my professional life in independent schools. I was master in charge of the scholars at Eton and headmaster at two other independent schools. I feel that the Charity Commission has started to show a political bias, which has actually been unnoticed in the whole of its history since it was set up by statute in 1853.
The fact is that very few independent schools have large endowments, but it has been acknowledged since 1601 that education is a charity and a charitable act. In consequence, every independent school that I know subsidises poor pupils with scholarships and bursaries. They do this by taking money out of their total income. The advantage given by charitable status is used to give these scholarships and bursaries. For example, at King’s School Canterbury, where I was headmaster for 11 years, there were no endowments whatever. It took 13 per cent of its mainly fee-paying income to subsidise scholarships and bursaries. Eton, where, as I say, I taught, had of course large endowments, but it used them to assist poorer scholars.
One reason why it was always hard to integrate people from the state sector into the independent sector was the teaching of languages. In the independent sector, languages are taught from eight onwards. This is a problem that Eton faced when it tried to bring people from the state sector into the school. How Eton resolved that problem was to admit people at 10 to preparatory schools, where it paid the fees and then guaranteed them a place at Eton until they were 18. As you can imagine, that was an enormously expensive operation, which still goes on today—and it is done on the basis of its charitable status.
The present charitable administration is questioning the commitment of independent schools to their charitable status. That is quite wrong and prejudiced and ought to be questioned. It could have an effect on the ancient universities, taking away their independence. As noble Lords know, the only universities to have large endowments are Oxford and Cambridge and one or two others, but some new universities are raising endowments. It is crucial to a democracy that a state should not influence their admission procedure or anything. Charitable status is terribly important to this. Because of that, I think that this legislature should begin to question the Charity Commission in this matter.
Everyone has looked at all sorts of charities and we have talked of the integrity of the Charity Commission, but I have the audacity to question that. The Charities Act 2006 went through without too much questioning—and I plead guilty myself, as I was ill at the time. The Charity Commission has turned very general clauses into a way of questioning the whole business of charitable education, particularly in independent schools. That is wrong and should be questioned. It is wrong that political activity should enter into such an organisation and I shall certainly be raising the issue later.
Lord Faulkner of Worcester
My Lords, given the lateness of the hour, I shall say less than I would have done had my name appeared earlier on the speakers list. However, I start by thanking the Minister for his good humour and patience in our debate today and for the meeting that he convened for all Peers interested in this Bill last Wednesday. I am not quite sure what he expected from that meeting but it was a remarkable occasion. Virtually every noble Lord who attended, while supporting the principle that non-departmental public bodies which had outlived their usefulness should be wound up or merged with others, expressed outrage at the way that the interests of Parliament and of the ordinary citizen are being sacrificed in this Bill. The Minister heard, over and again, complaints about the almost complete lack of consultation. Bodies which have served the community well, without a breath of scandal attached to them, which were seen by those who deal with them daily as helpful and supportive, which were in many cases established by an Act of Parliament after extensive debate in this House and in another place, and which were fulfilling a role which cannot be performed as cost-effectively or efficiently by others are all being tossed on to a bonfire with little more than a sentence in a departmental press release.
Those views, expressed at last week's meeting, are put even more strongly in the report of the Constitution Committee, which many noble Lords have referred to today. Let us consider some things that the committee says. “They”—that is, the Government—
“are pushing at the boundaries of the constitutional principle that only Parliament may amend or repeal primary legislation”.
The conclusion in paragraph 14 was:
“The Public Bodies Bill … is concerned with the design, powers and functions of a vast range of public bodies, the creation of many of which was the product of extensive parliamentary debate and deliberation. We fail to see why such parliamentary debate and deliberation should be denied to proposals now to abolish or to redesign such bodies”.
It really will not do, my Lords. The powers being taken by Ministers in this Bill to close down, to merge or to move organisations into partnerships with others go far beyond anything we have seen in legislation before. To claim, as the Minister did at last week’s meeting, that we need not worry because individual decisions on particular public bodies will all be subject to the scrutiny of this House, because they are to go through the affirmative order procedure, completely ignores the point that there is a long-standing convention in this House that we do not vote against statutory instruments.
I well remember, of course, that the noble Lord’s new friends on the Liberal Democrat Benches had no such reservations about that in the previous Parliament, or indeed in the two before that, but they voted against statutory instruments secure in the knowledge that their chances of winning such a vote were remote, because the Conservative Front Bench steadfastly and consistently refused to support them. Honestly, the Minister’s offer of a draft statutory instrument—a constitutional novelty, in my view—sounds little more to me than offering a condemned man the choice of hanging or execution by the electric chair. The decision had already been taken by the time that the statutory instrument had been produced and, as a result, would be a formality.
I was going to make a speech about a public body in which I have a particular interest and which I had the honour to chair until 2009, standing down when I became a Minister in the Government Whips’ Office: the Railway Heritage Committee. It is a body which has a link with Henry VIII because, as your Lordships may recall, Benjamin Disraeli predicted as long ago as 1845, in his novel Sybil, that the railways will do as much for mankind as the monasteries did. This is a debate which I want to have on another occasion and in Committee with the Minister.
However, I make the point now that that is a committee with a budget that costs the taxpayer little more than £100,000 a year. That can be reduced further, but that budget would have to be enhanced because the National Railway Museum will in future have to spend at least that amount of money on buying the artefacts and records which, at present, it gets for nothing. It is staffed entirely by volunteers—there is only one paid employee—and works with the grain of the railway industry and the heritage railway section. It was established by three separate Acts of Parliament, two passed by Conservative Governments and one, most recently, by the Labour Government in 2006. It is a body which fulfils the functions that were set out by the Minister standing at the Conservative Dispatch Box in 1996, to the letter, and has never attracted any criticism or scandal. It was abolished, or at least it is facing abolition, as the result of a single sentence in a Department for Transport press release, with no consultation whatever. The only warning that the members of the committee and the industry had that something was coming was the leak in the Daily Telegraph on 23 September. As a consequence of that, over 30 individuals, ranging from some very high-profile in international organisations—the Heritage Railway Association itself, the Keeper of the Records of Scotland, Sir William McAlpine and others—all wrote to the Minister begging her to think again before including it in the list for abolition. To no avail, though; that organisation is in Schedule 1 of the Bill. I hope that it will be possible, when we get into Committee, to do something about this deplorable state of affairs and that we can do something that recognises the importance of railway heritage in the tourist sector and in the economy more generally.
I do not want to speak any more tonight other than to say that I hope that my noble friend’s amendment will meet with approval in the House. It is important that we have more time to look at these proposals and redress, at least to some extent, the scandalous lack of consultation that has led to the Bill in its present form.
Viscount Eccles
My Lords, this debate has been both extremely interesting and rather paradoxical. There is general agreement that something should be done about public bodies but no agreement at all about the way in which at present it is proposed, so we are left with two ways forward. One is that my own Front Bench comes forward with some proposals that seem to noble Lords to represent a reasonable way forward, and the other is that the matter is referred to a Select Committee. My own preference is that we should decide and not delay.
In this debate there have not been any criticisms of the inclusion of the bodies in Schedules 1 to 6 that could not be dealt with in the normal Committee and Report procedures if they were to go forward on the Bill. There are some 60 to 70 bodies in those schedules; when we get into the question of 481, or some other enormous number, we should remember that in Schedules 1 to 6 there is a much smaller number. I think there would be general agreement that a lot of those bodies have worked their time out.
I am reminded of a conversation that I had with a fellow tenant of the National Trust about her National Trust district secretary. I asked her, “How do you get on with the district secretary?”. She said, “Oh, he’s perfectly all right as long as you don’t make any sudden movements”.
Schedule 7 is a sudden movement; there is no doubt about that. It came upon us as a surprise—certainly it did to me. If it were not this late, I would be talking to your Lordships about Kew Gardens, of which I was the chairman; the Commonwealth Development Corporation, of which I was the chief executive; the Monopolies and Mergers Commission, which the noble Lord, Lord Borrie, will remember well; and several other bodies. I once got a letter from Anthony Crosland thanking me for being on a body that I was never on.
I am therefore minded, at this hour, to follow my noble friends Lord Lester and Lord Norton and suggest that what we need is a solution, not to keep going around the same track. We need to take the Bill seriously because we are not in disagreement about the policy, and the detail of that part of the Bill that is acceptable to this House needs to be debated. There is a role and a place for secondary legislation, although it may well be that the safeguards are not enough. I was, for my sins, a member of the Merits Committee for quite a long time. I remind the noble Lord, Lord Faulkner, that we turned down home information packs and the big casino in Manchester, so it is not that that has never happened. I agree that this House would need to think seriously about its attitude to secondary legislation if the Bill were to go forward on the basis of Schedules 1 to 6. However, I see no advantage in referring the matter to a Select Committee. What would it do? It would have to read this debate, take it very seriously and take the Bill as it is. It would go round in circles and when it had finished its work we would be no further forward. The only positive suggestion has been about grouping and I do not understand why that would make any real difference.
There are, however, some things that would greatly help us to take the Bill forward, having committed it to a Committee after Second Reading. First, we should drop Schedule 7. It is such a big unknown and it has upset your Lordships so badly—why do we need to keep it in the Bill? The second thing that would help would be the addition of a sunset clause, saying that those things under Schedules 1 to 6 have to be dealt with within a definite period, and that if they have not been dealt with in that time the matter should be dropped. This would hold the Government’s feet to the fire. If they mean what they have put in Schedules 1 to 6, they will carry it out. Then, as policy develops—we have been told many times that policy will develop in detail—we can have a second public bodies Bill. It did not take the Government long to prepare this one, so I do not suppose it will take them long to prepare a second.
If we were to do those things, where would the problem be? I have not heard any serious analysis of a real problem in Schedules 1 to 6. It is Schedule 7 that has caused all the trouble. All that needs to be done is to drop it.
Lord Wills
My Lords, as noble Lord after noble Lord has demonstrated, this is not a good Bill. It exemplifies the dangers of concocting a headline and then back-filling policy into it. As so many noble Lords have pointed out today, as has the Constitution Committee, the Government as a whole—not the Minister, I hasten to add—are behaving like constitutional hooligans who are marauding through the public bodies of this country. After today’s long debate, I hope the advantages of the amendment moved by my noble friend Lord Hunt will be rather clearer to the Government than they perhaps were at the beginning of today’s proceedings. In the mean time, following other noble Lords, I should like to express my sympathy for the Minister, who appears personally blameless for this debacle but still has the thankless task of taking it through this House.
Although I recognise that the Government are not going to think again about the overall wisdom of passing the Bill into law, I offer the Minister some constructive suggestions, following the plea by the noble Viscount who has just spoken, about two bodies that are particularly important to the cultural vibrancy of this country—the Public Lending Right Office and the Film Council. Before doing so, I draw the attention of the House to my registered interests. I am the author of two novels published by Hodder Headline. It is possible, although sadly not very probable, that my novels could be turned into films. I am not signed up personally to benefit from the public lending right.
The public lending right scheme was the outcome of a long campaign by some of our most distinguished authors. Apparently unnoticed by Whitehall and Westminster, it has been a tremendous success. The Public Lending Right Office distributes more than £6 million a year to 23,000 authors. More than 200 authors receive the maximum possible payment of just over £6,500. Of those, 80 per cent said in a recent survey that the annual payment from the Public Lending Right Office is core to their income. Very few authors write bestsellers but that does not make the rest any less valuable to our cultural life. The public lending right is a critical part of our cultural infrastructure. It is administered by the Public Lending Right Office in Stockton in an operation which is widely recognised as capable and efficient. It has reduced its staff by half in the past 20 years while still maintaining high standards. It is an exemplary public organisation, yet now we learn that, as with so many other public bodies, it is to be disbanded and its functions allocated to another public body. However, I hope that the Minister will think very carefully about how this is done. The administration of intellectual property rights is complex, demanding and requires specific skills. Experience developed over time is invaluable. Disrupting a successful organisation, however small, is always perilous. Wrecking this resource would be devastating to many of the writers who do so much to sustain the cultural life of this country.
There are two things that I think the Government could do to mitigate the potential damage of this change which are still consistent with the overall policy framework. First, they could ensure that the current team, which has done such an excellent job, is kept together and in the same location, which is a low-cost area of the country, so avoiding all the disruptions of any move. Can the Minister give such an assurance and, if not, why not? Secondly, the Government could guarantee that the public lending right will not be decreased as a result of this move. Can the Minister confirm this? In particular, please can he confirm that any cost of the organisational change will not come out of the already stretched resources of the Public Lending Right Office, damaging the essential income and support that it provides to authors? If the Minister cannot respond to that point tonight, I should be grateful if he could write to me with the Government’s latest thinking on the most cost-effective and least disruptive home for this organisation.
My second area of concern is the Film Council. It, too, is a national institution that has proved its worth to the cultural life of this country and to our economy. In just 10 years it has been extraordinarily successful in developing the British film industry. It has helped to treble its turnover. It now returns more than £1 billion a year to the Exchequer. The Film Council has backed more than 900 films, shorts and features, which have entertained more than 200 million people worldwide and has helped to generate around £700 million at the box office. For every £1 of lottery money invested, £5 has been generated at the box office, allowing the Film Council to reinvest that straight back into new British films. It has supported the development of new filmmakers, funded imaginative and innovative British films and ensured that British audiences can have access to all the glories of the cinema, with a wider choice of films made available to people throughout the country. It has invested in training, promoted Britain as an international filmmaking location, raised the profile of British films abroad and overseen the introduction of the film tax relief, which is so vital to sustaining competitiveness. This success has been hard-won. Cultural entrepreneurship of this kind demands rare skills: a commercial eye for an audience; an academic intimacy with the medium; a human empathy with the creative artist and the ability to nurture and develop them; and an inspirational excitement about the cultural and industrial benefits that film can offer.
The Film Council has been fortunate in attracting such talent. Its remarkable record attracts the talented, skilled and experienced people who work there. It is essential not only to retain that talent and expertise but, if we are to avoid jeopardising years of hard work and success, to retain it in one place and under one roof; otherwise, some of the most exciting entrepreneurial talent in this industry will haemorrhage from the public sector and we risk losing that and precious creative talent overseas where they might feel more appreciated. This is a mobile industry and it is very important that we keep it in this country. The ecology of such organisations is fragile and can easily be destroyed without anyone necessarily intending such an outcome.
I suggest that there are four measures the Government could take to help avoid such damage which are still consistent with their overall policy approach. First, they could guarantee that the sums available for public funding of films will be ring-fenced, not used to plug funding holes in other organisations or to meet any transitional costs. Can the Minister give such an assurance and, if not, why not? Secondly, wherever the Film Council ends up, its current remit must be retained and not disaggregated or marginalised. In particular, its present commercial and industrial activities must not be compromised. Can the Minister give such a guarantee and, if not, why not?
Thirdly, the administration of lottery funds, as many noble Lords know, requires particular skills, and it would be wasteful of public money to seek to build up such experience in this area from scratch when the capacity already exists within the Film Council. Can the Minister guarantee that when it is decided where the Film Council is to end up, a fundamental review of the governance of that body will be conducted to ensure an effective incorporation of the Film Council into it and, in particular, to ensure that the ability to administer lottery funding effectively is entrenched in the new structure?
Finally—this request should be even easier than all the others that I have asked of the Minister—will he secure appropriate accountability for the new organisation? After all, the Government tell us that accountability is at the heart of the Bill. The board and management of the new organisation must be directly accountable to government, and through government to the public. Such accountability must include ensuring that all board appointments are governed by the DCMS and subject to the guidelines of the Office of the Commissioner for Public Appointments. This new organisation must also be subject to the Freedom of Information Act as transparency is the key to accountability. Given the Government’s commitment to accountability, I assume the Minister can reassure me on these points. I hope he will.
As I have said, I accept, regretfully, that the Government will proceed with these changes. I hope that they will change the process through which they go about those changes, as so many noble Lords have urged them to do, but how much of a disaster the changes will be will depend crucially on how they are implemented. I hope that I have been helpful to the Minister in suggesting practical measures for two important institutions and I hope that he can give me some comfort on them.
Baroness Deech
My Lords, it has been said that there are good quangos and bad quangos. It is time for some root-and-branch reform and it is the job of the powers contained in the Bill to distinguish between them. The art is to find the right criteria to enable us to reform or remove those quangos that are a hindrance, and preserve those that meet the right criteria, including cost, accountability, representativeness, impartiality and the ability to establish facts that enable good government to go forward.
Why have quangos become so unpopular? There are issues with salaries, people, language, mission creep and politicisation. One of the issues that have affected the standing of some quangos is salaries. Some are very high and it is important that the people who sit on the quangos should be representative of the population they serve and be well regarded for their expertise and impartiality.
John Kay, the economist, has said that there is a modern class of “quangocrats” who glide effortlessly from committee to committee. Some of your Lordships may include me in that category. Reluctant though I am, it has been said in the past few years that if it moves, I am called upon to regulate it. However, successful quangos are those that give real authority to people with specialist skills—judges, medical professionals and so on—where relevant to the committees. As your Lordships will know if you check your pigeonholes, there are far too many glossy brochures produced at great waste, not least of carbon emissions. When such publications emanating from quangos make less sense than they should because they shroud real meaning in a cloud of inappropriate business speak, one knows that there is something amiss. “Drill down”, “delivery”, “KPIs”, “going forward”, “robust”, “transparent” and “stakeholders” are all terms that I try to keep out of my office’s documents.
Others have commented on the constitutional issues arising from the power in the Bill to enable Ministers to set aside legislation without even a duty to consult. I support every word of the criticism made of the operation of the Bill. I am pleased that my noble and right reverend friend Lord Harries and my noble friend Lady Warnock, who have such experience and expertise in this field, have said all that I could say about the need to keep the HFEA; and others have spoken about higher education. It is not right to roll in the Office of the Independent Adjudicator—I was once the adjudicator—that takes care of complaints into the body that funds universities. Noble Lords should try to salvage whatever is good in the Bill. It is marked by indecisiveness and there is everything still to play for.
I will confine myself now to legal regulation and declare an interest as chairman of the Bar Standards Board. It is arguable that the legal profession is overregulated and is paying the price for the way in which solicitors did not handle complaints in the past. The Legal Services Act 2007 drew the barristers’ profession into the maze of regulation that it introduced, although there was little evidence to place the Bar under the same regime as solicitors. As chair of the Bar Standards Board, one of my serious concerns is the possible undermining of the professional standards, service and independence of the profession by the cult of consumerism. Consumerism is a major issue in the decisions about bodies listed in the Bill. It could be argued that the Legal Services Board Consumer Panel, whose existence has been said in newspapers to be under threat, fails to meet the criteria for retention. There is duplication of its work. The Bar Standards Board and the Solicitors Regulation Authority have consumer engagement strategies and panels. Much market research on this has been carried out, special reports have been commissioned on all sorts of areas relating to law, and there is no need for more. Not least, the cost of all this falls on the legal profession, which of course passes it on to its clients. When legal aid is being cut, I hope the Government will bear in mind the need to keep down those costs.
I welcome the proposal to study and merge the consumer organisations into one, and to end the tyranny of consumerism, as it has been called. Over the decades, the word “consumer” has become something of a Trojan horse for the import of the social policies of whatever Government are in power—a way of insisting that a certain line should be followed, sometimes without regard for the wider meaning attributed to the term “consumer” by the legal profession, which goes beyond the normal meaning to encompass duty to the court and the rule of law, and the engagement with judges, government departments, businesses and solicitors. My views accord with those of the noble and learned Lord, Lord Neuberger, Master of the Rolls, who said in a speech three days ago:
“It is of fundamental importance that, particularly when it comes to the professions, above all the legal profession, society does not adopt what might be called a form of unreflective consumer fundamentalism”.
“Consumer” is no longer equivalent to impartial or independent. Far from protecting the profession, it could be seen as a political threat. Even students are called consumers. They certainly are not: they are participators and learners. Education, like legal services, is not a good that is delivered and received passively for a price. Education is an investment, not something that is to be consumed. The provision of legal services is not equivalent to the servicing of a gas boiler.
There is a perception that the Legal Services Board Consumer Panel may fail the test of impartiality and expert evidence. After a freedom of information request, it was revealed that the panel has an unbalanced political composition. Half of its members are declared members of the Labour Party and/or members of unions—the unions being, of course, supporters of the Labour Party. Why does this matter? Because there is a conflict between the duty to represent the consumer and certain vested interests that are not always transparently declared in, for example, the Consumer Panel report on referral fees, which was adopted by the parent body, the Legal Services Board. The Labour Party itself is in receipt of referral fees. Lord Justice Jackson, in his Review of Civil Litigation Costs earlier this year, said that they should be banned in personal injury cases. So did the noble Lord, Lord Young of Graffham, in his report on the claims culture. The Law Society has set its face against the practice. Therefore, it is odd that the LSB Consumer Panel has come out in favour of the retention of referral fees, whereby solicitors and others may buy in work by, for example, paying unions to refer business to them. Given that half of the Consumer Panel is made up of members of the Labour Party, the perception may be there—it is possible to make the criticism—that it could be influenced by the unwillingness of the party to give up a potential source of income from the firm of solicitors that acts on its behalf in personal injury cases.
Lord Whitty
My Lords, I find this an extraordinary attack on the concept of consumerism or consumer representation within legal regulation. Your Lordships may recall that when the Legal Services Act passed this House, there was a barrage of resistance from lawyers of various descriptions on various Benches in this House to a consumer voice being built into it. After much persuasion, the Front Benches of all political parties accepted that there should indeed be a consumer panel, and I regret that some members of the legal profession now find it too onerous to observe the normal courtesies to their clients, as members of any other profession are required to do.
Baroness Deech
My Lords, there is no doubt that the voice of the consumer needs to be heard, but much turns on how one defines “consumer” and how that voice is heard and dealt with. It is very hard to overlook the scandal that occurred when sick miners were deprived of much of the damages that they should have had because the firm of solicitors that was tied to the union by referral fees creamed off much of the money for itself. The system of referral fees is flawed and it is very hard to understand how a consumer panel can support what looks like the interests of solicitors firms and unions rather than those of consumers. Therefore, I think that there is an element of politicisation in this. It has not worked out in the way that was intended, and it would be right to refer the Bill to a Select Committee for careful examination of the quangos listed, category by category, and for us to think afresh about who sits on them and what their job should be.
Lord Graham of Edmonton
My Lords, it is a pleasure to have the opportunity to speak in this debate and especially to have the Minister in charge of this Bill performing as he has done. The noble Lord, Lord Taylor of Holbeach, is very well known for growing bulbs. As a matter of fact, he won a prize in the Chelsea Flower Show this year. That is why the Government Whips Office put him in charge of planted questions.
Lord Graham of Edmonton
I dug myself into that one. I very much hope that the Minister has some latitude—possibly not to say tonight what he might feel, but he cannot be other than impressed by the majority of opinion, which is against the Bill. So far as I am concerned, it is against the Bill on specific points and not on ideological grounds, because many of my colleagues have spoken in the debate tonight and, as I believe my noble friend Lady Smith of Basildon pointed out, two-thirds of the quangos that are to be abolished were created by the Conservative Party. As with many other things, the question relating to quangos is how they are set up and dealt with.
Quotations have been read out and I think that they can be repeated. This is from the Select Committee report:
“When assessing a proposal in a Bill that fresh Henry VIII powers be conferred, we have argued that the issues are ‘whether Ministers should have the power to change the statute book for the specific purposes provided for in the Bill and, if so, whether there are adequate procedural safeguards’. In our view, the Public Bodies Bill fails both tests”.
I do not have the confidence to comment in detail on that but, when the Government realise the power and strength of that committee, surely they will realise that they should have reflected and consulted on the matter. This issue is not a party matter. It has been turned into a party matter by the arrogance of the Government in dealing with it.
I was in this House in the mid-1980s, 25 years ago, when the GLC and ILEA were abolished because they were causing a nuisance. Ken Livingstone was the king of County Hall and he got under the skin of Margaret Thatcher. Instead of trying to ameliorate or change or improve, the answer was to say, “Off with their heads”; they were murdered. I very much fear that people who are volunteering their time and money to various bodies to support them will be cast aside. I do not think that is right.
I come from the region of Tyneside and One North East is a very successful quango. It regularly invites parliamentarians from the north-east for consultations which impress me, and we get documents which also impress me. I know that others in the Chamber will be closer to the action than I am, but I do not think it is right that bodies which are genuinely open to improvement are simply cast aside. The Government should think again and take into account the almost universal reticence of this House on both sides to agree to what is on paper.
In my view, the solution is the amendment to be moved by my noble friend Lord Hunt. During the debate it has been said that time is important and of course it is. We all know, as political animals, that there is a timescale in which the Government wish to get this Bill and beyond which they will not. The Government have to think twice: either they accept the need for change in consultation with everyone else, or they risk the embarrassment of being defeated, but I do not want to see a defeat in that sense. I intend to support the amendment to be moved by my noble friend Lord Hunt.
Lord Selsdon
My Lords, for more than three or four decades I have had the pleasure of speaking either before or after the noble Lord, Lord Graham of Edmonton. Sometimes we sing from the same hymn sheet. In the spring of last year, I think that we both asked the same question about non-departmental public bodies at the same time.
I am confused, and even more confused today, as I cannot work out why we have more people speaking on this topic than we have in the defence debate on Friday. I thought that maybe it has something to do with money, so I asked myself, “What are we talking about?”. We are talking about 21 government departments, employing 528,000 civil servants, responsible for 192 non-departmental public bodies. The word “quango” was dispensed with many years ago; some of us tried to get rid of the “q” when we chaired various bodies that became autonomous non-governmental organisations, which probably would have been the secret for most of them.
Those 192 non-departmental public bodies employ about 111,000 people and they have around 18,000 appointees. The figures are difficult to determine, but they spend approximately £46 billion a year. To put that into context, the defence budget is £32 billion a year and the health budget is £105 billion a year. Here is £46 billion of public money going somewhere and the question is where, for what, how and why. I should explain that in the past I chaired one or two bodies in this field, but we had the great advantage that many of them were created to bring in unpaid people from the private sector who served for free without large amounts of bureaucracy.
Now that the change has come, no one is quite sure what these bodies are and what they do. I thought that the best thing to do would be to start asking Parliamentary Questions, which I did in 1999, with the objective of determining which Members of the House of Lords served on these bodies, because that would provide additional expertise to your Lordships’ House. What then happened was a sort of collapse of stout parties. It was normally, with noble Lords opposite in power, that, with regret, they did not know the answers. Instead of trying to find the answers, they would give the standard reply: “The information is not centrally available”, or, “To get that information would be too costly”. They could not answer at all. I asked again and again—a total of 55 Questions.
I have a roll of honour here of those to whom I asked those Questions who gave the most unsatisfactory Answers—beyond 11-plus: the noble Baroness, Lady Royall of Blaisdon, the noble Lord, Lord Malloch-Brown, the noble Baroness, Lady Vadera, the noble Lord, Lord Darzi, the noble Lord, Lord Hunt of Kings Heath—he was twice on the list, actually—the noble Baroness, Lady Morgan, the noble Lords, Lord Young of Norwood Green, Lord McKenzie of Luton, Lord Myners and Lord Patel, the noble Baroness, Lady Andrews, the noble Lord, Lord Carter, the noble Lord, Lord Hunt of Kings Heath, again, and the noble Lord, Lord Adonis. They all answered almost exactly the same: “The information is not centrally available”. I used to go to get that information and then ask the Question, and they gave the same Answer back. In later months, we had the charming noble Baroness, Lady Crawley, who, when I asked her the Question, gave the same Answer but had the decency to ask me out for tea, but I was worried that I might be corrupted, so I think that I paid for tea in the end, but she had great charm.
Then on to the scene came the noble Lord, Lord Taylor of Holbeach. Do you know, my Lords, he caught the same disease? He said, “The information is not centrally available”, or whatever. He wrote one of the naive, even less than 11-plus Answers, and I wrote him a rather nice charming letter—or a nasty charming letter—saying that he did not know what he was talking about.
Before we debate the subject, we should know what we are talking about. Your Lordships will know that the annual NDPB report that has just been issued for the period ending March 2009 is way out of date, so the figures in it make no sense whatsoever. At the moment, it seems that we are debating without any knowledge or understanding with Ministers who have no clue what their departments have been or should be doing. Perhaps we just need one simple report that updates the current figures. We had the figure of £43 billion in 2008-09 and we have gone up to £46 billion. We have had 11,000 more employees in that period. If we get it up to date—why can it not come up to right now?—on what all these bodies are, we might get somewhere.
In the anticipation that we might have a Conservative Government, naturally, I wrote to David Cameron last year and sent in the same sort of questions. He passed this on to Francis Maude and said that he would be in touch with me. Neither of them has been in touch with me. I have reason to believe that I probably have more information on these bodies than anyone else on the planet.
I could suggest that rather than having another ango—or something like that—the Government should just say to me, “Malcolm Selsdon, can you put the Act together?”. I believe that I could, because the civil servants themselves know the answers. The difficulty here is that there is a mutual protection society that wants none of them to be abolished.
The first question to which I would still like to know the answer is: how many Members of your Lordships’ House serve on these bodies? I then put the question, “And what is the remuneration?”. That was not to try to say that they were being funded illegally or overpaid in some way or another; it was to demonstrate that being on those bodies provides extra knowledge for this House. As I analyse those within the House who have served or serve on NDPBs, I think that we probably have enough expertise to put together a reasonable report. So why do we not set a date, that within 14 or 20 days from today we will have a report and then reconvene? I think that it would make a lot of sense.
Baroness Crawley
My Lords, it is a delight to follow the noble Lord, Lord Selsdon, who makes an excellent tea companion. I am sorry that he came away none the wiser. At this stage in the evening, with most points covered so eloquently, I do not intend to make anything other than a short intervention.
The Minister is viewed with respect and affection in this House, and it is in that spirit that I say to him that he and his Government have definitely bitten off more than they can chew when it comes to this rather unloved and illiberal Bill. It must have looked like a cracking quick win to an incoming Government: “quangos”, so it goes, “equal unpopular, unnecessary bureaucracy”. The Labour Government had already done a good deal of the preparatory work in their Smarter Government report of December 2009, as my noble friend Lady Smith of Basildon said, and the TaxPayers’ Alliance had been lobbying for years. The time for a cull had come. It would not cost anything to execute it—it might even gather in a tidy sum for the Exchequer. What could possibly go wrong?
Let me make it clear: I am not interested in the survival of NDPBs or their nearly 19,000 board members just as a general principle. That would be both ridiculous and indeed irresponsible. Any Government would be right to look at how the system could be reformed for the better.
As noble Lords have said, there is also churn—always churn—when it comes to NDPBs, as their usefulness and their relevance waxes and wanes. In fact under the Labour Government of whom I was a member, the total number of NDPBs fell by nearly 8 per cent from a high point in 1996-97. However, given that so much of the machinery and delivery of government services to the public is tied up in the public bodies regime, it is incumbent on government to undertake a proper cost-benefit analysis of the scale and the consequences of such radical dismantling of this regime before the bulldozers are brought in. Accountability is being held up as the prime motivation for the Government’s approach to public bodies, as my noble friend Lord Clark of Windermere said. Mr Francis Maude said:
“Today, the Government have taken decisive action to restore accountability … to public life”.—[Official Report, Commons, 14/10/10; col. 505.]
If that is the case, it is for the Government to demonstrate their newfound conversion to accountability and transparency by instigating an open, public process of consultation and dialogue with those public bodies, both advisory and statutory, affected by the Bill. Even at this late stage I would call on the Government to demonstrate their commitment to that accountability and to Parliament.
I wish briefly to address two specific areas before drawing my remarks to a close. The first is the fate, sealed before this Bill was even published, of the Women's National Commission, an advisory NDPB. I had the privilege of chairing that commission between 1999 and 2002, and I pay tribute to the wonderful work of my predecessors from all sides of the House and to my successors in that post, the noble Baronesses, Lady Prosser and Lady Gould of Potternewton. As noble Lords will know, the commission's role began 40 years ago and was to co-ordinate the women’s voluntary sector across the UK and to ensure that the strong, resplendent voice of this sector was heard clearly and independently by government. It is one of the true ironies of the opening months of the coalition Government that the creators of the big society should, without consultation of any meaningful kind, dismantle the very organisation—the Women's National Commission —that is so pivotally placed to assist in the delivery of the big society. For who are the leaders, the workers, the planners, the instigators of voluntary work in this country? It is women, of course. I ask the Minister to say what is to replace the Women’s National Commission and its work and how the Government are going to approach the independence of the dialogue with the women’s voluntary sector in this country. If the Minister feels that he is not well briefed on women—and who can blame him—will he write to me on these points?
The second and last point I wish to make is as president of the Trading Standards Institute, a body supported and respected across this Chamber. Trading standards officers work as local authority officials and keep rogue traders at bay, protect the public from loan sharks and assist local businesses in their legitimate growth. The announcement by the Secretary of State for Business, Innovation and Skills, Mr Vince Cable, that trading standards is a crucial front-line service along with Citizens Advice and will be strengthened by the new model set out in his consumer landscape review is, of course, to be welcomed but, and it is a very big but, handing over highly significant consumer and competition responsibilities through the Bill at a time of austerity-led local authority funding settlements is a move that has to be extremely carefully thought through because consumers—members of the public—must not be left less safe and more vulnerable with less opportunity and far less advice and choice in their lives. There is also the fact that while local government has broad shoulders and no doubt relishes these new challenges, consumers and markets are global as much as local these days and new governance models for trading standards and CABs must reflect those market and consumer demands, whatever the localist versus centralist politics of the day.
The Bill has raised many serious constitutional questions, as we read in the report by the Select Committee on the Constitution. The dreaded Schedule 7 —a quango version of Room 101—is there in front of us placing a cloud of uncertainty over highly significant public bodies, many of them esteemed partners of trading standards, such as the OFT, the Competition Commission, the Health and Safety Executive, the Local Better Regulation Office and many others. Can the Minister explain the necessity for and the reasoning behind Schedule 7? Will he look again at it given the strength of feeling and the rational argument across this Chamber tonight? Reform local bodies by all means, but do not recklessly dismantle them. I urge noble Lords to support the amendment to be moved by my noble friend Lord Hunt of Kings Heath.
Lord Kirkwood of Kirkhope
My Lords, this has been a very interesting debate and I have listened to most of it. I think that the Minister can take some encouragement from the fact that the policy intent of this measure is largely agreed. I do not think that anybody has gone full frontal in opposition to the policy intention of what the Government are trying to do. This is an important Bill and I draw encouragement from the fact that people are anxious to try to get the policy delivered. I hope that that holds, because the Bill has handling difficulties. As a former Whip, I can see that they are obvious in terms of what the Government have to try to get the House to agree to before Royal Assent.
The debate has demonstrated something else to me. It is that even when people agree with the policy intent, they all have their little lists of complaints about bodies that they want to protect. They say, “In principle, it’s really great; in practice, not in my backyard”. I have my little list as well. In 2007, I took part, as did the Minister, in the Child Maintenance and Other Payments Bill proceedings when we set up the Child Maintenance and Enforcement Commission. It took office in 2008 but is now in Schedule 1, so its days are numbered. I have great doubts about this. I moved an amendment to create it as an executive agency, as opposed to a non-departmental public body. Now the logic, the Ministers and the Government have changed and suddenly it is coming back to the Department for Work and Pensions. I am absolutely convinced that, in spite of this being the right thing to do in principle, issues such as this need to be looked at carefully. The Child Maintenance and Enforcement Commission is likely to cost more and to lose its focus. It is also likely to be much more difficult to run the collection of arrears that are so important to so many families in the United Kingdom.
The policy intent is agreed. We will all have our complaints and we will all have our little lists. Therefore, the question of the time that will be needed to deal with this Bill adequately is going to be a difficulty for the House, even absent the questions of process, to which I will turn in a second.
My great and much missed friend, Sir Clement Freud, used to make a lot of money on “Just a Minute” because he would always win the competition—without hesitation, deviation or repetition—by falling back on lists. Any time that he wanted to waste time in order to win the competition, he always resorted to lists. This Bill is full of lists. Noble Lords will speak without hesitation or deviation, but I think that repetition is out of order. I look forward to trying to help the Government, even absent the procedural issues, to get the Bill through in good order and in reasonable time, but that is a big ask.
I have listened to this high-quality debate on an issue about which people have thought a lot. I give the Official Opposition credit for this not being opposition for the sake of opposition. There have been some pretty robust speeches from Her Majesty’s Opposition, but I do not get any sense that there is a full-frontal assault to bring the Bill down, which I welcome. However, there are two problems that the Government will have to solve if they are not to put this Bill at risk, which would be a shame.
First, I do not think that the statutory instrument procedure that we have at the moment is adequate. That is clear to me. It was encouraging that colleagues came up with some solutions that I had not thought of myself. We have had some from my noble friends Lord Eccles and Lord Norton, among others, which deserve further and better consideration in terms of making sure that the role of the House is properly and adequately catered for when these statutory instruments start flowing from the Bill. Something that my noble friend has to do—he has to do it this evening—is give people proper reassurance that that issue will be addressed. I am open to argument, but this evening he has to address the depth and the extent of the criticism that was levelled in that direction.
Secondly, Clause 11 and Schedule 7 are in the same category. My noble friend Lord Norton came up with a good idea, which I had not thought of, of having a public bodies Bill in every Parliament. We now have five-year Parliaments and in each you could have a sensible public bodies Bill, which would be related to specific organisations. They would know which they were and we would be able to get proper scrutiny of them as time went on. Over the term of the Parliament, and over a period of time, there would be a systematic way of dealing with these bodies that makes sense and gives this House a proper and serious role, as well as the ability to amend the proposals in front of us.
I recognise and acknowledge that Clause 11 is an attempt at transparency. However, another way of drafting Clause 11 and Schedule 7 would be just to take the general power that was necessary and to leave the list out. Indeed, the noble Viscount, Lord Eccles, made a similar suggestion, which would get you to the same place. However, the Government took the view that the honest thing to do was to put the names that they had in mind in the Bill. That has had the unintended consequence of making matters worse and I hope that the Minister will recognise that it has been counterproductive. The Minister will have to satisfy the House on those two matters before we can attempt to judge whether or not the proposal for a Select Committee is worth pursuing.
Another question that the Bill will need to address in the fullness of time is that, because of the way in which it is drafted, new functions are capable of being created in the process of some of the changes that the Bill envisages. I hope that I am wrong about that, but there should be provisions in the Bill to ensure that it cannot happen. Such a reassurance is also important.
I say to my noble friend that the Bill is very important for a series of reasons and it is essential that we give it the best shot possible in trying to get it through the procedures of the House. He will facilitate that process if he can give reassurance on the two issues that I have mentioned: Schedule 7 and the process for dealing with statutory instruments. If he can do that, he might carry the House; if he does not, he will have difficulty in doing so this evening. That would be a great shame, because it would prejudice the future progress of the Bill.
Lord Hunt of Kings Heath
My Lords, it has been a long, impressive and important debate. It is important because the Bill will impact on many facets of public life in the United Kingdom and because it provides an early test of the House’s ability to scrutinise legislation effectively in this Parliament.
The Institute of Government believes that public bodies are now fundamental to the running of the British state and, yes, the Opposition believe it is right that the efficiency, accountability and purpose of these bodies should come under the microscope. That is what the previous Government were doing. I succeeded the noble Lord, Lord Warner, at the Department of Health and inherited his excellent arm’s-length body review programme. As my noble friend Lady Smith said, we built on this work, culminating in our March strategy. Yes, we had a target to reduce the number of bodies over a three-year period, but we also had a robust, rational and acceptable process for so doing. The Government’s approach is anything but that. They have failed to have genuine consultation; they have failed to give more than a paucity of information about the criteria they are using; and in the regulatory impact assessment they failed to provide any factual information.
In his opening remarks, the noble Lord, Lord Taylor, who we all admire, referred to the need for efficiency. I agree. Indeed, in the Queen’s Speech we were promised huge savings from this policy. An announcement was made from Downing Street at the time of the Queen’s Speech which suggested that £1 billion would be saved. However, since then the Government have become rather coy about that. Indeed, there is more than a whiff of suspicion that the costs may be greater than the savings. I ask the Minister: what savings do the Government envisage over the next spending review period?
In fact, the argument has moved on: now we hear that it is about accountability. We are being told that it is being done in the name of accountability. Can the Minister tell me how abolishing transparent, independent bodies and bringing their functions into central government departments can possibly increase their accountability? I have in mind here particularly the health and scientific advisory committees. I should like the Minister to assure me that these advisory committees will continue to be able to give robust, independent advice. Will that advice be published? Will Parliament be told when Ministers reject such advice? Some of the decisions the Government have made are puzzling. We heard from the noble Baroness, Lady Warnock, and the noble and right reverend Lord, Lord Harries. They spoke about the Human Fertilisation and Embryology Authority, as one example. It is an internationally respected organisation. Indeed, it was the respect in which the organisation was held which persuaded this House, after an eight-hour debate, to extend its remit to approve research in relation to stem cells. Why on earth do we undermine that work? It is essential to keep, as the noble Baroness, Lady Deech, said.
There are many other organisations we could name. There is just one I would mention. I agree with the noble Lord, Lord Kirkwood, that to take the Child Maintenance and Enforcement Commission back into the Department for Work and Pensions just when the signs are that it is beginning to get to grips with the difficult task it has would be a complete and utter disaster. We all have our favourite organisations on our list and no doubt when this Bill moves into Committee we will be able to discuss them.
I want to turn to the process. The Government have essentially introduced a skeleton Bill that would grant fundamental powers to individual Secretaries of State, thereby significantly reducing parliamentary scrutiny of executive action. The Bill gives Ministers the power to abolish or fundamentally change the operation of an arm’s-length body on a mere whim through an affirmative order. Schedule 7, as we have heard, is particularly worrying as it continues to hold a body under the knife of an individual Minister—facing trial, as the noble and learned Lord, Lord Howe of Aberavon, put it. How is a body such as the Independent Police Complaints Commission intended to operate independently of political pressure from Government when the Minister has the ability significantly to cut funding, change the constitution of the commission, or even abolish it?
My noble friend Lord Borrie referred to Ofcom, which is currently looking at the bid by News International for the remaining shares in BSkyB. There were also the wise comments of the noble Lord, Lord Norton, about the credibility of the Information Commissioner and the chilling effect of being listed in Schedule 7. There are the judicial bodies mentioned by the noble and learned Lord, Lord Woolf: the Civil Justice Council, the Civil Procedure Rule Committee, the Criminal Cases Review Commission, the Criminal Procedure Rule Committee, the Judicial Appointments and Conduct Ombudsman, the Legal Services Board, the Legal Services Commission and above all, the Judicial Appointments Commission. No wonder the noble and learned Lord spoke of his grave concern about the constitutional implications of the Executive being able, under this Bill, to abolish the independent appointments commission.
I ask the Minister whether this Bill is consistent with Sections 3 and 4 of the Constitutional Reform Act 2005, which is a guarantee of continued judicial independence. Have the senior judiciary been consulted by the Government? Have the Government law officers had any input into the drafting of the Bill? Will the Minister respond to points raised by the noble Lord, Lord Lester, about the Equalities Commission and the inconsistencies in the bodies listed in Schedule 7?
It was important enough to establish such bodies in primary legislation to start with. As the Constitution Committee report says:
“The Government has not made out the case as to why the vast range and number of statutory bodies affected by this Bill should be abolished, merged or modified by force only of ministerial order, rather than by ordinary legislative amendment and debate in Parliament”.
The noble Lord, Lord Norton, was very clear on that point. Indeed, I have rarely seen a Select Committee of your Lordships’ House so trenchant in its criticism of a Bill. I say to the Minister that the House tonight deserves a response to that committee’s report. It is not good enough to say that we should wait for Committee stage, as the Minister implied in his opening remarks.
On the Government’s response generally, the Minister offered some concession over consultation. That is of course welcome, but he could have gone further. He could have acknowledged that the Bill would have been much the better for pre-legislative scrutiny. He could have promised a proper impact assessment before we proceed to Committee. He could have agreed to publish the full costs and benefits of the proposed changes before we move to Committee. He could have promised that the Government would accept amendments from these Benches to ensure that the super-affirmative procedure will be used in the Bill.
The noble Lord, Lord Taylor, made great play of the fact that statutory instruments under the Bill will be affirmative, but he could have confirmed that the Government accept, without any hesitation, that the interpretation of the Merits of Statutory Instruments Committee on the best definition of the conventions applicable to secondary legislation is that contained in the report of the Joint Committee on Conventions. I remind the House that the report stated that,
“it is consistent both with the Lords’ role in Parliament as a revising chamber, and with Parliament’s role in relation to delegated legislation, for the Lords to threaten to defeat an SI … when the parent Act was a ‘skeleton Bill’, and the provisions of the SI are of the sort more normally found in primary legislation”.
Will the noble Lord confirm that the Government accept the interpretation of the Merits Committee published in a report only last month?
The noble Lord, Lord Taylor, could have said that the Government would withdraw Schedule 7 to the Bill and accept my amendment to his Motion. The practice of committing a Bill to a Select Committee has been very rarely used in respect of government Bills in recent times. The most recent occasion was for the Constitutional Reform Bill in 2004. The noble Lord said that the form of the Constitutional Reform Bill was of a different order and of great constitutional significance—and so it was—but I believe that, in its way, this Bill is of constitutional importance, too, and would merit being dealt with in the same way. I was immeasurably strengthened in that view by the interventions of the noble and learned Lord, Lord Woolf, and my noble and learned friend Baroness Scotland. They did not doubt the constitutional significance of the Public Bodies Bill.
The noble and learned Lord, Lord Mayhew, and the noble Baroness, Lady Scott of Needham Market, said that all Governments are affected by Henry VIII-type clauses. That is of course right, and this House has made its displeasure known whenever Ministers have fallen into such temptation. What is so worrying about this Bill is, in the words of the noble and learned Lord, Lord Mayhew, its industrial scale. The use of Henry VIII-type provisions is so blatant that, in the words of the Constitution Committee:
“The Public Bodies Bill [HL] strikes at the very heart of our constitutional system … In particular, it hits directly at the role of the House of Lords as a revising chamber.”
The noble Lord, Lord Taylor, suggested that my amendment was aimed at obstructing the Bill, but that is not so. The Opposition support efforts to improve the efficiency of these public bodies. I am quite content with the objectives in Clause 8(1). I see my amendment as being a reasonable and constructive course of action for the House to take in sending the Bill for examination within a Select Committee. Like the Constitutional Reform Act 2005, I have no doubt that the Bill would be immeasurably improved as a result. I agree with the noble Lord, Lord Maclennan, that it does not need to look into the merits of each body covered in this Bill. The noble Lord, Lord Lester, asked for a reassurance that the Select Committee proceedings would be confined to the constitutional aspects of the Bill, including process and safeguards. I agree with the noble Lord, Lord Lester, that it should be so confined, and I do not see why it cannot be done within three months.
We have no interest in delaying the Bill’s progress, but I suggest to the Government that a little more time spent on the Bill now would save a huge amount of time likely to be lost if the Bill went through in its present form. The Minister should listen to his noble friend Lord Greaves. I can testify to the ability of the noble Lord, Lord Greaves, to keep the debate going day after day after day. But to reinforce this point about time and to reassure the House, I am very happy to accept what the noble Lord, Lord Maclennan, says about timing. I certainly believe that the committee should be able to achieve its completion by 28 February 2011, as he suggested.
At the general election, the Conservative Party manifesto promised to restore the balance between government and Parliament. The Liberal Democrat manifesto promised to strengthen Parliament to increase accountability. If I as a member of the previous Government had brought forward this Bill, it would rightfully have been torn to shreds by this House. If as a Minister I had had to listen to the devastating speech of the noble and learned Lord, Lord Woolf, I would have known that the game was up.
As my noble friend Lady Andrews said, this is a real test of this House’s ability to scrutinise legislation effectively. I hope that we will meet that test by agreeing to the establishment of a Select Committee.
Lord Taylor of Holbeach
My Lords, this has been a good debate on a very serious subject in which people have expressed themselves seriously and with passion. If I have been on the receiving end of much of that, I should tell noble Lords that I am actually encouraged by this debate. As my noble friend Lord Kirkwood pointed out, there has been some agreement about the objectives of the Bill, even if there has been some criticism of the mechanism that the Government have chosen to implement it.
I thank all noble Lords who have participated. It has been a good-natured debate despite the seriousness of the subject. Contributions have been thoughtful and constructive and indicate a commitment to the principles of scrutiny and due process of which this House should be proud. As a Member of your Lordships’ House, I share these principles, and I have reflected carefully on the points that have been expressed today. I apologise in advance that I shall be unable to address them all specifically in the limited time available. I have in particular taken note of the general concern regarding the order-making mechanisms in the Bill, particularly as they relate to the bodies listed in Schedule 7. In the light of the seriousness of these concerns and the considered and impassioned case made by many noble Lords this evening, I have chosen to respond by making an equally strong commitment.
It is my firm belief, particularly given the quality and breadth of the contributions to today’s debate, that the appropriate venue for detailed scrutiny of the Bill is in a Committee of the whole House, supported by the detailed and expert scrutiny of the Joint Committee on Human Rights and the Delegated Powers Committee. The Constitution Committee has already made such a contribution, detailed in its report and expressed eloquently today by my noble and learned friend Lord Howe and my noble friends Lord Crickhowell and Lord Norton of Louth. That report has been the focus of much of today’s debate and, as such, I take it extremely seriously.
I take equally seriously the concerns raised by a number of noble Lords about ensuring the independence of bodies charged with delivering important public functions, and those regarding the scope and nature of Schedule 7. Accordingly, I wish to make clear my intention to bring forward amendments in Committee to address these issues constructively. I accept the Constitution Committee’s concerns and the need to meet them by devising a parliamentary procedure that will ensure proper public consultation and enhanced parliamentary scrutiny before any proposals to act under the legislation are approved.
We will also seek to amend the Bill to include safeguards to give independence to public bodies against unnecessary ministerial interference when performing technical functions, and when their activities require political impartiality and the need to act independently to establish facts. Finally, we will consider whether some of the bodies need to be removed entirely from Schedule 7. As part of these considerations, we will seek to address the concerns of the noble and learned Lord, Lord Woolf, which were echoed by many other noble Lords, including the noble and learned Baroness, Lady Scotland, about bodies that deal with matters relating to the judiciary or otherwise to the administration of justice.
There have been questions raised about the scope of Schedule 7 and the reasons for the inclusion of bodies in that schedule. There has been the suggestion that there is no rationale for the list. This is absolutely not the case; the bodies listed have all been included in the recent review and will be subject to future reviews. The Government do not believe that public bodies should remain, as a matter of course, in perpetuity or that their functions, remit or status should never again be examined. There will therefore be a triennial review process.
Schedule 7 omits some bodies included in the review and in future reviews because they do not have a statutory function. A small number of bodies have also been excluded because they are being taken forward in alternative legislative vehicles. For example, some proposed changes are out of the scope of the powers in the Bill, such as to the Audit Commission. In other cases, proposed reforms fit better with the wider legislative and policy objectives of a particular departmental Bill.
The noble Baroness, Lady Andrews, asked why two orders are required to remove bodies from Schedule 7 and then to effect changes using the powers in Clauses 1 to 6. We should remember that moving bodies from Schedule 7 might also be to merge them or to change or fulfil their functions under those clauses. I believe that it is important for the House to have the opportunity to approve the principle of the use of the powers in relation to a particular body. As she points out, there would need to be a separate order to approve the details of that change. If beneficial for scrutiny, these orders could be published in draft simultaneously.
The Government are committed to substantial reforms to public bodies aimed at enhancing their accountability, efficiency and effectiveness. The Government are further committed to continuing to review the public bodies landscape in future, ensuring that it remains fit for purpose. I suspect that most noble Lords agree with that strategy.
I am gratified to note that many noble Lords across the House have expressed their support for this policy in their contributions today. It is a programme that the voters and taxpayers of the United Kingdom expect us to deliver without delay. It is that objective that underpins the Public Bodies Bill.
I agree with the remarks of my noble friend Lord Blackwell, who applauded the principle of the Bill and expressed his hope that it had been brought forward with the intent to deregulate and simplify. I confirm to him that the Government are committed to a simpler, more transparent public bodies landscape, and that the Public Bodies Bill cannot be used to create new public bodies except as the result of a merger of existing bodies. I am happy to discuss with my noble friend how best to ensure that the Bill supports the principles of the regulations. I also note my noble friend Lord Kirkwood’s concerns about new functions.
I believe that there is broad agreement in this House about the policy behind the Bill, and that leads us to two sets of questions. The first is about mechanisms. With regard to this question, I hope that I have reassured the House of our intentions by making a commitment to bring forward amendments in Committee. I reiterate again my commitment to working with the House to address its remaining concerns.
The second set of questions is about the implications for specific bodies and functions. The noble Baronesses, Lady Stern and Lady Finlay, both express concern about the proposal to abolish the office of the chief coroner and the implications of that for bereaved families. The decision regarding the coroner was not taken lightly, and the abolition of the office does not indicate that we are not committed to an improved coroner system. We remain committed to improving the coroners’ service for bereaved families and those who work within the system. Our proposals, such as introducing a charter for the bereaved, will do exactly that.
The noble Baroness, Lady Royall of Blaisdon, and the noble Lord, Lord Clark of Windermere, expressed their concern regarding the provisions relating to forestry. I hope that they will permit me to respond to some of their detailed questions in writing. However, I offer my reassurances that there are numerous safeguards already in place to protect England’s trees, forests and woodlands irrespective of who manages them. The noble Baroness can rest assured that, as someone who was a fan of Dennis Potter, I share an awareness of the uniqueness of the Forest of Dean. I also hope that it helps noble Lords that I have several volumes by Oliver Rackham, our leading historian of woodlands and forests. The Government will bring forward proposals in the new year to invite interests from a wide range of potential private and civil society partners on a number of new ownership options and the means to secure public benefits.
I appreciate that many other noble Lords have expressed concerns about bodies that I have not had time to mention. I offer my apologies and give an assurance that I will seek to remedy this, either in writing or during future stages of the Bill. Once again, I thank noble Lords for their contributions today and for their constructive comments both inside and outside the Chamber. I reiterate my commitment to continue to work with colleagues to improve the Bill and to address the specific concerns about the processes that it sets out.
However, I do not believe that the Bill should be committed to a Select Committee. As I stated in opening this debate, it is right and appropriate that our deliberations should continue in a Committee of the whole House, which has today demonstrated its capacity to give this Bill full and considered scrutiny. The time between now and then can be used productively to address remaining concerns relating to the structure of the Bill. It would enable me to bring at an early date to the whole House sitting in Committee those amendments that we believe this debate has asked of us. It is for this reason that I hope noble Lords are persuaded not to commit the Bill to a Select Committee.
It is absolutely right that the House should scrutinise this Bill, and do so with its customary rigour. It is not right that the House should seek unnecessarily to delay a reform programme that is a coalition commitment, that reflects manifesto commitments and that the public rightly expect to be delivered without delay. I commend the Bill.
Lord Taylor of Holbeach
That the Bill be committed to a Committee of the Whole House.
Amendment to the Motion
Lord Hunt of Kings Heath
Leave out “Committee of the Whole House” and insert “Select Committee”.
Lord Hunt of Kings Heath
My Lords, we have had an extensive debate. I know that the House will now want to come to a speedy conclusion. The noble Lord, Lord Taylor, has said that he has listened carefully to the debate. He has certainly promised to bring amendments to enhance public consultation and public scrutiny. However, these undertakings are unspecific, insufficient and imprecise. The Bill will be better informed and immeasurably improved by going through a Select Committee process. Far from delaying the Bill, I am convinced that this will give the noble Lord a better Bill and one that will be produced through this House more quickly.
The Minister has not met all the constitutional concerns that have been raised tonight. He has said nothing about costs and savings. He has not agreed to put safeguards in a new clause at the beginning of the Bill. He has not said that the Government will agree to the super-affirmative procedure. He has not given a guarantee to take the judicial bodies mentioned by the noble and learned Lord, Lord Woolf, out of Schedule 7. The Minister has not responded to the concerns raised in this House by many Members. I beg to move.
Amendment to Lord Hunt of Kings Heath’s Amendment
Lord Maclennan of Rogart
At end to insert “; and that it be an instruction to the Committee that it should report the bill to the House not later than 28 February 2011”.
Lord Maclennan of Rogart
My Lords, in the light of the assurance that has been given by the noble Lord, Lord Hunt of Kings Heath, that the proposed Select Committee, if set up by this House, would complete its work not later than the end of February, and of the assurances by my noble friend to attempt to meet the concerns that have been expressed in this Second Reading debate, I shall not move my amendment.