Grand Committee
Budget Responsibility and National Audit Bill [HL]
(14 years ago)
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The Deputy Chairman of Committees (Lord Skelmersdale)
My Lords, I begin by repeating words that you have all heard many times before. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bell is rung and will resume after 10 minutes. We are now on the second day of proceedings of the Grand Committee on the Budget Responsibility and National Audit Bill.
Lord Peston
Lord Peston
Amendment 9 is grouped with Amendment 15, which my noble friend Lord Eatwell will speak to. I have discovered that the more work one does jointly, the more thoughts one has. Therefore, one or two things emerge from this amendment that had not occurred to me when I tabled it. I will mention what they are, but that does not necessarily mean that we should debate them today: we might save them for Report.
The amendment covers the role of the two or more other members. They are referred to in the Notes as non-experts. I had not thought through the implication, because the word is not used in the Bill, that the OBR people are the experts. At some point I shall try to find a way by which we can discuss the distinction between expert and non-expert. I assure the Minister that this is a probing amendment for elucidation. I am asking what the point is of having these people. Given that we have experts, what do they contribute? They cost money—I assume that they expect to be paid—and they will have to be serviced with briefings of all sorts. The point of the amendment is to ask generally why we need this class of member; and, secondly, if this is what the Bill intends and if we are to have them, to ask the OBR, which will want to appoint them: “Can you tell us why you need them in this broad category, and why you need these specific people?”. I was intrigued by the Notes saying explicitly that these people will not be experts.
My other point is that so far, the only thing that we have any practical experience of, given the operation of the OBR, is that these people are not experts in the sense that they are not economists. I assure the Committee that there are other experts in the world. One or two of my colleagues, particularly in the United States, believe that economics will develop into a universal science that will cover everything in the field of human knowledge. I do not hold that view. It seems to me that although the experts so far are economists, I can think of other areas of expertise that would class people as experts for the purposes of the Bill. I do not expect the Minister to talk about that today, but I will raise it on Report. Statisticians and businessmen have wide experience and could be classed as experts in this context. The point of this probing amendment is to seek enlightenment. I beg to move.
Lord Eatwell
My Lords, I want to speak to Amendment 15 in this group, which is tabled in my name and that of my noble friends Lord Davies and Lord Myners. The amendment seeks to provide a specific and important role for the non-expert members who, in the Explanatory Notes, are defined as non-executives. The role of the non-executives is very important indeed because, as we have already identified, the OBR is a strange beast. It is independent in an important way, or at least we hope it is, and yet it is an essential ingredient of policy-making within a particular department, mainly the Treasury. So it is not really a non-departmental public body as we know many independent bodies because it is very much part of the Treasury, and yet it is also very much not part of it. It is therefore important that we bolster the “not” side of that equation to ensure that not only is there the reality of independence in a way that I know the Government are seeking, but also the appearance of independence, which will be equally important, especially in more tempestuous political and economic times.
Amendment 15 seeks to clarify the role of the non-executives in a particular way. What is striking at the moment is that the non-executives have no role whatever except that of being involved in audit activity and the production of the annual report; otherwise, they simply make the tea for the experts. We want to give the non-executives a particular role, that of bolstering and supporting the independence side, let us call it, of the OBR. It will be done by requiring the office to include in its annual report an assessment of how the OBR and the Treasury have adhered to the terms of the OBR’s independence as set out in Clauses 5 and 6(2).
Noble Lords will recall that Clause 5 makes the particular point that not only does the OBR have “complete discretion” but, as set out in subsection (2):
“The Office must perform that duty objectively, transparently and impartially”.
One of the oddities of the draft charter is that it seeks to define the terms of Clause 5(2) which are perfectly well defined in the noble Lord, Lord Sassoon’s, favourite reference book, the Oxford English Dictionary. I do not see why we need any further definition, but we will come to that in a moment. The non-executives can comment on these provisions, but more especially they can comment on the provisions of Clause 6(2), which is the really crucial piece of independence in the Bill—the independence of method and of forecasting approach. That is because, as we discussed on Monday, the Treasury is to retain its own forecasting unit and the non-executives will have the responsibility of assessing whether the mutual influence between the two forecasting organisations compromises the OBR’s independence.
It is important that the Government should realise that forecasting organisations influence each other to a considerable degree in respect of introducing new and different ideas, concepts, judgments and methodologies. Moreover, first-class forecasting units interact with one another. That is absolutely inevitable at any level of serious intellectual endeavour. For example, in economic forecasting, the very method used can have a significant influence on outcome, and unwarranted influence on the outcome can be exerted as much by a debate over method as over judgment.
The role of the non-execs is simply to stand there as defenders of the independent side of the OBR, and we could give them the responsibility of reporting on that independence in their annual report. They would then have a specific, valuable and important role.
I admit that Amendment 9, tabled by my noble friend, is cast in much more general terms, but I think that it is seeking to achieve the same ends. It is seeking to define a role for the non-executives. I suggest that the statutory role that we are suggesting—as guardians of the independence of the OBR—will be of enormous value to the Government, to Governments in future and to the organisation itself.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, although the noble Lord, Lord Peston, says that this is not necessarily the opportunity to try to clarify what is intended, I think that it is worth spending a moment or two to try to tease out what is going on here, although from what both noble Lords said, it is probably now clear what is going on.
As I said at Second Reading, when I was first shown a draft of the Bill, it categorised the two groups as professional and non-professional. That was changed to expert and non-expert, but we are talking about, on the one hand, a group that is expert in the sense of having all the competencies to carry out the role of the OBR—so they are both expert and executive—and, on the other, another group of people who are described in the Bill as non-expert, but we are rightly talking about them as what they are in substance, non-executive. They might be expert or they might not, but the critical thing is that they bring to bear a degree of support and challenge that comes from a different perspective. If they happen to have some relevant expertise, fine, but that is not the point.
The so-called non-experts are non-executives, but are full members of the OBR, which means that they can help to carry out any of the OBR's functions beyond those reserved for the BRC. As I see it, their role will be principally one of support and constructive challenge to the executive members, just in the way that non-exec directors would normally exercise those functions. They may form part of some committee structure, if the OBR so decides—audit is a particular role often assigned to independent non-executives—and they will carry out an important role in safeguarding the independence of the OBR. I have no difficulty with the principle behind Amendment 15, spoken to by the noble Lord, Lord Eatwell. It is just a question of the best way to achieve that.
For a start, we have a statement from the Treasury Select Committee in its recent report on the OBR. It states:
“We will take evidence”—
from the OBR—
“regularly as part of the budget process. We will intervene if we believe the OBR's independence is threatened. We expect the members of the Budget Responsibility Committee or the non-executive directors to report any concerns they have to us. Only if it is independent will the OBR be successful”.
We completely agree with that and would expect both the executive and the non-executive members, whether collectively or separately, to report any concerns on independence. That is clearly implied by the whole nature of the construct. The non-exec non-experts must be people of independent mind and character.
The question is whether this needs to be written in further. My slight problem with requirements to report on things like independence on a regular basis is the risk of becoming formulaic. We want the OBR and the non-experts to report whenever they see any question of a lack of independence arising, and I hope that that will never occur, but my hesitation is that if you get people to report regularly it becomes another box that they tick and another standard sentence that they write. It may actually be more difficult for them to do what in substance there is nothing stopping them doing—there is every encouragement from the Government and from the Treasury Select Committee already—which is to raise any independence concerns in the appropriate way, which may not be in any particular form with any regularity.
I have noted the points that have been raised, but at the moment I am not convinced that writing more into the Bill will necessarily do anything but lock us in to one particular formula. However, I will reflect further on the points that have been put. For the moment, though, I hope that I have answered the questions that have been raised and that that is sufficient for the moment for the noble Lord to withdraw the amendment.
Lord Peston
My Lords, will the Minister clarify one or two of his remarks? I got a bit lost. I think I am right that he is now saying that the real distinction is exec versus non-exec, not expert versus non-expert, so we have moved on from the Explanatory Notes on those clauses to something different. Do I therefore understand that the non-execs could include people who would be regarded as experts?
My second question, and I blame myself for this as I did not emphasise it in my opening remarks, concerns the rubric in the Bill, “two or more”. I meant to ask: what is the point of “or more”? Two seems a lot. Why have the Government not been able to make up their mind what they think the right number is? I was very puzzled by that. I would have thought that two, full stop, would be enough. Certainly, if I were doing this, I would say, “If we’re going to have to have these people, a couple of them are fine”, but I do not see where the “or more” comes in, unless we go along with my noble friend Lord Eatwell that the two that we have turn out not to be able to make tea and we need a third one for that purpose.
Lord Sassoon
My Lords, in answer to the first question, to be clear again, it is certainly the case that there is a group which is executive and expert and then there is a second group, described at the moment in the Bill as “non-expert”, which is also non-executive. That second group could be experts, there is nothing to rule that out, but the point is that they do not have to be experts; they should, however, be sufficiently independently minded, supportive and challenging of the executive expert members.
We have put in “two or more” because at the moment we think that the remit of the OBR and the construct should be perfectly sufficient and workable for robust government arrangements. That is the minimum number. To have one non-exec would put that individual in an impossible position; two gets you to the minimum. If the OBR’s remit were somehow to develop in an unanticipated way, it might be appropriate to modestly expand the number of non-exec non-experts, but that is not the intention at the moment.
Lord Turnbull
I suggest to the Minister one possible use of this third post: at some stage, it might be thought helpful to recruit someone who has experience in a different country of how this kind of arrangement has worked. The two non-executives—I really do not know why we do not just settle on that as a description, because they are expert at being non-executives—could well be supplemented by someone who brings some other dimension to the affair.
Lord Sassoon
That is a very helpful thought. I shall in another context say that the parallel with the MPC is not at all inappropriate. For example, in the MPC or the board of the FSA there is a good record in the UK in recent years of bringing in relevant experts from overseas. I entirely agree with the noble Lord’s thought.
Lord Eatwell
My Lords, I am grateful for the noble Lord’s reaction to our Amendment 15; he said that he did not have any difficulty with it in principle. He then suggested that the independence of the OBR should be guarded by an external body—namely, the Treasury Committee of another place. While I have enormous respect for that committee, it would be better to bolster the independence of the OBR within its own organisational structure, rather than relying on an external body to deal with this issue. That is what I was trying to do in my amendment.
The other aspect is that if it is clear that the important role of the non-execs is to bolster the independence of the OBR, it will affect the sort of person who is appointed. You will want people of stature and self-confidence who would be willing to make themselves unpopular in defending the independence of the OBR. That would be a particular sort of person. It is especially valuable that we do not rely on an external organisation and use an internal structure with the non-execs. After all, they are there; we might as well use them to do this job.
I understand the point that a regular report might become formulaic, but this is such a serious duty that serious people would not treat it in a formulaic manner. However, I will take away the noble Lord’s point and see if I can modify the amendment a little.
Lord Sassoon
I want to clarify one matter. I was not for a minute suggesting that the Treasury Select Committee would be the sole policeman of independence. Under the current construct without the proposed amendment, I absolutely regard the OBR to be the guardian of its independence—which it shows every signs of being fiercely committed to. I was merely using the wording of the Treasury Select Committee report to point out that there are already external pressures on the OBR from a number of directions, but in no way was I suggesting that it will not already be expected to raise concerns on independence. The reporting mechanisms could include the annual report that will happen anyway. I am simply suggesting that making that mandatory in the legislation risks a formulaic approach.
Lord Eatwell
As I have said, I understand that; but when you are in the executive position, as the very distinguished people you have been lucky enough to attract to run the OBR are, it is very easy, because you have to get the report out and do things, to be so immersed in the incredible pressures that you slip across boundaries. If non-execs are there, like a non-executive chairman with a chief executive, they could help with guidance and prevent that slip happening. If we give the non-execs this particular role, it will not only bolster the appearance of independence of the OBR—which is valuable in itself—but provide an important check in reality. Including that duty in the Bill would be so serious that I do not think that serious people would treat it in a formulaic manner.
Lord Peston
My Lords, I thank the Minister for his clarifications, particularly in relation to the application of the exec versus non-exec issue. My noble friend Lord Eatwell has made a powerful case and I am glad that the Minister will at least reflect on how independence will work. Even though one felt very frustrated on Monday by the Minister’s refusal to give a much bigger role to the House of Lords, I can assure him that as long as I am alive, I and my noble friend Lord Barnett will find many a way of making sure that the OBR is subject to the kind of criticism that will ensure that, whatever else it is, it is definitely independent.
Having said that, I would like to come back to the question of expertise, but that can wait until Report. I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
A peculiarity of Schedule 1 as drafted is that the members of the committee who are required to have the relevant skills we have talked about are also required to obtain the consent of the Treasury Committee of the other place, whereas the non-execs are not. This is peculiar and unfortunate because, while there is a clear template against which to measure the members of the committee—they must have a suitable professional status within the economics profession, and especially within economic forecasting—the non-execs require a wider skill set. It would be inappropriate to spell out a particular skill set—even though my noble friend Lord Peston wants it in the Bill—because that is best assessed by the Treasury Committee and, if we wish to add it, the Economic Affairs Committee of your Lordships’ House.
What kind of things do we want? We want independence, experience, commitment, a clear interest in the issues at hand and an understanding—although not necessarily a high level of expertise—of the strengths and weaknesses of economic forecasting. We also want political independence, or at least political balance, within the structure of the non-execs. The Treasury Committee, which covers a multitude of sins, has the expertise to evaluate that kind of skill set. That is why Amendment 10 seeks to apply the kind of rigour and general assessment to the appointment of the non-execs as is applied to the appointment of the committee. I beg to move.
Lord Higgins
My Lords, I am a little worried about the remark “covering a multitude of sins” as I was chairman of the Treasury Select Committee in the other place for about 14 years—in fact, probably for most of the time that it has been in existence.
Lord Eatwell
If the noble Lord and the right reverend Prelate will allow me to explain, I was using the term in the same way as the Church of England covers a multitude of sins.
Lord Higgins
It will be interesting to know the Minister’s view on that one. I support the noble Lord in the view he has expressed. I welcome the fact that sub-paragraphs 1(1)(a) and (b) of Schedule 1 both require the Treasury Committee of the House of Commons to be involved. As I said at Second Reading, I think it is true to say that this is the first time that a Treasury committee in this sort of role has ever appeared in legislation. But like the noble Lord who moved the amendment, I am puzzled as to why the Treasury Committee should be involved in the case of the first two groups and not in the case of the third. It seems appropriate that it should be involved in all three. It is certainly appropriate that it should be involved in the appointment of the chairman, because the chairman plays a crucial role between the parliamentary side of things and the Executive nowadays, so that is very good.
I also remain puzzled as to why, under sub-paragraph (c) of Schedule 1, the two members are to be nominated by the OBR and then appointed by the Chancellor, whereas those under sub-paragraphs (a) and (b) are simply appointed by the Chancellor. No doubt the Minister can explain why the OBR should be in the nomination of the third group.
Lord Barnett
My Lords, I agree with the noble Lord. Although I am sure that the Minister will consider the amendment carefully before we get to Report, I wonder whether it would be simpler for him to add a few words to it—namely, that the Economic Affairs Committee of the House of Lords might be added to this consideration. I am sure that he would be happy to see that done.
Lord Sassoon
My Lords, I am quite puzzled by this amendment because we are moving into unusual territory. We believe it absolutely right for the Treasury Committee to have a veto over the role of the chairman, but it is almost unprecedented for Parliament or parliamentary committees to have such roles at all, let alone over non-executive members. One of very few other appointments that is subject to a parliamentary veto of the sort provided for in this Bill is that of the Comptroller and Auditor-General.
In terms of the non-executives, I do not share the analysis of the noble Lord, Lord Eatwell, in terms of expertise. I shall come back to the other constitutionally substantive point, which is that we are not talking about experts in this area in any sense but about those who will bring independence of mind and who will challenge and support. That is potentially a much wider field of candidates. So I think that such appointments would rest on the relatively narrow point about what the Treasury could bring to bear, and actually I do not think that it would have anything special to bring to this. The wider point to be made here is that we would be moving into new and extraordinarily different territory. To take one broadly similar example, the non-executive members of the board of the UK Statistics Authority are appointed by the Minister for the Cabinet Office after consulting with the chair of the UK Statistics Authority. So we are following a perfectly respectable precedent.
In answer to the question of why the names that are being considered for the non-expert, non-executive role should be nominated by the OBR, again we want to strike a balance between appointment by the responsible Minister, who is the Chancellor, while not leaving it entirely to the Chancellor and the Treasury to come up with names. So again there is a perfectly well precedented route by which the authority concerned has a role in identifying candidates. That would include the Debt Management Office, the Crown Estate Office, the museums, the Natural Environment Research Council—I could go on.
Our suggestion in the Bill for how this should work is well-worn territory; there is nothing so different about the role of these non-execs. We have already had some questions about how substantive the role is, but there is nothing that takes the roles of these non-execs into remotely different territory from the role of non-execs in a lot of other well functioning bodies in the broader public sector, and we have broadly followed the appointment processes in those other areas. I am genuinely puzzled by this amendment and do not believe that it would add anything to the strength of the OBR governance arrangements.
Lord Peston
Perhaps I may indicate one thought that has occurred to me, which the Minister might like to reflect on. It follows on from what my noble friend Lord Eatwell said: namely, that there is an enormous benefit to be gained if these people have been scrutinised. I do not believe that in practice it would occur very often, if at all, that the names brought forward were rejected, but a committee—which, one hopes, did not operate politically, such as the Treasury Select Committee; certainly the Economic Affairs of your Lordships’ House has never done so—might say, “We approve of these people; they’re just the people we need to help safeguard the independence”, which my noble friend Lord Eatwell has emphasised in this context and before. It is worth reflecting on whether that would be helpful in a body that is very different from any body that I can think of that has been set up in my time to consider economic policy-making.
There is an old adage, “Never do anything for the first time”, but that is what this body is doing, whether we think that that is good or bad. I would have thought that the Minister might like to reflect at least a little on the point that there would be positive benefits from going down the path that my noble friend suggests.
Lord Desai
I am sorry, my Lords, I did not speak in the Second Reading debate or on Monday. The point here is about trust. The Government have set up an institution that in its early days suffered from a bit of a problem of trust. I think that that was an accident, not the fault of the OBR itself. Whatever the Government can do to establish trust in the body would help them enormously. As my noble friend Lord Peston said, this is an innovation, a very good one, and perhaps it would strengthen it to do something, as my noble friend Lord Eatwell has suggested, to say that this is not like any other public sector body but is vital to the conduct of economic policy by the Government and to the perception of that policy. If the Minister can do something to assuage the trust deficit that we have here, it would be helpful.
Lord Higgins
My Lords, I agree with the point that has just been made. It is true, as the Minister has said, that we are breaking new ground here, but the other bodies to which he referred are very different from this one, which is unique. I would have thought that the case for having the whole board approved by the Treasury Select Committee gave greater weight to the committee’s authority and would certainly make the committee, which is going to be dealing with this whole issue a great deal, more acceptable to it in future proceedings. I am not clear why the Minister objects to adding this.
The Lord Bishop of Chester
My Lords, it would be a great mistake to regard being opposed to sin as the sole prerogative of the Church of England. I hope that the whole Committee is opposed to sin.
I have some sympathy with the Minister on this. My problem with this part of the schedule is that it feels too in-house to me—too much the same. The Chancellor of the Exchequer is involved in the appointments and perhaps the Select Committee will be involved. I should have thought that the office needs a certain amount of diversity; its independence requires a greater diversity. It strikes me that the schedule is too tightly constrained as it is and to constrain it further by saying that the Select Committee of the other place has to be involved each time feels odd. I would almost expect the Governor of the Bank of England to nominate a member. We need a greater sense of diversity and independence in what is supposed to be an arm’s-length body. This body is in danger of not being sufficiently arm’s length from government. On that ground alone, I support the Minister’s resistance. However, I have a problem in that the whole thing seems a bit too in-house as it is.
Lord Turnbull
The noble Lord, Lord Higgins, referred to making this more acceptable to the committee. I remember reading the report of the committee in another place: it did not actually ask for this. It asked for powers on appointment, and for powers of dismissal, which are built in here. Members of that committee did not think this was necessary and I am prepared to back that judgment.
Lord Sassoon
I am grateful to the right reverend Prelate. I hope that he will forgive me if I do not offer any thoughts on sin. I know my limitations. I am grateful to the noble Lord, Lord Turnbull, for reminding us that the Treasury Select Committee has not asked for this. We need to get back to the substance of this. Yes, the OBR is a critically important entity. I would not characterise its role quite in the way that the noble Lord, Lord Peston, did, as being involved in economic policy-making, but we had that discussion two days ago. The OBR is critically important. It has a role which it has already begun by producing the official economic forecast. Because that is such an important role, we have as a Government, in agreement with the Treasury Select Committee, come forward with a most unusual role for the committee in respect of appointment of the executive members of the OBR. That in itself emphasises the special nature of this entity.
We have recognised the special role of this body in the executive appointment process, but as to the non-execs, we should not get too excited and think that their role is very different. Are we really saying that the non-execs here have a completely different role to the non-execs on, say, the UK Statistics Authority board, which is another critically important part of the architecture? We risk over-engineering this.
Another point that no one has made is that all public sector appointments are subject to an independent process and a series of safeguards. We must not forget that this is not part of a closed process. I believe that the overall construct is appropriate and we should not over-engineer it, particularly in a way that the Treasury Select Committee has not asked for.
Deputy Chairman of Committees
The Minister was in full flow and presumably wants to continue.
Lord Myners
Before the Minister sits down, I should like to make one point. There is a rather good article in the Financial Times today by Miss Sue Cameron on the subject of the appointment of non-executive directors by government. It starts out by detailing some of the difficulties that the Government appear to be having in getting people of appropriate quality to step forward to take these positions. It then goes on to say that there is a lack of clarity about whom the non-executive directors owe their duties and obligations to and to whom they report. If, as I believe my noble friend Lord Eatwell suggested, the non-executive directors are there primarily to vouch for the competence and independence of the OBR committee, then it begs the question: with whom do they raise doubts about competence or independence? It seems to me that it would be the Treasury Select Committee rather than the Chancellor of the Exchequer. After all, it would probably be the Chancellor of the Exchequer or the Treasury that were encroaching on independence. If that is the case, surely it is also logical that the Treasury Select Committee should be involved in approving the appointment of the non-executive members. After all, those members are the eyes and ears of the Treasury Select Committee within the OBR committee.
Lord Sassoon
My Lords, I have not had a chance to read that article. If we have another break, I shall go and do so. The arguments of the noble Lord, Lord Myners, are always powerful and coherent, but there are plenty of instances of where the appointment process does not, for all sorts of different reasons, necessarily have much to do with where reporting lines go. At the moment, quite properly, banks have to do a huge amount of reporting to the Financial Services Authority but the FSA does not appoint the boards of directors, who are appointed by the banks’ shareholders.
Lord Eatwell
But the FSA now interviews non-executive directors from major financial institutions.
Lord Sassoon
The FSA does not appoint the boards of directors. We are talking here about public sector boards, and I feel that there is little more to add. The Treasury Select Committee has not asked for this, and it does not happen with other appointments. Critical bodies such as the statistics authority work perfectly well under the sort of construct that we are proposing here.
Lord Myners
Will the Minister confirm that appointments to this committee will follow the same procedures and processes as apply to membership of the statistics authority? In particular, will he confirm that the public appointments body will be involved in overseeing the process, that these positions will be properly advertised and that due regard will be given to diversity in the specification of the terms of appointment? I think that the Minister is leading in the direction of giving us some comfort that we can look to such parallels but it would be helpful if he could confirm that that is the case.
Lord Sassoon
I hope that I can be helpful on that point. The Government expect the appointment process for the BRC to match up to the high standards of public appointments. A bespoke appointment process has been put in place for the BRC executive members involving advertising, independent involvement in the interview process and so on, and that process has been designed to be open and transparent. It is up to the OBR to design the process for the non-executive members but we would also expect that to be open and in line with the principle of transparency. We have high expectations of the quality of the process and I hope that that gives the noble Lord some comfort.
Lord Higgins
Am I to understand that the Treasury Select Committee said that it wanted to be involved in the appointment of the chairman and executive members but that it did not want to be involved in the appointment of the non-executive members? If so, that seems a rather extraordinary position to take, but I will accept whatever the Minister says.
Lord Sassoon
My Lords, that is indeed the position. It may be extraordinary but, as I have tried to explain, it is entirely consistent with the fact that, as far as I am aware, no other non-executive appointments to a wide range of public bodies are subject to a parliamentary committee veto. Of course, it will be up to the Treasury Select Committee to decide whether it wants to interview the non-executive members individually, collectively or as part of the total board of the BRC, and it will have an opportunity to see them in accordance with its normal processes.
The Lord Bishop of Chester
Can the noble Lord comment on the fundamental point I made in my earlier contribution that, as it is set up, it is all rather in-house and too tight and that it does not draw from a wide enough range of sources—for example, the Governor of the Bank of England? One could no doubt think of others, but can the Minister comment on that point?
Lord Sassoon
Certainly it is important that the non-executives are people of independent standing and stature who are able to challenge as well as support. That is why there is a critical distinction. It may bring with it some lack of clarity but the expert/non-expert distinction makes the critical point that the non-executives should come from people who are capable of a broader challenge and support role. That is why there is a distinction between experts—which implies a closed group of economists—and a wider group. The posts will be advertised and subject to competition. It will come down, as it should, to the description of the posts, which should allow for people from wider backgrounds to come in. I welcome the right reverend Prelate’s reminder that that would be healthy.
Lord Myners
Does the Minister share my concern that, because these two members have not been approved by the Treasury Select Committee—I realise I am taking a different tack from the right reverend Prelate—their credibility, standing and authority as challengers within the committee is in some way diminished, and that, because they have not been anointed by Mr Tyrie and his colleagues, that detracts from their standing and makes them somewhat subservient or subordinate to those who have been approved by the Treasury Select Committee? I ask the Minister to take this away and give it a little more thought.
The Lord Bishop of Chester
My concern was that they are nominated by the office itself in an almost self-perpetuating sense. Whether or not they are approved by the Select Committee is a secondary issue. The more fundamental issue is how an arm’s-length body in such a sensitive and politically charged area should properly draw its membership. The danger is that this is too much like a self-perpetuating body, with the Chancellor involved in every appointment.
Lord Sassoon
My Lords, on the latter point, I say again that the fact that it is intended that, as part of the nomination process, there should be an openly advertised way in will make it clear that we looked widely for the non-executives.
Implicit in the remarks of the noble Lord, Lord Myners, about the non-executive members not going through the process of getting the imprimatur of the Treasury Select Committee is the suggestion that all the non-executive board members of a huge range of public sector boards who do not go through parliamentary scrutiny are subservient and subordinate. I do not know why it should be different here. As I have explained, we are applying the same rigorous, high standards to these appointments as are applied to all other bodies. I see no reason why they should be subservient or subordinate simply because they have not had Treasury Select Committee endorsement.
The critical thing is that these are non-executive non-experts carrying out an important role similar to that of non-executives in a huge number of bodies across the public sector. That is very distinct from the expert members who, because of their special role at the heart of economic forecasting—the Treasury Select Committee agrees with this distinction—should be subject to the special veto.
Lord Eatwell
My Lords, having had the opportunity to listen to noble Lords who have taken part in the debate, I have become more convinced of the value of the amendment. My conviction derives from the following points. First, we must recognise that this is a very peculiar body, as a number of noble Lords have emphasised. It is of the Treasury but not in the Treasury. It is of the Treasury because it plays an important role in the formulation of the Treasury’s policy by providing it with the information and forecasts that are necessary for the development of policy. However, it stands outside as well. It is that independence with which we have all been concerned. Analogies with other public bodies do not work very well. This is a very peculiar body that we are trying to get right in the Bill.
Having listened to the arguments, the major reason why I am even more convinced of the value of the amendment is that I was involved in such a process when I was chairman of the British Library. I had a very tough and effective chief executive, and we tried to build a board that would serve various important roles at the library. However, we were continually—I was going to say “interfered with” but that does not sound quite right—guided in a very decisive way by the Department for Culture, Media and Sport, which is not one of the most powerful departments, certainly when compared with the Treasury. It played a very active role in the so-called independent nomination process. I was continually having vigorous arguments with the Permanent Secretary at the DCMS in which I would tell her to take her tanks off my lawn and allow us at least to nominate members, as was our right under the relevant Act. I am not convinced that the nomination process will be as independent as might be expected from looking at the simple structure laid out in the Bill.
The amendment would protect the Treasury and the Chancellor from the accusation that there was any compromise to the independence of the OBR in the nomination of non-executives by granting oversight to the Treasury Select Committee. The point is important. Members of the Treasury Select Committee are politicians, and therefore they are very sensitive to issues of political independence. It is what they know about and their area of expertise. They can spot political tendencies a mile off because they are experienced politicians and that is their job. Having listened to the argument, I have become much more convinced of the value of this amendment. I was a little tentative when I set out, but now I am convinced that it is the right thing to do. We will return to this on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Higgins
“( ) The Office shall not be located in the Treasury.”
Lord Higgins
My Lords, the theme running through all our proceedings has been that the OBR shall be seen to be independent. In that context, its forecasts in particular need to be independent. It would appear that, despite what may be a possible solution, the Treasury will continue to make forecasts at the same time as the OBR is making them, and it will be extremely difficult for everyone to believe that there has not been any degree of collusion if in fact the office is located in the Treasury itself.
This is a simple amendment. It may be that the Minister will happily say right away, “It’s clear anyway from the clause, since the OBR apparently owns property in the context of this amendment’s location. There is not the slightest question of it being located in the Treasury”—in which case we can let the matter rest. I hope that that is so. I beg to move.
Lord Barnett
My Lords, it is really all about perception. We all know Robert Chote, the chairman; I respect him and believe him to be truly independent. Being based in the Treasury, with everything that that means, would clearly be wrong, but on the other hand I read recently—I do not know whether this is right—that the OBR was looking for premises outside. It may already have found them, so this amendment may not be necessary. Perhaps the Minister can tell us.
Lord Sassoon
My Lords, I hope that we might be able to dispose of this a little more speedily than some other matters today, although it is important. I shall make the situation clear: Robert Chote has announced that the OBR is moving out of the Treasury and will do so—my speaking note says “next month”. I think that we are already in next month. It will be moving out in December. Before Christmas the OBR will be out of the Treasury building and going to Victoria Street, so it will not be too far away. I think that the noble Lord, Lord Burns, noted at Second Reading that the OBR will inevitably work closely with the Treasury. It will be out of the Treasury building but it will not cost its members too much in shoe leather if they occasionally need to have meetings with the Treasury and with other government departments. The OBR is moving out and it is up to that body where it goes. We should not lay down in legislation whether it should go to one place and not to another.
Lord Myners
I do not think we can allow it to go unnoticed that the Minister, in his reference to “shoe leather”, assumed that the OBR would be called to the Treasury. I hope that the OBR will be sufficiently independent to call the Treasury to visit it at its own offices. I hope that the Minister is not conveying a subconscious message to us on that point.
Lord Higgins
My Lords, on one occasion when the Government that the late Iain Macleod was opposing accepted an amendment, his response was, “You don’t shoot Santa Claus”. Perhaps that is an appropriate reaction in this instance. I am delighted to hear what the Minister has said.
Lord Eatwell
Before the noble Lord finishes, I should like to comment. I really am having road-to-Damascus experiences today; I now think that this is rather important, although I did not when we started. Yes, the OBR is moving out, but the point is that this is a Bill to establish that body for the long term. The Minister has said that it is up to the OBR to decide where it goes. Let us suppose that it decided to go back. Would that be acceptable? The answer, of course, is no. Having felt that the noble Lord, Lord Higgins, had tabled an amendment that had been superseded by events, I now realise that he has spotted a rather important point.
Baroness Noakes
My Lords, before the noble Lord, Lord Eatwell, gets too carried away with joining in with any opposition to the Bill, I want to point out that the Treasury is not a place, so the drafting of my noble friend’s amendment, while appearing Santa Claus-like, is in fact defective. There is a Treasury building but the Treasury could be anywhere. I think that he means “located in the same premises as Ministers and officials of the Treasury”.
We can take this too far, though. There might be circumstances in future when it is perfectly sensible for space in the same building as the Treasury is located to be occupied by the OBR. If the Treasury shrunk in size to proper proportions again and did not occupy as much of its building, some of it could be let out. What would be wrong with having the OBR even closer to save on shoe leather? We must not get carried away with this amendment.
Lord Brooke of Sutton Mandeville
My Lords, I have not been provoked to rise by what the noble Lord, Lord Eatwell, said about the Department for Culture, Media and Sport, in which I once had the privilege of serving as a Minister. I, too, had that experience with it after I left, so I know exactly what the noble Lord meant. On the other hand, when the Department for Culture, Media and Sport was set up and was given the job of handling listed building consent, the Department of the Environment, whence that function came, had to employ Chinese walls when both departments were deciding which building should be listed and were giving listed building consent for the alteration or destruction of buildings, and there was no question at all that it was an enormous plus to have matters dealt with in two different departments. Therefore, in that respect, I have some sympathy with the amendment moved by my noble friend Lord Higgins.
Lord Higgins
My Lords, as I indicated earlier, what the Minister has proposed seems to be in line with the intention behind the amendment—namely, that the OBR and Treasury staff should not mix together over coffee or whatever. Should the situation be reversed at some point in the future, that may or may not happen. In any event, I am satisfied with the Minister’s reply and beg leave to withdraw the amendment.
Lord Barnett
“( ) The staff must be employed solely by the Office, and not be civil servants transferred temporarily from other departments.”
Lord Barnett
Listening to the previous debate, I am even more confused than I was before about which staff are now being employed by the OBR and what the plans are for the future. Perhaps the noble Lord can help us on that. I know from a Written Answer in which I got a proper answer from the noble Lord that 12 Treasury members were still working officially for the OBR—full time, I assume. As I now understand it, having listened to the previous discussion, there are a lot of non-executive members as well as executive members. Quality will be required in the new members of the OBR, but they will not necessarily be non-executive or executive members.
I do not quite understand what we are talking about when we refer to “staff”. For example, I understand that Robert Chote, quite rightly, retired from his position as head of the Institute for Fiscal Studies. I am not clear whether that institute is continuing with another head. I think that it probably is. I see the noble Baroness, Lady Noakes, nodding—perhaps she is the new chair—but it is just adding to the 50-odd independent forecasters that we have, or whatever the number was before, plus one. I should be glad if the noble Lord could clarify that.
In Amendment 12, my noble friend Lord Peston and I say that the staff must not be civil servants, because we were both worried about them either remaining as officials of the Treasury or being temporarily transferred to the OBR, which we would not find very satisfactory. The whole point about the OBR is that not only must it be independent, which I am sure it will be, but it must be seen to be independent. If we are not careful, because of its proximity to the Chancellor and the Treasury, it will not necessarily be seen to be as independent as it should be. For example, on the previous amendment my noble friend Lord Myners talked about the OBR moving its office to Victoria Street. However, it may be moving to the offices of the Department for Business, Innovation and Skills for all I know. Perhaps the Minister can clarify that as well. My noble friend was worried about whether they would have to keep traipsing backward and forward between the OBR offices and the Treasury, rather than inviting any Treasury officials to whom they want to talk to come to them. The foreword of the recent OBR report makes it clear that it sees not only the Treasury. It states that,
“we have also drawn heavily on the help and expertise of officials across government”.
There is a whole load of them, including Revenue and Customs, and the Department for Business, Innovation and Skills. The OBR officials go to lots of offices, so there is a wide-scale connection with government. I do not object to them seeing officials in government departments—that is sensible—but it makes me wonder, when I see the number of departments that the OBR visits, just how big it is, or is going to be. Perhaps the noble Lord, Lord Sassoon, could tell us how many staff the OBR has now, how many are full time, how many are part time, how many are quality, how many are not quality—doing the footwork, you might say—how many are experts, how many are executive, and how many are part-time executive. For example, are Robert Chote and the two people with him full time or part time? I do not know. Unfortunately, I have not seen the minutes of the Treasury Select Committee, where the answers may have already been given. Perhaps the Minister can tell us. I beg to move.
Lord Newby
My Lords, the provision in paragraph 8(2) of Schedule 1is sensible. It states:
“Staff are to be employed on such terms as to remuneration and other matters as the Office may, with the approval of the Minister for the Civil Service, determine”.
Surely that is the sensible way of doing it, with the chairman deciding which staff he wants. It would be slightly surprising if none of them came from a Civil Service econometrics background, which would bring strength to the office. Just because they have come out of Whitehall does not mean that they are somehow tied hand and foot to Treasury thinking. No doubt, people will come in from academia and elsewhere. It is for the chairman himself to decide who the best people are to do the job.
Lord Turnbull
I support the noble Lord, Lord Newby. As I understand it, the number of staff would be around 20. Some may be seconded from the Treasury, some may be brought in from academia, and some may come from somewhere else. It is basically for the chairman of the OBR to assemble the best team that he wants, and we should not fetter that discretion, because there is a safeguard in Clause 5(2), which states:
“The Office must perform that duty objectively, transparently and impartially”.
In other words, anyone who is on loan from another government department is subject to that duty, which should ensure that the right degree of independence is maintained. If you say that someone with a Civil Service career must resign from the Civil Service in order to go and work for the OBR, you will raise all sorts of issues relating to pensions, seniority, this, that and the other. You will make it difficult to assemble the best-quality team, and that should be paramount.
Lord Myners
I agree with those comments. However, the duties described in Clause 5(2) are subject to guidance given under Clause 6(1)(b), which slightly diminishes the confidence and reliance we can place on Clause 5(2).
I support the intention of this clause, but cannot bring myself to support the wording of the amendment. The majority of the staff of the OBR, certainly until quite recently, were former Treasury officials, and the majority are doing work that is very similar to the work that they were doing before the establishment of the interim OBR—work that they are now allowed to appear to criticise through the OBR. They are still in the Treasury building, they are still going to the excellent Treasury canteen for their subsidised lunches and they are still entitled to belong to the Treasury choir and the Treasury glee club. They have not left the Treasury. What we are seeking to achieve is appropriate distancing—but not at the cost of denying the OBR the best people to do the job. It is not unreasonable to assume that currently at least some of them will be working in the Treasury.
The difficulty that I have with the drafting of the amendment is the reference to “transferred temporarily”. “Temporarily” assumes some knowledge of the future. I see a situation in which somebody may go from the Treasury to the OBR and later return to the Treasury without that necessarily having been planned. There must be clear severance in employment terms: it must be quite clear that staff have left the Treasury and are now employed by the OBR. The independent, non-executive directors should keep a particularly close focus on where people are recruited from and where they go afterwards, in order to make sure that the effectiveness and credibility of the body is not diminished by a greater flow between the Treasury and the OBR than common sense might justify. However, I cannot bring myself to support the amendment as it is drafted.
Lord Peston
My Lords, I am not in the least concerned about the precise drafting of amendments, because all our proceedings in Committee are exploratory. The central point is that the staff of the OBR should be simply the staff of the OBR—end of story. It needs to be made clear that they are not other staff. The purpose of the amendment is to say categorically that these staff are now the staff of the OBR. I take it for granted that they will be full-time rather than part-time staff. This has nothing to do with the chairman or others choosing the best people; it is to do with the status of the staff. That is all the amendment is about. They should be the staff of the OBR and therefore, unless the law is changed, they will not be the staff of the Treasury or of anywhere else. My noble friend Lord Barnett and I would like a simple answer from the Minister. Are the staff the staff of the OBR? That can be answered with a yes or no.
Lord Newby
My Lords, perhaps I may ask the noble Lord, Lord Peston, a quick question. Is he opposed to any staff going on secondment from the Treasury to the OBR?
Lord Peston
Yes, categorically. The Bill refers to them as the staff of the OBR. We can argue about language, but if somebody asks who my staff are, I say, “He works for me and so does he. They are on my budget and they are my staff”. Sorry, I should have said “she”. If someone said to me, “Actually, they are not, they are Treasury officials on secondment,” I would not regard that as a correct use of the words “my staff”. The Minister may agree with the noble Lord, Lord Turnbull, that the point made by my noble friend Lord Barnett and me does not matter, and may be perfectly happy for them to be on secondment, work part time and so on. If that is the position, I would like to know. My position is that an independent body appoints its own staff, and they are its staff.
Baroness Noakes
My Lords, I profoundly disagree with the noble Lord, Lord Peston. I do not know what the initial position might be in the OBR in that they might all be initial employees. But we would restrict the OBR’s access to a pool of talented people if we insisted that they could work in the OBR only if they became its employees and severed any employment connections with other organisations. The OBR will be a small organisation, so in order to get good people it may well need to attract them through shorter secondments, whether to handle specific issues or to be part of the staff more generally. Over time, we have to allow the OBR that flexibility, and there is nothing wrong with that. People move in and out of all sorts of organisations throughout Whitehall and are brought in whenever it is necessary.
Lord Turnbull
My Lords, I am amazed at the sheer unrealism of the proposition of the noble Lord, Lord Peston. If this is enacted, there will be a major crisis in the organisation. Around 20 people will have to take a decision whether to resign from the Treasury or quit the OBR and go back to the Treasury. That is something we could absolutely do without. The initial staff in large majority are secondees. We have not complained about their work. We did not say that the report produced last week was ineffective or that we did not trust it because the staff are seconded. The noble Lord is imposing something that will be damaging to the credibility of the organisation and will make it much more difficult to attract people of the quality it needs. As I have said, a major problem will be created immediately if such a proposition is enacted.
Lord Peston
I did not create this problem. I did not set this body up. Unlike all other noble Lords present, I do not happen to be much in favour of it, but that is another matter. The fact is that our duty in this House, when a piece of legislation is going through, is to make it better. That is our role. So this is not my responsibility, but my point is that if we are going to have such a body, whose essence is its independence, if it turns out that the staff are secondees, that undermines its independence. It will not be independent any more.
Lord Burns
I support my noble friend Lord Turnbull and the noble Baroness, Lady Noakes. This amendment is totally unrealistic. To imagine that one should bar secondees from this kind of activity is extraordinary. There can be no real career structure within the OBR. There are specific sets of jobs and there will be little potential for advancement. It is bound to provide activities that people will take on for a certain period, after which they will move on to do something else. Inevitably, they will wish to hold on to their employment in a department which actually offers them the possibility of a career structure.
I think that the noble Lord hugely underestimates the independent-mindedness of many civil servants. During my time in the Treasury, and I am sure subsequent to that, we had many secondees from other departments who would work in our expenditure divisions. They would work effectively in support of the Treasury by running, very often, the expenditure policies relating to the departments from which they had been seconded. I had no difficulty with this. Indeed, when I first joined the Treasury, my noble friend Lord Kerr was on secondment from the Foreign Office to the Treasury in order to carry out the expenditure work of the MoD. These are everyday, bread-and-butter activities for civil servants, and I am confident that they can work very effectively.
Clearly there would be a problem if the executive members of the OBR were on secondment from the Treasury, but I assume that that is not what is in mind and that the mechanisms which have been put in place in terms of their appointments will safeguard against that. However, we must be realistic about these arrangements. As long as the senior people in the OBR are appointed under the correct processes so that they are independent, it should be for them to recruit the people who they think can carry out the tasks most effectively. To surround that with lots of restrictions is not only unrealistic but, as my noble friend Lord Turnbull said, very damaging.
Lord Eatwell
This is a tricky issue but the balance has been struck by a combination of the noble Lord, Lord Turnbull, and my noble friend Lord Myners. If the staff of the OBR is simply a rotating group of Treasury officials, the appearance of independence, which is so important to the OBR, will be endangered. We should remember especially the crucial independence of method set out in Clause 6(2). If it is a rotating group, it will carry with it the method that it brought from the Treasury. On the other hand, I recognise that we do not want to limit the career prospects of staff or the quality of staff; we want to get the best people we possibly can.
The Government cannot be complacent about this. The OBR will undoubtedly be under close scrutiny and it will not do for it to allow employment to be a revolving door connected to the Treasury. It is up to the Government to come up with an answer. If they want the OBR to have independence, they will have to find a solution to the staffing problem. I am afraid I do not have it; if I did I would offer it. Given its independent role under Clause 6(2), it is clearly a problem. However, I entirely agree that we should not in any way endanger the career prospects or the quality of the staff of the OBR.
Lord Higgins
My Lords, one could look worldwide and still fail to find better experts on the practical implications of this amendment than the noble Lords, Lord Burns and Lord Turnbull. There are obviously considerable practical problems and the Government have to face up to the fact that if these are insurmountable, then the argument that the previous arrangements on forecasting were biased and subject to ministerial interference and so on will be difficult to sustain if precisely the same people are making the forecasts now as were making them before.
The Minister shakes his head and I look forward to reassurance from him. However, one cannot simply let it rest and say that it does not matter because they are the same people. Given the overall intention of the creation of the OBR, one has the political problem that it should be seen to be independent.
Lord Brooke of Sutton Mandeville
My Lords, perhaps I may make an analogy which is completely separate from that that we have been discussing. The SAS is now one of the finest fighting forces in the world, frequently in much demand from the United States Army to work in conjunction with it. That organisation was founded in the desert in 1942 and people were asked to volunteer to join it. If they had been asked to resign all relationship with their previous regiment, I am not at all sure that they would have joined at that stage; nor that we would have had evolving out of 70 years of history the remarkable fighting force that we have.
Lord Sassoon
My Lords, we need to step back and, in answer to the fundamental challenge of my noble friend Lord Higgins, remind ourselves of just what is going on here. We need to remember that the people who were making these forecasts under the old way of doing it were essentially Ministers and their advisers, who plucked out from the numbers that the fine Treasury officials were putting in front of them, in some non-transparent way, the forecasts and published them.
In the new construct of the BRC we have Robert Chote and his two fellow members as the body charged with producing the forecasts. We should not lose sight of the fact that that is where the fundamental responsibility for decision on the forecasts will be made. What is needed under the new model—as it was under the old model—is the best possible group of forecasting expertise. The Government recognise that, yes, it needs to be independent and expert. The principal guardians will be the three independent members of the OBR, who must be allowed to hire the best staff. The arguments put forward by the noble Lords, Lord Turnbull and Lord Burns, and my noble friends Lord Newby and Lady Noakes are very persuasive. We do not want in any way to constrain the OBR from hiring and firing whoever it wants to hire and fire. But if we were to exclude it taking civil servants because civil servants would have to resign from the Civil Service, with all the consequences that that might mean for their terms of employment, pension and so on, that would significantly reduce the pool of relatively talented people that the OBR should be able to employ.
Sir Alan Budd, in his advice on the permanent OBR, noted the benefits of the office being established as a Civil Service employer. The noble Lord, Lord Myners, makes an important point, which is that as well as the OBR having freedom, the non-executive directors will take on a role, which is to consider the overall mix of people. There is not remotely a question of complacency here, but we should not invent a problem where there is not one and significantly restrict the potential pool of relevant expertise on which the BRC will need to call.
In answer to some of the questions from the noble Lord, Lord Barnett, about the situation at present, the OBR has 13 full-time staff. They are Treasury employees on secondment because, for as long as it takes noble Lords in this House and Members in another place to pass the legislation, they cannot be employed by anyone else. As soon as the legislation is passed and we put the body on a statutory basis—the sooner, the better, I say—lots of things will be put on to their proper basis, because the OBR will under paragraph 8(1) of Schedule 1 become an employer in its own right. Under the well established terms for Civil Service employment, staff can be transferred, remain within the Civil Service and maintain their Civil Service terms and have the ability to move. They might not necessarily move back to the Treasury, but take a completely different direction in their career.
There are 13 staff now supporting the BRC. Of the three BRC members, Robert Chote is full time and Stephen Nickell and Graham Parker are working, on average, three days a week at the moment. There is no question about the non-execs, because they do not exist. That is how it is at the moment. As the noble Lord, Lord Turnbull, indicated, the expectation is that the steady state of the OBR will be about 20 employees, but that is a matter for Robert Chote. He will make those decisions.
Lord Higgins
I intervene because I think that the Minister is winding up on this amendment. Why is it assumed that the staff of the OBR have to be people seconded from the Treasury? It is not as if the world is short of economic forecasters. One has only to look at the list of economic forecasters in the summary which the Treasury produces. Why do we feel that we have to second people from the Treasury rather than recruit them on a competitive basis?
Lord Sassoon
It is simply a matter of fact at the moment, because the OBR is not yet constituted on a statutory basis, that the employing body has to be somewhere else and, at the moment, it is the Treasury. The staff do not have to come from the Treasury. Indeed, I understand that an advertisement is out now publicly before the OBR to recruit an economist. It can recruit from wherever it likes; it has the resources to do that. The OBR will recruit to have an appropriate mix of knowledge and expertise, but the critical thing is that that it should recruit from wherever it would like to without any unreasonable hindrance. All the recruitment will be led by the independent, externally recruited members of the BRC. Even though it is not a formal employer at the moment, it is getting on and doing all the recruitment, totally independently.
Lord Peston
Perhaps I may interrupt the noble Lord. Do his numbers include secretaries, computer programmers and all the ancillary staff, or is he talking about frontline staff? I do not see how the OBR has managed to do any work at all if it does not have lots of ancillary staff. Am I wrong in that?
Lord Sassoon
No, the noble Lord is right. The figure is the total number of staff.
Lord Peston
That figure of 13 includes secretaries, PAs and computer programmers?
Lord Sassoon
I cannot give a breakdown of exactly what they all do, although it would be possible to do so. The office no doubt buys in all sorts of services, but that is the total number of staff. As I said, I believe that Robert Chote intends that when the office is totally established there will be about 20 full-time staff. That is the number that he believes will be needed.
Lord Myners
I find it extraordinary that the Minister has just disclosed to the Committee that the OBR has a total of 13 staff, including support workers and secretaries, yet the Government suggest that the OBR audited the Government’s forecast expenditure. Auditing is a demanding, challenging and fairly labour-intensive task, as the noble Baroness, Lady Noakes, will no doubt vouch. Auditing future expectations is extraordinarily difficult; to do it with only 13 people makes the use of that word totally inappropriate.
Lord Sassoon
There should be no surprise when I say that there are 13 people because I answered a Written Question asked by the noble Lord, Lord Barnett, almost exactly a month ago when the figure was 12. Now, it is 13. I received a note saying “IPA” but I did not say anything about that because I thought, “What does India Pale Ale have to do with it?”. However, I have now worked it out: the OBR has one PA. This is a lean and mean organisation. It includes secretaries and it has one PA. This is not a numbers game; it is a question of expertise and independence and, as has already been referred to, drawing on the underlying modelling base in Whitehall. The OBR does not require a superstructure of people to carry out the critical role that it does. If at any stage it decides that it wants more resources, it will have the ability—we will come to this in later clauses—to put forward the necessary request for money.
Lord Barnett
My Lords, I was trying to be brief. I introduced this amendment by asking just a few questions so that we might reach the target number of amendments that the Government want to reach today. I am not trying to delay the Committee but we have now spent 32 minutes on this amendment. I am not objecting to that; I welcome the views of Members of this Committee, such as the noble Lords, Lord Burns and Lord Turnbull, my noble friend Lord Myners and, indeed, the noble Lord, Lord Sassoon, himself, who have worked in the Treasury rather more recently than I have. I apologise for trying to be brief and for not expanding on what I might say at a later stage. However, I have now elicited a reasonable amount of information from the noble Lord, Lord Sassoon. I should make it clear that in no way am I or, I am sure, my noble friend Lord Peston seeking to obstruct Lord Chote—no, that comes later; I am making a forecast now. We are not seeking to obstruct the OBR from employing the best possible people.
I want to be crystal clear: like everyone else, we are both concerned about the independence of this body. As I indicated on Second Reading, I was not in favour of setting it up—unlike every other Member of this Committee—but we must have it. I do not object to that now but I want to know exactly what is going to happen. I was told by recent senior officials of the Treasury that people could be popping in and out and that there was no career structure. Perhaps the plan is that the OBR will be temporary, I do not know. I thought not; I thought it was another permanent independent forecasting body that was perhaps doing a lot more work than the Institute for Fiscal Studies or any of the other independent bodies. I would welcome any further information on that.
I do not wish to pursue the matter further now, other than to make clear that we are seeking to ensure the true independence—and the perceived true independence—of the OBR. I beg leave to withdraw the amendment.
Lord Barnett
“( ) The Office must make public the nature and membership of any committee or sub-committee it sets up, and subsequently the report of any such committee or sub-committee.”
Lord Barnett
My Lords, this is a simple question and I hope that the Minister will be able to reply. I have nothing more to say. I beg to move.
Lord Sassoon
My Lords, Amendment 13 is intended to create a legal obligation for the OBR to publish the nature and membership of committees or sub-committees and to publish the reports of those committees. It is inconsistent with the right of the OBR under paragraph 11 of Schedule 1 to determine the procedure of any committee or sub-committee. We should not seek to fetter the way in which the OBR organises its committee structure and processes. While I am happy to talk at greater length, we should leave it up to the OBR to determine how its committees and sub-committees should operate. This would be consistent with everything that we have said about the independent and unfettered way that it should go about its business.
Baroness Noakes
I am sorry to interrupt my noble friend. The amendment asks simply that the nature and membership of any committee or sub-committee, and the reports of any such committee or sub-committee, should be made public. That does not fetter in any way the discretion of the OBR to set up those committees; it is merely part of the public accountability of the OBR to explain what it does and how it does it. It is quiet simple and I am not sure why the Minister is resisting it on the grounds that he has given.
Lord Sassoon
For example, if the OBR wished to set up a sub-committee to deal with internal personnel matters, it would not be appropriate that it should be required to publish details about that. We are making presumptions that sub-committees have a particular meaning. Perhaps we should step back for a moment. The output of the OBR is essentially the 150-page document that it has now produced, along with a number of other reports and analyses that it has already made, and it has set out plans for future work streams. We must remember that this is not equivalent to talking about the Monetary Policy Committee or the yet to be established financial policy committee of the Bank of England, which will have regular monthly meetings to make decisions about policy.
We need to be clear about this. The output of the BRC of the OBR will be a series of policy documents that will not come regularly out of a minute-taking and minute-making process. Perhaps I was presuming a bit too much in my brief answer. The committee’s structure is up to the OBR, but it is likely to have more to do with the governance and management of the entity than with the reporting that comes out in its major documents. In that context, requiring this straitjacket would be inappropriate for the nature of the entity.
Lord Myners
My Lords, I speak specifically to Amendment 14, which proposes that the budget responsibility committee should publish the minutes of its meetings. I wait with somewhat bated breath, but with diminishing hope, for the Minister at some point, having whetted our appetite on Monday, to find some sympathy for at least one amendment. I fear that this will probably not be the one that he chooses to approve.
It is pleasing, though, in proposing this amendment, to have the noble Baroness, Lady Noakes in attendance in Committee. My mind goes back to a debate on the Financial Services Bill. The Committee may remember that that Bill, which was produced by the previous Government, proposed the establishment of a council for financial stability. The Government proposed that the council’s minutes should be published. The noble Baroness supported that but went on to propose a number of amendments, including ones relating to the speed with which the minutes should be published and, importantly, a requirement that the minutes should attribute comments to individuals participating in the council rather than being produced in the style of the Monetary Policy Committee.
I hope that we are not now seeing a conversion in the thinking of the Conservative Party, which is the leading member of the coalition, in this respect. When it was in Opposition there was a great enthusiasm for transparency, now that it is in government I hope we are not going to hear arguments that transparency would not be appropriate. If I could be persuaded that there was an argument for publishing the minutes of the council for financial stability—which, noble Lords will remember, succeeded the rather less formal tripartite process—a body that deals with quite confidential matters relating to systemic and idiosyncratic risk relating to individual financial institutions, and if I believed that the party in Government supported the view that those minutes should be not only published but published promptly and in a full and detailed form with attributed comments, then I find it difficult to believe that the Conservative Party would not also approve the publication of the minutes of the committee of the Office of Budget Responsibility.
I go back to the points that were made earlier today by at least two noble Lords: that this proposal would further enhance the appearance of independence—and, no doubt, the effective independence—of that committee and, in so doing, facilitate the role that the Chancellor of the Exchequer and the Treasury clearly have in mind. I urge the Minister to recognise that in respect of transparency this is a good opportunity to ensure that the minutes of the committee of the Office of Budget Responsibility are published.
The Government are already committed to saying that the people who meet the committee of the Office of Budget Responsibility will be identified in announcements made shortly after major publications—I do not know whether such an announcement has already been made in respect of the OBR’s report earlier this week—but it is incomplete to say that the OBR met the Chancellor of the Exchequer on five occasions, Mr David Ramsden on four occasions and economists from the Bank of England on two or three occasions without letting us see how that information shaped and formed the thinking that went into the OBR report. That would be best evidenced through the publication of the minutes, which would allude to any such input that had an important impact on the ultimate thinking and conclusions of the committee of the OBR.
Lord Peston
My Lords, there are three amendments in the group, but I want first to say a brief word about the amendment spoken to by my noble friend Lord Barnett. I am intrigued by what is set out in the Bill: the setting up of a committee or sub-committee that may consist of or include persons who are neither members of the office nor members of the staff. I asked myself what this could possibly be about. The Minister decided that he did not like that by quoting the most trivial example he could have dreamed up, and went on to say that they might have set up a committee to deal with personnel matters and that that should not be known. I do not see why that should not be known; transparency means transparency, it does not mean “transparency but”. I want to know what serious argument the Minister could possibly put forward to explain why the office is not obliged to let us know if it sets up a committee. I had assumed that we were talking about a committee of experts on optimal forecasting methods and that sort of thing. We need a more serious response from the Minister.
A fortiori, the amendment tabled by my noble friend Lord Myners requires a serious reply. If you believe in transparency, would there be any circumstances why the minutes of the Budget Responsibility Committee should not only be published but be made available to the public at the same time as they are made available to the members of the committee? Both of those are matters of significance.
I come now to the third amendment in the group, just to say that it is also important. My noble friend Lord Barnett will enlarge on it in a moment, but again I hope that we are given a serious answer, rather than a trivial example to explain why the Minister does not like it.
Lord Barnett
I shall say a word about Amendment 34. It seeks to provide that:
“The Office will place in the public domain a record of all meetings with the Chancellor … and other ministers”.
When I tabled a Question for Written Answer on this matter for the noble Lord, Lord Sassoon, he asked Robert Chote to answer it. Mr Chote has duly written to me and I shall quote from it:
“We will be publishing a list of contacts between the OBR and ministers, special advisers and their private offices shortly after each autumn and Budget forecast, beginning with our forthcoming forecast on November 29th”.
I do not know when the list is going to be published and I have not seen it, but it is clear that regular formal or informal meetings with the Chancellor and other Ministers are a very important matter for an independent forecaster, one that is not available to our other 50-odd forecasters. So I hope we will have an answer to this very soon. That is the whole purpose of Amendment 34.
I shall not add to my remarks because I am trying hard to curtail my contributions so that we get to the target figure of amendments that the Government want to see dealt with. But far be it from me to prevent Members of the Committee speaking.
Lord Turnbull
My Lords, it seems that an analogy is being drawn with the Monetary Policy Committee, whose minutes are produced. What happens at the Bank is this. On the preceding Friday of the week in which the committee meets, the members spend the whole day going through virtually every possible economic indicator and receive reports from the agents around the country. That is a meeting, but no minutes are taken. I think the members then meet on the Tuesday afternoon and hold discussions during which they try to sift out what the main measures are to be. Again, there are no minutes, or certainly none that are published. The members then come together at the formal meeting, which is where they take decisions and where the minutes for the record are produced.
In other words, they do not produce a running commentary. We are told here that the BRC has more than 40 challenge meetings with officials from other departments, in addition to numerous meetings at staff level. That is complete overkill and, I would say, a false analogy with the Bank to assume that each of those meetings has to be minuted and published. This thing is published—there are 150 pages of it—and it is produced twice a year. Everything else is work in progress, which leads to the production of the report. We should be satisfied with the fact that it is produced, eventually, after talking to whomever the committee wants to and whatever progress it wants to make. Some of that will include what is or is not in the Budget; some of it goes to the nature of fiscal policy. What is eventually produced is this report. Those are the minutes and I do not think that we need anything beyond them.
Lord Sassoon
I am very grateful to the noble Lord, Lord Turnbull, who, I think, gets it absolutely right. There is a further point, which he did not stress, which is that the Monetary Policy Committee is a policy-making committee. It is therefore important to understand how policy, and the thinking behind the policy, is being made. The OBR is not making policy; it is producing forecasts. They are very important forecasts and that is a critical function, but it is not policy-making that requires minutes to understand.
Lord Myners
The Minister has made a very important point. Can he clarify whether, because the committee of the OBR is not making policy, any Freedom of Information enquiries made to the committee of the Office of Budget Responsibility will require the committee to disclose minutes of meetings? One of the exemptions that I found—both as a Minister when I was signing the exemptions and which I now find rather more frustrating when I am not getting the information I require—is that the information officer in the department has concluded that this relates to advice to Ministers on policy-making, and therefore the document cannot be disclosed. The Minister has made a clear statement that that committee is not involved in policy-making, and, therefore, that exemption from FOI inquiries will not apply. I hope that he can confirm that my understanding is correct.
Lord Sassoon
The noble Lord’s understanding is correct in so far as the OBR will be subject to freedom of information legislation. That is clear. Of course, the example that he gives is not the only exemption. I do not want to disappoint him, but he should understand that, as he well knows, there are other exemptions—for example, where disclosure could prejudice the effective conduct of public affairs. They will be subject to the normal tests. No doubt the commissioner will test them if people want to challenge any decisions, but it will be for the OBR to decide how it interprets the Freedom of Information Act.
Lord Myners
So, the OBR will have its own information staff—it will not be relying on the Treasury for that. Of the 13 people, there is now minus one who is doing FOI; minus two was a PA. I must note that when the noble Lord, Lord Sassoon, was an employee of UBS Warburg, he probably had more than 13 PAs, let alone 13 staff. Can he confirm that that number now includes a freedom of information officer in the OBR, and that it does not rely on the Treasury for that function?
Lord Newby
Surely there is an easy solution: make the PA also responsible for freedom of information.
Lord Sassoon
It is clearly up to Robert Chote how he deploys his staff and what they do. Noble Lords obviously have not quite grasped what is meant by the independence of the OBR. It means that it is for the office to organise its life. I have not the faintest idea how it will do it, but I am sure that it will do it professionally and appropriately and that it will devote the necessary resources.
In answer to another question, I was going to quote from page 3 of the OBR report to summarise the contacts that it has had in the build-up to producing its 150 pages, but the noble Lord, Lord Turnbull, has already pointed to the key paragraph. The OBR made it clear that it would publish the list of contacts, which, as it promised, is coming out this week, shortly after the publication of the report.
Nothing in the Bill stops the OBR publishing any minutes, reports or documents of any kind that it wants to. As well as focusing on the critical point that we should not require it to produce minutes for the sake of minutes when the output is forecasts rather than policy-making discussions, it is also important that we should recognise that if it wants to disclose anything about the way in which it goes about its business, it is entirely free to do so. It can draw on external expertise. It might have committees with external experts. There is nothing to preclude that. The core executive functions cannot be delegated, though, and the minimum output will be the two formal reports per year. However, it is already also producing a considerable amount of other information, and it will do so in future. It is for the office to be as transparent as it thinks is appropriate, consistent with its mandate.
I do not for one minute take this to be a trivial point. I made the comparison with the MPC because it is critical. However, the amendments would require the OBR and the BRC to do a number of things that on the one hand are not required—consistent with the principles of accountability, transparency and independence—and, on the other, would put minor straitjackets on it that are not necessary because it should be free to publish whatever it sees fit to publish.
This has been an interesting discussion. I am sympathetic to some of the objectives that are desired, but I am afraid that the amendments in this group do not add anything to the underlying purposes, which I understand are well intentioned. I ask noble Lords not to press their amendments.
Lord Desai
Perhaps I might try once more. There was a birth trauma when the OBR was established, and its independence was undermined by what happened. Sir Alan Budd has publicly said that he suffered as a result. We are trying to help the Government to re-establish trust in this body. They have taken the view that they have done enough—but that is what they said last time. It is fine for them not to accept the amendments, but they will harm the reputation of the OBR.
Lord Barnett
My Lords, again I intended this to be a very brief debate, but already it has taken 22 minutes. I am obliged to the noble Lord, Lord Turnbull, for replying to my amendment. Sometimes I have the feeling that he is a frustrated ex-permanent secretary who, having taken control of Ministers, the Opposition and everybody else, now finds himself having to listen to arguments that he would have dismissed out of hand before. I hope that he will forgive me. I appreciate what he said, except when he claimed that there was no analogy between the MPC and the OBR. I deliberately never referred to the MPC. I more than recognise the difference between the MPC, which was given a job to do under the Bank of England Act, and the OBR. I recognise that the OBR is a forecasting body, but it looks as if it will be rather more, judging by the 150-page document before us.
The Minister, who has formally replied to the debate in place of the noble Lord, Lord Turnbull, said that once again—in Amendment 13, I think—we wanted to say something that was unnecessary because the OBR can do it anyway. Again, though, if it can do it, why not leave it in the Bill? However, we will come back to that on another occasion. Meanwhile, I beg leave to withdraw the amendment.
Lord Eatwell
“( ) The budget for the annual operations of the Office for Budget Responsibility shall be published, and be available for scrutiny by the Treasury Committee of the House of Commons.”
Lord Eatwell
My Lords, a well known and effective method of controlling any nominally independent body is by controlling its budget. Under this Bill, the budget of the OBR is clearly controlled by the Treasury. In Schedule 1(15)(1), we are told:
“The Treasury may make to the Office such payments out of money provided by Parliament as the Treasury considers appropriate for the purpose of enabling the Office to meet its expenses”.
If the OBR were not behaving in a manner that suited the Government, perhaps by undertaking a number of extra studies that cast the implications of government policies in an unfortunate light, the easiest way to discipline those independent-minded souls without going into any fuss about independence would be to cut their budget, forcing them back to their core function. Control of the budget is an important means of controlling an organisation.
All that the amendment proposes is that the budget be published and made available for scrutiny by the Treasury Committee of another place. That would give the Treasury Committee the opportunity to have its say on whether any inappropriate limitations were being placed on the operations of the OBR. Amendment 16 provides the scope for the Treasury Committee to act as the financial champion and protector of the independence of the OBR.
Noble Lords may have noticed a theme running through the amendments that my noble friends and I have proposed. We are attempting to enhance the independence of the OBR, and I am surprised that the Minister is resisting that attempt. I beg to move.
Lord Higgins
My Lords, I presume that the Minister will confirm whether the budget is going to be published. If it is, clearly the Treasury Select Committee could have a look at it if it wished. It seems more likely, however, that it would be examined by the Public Accounts Committee rather than the Treasury Committee, having already been looked at by the Comptroller and Auditor-General.
Lord Burns
My Lords, I support the spirit of this amendment for the reasons put forward by the noble Lord, Lord Eatwell. I am sure that no problems with the budget will arise during the early years of the existence of this body. Indeed, it has probably already been agreed in the present expenditure round. But if we are going to safeguard the OBR into the future, it is necessary to have a system of public accountability and the opportunity for the executive members and perhaps the non-executives to be questioned by the Treasury Select Committee whether they think the resources being made available to them are sufficient to do the job. On this occasion, I disagree with the noble Lord, Lord Higgins, because this is an issue that falls to the Treasury Select Committee as the body with oversight of the extent to which the OBR is doing its job effectively.
In most cases I suspect that these issues would arise naturally, without having to include them in the Bill, so I shall listen carefully to what the noble Lord, Lord Sassoon, has to say in reply. As I said, however, the spirit that is captured in the amendment is an important safeguard in terms of the future of the OBR. That is because in five or 10 years’ time, the circumstances surrounding the body may be very different.
Lord Sassoon
My Lords, let me see if I can help by making clear what is actually going on and what is intended here. The first point to bear in mind is that HM Treasury is not incentivised to underfund the OBR because it will be relying on the office to produce the official forecasts. We need to bear it in mind that the OBR provides a critically important component to feed into the Treasury’s economic and fiscal policy-making. I am not sure what the circumstances could be in which the Treasury would want to starve the OBR of funds because it provides such a critical service to the Treasury itself.
The second point is this. Noble Lords may not have seen it, but the funding has been put in place not for one year but is committed through the spending round period from 2011-12 through to 2014-15. The spending letter from Sir Nicholas Macpherson, the Permanent Secretary to the Treasury, has been published by the OBR. It makes it clear that the funding allocation is £1.75 million per year flat cash at a time when the Treasury group settlement is minus 33 per cent. The position for the next few years is clear. Sir Nicholas goes on to say in his letter:
“Should you find that you are unable to manage within the constraints of this allocation, please raise this with me at the earliest opportunity”.
So the initial funding is in place with an open invitation—which, as I have said, is very much in the interests of the Treasury—to the OBR to raise any matters of any potential underfunding. Robert Chote himself highlighted the importance of the OBR’s funding position when talking to the Treasury Select Committee:
“If you accede to my appointment and I find myself being squeezed in that way, this Committee will be hearing about it very promptly. That’s how we make that public and ensure that those sorts of pressures do not go unremarked”.
He is clear in the substance about where he would immediately go.
There are a number of specific safeguards in the legislation that go further. Schedule 1, which provides for the funding arrangements, ensures that the OBR’s independence and effectiveness will be protected. There will be a separate line for the OBR in the Treasury Estimate and the body will produce its own accounts which will be laid before Parliament. Furthermore, it will be able to submit an additional memorandum alongside that of the Treasury, which will be submitted to the Treasury Select Committee.
Lord Eatwell
Will the noble Lord give me the paragraphs in Schedule 1 in which those propositions appear, so that I can follow his argument?
Lord Sassoon
I will come back to the noble Lord on that: I do not have the Bill in front of me. The point that I was going to make was that there will be a role for both the Treasury Select Committee and the Public Accounts Committee in relation to the expenditure of the OBR. The Treasury Select Committee will take an interest in whether there is any pressure caused by inadequate funding of the OBR. In addition, because the accounts of the OBR will be audited by the National Audit Office, the Public Accounts Committee and the NAO can be expected to take a critical interest not only in the accounts themselves but in any conceivable underfunding that the accounts reveal. Any future Chancellor who attempts to impose any underfunding will get caught, both because the chairman can go to the Treasury Select Committee and can go public at any stage, and because the accounts will be subject to audit. It is paragraph 15 to which we should turn.
Lord Eatwell
I thought that it was, but paragraph 15 does not contain the propositions that the noble Lord suggested were in Schedule 1. Paragraph 15 is very short and consists simply of two short sub-paragraphs.
Lord Sassoon
Paragraph 15 provides for the Treasury to make payment of grants in aid from the resources devoted by Parliament, as reported in the Treasury Estimates. That brings with it various responsibilities to report the estimates, in this case in a separate line in the Treasury Estimates. I refer also to the production of accounts and the voluntary ability of the OBR to publish any additional memorandum that it wishes. In the incentivisation of all the parties concerned, and principally the incentivisation of the Treasury not to underfund, there is an alignment of interests.
Secondly, in respect of the formal reporting position, through the accounting, Treasury Estimates and the ability of the Treasury Select Committee, the Public Accounts Committee and the National Audit Office to look at the numbers, there are many formal structures. In addition, we have a funding letter agreed by the Permanent Secretary to the Treasury and the chairman of the Office for Budget Responsibility that covers the period up to 2014-15—a settlement that is markedly more generous than the Treasury's own and that contains an explicit invitation for the chairman of the OBR to come back to the Treasury at the earliest opportunity if they find that they are unable to manage within the constraints of the allocation. This is very important and, as with many issues that we are discussing today, there is no difference between us on the objective. There are plenty of safeguards already in place in the legislation and the development practice between the Treasury and the OBR.
Lord Eatwell
My Lords, I am grateful for the Minister's reply, although I am still confused about what he thinks is in Schedule 1 and what he thinks is not. I will deal with the points that have been made. First, the noble Lord, Lord Higgins, echoed by the Minister, talked about the role of the Public Accounts Committee and the Auditor-General. They will audit the accounts for honest and true accounting, efficient management of funding and so on, but they will not be sensitive to the issue of the independence of the OBR and its activities, and the degree to which they are constrained by budgetary methods.
Lord Higgins
Some years ago, the Comptroller and Auditor-General and the PAC agreed that the Comptroller and Auditor-General could carry out value-for-money examinations. So it could do that.
Lord Eatwell
Absolutely. I agree with value for money, but the issue that we are discussing is the independence of the OBR in the pursuit of its activities. It may have pursued a constrained raft of activities very efficiently, providing good value for money, but the issue is the constraint. The Treasury Committee would be sensitive to exactly that kind of issue. That is why I have incorporated the Treasury Committee into my amendment.
Lord Sassoon
Perhaps I may help the noble Lord on the point of sensitivity. He is absolutely right: the Treasury Select Committee is sensitive to the point and has taken it into account already. It may help him to know that the Treasury Committee issued a press release on 12 October—perhaps he has not seen it—headlined, “Treasury Committee Chairman Welcomes Chancellor’s Statement on the OBR”, particularly on this point. The press release stated that the chairman, Andrew Tyrie, said:
“It is vital that the OBR has the resources it needs. The Committee will monitor this carefully: the Terms of Reference suggest that the Treasury accepts the importance of transparency and separate disclosure, and we will have the information we need to do our work”.
I am grateful to the noble Lord for raising the question of sensitivity, but I trust he notes that the Treasury Select Committee has already said that it believes that what is proposed meets its requirements.
Lord Eatwell
The Ministers might care to look over their shoulders; they are being handed advice.
There are two points here that the Minister is getting wrong. First, on the business of being incentivised, of course the Treasury is incentivised to fund the OBR to do the things that the Treasury wants it to do; it is not incentivised to fund the OBR to do things that it does not want it to do. That, I am afraid, dismisses the incentivisation argument. It just does not make sense.
The second point concerns the funding in the current spending round and the comments by Mr Tyrie about that funding, which I welcome, but which do not address the point made by the noble Lord, Lord Burns, about the future. That is what the amendment is about; it is not about what is happening now. As far as concerns the Treasury Committee, the launch funding seems to be adequate—maybe even generous—but the question is whether we are to provide a mechanism in the Bill that will prevent future Administrations using the budget as a constraint on the OBR. It is the most effective constraint of all because no one really notices it.
If we are going to secure the independence of the OBR in the Bill, we should take the position supported by the noble Lord, Lord Burns, and clearly by Mr Chote, who said, “I will be off to the committee”. Let us ensure that the committee has full information and powers to recognise the chairman of the OBR at an appropriate time, and to defend him. We are not talking about subvention or incentivisation. The incentivisation argument is false—it is the other way round—because, if the Treasury is incentivised, it is of course incentivised to stop the OBR doing things that it does not want it to do.
Let us think about the future of this organisation and ensure that it has the independence that we seek. I will return to the issue on Report, because it is important. I am most encouraged by the support of a former Permanent Secretary, who has identified this as an important issue.
Lord Sassoon
Since the noble Lord is coming to the end of his remarks, I wanted to put something into, if you like, his work plan for thinking more about this matter before Report. This is another point that I had thought hardly needed to be made. The grant-funded NDPB model which we are talking about is common to a great many credibly independent bodies such as the Advisory, Conciliation and Arbitration Service and the Equality and Human Rights Commission. I do not believe that there is any question of funding for other grant-funded bodies of this sort being compromised. They produce explanatory memoranda; the OBR can produce an explanatory memorandum, which will go to parliamentary committees for scrutiny. I simply put on the table that if the noble Lord wants to go on thinking about this, he should also consider the read-across to other NDPB models.
Baroness Noakes
Before the noble Lord, Lord Eatwell, takes this away to consider before he comes back on Report, he might want to look at the debates on setting up the Statistics Commission. Very similar points were raised at the time. Although it was a non-ministerial government department rather than an NDPB, the principles are exactly the same. When I sat on that side of the Grand Committee, the concerns were that insufficient resources would be made available to the Statistics Commission to enable it to do the work that it needed to do because it was to be subject to Treasury control.
One of the arguments, which I am not sure has been fully deployed, although many good arguments have been, is that the annual report required by Schedule 1 is the vehicle for the body—the Statistics Commission in that case, and the OBR in this case—to say exactly what it wants. The Treasury has no ability to stop anything being put in the annual report, which must be laid before Parliament. This is in addition to the undoubted ability of Robert Chote to get Mr Tyrie to obtain a Treasury examination if he thought there was a problem, which can be done by informal means. Therefore, Mr Chote has a formal means of bringing to the attention of the wider public any concerns that he has about funding.
Lord Eatwell
I am grateful to the noble Baroness. She has given me some ideas to think about. I will go away and think about these things. It would be nice if we felt that the Government were going to do some thinking as well. We have an important issue here, which we will perhaps relate to the annual report. That is an interesting idea and I will look up the debate to which the noble Baroness referred. In the mean time, I beg leave to withdraw the amendment.
Amendment 16 withdrawn.
Lord Higgins
Lord Higgins
My Lords, Clause 4 states:
“It is the duty of the Office to examine and report on the sustainability of the public finances”.
The amendment proposes to insert at the end of that passage,
“on the basis of section 1(2)(a) and (b)”,
which, as we have already discovered, state that the charter should set out,
“the Treasury’s objectives in relation to fiscal policy and policy for the management of the National Debt”,
and the means by which the Treasury is going to achieve that. It is important to refer back to the earlier passage to be clear about how the OBR will carry out its duties.
I still have considerable problems in understanding how it is going to look into these matters without also examining the Government’s economic policy—a matter that we spent a long time on in the previous Committee sitting. In the mean time, however, we have received a letter from the Minister commenting on that aspect. It is closely written and very condensed, and it deserves careful study. I presume that it is being placed in the Library so that it will be generally available.
Baroness Noakes
Is this a letter that only the noble Lord has received from my noble friend the Minister?
Baroness Noakes
Yes. This is an unorthodox way of distributing letters to Peers.
Lord Higgins
I presume that the Minister was seeking to be helpful to the Committee so that we should have it in advance of our discussion.
Lord Sassoon
The letter was intended to be helpful in advance of our discussion. It was sent around by e-mail earlier today, but noble Lords may not have seen it. I do not know who received it and I am not sure exactly what time it went out. Hard copies are available here in the Moses Room and it is now, or soon will be, on the Bill’s website. We tried to distribute it in as wide a way as we could.
Lord Higgins
In fact, as my noble friend has discovered, the letter was also available to the Committee today. In it, this complicated issue has been very condensed, and we will no doubt wish to return to it later.
As I say, I still have problems in believing that the OBR will carry out its duty in the terms that I quoted earlier unless it can take into account the Government’s general economic policy, which is one of the means in subsection (2)(b) by which the Treasury intends to achieve its fiscal policy, otherwise known as the fiscal mandate. In any event, it seems to clarify the situation if we accept the wording in the amendment.
Amendment 27, proposed by the noble Lords opposite, is, rightly, linked with this amendment. It raises an important point: what is meant by sustainability? The essence of what I understand that the OBR is going to do is report on whether the fiscal policies—and, I thought, the economic policies—are sustainable. At this stage, so that we have some idea what we are talking about, we need a clear definition from the Minister of what is meant by “sustainability”. One problem, of course, is that one can sustain the finances at various levels. Without knowing what the economic policy is, it will be difficult to know at what level it is proposed to sustain the financial side of the Government’s operations. We need to know, since it is in the Bill and it is important, what “sustainability” means.
Lord Barnett
My Lords, the noble Lord, Lord Higgins, has referred to Amendment 27 in the name of my noble friend Lord Peston and myself. The amendment itself says:
“In any report on the sustainability of the public finances, ‘sustainability’ must be defined”.
I have tried hard to obtain some kind of definition of “sustainability” in the sense in which the Minister has used it—I have tried to elicit information on many of the words that he has used, as he knows—but that word, in some of the contexts that it is used, is a little difficult, to say the least. That is why we tabled the amendment; we need to know what is being talked about here.
Again, I have tried to be helpful and brief. I would like the Minister to explain briefly what is meant by “sustainability”.
Lord Peston
My Lords, the noble Lord, Lord Higgins, put his finger on the central issue that we debated at some length on Monday and on which I have since had a chance to reflect. The Government seem to be taking two positions. One is that it is possible to separate economic policymaking from economic forecasting. I used to lecture on this subject and I can say categorically that that is simply nonsense. I cannot believe that any serious economist would accept that the two can be separated. In fact, the correct position is entirely the opposite. The optimal macroeconomic policy and the optimal macroeconomic forecast are part and parcel of the same piece of economic analysis. That enables one to focus, first, on the major difference between some of us and the Government on this matter.
The second position, again echoing the noble Lord, Lord Higgins, is that however we define sustainability—several of us could try and I will have a go at it when we get to Report—the presumption that one should not make, and indeed economics tells us that exactly the reverse is the case, is that there is one unique state of government finances that is sustainable, rather than a multiplicity of such states. Therefore we must not make the error of assuming that there is only one sustainable policy, whatever the definition is.
Finally, since Monday I have had a chance to read the Economic and fiscal outlook. It reminds me of a debate that has been going on in economics for about 100 years, which is normally encapsulated in the phrase “measurement without theory”. The great Nobel prizewinning economist attacked the founders of the National Bureau of Economic Research because they were great believers in measuring, but in doing so without theory. I am in a tiny minority here because I do not think much of this report as a piece of economics. It is an example of economic forecasting without theory, and that is really not the way to do it. So my intervention is to make it clear that we need some clarification from the Government, and what we need to accept that there are many possible policies that might be pursued, along with many sustainable positions.
Lord Sassoon
My Lords, I regard the question of sustainability as very important, so much so that although I will give a brief definition, because I have been asked what the Government mean by it, the critical issue for the OBR is concerned is that it should have an unfettered ability to look at sustainability in its broadest sense. I see that the noble Lord, Lord Peston, is nodding in agreement. The main objective here is not to constrain the OBR by giving it some sort of government laid-down definition of sustainability—there is more nodding, for which I am grateful—so while I can give my own overview definition of sustainability, that rather misses the point. Sustainability is part of the Treasury’s overall fiscal policy objectives, and to the Government, the sustainability of the public finances means putting them on a footing from which they can withstand shocks. It means keeping the deficit down so that debt does not spiral out of control. That is the fundamental of it, and it is the Treasury’s responsibility to make policy that supports sustainable public finances. That would be my overview of where we start.
The important point is that the OBR should take this matter away. It seems to have indicated that this is not an easy thing to do, and has already made that clear in its remarks both in the Pre-Budget forecast earlier this year and in the November document, the Economic and fiscal outlook. The OBR talks about what it has done, and critically it says that it will examine the issue of sustainability in detail in the fiscal sustainability report due next summer. That is at paragraph 5.25 on page 140 of the latest document. There is a section on sustainability and, indeed, a chapter on fiscal sustainability, including, on page 55 of the pre-Budget forecast document, lots of complicated equations that are beyond my grasp of economics. The OBR is already, quite rightly, beginning to analyse this. It recognises that a lot more analysis is to be done, including looking at the implications of a number of relevant government policy areas and reviews. It has set all that out. The critical thing here is that we make sure that the OBR is allowed to do that unfettered.
I would not necessarily want to constrain the OBR in the way suggested by Amendment 27. I am sympathetic to the principle, because I think that it absolutely has to explain the context of any work that it does on sustainability.
Lord Peston
The amendment is not meant to constrain the OBR; it simply asks it to tell us what it has in mind, which I think is what the Minister is saying.
Lord Sassoon
Indeed. The question is: what is appropriate to put in the legislation? There is an element here of risking treating the OBR inappropriately by telling it to do things that are clearly already self-evident to the OBR, in that it has already started to make significant comments on sustainability but is not rushing to final conclusions or making it the subject of a separate major piece of work. Therefore I am absolutely sympathetic to the principle but I am not sure that we should get into the game of writing down everything that the OBR is to do. The question this provokes in my mind is whether anything more should be said about this point in the charter. If there is any more to be said, it should be in the charter, and it is in that context that I should like to reflect on the substance of Amendment 27.
Amendment 18 makes an explicit link between the OBR and the Treasury’s objectives and mandate. I absolutely agree that it is important for the OBR to work in the context of these objectives and the mandate. Therefore, the purpose behind my noble friend’s amendment is entirely appropriate but I am a little concerned that, taken particularly with Amendment 30, it would not provide sufficient protection to keep the OBR out of what could become broader and politicised debates about policy scenarios.
I have thought about this carefully. I believe that the current design achieves a balance for the broad remit for the OBR with a sufficiently clear focus on government policy, and any amendment in this area would need to ensure that that careful balance was protected. I am worried that the amendment might challenge that. As I said, I believe that the substance of what is intended is already in the Bill. I very much took to heart the words of noble Lords on this area at Second Reading, including those of the noble Lord, Lord Burns, who noted the importance of the OBR not being drawn into wider political debates and not opining on alternative policy options. We have to keep the OBR focused on the fact that its forecast has to be of the economic policies that have been decided by the Government. However, we should not through inappropriate drafting risk taking the OBR into debates about the policy itself.
I shall continue to think carefully about whether we have got the balance right, but I hope my noble friend understands that we may risk drawing the OBR into something wider than I suspect he intends. I ask him to withdraw the amendment.
Lord Higgins
My Lords, we are in danger of getting involved in metaphysics rather than econometrics. The absolutely central thing in the Bill is that the main duty of the office is to examine and report on sustainability. To say, “Oh well, the OBR itself will decide what is meant by that” when it is in the Bill is not a satisfactory situation. We have to have some idea of what is meant by it.
As far as the individual is concerned, it is fairly clear: if your expenditure is more than your income, the position is not sustainable—except, of course, that you can delay the proceedings by borrowing and so on. The same is not totally untrue as far as the Government are concerned. In the light of the earlier clauses to which I referred, is the OBR going to say, “The way the Government are going will not work. Their fiscal objective”—in the simple terms I have just outlined for an individual——“is not sustainable”? The same would have been true if the OBR had been reporting earlier on the position of the Irish Government. It could have said, “This is not sustainable. You will either default, have to be bailed out—which may or may not be a sustainable position—get out of the euro, or whatever”. Is the OBR going to say, as perhaps it might have said to the previous Government, “What you are doing is not sustainable”?
We have taken the clear position as an incoming Government that what the previous Government were doing was not sustainable; in short, they were going to go bust unless they could continue borrowing enough to stay afloat. Is this what is meant by sustainability? It probably is but, if so, we at least need confirmation from the Government—not from the OBR—that it means, “You cannot go on doing this without various other consequences following”.
Lord Sassoon
My Lords, I tried to make clear in summary what the Government understand by “sustainability”. It encompasses the thinking of my noble friend, which is the bare minimum that anyone would understand by “sustainability”. I want to allow the OBR to interpret it further. The noble Lord, Lord Peston, shakes his head. I say it is the bare minimum but I want to give the OBR the freedom to interpret “sustainability” in as wide a way as it thinks appropriate. Of course the OBR can and should say that the public finances are not sustainable if it considers that to be the case. It has written on sustainability already and will do a lot more work. I do not want to constrain it with a government definition that people may criticise. Having said that, there is a need for further consideration to ascertain whether the matter of sustainability can be reflected in the charter. However, it should not be done in a way that lays down a government definition of it.
Lord Higgins
That is a very helpful reply, if I may say so, but we cannot go along with the main object of the whole thing not being more clearly defined. Could my noble friend discuss it with the OBR and, before Report, get some idea of the answer?
Lord Sassoon
My Lords, as I have said, I am happy to discuss it with the OBR again, but it clearly believes that this is a very difficult issue, which is why it has made some opening comments, if you like, on sustainability in both its June and its November documents. It will make it the subject of a self-standing report—I assume, a significant one—next year, which is in its programme. It has already said that sustainability in its full richness cannot and should not be rushed or reduced to a simple formula. It wants to lay its thinking out in detail, and we should allow it to do that.
Lord Higgins
I beg leave to withdraw the amendment, but as the noble Lord has kindly produced a letter on the earlier part, perhaps he might try, before Report, to produce a letter on this issue.
Lord Eatwell
Lord Eatwell
As Amendment 19 bears on the debate we have just had, I thought that it would be entirely appropriate to go beyond our target and deal with it so that we can tuck it out of the way. Amendment 19 is intended to make clear exactly within what context the issue of sustainability might be considered. The term “sustainability” has no meaning in and of itself, as we have just discussed, unless we simply define it as “not spiralling out of control”, which I think everybody would accept as perfectly reasonable but somewhat trivial.
The reason that it has no meaning in and of itself is the interaction of the public finances with what is happening in the rest of the economy. It was very useful to see the first attempt at a discussion of sustainability by the OBR in its recent report. As I pointed out in my remarks on the Autumn Statement, the definition of sustainability which the OBR presents in that report is a surplus of 2.1 per cent of GDP on the Budget. I remarked then, and I remark again, that that is completely unsustainable. It is unsustainable because a Budget surplus of 2.1 per cent, with the normal balance of payments position of the past 10 years or so of minus 1 per cent of GDP, would imply that the private sector was accumulating debt at a rate of 3.1 per cent of GDP. That is unsustainable for the private sector.
I have already had some correspondence with Mr Chote on the matter. The OBR got that wrong, and it shows how difficult it is to encapsulate the notion of sustainability without referring to the general economic context. Let us take the example of Ireland, which was raised by the noble Lord, Lord Higgins. In 2007, prior to the crisis, the Irish Government were running virtually no deficit and had a debt to GDP ratio of 12 per cent, one of the lowest in the developed world. Yet they were pursuing an economic policy, with respect to what they were committing their banking sector to accumulate, that was unsustainable. If you just looked to the Government, everything looked great. They were pursuing exactly the policies that one would define as sustainable. If you took it in the context of the economic policy and the economy as a whole, it became unsustainable; just as the OBR has made the mistake in its report—I know that it will change it because it has good economists who will see the point very quickly—of pretending that a government surplus is the basis of sustainability.
Let us just look at the history: Governments have not had a surplus for 200 years but they have continued perfectly well. Indeed, it is important for the Government to run a deficit; otherwise there will be a major shortage of government bonds for pension funds and the insurance industry. In fact, our financial sector would be wrecked if the Government did not run a deficit. The Government can run a relatively small deficit, which will see the level of debt to GDP stable, perhaps even falling. That would be entirely sustainable and would not spiral out of control.
I suggest that introducing the phrase,
“in the light of the Government’s economic policy”,
solves the Minister’s problem. It says that we will look at sustainability in the round and it creates that notion of “in the round” for the OBR to work on. Once again, we have managed to solve a problem for the Minister, and I hope that he recognises that a solution has been provided for him. I beg to move.
Lord Burns
My Lords, I have been struggling with this debate. I have had difficulty in seeing where it was going. When I looked at the amendment of the noble Lord, Lord Eatwell, I thought, “Surely everyone assumes that that is the way that it will be done in any case”. In that sense, I am not sure what the amendment adds because I do not understand what the counterfactual position would be if the OBR tried to do an analysis of sustainability that was not in the light of the Government’s economic policy. To the extent that the amendment would clarify a situation if there were any real doubt about whether that would be the position, then I can see that it has merit.
I am not contradicting what the noble Lord says about how this should be done. I would expect the OBR to do it in that way, largely because I cannot see how it would do it in any other way; it would be rather limited. My assumption is that the response to this will be, “It isn’t necessary because everyone would assume that this was the way that it would be done”. I agree with everything that the noble Lord has said about how one would hope that this would be done; my only question is whether the amendment is necessary.
On the question of how far one wants to spell out the issue of sustainability, my preference would be to leave the OBR to give its own definition and present its own analysis. It would then be up to others to question whether it had done that correctly, whether it had missed out something in its definition of “sustainability” or whether the analysis was too narrow and should have been broadened. That could easily be a subject for debate after the OBR had presented its report, and no doubt it would then be taken into account when it made its next report.
If we follow much of the debate that has gone on, and if we are setting up something that we hope will last a long time, I am conscious of the fact that there are not many aspects of economic policy that remain unchanged for long periods of time. People’s interpretations of words and policies move over time. I would be cautious about trying to be too specific about what we mean by “sustainability”. In the broadest sense we understand what it means but, if circumstances were to arise that required a different definition or we had to assume that the Government would react in some way in future to certain types of events and that were to be built into the analysis, that could be done.
I find myself agreeing with the amendment, but I question whether it is necessary or whether it would not be assumed that what it suggests would already be the case.
Lord Sassoon
I am grateful to the noble Lord, Lord Burns. I think that he gets it right. I am sympathetic to the underlying concern of the noble Lord, Lord Eatwell, to try to solve a problem. The analysis of sustainability—the main duty of the office—has to have regard to, and be in the light of, the Government’s economic policy, so I do not think that there is any other way of doing it. Of course we must get the technical drafting right on this. In so far as there is any potential problem, we need to get it right.
I sometimes find the drafting of these things a bit obtuse, but I am advised by the experts on how these things are drafted that Clause 5(3) deals with the issue that the amendment is intended to remedy. That subsection states:
“Where any Government policies are relevant to the performance of that duty, the Office may not consider what the effect of any alternative policies would be”.
Lord Sassoon
It seems to deal with what should be excluded rather than what should be included. Due to the way that legislation is constructed, however, I am told that by referring to what should not be considered, the link to what should be considered is there by implication and hard-wired into Clause 5, which is the critical provision on how the main duty is to be performed. I am advised by the experts on these matters that we have in the Bill what is technically necessary to make the link through to the Government’s economic policy. Further to that, we have to be careful—this very much relates to the point made by the noble Lord, Lord Burns—because there are a lot of other matters in here that may come and go, to which the main duty of must have regard. Yes, it relates to economic policy, but what about the Government’s taxation and expenditure policies? What about the potential for the impact of external shocks? There is a danger here that if we agreed to the amendment, it would boilerplate the importance of the duty being carried out,
“in the light of the Government’s economic policy”.
I agree with the noble Lord, Lord Burns; how could it be any other way?
Lord Burns
I had assumed that the term “economic policy” encompassed all of the things that the Minister has just mentioned—taxation policy, expenditure policy, pensions policy or anything that would affect the public finances in one way or another.
Lord Sassoon
Again, I am advised that the drafting of the amendment would not necessarily achieve that end. If we include “in the light of economic policies”, even if it was widely interpreted, does that mean we should refer also to other aspects of sustainability, such as, for example, the impact of external shocks? I believe that the subsection works, even as drafted. We absolutely agree with both noble Lords in terms of what we expect to be taken into account, but we do not consider that the amendment will help. Its drafting does not do the trick and, I am advised, aims at something which is not necessary because we have it in Clause 5(3).
Lord Higgins
I have, in fact, tabled an amendment to Clause 5(3)—Amendment 30, which we shall come to in due course. However, long experience in these matters suggests that occasionally when one is discussing a Bill, it becomes apparent at what stage the parliamentary draftsman had a nervous breakdown. If the advice given by the parliamentary draftsman is that in some way Clause 5(3) is helpful in defining the point that we are discussing, I find that very surprising.
Lord Eatwell
Perhaps I may follow up that point. If Clause 5(3) is supposed to in some sense incorporate the notion of government economic policies and the definition of sustainability, it is obscurantist to an extreme degree. The subsection does not say that, and normal reading would not reflect that. It is a sort of philosophical point suggesting, “Don’t listen to what I say; listen to what I mean”.
I must say that what is written here does not in any common-sense manner refer in a constructive way to the point that we have been discussing. It is nonsensical to suggest that the clause provides the qualification that is required. If by some extraordinarily convoluted legal argument it does, there is an extreme lack of clarity here, and it is the Government's responsibility to make this clear. There is a severe deficiency of drafting in the Bill if the clause purports to refer in a constructive way to the matter that we have been discussing.
Lord Higgins
My Lords, Clause 5(3) on page 3 of the Bill is the subject of Amendment 30. However, I entirely agree with what the noble Lord said a moment ago: one cannot conceivably construe that subsection as in some way qualifying the issue that we are now debating. If that is the advice that my noble friend is getting from the parliamentary draftsmen, who of course are paid far more than anyone else in the Civil Service, it is an extraordinary answer.
Lord Sassoon
Perhaps I may try again. Under Clause 4(1) it is the duty of the office to examine and report on the sustainability of the public finances. For the reasons explained by the noble Lord, Lord Burns, it would be difficult to report on the sustainability of the public finances without having regard to a lot of things, including—critically and at the centre—government economic policy. That links to what is laid out in the charter. If there is any doubt about whether the office will take account of government economic policies, as opposed to any other economic policies, we should look at Clause 5 for guidance on how the main duty is to be performed. The first point, which is important, is that the office has complete discretion, subject to certain subsections. Therefore, there will be a raft of approaches and other considerations that it can bring in if it considers them to be relevant.
We may then go on to subsection (3), having established that the OBR could not exercise its main duty without having regard to economic policies. Clause 5(3) makes it abundantly clear that when it looks at economic and other policies, it must have regard to any relevant government policies—not just economic policies, or economic policies defined in the widest sense by the noble Lord, Lord Burns. Under Clause 4, the office must have regard to economic policy; otherwise, how on earth would it start to look at sustainability? Clause 5(3) makes it clear that the policies that it must have regard to are not alternative policies but the policies of the Government. It is clear if one follows it through.
Lord Newby
Everybody agrees on the substance. The problem is that the Minister is trying to turn words that are inelegant and the wrong way round to mean what we all agree on. Without wishing to claim the fee of a parliamentary counsel, it seems to me that we could deal with this simply by redrafting subsection (3) to read: “The office must perform that duty, taking account of any government policies that are relevant to the performance of that duty. It may not consider…”
Lord Eatwell
Absolutely. We have just heard clarity provided from this incredibly obscurantist piece of drafting. This subsection is a negative. It says:
“Where any Government policies are relevant … the Office may not consider”.
You are taken to the negative. The verb with operational significance in that sentence is “may not”. The noble Lord, Lord Newby, has hit the nail on the head. If one really wants to achieve what we are all trying to achieve, this subsection should be split into two with Clause 5(3) saying, “Take these things into account” and a new Clause 5(4) saying, “Don’t mess around looking at other people’s policies”.
Lord Higgins
When we consider my amendment which refers to Clause 5(3), I shall make a quite separate point. The noble Lord, Lord Newby, has essentially encapsulated what he wants to say. The problem for the Government is that we are saying that the OBR has to take into account the Government’s economic policy, whereas the noble Lord’s letter—and the debate on that lasted for an hour and 20 minutes on our first day in Committee—was concerned with saying that we must not under any circumstances allow the OBR to look at economic policy.
Lord Burns
There is an issue with the drafting of Clause 5 and I wonder whether we are trying to make subsection (3) work too hard for its living. I had assumed that it was there to make sure that the OBR did not get dragged into a political debate and would not be called upon by anyone to cost opposition policies—which, as we know, has become a bit of a habit over the past 25 years—or by a Select Committee to insist that it compared the outcome of the Government’s policies with that of another set of policies. That would inevitably draw the OBR into a political debate. I had assumed that that was the purpose of this subsection, and it may be working it too hard to say that it should also do the job suggested by the noble Lord, Lord Eatwell. I think that the noble Lord, Lord Newby, has captured the spirit of what a number of us have been concerned about.
Lord Sassoon
We are all trying to get to the same end. I do not think that this is a rerun of what we were talking about under Clause 1 on the charter for budget responsibility. If it were, I would not carry on with a sympathetic tone. If it is trying to reopen—
Lord Sassoon
Do not push me, because I can sit down now. All the notes say “Resist”, but there is “resist” with a smiling face and there is another kind. If this discussion is intended to reopen the debate around Clause 1, which would have the effect of getting the OBR into the business of commenting on government economic policy and conceivably alternative economic policies, then I am not going to suggest looking at clarifying the drafting to achieve that. My starting point, like that of the noble Lord, Lord Burns, is that it would not be possible to carry out the measure set out in Clause 4(1). How could you conceivably do that if it were not based on the Government’s economic policies as widely defined, including thinking about the potential for external shocks and so on? The very important point is that Clause 5(3) stipulates that the context is only one of government policies, not alternative versions. Therefore, when the OBR carries out its analysis, it should look at only the government policies that have been announced.
Lord Higgins
I am trying to be helpful; this is clearly rather more complicated than we may have thought a little time ago. Could my noble friend simply say that he will look to see whether the intention of the Government has been encapsulated by the draftsmen and that, if not, he will table a more suitable amendment, because I do not think that we can leave it as it is?
Lord Sassoon
I was going to make two points. There is a further important consideration here, which is that we have the draft charter in front of us. It is worth bearing in mind that paragraph 4.12 of the draft charter, at page 13, states:
“The OBR’s published forecasts shall be based on all Government decisions and all other circumstances that may have a material impact on the fiscal outlook”.
So it is quite clear from that paragraph that the published forecasts shall be based on all government decisions. It continues, in the first bullet point, or tiret, as the Treasury used to call it—I do not know whether it still does since the departure of the noble Lord, Lord Burns; I fear that it now calls them “bullets”. Anyway, in the first blob—
Lord Sassoon
They are slipping terribly. In paragraph 4.12, the first bullet point states,
“where the fiscal impact of these decisions and circumstances can be quantified with reasonable accuracy the impact should be included in the published projections”.
So we have in the charter a lot of the clarification, if there is any doubt to be avoided. I think that we have exposed all the issues here. I believe that between the two clauses and the charter, we have covered it all. I will look at the issue again in the cold light of day with officials. If, on reflection, there is anything more, I will write with further thoughts, but in the mean time, I ask the noble Lord to withdraw the amendment.
Lord Eatwell
I am grateful to the noble Lord. This debate has been much more valuable than I expected when we started. We discovered in the imperfect drafting of Clause 5(3) a real drafting difficulty, which has nothing to do with trying to make any political or more general economic point, but just concerns clarity. That was very valuable. I want to return to this, and want to associate with the notion of sustainability a general notion of economic policy. The reason for that is illustrated by the Irish case. The Irish Government looked incredibly stable in 2007, yet the overall economic position was completely unsustainable. If you just looked narrowly at the government finances, they looked terrific, but once you placed those government finances in the context of what was happening in the financial sector in Ireland as a whole, taking into account the Government’s economic policy with respect to the banks, for example, you would have seen that the position was unsustainable. It is that broader context that I was trying to get at here, and which informed my remarks on the sustainability analysis in the report published on Monday. We have teased out some important issues here, and we must certainly return to them on Report but, in the mean time, I beg leave to withdraw the amendment.
House of Lords
House of Lords: Reform
(14 years ago)
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The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the new appointments since the general election are entirely consistent with the coalition’s programme for government, which set the objective of creating a second Chamber that is reflective of the share of the vote secured by the political parties at the last general election. The Government are committed to reform of this House. The cross-party Joint Committee on House of Lords Reform will come forward with a draft Bill early in the new year.
Lord Dubs
My Lords, I want to make it clear that I mean no disrespect to the many Members who have recently joined this House or are about to do so, but how can the Minister reconcile the Government’s reducing by 50 the number of MPs in the House of Commons with increasing by more than that the number of Members of this House? Is he not breaking the cross-party understanding that the Government should not have an overall majority, especially as this has an adverse effect on the Cross Benches? I have yet to find a single Member of this House who agrees with the Minister—and I have asked quite a few of them. One can look at the faces behind the Minister to see that they are nodding in agreement with me and not with him.
Lord McNally
I had better not look behind me then. There is a dilemma which this House has partially created for itself. For as long as I have been involved in these matters, there has been an assumption that incoming Governments will freshen their Benches, partly for reasons of needing to man the government Benches. That is exactly what the Labour Party did, with Mr Blair creating more than 300 Peers during his term of office. The attempts to reform this House over the past 10 years have failed and we are left with a problem of a House that is too large. That is why I hope that the Benches opposite, when they get the opportunity in January, will enthusiastically embrace the reform programme which the Government will put forward.
Lord Tyler
Does my noble friend agree that the best way to make progress would be if the Labour Party, instead of bringing in ex-MPs who are refuseniks on reform of your Lordships' House, stuck to its manifesto commitments, made not just at the last election but at many other elections, to reform this House comprehensively?
Lord McNally
My noble friend makes some valid points, but I think that it is unfair to say that the ex-MPs who come in are against Lords reform. It usually takes them two or three weeks before they become enthusiastic supporters of the House. I see in his place the noble Lord, Lord McAvoy, who has taken to the ermine like a duck to water.
Lord Hunt of Kings Heath
My Lords, the noble Lord, Lord McNally, has implied that the 300 Peers brought in by Mr Blair were Labour Peers, but can he tell me how many were not and took other Whips in the House? Does he endorse the remarks made yesterday by his noble friend Lord Tyler, who in the context of Lords reform effectively told the Cross Benches that, unless they supported the Government in votes, a 100 per cent elected House rather than an 80 per cent elected House would be proposed? Does he endorse that view?
Lord McNally
I do not read that into what my noble friend Lord Tyler said yesterday. I trust the Cross Benches to take decisions on votes in this House as individuals and not as a collective group. I know that they will continue to do that. Even more shaming than any threats real or imagined from my noble friend Lord Tyler are the blatant attempts made by the Labour Party to lure the Cross Benches into elephant traps when trying to delay government business.
Lord Kakkar
My Lords, have any of the newly appointed Peers been asked to give an undertaking that they would support House of Lords reform as envisaged by the Deputy Prime Minister?
Lord McNally
My Lords, it is always good to have a contribution from the Cross Benches. No such assurances have been asked for and they would be pretty valueless for the reason I gave earlier. I can see faces on the Benches opposite who I remember in their radical youth wanted to burn this place down, and they are now enthusiastic supporters of no change at all.
Lord Campbell of Alloway
Does the noble Lord accept that there is no logical explanation to the Question put by the noble Lord, Lord Dubs? We all know the views of the Cabinet and the coalition. I speak as a Conservative, I am still a Conservative and I support—when I can—the coalition, but not on this occasion.
Lord McNally
I am well aware of those views. All I will say to all sides of the House is that the other place has come to a settled and consistent view on the need to reform this Chamber. In keeping with our democracy, those views were taken to the electorate. The Conservative Party’s commitment to reform, the Liberal Democrats’ commitment to reform and the slightly dodgy, but still there, commitment of the Labour Party to reform—
A noble Lord: We lost—
Lord McNally
We all lost, but some of us made a better fist of that fact than others.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, there is time for only one more question. Noble Lords cannot all stand up at the same time.
Lord Strathclyde
This is a question we will come back to many times. There is time for only one more question. The noble Lord, Lord Pearson, has been trying to get in consistently since the beginning and I suggest that we hear from him. There will be many other opportunities.
Lord Pearson of Rannoch
My Lords, if it is true that the Government are appointing new Peers in proportion to the votes cast at the general election, why does UKIP not have 24 Peers in your Lordships’ House and why did the Prime Minister refuse a single extra Peer?
Lord McNally
My Lords, I do not know. It is not in my brief, but I will find out. That shows that you should never let in that last question.
Roads: Long and Heavy Vehicles
(14 years ago)
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Lord Dixon-Smith
To ask Her Majesty’s Government what plans they have to permit a trial of longer and heavier vehicles on roads; and what assessment they have made of the impact of the use of such vehicles on rail freight.
Earl Attlee
My Lords, the Government have made it clear that they have no intention of permitting any trials of goods vehicles longer than 18.75 metres or heavier than 44 tonnes. The Government are awaiting the conclusions of research into a small increment in the length of articulated lorries, but this would provide no more loading capacity than is currently possible with a rigid draw-bar combination lorry.
Lord Dixon-Smith
My Lords, many types of lightweight freight are completely inappropriate for rail travel. At a time when all public expenditure is under critical examination, to improve productivity and to reduce costs, does my noble friend agree that it is appropriate to review all our regulatory systems at the same time, so that economic or environmental performance on this particular transport question can be improved wherever possible?
Earl Attlee
My Lords, before responding to that question, I should first declare an interest as I know Mr Dick Denby, who is a proponent of a longer and heavier vehicle. I have also received engineering advice from his designer on a pro bono basis. Mr Denby has done the country a great service by opening up this issue. As a result, this Government and our predecessor have been looking at a small increase in the length of an articulated vehicle to address precisely the concern of my noble friend: that low-density goods are bulking out, rather than grossing out, our current range of goods vehicles.
Lord Snape
My Lords, does the Minister accept that it is the heaviest goods vehicles that directly abstract traffic from rail freight? Will he accept from me that, for years, the road haulage industry has been claiming spuriously that heavier and longer goods vehicles would mean fewer of them? Does he agree that the heaviest goods vehicles have, for over 30 years, failed to pay their true track costs, and does he accept that any acceptance of longer and heavier vehicles will cause even more damage to Britain’s roads, which will be paid for by other taxpayers?
Earl Attlee
My Lords, most of what the noble Lord says is right. We are looking at an increase in the cubic capacity of an articulated vehicle, but we have absolutely no intention of increasing the gross weight of a goods vehicle, for precisely the reasons that the noble Lord explained.
Lord Geddes
My Lords, is the crucial question in this context not the axle weights rather than the overall weight?
Earl Attlee
My Lords, the noble Lord makes an important point. The damage to the road goes up in proportion to the fourth power of the axle weight, but we have no intention of altering the permitted axle weights either. However, the type of vehicle we are looking at will require different axle arrangements on the rear of the vehicle.
Lord Davies of Oldham
My Lords, I quite appreciate the Minister approaching this issue with some care, because he will know the anxieties of the general public about the questions over the damage which heavy lorries do to our roads and the pollution that they create. However, is there any reason why he should delay the charging of heavy goods vehicles, given that at present he is all too well aware of the unfairness of foreign lorries coming into this country and using our roads without cost?
Earl Attlee
My Lords, we discussed lorry road-user charging recently at Question Time. We are working on it and will announce on it in due course.
Lord Bradshaw
Can the Minister assure us that road safety will play a very prominent part in his consideration, because these lorries will not be confined to the motorway network? Will he please tell us, through the Library or however, how many prosecutions have been brought against HGVs—heavy goods vehicles—for contravening the weight restrictions on most of our roads?
Earl Attlee
My Lords, the noble Lord raises important issues about enforcement. This question is more about the design, construction and use of our vehicles, but he is right that we need to make sure that we enforce regulations on the operation of goods vehicles very carefully indeed.
Lord Faulkner of Worcester
My Lords, can the Minister confirm that it is the policy of this Government to carry as many goods by rail as possible and to transfer goods from road to rail wherever possible? In that context, will the Government continue to support freight transfer depots and other facilities to enable goods to be put on to the railway and carried long distances by rail rather than by road?
Earl Attlee
My Lords, on the first part of the noble Lord’s question, absolutely. We will do nothing that reduces the amount of freight carried by rail.
Viscount Montgomery of Alamein
Can the Minister confirm that the road axle weight has increased from 38 tonnes per axle? He rather gave that impression in his earlier Answer.
Earl Attlee
My Lords, the gross train weight—that is, the all-up weight of a heavy goods vehicle—was increased some time ago from 38 tonnes to 44 tonnes, but the axle weight is considerably lower than that.
Lord Craig of Radley
My Lords, will the Minister take into account the number of heavy goods vehicles that have jack-knifed during the recent bad weather and caused considerable traffic delays? Does this need to be borne in mind in deciding on the future of these arrangements?
Earl Attlee
My Lords, one of our motivations for considering a slightly longer articulated trailer rather than using a rigid vehicle towing a draw-bar trailer—precisely the point that the noble and gallant Lord makes—is that we believe that an articulated vehicle will be slightly safer.
IMF and World Bank: Appointment Procedures
(14 years ago)
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Lord Stern of Brentford
To ask Her Majesty’s Government what assessment they have made of the appointment procedures for the heads of the International Monetary Fund and the World Bank.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, G20 leaders are committed to open, transparent and merit-based selection processes for the heads and senior leadership of all international financial institutions. The UK supports this commitment as part of a broader package of reforms to increase the institutions’ effectiveness and legitimacy. Further consideration is being given to the processes for search, selection and appointment of heads at the IMF and the World Bank.
Lord Stern of Brentford
I thank the Minister for his Answer and I declare an interest as a former chief economist and senior vice-president of the World Bank.
Does the Minister agree with the assessment that the system of reservation—because that is what it is—of headships of the IMF and the World Bank for Europe and the United States respectively is outdated, unacceptable in the modern world and deeply resented by the Governments and people of developing countries? Does he also agree that past declarations of the importance of open competitions have not prevented the UK Government from participating in the continuation of these stitch-ups? Does he therefore agree that, to make the openness clear, the UK should support non-European and non-US candidates for these positions? There are many outstanding candidates. I am happy to provide him with a list. If the IMF position becomes available first, Europe must take the lead, as a matter of principle, whether or not the US tries to keep its monopoly at the World Bank.
Lord Sassoon
My Lords, I pay tribute to the noble Lord for the distinguished part that he played as chief economist at the World Bank and I therefore listen very carefully to what he has to say. I can confirm that this longstanding, informal agreement whereby the managing director of the IMF was always a European and the World Bank was always to be headed by a US citizen is well past its sell-by date. As I said, we support open and transparent appointments based on merit and in that context, while it is right and appropriate that good candidates from wherever should come forward, the UK’s position is emphatically that appointments should be made regardless of nationality or, indeed, of gender.
Lord Bilimoria
My Lords, does the Minister agree that waiting for the appointment of the head of the World Bank is like waiting for white smoke to emerge from the building? We know that the Americans fund the World Bank more than anyone else, but, in spite of that, is it right that the President of the United States, behind closed doors, should have the right to appoint the head of the World Bank in today’s world? With the IMF, why should it be a European? Why can it not be, as the noble Lord, Lord Stern, said, someone such as our mutual friend, Montek Singh Ahluwalia, the deputy head of the Planning Commission in India?
Lord Sassoon
My Lords, I will not repeat my previous answers but I draw attention to part of my first Answer. Processes for search, selection and appointment are being worked up by the IMF and the World Bank. I suggest that any candidates that noble Lords think are appropriate for the appointment should apply in due course.
Baroness Kinnock of Holyhead
My Lords, is the Minister aware that European countries occupy eight to nine of the 24 seats in the IMF and the World Bank? Does he not consider that we, as one of those European countries, should presume that it is about time some of these privileges were given up in favour of emerging and developing countries?
Lord Sassoon
My Lords, I said at the outset that the improvements to the processes for appointing the heads of these organisations must be part of wider reform packages for the entire governance of the IMF and the World Bank. Progress is being made on that in the quota shares, the voting arrangements and the governance arrangements. Equally, it is critical that, under the new arrangements, the four BRIC countries are in the top 10 voting and quota share countries, so we will have a much better balance in both voting and representation. It is equally important that the UK remains a top five member and that we retain our board seat.
Lord Newby
My Lords, does the Minister accept that these top appointments are intensely political? Therefore, simply having a process that is called “open and transparent” will not guarantee that the best person gets the job. Would it not be sensible, as the noble Lord, Lord Stern, said, for the British Government to make it clear at this stage that they expect the next head of the IMF and the World Bank not to be a European or an American?
Lord Sassoon
I can only restate the position of the Government: these appointments should be made regardless of nationality or gender.
The Lord Bishop of Liverpool
My Lords, is the Minister aware that many of the beneficiaries of the World Bank feel that the leadership of both the World Bank and the IMF are out of touch with the complexity of the issues facing the developing world, especially when it comes to land rights?
Lord Sassoon
My Lords, I am grateful to the right reverend Prelate for reminding us of what part of the important role of the World Bank is. Indeed, since we are talking about governance arrangements, it is important that there is a commitment to arriving at a new formula for the World Bank shareholding by 2015 that will properly reflect the development mandate of that organisation.
Lord Grenfell
I am most grateful to my noble friend for giving way. I declare an interest, having served 30 years with the World Bank and being in receipt of a pension from it. I totally agree with what the noble Lord, Lord Stern of Brentford, has said about the necessity of broadening the field of recruitment. Does the Minister agree that the most important aspect is to make sure that the best qualified person gets the job and that it is extremely important that, whatever negotiations are held, the G20 should not go from one stitch-up, which we have now, to another and thereby end up with the lowest common denominator of approval? We should at least find the best people available for both these posts.
Lord Sassoon
I am very grateful to the noble Lord, Lord Grenfell, who speaks from immense experience. I completely agree with what he said.
Lord McFall of Alcluith
Undemocratic and non-transparent are the buzzwords of these institutions today. Will the British Government take the lead from the German finance minister who asked for lower representation for European countries so that the sub-Saharan and developing countries can get more representation and so that we have a big step on the way to democracy for these institutions?
Lord Sassoon
The Government are pleased with the recent agreements in the IMF and the World Bank that have seen a significant shift of voting and quota away from the developed towards the dynamic, growing economies.
Immigration: Detention of Children
(14 years ago)
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Lord Foulkes of Cumnock
To ask Her Majesty’s Government what progress they have made regarding the ending of the detention of children of failed asylum seekers.
The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, there has been progress in the pilot studies that the Government have been conducting. We remain determined to end the detention of children for immigration purposes and intend to make a Statement on the subject before the Christmas Recess. As the House will be aware, the number of children in detention for immigration purposes has fallen dramatically—and is now very low—and takes place only for very short periods. There are no children in detention at present.
Lord Foulkes of Cumnock
Is the Minister aware that the Government kept their promise to end the detention of children in Dungavel in Scotland by shipping them hundreds of miles away to detention in Yarl’s Wood? The Observer reported on Sunday that the replacement for Yarl’s Wood is no better than Yarl’s Wood. How will the Government end what Nick Clegg described as a moral outrage or will this be another pledge he wishes he had not made?
Baroness Neville-Jones
My Lords, the Observer is inaccurate. It is not the case that the accommodation that will be provided will be “no better than Yarl’s Wood”. The picture painted of the current Yarl’s Wood was inaccurate. The Labour Benches opposite will know something about the changes that they made. The accommodation will not be like Yarl’s Wood and will not contain any means of detention.
The Archbishop of Canterbury
My Lords, the Government will be aware of the Church’s continuing acute interest in this subject not least because of an open letter to all party leaders that was sent before the general election touching this question. What are Her Majesty’s Government’s plans to keep monitoring the psychological and mental medical impact of detention upon children and families and the impact of some aspects of the whole regime that currently obtains, including the practice of dawn raids, the proposed suggestion of indeterminate dates for expulsion and comparable matters? Will Her Majesty’s Government be prepared to raise and press some of these issues with other European Union countries?
Baroness Neville-Jones
My Lords, the most reverend Primate raises a number of important points. The reason why we are concerned about the mental condition and psychological effect on children and their families of what has hitherto been the practice is the reason why this Government made a commitment to end the detention of children for immigration purposes. We will honour that commitment.
As a result of the number of questions that I have been asked on this subject, I have kept the House aware of the pilots that we are already conducting to alter procedures such that some of the things that have been mentioned will no longer take place. There will not be a need for the “raids” that used to take place. We are endeavouring to bring about a system that ensures that those who are not entitled to be in this country are not able to stay here and that they are not able to abuse the system, but that in its procedures is humane and just.
Baroness Afshar
My Lords, I declare an interest as someone who is involved in the Child M question and has raised the question of children in detention. It seems to me that the treatment of these children as numbers rather than as human beings, and the idea that they are a category that belongs or does not belong in this country, simply denies them their rights as human beings. Can we please take these cases as human beings and think what we would do if these were our children? I feel that Child M is being pulled every which way. The family is breaking up and the future of that child is being destroyed. We talk about future pilots. Here is an example. Please let us do something.
Baroness Neville-Jones
I say to the noble Baroness that these pilots are in progress; they are not future pilots. We are endeavouring to introduce means by which we can encourage families to return on a voluntary basis. I lay stress on the fact that we keep families together as much as we possibly can. It is now a very rare circumstance, such as, possibly, the brutality of parents within a family, that would result in family separation. We try to keep families together. Our aim is to get them to depart voluntarily if they are not entitled to be in the country and, if they do not do so, to make as humane arrangements as we possibly can to remove them, but we do not intend to involve detention in that process.
Lord Roberts of Llandudno
My Lords, is the Minister aware that in seven months we as a Government have made more progress to end the detention of children for immigration purposes than the Labour Party did in 13 years? Can she arrange a visit to Yarl’s Wood to enable the noble Lord, Lord Foulkes, the most reverend Primate the Archbishop of Canterbury, the noble Baroness, myself and others to see the ending of that desperately sad regime?
Baroness Neville-Jones
My Lords, I have already offered the possibility of a visit to Yarl’s Wood, which will, in due course, become a centre for adults only. However, I would be very happy to demonstrate to Members of this House the arrangements that we are piloting and hope to put in operation shortly. As I said, there will be a Statement on this issue before the Christmas Recess.
Superannuation Bill
16:27 - Division on Amendment 7 - Ayes: 161 / Noes: 222 - Amendment 7 disagreed.
Lord Brett
“( ) Section 1 of the Superannuation Act 1972 is amended as follows.
( ) In subsection (3), after “consult” insert “, with a view to reaching agreement,”.
( ) In subsection (3A) after “consult” insert “, with a view to reaching agreement,”.”
Lord Brett
My Lords, Amendment 1 stands in my name and that of my noble friend Lord McKenzie of Luton. As my noble friend Lord McKenzie said in Committee, this is a straightforward amendment designed to clarify the purpose of consultation, emphasising that consultation should aim to reach agreement. In Committee, the Minister expressed reservations that this amendment was drawn too widely in respect of the 1972 Act, but recognised that the Government’s aim, like that of the previous Administration, was to seek to reach agreement by consensus where possible. There have been discussions between the Civil Service trade unions and Ministers in this respect and the Government have now submitted Amendments 2 and 4, which are grouped with Amendment 1 and which I take to be an endeavour to offer the reassurance sought in Amendment 1. While I clearly prefer the simplicity of our amendment, I await the Minister’s arguments in support of his amendments with interest. I hope that our thinking is as one, even though our amendments may use different language. I beg to move.
Lord Wallace of Saltaire
My Lords, it may be helpful if I begin by reminding your Lordships of the main outcome that the Government are seeking to achieve in securing agreement to this Bill, which is to enable necessary reform of the Civil Service Compensation Scheme. Our goal in effecting this reform is to put in place a scheme, following consultation with the Civil Service trade unions, that is affordable, sustainable for the long term and fair not only to civil servants but to other taxpayers. This is not an initiative of this new Government but an issue that we inherited from our predecessors. Indeed, the previous Government negotiated for 18 months with the Civil Service trade unions and had a scheme to propose in February this year, which was then challenged by one of the unions and struck down in a judicial review.
I have described previously the intensive discussions between the Government and the Civil Service unions since my right honourable friend the Minister for the Cabinet Office, Francis Maude, announced on 6 July his intention to push through reform of the compensation scheme. Since Grand Committee, which took place three weeks ago, some of the unions have begun to ballot their members on a new scheme based on the agreement reached on 5 October between the Government and the negotiating teams of five of the six Civil Service unions.
The key elements of the new scheme that we propose to introduce include: a standard tariff for compensation payments; an entitlement for a three-month notice period on redundancy, whether voluntary or compulsory; significant protection for lower-paid civil servants; limitations on payments to higher-paid civil servants; and, lastly, the ability to access an unreduced pension for staff who have reached minimum pension age.
The Government listened carefully to points made by those noble Lords who spoke in Grand Committee about the purpose and structure of the Bill, as well as underlying concerns about how reform of the scheme would be achieved. We have brought forward some further amendments, which we believe address these points, as I will explain in due course. I hope that we will be able to use this Report stage to ensure that the Bill meets our goals of supporting a new, affordable, fair and sustainable compensation scheme and of providing that the Civil Service and the Government are not left in limbo over the reform of this scheme.
In speaking to Amendment 2, I will also address Amendment 4, which is simply a consequential drafting amendment, and respond to the points raised by noble Lords opposite on Amendment 1. Indeed, these government amendments are specifically intended to respond to the identical amendment that the Opposition tabled for Grand Committee and to the discussion that followed about the way in which consultation should be carried out.
Amendment 1 would insert into the Bill the words,
“with a view to reaching agreement”,
in references to consultation on schemes under Section 1 of the Superannuation Act 1972. It would in practice render my Amendment 2 unnecessary, as it covers the substance of my amendment and much more besides. That is why the Government have brought forward Amendment 2, to address the specific issue of consultation on the compensation schemes that are covered by this Bill.
The Grand Committee agreed to amendments that I had tabled to deliver the undertaking made in another place to reinforce the requirement for meaningful consultation with the unions before any compensation scheme is imposed. Those amendments inserted what is now Clause 2 of the Bill. The coalition Government firmly believe that a requirement to consult already carries with it the implication that the consultation must be genuine and that proper consideration must be given to the response. However, we were happy to set out in primary legislation our commitment to meaningful consultation, which we have also reiterated in both Houses of Parliament.
It is also the intention of this Government that any consultation that we carry out under the 1972 Act would be begun with a view to reaching agreement. Clause 2 already uses the words,
“with a view to reaching agreement”,
in respect of the report that the Government will in future be required to lay before Parliament about changes to the scheme. The noble Lord opposite pressed me in Grand Committee to make our intention clear in the Bill and to apply the same words expressly to the requirement to consult.
I do not think that there is much between us as to the aim and purpose of these amendments. However, as I explained in Grand Committee, the Government have reservations as to the breadth of the scope of the amendment from the noble Lords opposite. It would take us very much wider than the process of changes to Civil Service compensation, which is the key purpose of the Bill. Amendment 1 would in practice apply also to schemes in relation to pensions and injury benefits, which are subject to different regimes for consultation and agreement and which we have not otherwise considered in this Bill. The Government were therefore not able to accept the amendment in Grand Committee and this has not changed.
Nevertheless, I have reflected carefully on the points made by the noble Lord, Lord McKenzie, in Grand Committee. He said then that it should not be contentious to seek to emphasise that the aim of consultation should be for it to lead to agreement. Indeed, the Government would not wish to contend with that view. I also understand that inserting the wording,
“with a view to reaching agreement”,
explicitly into the requirements for consultation in the 1972 Act is seen by the Civil Service trade unions as an important indicator of the Government’s good faith in continuing to try to find agreement through negotiation. I have, therefore, brought forward Amendment 2, which relates, like the rest of Clause 2, to any cases where changes are proposed that would reduce the value of compensation benefits, in order to address that point. It will not have the effect of restoring the union veto on reform, which Clause 1 will remove, and it will not apply, as Amendment 1 would, to consultations on the much broader range of schemes covered by Section 1 of the 1972 Act. Those extend beyond the main business of the Bill, which we have had the opportunity to discuss in detail. However, it will make it absolutely clear that the Government will now have a duty to consult with a view to reaching agreement where there is any future proposal that would have the effect of reducing the amount of compensation benefits payable to civil servants.
I say to the noble Lord, Lord McKenzie, that I was persuaded by his arguments in Grand Committee but that, for the reasons that I have explained, I still prefer the approach in the Government’s amendments. I hope that noble Lords are persuaded, as I have been, that this amendment rounds out and reinforces the statutory commitments to meaningful consultation on compensation schemes. I also hope that it succeeds in meeting the substance of the genuine concerns raised by noble Lords opposite and that, therefore, they will agree to withdraw the amendment.
Lord Brett
My Lords, I am grateful to the Minister for that explanation. A number of amendments tabled by the Opposition and indeed a number of speeches made from all sides in Committee were about the confidence that is required to carry forward what is a contentious piece of legislation for those civil servants who will be worse off financially than they would have been under the provisions in the 1972 Act and beyond. However, I take the point made by the noble Lord regarding our endeavours to engender a degree of confidence in respect of the compensation element, which is the issue in this Bill. In the circumstances and with the strength of the reassurances given, I do not feel it necessary to test the opinion of the House and I beg leave to withdraw the amendment.
Lord Wallace of Saltaire
“( ) After subsection (3C) insert—
“(3D) So far as it relates to a provision of a scheme under the said section 1 which would have the effect of reducing the amount of a compensation benefit, the duty to consult in section 1(3) of this Act is a duty to consult with a view to reaching agreement with the persons consulted.””
Lord Brett
Lord Brett
My Lords, Amendment 3 stands in my name and that of my noble friend Lord McKenzie. Clause 2, as amended in Committee, requires the Minister to lay certain information before Parliament regarding the consultation undertaking in respect of the new Civil Service Compensation Scheme prior to the scheme coming into operation, with such information to be limited to information that the Minister considers appropriate. Again, we believe that that undermines confidence, as many people feel that it might be misused to withhold from Parliament information that would be influential in the subsequent discussions and debates that might take place.
We believe that constraining the information in such a way is unnecessary and will certainly not engender the confidence in the consultation process that I think everyone involved wants to see. I do not say that such is the Government’s intention, but unfortunately the wording in its present form to some degree undermines the confidence that we seek to restore. Our amendment seeks to remedy the situation by removing the ministerial discretion to limit the information. I trust that this will not be considered controversial and that the Minister will not feel the need to resist Amendment 3. I beg to move.
Lord Wallace of Saltaire
My Lords, we had a useful and constructive discussion on this in Grand Committee and I was persuaded by the strength of the argument put forward by the noble Lord, Lord McKenzie, at that time. We took the matter back and discussed it and now wish to accept this opposition amendment.
There was a perfectly good reason for the original wording that the noble Lord now proposes should be removed. It was simply intended to clarify that there might need to be some discretion about what precisely would be included in the published report of the consultation that had been carried out with the Civil Service trade unions. For example, some details might need to be omitted on the grounds that they should be held in confidence, such as a negotiating position set out by a particular union during the consultations that it asked should be treated in confidence.
However, I agree that it is unnecessary to insist on this wording as to what constitutes information. The report will be produced by the Minister for the Civil Service and will, in any event, include only information which he considers appropriate and which does not breach confidences from the negotiations. I agree that this need not be spelt out in the Bill, so I am happy to say that, with what I hope the Opposition will accept as good grace, the Government accept the amendment.
Lord Wallace of Saltaire
Baroness Donaghy
Baroness Donaghy
My Lords, I have pleasure in moving this amendment on behalf of my noble friend Lady Turner of Camden, who, as noble Lords will know, was taken ill on Monday. She was unable to attend the House today, but I am pleased to say that she is now at home. I am a lifelong admirer of Lady Turner and I hope that I can do justice to her amendment. I have a guess that this amendment might not be received in the same way as one or two of the previous ones.
These are worrying and uncertain times for civil servants, with their job security, pensions and standard of living under attack. I am sure that many noble Lords have received letters from individual civil servants about the impact of this Bill on their lives. They entered the Civil Service with certain expectations about their job security and pensions. The impact on their morale should not be underestimated, and I am concerned that the public focus on Civil Service pay and pensions is always on the higher paid. I notice that when this was discussed on 10 November, one contribution made out that an annual salary of £40,000 to £50,000 was the norm. I know that Members of this House will realise that that is not the norm. The majority of civil servants earn very modest salaries and even more modest pensions. It is not my intention to hold up the House by quoting the figures, but I know that the Minister will be aware of them.
I acknowledge the reassurance of the noble Lord, Lord Wallace of Saltaire, that negotiations will be genuine. However, the general tenor of the Bill will not reassure civil servants. I believe that it is reasonable to reach agreement with trade unions. There is a long and honourable tradition of this in the joint Civil Service negotiating bodies and I hope that the Bill’s tenor will do nothing to undermine it. It is in that spirit that I move the amendment tabled by my noble friend Lady Turner.
Lord McKenzie of Luton
My Lords, I thank my noble friend Lady Donaghy for stepping into the breach. She did indeed do justice to our noble friend and colleague Lady Turner. Perhaps we can take this opportunity of sending our best wishes to her for a speedy recovery.
I very much agree with the thrust of the amendment, which pretty much replicates a debate that we had in Grand Committee. The difficulty, in a sense, is that the approach is predicated on Clause 1 not standing part of the Bill, so there is a potential inconsistency between these two provisions. In so far as the cap is concerned, we are very clear that it should go from the Bill in its entirety, which would negate this amendment if it were to be pressed and were successful. However, we agree that there must be consultation with every effort made to end up with a negotiated settlement. My right honourable friend in the other place, Tessa Jowell, made clear that we accept that there would be circumstances in which changes would have to be made that did not rely on agreement. We do not recognise this lightly, nor indeed does the Minister. To that extent we may differ a little on my noble friend’s amendment, but we have some other amendments constructed to achieve in large measure the same thing, which is to get rid of the caps.
Lord Maclennan of Rogart
My Lords, I thank the noble Baroness for moving the amendment and I join the noble Lord, Lord McKenzie, in sending good wishes to the noble Baroness, Lady Turner. However, I fear the amendment as drafted goes too wide, as was implicit in the remarks made by the noble Lord, Lord McKenzie. It might have the effect of reinstating the veto, which it is the purpose of this Bill in large measure to withdraw. I am glad to recognise what was said in another place by Tessa Jowell and the inconsistency of that, as I see it, with the amendment tabled.
Lord Wallace of Saltaire
My Lords, I join other noble Lords in sending our best wishes to the noble Baroness, Lady Turner of Camden. I served on a committee with her when I first became a Member of this House and have been very fond of her ever since. We look forward to having her back with us. She played a useful and constructive role in our Grand Committee discussions.
In Grand Committee we discussed the question of the balance of pay with trade unionists and I remarked at the time that we need to understand how many low-paid civil servants there are and to construct a scheme which is as fair as possible to the lower-paid. As the noble Baroness will know, one of the elements of this scheme is that all those earning under £23,000 who are offered redundancy will be treated as if they were earning £23,000. So built into the compensation scheme are limitations for the small number of civil servants who are paid £150,000 or above and much greater benefits for that large number of civil servants who earn below the medium wage. I hope that this has the sympathy of all Members of the House because it is part of what this scheme is intended to achieve.
Although this amendment seeks to amend Clause 3, to some extent it contradicts Clause 1, as the noble Lord, Lord McKenzie, pointed out. The Government are not therefore able to accept it as it is not entirely clear what its implications would be. As I have already made clear, the Government are committed to full consultation with the Civil Service trade unions over the long term. However, the recent history of changes proposed to the Civil Service Compensation Scheme both by the previous Government and by the coalition Government shows that a requirement to reach agreement can lead to stalemate where the Government of the day are unable to implement the changes that are necessary or agreed with the majority of unions.
So in practice the drafting of the amendment may not have the effect that the noble Baroness, Lady Turner of Camden, would want it to achieve. It does not just apply to changes in the compensation scheme but rather to the scheme as a whole. I am sure I do not need to tell noble Lords that the Government would not want this to be the case. Nevertheless, I appreciate the opportunity that the noble Baroness’s amendment provides to emphasise yet again our commitment to meaningful consultation and our determination on the other hand not to allow any union to have a complete veto over changes that may be proposed to the Civil Service Compensation Scheme. This is an important point which we take as seriously as the noble Baroness does and we are determined that it is the lower paid civil servants who will have the most generous benefits, as we have proposed in the current scheme. We have therefore pushed this scheme forward and are puzzled by the resistance of one of the unions to a scheme that seems to us to be better for the lower-paid than the alternatives that that union seems to prefer.
Baroness Donaghy
My Lords, I neglected to declare an interest: I am in receipt of a very small Civil Service-related pension as former chair of ACAS. I apologise to the House for not having done that. In the light of the statements made, it does not seem sensible to press the amendment to a vote. I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“(2) Where a civil service compensation scheme, or any part of that scheme, is challenged in Court, the provisions of that scheme and any settlement made under that scheme shall remain in place until the Court has made a final determination about the legality of that scheme.”
Lord McKenzie of Luton
The purpose of this amendment is to consider alternative options to resolve the problem which the caps are said to be intended to address. We remain firm in our view that the caps are not necessary, are counterproductive and would present their own series of operational complications if they were ever in effect and applied.
As a responsible Opposition we have sought to get to the heart of the issue. Following deliberations in Grand Committee, we received a helpful letter from the Minister, dated 16 November. Based on this communication we understand that the Government’s concern is that, in the event of a challenge on the legality of any new scheme, the courts will reinstate the unaffordable current scheme. In his letter, the Minister notes that once litigation has been started, that alone will put a question mark over which scheme should be regarded as being in force at any one date before all the appeals have been exhausted. The Government are concerned that, in this interim period, the default position as applied by the courts will not be the new scheme which we understand the Minister intends to lay before Parliament in January, but the more expensive current scheme. The Minister states in his letter that it should be Parliament that decides the default position—which, by implication, is to be the caps. The Minister argues that if the challenge is on human rights grounds, the courts would not have the right to set aside limits in primary legislation but would be limited to declarations of incompatibility.
The purpose of our amendment is to address this uncertainty in another and, we hope, less complicated and more effective way. The effect of the amendment would be to state quite clearly in primary legislation what would happen during a period when the scheme was undergoing a legal challenge that had not reached a conclusion. Rather than revert to the caps, the Act would stipulate that the scheme in operation would be the default position until the validity of the new scheme had been determined. Things would eventually come out in the wash when the court process had run its course. We will come to a substantive debate on the caps in the next group of amendments, and we consider that there are compelling reasons to remove the caps in their entirety. We are supported in this position by the recent report by the Joint Committee on Human Rights which cast doubt on the benefit or extent of the certainty that the Government would achieve by relying on this mechanism.
I should make it clear that we do not intend to press this to a vote, nor are we wedded to this precise wording. However, we are firmly of the view that if the Government consider that a fallback in primary legislation is necessary—we do not—it must not be the caps locking in via primary legislation. The scheme most recently introduced, albeit by order, is potentially one way of achieving this. I look forward to the Minister’s reaction to this amendment. Perhaps, when he responds, he will also cover what alternative mechanisms have been considered to address his concern. I beg to move.
The Chairman of Committees (Lord Brabazon of Tara)
I understand that there is a mistake in Amendment 6 as printed in the Marshalled List. Instead of “(2) to (ii)” it should read “(2) to (11)”.
Lord Wallace of Saltaire
My Lords, I appreciate that we will come on to caps in a later amendment, so it is a little difficult to know whether to respond in detail now or to leave it to later. We discussed this delicate set of issues quite extensively in Grand Committee, and I subsequently set out in a letter, which the noble Lord, Lord McKenzie, has mentioned and which has been placed in the House of Lords Library, that I wished to avoid being in the position that followed the High Court’s judgment of May 2010, which resulted in the February 2010 arrangement being squashed and the pre-February scheme being largely revived. I reiterate our strong intention to ensure that the proposed new scheme is legally robust and our consequent view that the scheme would ultimately survive any legal challenge.
Nevertheless, it is open to anyone to seek to challenge the scheme now or in the future, regardless of whether their intention is rational or their arguments are ultimately found to be meaningful by the courts. Such a challenge could result in the scheme being suspended until due legal process has been pursued. The Government take court rulings very seriously; we would always give the most serious consideration to court judgments and would certainly take the necessary steps to take account of any final ruling. As I previously explained, the question that arises is what the default position should be during any period of uncertainty caused by litigation. The Government continue to believe that it is right that Parliament, a democratically accountable body, should decide in an Act of Parliament what the default position should be, and that is the reason for Clause 3 as it is currently drafted.
I do, however, feel certain that a court would have views of its own about an Act of Parliament containing the approach set out in Amendment 6. This seeks, in effect, to oust the court’s power to strike down a scheme, an approach which the courts have often felt to be misconceived and on which the Government would not therefore be confident to rely. I also note that the drafting of the amendment is a little vague, which would not be helpful in conveying to a court a clear meaning of Parliament’s intent. For example, given all the opportunities for appeal or for proceedings to be taken on to the European Court, how could anyone be certain that the “final determination” has been made? Even if the intention and the process could be made sufficiently clear, I am not convinced that a court would always accept that a compensation scheme that is being challenged qualified as a scheme that should remain in place during that challenge.
I emphasise once again, as we did on several occasions in Grand Committee, that the coalition Government hope not to need to use the powers in Clause 3, nor the powers in Clause 4 that support them. What we want is a new, reformed, sustainable, affordable and fair Civil Service Compensation Scheme that can be implemented once this Bill has received Royal Assent and which will mean that we will never need to use the caps in Clause 2. If we are taken to court and therefore need to fall back to a provision that means that the necessary reductions in the Civil Service workforce can be made without disproportionate cost and perverse effects, it is more reasonable to rely on such caps than on a clause that attempts pre-emptively to bind the court.
We shall shortly have the chance to discuss Clause 3 again as drafted, along with the provisions in Clause 4 that provide for the repeal, extension or revival of Clause 3. I do not think it would be right for us to agree to an amendment that might be interpreted by some as seeking to constrain the powers of the courts. So, for the reasons that I have given, I hope that the noble Lord will withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for his explanation of why the Government are unable to accept this amendment. As I explained when I introduced it, we did not propose to test the opinion of the House, but simply to probe alternatives to the use of the caps as the default position. With respect, the Minister has said why he does not like our formulation, but he has not dealt with the point about what formulations other than the caps have been considered to create the certainty that he seeks and considers is necessary in circumstances where there is a challenge. We do not object to Parliament deciding in an Act of Parliament what that default position should be.
I take the point that the formulation of our amendment could be seen as seeking to oust the power of the courts.
Lord McKenzie of Luton
My noble friend suggests otherwise. I am reassured by that intervention, if it is in support of our amendment. Will the Minister and his team reflect further on this matter? It is difficult to conceive that the only default position would be the caps. We will come on to why the caps are so offensive to many and why we think that it is misguided to retain them. If he Minister does not like our alternative formulation, will he enter into discussion to see what alternatives there might be that do not involve the default position being those caps?
We have all had correspondence from people about their fear of the caps and what it may mean to their compensation arrangements. Being able to remove that without wishing to detract from the Government’s position of wanting some protection and a fallback is worthy of further exploration. I simply do not believe that you could have only the caps and no other formulation. I beg leave to withdraw the amendment and, in doing so, I ask the Minister to reflect further on this issue. We would be happy to have discussions with him between now and Third Reading to test the alternatives that might give him the protection he wants without those caps.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, in speaking to Amendment 7, I shall speak also to the other amendments in this group. The purpose of this amendment is abundantly clear. It would remove Clause 3. Amendments 9, 10 and 14 are consequential, as the removal of Clause 3 would obviate the necessity of sunset and sunrise clauses, and provisions relating to orders. With the deletion of Clause 3, the caps, which have been at the core of so much dissatisfaction with this Bill and with this process, would go. They remain a continuing source of anxiety and many civil servants who fear redundancy believe that their compensation will be a fraction of what they hitherto considered to be their entitlement.
The caps set out in the Bill are not only punitive—certainly in relation to the current scheme—but they are, in terms of the Government’s own position, redundant. If the caps are a blunt instrument supposedly needed as a basis for discussion and to force agreement with the trade unions, they are no longer necessary, as an agreement is no longer a precondition of introducing a changed compensation scheme. We know that the Government are actively working up the detail of a scheme, which is expected to be introduced shortly after this legislation enters into force. Before the scheme order is laid, Clause 3 will have to be repealed for the scheme to be effective.
Lord Wallace of Saltaire
My Lords, the noble Lord opposite has raised a wide range of issues about the Bill. I recognise, again, the concern that a lot of civil servants have about the caps—perhaps on the misunderstanding that these are the only thing on offer. The Government have made it clear—and I will spell this out in answering a later amendment—that it is their intention to be more generous than the minimum caps expressed in the Bill. I remind noble Lords that Clause 3(11) gives the Government power to increase the compensation scheme but not to decrease it.
As noble Lords will recognise, the Bill at various points goes rather deeply into the relationship between Parliament and the courts. To anyone who would like to sink even more deeply into that area, I can recommend the evidence being given by various law professors to the European Scrutiny Committee in another place, where the doctrine of parliamentary sovereignty and the extent to which it depends on court rulings are being discussed in absorbing but extremely lengthy detail.
Today, the Minister for the Cabinet Office wrote to the chair of the Joint Committee on Human Rights. That letter will be in the House of Lords Library by the end of today; I hope that it will also be copied to noble Lords opposite. Perhaps it would be helpful if I read out two paragraphs from it. They state:
“I welcome the Committee’s acknowledgement that measures interfering with the peaceful enjoyment of possessions are capable of being justified by a sufficiently compelling public interest provided the interference is not arbitrary, is proportionate and does not affect the very substance of the right … Your report goes on to say that in the context of economic and fiscal policy generally, the European Court of Human Rights allows a considerable degree of latitude to States in deciding what is in the public interest, and that it is reluctant to interfere with that judgment unless it is manifestly without reasonable foundation. You also note that the European Court of Human Rights has generally been deferential to arguments of fiscal necessity although it has carefully preserved a scrutiny role and made clear that even interferences which are justified by fiscal considerations must not be arbitrary or so excessive that they remove the very essence of the right. As both this Government and its predecessor concluded, the current scheme is simply unaffordable for the taxpayer and over-generous when compared with comparable schemes elsewhere”.
I reiterate the point that the caps that Clause 3 sets out on the value of benefits under the Civil Service Compensation Scheme are a fallback. I have just explained that the Government are not persuaded that there is a better way to provide it. There is broad agreement that the compensation scheme must be reformed. Your Lordships will appreciate that, after two years of negotiation, we now need to proceed with a new scheme with some urgency, not only because the economic situation requires it but because civil servants will become even more anxious if the current uncertainty remains for longer.
The retention of Clause 3 means that a failure to implement a new scheme would prevent government departments making the changes to their workforce that they need to make for the future as well as now. The clause guards against a situation in which we would have no choice but to revert to the old scheme, which is, as I have said, unaffordable, unsustainable and out of place.
I appreciate that the other amendments which are grouped with Amendment 7 are consequential on it, since, if Clause 3 were not part of the Bill, much of Clause 4 would also not be needed. None the less, I am well aware that there is also concern about the power in Clause 4 to extend or revive the caps in the Bill, particularly some of those that would be among those deleted by Amendments 9 and 10. As Members who have read their Marshalled Lists will note, I have already put down amendments, which I hope we will have the opportunity to discuss later, which seek to respond to points made in this House and the other place about some of those delegated powers.
The Government are determined to ensure that there is certainty that a new and affordable compensation scheme can be put in place. I very much hope that that is the consensus among all your Lordships. The Government remain convinced that Clause 3 and the provisions that support its variation are the appropriate and proportionate way to secure that certainty. For these reasons and all those that I have previously given, I ask the noble Lord opposite to withdraw Amendment 7. I repeat that I shall say something further on a later amendment about the way in which we hope to provide a more generous compensation scheme.
Lord McKenzie of Luton
I thank the Minister for what he said in his response, although it does not take us far enough. I look forward to what he has to say on subsequent amendments and look forward to reading a copy of the letter from the Minister for the Cabinet Office.
From what was quoted from that letter, it did not seem to deal with the particular point about the caps being arbitrary and disproportionate. The Government in their own language have talked about them as blunt instruments and have identified them as a minimum and as a starting point for negotiations. The Government themselves have, in agreement with most of the trade unions, developed a scheme which is substantially in excess of what those caps provide. The very existence of those caps, according to the JCHR—and one can see the reasoning—are a threat to the compatibility of the policies with the convention. It does not help the Government’s case at all to retain those caps. On the basis of what the Minister argues, is it not the case that it would take only one person to appeal the new scheme for the Government to consider imposing the caps? They would remain an ever present threat for all of our civil servants while that is under way. That is one of the reasons why they should go from the Bill.
I can see from the Minister’s face that I am unlikely to convince him and to cause him to change his mind immediately. What I need to do is to test the opinion of the House on this matter.
Lord McKenzie of Luton
“( ) Section 3 comes into force at the end of the period of 1 month beginning with that day.”
Lord McKenzie of Luton
Amendment 8 addresses a practical issue concerning the timing for a new scheme, the coming into force of the Bill and the operation of any caps, now that they look likely to remain. It would delay the commencement of Clause 3, which sets the caps, until a month after the Act is passed by Parliament. Indeed, we would be amenable to a later date, should the Government consider that more time is necessary; or to the more flexible option of that clause being subject to a commencement order to be laid by the Minister.
We took from our earlier discussions that the sequence of events would be as follows. On day one, the Act would enter into force. On day two, Section 3 would be repealed by order. On day three, an order outlining the new CSCS would be laid, to be brought into effect immediately. However, from our discussion with the Minister and his officials earlier this week, it appears that there may now be a noticeable gap between the entry into force of the Act and the laying of the scheme order. This may be influenced by the timing of the conclusion and outcome of trade union ballots, which we understand will be on 14 January 2011. We are concerned that this delay will mean that people will be subject to the effects of the caps before the Government get around to repealing them and making an order for the new CSCS.
This produces an intolerable situation, in which those made redundant or agreeing to voluntary separation between entry into force of the Act and the laying of the order for the new scheme would face the limits imposed by the caps. It would be possible to cater for this by inserting a delay for the coming into effect of Clause 3, hence our amendment. We have assumed a delay of one month but the Minister may wish to comment on whether this period is likely to be sufficient. As noted, an alternative way of dealing with this would be for there to be a power to bring the section into being by order so that alignment could be assured, although Clause 4(4) might need to be adjusted if this route were followed.
This practical issue is yet another reason why the caps are more trouble than they are worth and why they should be removed from the Bill, but I acknowledge the vote that we have just had. However, if removal or delayed introduction are not supported, what will happen in this interim period? Will departments be advised not to proceed with any separations until a new scheme or order is made? What advice has been given to date? When we raised this issue with the Minister in our meeting, it was clear that officials had not given total thought to the matter. What reassurance can the Minister now give to civil servants who are expecting redundancy? If Royal Assent is given before the Recess and the new scheme does not come into effect until mid-January, or even later, it will consign potentially thousands of civil servants to a pretty miserable Christmas. How will the Minister ensure that there is a level playing field in operation? Since each department is, I understand, a separate employer, it would remain within the discretion of a department to treat individual employees as it saw fit. In the absence of repealing Clause 3, this would mean that it had to impose the statutory maximum on any redundancy payments. This would be the law. What is to stop departments with hard-pressed budgets being tempted to proceed in the window where the caps drive the compensation limits? Should this happen, what commitments should be given about bringing people up to the level of the new scheme when this is introduced?
These are real practical issues. We do not raise them just to be picky over the wording of the Bill. If the caps are to take effect in the circumstances outlined, they will have a real and detrimental impact on the lives of people subject to the scheme. If the Minister is not able to meet us on the detail of the amendment, I would press him to be very clear on the record about how the Government are to handle these matters. I beg to move.
Lord Maclennan of Rogart
My Lords, I feel some sympathy with the practical inquiries that have been made. It appears unlikely that there will be no redundancies between the date of the passage of the Bill and the introduction of the new compensation scheme. It is also possible that someone may test the compatibility of the Act with the human rights convention before the new compensation scheme has been introduced. Some reassurance is needed. The Government have given indications that they do not wish there to be a significant lapse of time between the enactment of the Bill and the introduction of the new scheme—which would obviate the problem—but that is not now a certainty. In those circumstances, if the Minister is not able to answer the question today, it would be very helpful if he undertook to answer this after due consideration of the issues raised by the noble Lord, Lord McKenzie.
Lord Wallace of Saltaire
My Lords, the Opposition wish to cast me—or the Government—as Scrooge, or I believe it is the Grinch that the younger generation talk about. The idea that the Government are looking for the opportunity to dismiss huge numbers of civil servants between 23 December and 10 January is an interesting but an unlikely one—indeed, an unreal one. The Government are still looking to lay the new scheme on the second sitting day following Royal Assent. An order to move the caps would be laid in the first sitting day following Royal Assent, which would have advice issued on the operation of the cap by the Minister to the department. As we have already said, we would be minded to increase the level if no agreement has been reached. As the noble Lord has already remarked, a number of unions are already balloting their members on the scheme that has currently been offered, with the negotiation and participation of several of the unions concerned.
One Government or another have, for two years or more, been negotiating on this scheme. Further delay does not seem desirable. I offered repeated assurances about the Government’s purpose in retaining, and our intentions on using, Clause 3 in the Bill—whether there might be some circumstances in which, for whatever reason, the new scheme could not be implemented. We do not see a justification for any further delay. I am not persuaded that we should accept Amendment 8 or any other proposal to further delay any part of this package. The Government are able to carry through the implementation rapidly. Members will understand that government, as well as Parliament, tends to slow down a little over the Christmas and new year break. If these matters are not completed by the time we rise on 22 December, action will be taken very quickly when we all return on 10 January. It is not an enormous delay and I therefore do not see the necessity of the amendment. I therefore ask him to withdraw it.
Lord McKenzie of Luton
My Lords, I thank the Minister for his response but it does not altogether deal with the issue that I seek to raise in this amendment. I can see that if the new scheme proceeds very quickly in early to mid-January, there is a limited window within which my concerns might arise. However, as I understand it, there is no certainty that the date will be the middle of January; it could be later. We do not know what will happen with the trade union ballots and whether that may affect the Minister’s view. This is absolutely not about delay because it does not touch on the date for the introduction of the scheme; it is about seeking to align the time at which the caps bite with the scheme, otherwise you would have a period in which the caps drove the compensation scheme, and that is a cause for concern.
I can see that encouragement and guidance might be given but, at the end of the day, departments are their own masters in this matter and in circumstances where departments are faced with very squeezed budgets the measure could give rise to difficulties. If the scheme is laid on 10 January—I think that is what the noble Lord suggested—I accept that there is only a very narrow window. If there were to be a wider gap—I think that this is taking us on to the next amendment—one way the Government might respond would be to increase the caps under Clause 3(11). That would certainly help to ameliorate the issue but not deal with it completely. Perhaps we should await the debate on the next group of amendments, but the Minister might reflect further on this. I hope that he will be as specific as he can on the record—if not today, perhaps at Third Reading—on a not insignificant gap opening up between the date that the caps come into effect, the date that the scheme is laid and comes into effect, and the Government’s response to that. That would be helpful because, as I say, we have identified a genuine concern. I am grateful to the noble Lord, Lord Maclennan, for recognising that concern. I am happy to leave it at that for now but ask the Minister to reflect further on this to see what reassurance he can give on the record in the event of the gap widening. Subject to that, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“(a) may only be made if, at the same time, the Minister makes an order under section 3(11) of this Act to align the provisions of section 3(2), as far as practicable, with the current terms of the civil service compensation scheme; and(b)”
Lord McKenzie of Luton
My Lords, in moving Amendment 11, I shall also speak to Amendment 12. We have been unsuccessful in deleting Clause 3, although we expect it to be repealed at some stage before the new scheme is introduced. The Minister has confirmed that that is the case. Government Amendments 13 and 15, which we will support, mean that Clause 3 can be revived for a period of up to six months, provided that the revival takes place within the three-year period starting when the Act is passed.
Amendment 11 would require that any revival of Clause 3 must be accompanied with an order under Clause 3(11) uprating the caps to a level consistent with the CSCS then in operation—that is, the revised CSCS introduced by order following the coming into force of the Act. It is accepted that a precise alignment may not be possible, hence the “as far as practicable”. I cannot see that the Government should have any difficulty with this unless there is an issue about wording, which could be revisited at Third Reading. It is understood that this would be their intention in any event. I think that the Minister hinted that that was the case in our debate on the earlier amendment, but perhaps he would confirm that. There would be no downside, as the measure would align the caps only with the new scheme; there is no additional financial commitment. It would help to address the concerns raised by the JCHR and provide some comfort to civil servants who believe that, at the end of the day, the caps will determine what they get.
Amendment 12 would reduce the time during which revival can take place from three years to one year. We have heard no detailed explanation of why three years is included in the Bill, so the Minister might take this opportunity to explain that in a bit more detail. He might also take the opportunity to be a bit more specific about the precise circumstances and the process under which any revival might proceed. I beg to move.
Lord Wallace of Saltaire
My Lords, I thank the noble Lord for the care with which he has approached this entire Bill. It is a complicated Bill and a complicated scheme; all those in the previous Government and in this Government who have been involved in these negotiations will know how complex it is, particularly when issues of judicial challenge come in. I assure your Lordships, once again, that the Government intend to repeal Clause 3 when the new scheme is ready, in order to enable that scheme—as I have explained, we have agreed that it will be more generous than the minimum reasonable levels set out in the caps—to be laid before Parliament and to take effect. It is not our intention to leave the caps in force for any length of time, since we want to make progress in delivering a reformed compensation scheme for the Civil Service. However, if Clause 3 were not yet in force when the new scheme is ready, as we hope will be the case before the end of the year, we would need to do one of two things. We would either proceed with laying the scheme before Parliament, without having available for several weeks the potential fallback of Clause 3, or we would move that a new scheme be put into place at that point.
I have listened with interest to the noble Lord’s detailed arguments and I thank him for giving me notice of Amendments 11 and 12 earlier this week. I have some sympathy for the reasons behind Amendment 11, but I shall explain that there are reasons why the Government are unable to accept this particular approach. The noble Lord has made it clear that Amendment 11 is aimed at testing the intention behind the power in Clause 4 to revive the caps in Clause 3 and to ensure that they would be reviewed if there were circumstances in which they had to be revived at a later date.
Our view is that there are some significant problems with the drafting of Amendment 11, which we do not think could be resolved. First, the amendment requires the revived caps to be aligned,
“with the current terms of the civil service compensation scheme”.
On the face of it, this might mean maintaining compensation payments as closely as possible with the terms of the proposed new Civil Service Compensation Scheme, which it is intended to put in place as soon as possible after the Bill receives Royal Assent. However, if the new scheme were struck down by challenge in the courts, it seems quite possible that it would not be interpreted as “the current terms”; rather, those terms might need to be interpreted as the terms of the previous, pre-2010, scheme, which would solve nothing, as that is the scheme that both this Government and our predecessor concluded must be reformed.
Even if this were not the case, the wording,
“align ... as far as practicable, with the current terms”,
is not at all clear and might itself be subject to challenge. It would not be as simple as the Government changing the caps to the numbers of months’ service specified in the scheme—for example, replacing 15 months with 21 months. We have made it clear that such an approach would not work, as staff accrue compensation payments differently under the existing and proposed new schemes and so simply changing the number of months stated in the caps would not keep compensation payments within the same cost envelope. We are simply not confident that the words “as far as practicable” would provide sufficient flexibility to set caps that would fully take account of differences in accrual or other issues determining the likely profile of departures.
While for these reasons I have considerable difficulties with the drafting of Amendment 11, that is not the end of the matter. The Government have provided in the Bill a power at Clause 3(11) to increase by order the number of months specified in the caps. I emphasise again that this is a power to increase and not a power to decrease the caps. The powers are there for a reason, which is that, just as the noble Lord has indicated, there might well be very good reasons why the caps should be increased should they need to be imposed following a revival of the provisions in Clause 3. If the Government had no intention of ever increasing the caps, they would not have sought this power.
Lord McKenzie of Luton
My Lords, I thank the Minister for what he has put on the record, which is helpful. Obviously we shall want to read what he has said and reflect on it. I noted that there were references to “significant detriment” and “fair and affordable”, which is not overly precise language. However, I accept the thrust of what he said, which provides some comfort on the issue of revival of the caps. The noble Lord, when a little on the back foot, sought to pick away at the detail of an amendment—I suppose I did that as a Minister—but, if necessary, that could be tidied up at Third Reading. The key thing is that we have something robust on the record. I would like to reflect on this and to read Hansard just to see in the cold light of day how far this goes, but it has been helpful. There is certainly no intention to press these amendments to a vote today. I beg leave to withdraw the amendment.
Lord Wallace of Saltaire
Lord Wallace of Saltaire
In moving Amendment 13, I shall speak also to Amendment 15. These are government amendments, but I am pleased to say that, unusually, they have the support of a broader coalition with the Front Bench opposite, as I am pleased to see that the noble Lords, Lord McKenzie and Lord Brett, both have their names to these amendments on the Marshalled List. The Government responded to criticism from the Delegated Powers and Regulatory Reform Committee of the unlimited time in which the caps proposed in what is now Clause 3 could be revived by introducing a three-year time limit. The government amendments in Grand Committee were intended to respond to that concern; as I made clear then, the Government accept that there should not be an unlimited power to revive Clause 3. Such a power might then be used many years in the future, in circumstances that we could not predict today and would clearly be unjustified.
However, on reflection, I believe that the amendments that we tabled then may not have had the desired result. In Grand Committee, there was a moment when I recognised that the Government were in a rather weak position, when it was pointed out by noble Lords that, while we had put a time limit on the power to revive the caps in Clause 3, we had not at the same time introduced a power to extend the time limit by a further six months. Had we done that, that power could be used to further extend the power by another six months and another six months, and so on indefinitely. Indeed, the noble Baroness, Lady Drake, commented,
“that does not seem much of a concession”.—[Official Report, 10/11/10; col. GC 58.]
I had to admit that she was probably right. I trust that your Lordships recognise that, when it is clear that the effect of the powers in a Bill do not achieve what the Government had intended to do, we will try to put it right. That is what we are doing in this amendment today.
Accordingly, we have decided that, for clarity, we should dispense completely with any power to extend further beyond three years the time limit on the power to revive the caps in Clause 3. That is what these amendments will achieve. On that basis, I beg to move.
Lord Brett
My Lords, my noble friend Lord McKenzie and I have indeed put our names to these amendments. I will avoid wincing a second time at the use of the word “coalition”. It represents, I believe, not so much a coalition but, because we see repentance of sinners, more a congregation. Suffice it to say that I think we have unanimity on this, and I also am moved to support the amendment.
Lord Wallace of Saltaire
Public Bodies Bill [HL]
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Greaves
Lord Greaves
My Lords, we resume our rapid canter through the Committee stage of the Bill. Amendment 19 refers to the,
“Agricultural dwelling-house advisory committees”,
in England and seeks to remove them from Schedule 1. I am not arguing that this is exactly what we should do. This is a probing amendment to establish who will carry out the important role of these committees in the relatively small number of cases involving agricultural tenants of tied housing, in which some 30 per cent of agricultural workers live. They are guaranteed security of tenure in their tied housing for fairly obvious reasons: their housing is tied to their job and their job is tied to their housing. That is a relatively unusual situation nowadays; it used to be a lot more common.
These committees were established under the Agricultural Wages Act 1948 and are now established under the Rent (Agriculture) Act 1976. They are convened locally and hear about 40 to 50 cases each year. Membership is drawn from membership panels that are maintained by the Defra offices in Crewe and Bristol and the meetings are set up on an ad hoc basis according to the business to be conducted. They are not terribly high-powered bodies in the sense of always being in session and always having a lot of business. They have a relatively small amount of business, but it is important. They consist of one member who represents agricultural worker interests and is nominated by the trade union Unite; one member who represents agricultural employer interests and is nominated by the National Farmers’ Union; and one independent member who acts as chairman and is appointed from a panel of persons approved by the Secretary of State for Environment, Food and Rural Affairs.
Agricultural workers living in tied cottages generally have security of tenure, but a farmer may apply to the local housing authority to have a protected worker rehoused if he or she needs the cottage for a replacement agricultural worker in the interests of efficient agriculture. In such circumstances the local housing authority, the farmer or the cottage occupier can ask an ADHAC to advise on the applicant’s case to determine whether it is in the interests of efficient agriculture and urgent. In other words, although the committee can be asked to intervene by any of the parties to the dispute and to the attempt to evict the farm worker from his tied accommodation—in other words, the farm worker or the employer—in practice, the usefulness of these committees is to provide advice to the local housing authority, or the local council, on whether it is a reasonable request.
That is the nub of it. I am not arguing that ADHACs should continue in their present form. It may well be that the number of cases that are dealt with each year is relatively small, and that they could be dealt with in some other way. Some other body could be charged with advising the housing authority, and in this respect I am aware of the position when an application is made for planning permission for a house or cottage to be built in an area of the countryside where it would otherwise not be allowed because of planning rules on building new dwellings in open countryside, on greenbelts, or whatever. What tends to happen is that the planning authority, which is part of a unitary local authority or, in two-tier areas, the district, seeks advice on whether the accommodation is sensibly required from the appropriate department of the local authority responsible for farming and agriculture in the area. In two-tier areas that will be the county council, and in single-tier areas it is another department of the same authority.
There is a duty to advise a housing authority on whether it is reasonable to require the local authority to provide accommodation for someone who is otherwise in tied accommodation, so putting that duty on the relevant department of the local authority—whether it is another department of a unitary or the county council in a two-tier area—is a sensible way forward. It could provide the same safeguards and advice, which the housing authority will need anyway, within the wish of the Government to abolish this particular board organisation. There are sensible ways forward, but they require a bit of care and application by the Government not simply to abolish the agricultural dwelling house advisory committees without having first made appropriate arrangements for other bodies to do what they do because it is a very useful and necessary function. You only have to think of the situation in which you are in tied accommodation because you have been a worker on a particular farm, but you have retired, the farmer needs your house or cottage, you need to be rehoused, and the housing authority needs to have specialist advice as to whether it is a reasonable application to take precedence over all other applications for housing in that area. I hope that I can get an answer from the Government that is sympathetic to what I am putting forward. On that basis, I beg to move.
Lord Clark of Windermere
My Lords, I follow in the tone of the noble Lord, Lord Greaves, who moved this amendment in a very moderate way. He said “necessary” provision. The role of the agricultural dwelling house advisory committees is very limited and focused. Nevertheless, it is critical to the individuals affected. Indeed, over the years the committees have helped greatly to facilitate on the one hand the evils of tied housing and on the other hand the needs of the farmer to get access to his tied house for his necessary employees. So there is a real difficulty there. We are talking about agricultural workers, but the tied cottage also applies to other related employees, such as gamekeepers and gardeners. I am conscious that tied-housing problems remain in urban areas, but the problem is probably not as great in those areas because there is more alternative accommodation in the form of affordable housing, council housing, and so on. In many rural areas the provision of affordable housing is quite low. So the demand is there. This may not be the vehicle to meet the demand, but we need to be reassured that the Government have thought this through and are certain that the new system that they need to put in place will meet the necessary requirement to which the noble Lord, Lord Greaves, referred.
I well remember the Labour Government’s 1976 Act at that time, how it seemed to be a major step forward and how it increased the work of the agricultural dwelling house advisory committees. Over the years the numbers have clearly fallen and the system seems to have worked, but the housing problem in rural areas is deteriorating. Increasingly, there is a demand for people to live in rural areas, a demand for second homes, and a demand for holiday homes as well. Often these are not only the modest cottages that one was used to in the past but increasingly ex-council houses as well. I see the noble Lord, Lord Henley, is here. He is aware that in parts of Cumbria many of these council houses are now used as holiday homes, so the reservoir of affordable housing is decreasing.
All Governments have recognised, in a different sense, that servicemen leaving the services should have priority in affordable housing. The decrease in the number of available houses for rent in rural areas plus the increasing demand for the remaining houses lead us to ask the Government whether they have thought this through. I can see their feeling, need and desire to get rid of the statutory bodies and understand it completely, but we must be convinced that the alternatives of the big society and localism, which the Government seem to espouse so much, will apply. I see nothing in the Bill or in what I have read to convince me that this has been thought through, but I remain to be convinced by the Minister later this afternoon.
Lord Newton of Braintree
My Lords, I rather rashly intervene to express my general support for the thrust of the amendment moved by the noble Lord, Lord Greaves. I declare an indirect interest as my wife is a member of the planning authority in the area in which we live—Braintree in Essex—and I know that some of these problems occasionally land up with that committee. I am not an expert, but I think what the noble Lord, Lord Greaves, said about the need for some kind of expert advice in areas where the issue is whether there is an agricultural need is important. I hope that my noble friends on the Front Bench can meet it.
Lord Whitty
My Lords, I agree with the general thrust of the approach by the noble Lord, Lord Greaves. I am certainly not arguing for the status quo, although this body has helped to solve a number of acute cases for individual retired farm workers, farmers who desperately need the accommodation to attract further labour and local authorities faced with the housing crunch to which my noble friend Lord Clark referred, so it has been a useful institution. The demand is diminishing, but it is important that we know what will replace this body.
I will make an additional point to the Minister because it goes to the heart of the way in which we are dealing with the Bill. In Schedule 1—and the same will apply to some extent to other schedules—each body has a particular situation to deal with and the Government appear to envisage different consequences of the abolition of those bodies. It is important that this House knows what is in the Government’s mind to replace what has hitherto been an important, if diminishing, function. It is important that we have this in writing, not simply as a reply in the debate. Some of us argued for a Select Committee procedure that would have allowed that to happen away from the Floor of the House, if necessary, and on a different basis of consideration. In this, as in so many other areas, we need to know the total picture. I make a plea to the noble Lords, Lord Henley and Lord Taylor, that as we go through the stages of this Bill, and it looks as though it will be quite a lengthy process, they provide us with that kind of information so that we can have a more rational debate. I make the point on this institution because it is one about which I do not disagree with the Government, but we need to know in all cases what is intended to replace these bodies.
The Earl of Caithness
My Lords, like the noble Lord, Lord Clark of Windermere, I remember the 1976 Bill coming through Parliament. I was on the Benches that he is sitting on now. I thought it was a bad Bill then, and it has remained a bad Act, in particular with regard to ADHACs. The noble Lord, Lord Greaves, said that this body is necessary. If it had been necessary, it would have been compulsory to have consulted an ADHAC. As it is, it is a purely voluntary agreement that an ADHAC can be used for consultation with the housing authority if necessary. The vast majority of cases are dealt with directly with the local housing association, so “necessary” was not the right word to use in this instance.
The noble Lord, Lord Greaves, said that there are 40 to 50 cases a year. I question that. My information is that the number is almost in single figures now. Sixteen ADHACs have some 10 cases a year in total. That means that half of them are not doing anything at all. It is high time we got rid of them, and I thoroughly support my noble friend in this. Could I just ask him whether, when we come to the follow-up legislation, he will propose to get rid of all 16 ADHACs at once, rather than one by one?
Baroness Quin
My Lords, I support the noble Lord, Lord Greaves, in having tabled this amendment, which allowed this issue to be aired through this short debate. I know that he had some support from my noble friends who added their names to his amendment, which is symptomatic of a wider concern than if the amendment had simply been tabled in his own name. It shows concern that the issues that the agricultural dwelling house advisory committees have been dealing with are still important to address for the future in whatever way the Government are envisaging. We will be very interested to hear how the Minister responds to this debate.
It seems to me that the scale of the issue is quite important, despite what the noble Earl, Lord Caithness, has just said. As I understand it, 30 per cent of agricultural workers live in tied accommodation. Given that there are some 150,000 agricultural workers, we are talking about a considerable number of people who could avail themselves of this service. Obviously, there is some dispute about the figures; I am also aware of the figures cited by my noble friend showing that the advisory committees deal with about 40 to 50 cases each year. The noble Earl has given us different figures. Perhaps the Minister, in his reply, might like to give us the official Defra figures for this process.
Even if the figures are lower than I and my noble friends believe, that does not necessarily mean that all the committees should disappear. There might therefore be an argument for rationalising the structure. I do not know if this is something to which the Government have given consideration. If there are cases—sensitive cases, because they concern people’s accommodation and whether they are going to be able to stay in their homes or be forced to move—being dealt with properly by the committees in a sensitive and efficient way, then it would be very unwise to simply disband the committees without having some very clear assurance as to how these matters will be dealt with in future. Perhaps the Minister can give us some figures showing whether the tempo of consultations and referrals to the committees has increased or decreased in recent years. The noble Lord, Lord Greaves, was quite right to stress, as the major point of his argument, the importance of how these issues are going to be dealt with in future and whether there will be people who know of the special circumstances of agriculture and the agricultural industry who will be able to deal with them.
Consultation is also important. I see that the noble Lord, Lord Taylor of Holbeach, is in his place. Much to the House’s pleasure, he gave it some assurances about the consultation process to which he was committed while taking forward the provisions in this Bill. It would therefore be interesting to know what consultation has taken place so far on this issue with those likely to be affected and those who are members of the committees at the moment, and to know whether they judge their work likely to decrease or increase. After all, there are quite a number of different and even specialised aspects to agricultural tenancies; for example, the different types of tenancy—protected, statutory or assured. We need to know that there will be people who understand how the system works and will be able to operate it in future. The point has also been made to me that when farm workers come up for retirement but want to stay in their homes, that can be a difficult time. Therefore, we are entitled to ask who will represent and support farmers at that stage of their lives and in those circumstances.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)
My Lords, in moving this amendment, my noble friend Lord Greaves said that this was his first amendment during what he described as a rapid canter through Committee on this Bill. I am not much of an equestrian, but “rapid” and “canter” are not the words that I would necessarily give to it at this stage. But I accept that my noble friend was merely putting forward a probing amendment. Therefore, I will try to set out why we think it is right that we are abolishing these committees.
As many noble Lords have said, ADHACs were set up under the Rent (Agriculture) Act 1976. The noble Lord, Lord Clark of Windermere, remembers the Act, as does my noble friend Lord Caithness. Sadly, I was not in the House, so I cannot go back quite that far. But I listened to both of them and they had rather different views. My noble friend made clear that ADHACs were set up to have an advisory role—I was very grateful he stressed that—in the rehousing of agricultural workers. To get on to the whole problem of accommodation in rural areas is stretching the point a bit too far. We are talking only about ADHACs and the advisory role that they had.
The purpose of the Act was to give those who lived in tied houses, such as agricultural workers, former workers and their successors, security of tenure and protection from eviction by their employer. Under the Act, a landlord can make an application to a local housing authority to rehouse a protected tenant on the grounds that the property is required for a new worker; that he is unable to provide suitable alternative accommodation for the existing tenant; and that the housing authority ought, in the interests of efficient agriculture, to provide suitable alternative accommodation. The landlord, the tenant or the local authority may refer such applications to the local ADHAC for advice on the agricultural need and the urgency of the application. However, there is no statutory requirement to consult an ADHAC. Again, I am grateful to my noble friend for stressing that point. Where advice is sought, the housing authority is currently obliged to take that advice into account when considering its housing priorities. But it is only a matter for the housing authority to take that advice into account.
Since the Rent (Agriculture) Act came into force, there have been significant changes to housing legislation, which have enabled farmers to let cottages to farm workers using an assured shorthold tenancy. As a result of these changes and changing employment practices within the farming industry, the use of ADHACs has fallen from what used to be something of the order of 500 cases per year in the 1980s to something fewer than 10 this year. To assist the noble Baroness with those figures, I can tell her that in 2007 there were nine cases, in 2008 there was a dramatic increase to 12, and in 2009 there were a further 12. So far we have had eight this year. As the noble Lord, Lord Whitty, put it, demand for this service is diminishing—and it is diminishing pretty fast.
In the light of this, the Government consider that, as the functions of the ADHACs are largely defunct, it is difficult to justify the retention of 17 different committees. Again, my noble friend referred to 16 different committees; I can assure him that there are 17 different committees covering England and Wales, with the associated administrative burden of recruitment and training of members. I appreciate that the cost is relatively low. The noble Baroness, Lady Quin, asked whether it was just £13,000. That is the figure I have for the direct administrative costs, but there will be other costs to the department in terms of the secretariat needed for 17 different committees in England and Wales.
Furthermore, it should be made clear that the function can be, and indeed is, carried out equally effectively by the local housing authorities on their own account, as my noble friend Lord Greaves seems to suggest. Many local authorities already take decisions on rehousing without the advice of an ADHAC. I can assure the Committee that the abolition of ADHACs will not remove any of the protection afforded to agricultural workers and their successors in tied housing. The only change will be when a local authority receives an application for rehousing a worker in a tied cottage; the local authority will need to determine the agricultural need and urgency of the application on its own account, as it does now in the vast majority of cases. Again, I stress, we have had eight uses of ADHACs in this year. I imagine, as we are already into December, that figure is unlikely to increase by that much.
There is no intention to change the provisions in the 1976 Act which give security of tenure to protected tenants; tenants will not be disadvantaged by the proposed abolition of ADHACs.
The noble Baroness, Lady Quin, asked about devolved Administrations—obviously in this case we are talking only about Wales, because this part covers only Wales. Yes, we will consult the Welsh Administration in the appropriate manner.
Finally, my noble friend Lord Caithness asked whether—or seemed to imply—we would need 17 different orders to abolish these. My understanding is that the power is such that there will be only one. I think that we—the noble Baroness as the opposition spokesman, and I as the Minister dealing with this in the Moses Room—will have to deal with only one rather than 17 different ones; I cannot remember whether the procedure is affirmative or negative. I hope with those reassurances my noble friend will feel able to withdraw his amendment.
Lord Greaves
My Lords, I am grateful to everybody for the constructive and consensual way in which the amendment has been discussed. The question of the number of individual cases per year has been raised. I am sorry if the figures I cited were rather larger than is actually the case. The figures came from what I took to be an official authoritative source on the internet, but perhaps that is a lesson for us all. I will go back and check that source, but that is clearly what it said.
A question of general interest was raised. I deliberately did not call the bodies “quangos”, for the very reasons that noble Lords mentioned; that is, that their scale and cost are small. In many ways, they strike me more as part of the big society than as quangos, but perhaps I should not pursue that very far. Perhaps there are parts of the big society which have performed a useful function in the past and are now redundant.
The Minister responded to my use of the phrase “rapid canter”. It is always a little dangerous to try to use irony in your Lordships' House, not least because Hansard has not yet got round to the use of smileys, which, as many of us know to our cost, are necessary if you are trying to say something ironic because a lot of people will otherwise read it absolutely flatly. I therefore make it quite clear that I was being absolutely ironic in talking about taking a rapid canter through the Bill, but—who knows?—it may be a rapid canter by the time we have finished.
I am very grateful for the Minister’s assurances that the legal protection for people who have tied tenancies will not change in any way. On that basis, and on the basis that I think that we have had the kind of discussion that I would have hoped for to make the position absolutely clear, I beg leave to withdraw the amendment.
Lord Greaves
Lord Greaves
My Lords, this is a much more substantive and important amendment—not that the last one was not important, but this one is much more so. I shall speak also to Amendment 21, which is grouped with and linked to it. Amendment 20 is about the agricultural wages board, whose purpose is to set the scale of agricultural minimum wages and related minimum terms and conditions of employment. It is an independent statutory body established by the Agricultural Wages Act 1948, and it goes back in its lineage as far as 1924, when there were far more agricultural labourers than there are now.
The question posed by the amendment is: are the functions of the AWB still needed, in whole or in part; and if they are still needed, in some way at least, is the best way to carry them out through the continued existence of the AWB or in some other way? There has been pressure for its abolition. The NFU has called for it, although not all farmers who employ agricultural workers would welcome that because it provides them with a clear framework of what they should be paying without having to negotiate. Its abolition was promised in the Conservative manifesto at the last election. It was not in the Liberal Democrat manifesto and was not in the coalition agreement. It is opposed by the relevant trade union, Unite. That information sets the amendment in its political context, but, as we know, the manifestos on which the last election were fought are probably redundant following the formation of the new coalition Government.
Liberal Democrat spokespersons, including my honourable friend Andrew George in the House of Commons, have expressed concern at the abolition and the potential removal of existing protections. The proposal to abolish the body was announced by the Secretary of State, Caroline Spelman, on 22 July, but it was done so, to the best of my knowledge, without any prior consultation. Any consultation would still have to take place.
The agricultural wages board consists of 21 people, comprising eight representatives of the employers, nominated by the NFU; eight representatives of the workers, nominated by Unite; and five independent members, including the chairman, appointed by the Secretary of State and the Welsh Assembly Government. I shall not speak much about the regional agricultural wages committees, which are the subject of the second amendment in the group, but they are linked to the AWB and basically set up by the same legislation.
Baroness Prosser
My Lords, I support the amendment put forward by the noble Lord, Lord Greaves. I also declare an interest as a member and previous deputy general-secretary of what is now the union Unite, which, as has been said, is the union that organises agricultural workers.
The noble Lord, Lord Greaves, said in moving this amendment that the agricultural wages council has been with us for a very long time. It came from the original trade board which was introduced at the very beginning of the previous century. When the Bill setting up that board and a number of other councils covering other areas of industry was introduced, it was supported by Members of Parliament from across all of the Benches. The thinking at the time—and this is why I and, I think, the union feel so strongly about this—was to encourage support for the wages councils, particularly the agricultural wages council, and the reasons behind that have not changed. The thinking was that there are certain areas of industry where it is enormously difficult to organise the workforce or protect it in a day-to-day way.
As noble Lords will know, aside from the agricultural wages boards, all other agricultural wages councils were abolished back in the 1980s. The agricultural wages council itself was retained because there was continuing recognition that this is a very difficult area in which to organise the workforce, and also because particular aspects of it need to be protected. The most particular aspect is that in many circumstances the relationship between the worker and the employer is very personal. The relationship often involves just one or two employees and one employer. It is a very close relationship where day-to-day friendship and trust has to be established. How, in those circumstances, can the employee raise for himself or herself the sorts of questions that need to be answered if that employee is to feel secure in his or her employment and endeavour to improve his or her circumstances?
The noble Lord, Lord Greaves, has already talked about the various grades available to agricultural workers. Moving along those grades depends on having had access to certain kinds of upskilling and training. How can a worker—knowing, quite often, that circumstances may be quite tricky on the farm; that they may be struggling in economic terms, or in terms of access to manpower—raise his or her own concerns and promote his or her own interests? It is very difficult. That is precisely why the agricultural wages board was retained when the other wages councils were abolished. I can see no reason why we should look at this now and say that things are any different.
I accept that life moves on, that nothing should be set in stone, that we have to look at arrangements that have been with us for many years and consider whether those arrangements are still appropriate. But nothing has changed in the day-to-day experience of those workers that would allow us to say that their protections should be lessened, loosened or removed in any way. The national minimum wage does not compensate and would not cover the circumstance which the agricultural wages council rules cover in terms of protecting that workforce.
With those few words, I support entirely the amendment put forward by the noble Lord, Lord Greaves.
The Duke of Montrose
My Lords, may I add a few words as an agricultural employer with a couple of agricultural workers? I must say that the two workers I employ are never loath to come and argue with me about what their wages should be. On the question of the agricultural wages board and the rate set, I am speaking, of course—it may be a difficult adjustment—of the Scottish Agricultural Wages Board and Scottish agricultural wages rates, with which I am familiar. I think one can almost say that practically no workers are paid the minimum that is laid down. It is used as a guide on which increments are added. That is true for full-time workers.
One area where the wages board is useful in our area is in dealing with younger workers, although, of course, everything is now tied back to the minimum wage. The minimum wage can serve as a guideline on what increases are useful or necessary in any given year. The other area—I do not know whether it exists so much in the English agricultural wages board—are the wonders, some of which no longer exist, which were called perks. What was the value of perks such as milk and potatoes? A wonder that still exists up in the north is that the provision of a house with hot and cold running water allows a deduction of £1 a week from the agricultural minimum wage.
Will my noble friend the Minister say whether these areas might need some guidance or a body to direct them? The final one, which is of interest in my area, is a shepherd’s provision of dogs, which has a special rate for it.
Lord Whitty
My Lords, I support the noble Lord, Lord Greaves, in his argument and agree with pretty much everything that he said. I caution the coalition Ministers that they will frequently find that propositions that have been put to successive Governments and their Ministers get dusted off and re-presented to new Ministers. Sometimes—I do not wish to impugn the noble Lord—Ministers are credulous enough to accept them, even though their predecessors have rightly looked at and rejected them. To my knowledge, the proposition of abolishing the agricultural wages board has continued for the past 40 years. It has come less from officials in MAFF or Defra than from pressure from the dead hand of the Treasury and the free labour marketeers in what is now BIS. That pressure is evident here. Certainly that pressure was put on Mrs Thatcher’s Ministers, who rightly resisted it. It was put on John Major’s Ministers, who also rightly resisted it. To my certain knowledge, every Secretary of State and junior Minister for Agriculture in the previous Administration was under such pressure and we rightly rejected it.
The noble Lord will say that things have changed. He has some justification because two things have changed slightly. First, for most of that period most farmers were in favour of maintaining the wages board. That is no longer entirely true. The upper echelons of the NFU have started voting with the workers rather than the farmers, who have taken a rather more jaundiced view of the wages board, even though it has meant a fairly balanced result for both sides in the long run. Many others, who are not necessarily in the top echelons of the NFU, are still favourably inclined towards the wages board because it saves small farmers a lot of work in trying to establish the appropriate rate for a skill and all the other terms and conditions. They would otherwise have to go through all that themselves. Indeed, some farmers’ organisations are still in favour of the wages board. The Famers’ Union of Wales, for example, is in favour of retaining it and opposes this proposition, as do the Welsh Government. We are talking about a body that covers England and Wales; there are devolution issues here. As far as I am aware, the proposition in Scotland is entirely separate. The noble Duke, the Duke of Montrose, who I am sure is one of the more benevolent employers north of the border, will find that there are Scottish farmers who still wish to retain the process. It is not true to say that all farmers, as employers, are now opposed to the continuation of the board.
Secondly, although we now have the national minimum wage, it deals only with the absolute minimum, as my noble friend Lady Prosser pointed out. There are differences of only a few pence in that area. The whole structure of skill rates and different time rates and the whole issue of non-wage benefits, which were dealt with by the wages board, are not dealt with by having a minimum wage. The whole grading structure is in peril if this board is abolished.
As the noble Lord, Lord Greaves, said, that is not to argue that the present structure could not be hugely simplified. Indeed, the previous Government looked at bringing forward a legislative reform order that would have reduced the number of committees, simplified the process and, to some degree, made the process for the agricultural minimum wage equivalent to that for the minimum wage. That was a sensible proposal, which would have had to follow the procedure of the Regulatory Reform Act. At the time, some noble Lords were concerned that the Act was moving towards the Henry VIII end of the spectrum. However, compared to this Bill, it was an absolute doddle for those who wished to preserve parliamentary privilege. It is probably more like a Henry III Bill in that Henry III had to compromise with Parliament. I believe that on some of these issues the Government will have to compromise with Parliament. The process that is being proposed in the Bill, as I have said several times, needs to be addressed.
The agricultural labour force of more than 150,000 in England and Wales—and others who use the wages board as an analogy to avoid engaging in separate bargaining with their employees or their unions—is still an important feature. I hope that the noble Lord can answer the question asked by the noble Lord, Lord Greaves: what will replace the board? Is there any role for the Low Pay Commission to look at aspects of this—at the particular rates and situations that apply to agriculture? Is there really any prospect of collective bargaining if it is not underwritten by the law? Under the legislative reform order that we contemplated, it would have been possible to have moved the agricultural wages board to a more bilateral structure but still with the legal underwriting. That would probably have been a sensible move. I was certainly in favour of it. We could have moved towards it.
If we leave this entirely to collective bargaining, as applies in other sectors, there is, as my noble friend Lady Prosser indicated, the difficulty of organising in this area. I do not have to declare an interest since I am not a member of Unite, although I have some family connections to it. These days I am a resident of Dorset, which is still a major focus of agricultural workers. There, the union’s ability to organise is a little better than it was at the time of the Tolpuddle martyrs, but it is not easy. In so far as the wages and conditions of agricultural workers in Dorset have dramatically improved since those days, they owe a lot to the 100-year operation of the agricultural wages board, rather than the benevolence of employers or the state. It is unlikely that it will be easy to move to a normal situation of collective bargaining in this area.
Perhaps this is not so much a West Country issue. The people who are pressing most for this are horticultural employers, who have a very odd workforce structure. The work is hugely seasonal for obvious reasons. Much of the workforce is made up of migrants, many of whom are very vulnerable. Employers tend to try to pay the minimum rate, if not less. In the horticultural sector, a lot of the seasonal workers, many of whom have skills and qualifications in their own countries, will be pushed down to the minimum rate. The only legally binding rate will be the minimum wage. That, I can see, is desirable for the more ruthless employers in the horticultural sector. However, it is not the equivalent of a situation where you are a permanent employee in a major area of agriculture.
The other question is: who will now enforce the minimum wage in agriculture? It is difficult if we are talking about farms with two or three workers or farms where there are many seasonal workers who move on after a couple of weeks. The agricultural wages board had a rather minimal inspectorate attached to it, but who will now do its work? The Revenue imposes and enforces the minimum wage, but it is unlikely to tramp up and down every farm to find out how much every worker is paid. Enforcement is also an issue.
The question to those of us who oppose the dropping of the wages board is: why is agriculture so different from other areas that it requires a continuing minimum standing wage? The fact is that every other wages board was abolished. The wages councils were abolished in the 1980s and 1990s and the average wage in those sectors dropped significantly. If this is a blatant wage-cutting exercise, we should be told. If, however, it is more that we want to develop a skilled, effective and competitive workforce in agriculture, people must recognise that there are several difficulties in this sector beyond those that have already been referred to.
I shall mention some in particular. My noble friend Lady Prosser referred to the rather close relationship that agricultural workers inevitably have with their farmer employer, particularly on small and medium-sized farms where there are only two or three employees. That is fine while it is good. As soon as it breaks down, however, the power relationship between the employer and the individual farm worker is incredibly imbalanced and the worker is incredibly isolated—literally, in geographical terms—because there are no workmates in the same situation.
The other dimension is that the farmer himself or herself is under severe pressure, to a degree that many other small businesses are not. The noble Lord, Lord Greaves, made reference to the role of the food chain in pressuring farm costs, particularly in relation to the supermarkets. I am glad that this Government have decided that they will take up with slightly more enthusiasm than the last Government the proposition for an ombudsman who will look at the contractual relationships between the farming industry and other small providers of food and the grocery chain. I very much commend them for that. However, this is moving in the opposite direction. Within a week or two of the legally binding minimum wages disappearing from horticulture and agriculture, the buyer from the supermarkets will say, “You now do not need to pay the wages that you have previously paid. You can lower your costs and your price to us and provide a significantly lower rate”. The cost benefit, therefore, of cutting wages does not go to the farmer. The employees will lose their living standards and the profit from the whole process will go up the chain to the big processors and supermarkets. If that is what the Government want, it is not in the interests of the agricultural sector. Indeed, it is a downward spiral in the agricultural sector and something that they have recognised needs to be counted in other respects.
Another nefarious dimension of the labour conditions in the agricultural labour market relates to the seasonal and migrant workers operating in many parts of agriculture but particularly in horticulture and in the larger-scale vegetable sector. I was grateful to hear on Second Reading the noble and learned Baroness, Lady Butler-Sloss, ask why the Gangmasters Licensing Authority was in this Bill at all. Speaking as the ex-Minister who brought in that piece of legislation, I am glad that she and others have recognised what a successful operation that is beginning to be. However, it is an uphill struggle because, in this sector, the conditions of the workers are open to the widest exploitation. The Gangmasters Licensing Authority has to check on a number of things. It clearly has to check on health and safety at work and in housing. It checks on the employment and migration status, tax and national insurance of the workers—and rightly so. The abuses in all those areas tend to be cumulative.
Another area—one that is absolutely essential in triggering the Gangmasters Licensing Authority’s interest—is whether the Agricultural Wages Board provisions are being followed. If the legal basis for that disappears entirely, the Gangmasters Licensing Authority’s ability to check whether appropriate wages and conditions are being paid by employers—many of whom will push their situation to the limits if they possibly can—is removed and a whole section of agricultural workers will lose one of their most important protections. These are just some reasons why agriculture, particularly the seasonal dimension of agriculture, drives us to think that a legal minimum ought to be retained.
I seriously ask the Government to reconsider this. I am not against the simplification of the wages board. I am not actually against the abolition of the wages committees. However, a basic minimum level of remuneration in agriculture would potentially avoid pretty substantial abuses, which I am sure that all parties in this House wish to avoid. I ask the Government to think again.
The Earl of Caithness
My Lords, I agree with the noble Lord, Lord Whitty, in so far as the Agricultural Wages Board has done a good job in the past, when it was badly needed. However, I cannot follow him in the rest of his arguments, except possibly his last statement, when he said that a legal minimum wage must be retained. Well, it will be retained, because there is the national minimum wage as the base floor. That solves the noble Lord’s last point.
Besides the national minimum wage, there are the working time directives and regulations that have emanated from and will continue to come out of Europe, as we are increasingly bound in our employment laws by Europe. I firmly argue that the days of the Agricultural Wages Board are otiose. It can all but be done by the farmers with the current legislation in place, which gives the workers the security that they certainly did not have when this came in 1948.
Nobody has really mentioned Amendment 21 on the agricultural wages committees. Nobody has sought to defend those—not even the noble Lord, Lord Whitty. It is worth reminding the Committee of the hard work that these committees do. The only thing left to the agricultural wages committee is to appoint the members of the ADHACs. As we discussed in the last amendment, there are only eight applications for ADHACs, while there are 17 ADHACs. So a lot of people are wasting a huge amount of time and money. Perhaps it is the best thing that we get rid of them soon.
Lord Clark of Windermere
I support the amendment by the noble Lord, Lord Greaves, and I do so in the same tone and with the same approach. The real point of these amendments at this stage is to try to ascertain what the Government’s real intentions are. What do they have in mind for the agricultural wages in the years ahead? This House has a high reputation because it is comprised of people who represent, often, the top of their professions—eminent people. As I look around and look across the House, I see so many people who know a great deal about this subject from the other side of the fence from the one that I occupy. I see a number of landowners from my native county of Cumbria. My only locus in speaking for this is that I started my working life under the Agricultural Wages Board and still remember when we used to glean The Westmorland Gazette—I think it was in October—for the advert that would tell us what our wage would be for the following year.
That was 50 years ago. I accept that times have moved on. However, as we heard from my noble friends Lady Prosser and Lord Whitty, there may still be a case for that certainty. My noble friend Lady Prosser made the point very clearly and graphically on the relationship between the small teams—often a farmer and his employee—that work on so many farms. It is difficult because they do work for a team; it is embarrassing and awkward for both sides. That has been the substance that has kept the Agricultural Wages Board going for the 62 years that it has been in existence. There may be a case for that certainty to continue.
The noble Lord, Lord Greaves, quite rightly made the point that 154,000 individuals are covered by the Agricultural Wages Board. However, it is much more significant than that, because the Agricultural Wages Board provides the yardstick and benchmark for many other workers in rural areas. While they might not be encompassed by the Agricultural Wages Board, they are influenced, and their wages determined indirectly by it. Again, we are talking about a great many people.
In the spirit of the noble Lord, Lord Greaves, I must say that one thing that has disappointed me most about the Agricultural Wages Board in committee issues has been the lack of consultation. I was amazed to read a letter from Mr Jim Paice, who I know well and respect a great deal. He is a thoughtful and considerate man. In a letter dated 8 September 2010, which was circulated to the members of the Cumbria, Northumbria and Tyne and Wear AWC, he responds to comments about a lack of consultation. The letter states that,
“we do not consider it would be productive to have a consultation on the proposals, although individuals will be welcome to continue to submit their views to Defra”.
That is not written in the same spirit in which Ministers have advanced their case in this House. I ask them to think a little more about this. With more consultation we are more likely to get a better result and a better conclusion. I hope that that negativity will disappear. As I say, I am very surprised that Mr Jim Paice wrote such a letter.
I stress the other main point that has been raised—that the Government argue that there is no longer a need for an Agricultural Wages Board as agricultural workers are protected by the national minimum wage. Of course they are; every worker in this country should be protected by the national minimum wage. However, as has been said repeatedly, that applies only to the basic agricultural wage, which currently is one penny an hour greater than the national minimum wage, so the amount is not great. However, modern agriculture is a highly technical industry involving a great deal of skill and often a great deal of expertise. That is recognised by the agricultural industry and is certainly recognised by the Agricultural Wages Board. While it is true that the national minimum wage would protect a worker on the basic rate, what about the five higher grades? What protection would people on those grades have? Mr Jim Paice states in the letter that,
“on the abolition of AWB, the six different grades of worker will not be retained, as agricultural workers will be covered by the national minimum wage rate, as for all other workers. It will be for individual workers and employers to agree different rates while taking into account experience and qualifications alongside the needs of the business and individual circumstances. Agricultural workers will continue to be protected in the absence of the AWB by bringing them into the framework of the National Minimum Wage”.
Again, I am worried by the tone of the letter. If I am right in my submission that the agricultural industry is a modern, highly technical industry, we need to encourage and reward skills. However, I submit that if we leave this matter to individual negotiations, bearing in mind the points raised by my noble friend Lady Prosser, there will be an erosion of skills in the agricultural industry.
I will not go on for much longer but I am probing the Minister to try to ascertain how the Government foresee the future for agricultural workers and related workers in forestry and other land-based industries. There may be a case for rationalisation but I seek reassurance that the Government have thought this through.
Lord Corbett of Castle Vale
My Lords, I apologise for not being here at the start of the debate on these amendments, to which my name is attached. I will not detain the Committee for long. I declare an interest in that 10 of the happiest years of my life were spent working for Farmers Weekly, during which time I gained a lot of experience of the work of the Agricultural Wages Board. I was provoked to intervene in this debate by the remarks of the noble Earl, Lord Caithness. There is a profound misunderstanding that the national minimum wage can take care of the proper pay rates for agricultural workers. As my noble friend Lord Clark of Windermere has said, there are six grades of pay. As he pointed out, if it is to be left to those on the five grades above the minimum rate to negotiate with the farmer who employs them, it is not beyond the wit of man to imagine that some farm workers will face pay cuts. This must be the logic of it. The noble Earl shakes his head. If I have this wrong, I will gladly sit down and he can put me right on it, but the minimum wage does what it says on the tin: it sets a minimum wage, but takes no account of the grades above that. As my noble friend Lord Clark of Windermere has also said, those grades are there for a purpose. They are accepted by the employers, farmers, who recognise that increased productivity and the higher levels of skills that are needed must be rewarded, which means that there must be different grades for different levels of skills.
Most farm workers—they are a dwindling number—work in groups of two, three and four, working closely with their employer, the farmer. It is only when you get into the poultry packing plants and the vegetable processing plants that you can measure workforces in the dozens and the hundreds, but that is a very different atmosphere in which to negotiate. Are the Government really suggesting that a father and his two sons, who make up the workforce on a mixed farm, will make an appointment with their employer, the farmer, to talk about rates of pay? This is not the real world because there is no equality there. In my submission, the Agricultural Wages Board was put in place in the interests of farmers and the industry as much as in the interests of farm workers because it levelled the playing field. The industry got great value out of the Agricultural Wages Board. The other day I was astounded to hear a former president of the National Famers’ Union, with whom I spent many a happy hour in the old days when I worked for Farmers Weekly, rely on exactly the same argument. He said, “No, Robin, it does not matter because the national minimum wage is there”. I take it that the official view of the National Farmers’ Union is that it now wants to see the destruction of the Agricultural Wages Board. I say simply that it will live to regret that because it could result in immense chaos, let alone unfairness, for the industry. A very heavy price will be paid if the board is abolished.
The last report of the Agricultural Wages Board that I could find in the Library was for 2007-08. It makes the point that the board does not deal just with wages. There have been demands from the workers’ side for an all-industry pension scheme. How will that be dealt with now? What are the unions supposed to do now? To whom do they write? Will they write to the president of the National Farmers’ Union of England, the president of the National Farmers’ Union of Wales and the Farmers’ Union of Wales and the NFU in Scotland? Is this the way that they are meant to proceed? Given the row about tithe cottages, who decides the value of the accommodation provided under the contract of employment to employees who live on the farm as part of their job? The national minimum wage will not take care of that. Who will take care of that? Will this be negotiated farm by farm across the length and breadth of England and Wales? This is a ridiculous way to engage in human relations and will cause immense resentment. I do not believe farmers are bad employers but they are not overgenerous with their money. As the last report of the Agricultural Wages Board notes, this is traditionally a low-pay industry, which is why the Agricultural Wages Board was established.
Lord Cameron of Dillington
My Lords, I declare an interest as a farmer and as an employer of staff in the West Country—not the county of Dorset, like the noble Lord, Lord Whitty, but next door in the county of Somerset. I had not really intended to get involved in this debate—I thought I would just let it wash on and see what came out—but I think that I should report to your Lordships from the real world of Somerset. If I was to reduce the wages paid on my farm down to the levels set by the Agricultural Wages Board, not the basic wage but the various craftsmen rates, I am fairly certain I would have a strike on my hands.
I rarely pay much attention to the Agricultural Wages Board or what it says. I can see that a guide on an annual percentage rise within the agricultural world is often quite useful. However, I dare say that in the absence of the Agricultural Wages Board there will be other means of arriving at such a benchmark system, and I am sure that the NFU and others will get together and provide us with one, if that is going to be needed.
Lord Wedderburn of Charlton
I, too, wish to support the amendment moved by the noble Lord, Lord Greaves, and the remarks made by several of my colleagues on these Benches. If this board was abolished in this rather casual way, without any suggestion of what should replace it, it would be regarded by writers in the future as a rather cruel joke, in view of the difficulty this area of the workforce has had to obtain normal collective bargaining resources. Now, fortunately, many workers belong to the union, UNITE, but there was a day when workers who wished to form trade unions in this vulnerable sector of the workforce were met by a very different response by their society.
This particular history does not die in the memories of those who are literate regarding trade union organisation. It is very surprising that the Government come forward with no suggestion of anything to replace this—one of the boards or councils set up in the early parts of this century to protect vulnerable sectors of the workforce that did not have the advantage of even the elements of collective bargaining. The existence of a minimum wage to cover the entire workforce is no argument at all. The Agricultural Wages Board can, and does, make very sensitive interventions, as my colleagues on these Benches have illustrated, with the modernisation of agriculture.
I very much hope that in reply the Minister does not resist the amendment—certainly not without any suggestion of what the Government foresee as the structure and protection of this area of the workforce. A raft of structures has been attached to the Agricultural Wages Board, such as the agricultural dwelling house advisory committees, as we have already discussed. I very much hope that the amendment in the name of the noble Lord, Lord Greaves, will be supported by this House in the interests not merely of labourers in agriculture but also of employers in the agricultural sector, who, as we have heard, also have an interest in the protection afforded by the Agricultural Wages Board.
Lord Morris of Handsworth
My Lords, I too support the amendment. I apologise for not being here at the very start of the debate; I was detained elsewhere in the House.
Let me declare an interest—for 12 years I had the great privilege of leading the union to which agricultural workers belong and which represented them. I was general secretary at the T&G, and I am delighted to see the noble Baroness, Lady Prosser, who was my deputy general secretary. Part of our joint and collective responsibility was to pay a special interest to the work of our agricultural membership. We did that because in many instances they had a diffuse working environment, away from the collectiveness of the workplace found in factories, warehouses and even supermarkets. I am sure that the noble Baroness would have made some of the points I might make now, and for that I apologise again.
The noble Baroness and I campaigned, along with the rest of the trade union movement, to have a national minimum wage introduced because it gave certain standards. It also sent a very clear message about how workers should be treated and what sort of economy we want to build in the United Kingdom. If I thought for one minute that the agricultural wages board could have done the job that the national minimum wage is intended to do, we would not have bothered. We are talking about two separate and distinct bodies, with separate and distinct functions. The agricultural wages board is a joint industry body—it represents agricultural workers, sitting face to face with employers, and of course has an element of independence as well. It looks after the interests of young people, it is concerned about safety and it has a duty and responsibility that goes far beyond anything that the Low Pay Commission ever does.
The Low Pay Commission was set up by the Government of the day to deal exclusively with pay—nothing else and nothing more. Therefore, any consideration of abolishing the Agricultural Wages Board, in the vain hope that the tasks, duties, responsibilities and obligations that it performs will be transferred to the Low Pay Commission, displays a level of ignorance which is quite threatening and worrying. The two bodies are different and they carry out different functions.
In fact, the Agricultural Wages Board was preceded by a body called the Fair Wage Resolution. Every so often a resolution would be passed to renew the principles of fair wages—nothing else but wages. However, it failed. Accidents were part and parcel of daily experience. Young children were going into grain silos with some horrific consequences. It was recognised that there needed to be an authoritative body which was not a trading body and not an employers' body, but a body for the industry which recognised and promoted the interests of the industry.
When my union goes to Brussels and meets agricultural workers, we do not say, “What is the rate of pay in other parts of the European Union?”; we do not say, “What is now being looked at for holidays?”; but we talk about the issues of the industry. The Agricultural Wages Board is an advocate for the international industry; the Low Pay Commission is no such thing. It would not just be a backward step but a tragedy for British agriculture to have no voice which represented both sides of the industry and which could speak with an element of independence, nationally and internationally. Therefore, I genuinely ask the Committee and the Government to think again because they will be sending the wrong signals and putting a lot of people in a lot of danger. They are making a tragic mistake. I hope that they pull back from this.
Lord Maclennan of Rogart
I declare an interest as the owner of a small farm in the north of Scotland, the circumstances of which are very different from the farms mentioned by other owners.
This has been a very important debate, stimulated by my noble friend’s amendment. There has been a remarkable chasm of opinion between those who view the winding up of the Agricultural Wages Board with concern and those who are either indifferent or supportive. The National Farmers’ Union apparently has made its position clear. The one interest which has not been expressed in this debate so far from the point of view of an objective economist is: what will be the impact on rural development of a depression in farm workers’ wages? That seems to be the natural consequence of the removal of this body, at least at the lower end of the scales.
I recognise that in some prosperous parts of the country, agriculture has to compete for skilled activity from people who could find alternative employment relatively easily in the area. Large parts of the south-west may be a good exemplification of that, but in the more sparsely populated areas there is not a superfluity of employment. There are not many alternative jobs available and it seems to me that a consequence of depression in income of those working on farms, whether at the top of the local scale or near the bottom, is likely to result in a further flight from the land. That has to be of concern. I cannot speak with the authority of a rural or agricultural economist, but I very much hope that the Government, in considering this proposition, have taken those considerations into account. If there is any evidence that can be revealed, I hope they will reveal it this afternoon or at a later stage of the Bill.
The Duke of Montrose
Perhaps I might intervene again. Having listened to the various speeches around the House and particularly to the speech of the noble Lord, Lord Morris, giving the story of the very essential and important work that the agricultural wages board has done over the years, we need to consider how things have moved on. One element which is very different now is that all employers and all jobs are subject to the Health and Safety Executive. All accidents must be reported to the Health and Safety Executive, so that deals with one element which perhaps the agricultural wages board used to look into.
The other point, which the noble Lord, Lord Corbett of Castle Vale, spoke about, is the difficulty in the grading of agricultural workers. One big difference now is that, in the nature of things, agricultural workers acquire certificates and they come with a grading of their own. If someone applies to you for a job, he can produce certificates of his skills and certain elements. In my part of the world, I do not see a danger of reduced wages because there is a shortage of skilled men and they are now, more or less, in a position to name their price.
Viscount Eccles
My Lords, I reinforce the argument made by my noble friend. I drove a tractor some time ago—1943, I think it was. Whether I was underage I will leave the House to decide. I remember that we were very happy if we got 30 hundredweights an acre. We stooped it, then it was put in a stack, and it was then thrashed by a threshing machine that came around at about this time of the year.
Today, you have a computer-controlled combine harvester that does the whole thing on its own. It is about two and a half times the width of the old cutters that we used to have. I will gamble that there are very few farmers that own one of those combines. There are some in Norfolk, in the grain area of the east of England, but in my part of England—in north Yorkshire—none of the farmers owns their own combine harvester. The contractors own it—and they do the potatoes as well. There are no labourers left in north Yorkshire in agriculture. No such person exists any longer. If there is not a skill, then you cannot employ anybody in agriculture in north Yorkshire—I am not sure about north Scotland.
I contend that—never mind the £8-something—you will not get that combine driven by anyone paid anything less than £10 an hour. The statistics that I would like to understand are the actual wages in agriculture today, because—believe you me—they do not bear much relationship either to the minimum wage or to the wages that were set on 1 October by the board which we are discussing.
Baroness Quin
My Lords, I, too, support strongly the amendment and pay tribute to the way in which the noble Lord, Lord Greaves, introduced this debate. It has been an interesting and powerful debate, and noble Lords from around the House have certainly brought their experience to bear on this issue. We even had the personal experience of my noble friend Lord Clark of Windermere, who, at an earlier stage in his career, was affected by the decisions of the agricultural wages board.
We were reminded by the noble Lord, Lord Greaves, that the board, in one form or another, was established a long time ago—in 1924—and has been a tried and tested institution. The noble Lord, Lord Greaves, also referred, as I think did the noble Lord, Lord Cameron, to industrial action. Happily there has not been industrial action in the agricultural industry since 1923—significantly, the year immediately before the establishment of the board. However, I support the agricultural wages board not simply because it has been here for a long time. The Minister misquoted me in our last debate when he said that I had said at some point,
“that everything should continue as it is just because it always has existed in the past”.—[Official Report, 29/11/10; col. 1360.]
I can assure him that I have never said anything remotely like that, and I am very often persuaded of the need for all kinds of change. I hope, after what has been said today, particularly by my noble friends and by the noble Lord, Lord Greaves, that the Government will think again about the decision to abolish the agricultural wages board. I think they should reconsider it very seriously indeed in the light of this discussion.
A number of noble Lords mentioned consultation, and there certainly has been next to no consultation on this decision. The Minister, in answer to a Written Question from me, said:
“No specific consultation was undertaken prior to the decision to abolish the Agricultural Wages Board”.—[Official Report, 26/10/10; col. WA 245.]
It is my understanding that the Welsh Assembly Government criticised their notification of this as being totally inadequate; they were given one week to respond. Indeed, in an answer to a Question from the former Defra Secretary of State in the other place, Hilary Benn, again the lack of consultation was clearly evident. Given that the agricultural wages board has been a very long-standing feature of our economic and agricultural landscape, to have no consultation is very serious indeed.
Lord Maclennan of Rogart
Would the noble Baroness agree that the debate has been forceful in indicating that consultation would be advisable and helpful, and that perhaps it would be sensible not to reach a conclusion on this matter in this debate, because evidently there is still a great deal of time left to consider the Bill?
Baroness Quin
The noble Lord makes an important point. Obviously, how we proceed is up to the author and introducer of the amendment to decide. None the less, given the number of questions that have been raised in this debate on all sides, and given the fact that there has been a very strong feeling in the Chamber that this is an issue about which there should be proper consultation, I am inclined to support the noble Lord, Lord Greaves, in his comments. I am sure that, in the light of whatever response we get from the Government, we would very much want to return to this in any case, because it is obviously of great concern and interest to many Members in this House and, of course, to many people outside.
The issue of cost has once again been referred to. The noble Lord, Lord Greaves, in his introductory comments, said that the cost of abolishing the board was very limited. In answer to a Parliamentary Question in the other place by Willie Bain, I understand that the Government said that the costs would be “negligible”; indeed that the,
“changes to include agricultural workers within the scope of national minimum wage legislation”,
were,
“expected to be cost neutral”.—[Official Report, Commons, 25/10/10; col. 14W]
Therefore this has not been brought forward to save a great deal of money, again like some of the measures that we were considering earlier. In many ways it seems to be part of a political agenda—a political decision—which I must say I very much regret. The noble Lord, Lord Greaves, himself said that the abolition of the agricultural wages board was part of the Conservative manifesto but was certainly not part of the Liberal Democrat manifesto. It was not part of the coalition agreement, and for that reason I think that it would be very good if it were not part of government policy here and now. I know, having looked at the Liberal Democrat Voice on the internet, that there is a concern generally about the Bill among Liberal Democrats, but also about some of the specific proposals, including this one.
I know that some farmers have come out very much in favour of abolition of the agricultural wages board, including the NFU in England. It is interesting, however, that the National Farmers’ Union in Wales has come out more in support of the retention of the agricultural wages board. Indeed, it and some other farmers have made the very important point that the agricultural wages board actually lifts from individual farmers the burden of negotiation. Quite understandably, this debate has focused on the effects of abolition on agricultural workers, but there is also a negative effect on many farmers who find the operation of the agricultural wages board helpful and valuable in terms of the recruitment and retention of skilled labour. The Government have said in the past, in debates in this House, that they value professionalism in agriculture; yet I fear that, by going down this route, we will undermine agriculture and show it as a low-paid profession where there is not proper protection for workers. We already know that agriculture is a dangerous industry in terms of accidents. We need to tackle that issue, which I think the noble Duke, the Duke of Montrose, referred to. At the same time we want agriculture to be seen as an industry which is attractive for new employees in the future.
Lord Henley
My Lords, I will start, as is proper, by offering an apology to the noble Baroness, Lady Quin, for possibly misquoting her, as she alleged earlier in her somewhat lengthy speech. I am not sure whether I did, but I will look at the record and, if I have misquoted her, I will offer my sincere apologies for so doing. If I can quote her again, I noted that she made the point towards the end of her speech that there was possibly a case for strengthening the Agricultural Wages Board for England and Wales. I think that the noble Baroness accepts my quotation. I note that as a new commitment by the party opposite from its Front Bench.
The noble Lord, Lord Whitty, listened to his noble friend’s speech with great attention and I was grateful for his admission that the Government of which he was part had considered the abolition of the agricultural wages board. They decided not to for reasons that I cannot speculate on, but the range of speakers who come from the other side might give some indication as to why they changed their mind on the issue. We have examined the issue again and we have decided to go ahead with abolition. I will try to set out just why we wish to do that.
When the wages board and the committees were established in 1948—in fact, they were established earlier than that, but the parent Act is the 1948 one—farm workers had very little protection available to them from exploitation. The close working relationship between workers and employers, where the former were often dependent on the latter for housing, meant that workers were often at a disadvantage in negotiations on wages. In these circumstances, it was sensible to provide an independent statutory forum where farm workers and employers could come together to agree pay and conditions. Since that time, we have seen tremendous changes in wider employment legislation, both nationally and, as my noble friend Lord Caithness said, at an EU level, which protects and benefits workers in all sectors of the economy, including farm workers. Those changes include the introduction of legislation on the national minimum wage, which has been referred to. That makes it illegal to pay a worker below the current national minimum wage. There are also the working time regulations referred to by others, which, among other provisions, set a statutory minimum entitlement to a minimum wage.
For these reasons and all the changes that we have seen since 1924 and 1948, the agricultural minimum wage framework set out in that 1948 Act is, we believe, anachronistic. As the noble Baroness, Lady Prosser, and the noble Lord, Lord Clark, put it, in more or less the same words, life moves on. I accept that life moves on. Life has changed considerably since 1948 and it is no longer necessary to do what the Act does and effectively duplicate and gold-plate wider employment legislation. It adds an unnecessary regulatory burden for businesses in the agricultural and horticultural sectors, many of which are small businesses. It is a particular burden for farm businesses that also operate in sectors outside those covered by the agricultural wages legislation and hence have to cope with dual regimes. Moreover, the agricultural wages legislation effectively prevents the payment of annual salaries and fair piece rates, preventing farm businesses from adopting modern, flexible practices. That can also be disadvantageous to the workers.
I will say a word or two about Amendment 21, which would remove from the Bill the agricultural wages committees. Most of the functions of those committees, as my noble friend Lord Caithness made clear, have lapsed in practice or have been replaced by wider legislation. As my noble friend put it, there are currently 15 committees in England and one in Wales and their only remaining active functions are to appoint members of the agricultural dwelling house advisory committees and to report to the Secretary of State on their proceedings, which are now limited to holding an annual general meeting. I do not think that there is any case for retaining them.
It is for these reasons that we consider that the separate employment regime for agricultural workers is no longer appropriate. I am grateful again for the intervention from the noble Lord, Lord Cameron, who pointed out that he was not going to get away with paying the lower wages that seemed to be suggested by the party opposite. People just would not accept them. The same could be said for the intervention from my noble friend Lord Eccles when he pointed out that the whole industry has changed too much in terms of the sophistication of the skills that are required for many workers to confine themselves to pay rates of the sort that we are talking about. We believe that by abolishing the agricultural wages board—
Lord Whitty
Apologies if the Minister was moving on to this point, but do the Government have an impact assessment of the effect of the abolition of the legal minimum on wage rates, given that when each of the other wages boards was abolished the rate in that sector fell? Clearly, there are always some who are paid more than the minimum, but have the Government done that calculation? If so, I think that we should know.
Lord Henley
I do not think that it is necessary for that work to have been done. As I said, we believe that with the abolition of the board the industry will be able to operate more flexibly, which would lead to more job creation and better opportunities. What the noble Lord and others have been asking us to do is describe what picture, as they put it, we see for the future. I believe that it is one where it is open to the industry to come together to set up its own system. Again, I was grateful to the noble Lord, Lord Cameron, who said that the NFU ought to be out there seeking to put something together. What I did not hear from the representatives of Unite or Unite’s predecessor, the Transport and General Workers’ Union, was whether they were prepared to come together with the NFU and put something together. I do not see why the NFU, Unite and other industry representatives cannot come together and create their own advisory committee to discuss these matters. We do not think that it is necessarily a matter for the Government.
Baroness Quin
If I could follow up on my noble friend’s point, I thought that the Government had said that they would routinely carry out impact assessments in coming forward with legislation. I do not understand why they do not seem prepared to do so in this case.
Lord Henley
My Lords, as I made clear, I do not think that it is necessary in this case to carry out an impact assessment. If it was necessary, we would do so. What I am saying is that, after the abolition of the wages board, it is open to the industry to look at its own arrangements. That is why I was grateful for the intervention from the noble Lord, Lord Cameron, who said that the NFU could do this, but I do not see why the NFU cannot do it along with Unite and all the other representatives of the industry.
I appreciate that we have now spent an hour and a half discussing these matters. We will no doubt come back to this in due course. My noble friend Lord Maclennan said that there was still much time to discuss these matters. There certainly will be time, because noble Lords opposite wish to make sure that there is. We will discuss these matters further, therefore, but I have not heard anything yet this afternoon that would encourage me to say that there was a case for preserving the agricultural wages board or the agricultural wages committees. I hope, therefore, that my noble friend will feel able to withdraw his amendment.
Lord Greaves
My Lords, I thank everybody who has taken part in an excellent and sensibly tempered debate with a huge amount of expertise on an important issue. It is curious that we are having this kind of debate on the Public Bodies Bill, which is not, on the face of it, about agricultural wages or, indeed, about many of the other things that we will debate in the course of its consideration in Committee, except that it is about everything. It is a curious Bill about everything and nothing but, if it leads to debates like this, the Committee will be doing the Government a service as well as the country generally.
I was particularly taken by the range of expertise in the debate. I do not want to reply to everybody, because it would take far too long, but I was slightly amused by what the noble Baroness, Lady Prosser, said in her excellent contribution. It took me back to the great Liberal Governments of a hundred years ago, who had a great deal to do with the introduction of wages councils. However, times have changed and the solutions of a hundred years ago are not necessarily the solutions of today.
The noble Lord, Lord Whitty, is one of a large number of speakers with ministerial experience, particularly in this area, who are distinguished Members of the House. He referred to the possible involvement of the Low Pay Unit as part of the solution to this conundrum. I am aware that such discussions are taking place in some areas. Whether they will come to anything, I do not know, but at least there is some time to pursue them and other discussions in the mean time.
The noble Lord, Lord Cameron of Dillington, and the noble Duke, the Duke of Montrose, got me wondering about what I would do if I had my time again. I thought that I would perhaps have liked to have had a more outdoors life. If it were a choice of looking after sheep on a Scottish hillside or looking after the cattle of the noble Lord, Lord Cameron, there would be no real choice: I would spend my life on the noble Duke’s Scottish mountainside and probably enjoy myself more than I have done, although I have enjoyed a great deal, especially being able to stand and make speeches in your Lordships’ House.
The noble Viscount, Lord Eccles, raised an important question: do the Government have the facts about agricultural wages at the moment? How many agricultural workers are at the moment on the basic levels of pay set out by the agricultural wages board? I have not seen this information, but it must exist somewhere. How many of them are working for more enlightened employers, such as the noble Lord, Lord Cameron, or perhaps for employers who are exposed to a market that requires that they pay higher wages, or for a combination of both? We need that information before we can get to the bottom of how much the existing protection is required. Unite, among others, is saying that it has evidence of farmers telling their existing workers that if the protection is removed their wages will go down. I do not know whether this is tittle-tattle or hard evidence, but we need evidence to probe and investigate in the mean time.
Some noble Lords have argued that the legislation is not needed because they know of lots of people who are paid more than the level set out or, indeed, who employ people who are paid more than the level set out. I take that with a slight pinch of salt because you could apply that argument to the national minimum wage. Most people in this country are paid more than the national minimum wage, a lot of people are paid a great deal more than the national minimum wage and some people are paid astronomical sums—millions of pounds a year, according to what we read in the newspapers—but just because a lot of bankers are apparently paid these huge salaries is no argument for saying that the national minimum wage is not necessary or is not a good thing, because it protects a lot of other people who need protection. Again, I think that we need the kind of facts that the noble Viscount suggested that we should have. I hope that the Government will find it possible to dig out those facts, circulate them and write to all noble Lords who have taken part in today’s debate.
Having said that and having said what an excellent House of Lords debate this has been, with propositions made, questions asked and debates enjoined, I should add that the other part of the equation that is traditionally necessary in the House of Lords is for the Government to listen to what has been said, think about it and respond to it. I thought that I detected in the Minister some softening and some willingness to continue to take part in the debate. I hope that that is the case. He said that we will discuss these issues again further. I hope that he did not mean that we will have to wait until Report, when we can have a set-piece battle with everybody lining up with their pitchforks or whatever people use nowadays instead of pitchforks. I hope that the discussion will take place in the several weeks that will be available to us before we get to Report.
Let us keep talking and let us have further discussions wherever we can. Let us bring the matter back on Report if we need to, but in the mean time let us hope to find a way through the issues that have been raised today and find some sort of compromise. Let us distinguish between closing down a quango, which the Government are adamant they want to do, perhaps saving quite a bit of the £250,000-plus that it costs to run, and keeping at least some of the functions, which might be carried out by somebody else. Even if that is not possible, let us understand what kind of negotiating system and procedure there might be in future between employers and employees at a national level and what sort of guarantee there might be that that will result in solutions that will stick rather than advice that can be ignored.
There is a great deal to be discussed further. The burden to business is being exaggerated a little, but with reform, modernisation and streamlining of the system it might be possible to reduce quite a few of those burdens without taking away the essential safeguards of the floors that exist to protect a group of people who, as many noble Lords have said, are more vulnerable than many other groups nowadays. The world has changed, so let us change the systems in response to that without taking away what is valuable.
I think that there is a general view around the Committee that we should not divide on this occasion. Indeed, in view of what I have said, it would be totally inappropriate for me to ask for the opinion of the Committee at this stage. I therefore beg leave to withdraw the amendment.
Lord Rosser
Lord Rosser
My Lords, the Aircraft and Shipbuilding Industries Arbitration Tribunal organises compensation in connection with the nationalisation of the aerospace and shipbuilding industries. It hears appeals on valuations with a right of appeal ultimately to the Supreme Court. There is also provision for judicial review of the original compensation offer. The tribunal continues in existence but was described by the Council on Tribunals in 2006 as “rarely convened/moribund”. On 1 November 2007, the tribunal came under the supervision of the Administrative Justice and Tribunals Council, whose future also now appears somewhat less than secure. When he responds, will the Minister indicate the annual cost of the Aircraft and Shipbuilding Industries Arbitration Tribunal, how many members there are of the tribunal and how many times, if any, it has met in each of the past three years? Will the Minister also indicate the list of duties and responsibilities of the arbitration tribunal and state which duties and responsibilities the Government consider no longer need to be undertaken at all and why, and which duties and responsibilities, if any, will continue to be undertaken, and to whom or to which body they will be transferred? Presumably, the Government must have come to some conclusions on these issues. Having taken into account which duties and responsibilities will be transferred elsewhere, and the cost of continuing to carry out any remaining duties and responsibilities, could the Minister say what the net saving will be from abolishing the Aircraft and Shipbuilding Industries Arbitration Tribunal? I beg to move.
Viscount Eccles
We seem to concentrate only on whether something saves money, but the public are not interested only in saving money. They believe they are over-governed, that there is too much regulation and too much interference in their lives, and that there are too many bodies carrying out functions which most likely could be carried out better somewhere else. They want to see the system simplified, and I believe that this House should remember, when they are discussing these matters, that it is not only a matter of money; it is also a matter of making life less complicated.
Lord Taylor of Holbeach
My Lords, I am pleased to move on to this series of amendments, and I will first turn to the Aircraft and Shipbuilding Industries Arbitration Tribunal. This was set up under the Aircraft and Shipbuilding Industries Act 1977 and related to the nationalised industries in aircraft manufacture and shipbuilding. These nationalised industries no longer exist and the tribunal is redundant. Similarly, the purpose of abolishing British Shipbuilders as a corporation is to simplify the administration of the funding and handling of British Shipbuilders’ residual liabilities. These liabilities will be transferred directly to the Department for Business, Innovation and Skills, which will provide a long-term solution to managing these liabilities.
The Government are committed to making compensation payments to former employees of British Shipbuilders, and I can give an indicative figure of the level of those compensation payments. They come to about £7 million a year. I hope that helps. The tribunal itself does not cost anything, as there are no standing costs and it does not have any employees. The compensation payments for former employees cover such injuries as mesothelioma, which were the result of their employment with British Shipbuilders. The payments are in line with the obligations that British Shipbuilding had to its employees.
British Shipbuilders Corporation was set up under the Aircraft and Shipbuilding Industries Act 1977. The corporation has no active trading operations and exists solely to meet its residual liabilities—litigation, insurance claims and other contractual matters— relating to its former employees. British Shipbuilders is effectively a shell company. In light of my assurances, I hope the noble Lord will feel able to withdraw his amendment.
Lord Rosser
I am not entirely sure whether the Minister was also replying to Amendment 24 as well as Amendment 22. Amendment 22 is about the Aircraft and Shipbuilding Industries Arbitration Tribunal, which is the one that hears appeals over valuation in relation to the nationalisation of the aerospace and shipbuilding industries. As far as I understood it, we were dealing with Amendment 22 separately. It seemed to me—though I am obviously prepared to stand corrected—as though some of the comments that the Minister made related to Amendment 24, which is about British Shipbuilders and any subsidiary of that company. I did raise a number of points—
Lord Taylor of Holbeach
I did speak to Amendment 24 because my speaking notes represented a grouping which is not current, and I apologise to the noble Lord. Perhaps he will confine himself to my response in respect of the tribunal, because that is what he was speaking to. I apologise.
Lord Rosser
I was not entirely clear about what the Minister said. He did say that it was moribund, so do I take it that the answer to my question as to how many times it met in each of the past three years is that it has not met at all? Is it the case that, despite the comments made by the noble Viscount, Lord Eccles, no costs are being incurred by this body, because it is moribund and it has not met?
Lord Taylor of Holbeach
I confirm that is the case. It does not cost anything, there is no standing cost and it does not have any employees.
Lord Rosser
I thank the Minister for that clear response and I beg leave to withdraw the amendment.
National Assembly for Wales (Representation of the People) (Amendment) Order 2010
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Wallace of Tankerness
That the draft order laid before the House on 25 October be approved.
Relevant document: 6th Report from the Joint Committee on Statutory Instruments.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, this draft order makes a number of modest policy and technical changes to the National Assembly for Wales (Representation of the People) Order 2007. The 2007 order makes provision for the conduct of elections to the National Assembly for Wales and was made under the powers in the Government of Wales Acts 1998 and 2006. It also comprehensively reflects changes made to electoral law since the previous order in 2003 and, in particular, by the Electoral Administration Act 2006.
While this draft order only numbers some 10 pages, the 2007 order runs to some 273 pages in total, so I do not intend to speak in any great detail about its contents. I do intend, however, to outline the main changes that will be made to it by the amending order before the House this evening.
Article 3 amends the definitions of Assembly constituency, Assembly electoral region and elector in the 2007 order to ensure that they are consistent with the Government of Wales Act 2006. The relevant provisions in the Government of Wales Act 2006 did not commence until after the 2007 order was made. The definition of elector also reflects changes to the Representation of the People Act 1983, which were made by the Electoral Administration Act 2006. This includes references to anonymous voters.
Article 4 makes amendments relating to registration appeals, where decisions on appeals about entries in the register in respect of postal votes are determined before the election. These decisions will now take effect and the register altered. The article also clarifies the relevant provisions under which an appeal can be made and a notice of alteration issued. Article 5 makes an important change to the 2007 order, under which the election agent for a candidate who stands in an Assembly regional election must have an office in that region.
A number of political parties raised concerns about this requirement during the 2007 elections, as a political party might wish to appoint only one election agent to represent all the regional candidates for that party in an Assembly election. The previous provision, which required the election agent to have an office in the region, prevented them from doing so. Following a recommendation by the Electoral Commission, made after the 2007 Assembly election, this requirement is being relaxed so that an agent’s office must be located within Wales.
Articles 6 and 7 make minor changes to the 2007 order that reflect changes made by the Legal Services Act 2007. If a legal professional is found guilty of a corrupt practice during an election campaign, an election court must inform bodies capable of exercising regulatory functions over the legal profession. Article 6 expands the definition of these bodies. Article 7 amends the relevant part of the 2007 order which expands the definition of who the Director of Public Prosecutions may send as his representative to attend election courts.
Articles 8 and 9 amend references in Schedules 1 and 3 of the 2007 order respectively which we subsequently found to be incorrect. Article 10 makes perhaps the most substantive change to the 2007 order by changing the design of the constituency and regional ballot papers. In October 2009, the Electoral Commission published its guidance on designing voter materials, Making Your Mark. This guidance highlights best practice when designing voter materials, such as ballot papers, to ensure that they are as accessible and intelligible as possible for voters. It is clearly in the interests of democracy that every eligible elector is able to participate in elections and that the voting process is as clear and simple as it can be. In designing the new ballot papers, we have worked closely with the Electoral Commission to ensure that we adhere to the spirit and the letter of the guidance. Apart from the design, the key change is the removal of the names of those on the party list from the regional ballot paper. Noble Lords will wish to know that this also occurs in Scotland.
Noble Lords will know that the Parliamentary Voting System and Constituencies Bill before this House provides for the referendum on the alternative vote system for electing Members to the other place to be combined with the elections to the National Assembly on 5 May next year. The provisions within this draft order are not affected by the combination provisions.
The Government and the Welsh Assembly Government are committed to working together to ensure that the polls next May are a success. Jenny Watson, chair of the Electoral Commission and chief counting officer for the alternative vote referendum, who will have the lead role in the combined polls, said last month that the commission believed that,
“enough progress has been made … to allow the National Assembly elections and referendum on 5 May to run smoothly”.
In conclusion, in preparing this order, the Wales Office has worked closely with electoral administrators, including the regional returning officer for Wales, the Electoral Commission, the Welsh Assembly Government and the four major political parties in Wales. I commend the order to the House.
Baroness Gale
My Lords, I thank the Minister for bringing this order before us today. Although this is not a milestone on the devolution road which we travelled last week, it is nevertheless an important order, although largely technical in nature. As the Minister has said, it corrects drafting errors in previous legislation and its provisions update the National Assembly for Wales (Representation of the People) Order 2007, bringing the 2010 order in line with changes to electoral law effected under either the Government of Wales Act 2006 or the Electoral Administration Act 2006.
Article 3 updates the definitions in the 2007 order to ensure that they are consistent with those in the Government of Wales Act 2006. It also updates the definition of elector as set out in the current definition in the Representation of the People Act 1983. We agree with this tidying-up amendment. We welcome the change proposed in Article 5 of the 2010 order that amends Article 39(2)(b), which stipulates that the office of an election agent for a regional election should be within that region. This amendment is in keeping with suggestions made by the Electoral Commission to allow election agents for the regional elections to have their office anywhere in Wales and not solely within the region. This practical amendment makes sense: in most cases the campaign for the regional list candidates would be run centrally, usually from the political party's headquarters in Wales.
We are content that the amendments in Articles 6 and 7 reflect changes made by the Legal Services Act 2007, which expands the description of bodies regulating the legal profession that must be considered by election courts and describes the duty of the Director of Public Prosecutions. These are reasonable and appropriate amendments and we would support them.
We are content with the changes to Schedule 10 described at Article 10 of the amended order relating to the format of the ballot papers for the Assembly constituency elections and for the regional elections. The changes improve the ballot paper, making them easier to understand, and correct omissions on one of the forms and one of the poll cards used in the elections. They are rational and evidence-based.
I believe that this format for the ballot papers is much easier and clearer for the voters. In the case of regional list ballot papers, electors are asked to vote for a political party rather than for a named political party candidate, unless of course the candidate is an independent. Will the Minister confirm that a full list of candidates will be on display at the polling station?
We agree with the order before us. They are sensible and practical amendments to the elections laws for the Welsh Assembly elections on 5 May next year. Agreeing to them tonight means that they will be in place in time for those elections. I am pleased to say that we support these amendments.
Lord Elystan-Morgan
My Lords, there are two good reasons why one should welcome this order. The first is that the House is not experiencing any problem as far as seating is concerned. The second is that, for once in the history of Wales, we have a development that seems to be applauded generally and totally by everyone. That is almost unique in a land of such fissiparous divisions as my own land and nation of Wales. The Electoral Commission and all those bodies responsible for these amendments are to be commended on the way in which they have conducted themselves. They have consulted fully and have managed to achieve a rapport among all bodies. All that is involved in the order are amendments that are consequential on legislation that this House and the other place have passed over the past four years.
Having said that, perhaps I may, with the indulgence of the House, take one minute to mention other matters. No one can speak of elections in Wales without being aware of the vulturous presence of legislation that will in a few months affect Wales greatly. I refer specifically to the Parliamentary Voting System and Constituencies Bill, which will deprive Wales of one-quarter of its constituencies. That is an immense proportion. Reducing the number of constituencies of England, Wales, Scotland and Northern Ireland by 50 will mean a reduction of one-thirteenth. If my mathematics is anywhere near right, that is about 7.8 per cent of the totality. In Wales, it will be 25 per cent.
Many people may say, “Well, come off it, you have managed to have this advantage for many decades. Has not the time come when you should surrender this advantage?”. That exact point was put to the right honourable Kenneth Clarke as Home Secretary when he was conducting the parliamentary commissions Bill through the House of Commons in 1992. He said, “I am not having it. Wales is a land, a nation. There is a constitutional arrangement here, which I respect and am determined to uphold”. Wales is no less a land, a nation, now than it was in 1992.
If the House wishes to have a sleepless and nightmarish experience over the next few hours, one need only contemplate the possibilities of what will happen not in May 2011 but in May 2015—assuming that Parliament will by then have passed an Act making the life of Parliament a solid five years, no more and no less. It will mean that the elections to the Welsh Assembly will coincide exactly with the elections to Westminster, and people will be in constituency A of the House of Commons but constituency B of the Welsh Assembly. It is, as I say, a wholly terrifying and nightmarish consideration. But that is not strictly relevant to this issue.
Lord Roberts of Llandudno
My Lords, I appreciate the words of both the noble Baroness and the noble Lord, both of whom I consider as colleagues and as friends. However, looking at this order, I am not quite as appreciative of it as others who have spoken. There is some concern that the order distances us from local areas and local people. It is true that you can have one agent for the whole of Wales, but it means that the Wales campaign is centralised, not localised—or it can be. The noble Baroness, Lady Gale, knows more about this than I do. So you could have a central campaign that does not reflect local interests.
There was a time when I was a young candidate and every ward had its own committee room on election day and every constituency had its central committee room—its swyddfa ganolog. Then there is the region. Yes, you can get on in the region, but remember that Welsh regions, like Scottish regions, are quite massive sometimes; they can stretch for many miles. The agent is far away, even at a regional level, from the local activity. We could possibly accept this, but some may remember when we had not one agent for Wales, but we had subagents covering so many areas of a constituency. To have an office located anywhere in Wales could present difficulties in the organisation of election days and electoral officers. It needs to be very well thought out.
The region-less ballot paper—the new one that has been presented to us—is far less cluttered than previously because, as has been stated, no candidate’s name is printed. The noble and learned Lord, Lord Wallace, suggested that Scotland has the same kind of ballot paper. Is this the first time in the United Kingdom that we have had a ballot paper with just the party’s name but no candidates? Is this a step in the right direction? I can understand why, because many parties—my own included, I am sure—have in the past nominated, say, 12 candidates for each region. Let us say that you have six or seven different parties contesting and most of them give you a dozen candidates. Wow, that ballot paper will be very cluttered. But to go further in a different direction and simply say Conservative, Labour, Plaid Cymru, Liberal Democrats, Greens, without giving any indication of who is the lead candidate, would cut away the personal link. It makes the regional candidates second-class Assembly Members, because they have not been elected as individuals, even though, as the noble Baroness mentioned, you can have a list of them in the polling station. When I go into a polling station—and I am allowed to vote at some elections, including the Welsh Assembly election—I do not look at the posters, I just look at the ballot paper I vote on.
I would ask—and other people are thinking this way—that we do not put 12 names for each party, but that we print the four top names selected by each party on the ballot paper of a regional list. At least we would have a personal involvement. People will have some idea about who they are going to return, not just someone who they have never heard of and whose name is totally strange to them. I speak to the Minister as a very dear friend of mine. I hope it is not too late to amend this order. I suggest we have four names—it might be three, it might be five—so that we keep that personal link with the regional list members as well as with the constituency members.
What you are doing also is that you are increasing the authority of a party and making it far superior to the individual candidate. Is this a danger? I think it is a dangerous step—a very dangerous step. We do not have to take that step—it is not too late—because we can amend it to include the lead names for each party.
I am more than happy with the constituency ballot paper. It is clear and the sort of ballot paper that we are more or less used to. Mind you, there is one great sadness. You are asked to put an X in one of the boxes. I hope the time comes when we do not ask for Xs but for 1, 2,3, and 4 and we have a proportional system.
Lord Elystan-Morgan
My Lords, in so far as that particular specimen ballot paper is concerned, has the noble Lord noticed that all the names used were Anglo-Saxon ones—there was not a Jones, an Evans, a Morgan or a Williams? It may very well be that this was done, as lawyers would say, ex abundanti cautela—out of an abundance of caution; I must say it struck me as rather strange that there was not a single Welsh name among them.
Lord Roberts of Llandudno
I of course defer in this to the noble Lord, Lord Elystan-Morgan; he not only has one name on the ballot paper, he has two. I am reduced to the very inferior status of a Roberts, but, as a Roberts, I say, yes, I welcome the constituency ballot paper. Then I ask the Minister to look again at the absence of names on the regional ballot paper. I think that we may have to accept the one agent for the whole of Wales, although I still remember the ward committee rooms with great affection.
Lord Jones
The National Assembly for Wales is a real success. It is striking out on its own trajectory. It is barely 10 years old, but it has done so much and has grown in stature. To cut the number of parliamentary constituencies in Wales by 25 per cent is something of a folly. No doubt we can return to this matter another time, but it cannot be right.
I acknowledge the erudite introduction by the Minister, and I also thank my noble friend Lady Gale for her observations from the Dispatch Box. If anybody knows about elections in Wales, it is my noble friend, for she has a magnificent record of general election campaigning in Wales. The statistics indicate that hers were always the best results for the Labour Party throughout Britain. My noble friend is very surefooted in the matters delineated in the order. Yes, it is a tidying-up measure and not controversial. I support it. Surely it will be passed.
It is good to see the parity given to both languages in this order. The Government cannot be too careful on matters concerning language in Wales. Language is now at the forefront of consideration in public life in Wales, and I think that it will remain so. I am glad that the order has comprehended that.
The schedule helpfully presents Form CK, Form CK1 and Form CL. In the Explanatory Memorandum is a splendidly deadpan sentence under the heading, “Territorial Extent and Application”. It states:
“The Order extends to the whole of the United Kingdom but applies only in relation to the election to the National Assembly for Wales”.
I think Sir Humphrey lives; it is a delicious catch-all. Constitutional change always fetches up example after example of such glorious lines as that. What fun the civil servants must have had; how enjoyable the draftsmen must have found it. Sir Humphrey lives and, without a doubt, devolved government presents for all of us here in your Lordships' House a perpetual learning curve.
In the schedule, the mock constituency ballot paper and the mock regional ballot paper are very helpful. There is an interesting coincidence where Sarah Gale is concerned. I am looking again at surnames—there is no relation of course. I very much agree with my noble friend that there are no genuine Welsh names, and I would not be the first in this debate to point that out. It cannot be right. My noble friend was right in his mischievous and humorous way to tell us of that fact.
In the 1997 Parliament in another place, the then Madam Speaker appointed me as the chairman of a new committee, the Political Parties Committee. The committee was to settle upon the description of a political party’s name—the words describing the party. It was also to settle upon the logo that that party could adopt. It is interesting now to see the ballot papers proposed. All the political parties in Great Britain, and some that one never knew existed, came forward with their logo and their self-descriptions. I had been on the Intelligence and Security Committee, appointed by the Prime Minister, for some 11 years, but I learnt more about the Communist Party of Great Britain from its description of itself than I ever did from being a member of that committee.
Lord German
My Lords, perhaps I may make a short intervention in support of my noble friend Lord Roberts of Llandudno on the issue of the regional ballot paper. It will give me the opportunity also to answer one of the points raised by the noble Lord, Lord Elystan-Morgan, about the coincidence of elections. It is incidental to the order, but I cannot resist the opportunity of answering that point.
There is a long and noble tradition in our electoral system of people being able to vote for people. If I have to look at the wall of a polling station to find out who will be elected if I put my vote against a party’s name, it is not quite the same as having the name there on the ballot paper. I understand the point about numbers, but only four people can be elected from the regional lists for any constituency in Wales. If the top four names for each of the parties are given, people will be able to say, “If I am voting for this party, I am voting for these four people in this order”. It will be quite clearly laid out on the ballot paper. I therefore ask my noble friend the Minister to consider this matter and see whether it chimes with political parties and the Electoral Commission for the elections next year.
On the coincidence of elections, we now have four elections in Wales: a European election, a National Assembly election, local council elections and elections for the other place. After the Bill passes, as we assume it will, there will be two five-year terms, for the European elections and the elections to the other place, and two four-year terms, for local authority and National Assembly elections. The National Assembly has previously moved elections for local government so that they do not coincide. The one, obvious way out of this difficulty whereby elections might clash on any number of occasions in the future—just as local elections and National Assembly elections would have clashed in the past—is to make all elections have five-year terms. We have two elections with fixed terms, European and Westminster; it seems that we should do the same for National Assembly and local elections.
These are personal views. I am testing them on this House so that people might consider them as a way out of the confusion created by having two sets of elections occurring at different intervals. Those of your Lordships who are good at mathematics will know that, if you have two fives and two fours, the fives and the fours will eventually clash. If it is logical to have fixed-term Parliaments for Europe and for the other place, it might be logical also for the National Assembly and local councils. If the logic is that fixed terms give you more time to make your programme of government work, that logic can be applied also to the National Assembly and local government.
Lord Wallace of Tankerness
My Lords, I thank the noble Baroness and the noble Lords who have contributed to this debate. I am grateful for the general welcome that has been given to the order. I noted that the noble Lord, Lord Elystan-Morgan, rehearsed his speech for the debate that we will undoubtedly have during the passage of the Parliamentary Voting System and Constituencies Bill. I rather suspect that it will fall to me to answer that part of the Bill. At least I am well prepared by knowing from where the attack will come, and I can expect it also from the noble Lord, Lord Jones.
There will undoubtedly be an opportunity to consider the coincidence of elections when we come to debate the Fixed-Term Parliaments Bill—I hear the point made by my noble friend Lord German. The noble Lord, Lord Elystan-Morgan, and the House will perhaps be reassured to hear that the Government are aware of the concerns that have been expressed in some quarters about the coincidence of polling dates in 2015. They are consulting the Welsh Assembly Government, all political parties represented in the Assembly and representatives of the Assembly itself on options for moving the date of elections to the devolved legislature—a similar consultation is taking place also in Scotland and Northern Ireland. We will decide whether further legislation is needed in the light of the consultation.
The two issues of concern to my noble friend Lord Roberts of Llandudno related to the location of the agent’s office and the names on the ballot paper, which my noble friend Lord German mentioned as well. The relaxation of the rules for agents is only for the regional election. The order states that the office must be “in Wales”. It could be in the respective regions, given that they are all in Wales. Only if political parties choose to have one agent for every regional election will it now be possible for an office not to be in every region. That arose during the 2007 election and has been taken forward. No party has objected to the change. I remind my noble friend that this rule applies to the agent’s office and not to the candidate’s offices. Candidates will still have offices in the respective Assembly constituencies. I hope that that gives some reassurance to my noble friend, who I know will engage in the electoral battles with the same gusto as I have seen from him over many years.
It shows just how much attention I pay that I had thought that names had been on the regional list for the previous Scottish elections; I am told that they were not, that that already is the case in Scotland. Such was my enthusiasm to vote for Scottish Liberal Democrats, I did not pause to notice whether the names were there or not. The names of the candidates will be displayed in the polling stations. My noble friend asked whether it would be possible to amend or reduce the number of names to four. That could happen only with the agreement of all the political parties that would be putting up more than four candidates; and although that agreement has been sought, it has not been forthcoming. It could be done by primary legislation, but clearly there will not be an opportunity for primary legislation between now and the elections.
The Government did give careful thought, and did consult the main political parties in Wales, before deciding which was the appropriate way to go forward. In the regional elections voters cast their votes predominantly on the basis of party affiliation rather than individual candidates, although independents can of course stand; and we believe that the change will help ensure that ballot papers do not become unduly unwieldy if all the names are on them. I am advised that representatives of Plaid Cymru and the Welsh Labour Party agreed the proposal, while the Welsh Liberal Democrats did not object. No comments were received from the Welsh Conservative Party, although it was circulated with it. The change is strongly supported by the Electoral Commission and by the representatives of the Association of Electoral Administrators in Wales, including the regional returning officer for Wales.
After every election there is a wash-up by the Electoral Commission. No doubt in May next year, this may be something that the respective political parties may wish to reflect on with the Electoral Commission in the light of that experience.
With regard to the sample names that have been mentioned, I had noted—the noble Lord, Lord Jones, beat me to it—that the candidate on the constituency ballot paper representing the farmers of Wales was Sarah Gale. I am not sure of the Welsh origin, if there is any Welsh origin, of the name which the noble Baroness is no doubt proud—
Lord Elystan-Morgan
What struck me was not the name of the candidate but the bovine that represented the logo. It was not a Welsh black, it was a Friesian.
Lord Wallace of Tankerness
Even more damning, I suspect. I rather suspect that the names were put there to be neutral. I only conclude on this point by noting that in the regional ballot paper, where there is one independent named, he goes under the name of Xavier Alfonso. I may be wrong, but it does not sound like the name of a boy from the valleys to me.
In conclusion, the noble Lord, Lord Elystan-Morgan, said that this was perhaps a unique moment given that all sides were applauding a particular order; and the noble Baroness, Lady Gale, commended the order for its evidence base, for being practical and for being sensible. I think there is general agreement. I have no doubt that when the time comes, the respective parties will engage in electoral combat with great passion, but no matter which party we belong to—or none—it is in all our interests that these elections are conducted effectively and efficiently, and I believe that with this order, we put in place the machinery for doing so. I commend the order to the House.
Public Bodies Bill [HL]
Lord Warner
“Audit Commission.”
Lord Warner
My Lords, my amendment would add the Audit Commission to Schedule 1. I move it not because I wish to abolish the Audit Commission—quite the reverse—but because I wish to probe the thinking of the Government on why it has been excluded from the Bill while other bodies have been included in Schedule 1.
The utterances of Conservative Ministers in the coalition have been extremely critical of the Audit Commission and there has been a steady trickle of briefing against it from within the CLG so I, in my naivety, had rather assumed that Mr Eric Pickles would have been rather keen to rid himself of this body at the earliest legislative opportunity. Perhaps, let us hope, he has had a damascene conversion against abolition but more probably, as I suspect from my own intelligence, it is proving a bit more difficult than he thought to dismember the Audit Commission. That sort of impetuosity is typical of the way in which much of this Bill has been produced: decide first and think about what the reasons were afterwards.
I should acknowledge that, over the years, my path has crossed several times with the Audit Commission, so I could be said to have an interest to declare. In 1986, the commission produced an excellent report on community care which, to their credit, the Conservative Government acted upon. I was very involved with the reforms that followed that commission report, and again, 10 years later in 1996, when the commission produced a withering critique on the state of the youth justice system under the Conservatives that in its turn led to the establishment of the Youth Justice Board in 1999—an issue that we will debate later under an amendment in my name and that of the noble Lord, Lord Ramsbotham. Then, when I was a Health Minister, the commission helped to sort out some arcane, unworkable NHS accounting rules and provided much technical help on NHS reform, certainly to me. The fact that this commission has been capable for many decades of speaking truth to power has been a continuing feature of its work, but it seems to be a quality that has been little valued by some senior Ministers in the coalition Government. The way that this Bill has been produced rather confirms that.
I will not spend a lot of time today explaining why abolition of the Audit Commission is a thoroughly bad decision and will do much damage to good governance and efficiency in the public sector. There will be plenty of time to do that when, as I suspect, the Government eventually find a way to swing the legislative axe next year. However, I shall mention one issue that affects many public bodies but which, it is clear, has not been adequately thought about before the Government decided to abolish the Audit Commission—how to ensure that all local public bodies have an audit system based on clear principles of independence. We will not go into that tonight but I want to register that point.
There is no doubt that the Audit Commission has curbed the fees of the big accountancy firms for auditing public bodies and that its removal is likely to unleash significant increases in public expenditure thereafter. This is the kind of thing that we would expect to have spelt out in any impact assessment on legislation on the Audit Commission. However, if one looks at this Bill, one actually sees what I can only describe as contempt for Parliament, with the publication of an impact assessment that has no costs and benefits assessment in it about these bodies in Schedule 1. There is nothing there to tell us what the benefits and costs are of doing the things that the Government want done through Schedule 1. That is one reason why many of us are so concerned about the Bill.
Viscount Eccles
My Lords, I have not the good fortune to have been in this House for very long. I have had two sessions here. One, in 1999, was rather short, but I have been here from 2004 until today. I do not know a great deal about the procedure of this House, but that sounded extraordinarily like a Second Reading speech. Perhaps I am mistaken, but that is how it sounded to me.
I will briefly offer a little comfort about impact assessments. This is, admittedly, a framework Bill, and there is a long list of bodies in Schedules 1 to 6. Whenever a Secretary of State wishes to put down an order to abolish, to change funding or to merge, he will have to produce an affirmative instrument. Affirmative instruments are subject to 12 weeks’ consultation and the provision of an impact assessment, unless there is a very good reason why there should not be an impact assessment. The idea that there will never be any impact assessments for this House to look at is not right.
How will this House look at them? There is a committee called the Merits Committee, on which I was fortunate enough to serve for four years. That committee, as your Lordships know, looks carefully at every instrument. If it thinks that it is right to draw something to the attention of this House, it does so. If it thinks that the policy in the instrument is inconsistent with the Government’s declared policy, it says so. Then that affirmative instrument is debated.
It has been said—and we shall come back to this—that there should be some enhanced procedure, allowing Parliament to debate the thing in more detail because, it is said, Parliament does not usually turn down affirmative instruments. Nevertheless, we have that power. I believe, if the noble Lord, Lord Warner, will forgive me, that to reiterate that there is no impact assessment is to misunderstand the way in which the Bill has been put together. If you believe that this Bill should not have been put together as it was and that we should do whatever will be done only by primary legislation, what you are saying is that we will do only half a dozen bodies a year, because that is about all we would ever get the parliamentary time for.
Lord Warner
The noble Viscount may wish to interpret this as a Second Reading speech, but I thought that I was asking a very serious question about why some of these bodies are in Schedule 1 when they are fundamentally not that much different from the Audit Commission, which is not in Schedule 1. I am trying to understand the Government’s criteria for including some bodies but not others in this Bill. That is the whole purpose of my speech. I say to him, with the greatest respect, that debating the detail of an order some many months after the passing of this Bill will be too late. Those of us who have experience of chairing and being a member of staff of some of these public bodies would say to him that, once you have signed the death warrant—that is what the Bill is—you have no hope of retaining a great deal of talent in some of these bodies. That melts away. It is a perfectly rational, human response to a death warrant being signed on the organisation that you work for. It is a bit late in the day, when we get to the order, to start having the debate about whether it was a good idea in the first place.
Lord Hunt of Kings Heath
This has been a very interesting short debate. I am grateful to my noble friend Lord Warner for allowing us to debate the Audit Commission and some of the matters that arise from consideration of it as far as the Bill is concerned. My noble friend has a distinguished record as a quango basher. He led the arm’s-length body review in the Department of Health, which I succeeded him on. That reinforces the view that we, on this side, are not at all opposed to the principle of looking at each of these organisations where it is quite clear that they ought not to continue or that their functions can be done in another way. We have no problem with that. We do have a problem, however, with the architecture of the Bill. There is the general principle of the Henry VIII clauses, a huge and unprecedented power given to Ministers. I have no doubt whatsoever that, if we as a party had brought this Bill before your Lordships’ House in the last Parliament, we would have had no possibility whatsoever of having it passed.
The second point is this. The noble Viscount is right to suggest that, when affirmative orders come before your Lordships’ House, consultation has to take place and impact assessments have to be published. However, we are right, at this stage, to scrutinise those bodies that are under threat in this Bill.
Also, as a distinguished member of the Merits Committee, the noble Viscount may well have observed the correspondence between the committee and the noble Lord, Lord Strathclyde—the Leader of the House—on the question of the use of the conventions as regards secondary legislation. The Cunningham joint select committee report, which was approved by this House, made it clear that there were circumstances in which it was quite appropriate for the House to seek to defeat secondary legislation. My judgment is that that would apply to this Bill, because the kind of skeletal Bill that the Cunningham committee described is exactly what we are debating today.
The noble Lord, Lord Strathclyde, seeks to reinterpret the convention as regards secondary legislation. Essentially, he does not accept that there is a convention that this House can seek to defeat secondary legislation in the circumstances described by the Merits Committee. That increases our nervousness about whether the scrutiny available to the House of Lords will be sufficient to meet the needs of this Bill. We would have had greater comfort if the noble Lord, Lord Taylor, who is leading this Bill through with his usual inestimable charm, had clearly indicated that the Government would not proceed with Clause 11 and Schedule 7 and would agree to use the super-affirmative procedure. If he had acknowledged that at an early stage, the passage of this Bill would be an awful lot easier. I suspect that that will be the end point of our debates in your Lordships’ House. He will know that there is profound unease about this Bill all round the House. We will continually come back to the point about the architecture.
Lord Greaves
Before the Minister replies, may I ask the noble Lord, Lord Hunt, a question? Earlier in his speech, he waxed lyrically in his normal way about the problem of whether the House of Lords can reasonably reject affirmative orders. As the noble Lord knows, many of us in this part of the House very much agree with him that the ordinary affirmative procedure is not acceptable for this legislation. Indeed, the enhanced super-affirmative procedure being put forward by the Government is still not adequate. Something rather special is needed, given the proposal to close down by ministerial order so many organisations that have been set up by primary legislation. There is a great deal of common ground on this issue around the House.
I wanted to pick up the point that the noble Lord has made several times about the approach that my noble colleague the Leader of the House is taking to affirmative orders, possibly taking a different approach from the view that was taken by the Cunningham committee. Does the noble Lord, Lord Hunt, accept that, as ordinary affirmative orders have to be put to the House after discussion, nobody in this House—not even the Leader of the House—can prevent this House from rejecting an affirmative order if that is what it wants? If there is a division of opinion when the voices are called for, there will be a Division and, if more people vote in the Not Contents Lobby than in the Contents Lobby, the order is rejected. That cannot be prevented by anybody.
Lord Hunt of Kings Heath
My Lords, I am sure that that is right. I remind the noble Lord that the Companion recalls the vote taken by your Lordships’ House some years ago that reaffirms its right to defeat secondary legislation. I am sure that that is the position. However, it is important to note the views of the Leader because it is worrying that he should seek to undermine the consensus that I thought we held about the Cunningham convention.
Lord Taylor of Holbeach
We had this debate the other evening. If the noble Lord remembers, I corrected what I said from “convention” to “custom”. I think that that more closely fits what happens in this matter. It is for the House to decide how it deals with statutory instruments. It is not a matter of convention; it is purely a matter of custom. If the noble Lord is seeking to develop this argument, which may be connected to this amendment—I understand that it is certainly connected to the purpose of the Bill—I think that it would be important for him to bear that in mind.
Lord Warner
Whether it is a custom or a convention makes very little difference to the people working in these organisations. As far as they are concerned, if Schedule 1 goes through, they are for the chop. That is the end of those organisations. People will make their own dispositions. They are not going to sit around waiting for the customs and conventions—or whatever we want to call them—of this House to decide whether this House will or will not defeat an order many months later. Does the noble Lord accept that there is a problem of handling for many of the organisations in Schedule 1?
Lord Hunt of Kings Heath
Perhaps I may come in first and respond to the noble Lord, Lord Taylor, before he responds to my noble friend. In my remarks I made no criticism whatsoever of the noble Lord, Lord Taylor. He is quite right that he made the point about custom, but I was referring to the correspondence between the noble Lord, Lord Strathclyde, and the Merits Committee, which has been published in, I think, two reports of the Merits Committee.
Finally, having raised concerns about this Bill, we have been informed that we should be comforted by the fact that each order would be an affirmative order. I do not think that that is sufficient, nor do I think that the amendment that the noble Lord has tabled in relation to enhancing that is sufficient.
The problem is that at the moment we do not find the Government willing to hear the voices around this Chamber or to understand that at some point they will have to make some movement, as it is pretty plain that this Bill will not get through your Lordships’ House in its present form. Therefore, it would be in everyone’s interest for the Government to show willing and to sit down and listen to some of the genuine concerns that are held in the House to see whether we can find a constructive way through. The debate on the Audit Commission allows us to put those matters on the table.
Lord Taylor of Holbeach
I thank the noble Lord for that contribution to our discussion on this amendment. The amendment in the name of the noble Lord, Lord Warner, if not a probing amendment, is a teasing amendment. It is a new parliamentary device to tease the Government into enunciating their philosophy behind the Bill. Noble Lords would agree that some of the speeches have resembled Second Reading speeches and have gone over ground that we have discussed before. So that all noble Lords are aware of this, I reaffirm that I am listening and that I am conveying the mood of the House.
Why I must resist the amendment to include the Audit Commission in Schedule 1, which I have no hesitation in doing, and why I forgive him for not producing an impact assessment on his proposal to include it in the schedule is because the noble Lord knows very well that the time for consultation and impact assessments comes later on in the proceedings. It is not part of this legislation to produce those documents for individual bodies.
Lord Warner
The Government actually produced an impact assessment and that impact assessment is totally silent on the subject of costs and benefits of the proposals, even in any kind of outline form. Is the Minister saying that the Government can bring a Bill to this House seeking to abolish a very large number of bodies and not produce any numbers whatever about the costs and benefits? Is that his position?
Lord Taylor of Holbeach
Indeed, it is. The process that is built into the Bill allows for impact assessments to be presented at the time of change. The Bill does not propose change; it facilitates change. I tease the noble Lord. He is proposing to include a body in Schedule 1 but, quite rightly, he has not come up with an impact assessment because he is not in any position to provide that; nor would I be in a position to provide that. The time to do that is when the department makes a decision to act under the Bill. I know this is a tease on the noble Lord’s part, but it is very important to use the opportunity of this debate to get that message across.
Lord Warner
If the Minister looks back to the period between 2004 and 2007 or 2008, he will see that the previous Government came forward with primary legislation for changes to bodies set up by Parliament with an impact assessment which set out the cost of those changes so that Parliament could see the money implications of changes to legislation that it was being asked to make. In effect, the Minister seems to be asking for a constitutional change: to come to Parliament to take primary legislation to abolish bodies which have been set up by Parliament without giving any idea of what the costs and benefits of that decision are. That is what he seems to be saying.
Lord Taylor of Holbeach
I am trying to use the opportunity of this debate to reassure the noble Lord about the process that will exist following the passage of the Bill, that no action can be taken without proper consultation and impact assessments. Noble Lords know that. I have said this many times. However, I have listened to what has been said about the need for information. I appreciate that the Committee and the House would like more information on proposed changes, and I take that matter on board.
Baroness Royall of Blaisdon
I am sorry to delay the noble Lord once more. However, in that information, if we are to take real decisions about whether important bodies such as the Agricultural Wages Board, which we were discussing earlier, are to remain in existence, then the information that the noble Lord is very kindly going to provide us with must include an impact assessment on, for example, the costs. Otherwise, we cannot come to a clear and rational decision.
Lord Taylor of Holbeach
Indeed, I reassure the noble Baroness that any instrument produced under the Bill to enact any of the powers within it will contain that information. That is the position. This is not primary legislation to abolish the Agricultural Wages Board or the Audit Commission. That is not what the Bill is about; it is intended to empower the executive with the ability to bring forward secondary legislation in order to facilitate change. It is at that stage that the legislation occurs. It is very important to get that message over.
We have produced an impact assessment for the Bill. It talks about changes to particular bodies made under the orders of the Bill, and they will be produced in accordance with its existing rules and guidance on impact assessments at the appropriate time. Perhaps I may continue by addressing the amendment. After all, the noble Lord has proposed that we should include the Audit Commission in Schedule 1, and I wish to tell the Committee why I think that suggestion needs to be resisted and why there may well be a better way of dealing with the policy change which the coalition has announced in order to deal with it.
The Government intend, where appropriate, to use the power in the Public Bodies Bill to make changes to public bodies. However, the changes regarding the Audit Commission require power changes to legislation which is outside the scope of the Public Bodies Bill. Therefore we are setting up an alternative legislative vehicle. I will explain the background to that. On 13 August, the Secretary of State for Communities and Local Government announced plans to disband the Audit Commission and refocus audits on helping local people to hold local bodies to account for local spending, as well as on saving the taxpayer some £50 million a year. This figure reinforces the one given by my noble friend Lady Hanham.
The commission’s responsibility for overseeing and delivering local audits will stop, its research activities will end and its in-house audit practice will be moved to the private sector. We are considering a range of options for doing this. Councils will be free to appoint their own independent external auditors from a more competitive and open market, and there will be new audit arrangements for local health bodies. All local audits will be regulated within a statutory framework, with oversight roles for the National Audit Office and the profession. As a result, the Audit Commission’s in-house practice will be transferred out of public ownership. A range of options are being considered and evaluated for moving the audit practice into the private sector. The department is now working closely with the commission, the accountancy profession, local government and the health sector to develop the detailed design of the new systems, and to take forward, in the most effective way, the transfer of the commission’s in-house audit practice into the private sector. This work is ongoing. We are aiming for the new regime to begin to come into effect during 2012-13. That regime will require primary legislation and as such, this timetable is dependent on parliamentary time. If the noble Lord’s amendment were to succeed, it would mean that the Government could use the power in Clause 1 to abolish the Audit Commission. However, the Government would not be able to ensure that a robust statutory framework for local audit is put into place.
This is the statutory regime for the audit of local authorities and local health bodies, including foundation trusts and other NHS trusts. For example, the powers in the Public Bodies Bill would not allow the Government to provide these bodies with the powers they need to appoint their own independent external auditors. Likewise this Bill would not enable provision to be made for the arrangements through which the quality of local audit will be maintained. The Government intend to bring forward separate primary legislation, subject to parliamentary time, which deals with the disbanding of the Audit Commission, the transfer of the in-house practice into the private sector and the setting up of the new local audit regime in a comprehensive and integrated way. As such, I hope that the noble Lord will withdraw his amendment.
Lord Warner
My Lords, I was fascinated to hear that elegant explanation of how the Government will deal with the Audit Commission. If only I felt they would use that same elegant approach to some of the other bodies in Schedule 1, I would go home happy. I shall continue to reflect on what the noble Lord has said, and look forward to having answers to my questions, which I do not feel that I have had. In the mean time, I beg leave to withdraw the amendment.
Lord Fowler
“BBC Trust.”
Lord Fowler
I think that I can bring the Committee into calmer waters by proposing something that the government Front Bench will have no difficulty whatever in accepting. The Marshalled List is littered with amendments to preserve bodies that the Government propose to abolish. I am not doing that in any way; I am adding a body that should be abolished and which would have beneficial financial consequences for the Government. I hope to have a very helpful reply from the government Front Bench but I fear an unhelpful intervention from my old pal on the Select Committee.
Lord Maxton
I have a lot of sympathy with the amendment but if I were a Clerk in the other place I do not think that this amendment would be in order. The trustees of the BBC and the BBC itself are not established or controlled by an Act of Parliament. Therefore, I do not see how we can have an amendment that would abolish something in an Act of Parliament that in itself was not established by an Act of Parliament. That may be a little legalistic but I wonder whether the noble Lord would like to comment on that.
Lord Fowler
I knew that the noble Lord would say something entirely unhelpful from past experience. I will come precisely and exactly to that point, but let me make the case in principle, with which the noble Lord is honest and experienced enough in these matters to sympathise.
Let me make it clear that this is in no way an attack on the BBC. I am a committed supporter of the BBC, as I think is the noble Lord. It provides the best news coverage both domestically and internationally of any media organisation, probably in the world. I totally support its freedom to report, including the recent “Panorama” on corruption inside FIFA. I note, when abroad, how high the corporation’s reputation is. In short, I believe that we would be mad to turn our back on the BBC or see it weakened. But one of the things we should recognise is that the BBC is currently, and has been for some time, under attack from powerful forces who would like to see it changed and weakened. There is no question about that. It is therefore crucial that the BBC has a structure which, apart from anything else, enables it to fight its corner, to put its case and to reply swiftly and with confidence to attacks when they come. My view is that this is simply not achieved by the present divided leadership of the BBC and much of that fault lies with the formation of the BBC Trust.
The BBC Trust is a recent invention. For the vast majority of the time and history of the BBC we did not have a trust and there was no need for such a body. It was set up by the last Government in the aftermath of the dispute with the BBC about its reporting of Iraq. The result has been that there have been not one board but two boards. We have had an executive board that has been headed by the director-general but with non-executive members—something pretty unusual in corporate history—and we have had the BBC Trust, which was kept deliberately separate from the BBC executive, housed in a different body and with the chairman being able to call himself the BBC chairman but only as a courtesy title. That is exactly how it is set out.
The Select Committee which examined the royal charter of the BBC, which I chaired and of which the noble Lord, Lord Maxton, was a member, opposed this change. Basically, in précis, we said that it would be much better to have one organisation—a BBC board, a chairman, non-executive directors, a chief executive and other executives—in other words, a structure just like the structure of any other major corporation in this country, with regulation carried out if necessary by Ofcom. We were not alone remotely in our opposition to the change that was being proposed at the top of the BBC. Past chairmen of the BBC such as Christopher Bland made it clear that they were opposed to it. Most significantly of all, by the end of the last Government, Ben Bradshaw, then Secretary of State for Culture, also said that he was opposed to it. So I think we can say that there is a pretty strong consensus, and an even stronger consensus in the broadcasting industry, that this is an unnecessary body and that reform and change need to take place. Perhaps I should say in parentheses that this is in no way a personal criticism of the present chairman of the trust, Sir Michael Lyons, who I know and like and have worked with entirely happily. It is not a criticism of him; it is a criticism of the divided structure. But Sir Michael is now standing down and there therefore exists the opportunity to change the structure into something more sensible. That is the point. This Bill seems to me potentially to give that opportunity.
The purpose of the Bill is to eliminate or pare down unnecessary bodies in the public sector. The BBC Trust qualifies on all counts. It adds to cost, causes delay and sometimes confusion in decision-making, and could all be done so much better than it is. Again, I think there is no real conflict on that. But so far that opportunity has not been taken. I do not detect that that is because this Government are any more enthusiastic than the last Government about the trust—any more enthusiastic than Mr Bradshaw. The concern seems to be that action would mean interfering with the royal charter. I come now precisely to the point that the noble Lord, Lord Maxton, was putting. Our view as a Select Committee was that the whole governance of the BBC should be put on a statutory basis, but this was resisted by previous Ministers on the grounds that the royal charter cemented everything in for 10 years. That, in précis, was the case that was put to us. In the past few months we have seen the licence fee frozen and the cost of the World Service added to the licence fee, and we very nearly saw the cost of licences for the over-75s added to the licence fee as well. I do not debate the merit of those proposals—I would love to do so, but I do not—but I observe that it has not proved very durable cement as far as the 10-year period is concerned.
Lord Stevenson of Balmacara
My Lords, I declare an interest as a member of your Lordships’ Select Committee on Communications and pay tribute to the stewardship of the former chairman, the noble Lord, Lord Fowler, who has just spoken. It was interesting to listen to the initial spat between the noble Lord and another former member of the committee about whether this amendment could be permitted. In truth, the whole of his speech appeared to be about moving the BBC into Schedule 7, not Schedule 1. The attack, as it was, on the current governance arrangements of the BBC was well made and echoed what was in the Select Committee’s report a few years ago, but it is really about change, not abolition. However, I will pass on because we are in tickling and teasing mode rather than worrying too much about exactly how these things are coming out at the moment.
Today’s debate has been, for those of us who are somewhat new to the arrangements for discussing Bills, a wonderful tour d’horizon of the far reaches of our constitutional arrangements in this country. I did not know enough about agriculture, justice, the Audit Commission or various things to do with shipbuilding. I may even have heard about aircraft—or was it the other way around? I was not quite sure at the end of that discussion whether we had in fact had an answer to the amendment earlier today, but, again, I will pass on. We were only tickling there. Underneath all this, however, does the discussion not raise one or two principles? It seems to me that, although a lot of the heat and energy in this debate has been about whether we are doing it right, the elephant in the room—that terrible hackneyed phrase—is really what this says about our constitutional measures.
Every Government and every governing operation has to work out how to deliver the services that legislatures create for them. In that, we have to think about subsidiarity—the lowest level to which we can devolve the operations which are to be carried out, and make sure they are done properly. We have to give protection from undue interference from those who have set up the arrangements and freedom to those who are charged with getting on with the duties to undertake reasonable stewardship. I do not hear those principles coming through very much in the debate we have been having, but they are surely underlined in what we are saying.
The amendment to which I am speaking is really, as I said, a teasing amendment—a hypothetical situation perhaps. But the noble Lord, Lord Fowler, brought out very well, and I am sure other speakers who will join us in this debate will also say, that nobody argues against the very special place that the BBC holds in this country. It makes entertainment programmes among so many other things, so it obviously affects every aspect of our culture, and it informs and therefore changes the terms of the political debate. It is absolutely at the heart of what we believe our country is about. It is important that we find some form of super-protection, and I think the noble Lord was saying the same thing, both within the environment in which the BBC operates, but also against Ministers and even against Parliament. One could not imagine, if the BBC were to be abolished, the DCMS accepting responsibility for all the various aspects of our life that the BBC influences. That must not be right.
We could not abolish the BBC, but how do we manage it? That is the question that we have to think about. Clearly, the state has to balance the interest it has in economy, efficiency and effectiveness, and apply that to all its public bodies. I worked in a similar body, the British Film Institute, some time ago; just before I arrived, it had negotiated very hard indeed against the then Government to achieve a royal charter, which was given to the BBC about 50 years after its incorporation in 1933. We celebrated that, because it felt as if we had received the gold standard in terms of freedom from interference from Ministers and those in authority. It was illusory, obviously, because Ministers are very persuasive and good at getting around anything that could possibly smack of concern about these sorts of issues; but it was something that we ritually touched every month or two, just to reassure ourselves that we did exist, that we had that protection and that we should have had it. The BBC is in a similar position. Its charter is renewable, as it was not in the BFI’s case, but there was sufficient public interest and discussion in the renewal process to ensure that the BBC would not be affected too badly.
My concern in this amendment—and I am not entirely sure whether I am speaking in favour of it or against it, but I suppose I am tickling it—is that this is really about how one would find in a constitutional settlement, perhaps a codified constitution towards which we are surely moving, a way of expressing some of the issues that appear in our day-to-day existence, which we take for granted, such as academic freedom, freedom of speech, and the ability to switch on our television and see unmediated news and entertainment. These things have to be written in somewhere, not be dealt with simply by a framework Bill, a subsequent affirmative order or in speeches made in this House or another place. That is more important than some of the points made around other bodies here. There are one or two organisations and bodies that we would recognise as being hard-wired in our operation of this country, but I have yet to find an appropriate place within the various organisations that we currently see.
In another debate at another time, I encouraged the noble Lord, Lord Maclennan, to talk a little more about his ideas for a council of state, which might in some way take on the responsibilities of this Chamber. It may be that at some point we should think again about how we account for those senior bodies, such as the BBC, that we must have in our arrangements. I leave that thought with this House.
Lord Maxton
My Lords, given that I waited 40 minutes for a bus last night in the cold, I do not intend to detain the House for long tonight. I do not think that this amendment could be part of this Bill. The BBC is part of the royal charter. To get rid of the trustees, as the noble Lord, Lord Fowler, said, you would need to put the BBC on a statutory basis in an Act of Parliament. I accept the tenor of his amendment, and I supported the report when it was published in terms of not wishing to have trustees but having a different type of governance. However, my worry is that, if we get to the point where the BBC is to be established by an Act of Parliament, it would mean passing an Act of Parliament to abolish the present situation—essentially abolishing the present BBC—and then re-establishing it. In those circumstances, given what the noble Lord said about the threat that is coming to the BBC from external forces, we would put the BBC under even greater threat. That would be the whole existence of the BBC in those circumstances.
Having said that, I have a lot of sympathy with what the noble Lord has said, not just because the governance of the BBC is wrong in terms of the trustees. This is no criticism of the trustees personally, but they have failed in one of their primary responsibilities—to hold the BBC, somehow independently of the BBC, to account. They have failed to do that job properly in one particular regard. The BBC, after all, is funded entirely out of public funds, and the trustees should say to the BBC that it should be accountable to the public in the same way as is every public body funded by the taxpayer. In particular, as the noble Lord will know, I believe that the whole BBC—every person, both employee and contractor—should be subject to the Freedom of Information Act in the same way as are all other public employees. Therefore, we should know exactly what some of the people in the BBC earn, and I do not mean the big entertainment stars. I am much more interested in knowing what some journalists earn, as they attack those of us who are public servants in other ways, including attacks on MPs about their expenses. In that sense, the BBC Trust has failed in its duty to hold the BBC to account. For that reason, I would support the amendment in the name of the noble Lord, but I feel that if his amendment is carried it would put the BBC as a whole at some risk.
Baroness Jones of Whitchurch
My Lords, I have listened to the contributions of the noble Lord, Lord Fowler, with some interest. I certainly acknowledge his experience and his interest in the future of the BBC over the years. He described himself as a committed supporter of the BBC and I certainly endorse that. However, by raising this issue in this way, I fear that he will undermine the very cause that he at the same time is seeking to champion. I say that for a number of reasons.
There may well be the need to have a debate over the future of the BBC Trust. As the noble Lord, Lord Fowler, said, the previous Secretary of State, Ben Bradshaw, has already described the BBC Trust as not a sustainable model in the long term, a fact which we acknowledge. But this is not the time for such a review. The truth is that over the last few months the BBC has been battered by the challenges to its role. There have been, as has been acknowledged, powerful forces seeking to undermine its role. It was forced in an unseemly timescale to agree a financial package that might have been more robust, more defensible and more justifiable if a longer time had been taken over those negotiations. In its wake, questions have been left over the future funding of organisations like the World Service and S4C which might not have been intended at the outset of those negotiations.
Lord Taylor of Holbeach
My Lords, I thank my noble friend, who I hold in high regard, for moving this amendment. However, I have to disappoint him by saying, like the noble Baroness, Lady Jones of Whitchurch, that this is not the time nor the place. Now is not the time, and this Bill is not the place, to debate the proposals that he has presented in this amendment. Perhaps the contribution from the noble Lord, Lord Maxton, explained that for the Committee.
The BBC Trust is established through the royal charter, the current charter being in place until the end of 2016. The Government have no intention of bringing the charter to an end before its designated end date of 2016. There are certain benefits in granting a 10-year charter and remaining committed to its stated duration. For example, a charter supports the independence of the BBC from government and Parliament, to which the Government are committed in the coalition programme. A 10-year charter provides greater certainty and stability for the BBC in the way that it operates, including its governance arrangements, and gives the BBC an ability to plan for the future while allowing for a fundamental review at expiry. Ending the charter before its due date would undermine these important principles and lose the benefits of granting a 10-year charter. As noble Lords are aware, the Government have agreed with the BBC that the NAO can have full access to the BBC’s accounts in order to make it more transparent and accountable to Parliament. The Government do not believe that there is a case for any greater accountability to Parliament. As the noble Lord, Lord Stevenson of Balmacara, said in a very thoughtful speech—I was grateful for his contribution—the BBC must be able to hold Parliament and parliamentarians to account. Increasing the BBC’s accountability to Parliament would counter the principle of safeguarding its editorial independence.
The future of the trust as a model of governance will be fully assessed at the time of the next charter review. I am sure that my noble friend Lord Fowler will be in a position to advise on that assessment, and I imagine that he will do so robustly. As my noble friend is aware, the chair of the trust is due to leave the post at the end of his current term and a new chair will be appointed from next May. The BBC Trust offers a direct line of accountability to TV licence payers. It holds the executive to account. This separation has a purpose. As I have said, when the next charter expires, all issues relating to the BBC will be discussed.
When the current charter was created, extensive consultation took place. The public made it clear that the BBC should not be made more accountable to Parliament.
Lord Taylor of Holbeach
As I have said previously in my response, the public said in the consultation that they did not want the BBC to be beholden to Parliament because they felt that its independence and ability to criticise Parliament and government would be impeded.
Furthermore, the BBC is not a statutory body, as the noble Lord, Lord Maxton, pointed out. This Bill is designed to cater for bodies where changes need legislation in order to be effective. This is not the position in relation to the trust. Therefore, as with all other non-statutory bodies, it is not appropriate to include it in the Bill.
Despite disappointing my noble friend—I am sure that I have not surprised him—I would ask him to withdraw his amendment.
Lord Fowler
My Lords, as the Minister said, it is a disappointing reply. Frankly, I think that we are going backwards, because the previous Secretary of State in the previous Administration made a darn sight more radical assessment of the royal charter than the Minister has. He is now repeating all the things that we were told about four or five years ago. It is exactly the same script as the Department for Culture issued at the time. This stuff about the public having been asked is complete rubbish; I really do think that the department might at least take that out of its script if nothing else. I am sorry to get heated about this, but it is fairly dismal.
I thank all noble Lords for their contributions. It has been a useful debate. What the noble Lord, Lord Stevenson, said was extremely interesting. I do not think that the royal charter is a gold standard. It has not worked for the BBC. It is frankly just a deal, as I said, between the Secretary of State on the one side and the chairman of the BBC on the other. We can set up Select Committees to kingdom come, but some of us have to take notice of those Select Committees, and the record of that has not been great. When we come to Select Committees, I would point out to the noble Baroness, Lady Jones, that the Select Committee in the House of Lords and the Select Committee in the House of Commons have both said that the BBC should be placed upon a statutory basis. There is no doubt about that. The noble Lord, Lord Maxton, raised an interesting and important point about the statutory basis and the dangers that it could have and I do not wish to decry that. I also remember him arguing passionately in the Select Committee that the only democratic representatives, as far as the licence fee was concerned, were Members of Parliament.
The noble Baroness said that the BBC has been battered. She might consider that one reason it has been battered is that it has no strong chairman, no strong board and no one to respond for it. She asked, “why now? We cannot have a debate now.” I would point out that I have had a request for a debate on the Order Paper for the past 12 months. There are not that many opportunities for debates in this House. The crucial question, the crucial issue is this. Sir Michael Lyons, the chairman of the BBC Trust, is resigning. It gives us an opportunity to rethink.
Of course I will withdraw this amendment, but I warn the House that when both the government and opposition Front Benches agree on a policy, then the Back Benches need to think very carefully indeed. With that in mind I beg leave to withdraw the amendment.