House of Lords

Tuesday 7th December 2010 Lords Chamber

Tuesday, 7 December 2010.

14:30

Prayers—read by the Lord Bishop of Lichfield.

Baroness Vadera made the solemn affirmation.

Bankruptcy

Tuesday 7th December 2010 Lords Chamber

Question

14:36

Asked By

[Lord Barnett]

To ask Her Majesty’s Government what is their definition of “bankruptcy”, as the term was used by Lord Sassoon on 1 November (HL Deb, col. 1552).

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, public sector net borrowing in 2009-10 was £156 billion or 11.1 per cent of GDP—the highest level in UK post-war history. The Government were borrowing £1 for every £4 they spent. That was the brink of bankruptcy.

[Lord Barnett]

My Lords, I should declare a professional interest; perhaps I should also declare that I have had free tuition in economics from my noble friend Professor Lord Peston.

Despite the Minister’s Answer, does he not agree that on any definition this country never has been, and is not, anywhere near bankrupt? The plain fact is—and the ONS confirms this—that the net asset position of this country at the end of last year, just before the noble Lord took office, was £6.7 trillion. On top of that, there is no problem in paying debts, because the average length of debt repayment is 14.2 years. We recently lost the services of a distinguished noble Lord in this House. I would not like to see another one go so soon from the Prime Minister’s service. Will the Minister withdraw the word “bankrupt” and apologise to the House for using it?

[Lord Sassoon]

My Lords, I know that the noble Lord, Lord Barnett, is a man who likes precision, so I thought that I would do a little research and see how he has used the term “bankrupt” in this and another place. The first time that the noble Lord used that word in another place was very interesting. It was on 8 April 1965 in the Budget debate. The then Member for Heywood and Royton was defending the then Labour Government’s cuts to our Armed Forces east of Suez. He asked:

“Have we discussed this with our Commonwealth friends in the area and told them … that … it would not help them or us if we bankrupted ourselves by having a force in the area of a size which we could not afford?”.—[Official Report, Commons 8/4/1965; col. 737.]

That was in 1965 when public sector net borrowing was 1.6 per cent of GDP. On that basis, does the noble Lord think that I was a little moderate in my language when I talked about the brink of bankruptcy?

[Lord Peston]

My Lords, as the Minister does not, under any circumstances, believe in answering questions put to him, can I ask him whether he has looked at the latest report of the Office for Budget Responsibility, whose forecasts for the next five years—which is how long this Government are insisting that they are going to stay—state that the balance of payments will be in deficit for every one of those five years? That means that our net assets will decline overseas by the amount we have to borrow to finance that deficit. What a nerve the Minister has to talk about bankruptcy in connection with the previous Government, when the balance of payments forecasts show that if anyone is making us head for bankruptcy—although I do not actually believe that we are—it is the present Government?

[Lord Sassoon]

My Lords, when the Government came into office, we had been put on negative credit watch by one of the main rating agencies, unprecedented for the UK, and were paying interest of £120 million a day. The first or second largest holder of bonds in the world had talked of the UK as a “must to avoid” and described the UK’s gilts as,

“resting on a bed of nitroglycerine”.

The Government have restored confidence in our public finances by setting out a clear plan to restore the budget to balance and that is what enables us to borrow what we need to borrow on the international markets on reasonable terms.

[Lord Naseby]

Has my noble friend had a chance to read the statement from the shadow Chancellor in which he said that the problem for the Labour Party was that it had built up a reputation for 13 years of overspending and debt? Is that not near-bankruptcy?

[Lord Sassoon]

I completely agree with my noble friend. That is indeed it. I was looking at the Oxford English Dictionary this morning and I saw that one definition of “bankrupt” is,

“one who has brought himself into debt by reckless expenditure or riotous living”.

I would not presume to accuse the previous Government of riotous living.

[Lord Davies of Oldham]

My Lords, the successive attempts by the noble Lord to define bankruptcy have looked quite pathetic.

[Noble Lords]

Oh!

[Lord Davies of Oldham]

Well, his latest definition would indicate that every mortgage holder in Britain was bankrupt because they have substantial debts. The issue is whether these debts can be managed. He must draw a distinction between the situation of Ireland at the present time, or of Greece in recent times, and that of the United Kingdom, where, as has been indicated, our debt repayment is over a 14-year period.

[Lord Sassoon]

My Lords, leaving aside the fact that the mortgage payers of this country would be somewhat upset to be thought of as having brought it upon themselves by reckless expenditure, the point is, as the IMF succinctly put it in its report of 27 September 2010:

“The consolidation plan and implementation of early measures to tackle the deficit—one of the highest in the world in 2010—greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy”.

That was what the IMF had to say.

[Baroness Seccombe]

My Lords, does my noble friend agree that, if we had not taken action so quickly, we would have been a further £100 billion in debt by 2015?

[Lord Sassoon]

Indeed. I am grateful to my noble friend and I think that points out how close to bankruptcy we were.

Sinn Fein: Parliamentary Oath of Allegiance

Tuesday 7th December 2010 Lords Chamber

Question

14:43

Asked By

[Baroness Boothroyd]

To ask Her Majesty’s Government whether the statement by the Northern Ireland Secretary to the House of Commons Northern Ireland Affairs Committee on 8 September, that he was “open to suggestions” from Sinn Fein on ways to vary the parliamentary oath of allegiance to enable its MPs to take their seats at Westminster, reflects government policy.

[Lord Shutt of Greetland]

My Lords, the Government have no plans to change the text of the existing oath. The Prime Minister and the Secretary of State have made clear their belief that Sinn Fein Members should take their seats in Parliament. If the oath is a barrier to them doing so, it is up to Sinn Fein to suggest an alternative. It will then be for Parliament to consider any changes.

[Baroness Boothroyd]

My Lords, that is reassuring news. Perhaps I may remind the Minister of the judgment of the European Court, made when I was Speaker of the Commons, that the oath of allegiance is part of our constitutional arrangements and that the refusal of Sinn Fein Members to take it legitimately debars them from taking their seats. Will the Minister confirm that Parliament's allegiance to our constitutional monarchy will not be meddled with for the convenience of any party or Government, and will he bring his answer to the attention of the Secretary of State for Northern Ireland?

[Lord Shutt of Greetland]

My Lords, I do not know whether I can add much, other than to state the belief that the Good Friday agreement means that the constitutional settlement is a settlement, and that there is no reason why Sinn Fein Members should not come to the other place. We are not aware, one way or the other, whether that is a major problem for them, or whether they would abstain from coming to the other place in any event. The Secretary of State has said that if Sinn Fein Members have a problem with the oath, they must raise it and see whether there is a way in which it might be solved. That is the position.

[Lord Morris of Aberavon]

My Lords, it is a mystery to some of us how Sinn Fein Members were able to claim the privileges of being Members of Parliament without taking the oath. Will the Government take on board that there would be wide repercussions in both Houses, and in public life generally, if there was a further dilution of long-established practices?

[Lord Shutt of Greetland]

I understand what the noble and learned Lord is saying. The position at the moment is that the Sinn Fein Members do not come here and do not claim a salary. They cannot have a salary because they do not come here. They can claim expenses because they still do constituency work: the other place agreed that that should be the case. They cannot claim £500,000: their expenses amount to somewhere in the region of £800,000.

[Baroness Harris of Richmond]

My Lords, what happened at Stormont? Did Sinn Fein Members take an oath?

[Lord Shutt of Greetland]

My Lords, part and parcel of the Belfast agreement is the agreement to behave in a peaceful way, with all that that means. As far as concerns allegiance, everybody who is elected to Stormont signs the roll of membership. They then designate their identity as nationalist, unionist or other: that is it. However, Ministers are required to take a pledge of office. There is a great deal more to that. It covers good faith, non-violence, peaceful and democratic means, and serving the people of Northern Ireland equally. Ministers sign up to a catalogue of things, but there is nothing that equates to an oath for Members of the Assembly.

[Lord Hylton]

My Lords, does the noble Lord agree that something along the lines of a pledge of office might meet the case of the elected Sinn Fein Members of another place?

[Lord Shutt of Greetland]

My Lords, I do not know. The Secretary of State has put it to them: if they have a problem in coming, they must say what it is and let the other place as a whole decide whether that is something that it can deal with. The offer is open to them if they wish to come, but we do not know whether they do wish to come.

[Earl Ferrers]

My Lords, given what my noble friend has just said, will he give an assurance that the oath taken by Members of the House of Commons will not change?

[Lord Shutt of Greetland]

My Lords, I cannot be absolute about this. The Secretary of State, supported by others, has said, “If there is a problem, come and put something to us and we will give it our consideration”. I cannot say what the Members of the House of Commons will say en masse if something is put to them. It may be that something with which they can agree is put to them; or it may be that they do not entertain it. I cannot answer that question.

[Lord Trimble]

My Lords, surely the Minister can tell us the Government’s position and policy on this. It is all very well to say that the Members in another House might or might not take a view but I trust that Her Majesty’s Government have a view and advice to give the House.

[Lord Shutt of Greetland]

As I said to the noble Baroness, Lady Boothroyd, at the outset, the Prime Minister and the Secretary of State have made clear their belief that Sinn Fein Members should take their seats. If the oath is a barrier to them doing so, it is up to Sinn Fein to suggest an alternative, and it is then for Parliament to consider changes.

[Lord Soley]

Perhaps I may suggest that we are making very heavy weather of this, and I am with the Minister in the sense that I do not think we should be doing that. However, I recognise that there is a problem for those who do not sign up to royalism, as they see it, and that goes back to the Civil War in all parts of the kingdom, not just England. When people take the oath, as we do here, they take it to the monarch but with the crucial words “under the law”. The law is made by Parliament and the monarch is part of Parliament. There is a case for looking at whether we should emphasise the rule of law and Parliament rather more but, as long as we are a constitutional monarchy, the oath will inevitably involve the monarch.

[Lord Shutt of Greetland]

The noble Lord is right. I repeat: the Government have no plans to change the text of the oath. It may be interesting for noble Lords to know that in Scotland, Wales, the Isle of Man, Jersey, Guernsey, Canada, Australia and New Zealand, Members take the oath, just as it is taken in this place, by either swearing or making an affirmation.

[Lord Brooke of Sutton Mandeville]

My Lords—

[Noble Lords]

Order!

[Lord Brooke of Sutton Mandeville]

I shall give up. The clock is now showing 15 minutes.

Autism

Tuesday 7th December 2010 Lords Chamber

Question

14:51

Asked By

[Lord Touhig]

To ask Her Majesty’s Government whether the forthcoming Autism Act 2009 statutory guidance will be effective in delivering the vision set out in the strategy document Implementing “Fulfilling and Rewarding Lives”.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, yes, I believe that the planning guidance will be effective in delivering the strategy for adults with autism. This guidance has been developed with advice from health and social care professionals, people with autism and their carers and the voluntary groups representing them. Only by such a transparent, mutual approach can we achieve the vision that the Government have set out for adults with autism: fulfilling and rewarding lives within a society that accepts and understands them.

[Lord Touhig]

I thank the Minister for that reply. I am sure he agrees that, when planning services, it is important to know what services are needed and how many people need them. I do not know whether the Minister is aware of the National Audit Office report which has revealed that 80 per cent of councils have no idea how many people with autistic spectrum disorders live in their areas. Will the Minister therefore agree to meet our colleague, the noble Baroness, Lady Browning, myself and members of the National Autistic Society to discuss ways in which we can ensure that local authorities meet their statutory duties towards people with autism?

[Earl Howe]

My Lords, I should be very happy to meet the noble Lord to discuss those issues. Although we do not have definitive figures for the number of people with autism in England, we have commissioned a study into the prevalence of autism among adults to inform strategic planning at central and local levels to benefit adults with autism as they access public services. We have commissioned that study from the University of Leicester and it is due to report by March 2011.

[Baroness Browning]

Can my noble friend confirm that part of the strategy will entitle people on the autistic spectrum to an assessment if they have an IQ of over 70? For many years, Department of Health circulars have given them this entitlement but they have been ignored in most parts of the country by social services departments. How will my noble friend ensure that this new strategy is properly implemented and that people with IQs of over 70 get the assessment to which they are entitled?

[Earl Howe]

My Lords, I am very grateful to my noble friend for raising that issue. I can reassure her that under Section 47(1) of the National Health Service and Community Care Act 1990 local authorities have a duty to assess a person who may be in need of community care services. This duty applies to people with autism. The revised Fair Access to Care Services guidance already makes it clear that an assessment of eligibility for care services cannot be denied on the grounds of a person’s IQ. We intend to reiterate this very clearly in the autism statutory guidance.

[Baroness Pitkeathley]

My Lords, does the Minister agree that delivering the vision for people with autism and their families is, in many cases, dependent on local authority resources? Has he any anxiety about that, especially as many of the services are delivered in the voluntary and community sector, which is already reporting major cuts to its grants?

[Earl Howe]

My Lords, clearly, local government grants will come under pressure over the coming years. To my mind, that makes it even more important that decisions about priorities are taken at a local level and the joint strategic needs assessment is, of course, the tool which will enable local authorities to decide on their priorities locally.

[Lord Low of Dalston]

My Lords, training for awareness of autistic spectrum disorder among frontline professionals is key to improving services. Following the publication of the guidance, when does the Minister expect that all lead professionals involved in commissioning community care assessments and GPs will have received autism training?

[Earl Howe]

My Lords, the statutory guidance that already exists—it has been revised in light of the response to the consultation—makes it explicitly clear that in addition to general autism awareness-raising training for staff, local areas should develop or provide specialist training for those in key roles who have a direct impact on access to services for adults with autism, such as GPs, community care assessors and commissioners and service planners.

[Baroness Thornton]

My Lords, I congratulate the Minister on continuing to make progress in this matter. As he will know, commissioning for autism services requires expert knowledge and, as my noble friend said, a recent National Audit Office survey found that 80 per cent of GPs said that they needed more training in autism awareness. Can the Minister outline whether any progress is being made to change that situation because, if it applies to GPs, it probably applies to other health workers? Is the Minister also supportive of the call from the National Autistic Society for NICE guidelines and for the inclusion of autism as one of the future quality standards currently under consideration by the National Quality Board?

[Earl Howe]

My Lords, we cannot mandate to NICE what quality standards are produced. However, the case for developing a quality standard for autism will be considered as part of work to commission a comprehensive library of such standards from NICE in line with our plans in the White Paper. NICE is already developing clinical guidelines on diagnostic pathways for autism, including one for children and young people with autism. That is scheduled to be published in September next year. On training, I cannot really add much to what I have already said to the noble Lord, Lord Low, but it is very high on the agenda.

[Baroness Hollins]

My Lords, in respect of the training of medical students to be able to provide, in their future careers, adequate and reasonable adjustments for people with autism, what does the Minister think can be done to develop sufficiently existing equality and diversity training so that there will be adequate understanding and adequate adjustments will be made?

[Earl Howe]

The noble Baroness raises a very important point. We know from general practitioners that they feel an absence of knowledge and training in this area. We are talking to the royal colleges about this.

[Baroness Hussein-Ece]

My Lords, how will the Minister ensure that the guidance ties in with the reforms to the NHS, for example, ensuring that the NHS bodies have due regard to any quality standards on autism that will be produced by NICE?

[Earl Howe]

My Lords, when the National Health Service commissioning board is established, it will have a duty to promote quality in the NHS. One way of doing that will be to utilise the quality standards produced by NICE, to produce commissioning guidance based on those quality standards and, in that way, to promote consistency of commissioning across the health and social care sector.

Banking: Liability.

Tuesday 7th December 2010 Lords Chamber

Question

14:59

Asked By

[Lord Haskel]

To ask Her Majesty’s Government whether the report published on 2 December by the Financial Services Authority regarding the Royal Bank of Scotland finalises the matter of liability.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, on 2 December the Financial Services Authority closed a supervisory investigation into the Royal Bank of Scotland group. The review confirmed that RBS had made a series of bad decisions in the years leading up to the financial crisis, but concluded that enforcement action was not warranted.

[Lord Haskel]

I thank the Minister for that reply. Is he aware that this report fails to respond to the widespread concerns expressed by many people, some of them on his own Benches, that the report deals with the letter, but not the spirit, of the law? Will he tell us how the restructured FSA under the remit of the Bank of England will function more appropriately and take this into account?

[Lord Sassoon]

My Lords, we do not know what the report says because we have not seen it. We cannot say what the report deals with, but it is clear that it concludes that enforcement action is not warranted in this case. The FSA cannot publish the content of the RBS review because information gathered from the bank during the course of the review contains confidential material. The report remains confidential under the Financial Services and Markets Act 2000. I am grateful to the noble Lord for drawing attention to the fact that we are embarked on a process completely to redraw the financial regulatory architecture. I expect that under the new architecture, the new prudential regulatory authority will be able to exercise powers under the tools we give it to minimise the risk of another case like RBS coming up in future.

[Baroness Oppenheim-Barnes]

My Lords, would my noble friend agree with the view that has been expressed by some people from time to time that the FSA and the Royal Bank of Scotland are covering for each other?

[Lord Sassoon]

My Lords, I would not say in any way that the FSA and the Royal Bank of Scotland are covering up for each other. The FSA has conducted a lengthy report. It is clearly unfortunate that under the Financial Services and Markets Act, it is not possible at the moment to make the report public. On the other hand, when enforcement action is taken, it is usually made public and, indeed, in May this year, the FSA announced the conclusion of an enforcement investigation into one of the executive directors of RBS.

[Lord Gilbert]

My Lords, no small part of the public fury over the Royal Bank of Scotland affair related to the pension arrangements for Sir Fred Goodwin. Were they not the responsibility of the remuneration committee of the Royal Bank of Scotland? Should those names not be made public? Is it not the case that one of the people on that remuneration committee was a senior officer of Goldman Sachs, the same firm that helped the Greek Government fiddle their statistics and behaved disgracefully over the Wells letter? Will the Minister ask his colleagues to investigate whether that firm should continue to advise successive Governments and about its suitability to be an adviser to Her Majesty’s Government?

[Lord Sassoon]

My Lords, I cannot comment on the pension arrangements. I believe they took place before the previous election, and I am no position to comment on the pension arrangements for former directors of RBS. As regards the other matters, if there are any complaints about any regulated firm, I am sure the FSA will be, as it always is, open to looking into any complaints that are made.

[Lord Newby]

My Lords, does the Minister agree with the FSA and the report that RBS under Sir Fred Goodwin was properly governed? If he does, will he explain what he thinks a failure of corporate governance might look like?

[Lord Sassoon]

My Lords, I have not conducted an investigation into RBS. The FSA has, and it published a summary note on 2 December. It is clearly regrettable that we do not see the full report, but I should point out that the really important consequences of this are the change in the regulatory landscape that was brought to our attention by the noble Lord, Lord Haskel, and the fact that the Independent Commission on Banking is looking at the structure of banking in this country, so there are important ongoing inquiries that the RBS saga bears on.

[Lord Myners]

My Lords, it stretches credulity that the FSA could conclude that there was no sign of governance failure in the Royal Bank of Scotland. From my perspective as a Minister, there was a lamentable failure of leadership, proper inquiry and proper governance in the Royal Bank of Scotland. Does the Minister agree that the FSA should publish its own report on the lessons to be learnt from the collapse of the Royal Bank of Scotland and that it should seriously consider whether it should no longer use accounting firms to conduct Section 166 inquiries of the sort carried out here?

[Lord Sassoon]

My Lords, I am sure that the FSA will take note of the noble Lord’s suggestions about how it goes about its business. But I can only, as he does, read the conclusion of a report by the FSA that follows an investigation that began in May 2009 and out of which has come one enforcement case.

[Baroness Williams of Crosby]

My Lords, does the Minister agree that this might be a case for a WikiLeak? Will he also assure the House that, in looking at the proposals that are emerging with regard to the regulation of banking, a heavy emphasis will be put on transparency and openness in future?

[Lord Sassoon]

My Lords, I am happy to confirm that in everything the Government do, we put a major store on openness and transparency. Indeed, we will bear that in mind in our approach to financial regulation in future.

[Lord Davies of Oldham]

My Lords, does the Minister not recognise the great anxiety about this situation? He says that “we”—I presume that he therefore speaks on behalf of the Government—have no knowledge of the report either. This is a totally unsatisfactory situation when lessons need to be learnt about such an important development. Will he not therefore look at the extent to which Her Majesty’s Government can emphasise to the FSA the desirability of making more public the position it has taken up?

[Lord Sassoon]

My Lords, that is what we are doing, but we are acting within the constraints of the Financial Services and Markets Act, which was brought in by the previous Government in 2000.

Arrangement of Business

Tuesday 7th December 2010 Lords Chamber

Announcement

15:07

[Baroness Anelay of St Johns]

My Lords, immediately after the proceedings on the Savings Accounts and Health in Pregnancy Grant Bill, my noble friend Lord McNally will repeat a Statement on the Green Paper, Rehabilitation and Sentencing.

Intelligence and Security Committee

Tuesday 7th December 2010 Lords Chamber

Membership Motion

15:07

Moved By

[Lord Strathclyde]

That this House approves the nomination of the Marquess of Lothian as a member of the Intelligence and Security Committee.

[Lord Harris of Haringey]

My Lords, before we consider the Motion in the name of the Leader of the House, as I understand it the Prime Minister makes these appointments having considered nominations from Parliament. Is this a nomination from Parliament? Does this mean that there will now be two Members of the House of Lords sitting on this committee? Is it not normally the case that under circumstances where there were two such nominations, one would come from the Opposition and one from the government side?

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, no, it is not a nomination from Parliament. The Prime Minister wrote to the acting leader of the Opposition in the summer. It was her proposal that there should not be a Labour Member of the House of Lords sitting on this committee.

[Lord Harris of Haringey]

My Lords, will the Minister clarify whether this is a nomination from Parliament? The Order Paper reads,

“to move that this House approves the nomination”.

As I understand it, the legislation says that the Prime Minister makes these appointments, having considered nominations from Parliament and after consultation with the leader of the Opposition. Where are we in that process?

[Lord Strathclyde]

My Lords, this is the final agreement of the process in your Lordships’ House because my noble friend Lord Lothian is a Member of this House. The Prime Minister consults with Parliament by writing to the leader of the Opposition, which is what he did.

Motion agreed.

Superannuation Bill

Tuesday 7th December 2010 Lords Chamber

Third Reading

15:09

Motion

Moved by

[Lord Wallace of Saltaire]

That the Bill do now pass.

[Lord Wallace of Saltaire]

My Lords, I beg to move that this Bill do now pass, and in so doing it may help the House if I briefly rehearse the evolution of this Bill as it passed through this House. I am aware of concern on all sides of the House at maintaining the central function of the Lords as a revising Chamber under the novel conditions of coalition between two of the four broad groups that constitute this House. I therefore wish to reassure the House that this Bill has been carefully considered, in its Committee and on Report, and that the Government have listened to the reasoned criticisms that were made and have revised the Bill in response to those criticisms.

There was, it is true, only one Division on Report, and that was won by the coalition Government, but, as noble Lords well know from the treatment of many other Bills under successive Governments, the calculus of victory versus defeat in contested votes provides only a crude measure of the process of legislative revision. Probing amendments in Committee explore the rationale and justification for detailed elements of government proposals. Committee reports—in this case from both the Delegated Powers Committee and the Joint Committee on Human Rights—add their critical opinions. This Government, like their predecessors, respond appropriately. I have written to the chairman of the Delegated Powers Committee today to respond to its report and to provide detail on the adjustments that we have made in response.

The Government moved several amendments on Report to accommodate criticisms made in Grand Committee. We accepted an amendment proposed by the opposition Front Bench, repeated from Committee, on which we had recognised the force of the arguments put forward. One amendment was jointly signed by both Front Benches. The Government offered assurances in debate on other issues of concern to noble Lords from around the House. The Minister for the Cabinet Office is writing to the Labour Front Bench to reinforce the assurances offered on Report in this House.

The goal of this Bill is to put in place a reformed Civil Service Compensation Scheme that is affordable, sustainable for the long term, and fair not only to civil servants but to other taxpayers. It is in no way an attack on collective bargaining with the Civil Service trade unions. Indeed, the Bill has now been amended to emphasise that future changes to the Civil Service Compensation Scheme would require consultation with the Civil Service trade unions,

“with a view to reaching agreement”.

The Cabinet Office sent the draft rules for the new compensation scheme to the Council of Civil Service Unions yesterday, seeking its views. These rules will form the basis of the new compensation scheme that will be laid before Parliament. Our target remains to do so before the House rises for the Christmas Recess.

The Bill before noble Lords has thus been modified in a number of significant respects from the form in which it entered the House. I recognise, of course, that there remain clauses and subsections which noble Lords on the opposition Benches would have liked to modify further; that is always the case with the process of consultation and compromise that constitutes legislative politics. However, I re-emphasise that this Bill has been revised as it moved from Second Reading through Grand Committee and Report to its Third Reading. The record of the Superannuation Bill supports the view that this House retains its proper role as a revising Chamber.

I thank all those who have taken part in the several stages of scrutiny. The Labour Front Bench provided constructive and well-argued opposition. The noble Baroness, Lady Turner of Camden, made some characteristically vigorous contributions to Second Reading and Committee. We were sorry that illness prevented her from moving her own amendment on Report, and I am very glad to see her back in her place today. I was blessed with the support of a particularly skilled and effective Bill team of the Cabinet Office. I beg to move.

[Lord McKenzie of Luton]

My Lords, I shall take a brief moment on behalf of my noble friend Lord Brett and myself to thank the Minister, the noble Lord, Lord Wallace of Saltaire, for the constructive manner in which he has engaged with the opposition Benches on this Bill, and indeed to thank the Bill team. We agree on the need for the compensation scheme to be amended—indeed, we thought we had achieved that ourselves earlier in the year—and very much support what the Minister has said about processes of collective bargaining. We would share in the disappointment at the end of the day if it was not possible to reach total agreement between those who are engaged in that process.

The noble Lord is right to say that the Bill is not entirely as we would like it, but we are grateful for the reassurance that he put on the record on Report, and certainly grateful for the wider dissemination of that on the caps. That will reassure the Civil Service at a particularly difficult time for it. I thank the Minister again.

15:15

[Baroness Turner of Camden]

My Lords, I thank the Minister very much for his kind remarks. I am very sorry that I was not able to be here to move my amendment. On the other hand, I know that my noble friend Lady Donaghy made a good job of it. I should like to thank her for the able way in which she handled it. Of course it is disappointing that the very firm assurances to the unions do not appear in the Bill. On the other hand, as the Minister has indicated this afternoon, amendments were moved during the passage of the Bill through this House and assurances have been given by the Minister. I am very grateful for that, and very happy that at least we made some impression. Certainly, the civil servants who have written to us will know that the arguments they put to us in their many letters have received endorsements from some of us on this side of the House, and we did our best to advance their arguments. In the mean time, I thank those who participated in the debates and who said some very nice things about me.

[Lord Maclennan of Rogart]

My Lords, I join in expressing appreciation for the consultative approach taken by the Government to this matter. The objectives were broadly shared on both sides of the House, and it is highly desirable in an area of potential conflict that there is as near consensual an outcome as we have seen.

I invite the Minister to indicate, if he can, where the unions stand, particularly those that conducted ballots of their members about this. I assume that it is the intention to allow those unions to conclude their ballots before seeking Royal Assent for this measure. One union, the PCS, unfortunately seems to stand out in that it is not making its alternative position at all clear, which of course undermines its argument very seriously. However, I conclude by thanking the Minister for his responsiveness.

[Lord Beecham]

My Lords, can the Minister comment on whether staff employed by the government offices in the regions and the regional development agencies will be able to apply for severance payments on a similar basis to that which has been previously afforded to people in comparable positions, or will they be involved in the new scheme that is about to be announced?

[Lord Wallace of Saltaire]

My Lords, I am conscious that the House is waiting to debate the Second Reading of another Bill. I am well aware, from Yorkshire, of the issue which the noble Lord raises. On union ballots, I am aware that some of the Civil Service unions are currently balloting their members, and I understand that they will close their ballots and count on 16 December. Some other unions will ballot over Christmas and into January.

Bill passed and returned to the Commons with amendments.

Savings Accounts and Health in Pregnancy Grant Bill

Tuesday 7th December 2010 Lords Chamber

Second Reading (and remaining stages)

15:19

Moved By

[Lord Sassoon]

That this Bill be read a second time.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Savings Accounts and Health in Pregnancy Grant Bill does three things: it ends eligibility for child trust funds for children born from January 2011 onwards; it repeals the Saving Gateway Accounts Act 2009, following the Government’s decision not to introduce the saving gateway scheme; and it abolishes the health in pregnancy grant, again from January 2011. I will come on to the detail of these measures, but let me begin by explaining their purpose, and the purpose of this Bill.

As noble Lords will be aware, Britain is facing an extraordinary fiscal challenge. Last year, we had the largest peacetime deficit in our history, and we were borrowing one pound in every four that we spent. That challenge required the Government to take quick and decisive action to respond, and we have done so. In May, we set out over £6 billion of savings that we would make in this financial year, including £320 million from the child trust fund. At the Budget we then set out a clear plan to tackle the deficit over the coming years, and at the spending review we set out how we would put that plan into action. As my right honourable friend the Chancellor of the Exchequer said in the Statement that I repeated in your Lordships’ House last Monday, that plan is working; it has taken Britain out of the financial danger zone. The forecasts made by the Office for Budget Responsibility last week show the economy growing in each of the next six years, and growing faster this year than had been expected in June. Employment is also forecast to grow in every year of this Parliament, with total employment expected to rise from 29 million to 30.1 million.

As my right honourable friend the Chancellor said last week, the decisive plan that the Government have set out is working and we will not abandon it.

[Baroness Armstrong of Hill Top]

My Lords, has the Minister seen the report from the Fawcett Society which identifies how discriminatory the Budget and the spending review have been against women and women with children? As this Bill is all about that issue, what is the Minister’s response to the Fawcett Society report?

[Lord Sassoon]

As I understand it, the Fawcett Society is currently involved in judicial review proceedings in relation to this matter. I am sure that we will come on later, as we should, to talk about the specific impact of the Bill. However, I am not sure that now is the right time to talk about the wider impacts. A Question has been tabled for answer next week about the wider impact of the Government’s measures. We should stick to the effect of the current measures, which I will come on to.

As I say, the Bill is an important part of the Government’s consolidation plan. Together, the ending of eligibility for child trust funds, the decision not to introduce the saving gateway and the abolition of the health in pregnancy grant will save £370 million this year and around £800 million in each year in future. While I realise that some noble Lords will find these changes disappointing, I believe that they are necessary and are the right savings to make. The child trust fund, for example, would have cost over half a billion pounds this year. That money would have been locked up for up to 18 years instead of supporting people now, and that is a luxury that we simply cannot afford.

As noble Lords will know, we therefore announced in May that government payments to child trust funds would be reduced and then stopped altogether. In July, we made regulations to reduce payments at birth and to stop payments at age seven altogether. Those regulations will also end the additional payments that are made to disabled children from 2011-12 onwards, although we will recycle the money that would have been spent on those payments to provide additional respite breaks.

Clause 1 now completes the process by ending eligibility for child trust funds for all children born from January 2011 onwards, meaning that the remaining government payments will stop altogether. However, we remain committed to encouraging saving for children within our limited resources. At Second Reading in another place, my right honourable friend the Financial Secretary announced that the Government will introduce a new tax-free account for saving for children, likely to be known as a junior ISA. We are now working closely with stakeholders to design these accounts but we have already set out that they will allow parents to invest in either cash or stocks and shares for their children, with the money locked up for the child until they reach adulthood. These accounts will offer parents a clear and simple way to save for their children, tax-free, but to do so while saving the half a billion pounds a year that continuing with child trust funds would have cost us.

That would have been unaffordable. We also believe that it would have been unaffordable to introduce the saving gateway, which is dealt with in Clause 2. That would have been a cash savings scheme for people on lower incomes, based on the idea of matching a government contribution for each pound saved. The scheme was due to be introduced in July 2010.

There was some evidence from the pilots for the saving gateway that matching was a popular and easily understood incentive to save, but the Bill Committee in the other place also heard from Carl Emmerson of the Institute for Fiscal Studies that,

“there was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households”.

When we looked at this ahead of the Budget, it was clear that the summer of 2010, just as we were starting to tackle the deficit, would have been exactly the wrong time to bring in a new scheme that would have cost £300 million over the next five years. We also had concerns that the previous Government had failed to sign up enough account providers to operate the scheme effectively. The RBS Group and Lloyds Banking Group had said they would offer the accounts, but none of the other big high street banks was planning to do so, nor was a single building society. The Post Office had agreed to offer the accounts only if it received a subsidy from the Government to cover its costs.

For these reasons, we announced at the Budget that the saving gateway would not be introduced. We therefore stopped the Saving Gateway Accounts Act 2009 coming into force, and this Bill repeals it altogether. As we have no plans to introduce the scheme, it is right to remove the legislation from the statute book.

Finally, Clause 3 would abolish the health in pregnancy grant, which is a one-off cash payment of £190 to pregnant women. The previous Government said that it was being introduced in recognition of the importance of a healthy diet during pregnancy. However, there is no requirement for the grant to be spent on better health and well-being; women can spend the money on whatever they want. The grant is not paid until the mother has reached the 25th week of pregnancy, but the evidence shows that, to quote the National Childbirth Trust,

“if dietary intervention is to have an impact on birth weight and outcomes for the baby in later life, it should be started as early as possible”.

The grant is unfocused. It is also untargeted: it is paid to all pregnant women regardless of their income.

This Government recognise the importance of maternal health, but it should be supported through focused and targeted policies such as the Healthy Start scheme. This scheme is effectively focused on supporting health and well-being because it pays support in the form of vouchers rather than cash. It is targeted at pregnant women and children living in low-income households. We will therefore continue the Healthy Start scheme, but the health in pregnancy grant will be abolished for all women who reach the 25th week of pregnancy from January 2011. That will save us £40 million this year and £150 million each year thereafter.

The savings that we are making from the child trust fund, the saving gateway and the health in pregnancy grant allow us to focus our limited resources on our priorities. We are delivering on our commitment that health spending will increase in real terms in each year of this Parliament. We are prioritising fairness and social mobility, including by transforming the prospects of the poorest children through the schools pupil premium, which will be worth £2.5 billion by 2014-15. We have ensured that the spending review will have no measurable impact on child poverty in the next two years.

At the same time, we are tackling Britain’s unprecedented deficit. As I said earlier, we have a clear plan to do that. It involves difficult choices such as those included in this Bill. It was clear from the brief debate last Monday that some noble Lords have strong feelings on these issues, so I look forward to a full debate on them today.

I restate that I believe that these are the right choices. We cannot afford the luxury of spending half a billion pounds a year on the child trust fund for 18 years when the money is not available; we could not have afforded to introduce a new scheme such as the saving gateway; and we cannot afford to keep spending £150 million per year on the untargeted, unfocused health in pregnancy grant.

The savings that we have made through these policies will amount to £370 million this year and around £800 million each year from then on. That means £800 million less in other spending cuts, in tax rises or in even higher borrowing. This Bill puts those choices into action. I beg to move.

15:30

[Baroness Thornton]

My Lords, I thank the Minister for his introduction to this somewhat pick and mix abolition Bill, containing as it does future plans for three quite separate pieces of primary legislation. The Bill, like so much of the cuts programme of this Government, will hit children, women and the poorest families hardest. It is almost as if Nick Clegg and David Cameron, like a pair of playground bullies, said, “Let's push around those least able to defend themselves”. This Bill will hit the poorest in society hardest and it will undo positive measures introduced by the Labour Government; wholesale and without any consideration of mitigation.

As the Minister said, the Bill removes eligibility for child trust funds, abandons the saving gateway and abolishes the health in pregnancy grant—a measure that I was responsible for steering through your Lordships' House at the time we enacted it. All of those acts were progressive measures and we need to be clear that their abolition is in fact a matter of dogma. That this is dogma is borne out by the fact that the Government could not even be bothered to undertake a proper impact assessment on their proposals, from which I take the lesson that they do not really care what the effects will be.

I know that we are becoming more and more familiar with broken promises from both parties in this Government, but it is worth noting that the Conservatives are breaking their manifesto commitment, which said:

“We will … cut government contributions to Child trust funds for all but the poorest third of families and families with disabled children”.

Another commitment bites the dust. It is true that the Liberal Democrats had in their manifesto an end to the child trust funds. I am not sure why, because there was no explanation. I looked in vain to see whether the funding might be redirected to some other support for the most impoverished and for anything at all about looked-after children. It may be there, but if so it is very well hidden. I looked in vain for anything that suggested that the Liberal Democrats had thought about how to create and nurture the savings habit.

The child trust fund is a savings and investment account for children born on or after 1 September 2002. The Bill ends new child trust funds from January 2011, worth £500 to all children over their lifetimes and £1,000 to the poorest children. Children who were due to receive the £250 top-up—£500 for the poorest—on their seventh birthday will not now do so. I hope that the Government intend to write to them all.

Last year, the Labour Government announced that they would contribute an extra £100 each year into the accounts of all disabled children, with severely disabled children getting £200 a year. I am bound to remind the House and perhaps the Minister, who was not about during that time, that David Cameron's Conservative Party did not oppose the measure when it was passed earlier this year before the general election. Perhaps that timing has something to do with this particular decision. I do not think that a respite scheme, welcome though it might be, is a substitute for those disabled children.

The child trust fund is a hugely successful scheme. In a recent survey by Mum’s Views, polling more than 1,000 current or expectant mothers, a staggering 91 per cent of expectant mothers interviewed had no idea that the Government were planning to replace the much loved child trust fund, and nearly half said that the Government should work harder to keep parents informed. Perhaps more worryingly, 18 per cent of those surveyed claimed that the changes meant that they were less likely to save for their children's future. That is a considerable proportion of the very people that the scheme was designed to reach.

Wherever you may sit on the political spectrum, everyone can agree that fostering a long-term savings culture is something that the UK badly needs. I am aware that the Government want to bring forward a junior ISA. However, it will not be ready until the autumn of next year. In the mean time, did the Government consider leaving the child trust fund in place so that families do not fall through the gap in the first half of 2011? Why did they not do so? For children born between January and the introduction of a new scheme, there will be no government-endorsed, universal tax-free scheme into which their parents will be able to save. Contrary to the Government's assurances that the retrospective nature of a replacement scheme will address the issue of a savings black hole, I remain profoundly concerned that, at this incredibly busy and emotional time, when new parents’ minds are far from focused on savings products, the lack of a government-endorsed product will result in a lost generation of children with no savings provision.

I turn to the case for looked-after children. As it currently stands, the new junior ISA would rely on voluntary contributions from parents and family members and there would be no provision at all for contributions to an account for looked-after children. The House is not permitted to discuss amendments to this Bill, but I am certain that this issue in particular is one that many noble Lords would have wished to address. I am now, with respect, addressing the Minister on behalf of looked-after children and their champions, notably Action for Children and Barnardo's. Will the Government consider picking up the amendment in the interests of looked-after children, or something like it, that my honourable friend Paul Goggins put down in another place? If not, why not? The Government have had time to reflect on this issue since 22 November, which was the Third Reading in another place, and I hope that they will have taken on board the powerful and compassionate arguments in favour of either maintaining the child trust fund for looked-after children or coming forward with a suitable replacement.

My understanding is that Action for Children, Barnardo's and Paul Goggins MP met the Financial Secretary Mark Hoban MP at the Treasury to discuss the proposal during the Report stage of the Bill in another place, and the Minister agreed that the proposal was worthy of proper consideration. He said:

“I have a lot of sympathy with what he”—

Paul Goggins—

“is trying to achieve, and I want to consider the matter more closely”.—[Official Report, Commons, 22/11/10; col. 78.]

Have the Minister and his colleagues done so? Have they looked at the impact that the abolition of the child trust fund will have on looked-after children? What is the conclusion of their deliberations?

Some 6,000 children go into care each year. Over previous years, the Government have opened 33,158 child trust funds for children in foster care, residential care or children who are being looked after by the state. If the Government refuse to allow the child trust fund to continue, what exactly are they, as the corporate parent, going to say to the children who will not have that nest egg at 18? What about the situation of siblings, one of whom may qualify because they went into care last year, and a brother or sister who will not qualify because they go into care in the coming year? What responsibility does the Minister believe the state has in these circumstances, as the corporate parent of some of the most disadvantaged children in society?

At the moment we have no details for the implementation of the child ISA, and we do not know what will happen to the most disadvantaged children. We know that there will be a gap, and I invite the Minister to address these important issues before the Bill passes from your Lordships' House.

This Bill repeals the legislation providing for the establishment of a saving gateway scheme. As noble Lords will be aware, in 2009 the Saving Gateway Accounts Bill was introduced to pave the way for a national scheme. The purpose of the scheme was to promote a saving habit among working people on lower incomes by providing an incentive to save through a government contribution for each pound saved. We would all agree that savings are important in providing people with independence throughout their lives and security if things go wrong. While we on these Benches disagree with the decision not to establish the saving gateway next year, I would put in a plea to mitigate this decision, in the knowledge that the Conservative Opposition supported this scheme only last year. Would it not make sense to delay the implementation rather than repealing the Act? Will the Minister explain this change in policy to the House? Do this Government now not want to encourage low-income people to save, or was this yet another casualty of the coalition agreement—and, if so, which part of it exactly?

The last part of the Bill removes the entitlement to the health in pregnancy grant when a woman reaches the 25th week of her pregnancy. I regard this as a health issue, not a money matter, and I would have much preferred the kind of well informed debate that the House had when we established that grant. The health in pregnancy grant is a one-off tax repayment of £190 from HMRC for mothers-to-be who are at least 25 weeks pregnant to help them prepare for the birth of their baby. The payment is not means-tested and does not depend on national insurance contributions. It is estimated that there are around 750,000 qualifying pregnancies each year, based on the national statistics projections for birth. I am very sad that the Government have decided to remove this grant. It can make a crucial difference at a time when family finances become tight. It may not be a significant amount to the Minister but £190 is a substantial amount to a low-income family and, whatever the grant’s imperfections, it must be a matter of enormous regret that the Government propose to reduce the investment in women as they conceive, bear and give birth to children. I invite the House to join me and these Benches in regretting anything that has a detrimental impact on maternal health and well-being.

We know that women need to approach giving birth in a calm and confident frame of mind. We also know that very low-income families can and do run out of money for food from time to time, so this grant can be, could be and is of enormous importance. The Royal College of Midwives said that it was,

“disappointed at the decision to abolish the Health in Pregnancy Grant, which, apart from providing pregnant women with much needed financial support, provided an opportunity for midwives to communicate health advice to women and their families”.

As we are quoting the National Childbirth Trust, its chief executive said:

“At a time when families are trying to make ends meet, the Coalition Government has hit parents particularly hard. Cutting pregnancy and maternity grants, as well as child benefit and tax credits, will make it even more difficult for new parents or those wanting to start a family. We’re worried that parents, and parents-to-be, have been singled out unfairly, and that the Government should stick to its commitment to making the UK more family friendly”.

When this legislation was introduced in your Lordships’ House, many noble Lords who come from a medical background and are knowledgeable about pregnancy and childbirth were very much in support of this grant. Indeed, the noble Lord, Lord Patel, and my noble friend Lord Winston have spoken to me about this and I am very grateful for their wise counsel on this matter. My noble friend Lord Winston is unable to be here today, so I shall reflect his views, as they were expressed to me, to the House. He pointed out to me that there is growing evidence that health and the feeling of well-being are not only important for pregnant women but for their offspring. The modern field of epigenetics suggests that environmental influences on the pregnant mother may alter the way that the DNA of her child functions and that this may have long-term consequences for the health of the baby, even as an adult.

The epigenetic effects are likely to be heritable: that is to say, not only the baby to be born but his or her offspring may suffer from the inherited deleterious effects from the circumstances of their grandmother’s, or even their great grandmother’s, pregnancy. My noble friend Lord Winston provided me with five examples of research from Australia, New York, Canada, Southampton and Imperial College in the UK, which I am more than happy to make available to the Minister.

I am not claiming more for this grant than that it is a contributing factor to the well-being of the pregnant mother and that the Government should have a better justification for its abolition than simply money-saving. I thought that one of the most powerful arguments for this grant was the fact that it is not given unless the mother has attended an interview with a medical professional, a health visitor or a midwife, and discussed her pregnancy, care and diet. There are some women—I am thinking particularly of very young, vulnerable or teenage women—for whom this visit may be their first contact with a health professional. The grant has two benefits: first, it provides a lump sum to assist a pregnant woman with either diet or something else that she might need towards the end of her pregnancy; and, secondly, it helps to ensure that she is in the system and stands a better chance of receiving care and support throughout the rest of her pregnancy and the birth of her baby.

Would the Minister care to address the issues of the benefit that pregnant women receive from this grant and how the Government intend to replace it—if not, why not?—and of how the Government intend to address the issue of women who receive extra support as a result of this grant? I very much look forward to this Second Reading debate and to the Minister’s response to the questions that I have raised and that other noble Lords will raise during the course of the debate.

15:45

[Lord Newby]

My Lords, I thank the Minister for his clear introduction to this debate. I would have more sympathy with the noble Baroness, Lady Thornton, if the Labour Party had been able to explain how it was going to save so much as £1 of the £44 billion that it legally committed itself to cutting under the legislation to halve the budget deficit, which it passed in the previous Parliament. Every time a measure that involves a cut of any sort to public expenditure comes before your Lordships’ House, the Labour Party opposes it. Today has been no different. The noble Baroness accuses those of us on these Benches of many heinous crimes—of being heartless and uncaring. I reject those allegations, which are completely unfair on her part and simply untrue.

As regards the child trust fund, the noble Baroness, Lady Thornton, accused the coalition Benches of broken promises. This is a Liberal Democrat promise that the coalition has kept. She says she has never heard any arguments in favour of that stance. She has been spared the many speeches that I have made on the subject in your Lordships’ House. We opposed the introduction of the child trust fund, we have opposed it consistently ever since and we do not now mourn its passing. There are several reasons for that; I will give just two.

First, it is hopelessly untargeted. Only 73 per cent of parents take up the offer of doing something with the voucher that they get when they are allocated their child trust fund. Incidentally, this figure has remained absolutely static since the child trust fund was introduced in 2002. Around that figure, in the constituencies that are predominantly middle-class—Buckinghamshire, for example—the percentage goes up to 84 per cent. In the constituencies that are poor—Belfast West, for example —it goes down to 48 per cent. The people who take up their options under the child trust fund to insert additional savings for their children are predominantly those who need no extra incentive from the state to do so. That is our first major criticism of it.

Secondly, one of the purposes of the child trust fund was to instil the saving habit in young people. The saving habit involves forgoing expenditure now to gain greater benefit later. That is what thrift is all about; that is what the saving habit is all about. This measure does nothing to encourage thrift among young people. It is simply a windfall gain at the age of 18. That is, again, an argument that I have made many times in your Lordships’ House. Looking to the future, for many parents, the ISA—particularly a child ISA—is a tax-efficient way of saving for their children. That is the way in which we should look for parents to gain a benefit in saving for their children. The noble Baroness, Lady Hollis, shakes her head but I believe it to be the truth, however hard she shakes it.

Looked-after children are clearly in a different situation from everybody else because they do not have parents. Like the noble Baroness, I hope the Government can do something for them. However, doing something for looked-after children is very different from doing something for every child. Looked-after children are a very small proportion of the population. Doing something for them in a whole raft of ways is hugely important. We do quite a lot for looked-after children and no doubt much more can be done. It would be a very positive move if Mark Hoban and his colleague, the noble Lord, Lord Sassoon, could enable something to happen in this specific area for looked-after children. However, that is very different from saying that every child, however affluent, should benefit from this scheme. Therefore, I do not change my view that, on balance, abolishing this scheme is a more sensible way of saving public money.

It was difficult to oppose the principle of the saving gateway and we did not. However, we had major questions about it. One was that unlike middle-class tax incentives for saving which apply, for example, to pensions all the way through, the saving gateway applied only to two years of savings. Thereby, the amount by which you could benefit was relatively small. The saving habit for people—having got them into it and having given them the incentive—was removed after two years. You could not get another one, whatever happened to you. So if the scheme would kick-start a saving habit within two years, great; but if not, I am afraid that it was unlikely to have been successful.

The other question that I would very much have liked to have been answered was: what proportion of the potential beneficiaries of the saving gateway would actually have taken it up? One of the obvious problems about poor people is that they do not have a surplus. Therefore, while we would ideally wish them, like everyone else, to save, in reality that is crying for the moon for many of those individuals and families. They require every penny that they have to make ends meet.

The Minister also mentioned that virtually no financial institution was prepared to touch the saving gateway because it was not worth their while. Not even the Post Office, which one would have hoped would administer this scheme, was prepared to do so because it could not make it pay. One wonders whether, in reality, once the measure had been introduced, RBS and Lloyds would have continued with it. As we have seen with basic bank accounts, it is very difficult to get the banks enthusiastically to support things that they do not make any money from. Given our approach to the largely nationalised banks, which unfortunately is almost totally hands-off, I would not put any faith in them implementing the saving gateway.

It would be like being in favour of sin to say that the saving gateway was a terrible idea, but it was badly flawed and, frankly, if we are going to make any cuts, this seems to be a reasonably high-priority and low-cost—in social terms—way of doing it.

The health in pregnancy grant is another untargeted grant. In times of stress and financial stringency one should look at targeting the public money we have available for this kind of thing, rather than making a blanket payment. I note that the grant was introduced in April 2009, and important though it may be, it was not exactly the top priority for a Labour Government, who at that point had been in office for 12 years.

Again, in an ideal world, would it not be nice if we kept this grant? We are not in an ideal world. Under Labour, we were not going to be in an ideal world. The Labour Party was committed to making cuts worth tens of billions of pounds; it still has not identified where they should be made. If you have to make cuts, these are sensible. Reluctantly, on that basis, I support the Bill.

15:52

[Baroness Howe of Idlicote]

My Lords, I voted last week with Her Majesty’s Government on the Motion on the Bill, because, on balance, I believed that the Speaker’s ruling that it was a money Bill should be respected. However, in doing so I was certainly not in favour of the Bill’s aim to remove the child trust fund payments for all looked-after children born after January 2011. That would serve further to disadvantage some of our most disadvantaged children. That is why I am speaking today, and I will address only that aspect of the Bill.

As the noble Baroness, Lady Thornton, said, it appears that during the Bill’s passage in the other place, Paul Goggins, working with Barnardo’s and Action for Children, and after a sympathetic discussion with the Treasury Minister Mark Hoban, proposed an amendment based on the new junior ISA that the Government themselves proposed to introduce in 2011. The scheme, which I am certainly not against in principle, will apparently allow parents to contribute limited tax-free sums each year for their children’s use when they became adults. Thus the amendment that Paul Goggins proposed would, as your Lordships have heard, ensure a yearly government grant, guaranteed for each looked-after child after she or he had been in care for more than three months. The cost would certainly be a reduction of, I think, £6.6 million from the saving of £500 million a year achieved by the abolition of the child trust fund, but it would at least ensure that these highly vulnerable children, too, have some help at that difficult time when they leave care and begin adult life.

That is the point at which the situation becomes obscure. There was, apparently, no prior indication that the Bill would be deemed a money Bill during Report in the other place. I understand that Paul Goggins therefore withdrew his amendment on the basis that, if the Government did not come up with their own satisfactory scheme for looked-after children, it could be tabled in your Lordships’ House—I would certainly have been very happy to table it. However, as we now know, due to the Speaker’s decision at that late stage of the Bill, the opportunity to amend the Bill in your Lordships’ House is no longer available.

My concern, and that of other noble Lords, is that by making the Bill a money Bill late in the process, we are not given the opportunity to amend and thereby ensure that there is an equivalent scheme for looked-after children. The result is that the Government risk being seen—I am sorry to say this, but it is true—as neglecting their responsibility to our country’s most vulnerable and disadvantaged children.

At Second Reading in the other place, the Government promised:

“To make sure parents have a clear, simple and accessible option to save for their children”.—[Official Report, Commons, 26/10/10; col. 212.]

However, without government contributions, how will the Government ensure that looked-after children have the same opportunity to begin life with a similarly adequate nest egg?

I dare say it will be argued that the junior ISA gives local authorities discretion to pay into savings accounts for looked-after children. However, considering that their budgets have been cut by 26 per cent over the next four years—I am not complaining about that, because I know savings have got to be made and we have to face that situation—how realistic an expectation is this, unless a sum from Government is ring-fenced for this specific purpose?

The evidence to support the value of financial assets for children in care is plentiful. As it stands, 90 per cent of 19 year-old care leavers were NEET—not in employment, education or training—in 2009, compared with 17 per cent of 18 year-olds in the general population. Financial assets through savings accounts can be vital for children as they make the transition from care to independence, not least if they are going to continue in education or training of some kind, as we hope they will.

As the Prime Minister explained at Question Time on 30 June, only 0.6 per cent of children are in care, but 23 per cent of adult prisoners in our prison system were in care. With limited resources, when these children in care grew up, they often had nowhere else to turn. More financial resources, not less, as well, of course, as other forms of community help, are certainly needed to support vulnerable children.

Frank Field's recent report, The Foundation Years: Preventing poor children becoming poor adults, which the Prime Minister apparently welcomed enthusiastically, further strengthened the case for providing the utmost support to children in their early years. The report found overwhelming evidence that life chances are most heavily predicated on their development in those vital first five years of life. All of us, especially the Government, have a responsibility to protect and support our country's most vulnerable children. I hope that the Minister will give noble Lords some indication that an appropriate government scheme for looked-after children will be produced, and tell us when.

I will end with a concern that I believe other noble Lords share. What is the Government's definition of a money Bill? We need to know when a Bill is a money Bill and when it is not. The procedure in the case of this Bill is particularly worrying. What was the justification for making the announcement so late in the Bill's passage through the other place? Any new Government face challenges. A coalition partnership may have more problems than most Governments in getting its legislation accepted. However, noble Lords need to be reassured that this kind of procedure is not going to be used as a way of easing a difficult issue through the parliamentary process.

16:01

[Baroness Noakes]

My Lords, the noble Baroness, Lady Howe, raised the issue of a money Bill. I remind her that money Bills are established conclusively by the certificate of the Speaker. This is not a question of government policy and, much as we might like to delve further into it, this is not something that your Lordships' House can do.

I support the Bill. When I was sitting on the Front Bench opposite, I had the privilege to speak for Her Majesty’s Official Opposition on both the Child Trust Funds Bill and the Saving Gateway Accounts Bill, and so I know a little about the schemes. As the Opposition, we did not oppose either the Child Trust Funds Bill or the Saving Gateway Accounts Bill, although we did improve both during their passage here. However, our lack of opposition was not based on a belief that either Bill represented a good use of public money. Rather, as I made plain at the time, we supported them because we were in favour of supporting savings.

We should remember that the savings ratio was a healthy 10 per cent in 1997, when the previous Government took office. It fell disastrously after that. In 2008, the savings ratio went negative: overall, people reduced their savings rather than made additional savings. The ratio has gained ground since then, as is normal in recessionary times, but it is still not at the healthy levels that we experienced in the early 1990s and earlier.

I will start with the Child Trust Fund. The timing of the fund was pure politics. It was designed so that lots of £250 vouchers would drop on the doormats of parents just at the time of the 2005 general election. It was also pure new Labour. It had been described at a seminar organised by the Institute for Public Policy Research—at the time the think tank of choice for new Labour—as “the third way within the third way”. I did not understand at the time what that meant, and the years since 2004 have provided no further enlightenment. I suspect that third-way theology has now been consigned to history by the Benches opposite and so we may never find out.

There was no proper research underpinning the Child Trust Fund proposals. No one knew what the impact would be on savings during the accumulation period, and no one knew whether the acquisition of a financial asset at 18 would make any difference to the savings behaviour of young adults. The Government asserted that a financial asset would increase the life chances of young adults, but, as the acting director of the Institute for Fiscal Studies said in giving evidence to the Public Bill Committee in another place, that analysis relied on correlation, not causation. Furthermore, no one had any idea what young people would do with their windfall of several hundred pounds when they gained access to it aged 18. There were pious hopes about education and other worthy expenditures, but many of us thought that the purveyors of drink and drugs might well be the beneficiaries, because no constraints were placed on how the money could be spent. The Government had done no modelling on likely outcomes; nor were they prepared to set any targets against which the success of the scheme could be judged. This was evidence-free, outcome-indifferent policymaking at its worst.

We have some evidence of the impact of the policy from the regular statistics that are produced by HMRC, but these require some interpretation. The previous Government typically claimed that these statistics showed the success of the scheme. Some of the child trust fund providers, mainly financial mutuals, also claimed that. I am not going to unpick all the statistics today—the noble Lord, Lord Newby, has referred to some of them—but one thing they showed was that only 24 per cent of accounts attracted additional savings beyond the Government’s contributions, and only a tiny number contributed the maximum allowed.

The 2009-10 distributional analysis figures have mysteriously disappeared from HMRC’s website today but in 2008-09 extra savings amounted to £290 million. However, no one knows whether these savings were genuinely additional or whether they were simply diverted from other savings mechanisms to which parents and others would have contributed. The previous Government did not want to know the answer to that question and never asked it.

In order to appease the critics of the abolition of child trust funds, who are largely the providers of child trust funds, the Government have announced junior ISAs to provide a specific tax-incentivised savings vehicle from next year. I am not sure that this was wholly necessary other than to provide a marketing peg for children’s savings product providers. However, if the tax cost is modest, something which promotes savings without the £500 million-plus price tag which came with the child trust fund is to be welcomed.

There is just one area which deserves further consideration, and other noble Lords have spoken about it already—namely, the position of looked-after children. These children do not have families who will save for them. They will start adult life with all the disadvantages that children in care have. When child trust funds disappear, they will have no financial assets either. As has already been stated, my honourable friend Mr Mark Hoban said in another place that he would look at what could be done to get local authorities to provide equivalent savings, and I hope that my noble friend on the Front Bench will be able to say more about that when he responds to this debate.

The child trust fund is also an untargeted, universal benefit, which is usually a good indicator of poor value for money. The savings gateway was a little different in that it was specifically targeted at low-income households. This project was piloted twice and so it was not a wholly evidence-free project. That did not, however, mean that it would be a success in creating an enduring savings habit among recipients of the benefit.

The pilot studies suggested that some savers were simply diverting their money from other forms of saving—often informal methods—and the pilots did not go on long enough to indicate whether there was persistence of savings at the end of the minimum saving period which led to the acquisition of the savings bonus. As my noble friend Lord Sassoon pointed out, the saving gateway scheme was not popular with providers. All building societies and most of the banks shunned it. The Post Office, which was keen, would get involved only with a public subsidy. The economics of the saving gateway scheme simply did not add up. Therefore, it was far from clear that the savings gateway would have flown even if it had got off the ground on implementation.

I have to say, however, that I have concerns about how to encourage those on low incomes to save. The evidence shows that 43 per cent of those on very low incomes, of less than £100 per week, have no savings whatever, and therefore they are very exposed when things go wrong in their lives. I completely support the judgment of the Government that over £100 million a year is too high a price to pay for the saving gateway scheme, which might not have done much to increase long-term savings. However, I hope that the issue of longer-term savings among the poor does not disappear off the Government’s agenda, although I am sure that gimmicks such as the savings gateway are not needed.

I know next to nothing about health and pregnancy grants other than that they are untargeted, universal benefits and, despite their names, are not related to health in any meaningful way. They could have been, and were, spent on whatever pregnant women chose. For me, that is good enough reason for abolition.

The Government have brought this Bill forward against the background of the disastrous economic circumstances which they inherited when taking office this year. It is absolutely right that we take steps to eliminate the deficit, as my right honourable friend the Chancellor has set out. In that light, the schemes being abolished by this Bill are obvious candidates. However, I believe that a respectable case can be made for repealing these schemes even if we had a firmer financial footing. It is unlikely that my party would ever have introduced them as a matter of choice and, with the small exceptions to which I have referred, I shall not regret their demise. I support the Bill, not with the reluctance of the noble Lord, Lord Newby, but with complete enthusiasm.

16:11

[Baroness Hollis of Heigham]

My Lords, this Bill will impact hardest on the poorest in society and on disabled children who at some time between the ages of 14 and 24 move from better funded children's services to more Spartan adult services and who might have used this premium, this sum of money, either to go to college or to buy equipment for their disability. As the noble Baroness, Lady Howe, said, it will impact on children coming out of care who often have no family support. The £8,000 a year might have been used, for example, to take driving lessons to improve their work prospects. Ministers talk blandly about corporate parents—local authorities—at the very same time as Mr Pickles is cutting local authority money by 30 per cent and local authorities cannot even protect statutory services. It is complacency gone mad.

The Saving Gateway would especially have benefited women and people from BME communities, most of whom have negligible assets and no ability to aid their children. Also, the Government said—and this was repeated by the noble Baroness, Lady Noakes—that the health and pregnancy grants were unfocused, rather like the winter fuel payments to pensioners, perhaps. Why do so many people believe that pregnant women cannot be trusted to spend a grant wisely, but there is no attempt to supervise pensioners in southern Spain enjoying the winter fuel allowance?

As Katherine Rake said in her expert evidence, for low-income women pregnancy is the route into poverty, yet the Government are removing a useful resource. Why does the Bill and so much of the Government’s strategy fall on the weakest and the poorest rather than on those who have broader shoulders? The Government have abandoned their manifesto promise to target these policies on the more vulnerable and have provided no equality impact analysis, no doubt because it would make deeply uncomfortable reading. Why exactly do the Government need to incentivise the better-off like me with 40 per cent tax relief on savings, worth up to £11,000 a year, even under the current regime? Why do I need incentivising, yet the poorest among us do not, even though the sums expended will be modest by comparison and their incomes infinitely lower?

I think the junior ISA is remarkably silly. All the evidence shows that people are putting more money into ISAs and pensions at the moment because of ease of access, yet the junior ISA will lock money away for 18 years with limited tax relief because it is designed to help the poorest. So it will combine the worst effects of ISAs with the worst effects of pensions. If there is any spare money, it should go into an adult ISA instead. As I say, it is a remarkably foolish idea.

In debates in the other place, the committee on the Bill took several days of expert evidence—a practice followed in the Commons since 2006 and much to be welcomed—from the IFS, the IPPR, the Family and Parenting Institute, credit unions, Scope, 4Children, the Royal College of Midwives, the National Childbirth Trust and so on. They and the committee discussed, for example, the need for more health visitors, the high risk of miscarriage in the first trimester, which is why the health in pregnancy grant did not come early enough, Gypsies, credit unions, the cost of second-hand buggies, disability needs, the Child Support Agency, folic acid, free prescriptions, financial education, Sure Start, the collapse of Farepak, tuition fees and the pupil premium. All this expert policy discussion was around a so-called money Bill. If it was a money Bill, why on earth take evidence from expert witnesses on its policy implications? No previous money Bill has.

No one at any stage, including the Minister in his evidence, suggested that this was a money matter. Indeed, reference was made to further consideration and report back from the Lords in the normal way. As my right honourable friend Mr Hanson said, this is a deeply political Bill. Committee members fully understood the policy significance of these measures. It was treated throughout as a social policy Bill as, indeed, I believe it to be. If so, why is this social policy Bill coming to us as a money Bill, which means today that we are all in effect wasting our time?

I went back to the 1910 debates to seek to understand how the Speaker on advice could have made the ruling he did. The Lords in 1909 had rejected the Lloyd George Budget and the Commons discussed whether it was entitled to do so. A route out was suggested by Mr Asquith, leader of the Liberals, that the Speaker should rule on what was a money Bill. Balfour, the Conservative leader, had some prescient words to say. He argued that the Liberals were making,

“Mr. Speaker into an arbiter … it will rest with the Speaker of one House of Parliament not merely to say what the duties of that House are, but to say whether a particular Bill shall become law or shall not become law. He becomes not merely the guardian of our rights, but, in a certain sense, the author of our legislation. He is to say whether or not a certain Bill is one that this House can pass over the heads of another place. I do not know whether that is a wise addition to Mr. Speaker's powers”.—[Official Report, Commons, 29/3/1910; col. 1189.].

Why did Mr Balfour hesitate? He hesitated because of the fears expressed all around the Commons of what was then called “tacking”: that is, adding on to Finance Bills or money Bills matters of policy extraneous to them in order to bypass the Lords. As Balfour put it,

“bringing forward Bills which are in form purely Money Bills for objects which are not purely money objects”.—[Official Report, Commons, 29/3/1910; col. 1190.].

That concern was shared by the Liberal Herbert Gladstone.

From reading those debates and the Parliament Act, either this Bill is not a money Bill or almost all Bills, from social security to defence, are money Bills. I have taken two Tax Credits Bills through your Lordships' House and was much aided by opposition contributions and some of their amendments. In my view, those Bills had as much or as little claim to be regarded as money Bills as this Bill.

Speaker Lowther in 1914 seemed to put the matter to rest when he said:

“It is desirable ... to keep the Bill which imposes taxes upon the people separate from the Bill which proposes to expend the money derived from the imposition of those taxes”.

His assumption was that the first was a money Bill, but the second was not. Finance Bills he went on, should be confined,

“to the imposition of taxes, and arrangements for dealing with the National Debt, and so forth”.—[Official Report, Commons, 22/6/1914; col. 1509.]

I turned to Erskine May to see how the debate had moved on. It had not. Essentially it follows Speaker Lowther's ruling. It states:

“No serious practical difficulty normally arises in deciding whether a particular bill is or is not a ‘money bill’”,

and that,

“even if the main object of a bill is to create a new charge on the Consolidated Fund or on money provided by Parliament, the bill will not be certified if it is apparent that the primary concern of the charge is not purely financial”—

a point that was established by my noble friend Lady Thornton.

Over the years, fewer and fewer Bills have been designated as money Bills. All the constitutional experts I have consulted in the past week or two do not believe this to be a money Bill. We are not talking about papal infallibility; we are talking about judgment, and I believe that a wrong call was made. During the past three years, three Bills have been certified as money Bills by the Speaker, over and beyond conventional Finance Bills: that is, the Equitable Life (Payments) Bill 2010, the Fiscal Responsibility Bill 2009 and the Industry and Exports (Financial Support) Bill 2008-09.

There was some debate as to whether today’s Superannuation Bill was a money Bill. It, too, took witnesses, and the Commons and the Speaker decided that it was not. We had its Third Reading just minutes ago. I believe that all those decisions were correct. They followed Speaker Lowther and Erskine May. I do not believe that this Bill does. Surely no one would argue that setting up, say, a child trust fund is not a money Bill when it is introduced, but is a money Bill when it is altered or scrapped. If there is social policy behind its introduction, there are social policy consequences for its abolition.

Why does it matter? Let us take child and maternal welfare, disability, foetal health and nutrition, mental health and depression, and debt and credit unions. Almost all those topics, which were explored in the Commons committee on this Bill, have been debated by your Lordships in the past. I hope that the other House would agree that this House, especially its Cross-Benchers, has expertise, experience, knowledge and practice that are unrivalled in the other place. Why is that? Because in the other place, Members represent communities of locality: their constituencies. We do not, but most of us have come from, or represent or speak for, communities of interest: that is, disabled people, pensioners, asylum seekers or perhaps, as today, children in care.

Most of us are presidents, patrons or chairs of major voluntary organisations and charities, which look to us, in a way that no MP properly can, to speak for communities of interest that are based not on place but on people perhaps scattered across the land and often barely visible or heard. That, together with the careful way in which we revise and suggest amendments, seems to me to be why this House is so valuable. Yet your Lordships have no power whatever to amend this Bill or to influence its outcome in any way. In no way can we ask the Commons to think again about the impact of this Bill on communities of interest, of which many of us may have considerable knowledge.

Of course the Commons has the final word, but surely it should not exclude from consideration our words and views on matters of such social policy. I repeat; if this ruling becomes a precedent, some of us might as well go home. If in this House we cannot affect policy on social welfare, poverty, child and maternal health, tax credits and benefits, and ask the Commons to think again, what exactly are we here for? We are redundant. We will not need Lords reform. Our purpose will have been severely curtailed ahead even of possible reforms to our membership. Surely that is not wise—that is, if we believe in a two-Chamber Parliament. More importantly, perhaps, surely it is not decent that our ability in this House to speak out for—and, I hope, to defend— some of the most voiceless and powerless in the land should be curtailed in this way. It is wrong, profoundly wrong.

16:23

[Lord Griffiths of Burry Port]

My Lords, I need not detain your Lordships long. Since entering your Lordships’ House, it has been my principle to promise myself never to repeat points that have been made adequately before I get up to speak. I wish, indeed, that other Members of the House would share with me the same idea and ideal. But I am not going to apologise on this occasion for repeating precisely some of the things that have been said, and said very eloquently.

First, I need to say that last week’s debate was the most frustrating that I have sat through since coming here. I am not a politician; I am just a Methodist minister. I deal with people on the ground, their pastoral needs and their everyday concerns. But I wish that the two opening speakers last week had spoken the other way around. The noble Lord, Lord Strathclyde, guessing what his opponents’ arguments would be, chose all the wrong targets. He did not itemise anything that was actually going to be said by my noble friend Lord McKenzie of Luton, who did not argue that we should ignore, or want to repeal, or object to the implementation of the Parliament Act 1911—not at all—but that using the Act, and the conventions that arise from it, we should seek, within the month that is available to us, to find some way of amending in small ways the provisions of the Bill that is now before us. I just feel that the noble Lord, Lord Strathclyde, chose the wrong targets and, in doing so, poured scorn on those who had not yet spoken; accusing them of opportunism, of wheezes, of procedural ploys, of games and the like. In my book—and mine is only a small book—that is an unworthy way of conducting an argument.

In the course of last week’s debate, it was said, more than once, that since 1997 64 money Bills had been introduced to this House, with all the rules and regulations that go with that. No one said—indeed, my noble friend Lady Royall asked the question directly of the noble Lord the Leader of the House—how many of those 64 Bills had been declared to be money Bills at the conclusion of their treatment in another place. I ask the Minister—his advisers are there—whether he can answer that question in summing up this debate. How many of the 64 Bills, 40 per cent of which came before this House in the previous Parliament, were declared money Bills at the end of their treatment in another place? That is a very important thing because there were people in another place who wanted to amend the Bill, who confidently expected the opportunity would arise for us to do it here, and who were denied that opportunity because at the conclusion of the Third Reading it was declared to be a money Bill. That is a very important question for us to know the answer to.

I ask the Minister, who of course is a finance Minister, not a social policy Minister, whether the noble Baroness, Lady Noakes, is correct as against a statement I have had in some briefing material I have received. I want to know the answer to this. The Bill’s passage through Parliament is described for another place. It says that the Bill completed its Commons stages on 22 November, and following the end of the Third Reading in the Commons, it was designated a money Bill by the Speaker—so far so good—at the request of the Government. That is against what the noble Baroness, Lady Noakes, seems to me to have said and I want to know which version is correct.

Having laid out my stall, as it were, I want to speak to a very narrow point. It is the plight of looked-after children. On all sides of the House, we are agreed that this represents a most needy part of our population. A small percentage, 0.6 per cent, of children are in care: 23 per cent of people in prison have been in care. We have to address this as a matter of urgency and it does not belong to one party or another, or to a coalition Government, or Opposition, or the Cross Benches to say “It’s our bag this one”. It belongs to all of us. It belongs to our society as a whole.

This abolition of the child trust funds is going to affect looked-after children in a big way. I know that Paul Goggins, in another place, had formulated, after consultation with Ministers, a possible amendment to the provisions of the Bill that would have benefited looked-after children. Because of the procedural way in which this Bill is now before us, that has been denied him, that has been denied us, and that has been denied looked-after children. Is it a waste of time? It is not for me. If I can put on the record of the proceedings of this House my concern that these children should be dealt with in a less cavalier fashion than the Bill provides for, I will be satisfied. But I will also be satisfied because as a member of the human race I can speak on behalf of vulnerable people in this way and urge the Minister that, if he cannot allow us to amend the Bill—which he cannot—he will at least promise us that the concerns of looked-after children will be taken forward by him with his fellow Ministers so that we can have greater satisfaction on this issue.

16:30

[The Earl of Listowel]

My Lords, I begin by declaring my interest as vice chair of the Associate Parliamentary Group for Looked After Children and Care Leavers, and as a patron of the Who Cares? Trust, an advocacy group working for the interests of young people in care, championing in particular their education over the years. I begin by expressing my gratitude to noble Lords for their concern about young people in care, which has been expressed on all sides of the House in the debate.

I want also to make an apology. I am sorry for giving a Second Reading speech in the procedural debate relating to this Bill last week. I recognise that I was trespassing on the conventions of the House. I ask the forgiveness of noble Lords, but as is often the case, there is little time to prepare for our debates and I was responding as best I could to the strong concerns of agencies working in this area.

I thank the Minister for his opening speech, but I was reminded that he is something of a purveyor of bad news and that it might be tempting for him to shut his ears to the criticisms being levelled at him. Recently I spoke to a man from Ireland who was over here to make money for a few weeks before returning to spend time with his family. He was doing this because there is simply no employment for him over there. So we cannot be complacent about the current extraordinary fiscal deficit. It was also good to be reminded of the positive indicators for employment growth produced by the Office for Budget Responsibility. A saving of £500 million will be made as a result of the abolition measures set out in this Bill, and I will come back to that in a moment. First, I ask the Minister whether he considers it likely, in the current circumstances, that local authorities will be able to fund the proposed ISA funds. Has he taken soundings to this effect?

I welcome the comment of the noble Lord, Lord Newby, on the need to focus particularly on this group of children. My noble friend Lady Howe spoke eloquently on their behalf, and highlighted the difficult period of transition for these children as they leave care. A quarter leave care at the age of 16, but despite the pilot schemes that have been set up to enable children to remain with their foster carers until the age of 18, many of them feel that they are being pushed out into the adult world prematurely. These children often have chaotic childhood histories, not only in their own families but all too often within the care system itself. They can be passed from foster carer to foster carer, to children’s home and then back again. So it is important to bear in mind that they may be beginning to put their lives together at some point between the ages of 18 and 21, and that this nest egg may be an important means by which they can change the direction of their lives during this time. The Minister may say that the £500 million has already been accounted for in the budgetary plans. I hope that he will consider whether there may be some scope for rebudgeting in this area.

I want to set out in some detail the proposal made by the honourable Paul Goggins. I know that this is a Second Reading debate, but since we will not have the opportunity to discuss any details in Committee or on Report, I hope it may be helpful to outline the key features of his proposal.

Any child who enters local authority care under Sections 20 or 31 of the Children Act 1989, or the equivalent legislation in Scotland and Northern Ireland, and remains in care for a minimum of 13 weeks, would be eligible for a junior ISA. After 13 weeks the responsible local authority must send the child’s details to Her Majesty’s Revenue and Customs, which will then open an account. HMRC will make an initial payment of £250. The responsible local authority must notify HMRC if the child spends more than 26 weeks in the next year in care. HMRC will then make a further contribution of £100. The same applies in any subsequent year that the child spends in care until he reaches his 18th birthday. Local authorities, which are the benefactors, can contribute additional amounts to the account subject to the general conditions laid down in relation to a junior ISA. No child who has a child trust fund would qualify for a junior ISA under this scheme, which applies equally to children in England, Wales, Scotland and Northern Ireland. I shall not go into too much detail but the overall annual cost of the scheme is estimated to be £6.6 million—however, this has to be an approximate figure.

The noble Baroness, Lady Noakes, raised an important point generally about how the child trust funds might be misused at the age of 18 or whenever the child benefits from them. This may apply particularly to looked-after children when they come of age and we will need to look carefully at how the money is administered to ensure that it is used in their best interests and not to their detriment.

I hope to short circuit much of what I had planned to say. Will the Minister meet with interested Members of your Lordships’ House early in the new year so that we can discuss what provisions might be put in place to secure the interests of children in care? Given that there will be no opportunity for further deliberation and the many concerns which have arisen, it is important that this issue is not lost. I hope the Minister will consider that.

I pay tribute to the work of the right honourable Iain Duncan Smith and the Centre for Social Justice and to their recognition of the needs of these children and the way in which we have let them down in the past. I also pay tribute to the previous Government for the many measures they took to improve outcomes for children. I know it sometimes seemed that they were investing huge sums of money and were making little progress, but it is encouraging to learn from the latest research that 10 years ago only 1 per cent of children in our care system went on to university; now it is 8 or 9 per cent—a 800 per cent increase or more. It is still poor, but it is a vast improvement on the past. We need to sustain that momentum; we must not fall back when it comes to keeping our eye on these children. It is not that we do not care about them but, if we do not prioritise them, they will simply fall back again because their needs are so complex and so difficult to meet.

I pay tribute also to the Frank Buttle Trust and its chief executive, Gerri McAndrew. The trust has played an important role in this improvement with its kitemark universities, ensuring that care leavers are given the support they need at university. I look forward to the Minister’s response.

16:38

[Baroness Armstrong of Hill Top]

My Lords, my early training was as a social worker and I have continued throughout my career to maintain an interest in looked-after children, as we now call them. I find that a difficult phrase because too often we complain that they have not been sufficiently well looked after. I have also had a lifelong relationship with Action for Children and currently carry out the role of an ambassador for it, which is a bit strange, but there you go. I want to ensure that no one thinks I have interests that I am not talking about.

One of my greatest privileges in my previous job as Minister for the Cabinet Office was being given responsibility for social exclusion. I was challenged by the Prime Minister to take a new look at children in care. That has informed many of my views and concerns about the some of the actions that the Government are now taking.

I was tempted to raise the Fawcett Society report, because the Minister has once again justified everything on the basis of reducing the deficit. Everybody accepts that there is a deficit, but it is claimed that it is our fault. Yet the Minister acknowledges that it was important to bail out Northern Rock; indeed, the Government now feel able to bail out Ireland with £6 billion. I agree with that, but the Minister should temper the way in which he raises the issue. Whatever our view of how the deficit should be tackled, it is absolutely clear that the people who will suffer most from the Bill and the manner in which the Government are imposing their deficit reduction programme are women and children. I do not think that that was the Government’s intention, but it is the effect of their not adopting the approaches to budget assessment that they have been implored to adopt. We were implored to take the same approach. Gender budgeting is not new. Many organisations have urged Governments to take it more seriously. I attended with the Chief Whip in 2007 a United Nations conference in New York which looked exclusively at gender budgeting. The ideas have been around for a long time. It saddens me that the Government forgot about them when looking at how they would cut the deficit.

There is now a lot of debate about how child poverty can be reduced and how children can grow up in a way that enables them to take advantage of their potential. The importance of assets is also recognised. They are more important than they ever were when I was born. Then, very few people could benefit from their parents being able to sell their house, for example; now, it is the expectation among the vast majority of people in this country that they will benefit from some sort of asset transfer. For looked-after children and children from the poorest neighbourhoods, that prospect is still a long way away. That was not the sole reason for introducing child trust funds, but I assure the Minister that it was none the less debated and discussed in think tanks, voluntary organisations and in government when they were being set up.

I know very well the views of the Liberal Democrats—I have listened to them on many occasions in the other place—but I simply disagree. We have to find a way in which our poorest children can have the same rights of expectation as other children take for granted. Building up an asset that they can take advantage of is an important part of giving them the same opportunities that others take for granted. I am prepared to have the debate about whether that was the most effective way, but I none the less will continue to argue that it was a noble aspiration and one that we should not lose. I mainly wanted to intervene because of my concern for looked-after children.

We cannot afford to be complacent. The work done by the noble Earl, Lord Listowel, over many years is to be commended. Many other people in this House have also continued to talk about the needs of looked-after children. But we have such a long way to go. I had the opportunity to go to other countries to look at what was happening. One of the interesting things is that we say that the local authority or the state becomes the corporate parent. Many other countries refuse to do that. I was concerned about something in the contribution of the noble Lord, Lord Newby. He said that looked-after children do not have parents. They mainly do, but the parents simply do not know how to parent or look after their responsibilities.

In many other countries they say, “We are not the substitute parents. We are there to form a bridge between what went wrong with those children when they had to leave home and what is happening to them now”. That is probably a healthier position to be in. We should recognise that it does not matter how damaged the background, the children themselves want to be part of the family and want to know about the parents, even if in many people's judgment that is the worst place they could be.

We take responsibility in this country for the state being the corporate parent. Yet, as I have heard from young person after young person, they leave care with something like £30. That is it. They leave care with virtually nothing. Many of them leave care without the personal resources to be able to cope. I suspect that there is not a parent in this House who would kick their kids out when they were 16 or 18. We have tried to extend the responsibility for leaving care beyond 18, but it does not happen everywhere and it does not always happen. No one in this House who had parental responsibilities would say, “That’s it: you're on your own. You get nothing”. It is a shame on us that we are the corporate parent and yet we are not prepared to take any of the measures that we as individuals would expect to take in respect of our own children.

We are in real difficulty with this Bill because of the money Bill issue. I do not want to run around the technicalities, but the expectation in the other place was that this Bill could be amended here and then returned to the Commons for consideration. Now that cannot happen. Therefore, I want to go further than other Members. It is not good enough to say that the Government will continue to discuss this issue. We have the right to expect today from the Minister an absolute commitment that the Government will legislate to make sure that an equivalent of the child trust fund is made available to children and young people who are in care. It needs to be a statutory provision. If it is not, the Government will be able to say that it is up to local authorities. I agree with the principle of loosening ring-fencing, but the problem is that there is no ring-fencing around the needs of disadvantaged children or for child protection.

When local authorities get their settlement, in the announcement that I expect in the next week, many will have a 30 per cent or even greater reduction in their budget. We are told to expect an average of 28 per cent. Having been responsible for the local government settlement for more years than I care to remember, I know that that means that some will get worse than a 30 per cent reduction and some will have a smaller reduction than that. I predict that the ones that do worse will already be the poorest, given other decisions made by the Government, whereby special grants to local authorities for looking after the most deprived have disappeared. It is almost inevitable that when the settlement comes out it will affect very harshly many of the already most deprived neighbourhoods. In those circumstances, we cannot do this on a wish and a prayer. We have to be convinced that there will be legislation that will defend the interests of looked-after children and make sure that, however small it is, we none the less recognise the importance of their being able to have an asset that they can take with them when they become 18 and leave care.

I understand that the Government are drafting legislation quickly, and I am even prepared to grant that they may not have realised that they would not have the chance to amend the Bill again, but they do not have that opportunity. We need to know that legislation will be brought forward in good time to make sure that looked-after children are looked after by this Government.

16:52

[Baroness Ritchie of Brompton]

My Lords, I welcome the opportunity to contribute to this debate and, in particular, I would like to speak about those children for whom the state is the corporate parent, as many noble Lords have done.

In my own local authority, I am a corporate parent to these children in our care, and I regularly meet with them to hear about their achievements and successes, of which there are many, and their concerns and problems. The issue of money and managing their finances is a common concern, which was highlighted in the recent report by Demos for Barnardo’s, In Loco Parentis. I welcome the Government’s proposal to introduce a new junior ISA in 2011, which will enable some children to build up funds for the future. But children looked after will always find it difficult to save due to their circumstances. Some 48 per cent of children and young people in care are in care for more than three months; this amounts to some 19,000 children remaining in care for longer. These are the children who often do not have access to parents, grandparents or family to help them save for the future or to top up a junior ISA. I believe that we need to find a way of providing for these children in the future.

I declare an interest as lead member for children in Kensington and Chelsea, where we have already been contributing funds for our looked-after children who predate the establishment of the child trust fund by building up savings account for them, and we intend to continue to contribute to junior ISAs. We give them a statement twice a year so they know how much money they are saving; they enjoy receiving this statement, and it is a positive encouragement for them to continue to save throughout their lives. We are also looking at matching any pocket money that they contribute and are hoping that our foster carers will also either contribute or encourage their charges to save.

I think we can all understand that, for a young person, the knowledge that they have a capital asset, however small, can give them a positive view about their future and, as I have indicated, help them to learn about the management of money. As president of the National Children’s Bureau, I know that it runs a project which engages young people as money advisers to other young people. Anything that we can do to encourage young people leaving care to help and plan for their financial future should be encouraged.

As the noble Earl, Lord Listowel, mentioned earlier in the debate, only 8 to 9 per cent of young people who have been looked after are accessing higher education—albeit it is a great improvement, as he indicated, on the past. They will have access to grants and help with fees but some measure of financial independence would help them to buy the extras which are needed to fit into student life. As we heard from the noble Baroness, Lady Howe, around 90 per cent of 19 year-old care leavers were not in employment, education or training in 2009. There are many reasons why this may be the case, but it is not helped by the lack of financial support. Although care leavers receive a grant, it is, as has been mentioned, up to the discretion of local authorities, and it can range from £500 to £2,000. At a time when local authorities have to make substantial savings to help this country’s budget deficit, these payments could be under threat.

For young people leaving care, knowing that they have a fund which they own and can rely on, without any strings attached, would help to give them confidence to start out and the flexibility which many other young people already have. It would give them a measure of independence, perhaps to put down a deposit for a flat or enable them to buy clothes for interviews, or perhaps to travel in order to widen their horizons—all of which are things that many parents will provide for their own children. It would help young people who go into apprenticeships and internships where they receive little pay, or voluntary work when they are looking for jobs. Internships can be a good way for young people to find out what sort of career they want to go into, but often it is the young people who are supported by their families who can afford to explore these opportunities.

We hear that the abolition of the children’s trust fund will save £500 million. If the state were able to contribute to a looked-after child’s junior ISA, the cost, as we have also heard, would be around £6.6 million a year, which would include the £250 initial contribution and subsequent annual payments of £100. I believe that we need to send a message to our looked-after young people—that we value them and feel that they are responsible enough to own savings accounts; that we recognise that many of them feel that they face an uncertain future; and that we are trying in a very real way to mitigate some of the disadvantages that they have had to face in their lives. I therefore ask my noble friend the Minister if he will seek to find a way to give the children in our care a more secure financial future.

16:58

[Baroness Drake]

My Lords, fairness dictates that the savings gateway and the children’s trust fund are worthy of greater consideration than straightforward abolition. Issues of affordability could be addressed by greater targeting and deferment. Policies focused on improving benefits and policies directed at asset-building for lower-income groups should not be seen as alternatives. It is not a matter of choosing either/or but of recognising that addressing inequality is a complex challenge.

I always fear what I call the “rational” paternalism that argues that those on lower incomes should not aspire to save and accumulate assets, should not expect government policies that allow them to do so, should have to accept that the market will not cater for them and must forgo the greater control which assets can bring over household debt. Meanwhile, the systemic inequalities in asset distribution simply get worse. I wonder how rigorous the impact assessment of this Bill has been, because while income inequality attracts greater attention, assets are far more unevenly distributed. Financial inclusion policy persistently fails to take adequate account of asset fund-building policies, despite the fact that assets directly affect financial inclusion.

As has been said, more than 60 per cent of black and Asian people in the UK have no savings at all. Women have 40 per cent less than men. Lack of assets is a problem for people who run into financial difficulties—lack of control takes over. Poor people who lack rainy-day savings are exposed to subprime and even illegal lending practices. Savings provide an alternative to high-cost credit and have the potential to change the long-term flow of money within a family. Those without savings are exposed to high charges for other products, such as insurance. Owning assets has an impact on confidence, sense of control and willingness to engage.

There is a difference between recognising the public spending challenge, and so moving to targeting, and deconstructing the complete edifice, which is what the Bill does. The child trust fund gave a real kick-start to the savings accounts of children of people on lower incomes. It overcame inertia, combining auto-enrolment with a strong and simple incentive. It made the provision of such a savings product for lower-income families more attractive to the financial markets. It allowed providers to do some cross-subsidy between their richer and poorer clients. It increased accessibility to a savings product for low-income groups. The product was taken to them; they did not have to search the market. The momentum that has built up in this product—75 per cent take-up is pretty high, compared with a lot of products—could have been sustained over the longer term.

Particularly regrettable, as so many noble Lords have said, is the abolition of the trust fund for children in care—some of the most vulnerable and least well placed in terms of assets. Who will look after the asset accumulation of our vulnerable children in care now? In response to the noble Lord, Lord Newby, is it so wrong for children in care to get a windfall asset? They certainly will not get the windfall asset of a tax-free inheritance, up to about £325,000. I ask the Minister to seek from the Government a commitment to continue such payments and, if the vehicle is a junior ISA, to require payments to be made into that account. An annual payment of the order of, for example, £100 would be small in the scheme of things, but it would make a real difference to those individual children.

I also ask the Minister whether the Government will commit to addressing this issue in another piece of legislation if it is not possible to amend the Bill. I refer to the comment of the Prime Minister at Question Time on 30 June 2010, when he said:

“We really do need to do better as a country”,

for care leavers. He went on to say that,

“children leaving care aged 18 have … no one to help them”.—[Official Report, Commons, 30/6/10; col. 857.]

Here is a chance for the Government to help those children in care and to meet the aspiration that the Prime Minister himself articulated.

Child trust funds for disabled children worked alongside the benefits system. Although the Government have said that they will redirect some of the abolished payments for short-break provision, does such provision and asset-building for disabled children truly have to be mutually exclusive? Is it not possible for the brains of the Treasury to find a more worthy set of candidates who could bear the marginal contribution to the public debt of making those modest payments to disabled children? Could the Minister not give an assurance that they will consider maintaining even a modest payment for those children and, when more benign economic circumstances allow, making those payments more generous?

What about the impact on ethnic minority children? The BME age profile is much younger than the national average. Proportionately more of them would be able to receive a trust fund. That is important because the low level of assets held by black and minority ethnic parents means that they will be less able to benefit from familial redistribution.

Notwithstanding what has been said, I fear that the Government are dismantling the child trust fund and replacing it with a savings vehicle which will widen inequality and undermine the behavioural momentum that was being built up for low-income groups. Junior ISAs will provide tax-free returns, but there is a public cost to extending that tax-free element. It is revenue forgone, and it is affluent parents who will secure the greatest benefit on behalf of their children. It is much less likely that junior ISAs will be as effective in increasing the level of new savings. If that is the concern, then these junior ISAs will probably deliver less, because many low and moderate earners simply will not engage with such mainstream products. The trust fund worked because the product was taken to them. It took away the inhibitions and the complexities of engagement that many financial products involved.

Let us again consider BME people. Not only do they have lower amounts of savings; they utilise mainstream financial products even less, in particular ISAs. If junior ISAs are to substitute for the child trust fund, do the Government intend to consider this deficit of engagement with mainstream financial products particularly among low-income and BME families?

There is another important difference. An ISA is run on an annual renewal basis, whereas a child trust fund is run as a trust over a much longer period. This is an important distinction. The financial services industry often takes advantage of inertia. Customers are frequently defaulted into ISA products with extremely low interest rates, and even interest rates on fixed-term cash ISAs are frequently below the returns available on non-tax-exempt products, thereby undermining the public policy intention of introducing the ISAs in the first place. If the Government are to introduce ISAs for children, will they take action in designing them to hold the markets to account for the practices I have described? ISAs are not trusts.

Statistics reveal that lower-income families’ contributions to their children’s trust funds formed a greater percentage of their income: 1.14 per cent, compared with 0.76 per cent for more wealthy families. Who says that poor people do not want to care for their children? Those who do contribute give up, on average, a higher percentage of their family income. Families earning £16,000 or less have on average been saving £15 a month into the funds. That momentum might well have been maintained but now we will never know. If we are to help poor people to build assets, we are going to have to start again with that momentum and engagement. Seventy-five per cent was a jolly good start compared with some products. I wish that one could get that level of engagement in free contributions from employers to occupational pension schemes. It would be so much better if the Government targeted even a modest amount of money on the most disadvantaged children.

Similarly with the abolition of the saving gateway, the effect of the Bill means that although we will have a relatively generous pension and inheritance tax system, the two incentivised savings products for low-income households and their children will be scrapped. The issue of affordability will not be addressed by targeting. Providing low-cost products for low-income savers will always be a challenge for the financial services industry. Put at its simplest, such products do not provide an attractive profit. That is precisely why government support for initiatives such as the savings gateway is so important for meeting a market gap. By withdrawing so absolutely from the savings gateway, the Government have simply heightened the political risk for financial services organisations of investing in savings products for lower-income groups. Who is going to do that now? When people have built up such savings, they have been downed and no one knows what the future might hold.

The Government admit to the possibility of returning to the issue because they know, as everyone else does, that interfacing with the financial services industry is a persistent problem for low-income people. Why cannot the savings gateway be deferred, or its introduction phased in, so that the positive gains from the project can be banked, so that those parts of the financial services industry that have engaged can remain engaged and so that the cost could be minimised in the short term and highly targeted in the long term? Why scrap? You could make a huge contribution to the issue of affordability without downing the edifice and abolishing in the way proposed.

I recognise that a financial advice service is to be rolled out and that that is a real positive. Citizens have a right to enjoy financial advice and to be given guidance on how to exercise their financial interests and responsibilities. However, there are reams and reams and books of evidence to show that advice often does not lead to active decisions to save, particularly among low-to-moderate earners. The DWP has trialled schemes with employers but advice has not translated into action, which is why nudging, powerfully incentivised and well designed default products are so important to increasing saving. Instead of targeting and keeping the remnants—keeping some of that edifice alive—all the work is being abolished.

Finally, financial education for children is likely to have much more impact if all children, the poor as well as the affluent, have a sum of money in an account with their name on it. That would have much more meaning.

17:12

[Baroness Blood]

My Lords, speaking towards the end of the list, everybody has said what I wanted to say, so I shall be brief. I do not support the broad thrust of the Bill or the focus of many of its provisions. I do not think that it is my task here today to discuss that, but I wish to state my concern that doing away with the child trust fund, the health in pregnancy grant and the Government’s contribution to them will disadvantage some of the poorest children and families in our society. My purpose in speaking in the debate today is rather to support a scheme that was proposed in the other place and which, I understand, the Prime Minister may be willing to consider.

The scheme focuses on one of the most vulnerable and disadvantaged groups of children and young people. They very often do not have anyone to speak for them and make their interests heard. I speak, of course, about children and young people who are looked-after, or in care, and here I must declare an interest. I am the chair of Barnardo’s in Northern Ireland and a trustee of Barnardo’s in the UK.

Some 86,000 children are in care across the UK. In Northern Ireland, more than 2,400 children are in care. The vast majority of these children and young people will be in foster care and most will have had a very traumatic experience in their life which has brought them down this route. Many will have experienced neglect or abuse and the trauma of no longer being able to live with their birth families. In Northern Ireland, the single biggest reason that children move into the care system is neglect, often linked to parental alcohol and drug misuse. Yet it is rarely given the attention and focus it requires and children and young people leaving care are the group who do least well.

In Northern Ireland, 83 per cent of all children tested in key stage 3 achieve level 5 in English, but for children in care, it is 27 per cent. Similarly, 81 per cent of all children achieve level 5 in maths, but for children in care, it is also 27 per cent. While 99 per cent of the Northern Irish school population attain at least one GCSE, for children in the care system, this is down to 61 per cent. Looked-after children are four times more likely to be suspended from school than those in the general population. In 2008-09, 8 per cent of all looked-after children were suspended or excluded from school, compared with 2 per cent of all other children. In 2009 in Northern Ireland, almost one in 10 of all children in care was cautioned or convicted of an offence. Similarly, young people leaving care are much more likely to be unemployed and not in education or training. This pattern reflects the situation of children in care not only in Northern Ireland: the same pattern of poor families and lost opportunity extends across the United Kingdom. This is why we should support the call for the Government to introduce and fund a junior ISA for children in care. While the Government's intention in the Bill is to encourage parents to save and to buy junior ISAs for their children, when a child is taken into care, the state becomes the parent, so it is beholden on the state to act as a good parent and to save and provide a nest egg for the children for whom it has responsibility.

The scheme is relatively straightforward. It will apply to any child who enters care after January 2011 and remains there for a minimum of three months. The Government will open a junior ISA for each child who meets this criterion, with an opening deposit of £250. There would be a top-up of £100 for each subsequent year that the child remains in care. Of course, it would also be possible for others to contribute to the child's ISA: extended family, local authorities, trusts or other benefactors could also make contributions. This would also give young people—who at 16 or 17 could be working part-time—the opportunity to contribute. Children and young people in or leaving care have to be more resilient than most young people, and it would be good for them to learn the importance of saving and planning ahead, knowing that they have a nest egg to which they can contribute.

I understand that the total cost of the scheme would be around £7 million. It would be a very effective use of public money to support very vulnerable children over the long term. Of course, I am keen to ensure that if the scheme goes ahead, it will apply to Northern Ireland—but the whole of the UK should be involved. I look forward to hearing the views of the Minister, and urge him to make a firm commitment to provide appropriate funding for saving accounts for looked-after children, who after all are some of the most disadvantaged people in our society.

17:17

[Lord Northbourne]

My Lords, I have considerable sympathy with some of the views that have been expressed by the Opposition, particularly in the context of disadvantaged children. I congratulate the noble Baroness, Lady Hollis, on her amazingly powerful speech about the inappropriate muzzling of this House.

I will be brief and simply challenge the Minister on one extraordinary statement that the Government have made. The Explanatory Notes state:

“The Government does not believe any significant impact on equality arises from these proposals”.

I believe—and I dare say a number of my colleagues agree—that that might be wrong. I say respectfully to the Minister that the only circumstance under which the Government could justify making that statement would be if they were proposing immediately to make other arrangements to ensure, so far as is possible, that pregnant mothers do not suffer from malnutrition. I was looking only at the health in pregnancy grant, but the same would apply to many other parts of the Bill.

One of the most important forms of inequality in our society today is the gap between the poor and the very rich. In recent years—and, I regret to say, under a Labour Government—that gap widened. It is quite clear that the status quo is not an option, but the Bill will make matters worse.

Let us look for a moment at why malnutrition in pregnancy matters so much. Maternal malnutrition during pregnancy is statistically and causally linked to low birth-weight and to a lower probability of breast-feeding. Low birth-weight and the absence of breast-feeding have been shown by good and reliable research to relate to the child’s performance in school and to disadvantage in later life. A report published by the Joseph Rowntree Foundation earlier this year, which confirms much earlier research, shows that one of the most important factors contributing to poor outcomes for a child in school and in later life is low birth-weight. It is surprising but it is a fact.

My noble friend Lady Finlay of Llandaff had hoped to speak this afternoon but regrets that she cannot be here. However, I met her in the Lobby yesterday and she asked me to stress on her behalf that maternal nutrition during pregnancy influences the long-term life prospects of the child. Further evidence comes from the 2008 public health guidance report of the National Institute for Health and Clinical Excellence:

“The importance of ensuring mothers and their babies are well-nourished is widely recognised. A pregnant woman’s nutritional status influences the growth and development of her fetus and forms the foundations for her child’s later health … The mother’s own health, both in the short and long term, also depends on how well-nourished she is before, during and after pregnancy”.

Of course, the mother’s health can have a substantial influence on the well-being of the child as he or she grows up.

We must not think that poor outcomes at school for disadvantaged children do not matter. They matter very much not only because such children are condemned to a lifetime of disappointment and failure but also because, when disadvantaged children grow up and become parents themselves—often too soon—they are likely to pass down this disadvantage from one generation to the next. This happens all too often in our society today and it should be more widely recognised as a major social problem.

I recognise that, by ending the health in pregnancy grant, this Government will make a significant contribution to the very necessary task of reducing government expenditure. However, we must ask ourselves: at what cost to our society as a whole? That depends on whether the Government intend to put some scheme in its place to address the real problem of malnutrition in pregnancy. It is possible to envisage schemes that would be far less expensive and more effective than the health in pregnancy grant, and I hope the Minister will say that that is what the Government intend to introduce. One way in which this could be done is by targeting help only to those who need it and by ensuring that money is used only to buy nutritious food to be consumed by the mother. It is possible to envisage a scheme linked to antenatal services involving appropriate food entitlements for mothers either through direct distribution or through some kind of voucher scheme, with which the major supermarket chains might well be proud to co-operate.

I conclude by asking the noble Lord two questions. First, do the Government recognise that there is an important problem of malnutrition among pregnant mothers in some parts of our society today, and do they believe that this matters? Secondly, in the light of that problem and their decision to bring to an end the health in pregnancy grant, will they undertake urgently to explore ways of addressing the problem of malnutrition among pregnant women and to take necessary action to address it?

17:24

[Baroness Hughes of Stretford]

My Lords, we have had enormously powerful and very knowledgeable contributions this afternoon on the substance of the Bill before us and I shall not repeat them. I wish to make some brief comments on the process in which we find ourselves and on the substance of the Bill.

I should like to reflect on two broad issues. The contributions that we have heard from some Members opposite illustrate for me how deeply contradictory the approach adopted by the Government is to explaining the way in which they are conducting their deficit reduction strategy. The Minister has told us that, on the one hand, there was no alternative to measures such as these to abolish very important social policy measures but, on the other hand—here I agree with the noble Lord, Lord Northbourne—he asks us to believe that this will have no negative impact on inequality and child poverty in particular. That is simply inconceivable and deeply contradictory. In all of these debates about how to reduce the deficit, I can see no evidence of any clear criteria to explain which measures the Government have decided to abolish and which they have not. I should have thought that any important set of criteria should include something that attempts to retain, at least in part, measures such as these that will make a long-term positive difference to some of the most disadvantaged people in our community.

I take up a point raised by my noble friend Lady Drake. We heard from the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, that in principle they are very uncomfortable with universal measures, such as the child trust fund and the health in pregnancy grant. On that basis, and to take it to its logical conclusion, they may well be opposed to free schooling and the National Health Service. However, if they are so concerned that, at least in the present climate, a universal measure such as the child trust fund cannot be sustained, it is open to them to argue for the targeting that they say they support. Yet we have heard no such argument for targeting; instead we have a wholesale dismantling of these measures. These abolitions will affect the poorest people the most.

The second issue on which I wish to reflect is why these measures were introduced in the first place. All, in their way, are preventive measures. They are designed to help people avoid falling further into poverty or disadvantage. The child trust fund, in particular, and the saving gateway formed a radical new approach alongside the measures which the previous Government brought in to try to improve people's prospects in the here and now through the working tax credit, for example, and the national minimum wage. They were farsighted measures to try to help people to get into the habit of saving and to accumulate assets which they could use when they needed them. Long-term universal benefits help to achieve those long-term aims and they help people who, otherwise, would not have the opportunity to get the benefit of long-term savings, which many of us take for granted. It was also a very strategic approach to try to sustain, over the long-term, the improvements that we saw in the reduction of the number of children living in poverty over the lifetime of the previous Government: 600,000 fewer children living in poverty by the end.

It is worth reflecting on those issues because that brings me to the conclusion that, even in the current climate, the child trust fund, in particular, should be retained for those specific groups of children who are least likely to acquire long-term assets through their own families. While children in care are an obvious group for whom I support such a measure, there are others, such as disabled children, whose families find the cost of their disability an enormous burden on family resources. There is a very strong case for continuing the child trust fund for them and for children living in poor families, where there is no hope of such children acquiring the kind of back-up of a pot of capital assets that most parents want for their children. It is out of reach for children in those specific groups.

I shall focus briefly on the process that was clarified for us by the noble Baroness, Lady Howe. The Speaker has made a decision, although we do not know whether it was at the request of the Government or simply on advice, but the Minister knows the position and sees the concern of Members in both Houses of Parliament who would wish for an opportunity to amend this legislation. The Minister cannot hide behind the Speaker’s decision because, while he cannot challenge that decision, and nor do we, there are other routes open to him to bring forward other measures as outlined by my noble friend Lady Armstrong. He can give a commitment to the House today that he will do so.

On the merits of the argument, there is an overwhelming case for continuing the child trust fund, not some other measure. The child trust fund has many advantages over the junior ISA being proposed. We should continue it, at least for children in care. We have heard in great detail, which I shall not rehearse, the arguments relating to the still poor, although improving, outcomes for children in care. As Minister of State, I was responsible for developing the Green Paper Care Matters. Many Members of this House helped me with that and were very energetic in trying to take the boundaries of the policy as far as we could, and I was very grateful for their support. Through that process, I talked directly, as the noble Baroness, Lady Ritchie, does in her current position, to many children in care. I can say to your Lordships without any sentimentality that many of them constantly surprised me with their talent, ability and resilience in terms of what they had been through and the enormous hurdles that they had overcome.

Particularly at the point of transition out of care, whether at 16, 17 or 18, they have virtually no resources to fall back on. I talked to a number of young people who were in higher education, and many Members of this House will know from their experiences with their own children of the things that you have to buy for them when they go away to university or college or when they move into their own flat. There is an enormous bill for most parents. Young people who have been through the care system simply do not have the wherewithal to cope with that, so I think there is an unassailable case for continuing with a long-term savings mechanism, such as the trust fund, for children in care because we, the state, are the parents. I think there is also an equally strong case in terms of need for families with disabled children and for children in poor families. What we need from the Government today is not more warm words or promises but a firm promise from the Minister to bring forward in another Bill proposals to ensure that the child trust fund is either continued or replaced with a similar measure, at least for all children in care, and with a process that will enable Members of both Houses to amend those proposals.

17:33

[Baroness Browning]

My Lords, as the final Back-Bench speaker, I wonder whether there is anything left for me to say. I hope your Lordships will allow me to touch on two issues, and I hope I will not repeat a lot of what others have already said, much of which I agreed with.

First, I say to the Minister that I support the Bill. However, as others have said, he would do a great service to the people concerned if he would share the information that has been expressed in today’s debate, particularly with Ministers in other government departments, because one of the weaknesses of government in its generic form is that it tends to think in silos and, if I may respectfully say so to my noble friend, none more so than the Treasury. If Ministers would just take concerns away from debates and share them with other Ministers, we might have what often is referred to as joined-up thinking in government. That would definitely be to the benefit of the way in which we legislate and its effect on the recipients of legislation that comes through this House.

I totally support the points that have been made on child trust funds. We also have had excellent briefing from Action for Children and Barnardo’s about the special case that is needed for looked-after children. I do not want to repeat too much of what has been said, much of which I support. I was particularly taken by the point made by the noble Earl, Lord Listowel, about the 18 year-old threshold. If you make a will, however much or little you have to leave to your descendants, solicitors will always advise you to write in the age of 25 and not 18. They say that for very good reasons—and I hope that my own children are not listening to this. I am the mother of two middle-aged men, so it is a long time since they were 18 years old, but I would have been very nervous even for small sums of money to have been at their disposal at the age of 18, with them having total discretion as to what they spent it on. It is not that I am a bit of a killjoy of a mother.

There is a need to look, as I hope my noble friend will, at the case made for looked-after children and to take into account how any such money might be discharged. I hope that my noble friend will know that I am speaking in a very positive way about how money “will” be discharged. I feel that there is an imperative here today to make sure that that message goes from this House and that the case for the looked-after children is made.

When I was a Member of Parliament—I am sure that others in your Lordships' House will have shared this experience—I often had to intervene in the transition period for looked-after children when they came out of care and transferred into employment, education or sometimes absolutely nothing at all. It is a salutary experience to see not just the financial challenges that those young people face, but, if I have interpreted correctly a point made by the noble Baroness, Lady Armstrong of Hill Top, there is still an ongoing need for emotional and welfare support, over and above the finances. If we as a nation are to be in loco parentis—goodness knows, if those in this Chamber and in the Chamber in another place think about where the buck stops when decisions are made on just how that is delivered, surely the buck stops with us—we have to take this seriously.

Again I say to my noble friend that these are the sorts of issues that, if policy is changed in a Bill that comes through the Treasury, read across other government departments. I hope that he will not just take from this House the message about looked-after children to those with responsibility for local government finance, the Department of Health, the Department for Work and Pensions, and others, but that he will take it with enthusiasm to ensure that the message that has clearly gone from all sides of this House today is translated into something of which we can all be proud.

In January 2008, I had the great privilege to serve on the Health and Social Care Bill Public Bill Committee in another place, which led to the legislation that brought the health in pregnancy grant into being. When we came to the vote then, I opposed it and I support the Government’s decision to abolish it for the following reason. There was a lot of confusion around this legislation. When the previous Government started to talk about the purpose of introducing this grant, it had a focus.

As a reminder, I should like to share with your Lordships information that we took in evidence on this Bill before we started Committee—something which I would commend to almost all Bill committees. We took evidence from Rosemary Dodds from the National Childbirth Trust. Her first question was about this one-off payment of £190. She said:

“The important thing is the intention of the payment. Originally, there was a lot of discussion about impact on birth weight and prematurity, but the intention of the payment has not been made clear. In order to answer the question about what the impact would be, we need to know the intention of the grant”.

Right at the beginning, even in Committee, there was confusion about what the Government had said prior to printing the Bill and what actually happened when we got to Committee. She went on:

“If the impact is desired on birth weight and on prematurity”—

which quite clearly it was when the Government first started to talk about it—

“my understanding is that even 25 weeks is too late, from the evidence base, to have much impact”.—[Official Report, Commons, Health and Social Care Bill Committee, 10/1/08; col. 85.]

The Government’s intentions right at the beginning were extremely noble. They wanted to have an impact on prematurity and low birth-weights, which many of us could have supported, but they then discovered that if you do not set a higher threshold you bring into grants people who subsequently either elect to have an abortion or who unfortunately have a miscarriage. The threshold was therefore set much higher, so high in fact that the impact of early nutrition—both before conception and in the very early months of pregnancy, which were deemed to be the critical time if you were to avoid low birth-weights and premature babies—went out of the window. The alternative suggestion—of well-being and a general fund to help mothers in pregnancy—was therefore substituted for the original intention. I hope that my noble friend—again, this is not a Treasury matter—will convey this issue to the Department of Health.

I support the Government’s announcement of more health visitors, because clearly more health visitors on the ground could have an impact here. So, too, could more training in nutrition. Many years ago—a lifetime ago now—I trained as a home economist. I studied nutrition. Many people who are involved in the welfare and care of pregnant mothers, including some midwives, have very little real knowledge of nutrition; very few actually know the importance of the correlation between calcium and phosphorus in the early laying-down in pregnancy of healthy bones and teeth et cetera.

My noble friend is right to get rid of this fund, but I hope he will talk to the Department of Health about how we can help in other ways to mitigate the problem that we have in this country: the tragic problem for many individual people of low birth-weights and premature babies.

17:43

[Lord McKenzie of Luton]

My Lords, this has been a very powerful debate, with some excellent, if not brilliant, contributions, but I express again disappointment that the designation of this Bill as a money Bill precludes us a proper Committee stage. Indeed this issue has clearly exercised a number of speakers this afternoon. To the noble Baroness, Lady Howe, who was obviously unable to support us on the Motion last week, I say that that was not a challenge to the certification by the Speaker; it was simply to get a Committee stage within the existing rules. The noble Baroness, Lady Noakes, is right; we do not and cannot challenge the certification by the Speaker, although if I had the benefit of the incisive research, as ever, of my noble friend Lady Hollis, I might have been a little bolder.

My noble friend Lord Griffiths raised an interesting point about whether this certification was pressed on the Speaker by the Government; it was a new point to me, but something which we ought to understand. Certification comes at the end of the House of Commons process, but that is not to say that somebody might be preparing the arguments for, and be privy to, the prospect of that certification in due course. I think that that is a specific issue that we need to understand in relation to this Bill. If nothing else comes from the debate we have had around this issue, I hope that it will bring a process of some greater clarity to when a money Bill is a money Bill and some greater clarity on the process and timing of that. Notwithstanding that, my noble friend Lady Hughes urged the Minister not to stand behind that certification and to bring forward legislation which clearly has strong support right around the House.

As we heard from the Minister, the Bill implements the second stage of cancelling government contributions to child trust funds, withdraws funding for the health in pregnancy grant and repeals the prospect of rolling out saving gateway accounts, which have been the subject of successful pilots. Each of these measures has resource implications, of course, but they have profound policy implications as well. But given the Government’s focus on deficit reduction, any consideration of the Bill is inextricably linked to consideration of their approach to tackling the deficit, an approach we consider to be flawed.

We have heard the usual party line from the Minister about the deficit, but no objective analysis of our economic position. Over the past two years, the UK has faced the biggest economic challenge for generations as the global financial crisis hit our banks here and our export markets around the world. At the start of the crisis, the UK had the second lowest debt in the G7, below that which we inherited from the Conservative Government in 1997. Borrowing rose not because of our spending before 2007, but because tax receipts fell and spending was allowed to rise to provide extra support for the economy when it was at its weakest. The fiscal stimulus co-ordinated with the rest of the world, with only the Conservatives in the UK a lone voice in opposing it.

The consequences of that—an increasing deficit and an increase in public sector debt—would have to be dealt with by any Government and tough choices would be necessary, but we consider that the coalition Government have made the wrong choices. We reject the Osborne prescription which says the faster, the harder and the earlier you cut, the better for our economy. Indeed, is that not the advice that Ireland was given? We argue for an approach that would bring the deficit down, but in a balanced way that gives the private sector a more realistic chance of taking up the slack. Indeed, last week’s OBR forecast shows lower growth than expected over the next two years, a relatively slow recovery from recession by historical standards, and that the scale of the fiscal consolidation, yet to have its full effect on the economy, has weakened the prospects for growth.

So there is an alternative approach, and there are different choices about how the fiscal consolidation should be borne. But by locking into an imprudent consolidation plan, the Government have restricted policy choices and made a joke of the Chancellor’s declaration that he will not balance the budget off the backs of the poor. That is precisely what is happening in this Bill. There are consequences that arise from the deficit reduction plan, as my noble friend Lady Hughes pointed out.

The noble Lord, Lord Northbourne, rightly challenged us not to accept that poor outcomes for some children do not matter. Of course, it is the pattern of what has gone before. We know that the combined effects of the June emergency Budget and the comprehensive spending review are deeply regressive, and what is fair about measures that have cut almost £7 billion from direct support for children and where women are hit twice as hard as men by changes to tax credits and benefits? My noble friend Lady Armstrong pressed on this, although I think it is right to say that the Conservatives were not originally in support of our action on Northern Rock.

My noble friend Lady Thornton made it clear that there can be little doubt that child trust funds have been a success in terms of encouraging people to save. Evidence submitted in another place showed that there was a 72 per cent take-up of the scheme by parents, with obviously all children being enrolled after 12 months. Some 31 per cent of accounts were being topped up, rather than the 24 per cent suggested. This was across the board, although regularity and amounts varied. Evidence provided in another place variously described child trust funds as the,

“single most successful savings policy to date”,

or a,

“very successful nudge for people with regard to the inertia over savings”.

It is like auto-enrolment for pensions, as my noble friend Lady Drake argued. Depending on the rates of return, it was suggested that accounts could accumulate to as much as £9,000 or £10,000 by the age of 18.

There are obvious benefits of the child trust fund in helping to develop and reinforce a savings culture, encouraging asset accumulation, seeing the benefits of young people having a tangible stake in society, having to make choices, hopefully responsible choices, about resources, and becoming more financially literate. These are opportunities that many young people from better off families have at the moment. Child trust funds opened up these prospects for children from poorer families, and they are now to be denied.

There are a number of options the Government could pursue to retain the prospect of some of the benefits of the child trust funds—certainly the prospect of concentrating the saving instrument on the poorest one-third of families, those on DLA and looked-after children, which was a commitment of the noble Lord’s party at the last election. What has happened to this pledge and what would it cost now to fulfil it? They could reduce the government contribution for a period or defer the abolition for a period, but they have chosen to stop these arrangements entirely. That is to be regretted.

We acknowledge, though, that the national financial advice service, with its limitations, as my noble friend pointed out, and the annual financial health check will help build financial literacy and is to be welcomed. We are told that this service is to be rolled-out next spring. Given its proximity, perhaps the Minister will tell us a little more about its scope and reach and the nature of the levy on the financial services sector, which is to provide the financing.

It has been announced—we heard it again today from the Minister—that the Government are to introduce a junior ISA, but that some of the detail is still unknown, as, indeed, is its final timing. Clearly such a savings product would not benefit from a government initial or interim contribution but would obtain the benefit of a tax-free build up and would be, presumably, tax free on exit. The benefit of the tax-free build up would, presumably, effectively accrue to contributors, whose income would be sheltered. In comparison to the child trust fund, this would be less advantageous to those families on the lowest income, who are not wholly within the charge for tax, and who would miss out on the extra government contribution—the poor missing out again, with higher rate taxpayers benefiting most. So much for Conservative and Lib Dem values.

Evidence given to the Public Bill Committee in another place suggested that providers of child trust funds would need time to get their systems, including distribution systems, in place for the new product—unless, that is, the junior ISA is the CTF without the government contribution. Given this seemingly inevitable gap between the proposed demise of the child trust funds and the introduction of junior ISAs, could there not be some process to bridge the gap by extending the child trust funds or backdating junior ISA arrangements? What attention are the Government giving to the practical implications of introducing a new product? What reassurance can be given to those who, according to Save Child Savings, have invested millions of pounds in the systems, infrastructure and marketing required to ensure consumers have access to a vibrant competitor provider community? What assessment has been undertaken concerning the likely take up of junior ISAs—the cost does not appear in the Red Book, so far as I can tell—and the distributional affect of the benefits?

Nearly every noble Lord who has spoken has focused on the issue of looked-after children, including my noble friends Lady Thornton, Lady Armstrong, Lady Blood and Lord Griffiths of Burry Port; the noble Baronesses, Lady Howe, Lady Noakes and Lady Ritchie; and the noble Earl, Lord Listowel, who has always strongly supported the cause of looked-after children. It has been rightly the subject of debate both today and in another place, but we should acknowledge that, despite progress, we do not have a strong record on providing good outcomes for looked-after children, who enter adult life poorly provided for.

As Barnardo’s and Action for Children state, the transition from care to independence is a critical period for young people and having adequate financial support is a key factor if they are to succeed as they enter adulthood. Child trust funds would have been one way of helping to rectify the problem. The proposed replacement by a junior ISA, which is presumably predicated on parental contributions, does not help without special arrangements.

The budgets of local authorities, who are the corporate parents of looked-after children, have been particularly savaged by the CSR, as my noble friend Lady Armstrong explained. We are aware of the discussions that have taken place with Mark Hoban, Paul Goggins MP, Barnardo’s and Action for Children, and warm words have, indeed, been spoken. What specific proposal is coming forward from the Government? We cannot pass an amendment today, but we hope in the circumstances that the Government can give us the clearest commitment, on the record, to bring forward legislation on this matter.

The Bill before us repeals the primary legislation for the savings gateway, which was to be a tax-free cash saving account available to people in receipt of qualifying social security or tax credit awards. The purpose of this was clear: to promote a saving habit among those of working age on low incomes by way of a government contribution for each pound saved. It was acknowledged by the Minister that the evidence from the pilot studies showed that matching was a popular and easily understood incentive to save. Given that the first accounts were due to be opened in July this year and that the government contribution were to come after two years, no cost would have arisen until 2012-13. It cannot be argued that this was not a targeted programme. Its scrapping will only disadvantage the poor. Why repeal the primary legislation? If the Government insist that the gateway is unaffordable but they recognise its merit, why not defer for a period? The noble Baroness, Lady Noakes, hinted at support for some arrangement to incentivise saving for low-income families.

There is another dimension to this. How does the Minister respond to the submission from the Runnymede Trust that the withdrawal of the savings gateway would disadvantage BME communities in particular, who tend to have lower levels of savings? What detailed assessment of the equality implications of the proposals has been undertaken? I noted that the noble Lord, Lord Northbourne, expressed incredulity at the Government’s claim that the Bill has little impact on equality.

My noble friend Lady Thornton spoke of the health in pregnancy grant with knowledge and passion, as did others. The evidence presented to the Public Bill Committee in another place set out the benefits of the grant and its potential to improve a mother’s diet during pregnancy, as well as providing the wherewithal to help with necessary purchases of equipment. Indeed, the evidence described how the onset of motherhood is a defining moment in a parent’s life but how it can also be a step towards poverty. It is a time when the support of services and financial means should be sustained and not withdrawn.

There may be issues about the timing of the grant, and whether earlier payments would be more appropriate, but withdrawal of this support at the same time as families are facing an array of other cuts is unacceptable and flies in the face of the Government’s expressed objectives of reducing inequalities and improving social mobility and outcomes for children. The Minister spoke about the benefit of a voucher system. I wonder quite how that sits with issues of individual responsibility.

As was pointed out, it is not just universal but means-tested benefits which are being attacked. The Sure Start maternity grant for other than the first child is to go. Yesterday’s announcement that Social Fund budgeting loans will be available to help families to buy maternity items will be of little comfort. What additional resources are being made available to the Social Fund for this?

Our opposition to the Bill is on two levels. It is set in the concrete of a deficit reduction approach which drives conflicts with stated government policy around fairness, social mobility and better outcomes for children. Even within the practical confines of these constraints, it fails to take opportunities to retain and build on that which the Government have acknowledged to be worth while. All in all, it is another measure which will hit the poor the most.

17:59

[Lord Sassoon]

My Lords, we have had an interesting debate. I am grateful to all noble Lords who have contributed to it. We have covered a range of topics. I shall start with one or two of the wider points raised and then move on to some of the important questions of detail in the Bill.

I start where I started in opening this debate; that is, by saying that this action is necessary. We have had to make some tough choices. I am grateful to my noble friend Lady Noakes for pointing that out and to my noble friend Lord Newby who pointed out that the Opposition had come forward with no alternative policies for cutting the deficit. I had rather hoped from the build-up from the noble Baroness, Lady Hughes of Stretford, that we would get some ideas, but there was nothing. We then had a very long build-up and an economic essay on the story of the previous Government seen from one perspective—that of the noble Lord, Lord McKenzie of Luton. Even though he and I would disagree about the path that got us to the present predicament, he seemed to acknowledge the need for dealing with the economic situation. I hoped that we would get some alternative ideas, but sadly not. Of the other speeches that touched on this point, the speech of the noble Earl, Lord Listowel, put the context of this Bill in a sensitive and well considered way. I did not get any of that from the Opposition Benches. We need to acknowledge that the deficit has to be reduced and that that requires difficult choices.

I stress again that in the overall process of deficit reduction we are, as a Government, prioritising groups that need the most support. Disadvantaged children will benefit from our pupil premium and in the spending review we made sure that there will be no measurable impact on child poverty in the next two years. At the other end of income and wealth distribution, we are making sure that everybody makes a fair contribution. Those on the highest incomes will contribute more towards the entire fiscal consolidation. We are making sure that we get more tax revenue in. We are providing additional resources to combat tax avoidance to raise an estimated additional £7 billion of revenue annually by 2014. Of course, we have also introduced a bank levy that will generate £2.5 billion a year. We are making sure that we raise revenue from every source and that the pain is shared equitably.

Before I turn to some specific points on the Bill, I should say something about the question of the money Bill status of this Bill. I was somewhat surprised not by the relatively measured terms in which the noble Lord, Lord McKenzie, talked about this, but by one or two of his colleagues who surprised me very much, particularly former Ministers both here and in another place. They probably know the processes for money Bills: they would certainly know them better than I do. First of all, it is a certification of the Speaker that cannot be challenged. Even if football managers are getting into the habit of questioning the judgments of referees, which is not entirely a desirable thing, there are limits. I am not sure that it is appropriate for noble Lords to challenge the judgment of Mr Speaker. He is under a statutory duty to certify a Bill as a money Bill if in his view it falls within Section 1 of the Parliament Act 1911. In answer to these extraordinary suggestions that he might have been given advice or been leant on—I do not know what the suggestion is—by the Government, he takes advice from the Clerks in another place and not from the Government. The Government do not offer him any advice.

In respect of mischievous suggestions that somehow the process was different on this Bill from previous money Bills, all of the previous money Bills were certified at the end of their Commons stages. Certification cannot happen until the Bill has completed all of its stages in another place.

[Baroness Hollis of Heigham]

To go back to the process on the money Bill, chapter 33 of Erskine May does not refer to the Clerks but says that the Speaker should call on the advice of at least two chairmen from the panel of committee chairmen in the House of Commons, and that on their advice also he should respond. There is no reference to the Clerks in Erskine May. Was that procedure followed in this case?

[Lord Sassoon]

I can give noble Lords my understanding of what the procedure is, but I certainly cannot and would not presume in any way to go into what process Mr Speaker went through. That is a matter entirely for Mr Speaker and not a matter for us in this House to question.

[Lord Elystan-Morgan]

I speak with all the neutrality that one can from these Benches. Is not the situation that there is a very substantial grey area? Section 1 of the 1911 Act gives many possibilities so that, if a rigid application of that provision had been applied since 1911, hundreds of Bills could have been called money Bills that were not called money Bills. There is a very substantial area of dispute, which will remain unless and until there is some curtailment of that discretion vested in those who advise the Speaker of the House of Commons.

[Lord Sassoon]

My Lords, I do not think that we should stray into a constitutional debate this afternoon. The point that I wanted to make was that this Bill was certified by Mr Speaker and that it was not a certification that we should be challenging. As far as I am aware, the Bill was dealt with in another place exactly as other money Bills have been, and the suggestion that there has been some improper behaviour by the Government on this matter, or that somehow there was something different—

[Lord Reid of Cardowan]

I do not think that anyone is suggesting that there has been improper conduct. We did not stray into this territory—the Minister led us there by describing in some detail the process. If he is now saying that he does not know what the process was, will he indicate to us whether his original statement was accurate or an assumption on his part?

[Lord Sassoon]

My Lords, as I said before, I have given a description of the process and indicated that there was no question that the Government in any way behaved in some out of the ordinary way with this Bill, as has been hinted at. I really think that—

[Lord Griffiths of Burry Port]

As it was probably my suggestion that has led to this response, I should like to speak just for a moment. I was given very clear advice from those who prepared a briefing paper, which many of us read—I heard it being quoted all round the House—that it was done at the request of the Government. I am not hinting that improper stuff has happened; I was merely asking whether that was true.

[Lord Sassoon]

My Lords, I am grateful to the noble Lord. He is right to say that some of these points were raised by him, which is why I thought it was right to address them. This is an important point. I can confirm what he asked me to confirm, but I think that I should move on to address some of the many other points that were made on this money Bill.

The point that attracted the most interventions—and it is an important point—was on junior ISAs for looked-after children. That point was raised at the opening of the debate by the noble Baroness, Lady Thornton, who reminded us that proposals were raised in another place in that area, and a number of my noble friends and the noble Earl have touched on the point. I start by reiterating what my honourable friend the Financial Secretary said in another place—that we would need to think about this carefully and that we will think about it carefully. He has had conversations and we need to recognise the limitation of resources that are available. There is certainly no unallocated funding in the Department for Education budget that could be used for it, but we are considering the issue. My honourable friend is going to work with the Minister for Children. He made it clear that if we wanted to do something in this area, it would be possible to do it outside the scope of this Bill—a point which I think was touched on by the noble Baroness, Lady Howe of Idlicote. It does not require the Bill to be in place. I think that the noble Lord, Lord Griffiths, also touched on that point.

I assure my noble friend Lady Browning that I do indeed talk to my colleagues. I was talking to the Financial Secretary only this morning and I shall relay these messages back in. Yes, the Treasury is a siloed place. My proposal that Ministers in the Treasury should all sit in an open-plan office has not yet found favour but my noble friend encourages me onward in that objective. The noble Earl also made a practical suggestion on whether an additional meeting involving noble Lords would be helpful. As I have said, my honourable friend the Financial Secretary is having meetings. I am not sure which additional meetings would be helpful but I certainly accept his offer.

[The Earl of Listowel]

If it might help the Minister, it might be particularly useful to meet the Minister to discuss this with his honourable friend and with Mr Tim Loughton early in the new year. That might be welcomed by your Lordships—as I look around the House, perhaps not—but that was certainly the sort of thing that I had in mind.

[Lord Sassoon]

I will relay the message back and discuss it with the Financial Secretary. There were also questions on the capacity of local authorities. My noble friend Lady Ritchie of Brompton gave the most considered view from a local authority perspective, as she should. She talked about local authorities being under pressure. Certainly, I did not hear her say that it would be impossible for local authorities to find funding in these areas, but of course they have to make difficult choices—ones which, going forward, will not be constrained by so much ring-fencing in their budgets, as has been recognised.

[Lord McKenzie of Luton]

If it is the Government’s proposition that local authorities should pick up the obligation to support junior ISAs for looked-after children, given that the Government have signed up to the principle that they would keep local authorities whole for new burdens, will the Minister give a commitment that if that is the way that it goes, the Government will provide that extra funding?

[Lord Sassoon]

My Lords, I cannot promise today that all looked-after children will have a junior ISA opened for them and I certainly cannot provide any assurance about government funding. I have said that my honourable friend is looking into all this and, if and when there are proposals, the Government will indeed come forward with them.

I turn to some other important points on child trust funds and their effects on savings. A number of points were made by the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie of Luton. Have child trust funds had a positive effect on savings? There is currently no robust evidence about whether the child trust fund has increased savings for children. While some parents are using child trust funds, not all are. I have it that 22 per cent of child trust funds received contributions in 2009-10, marginally down on the 24 per cent in the previous year. In any case, we do not yet know whether any of that saving is additional or would have happened anyway. For lower-income families, only 12 per cent of CTF accounts received contributions. I take my noble friend Lord Newby’s points to heart about the untargeted and, certainly, the unproven nature of the effect of child trust funds.

Several noble Lords, including the noble Baroness, Lady Thornton, and the noble Lord, Lord McKenzie, raised the question of the gap before the introduction of junior ISAs. I must go back to the need for us to move quickly to tackle the budget deficit. I realise that this will leave a gap before the junior ISAs are available. However, we are working hard with the industry and other stakeholders to make sure that the gap is as short as possible. We intend to publish draft secondary legislation, setting out full details of the new accounts, in the spring and for them to be up and running in the second half of 2011. We will ensure that eligibility for the new account is backdated to ensure that no child born after the end of the CTF will miss out on the chance of having one of these accounts.

Concerns were raised by the noble Baroness, Lady Hollis of Heigham, and others about the suitability of junior ISAs for children from families on lower incomes, and whether they would benefit only the rich. I certainly do not believe that this will be the case. These accounts are not just about offering people a tax-free option for children’s savings; they will also offer a clear and simple way of saving for children and of ensuring that the money is locked up until the child reaches adulthood. This will prove attractive to many families on lower incomes. Of course, saving issues are difficult for us all, particularly those on lower incomes, but I remind the noble Baroness and the noble Baroness, Lady Drake, that already more than 12 million people with incomes below £20,000 have an ISA. It is penetrating lower-income groups.

I am grateful to the noble Lord, Lord McKenzie of Luton, for drawing attention to the annual financial health check. That was also welcomed by the noble Baroness, Lady Drake. There are questions about advice turning into action but we should start somewhere. I am grateful to noble Lords for drawing attention to that important initiative.

On the question of the Bill’s equality impacts, an initial assessment of these was published on 15 September, when the Bill was introduced. Although we do not say that there are no impacts, the impact assessment shows that those that have been identified are proportionate, given the need to reduce the UK’s budget deficit.

I should say a little about the health in pregnancy grant, which the noble Lord, Lord Northbourne, raised first. I assure him that we have another scheme, the Healthy Start scheme, which targets and supports pregnant women on lower incomes, providing vouchers for fruit, vegetables and milk from the 10th week of pregnancy. This very much goes to the heart of the point that my noble friend Lady Browning made from an expert perspective. It did not look as though the health in pregnancy grant was achieving its original target of reducing the incidence of low birth weights. The Healthy Start scheme is much better targeted towards that.

[Baroness Hollis of Heigham]

Does the Minister agree that the Healthy Start scheme gives something like £3 a week for, at best, around 30 weeks, which is a smaller sum than is being lost?

[Lord Sassoon]

My Lords, it comes back to where we need the scarce resources available to be targeted. In answer to the questions that were raised about the underlying purpose of the pregnancy grant—namely, to deal with the problem of underweight children and nutrition—the Healthy Start scheme is far better targeted to that end.

I am conscious of the time. In my final minute I come back to the wider point of the Bill. Without the changes that we are making, we would have had to spend more than £3 billion in the four years of the spending review period on the child trust fund, the saving gateway and the health in pregnancy grant. That would simply have been unaffordable. The Opposition have not come up with any ideas of how we could have made alternative cuts.

[Lord McKenzie of Luton]

My Lords, if the noble Lord is tempting me, I have a whole string of things that I could raise, but does he think that we might do without the £2 billion to £3 billion that we are spending on an unnecessary, unproven and top-down reorganisation of the NHS?

[Lord Sassoon]

My Lords, out of this Bill we are saving £3 billion of spending which we believe could be better targeted. We therefore believe that that is actually concentrating our scarce resources on disadvantaged children and child poverty—that is where the resources should go—as well as enhancing growth in our economy through spending on infrastructure, low-carbon investments and science.

I realise that the measures in the Bill are disappointing to some noble Lords. I believe that they are necessary. Notwithstanding the fact that this is a money Bill, we have had a good debate. Some follow-up points in one important area have been made from all sides of the House. I believe that the Bill is necessary and I ask the House to give it a Second Reading.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Business: Oral Statements

Tuesday 7th December 2010 Lords Chamber

Announcement

18:21

[Baroness Northover]

My Lords, at its meeting yesterday the Procedure Committee discussed the conduct of Oral Statements, during which it was suggested that it might be helpful to remind the House of the relevant guidance in the Companion to the Standing Orders. I therefore remind the House of that guidance. It states:

“Ministerial statements are made for the information of the House … and should not be made the occasion for immediate debate”.

The 20 minutes for Back-Bench questions and answers should therefore take the form of brief comments and questions. Brief interventions from Back-Bench Members will of course allow more Members to participate in the discussion overall.

Rehabilitation and Sentencing

Tuesday 7th December 2010 Lords Chamber

Statement

18:22

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Lord Chancellor and Secretary of State for Justice. The Statement is as follows.

“On 12 May, we said in our programme for Government that we would conduct a full assessment of rehabilitation and sentencing policy to pave the way for a radical reform to the criminal justice system. I have laid before Parliament the Green Paper entitled Breaking the Cycle: Effective Punishment, Rehabilitation and Sentencing of Offenders. This sets out our initial conclusions from this work on which we will be consulting widely over the next 12 weeks.

Despite record spending we are not delivering what really matters. Society has a right to expect the criminal justice system to protect it. Prison will always be the right place for serious and dangerous offenders. Criminals should be properly punished. Prisons should be places of hard work and industry, and community sentences must be credible and robust. Criminals must also be reformed so that when they finish their sentence they do not simply return to their life of crime, creating more misery for victims. The criminal justice system falls short of what is required. Around half of offenders released from prison reoffend within a year. Reoffending rates for young offenders sentenced to custodial or community sentences are even worse. It is not acceptable that three-quarters of offenders sentenced to youth custody reoffend within a year. If we do not stop offending by young people, these young offenders of today will become the prolific career criminals of tomorrow.

We cannot let this continue. Solving these problems requires a radically different approach. Criminals must face robust and demanding punishments. This means making them work hard, both in prison and in the community. More prisoners will face the tough discipline of regular working hours. This has been lacking in prison regimes for too long. Community sentences will be more credible, with more demanding work and greater use of tough curfew requirements. There will be greater reparation to victims through increased use of restorative justice and by implementing the Prisoners’ Earnings Act. We will bring forward other changes to make sure that more offenders directly compensate the victims of crime.

However, we will take a new approach to the reform of offenders. I regard prison, first and foremost, as a place of punishment where people lose their liberty as reparation for what they have done. On top of that, prison cannot continue to be simply an expensive way of giving communities a break. We must give higher priority to getting more prisoners to go straight on release. Offenders will face a tough and co-ordinated response from the police, probation and other services. It will mean that they must either address the problems that fuel their criminal activity or be caught and punished. It will mean taking action to get offenders off drugs. It will mean reducing the abuse of alcohol. It will mean improving the treatment available to those suffering mental illness. It will mean getting more of them off benefits and into honest employment so that they pay their own way.

We will be bringing forward a revolutionary shift in the way rehabilitation is financed and delivered. We will begin by commissioning a range of providers to administer at least six new projects over the next two years. They will be paid for the results they achieve. I intend to apply the principles of that approach across the whole system by the end of this Parliament. We will also test this payment-by-results approach with young offenders and devolve more responsibility for preventing and tackling youth offending to local communities. We will introduce more competition across offender management services to drive up standards and deliver value for money for the taxpayer. We will increase discretion for public sector providers and front-line professionals.

The sentencing framework must provide courts with a range of options to punish and rehabilitate criminals and keep the public safe. The sentencing framework has developed in an ad hoc fashion with more than 20 Acts of Parliament changing sentencing in the last 10 years. This has left it overly complex, difficult to interpret and administer, and hard for the public to understand. We need to make better use of prison and community sentences to punish offenders and improve public safety, while ensuring that sentencing supports our aims of improved rehabilitation and increased reparation to victims and society. We will simplify the sentencing framework in order to make it more comprehensible to the public and to enhance judicial independence. We will reform community orders to give providers more discretion. We will encourage greater use of financial penalties and improve their collection.

We will bring forward reforms to the indeterminate sentence of imprisonment for public protection—the IPP. This sentence has been much more widely used than was intended since its introduction in the Criminal Justice Act 2003. Indeed, the last Government had already changed it since its introduction. We will reserve IPP sentences for the most serious offenders and focus indefinite punishment on those who most clearly pose a very serious risk of future harm. Of course, prisoners who in future do not receive an IPP sentence will instead receive long determinate sentences. This will enable us to restore clarity in sentencing, plan rehabilitation and target punishment more effectively to protect the public.

Let me assure the House that public safety remains our first priority. We will continue to ensure that serious and dangerous offenders are managed effectively and that their risk is reduced through appropriate use of prison and through multiagency public protection arrangements. Let me also assure the House that we will also ensure effective responses to knife crime. Knife crime is wholly unacceptable. It causes misery for victims and is often connected to the kind of gang violence that can wreck whole communities. The government position is clear. Any adult who commits a crime using a knife can expect to be sent to prison, and serious offenders can expect a long sentence. For juveniles, imprisonment is always available and will also be appropriate for serious offenders.

The Green Paper is an important change of direction in penal policy which will put more emphasis on reducing reoffending without reducing the punishment of offenders. By reforming criminals and turning them away from a life of crime, we will break the cycle. This will mean fewer crimes, fewer victims and safer communities. The Government will make a further Statement to the House when they publish their response to the consultation. In the mean time, I commend this Statement to the House”.

18:31

[Lord Bach]

My Lords, I start by thanking the Minister for repeating the Statement of his right honourable friend. In its four-year plan, the Ministry of Justice states:

“We will provide a clear sentencing framework. It will punish those who break the law, and help reduce re-offending”.

We do not disagree with that. It is a reasonable vision for sentencing policy, entirely in keeping with the emphasis on punishment and reform that we followed in government, which helped to cut crime by 43 per cent between 1997 and 2010, in times both of growth and recession. We were the only Administration since the Second World War who could boast such an enviable record. I will first ask the Minister to confirm that the crime rate significantly declined under the Labour Administration.

On the core principles we are in agreement. Where the Government propose sensible measures to punish and reform offenders, we will support them. However, the Statement that we have just heard gives rise to a number of questions and concerns. The Minister is probably quietly pleased that the entirety of the Conservative Party's manifesto on law and order at the last election has been abandoned. Some of the people who were persuaded to vote Conservative on that basis may be less pleased. Perhaps manifesto commitments do not matter much when the noble Lord's party is prepared to tear up personal pledges. Both on knife crime and increasing prison capacity, the Conservatives have dumped their previous policies.

Like so many heavily trailed announcements in the past six months, the sentencing review could be a wasted opportunity. Sentencing policy should be about dealing with offenders in the right way, in order to protect the public and, in particular, the victims of crime. However, this review has been about trying to reduce the prison population in order to cut costs. The Lord Chancellor outlined his principal aim in the comprehensive spending review, which was to reduce the total daily prison population by 3,000 by 2014. It is about 85,000 today, so that would mean it would be 82,000 in four years’ time. However, in practice, because many people serve less than a year in prison, meeting the target would mean sending 10,000 fewer offenders to jail each year than we do now. Unfortunately, this is what the sentencing review is all about: not protecting the public or victims, but saving money. Will the Minister confirm that his department will publish the detailed assumptions that his officials and the Home Office have made about crime trends to justify the target of 82,000?

We do not subscribe to the view that there is a direct link between prison and crime, but we do not share the Government’s view that there is no link at all. Of course there is a link; it is entirely irrational to think otherwise. During the past couple of years of the previous Conservative Government and under the Labour Government, more serious and persistent criminals went to prison for longer, and—guess what—crime fell. The relationship between those two things may not have been simple or straightforward; other factors were at play, including of course—something that the Government may want to take notice of—an increase in police numbers, but there was a relationship. To justify the view that there is no link, the Government say that crime rates also declined internationally in that time but that prison rates in many countries went down. That view is wrong. The figures for OECD countries show that prison populations rose almost everywhere.

We accept, of course, that prison is not always the best place for offenders and that community sentences can be a better alternative in cutting reoffending. Does the Minister accept that, as a result of changes that we introduced following the Corston report, the number of women in custody has gone down? Furthermore, does he accept that reoffending rates for women, young men and first-time offenders have gone down too in recent years?

Of course, further action on drug addiction is clearly to be welcomed, and I do welcome it. The steps outlined to deal more effectively with offenders with mental health problems are also to be welcomed. That is one of our society’s most pressing issues and it is a vindication of the decision to set up and begin to implement the important Bradley review. However, what assurances can the Minister give the House that those with mental health problems who are liable to commit offences—particularly violent offences—will be treated in secure establishments?

In our view, the Justice Secretary’s eagerness to please the Treasury by cutting the Ministry of Justice’s budget by 23 per cent is going to make it both difficult and risky to turn these fine aspirations into reality. In particular, I ask the Minister to explain to the House what assessments are being made of the likelihood that prisoners on indeterminate sentences, whom the Justice Secretary wants to release, will no longer be a risk to the public. What procedures will be put in place to monitor such people in the community? We would also like the Minister to confirm whether it is intended to relax the rules on the recall of offenders. If that is the intention, I ask why, and how will he ensure that it will not result in higher rates of reoffending?

Our probation service does a good job. Cutting the service so deeply, as the Government intend to do, seems like a massive gamble. Why are the Government doing this if they truly believe in rehabilitation? Every time the Justice Secretary is asked about resources, he falls back on the payment-by-results model being piloted in Peterborough and started by the previous Government in March this year. It is an interesting model, which we agree should be expanded.

Finally, the Justice Secretary was recently asked on “Newsnight” how he would judge the success of his penal policy. His first response was that he “hadn’t the first idea”. That really is not good enough. Let us offer him a better idea for judging the success of his policy: will it make communities up and down the country more or less safe, and will it result in crime going up or down? That is what matters to people who live in the real world.

18:40

[Lord McNally]

My Lords, I thank the noble Lord, Lord Bach, for his questions and for his response. I hope that we can address this Green Paper in the way in which it has been presented to the country: as a really good, constructive, national debate about our criminal justice system. Therefore, I do not deny that many reforms were carried through by the previous Government that we have learnt from and which we shall try to develop. I am not really worried about the little bit of party politics on manifesto commitments. I know they play that game much more at the other end. This is a real attempt, in the six months in which we have been in office, to look at prison numbers. We need to look at the fact that they have doubled over the past 15 years.

Central to this paper is reoffending. More than half the people going through the system reoffend—75 per cent of young people reoffend—which makes us think that it is worth taking a serious look at what has been termed a rehabilitation revolution. In looking at offending and reoffending, it does not take rocket science to work out that issues come up time and time again. When I went to a secure training centre at Medway, one of the guys who showed me around said that one of the tragedies is that most of these boys have had only passing contact with education throughout their lives. We all know the evidence of illiteracy, innumeracy, homelessness, drug addiction, alcohol dependency, long-term unemployment and social disruption at home. They are all there and we are looking to see whether we can make dents into that.

I know that the Lord Chancellor and Secretary of State for Justice is sometimes unorthodox in his replies, but I look around at some of those who have experience of trying to run the system and anyone who bets the House on the success of any strategy is reckless indeed. We are bringing forward for public debate and public consultation an invitation for people to look at the central issue of reoffending, which goes right through the system, and to address it in a way that maintains and increases public confidence. I entirely accept that the crime rate fell during the Labour Government. We have not denied—and it is made out in the paper—that prison works in certain circumstances, but the reoffending rate also suggests that in other circumstances it does not. We are not trying to deny the experience of the past 15 years, but we are trying to learn from some of the downsides as well as the upsides.

Equally, I pay tribute to the work of two landmark reports produced during the previous Administration by the noble Baroness, Lady Corston, and the noble Lord, Lord Bradley. Certainly the advice in the report by the noble Lord, Lord Bradley, will be very much reflected in the Statement on drugs and drug treatment that I expect to be made imminently, as will the report by the noble Baroness, Lady Corston, on the treatment of women offenders. Throughout the Green Paper, I think you will find a genuine attempt to reflect some of the recommendations that she made, along with a central commitment to continue to try to drive down the still unacceptably high number of women in our prison system.

The noble Lord asked whether I would publish assumptions. Our initial assumptions have been published in the impact assessment accompanying the Green Paper. As the policy proposals are firmed up following consultation, we will update and publish those impact assessments. He also asked for assurances that offenders with particular mental health problems will be treated in secure settings. Our proposals offer liaison and diversion schemes that will assess offenders for mental illness as well as their risk to the public. We will make sure that any treatment is in suitably secure settings. One of the good things that we are carrying through in trying to deal with the report by the noble Lord, Lord Bradley, is close liaison with the Department of Health in taking forward that policy. There will be no mass releases of the 6,000-plus people now held on IPPs. Any decisions about release will be taken on a close assessment of the existing danger to the community and very close management of those released.

The noble Lord also mentioned the Probation Service. Some of what we are doing will be a challenge to it, but I hope that the flexibility will also give it an opportunity to exercise its own judgment and to participate in the wider scheme. It is certainly true that my right honourable friend puts a great deal of emphasis on payments by results, as the noble Lord, Lord Bach, indicated. That was piloted in Peterborough, and we are now going to pilot it further. I do not think we should rubbish it in advance. It could be a very interesting way of making sure that rehabilitation is expanded in the way in which the Government hope. There is an opportunity for the Probation Service to improve its performance and to participate in a wider—and, we hope, very interesting— approach to rehabilitation, with an opportunity to work on a genuine multi-agency basis to address these problems.

18:49

[Lord Thomas of Gresford]

My Lords, from these Benches, I welcome wholeheartedly the change in emphasis from warehousing prisoners to rehabilitation. I am grateful to my noble friend for putting forward these proposals in the way that he has. I am disappointed that the indeterminate sentence is not to be abolished completely, but I am encouraged by seeing that it is to be restricted. It has been used far too greatly without the proper resources behind it to enable the 6,000 people currently held on these sentences to earn their release.

There is one matter that I shall raise with the Minister to have his response. Has he considered veterans’ courts? They have been set up in the United States for a period of two years to deal with the specific problems of those who have served their country but have found themselves in prison because of the experiences that they have undergone. Proportionately fewer veterans go to prison, but of those a greater proportion are in prison for sex and violence offences. Their needs must be addressed in a special way, as they have been in the United States. Perhaps I may commend to my noble friend the report of the Howard League, Leave No Veteran Behind, which was published last month, to make sure that those who have served their country are properly attended to by the system.

[Lord McNally]

My Lords, I take on board what my noble friend said about IPP. It is true that there has been an increasing focus and an increasing public concern about the number of our veterans who seem to end up in our criminal justice system. I have not looked at the American example to which he referred, but that is exactly the kind of constructive suggestion that we hope this Green Paper will bring forward. My department is in contact with the Ministry of Defence and the Royal British Legion about these issues. I hope that we can take forward measures to help veterans who find themselves on the wrong side of the law or in prison. The Royal British Legion already has a system of visiting, advising and counselling for veterans who find themselves in this situation. We have got to give this priority and I assure my noble friend that we will.

[Lord Reid of Cardowan]

My Lords, I declare two interests; first, my interest as registered in security matters; and, secondly, as Home Secretary, having introduced a number of measures to try to bring diversity to probation services and the treatment of prisoners, where the opposite Benches voted against my proposals. So I welcome elements of what has been suggested today.

Perhaps I may also suggest to the Minister that the premise on which the new direction is based is flawed in two essential areas. The first is the assumption that the increase in prison numbers, which has doubled, and the reduction in crime, which has almost halved, is merely a chronological coincidence. It is not. It is a causal relationship between the two. Secondly, prison is not just about punishment, rehabilitation or reform. It is also about the protection of society.

Let me make a prediction, without judging how these consultations will end. If they end on the premise on which they started—perhaps thousands fewer police on the streets; 10,000 more felons not sent to prison; potential softer sentencing on community sentences, which will be optional; and the dropping of more serious sentences for knife crime—tragically, I believe that we will see a proportionate increase in crime over the next few years. I predict that will be the case rather than what I am sure the Government and everyone in the House are seeking, which is a continued reduction in crime, following on from the past 15 years.

[Lord McNally]

I acknowledge the experience of the noble Lord in these areas, but his little catalogue at the end was just the kind of fear and alarm about these issues that we have heard. We have to ask whether if what he said is so, perhaps we should double the prison numbers again. I think that I have mentioned previously in the House that I once went to a talk given by Ronald Reagan’s former prison adviser, which I think was at about the same time as the noble Lord was Home Secretary. He estimated that the proper size of Britain’s prison population should be about 170,000, because that would, as the noble Lord suggests, get all the offenders out of harm’s way. But it does not seem to remove public concern about crime. It does not seem to address this issue of re-offending. We are not going to deal lightly with knife crime, as the Statement makes clear, but neither are we going to put every juvenile who is found to be carrying a knife into prison. That would be absurd. There are other things in his litany that would go.

To listen to some, one would think that next Friday, Ken Clarke is going to throw open the gates of the prison and usher out the first 3,000 who want to leave. If anyone reads the Green Paper, they will see a measured response that does not ignore the fact that there will be other things that will come into play quite often. As the noble Lord and others with experience know, addressing this is often like trying to solve a Rubik’s Cube; when you get one bit of it right, you look round the other side to see that that has gone wrong. Within the paper there are some innovative, and, I hope, optimistic views of the way we can approach this situation which may make some of the noble Lord’s pessimistic predictions wrong. As always, we will have to wait and see.

[Lord Elystan-Morgan]

My Lords, I congratulate the Minister on a reappraisal of what might be termed the classic Conservative attitude towards penal policy over the past decades. I exculpate completely, of course, the noble Lord and his party in respect of that, but that is another matter.

On the question of indeterminate public protection sentences, does the noble Lord recollect that when the 2003 Act was passed, it was estimated by Ministers that the prison population would increase by 900 in respect of that piece of legislation? By this year it had increased, as the noble Lord has already said, by 6,000. The most tragic aspect of that is that 2,500 of those are persons who have already served more than the recommended period of imprisonment that was mentioned by the sentencing judge. That is a denial of justice. It is a totally impossible and unacceptable situation. What are the Government going to do about that? Are they going to increase the size of the Parole Board, which is the sieve through which these cases must pass? Are they going to relax the rules? Or are they going to act in some other way? Those, I respectfully suggest, are indeed fundamental questions that the Government have to answer at this stage if this issue is to have any credibility. As I say, I congratulate the Government on doing the right thing, but for all the wrong reasons.

[Lord McNally]

I am sorry there was that sting in the tail from the noble Lord. I have to remind him that what he termed a classic Conservative approach to penal policy over the past 20 years was being carried out for at least 13 of them by the party opposite. I notice the noble Lord, Lord Reid, nodding vigorously. Yes, it is a change of approach; it is an attempt to see if some new measures, new thinking, and new ideas can come.

On the noble Lord’s point about IPP, he has put his finger on exactly why we want to consider the measures. As he said, when it was introduced it was going to apply to a very limited number of prisoners. His figures are quite right because we now have more than 6,000 prisoners on IPP sentences, 40 per cent of whom are now well beyond their tariffs. We are in consultation with the Parole Board and others about how to deal with this. But we are where we are, and what we obviously cannot do is simply release people who may still be a threat to the public. This has to be handled carefully—with full consultation but with a determination that we do not find ourselves with 10,000 people in this situation in five years’ time. We are going to address the problem we have inherited and change the guidance for future sentencing.

[Lord Mayhew of Twysden]

My Lords—

[The Lord Bishop of Lichfield]

My Lords—

[Baroness Northover]

My Lords, it is the turn of the right reverend Prelate and then the Conservatives.

[The Lord Bishop of Lichfield]

I thank the Minister for the Statement and his helpful answers to the questions put to him so far. We on these Benches broadly welcome the Statement and the proposals set out in the Green Paper. The Christian churches are bound by our belief in the possibility of redemption, so we welcome a renewed commitment to rehabilitation, which is one of the marks of a decent society. I want to salute the work of chaplains and their colleagues, most particularly initiatives such as Alpha for Prisons and so on. I acknowledge too all the volunteers who work in prisons. We see genuine conversions and changes of life in what are sometimes the most unpropitious of circumstances. However, prisons that are overcrowded and filled with people who ought to be elsewhere to be treated for mental health and addiction problems are limited in what they can achieve. It is to be hoped that the diversion of offenders with severe mental illness into suitable treatment will be pursued vigorously, as was recommended in the report of the noble Lord, Lord Bradley, which has already been mentioned.

I also welcome the use of community sentences where appropriate, and the recognition that such sentences must carry the confidence of the judiciary and the police. There is obviously a need both for well designed programmes and for publicity aimed at local communities about what they involve. I applaud the commitment to promote co-ordinated support for the resettlement of offenders in society, which leads to my main question at this point. If this is to succeed, it will require adequate funding arrangements and appropriate performance indicators. It is a standing joke in my part of the world that one of the growth industries in Staffordshire is that of providing new accommodation for young offenders. Nevertheless, we have in my own diocese the wonderful North Staffordshire Community Chaplaincy, which provides housing and other services for ex-offenders. It has an excellent record. I am told that the reoffending rate is only 10 to 12 per cent, even though the most vulnerable and likely to reoffend prisoners are chosen. I hope that the Minister will be willing to look again at the funding for these schemes because we have been told that there is no money for this kind of investment.

[Lord McNally]

I pay tribute to the chaplaincy service of all faiths in our prisons as well as to those who take on volunteering and mentoring work. It is often the faith-based organisations that help so much in our prisons.

On the challenge of resettlement, resources are in short supply. The payment by results initiative may be one way of providing them. I reaffirm what the right reverend Prelate said. In the six months that I have been in this job, I have been impressed by the fact that where there are interventions the reoffending rate falls. So there is an immediate come-back and pay-back if we can get such schemes working.

[Lord Mayhew of Twysden]

My Lords, I apologise to the right reverend Prelate and to the House for being a little previous. Does not equipping prisoners to live a useful life when they are released remain the overriding objective at the head and forefront of the prison rules? If it be the case that today nearly 50 per cent of people who are in prison reoffend within one year of their being released, is it not disappointing to hear asserted—as it was by the noble Lord, Lord Bach—that this review is only about saving money?

[Lord McNally]

Once we move from the parliamentary knockabout stage to a proper examination of this issue, we will try to identify schemes that have the real impact to which my noble and learned friend has just referred. As I said at the beginning, illiteracy, homelessness and lack of a job are common factors. Another common factor, which fills me with shame, is that 24 per cent, I think, of offenders have been in our care at some stage or another. If we can address that basic lack of skills, we can also tackle the reoffending rate.

[Lord Warner]

The Minister has not so far mentioned youth justice so perhaps I may ask him some questions about that issue. I welcome much in the Statement about rehabilitation and reoffending, but is he aware that many of the issues of concern expressed in the Green Paper—such as young people’s first entry into the criminal justice system, restorative justice, reducing custody, improving the rates of reoffending when they have been sentenced and giving the courts more options on sentences—have been pioneered by the Youth Justice Board and the changes in the Crime and Disorder Act? Can the Minister explain why the Government want to abolish a body that has done the very kind of things that are in the Green Paper?

[Lord McNally]

My Lords, I pay genuine tribute to the noble Lord, Lord Warner, as the chairman of the Youth Justice Board, and, as I have done before at the Dispatch Box, I put on record my admiration for its work. The decision to bring it in-house within the MoJ and to include it in the list of arm’s-length bodies to be abolished is a matter that is still before the House, but we of course hope that it will accept our recommendation. The general feeling is that the YJB had been a successful operation over the past 10 years. There were some criticisms of it here and there but, on the whole, it had been a success. However, that success now allows us to move to a stage where youth justice is much more a local and community responsibility undertaken by the successful operation of youth offending teams. I hope the noble Lord, Lord Warner, does not see the decision to abolish the YJB as a condemnation of it; it was a stage in the progression to what we hope will be a successful youth justice operation.

House adjourned at 7.10 pm.