Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that the Committee do consider the statutory instrument in question. I should make it clear that the Motions to approve the statutory instruments will be moved in the Chamber in the usual way. If there is a Division in the House, the Committee will adjourn for 10 minutes.
Land Registration (Network Access) (Amendment) Rules 2011
(13 years, 5 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Land Registration (Network Access) (Amendment) Rules 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the noble Baroness, Lady Royall, beat me to the punch by whispering across the point that I was going to make. Looking at her sitting in solitary splendour, I am reminded of the advice that you face your opponents but your enemies are behind you.
The rules before us today amend the Land Registration (Network Access) Rules 2008, which make provision about network access agreements. These are agreements with the Chief Land Registrar conferring authority to have access to the Land Registry’s electronic network on a person who is not a member of the Land Registry.
The purpose of these draft rules is to ensure that the criteria that applicants for a network access agreement must meet are consistent with the terms of the Legal Services Act 2007, which makes provision for the regulation of persons who carry on certain legal activities.
It may be helpful if I say something about land registration legislation and the Legal Services Act before considering these rules in more detail. The Land Registration Act 2002 enables the Chief Land Registrar to set up a land registry network to be used for electronic conveyancing. It provides that a person who is not a member of the Land Registry staff may have access to the network only if authorised by a network access agreement entered into with the Chief Land Registrar. The Land Registration (Network Access) Rules 2008 provide the criteria to be met by an applicant for a network access agreement, and also some of the terms that a network access agreement must contain. A conveyancer with a network access agreement can make electronic applications to the Land Registry that may result in a change to the register of land.
The Legal Services Act 2007 regulates the provision of legal services in England and Wales. Among its provisions, it sets out which legal activities are “reserved”, and who can carry out those reserved legal activities. One category of reserved legal activity is “reserved instrument activity”, which includes preparing certain conveyancing documents for the purposes of the Land Registration Act 2002, and making applications or lodging documents for registration with the Land Registry. Under the Legal Services Act, only an “authorised person” is allowed to carry out a reserved legal activity. “Person” includes a body of persons. The authorised person may be authorised to carry out all or only some of the reserved legal activities. It is a criminal offence to carry on a reserved legal activity if a person is not authorised to do so.
Much of the Legal Services Act 2007 came into force in 2010. Later this year, it is expected that further sections of the Act will come into force that will allow for the introduction of licensed bodies, which are commonly referred to as alternative business structures. The purpose is to relax the statutory and regulatory limitations on the ownership and management of legal practices to allow for greater flexibility and choice in the provision of legal services.
The Land Registration (Network Access) Rules 2008 came into force before the changes made by the Legal Services Act. At that time, the provision of reserved legal activities was subject to the provisions of the Solicitors Act 1974 and various other enactments. The network access rules were drafted to be consistent with those enactments. At that time, the regulation of legal services was based around the regulation of individual solicitors, barristers, licensed conveyancers and notaries. Under the Legal Services Act, there is a move towards the regulation of bodies that deliver legal services.
Now that the Legal Services Act has made changes to the regulation of legal services, and more changes are on their way with the introduction of alternative business structures, it is necessary to amend the network access rules for consistency with the new legislation. It would be inappropriate for the Chief Land Registrar to enter into a network access agreement with a person or body that was not authorised under the Legal Services Act to undertake land registration activities.
The rules before us today amend the criteria to be met by applicants for a network access agreement to bring them into line with the Legal Services Act and to make adjustments to take account of alternative business structures. These rules will allow for a person or body that is authorised under the Legal Services Act to carry on legal activities relating to land registration, or a person or body that employs such an authorised person who will undertake those activities or direct and supervise them, to enter into a network access agreement, provided that they also meet other criteria set out in the network access rules. One class of body that can currently enter into a network access agreement will be unaffected—a government department. This is because of the exemption for public officers from the provisions of the Legal Services Act.
In addition, amendments have been made to the definition of “intervention”, and “disciplinary proceedings” to include reference to licensing authorities which will regulate alternative business structures; and the insurance criterion has been amended so that the words correspond with wording used in the Legal Services Act.
Members of the Committee will see that the amendments will come into force on the day that Section 71 of the Legal Services Act comes into force. That section will allow for the commencement of alternative business structures. In drawing up the amendments, the Government intended to ensure a level playing field for all legal service providers—whether traditional conveyancing practices or alternative business structures. This reflects the policy behind the Legal Services Act.
The Lord Chancellor must consult such persons as he considers appropriate before making rules relating to access to the Land Registry’s electronic network. An impact assessment was also undertaken. The majority of those who responded to the consultation and impact assessment supported the proposals.
In summary, the rules update the criteria for entitlement to a network access agreement with the Chief Land Registrar, reflecting provisions already made by the Legal Services Act. I therefore commend these draft rules to the Committee.
Lord Thomas of Gresford
My Lords, the important point that should be appreciated—I am sure that it is—is that when a title is registered, it is an absolute title. It can be obtained by fraud or by any other means, but it is an absolute title, once registration has been granted. That means that the person who owns that title can sell it on and deal with it as if it were his own. Any issue as to how that registration has been obtained is left for litigation. Therefore, it is crucial that the integrity of the register is maintained. So much depends on trust. We trust that the people who make these applications will do so honestly, with proper consideration of all the issues and in the interests of their clients. That is why we have all these rules, which endeavour to ensure that the very competent staff of the Land Registry are not deceived by applications from outside.
What is this all about? It brings the alternative business structures system into the position of being an authorised applicant to deal with the Land Registry. I have expressed my views on these alternative business structures so often that I sound a little like Cassandra. However, I foresee trouble. If there is trouble in the future, it is not the lawyers who will suffer; they will do very well. It is the consumer and the customer who will suffer.
There is a lack of confidence in the way that this has been put forward. The summary of the impact assessment says on page 3, under the heading “Other key non-monetised benefits by ‘main affected groups’”:
“The proposals will avoid the potential costs to Land Registry customers outlined in the base case by ensuring only persons authorised to prepare and make applications relating to land registration are able to do so”.
That states the obvious; it is the position at the moment. The summary goes on:
“Land Registry customers may further benefit if the new definition of ‘conveyancer’”—
that is, these rules—
“leads to better quality conveyancing practices compared to current levels”.
Why it should lead to better conveyancing practices than the current system, under which conveyancing is carried out by qualified lawyers or managing executives, I do not know. The summary continues:
“Ensuring ABS firms fall within the definition should also lead to increased competition in the conveyancing market, which may provide efficiency benefits for society, and direct benefits for Land Registry customers in the form of lower prices and/or increased choice”.
The sort of situation that I envisage, particularly in a tight housing market, is that developers will offer a conveyancing service, or an ABS. They will have an interest in the outcome of the conveyance of their own homes and access to the registry. They may act for both parties. All the checks and balances that have developed over the years to protect the consumer and householder will be weakened.
I have had my usual rant on this subject, so I shall leave it at that. I cannot say that I welcome this measure.
Lord Hodgson of Astley Abbotts
My Lords, I had not intended to intervene on this matter but since “network access” appears in the title of the rules that we are discussing, I seek reassurance from my noble friend about the checks that are being made to ensure that those who are not authorised do not obtain access. Something that has recently come to public notice is the ELMER database, which is operated by the Serious and Organised Crime Agency. This is where reports of suspicious activity are collected for purposes of investigating money laundering. It appeared that the rules were perfectly tightly drawn, and that only SOCA and police forces throughout the country could obtain access to the information that is contained there. There are now 1.2 million records on the suspicious activity report database. Subsequently, now it transpires that actually all sorts of social security departments and other operations are able to get into the database. Given the importance of this, and the critical nature of the functions being carried out, it would be good to know that careful checks are being made to ensure that people who are not entitled to access do not get it.
Baroness Royall of Blaisdon
My Lords, I shall make a brief intervention on this, with a couple of quick questions. In the Explanatory Notes somewhere it says that the first alternative business structures will be established in October this year. Is it anticipated that that is the case? Furthermore, there is mention of an informal consolidated text in the document. What is the state of an informal consolidated text, as opposed to a proper consolidated body of law?
I very much welcome the update of the Land Registry portal guidance notes, which will be important. However, following on from what the noble Lord, Lord Thomas of Gresford, has said, and the noble Lord, Lord Hodgson of Astley Abbotts, there are clearly potential problems with this order. There is to be a post-implementation review in 2015. I have two things to say about that. In view of the concerns expressed by noble Lords, are the five years before there is any sort of review not a little too long? If consumers have been found to be suffering as a result of this order, perhaps the Government might seek to act before then. If the review finds that the policy objectives of the order have not been met and that consumers have been harmed as a result, will the Government seek to act and revise the order in some way to ensure that consumers do not continue to suffer as a result?
Lord McNally
I am grateful to noble Lords who have participated. On the important question of when alternative business structures will be introduced, the Legal Services Board and the Ministry of Justice are working towards October 2011 for implementation. The noble Baroness was in government long enough to know that saying that we are working towards that is as firm a commitment as I can make at this precise moment—but that is the objective.
On the question asked by the noble Lord, Lord Thomas, about the importance of the integrity of the Land Registry process, I need no urging on that. I am the Minister responsible for the Land Registry. One thing that I continually impress on colleagues from other departments is that we have a very important public asset in the trust that people put in the Land Registry process, and rightly so. For the great majority of us, the title and ownership of our property—those of us who are house owners—represents the biggest investment that we ever make in our lives. So the integrity of that process is extremely important. Although I have heard before the doubts expressed by the noble Lord, Lord Thomas, about alternative business structures, I would not go so far as to describe him as a Conservative on matters of legal structures.
Our aim is to bring what we hope will be some exciting competitive pressures into the delivery of legal services, and those responsible for delivery will keep a close eye on things. In a recent meeting on related matters, the noble Baroness, Lady Hayter, attending in her capacity as chair of the Legal Services Consumer Panel, expressed confidence in the overall checks and balances being put in place. Alternative business structures will provide opportunities for practitioners from different professions, legal and non-legal, to join up to ensure that it is economically viable for them to continue to provide legal and associated services and gain efficiency savings.
Although we promised a review after five years, Land Registry constantly reviews its practices and will review the network access rules if alternative business structures result, paying particular regard to consumers.
The noble Lord, Lord Hodgson, spoke about the use of databases—I think that he referred to the suspicious activity database. Thorough checks are made before entering into network access agreements and continuing checks are made to make sure that there is no abuse. However, the noble Lord raised an interesting broader point. The advance of technology has meant that the ability of the state and private industry to amass vast amounts of information about the individual could pose a threat to their civil liberties. I shall quote, as I do frequently in other places, something that the noble Lord, Lord Thomas of Gresford, once said to me. He said that in a free society there must be a limit to what the state knows about the individual. In our modern world, vast amounts of information are amassed. What is more, there is almost limitless technological ability to exchange that information unless checks and balances are put in place. That is partly the responsibility of government and Parliament.
I hope that I have covered the points that colleagues have raised. As I have said, the measures bring the various Acts into kilter and anticipate new structures. On that basis, I hope that the Committee will agree the Motion.
Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011
(13 years, 5 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, as the Committee will be aware, the Rehabilitation of Offenders Act 1974 exists to support the resettlement of offenders into society where they have demonstrated that they have put their criminal behaviour behind them. After a prolonged period of time, therefore, the Act declares convictions spent and an ex-offender need no longer declare them. When they apply for jobs, or seek insurance, they need not disclose this information and subsequently not suffer the potential discrimination as a result of it.
There must of course be exceptions to this rule. Where, for example, someone is applying to work with children or with vulnerable adults, it is appropriate that the employer knows the full history of the individual. The exceptions order to the Act is the means by which this is achieved.
The exceptions order lists certain activities that are exempt from the Act. This means that where an individual is applying for a job within a specified activity or is involved in specified proceedings, their full criminal record history is available to the employer. If an individual has a conviction that has been declared spent, the prospective employer will then see it. We must be careful not to jeopardise the operation of the Rehabilitation of Offenders Act, so the activities listed on the exceptions order are only those that present an opportunity for people involved to cause harm to the public or the work concerned is of a sensitive nature, which might include children, the finance sector or national security.
This careful balance between allowing offenders to lead law-abiding lives by removing barriers and maintaining public protection needs to keep pace with the present. The exceptions order must therefore remain up to date with developments elsewhere. The order presented today is an illustration of the Government seeking to maintain this balance in line with the developments occurring in the financial and legal sectors.
Noble Lords will know that wide proposals for reform of the Rehabilitation of Offenders Act are being considered by the Government. Today is not the day to debate these, and I cannot make further announcements at this stage.
The current exceptions order enables the Financial Services Authority to take spent convictions into account when authorising a person to carry out regulated activities under the Financial Services and Markets Act 2000. This amendment will enable the Financial Services Authority to take spent convictions into account when authorising a new category of business—payments institutions.
Payments institutions were brought within the scope of regulation by the Financial Services Authority in 2009. They provide payment services, for example enabling cash to be placed in or withdrawn from a payment account, and range from large credit card companies to sole traders offering to send money abroad for a small fee. Money remitters, for example, transfer large amounts of money to and from overseas, with many specialising in remitting funds to specific accounts, such as in India, Pakistan or Poland, on behalf of immigrant communities. In many cases these customers are financially disadvantaged people, who have limited access to the banking system.
There have been a number of failures of business in the money remittance industry, and the failures have uncovered an element of mismanagement, financial impropriety or fraud. It is therefore important that the Financial Services Authority can assess those responsible for management of these businesses before authorising them to carry on business. This amendment will therefore bring payments institutions within the exceptions order so that the Financial Services Authority can take into account the full background of those responsible for the management of these bodies.
The second amendment relates to the introduction of alternative business structures, which will allow lawyers and non-lawyers to work together to provide legal and non-legal services. These bodies will be licensed and regulated by licensing authorities. Two new roles—head of legal practice and head of finance administration—are being introduced and will be responsible for an alternative business structure’s compliance with their licence. Licensing authorities must be satisfied that individuals applying to be heads of legal practice and heads of finance administration are fit and proper persons for appointment. In particular, not only will persons in these roles be responsible for compliance with the body’s licence, they could have access to vulnerable clients, client money and personal or sensitive client information. Making this amendment means that licensing authorities can seek information on previous convictions and cautions from applicants seeking to take up the role of head of legal practice and head of finance and administration. This will ensure that they are fit and proper for appointment.
I am aware that a further request has recently been made by the Legal Services Board for non-lawyer owners and managers of alternative business structures to be added to the exceptions order. At this early stage, no decision has been made. We will of course give careful consideration to this request, and this process is under way.
The final amendment is one of wording only. There is currently an entry on the exceptions order relating to “actuary”. The term is currently defined in the exceptions order as,
“a member of the Institute of Actuaries or a member or student of the Faculty of Actuaries”.
On 1 August 2010, these two bodies merged to become the Institute and Faculty of Actuaries. In order to continue to give effect to the applicable exception the definition is to be updated to reflect this change.
I hope that I will have the agreement of all noble Lords that the exceptions order is an important means of protecting the public. The instrument presented today responds to the latest analysis of risks. It therefore ensures that legislation is up to date and effective in its aim, while maintaining the vital balance towards the resettlement of offenders that the Rehabilitation of Offenders Act seeks to achieve. I beg to move.
Lord Hunt of Wirral
My Lords, I declare an interest in the global firm of solicitors, Beachcroft LLP, where I have been a partner since 1969, and as vice-chairman of Justice. I say that with trepidation in the presence of the emeritus chairman of Justice—my noble friend Lord Goodhart—because Justice must deserve a great deal of credit for the original rehabilitation of offenders legislation.
However, I need help from my noble friend the Minister on giving a commitment—a commitment that was given by the party opposite when it had responsibility. I also gave personal commitments when I was leading for the Opposition from the Front Bench and made it clear, right at the outset, that a single set of regulatory standards would be required for alternative business structures.
The Minister has received a fascinating brief from his officials to explain the mistake in singling out “head of legal practice” or “head of finance and administration”. I warmly commend the officials for having thought up this reason, but it was two years ago that we made it clear that it is the owners and managers of the alternative business structures who must be the people in the spotlight. It may well be that they will need under them a head of legal practice or finance and administration, but at the end of the day the key role played by the owner/investor/manager of the alternative business structures must mean that they should be subject to the same authorisation rules as solicitors in regard to disclosing criminal offences. Why? Because we must ensure, as both Front Benches agreed we had to, that convicted criminals are not able to become owners and managers of legal practices.
It is not just that a request has only just been received from the Legal Services Board, because it was in June 2009 that the Solicitors Regulation Authority made it clear that a single set of regulatory standards would be required. Why on earth this is not included now I just do not know, because what it means is that someone who has served a sentence for a serious crime such as money laundering does not have to disclose this when applying to be an owner or investor in an alternative business structure firm.
I suppose that my noble friend can immediately move to give me assistance by promising that there will be a further order to rectify this omission, which will then make it clear that the exemption of course also applies to owners and managers of ABS firms, as well as to the heads of legal practice and finance and administration within those firms.
Lord Dholakia
My Lords, I thank my noble friend the Minister for the explanation that he offered on the order. My noble friend Lord Thomas of Gresford has commented on some aspects of the order, particularly in relation to the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011. I intend to build on that. However, let me make a confession first. My noble friend Lord Hunt just wanted a minute from me, but in that minute he has stolen half my thunder. But I can build on what he said—and certainly the Minister might look sympathetically at why we are making this request.
As one who is promoting the Rehabilitation of Offenders (Amendment) Bill, I am aware that this order is adding additional exceptions to the Rehabilitation of Offenders Act, which does not include external owners. The matter was brought to the attention of the Ministry of Justice by the Solicitors Regulation Authority, which said that a single set of regulatory standards will be required, based on the existing ones for solicitors and traditional law firms and on the assumption that all potential owners of alternative business structures will have to disclose all previous criminal convictions. It would be very helpful to know from my noble friend the Minister why the Government have not included external owners in the list of exceptions. The Solicitors Regulation Authority is clear that it will not be able to subject external owners and managers to the same standard of fitness and propriety checks as apply to solicitors. I am told that the SRA conducted a public consultation and no objections were raised about alternative business structure owners and managers.
Will the Minister now intervene to ensure that the liberalisation of the market can occur with appropriate public protection? My Private Member’s Bill includes exceptions in serious cases, and that is right; it is how it should be, if we are to build the confidence of the public in the structures that we promote. The crux of the matter is to establish a strict regulatory regime so that serious criminals cannot take control of legal practices. This is where changes are necessary.
There is a clear divide between what the Ministry of Justice is proposing and what is required by the SRA of the Law Society. It would be helpful to have the Minister’s reasons for this order. It poses difficulties for the SRA, whose task it is to establish standards, and it is the SRA’s view that it cannot license ABS until these exceptions are in place.
Lord Thomas of Gresford
My Lords, I support my noble friends in their comments. On the previous occasion, as I am sure the noble Lord will recall, I used the illustration of having appeared in Hong Kong in a case where I was instructed by what turned out to be a Triad-backed solicitor’s firm. The solicitor was merely the front man. Therefore, the owners and managers of a firm must be of a proper standard.
While my noble friend was replying to the previous debate, I suddenly recalled that within the past three years I have represented someone charged with stealing a house. It was a fairly unlikely charge, which I had not come across before, but there were two solicitors in the dock with the person in question. This is the real world. This is where people who are undesirable can move in and take advantage of the legal system if it does not contain all the safeguards. The necessity for owners and managers of alternative business structure firms to be subject to the same checks as every other solicitors firm is essential, so I support my noble friend.
Baroness Royall of Blaisdon
My Lords, I also support what noble Lords opposite have said. Of course, as the Minister said, we have to be careful not to jeopardise the workings of the Rehabilitation of Offenders Act 1974, but there clearly have to be exceptions. Like noble Lords opposite, frankly I do not understand why this order does not encompass ABS firms, or the head of legal practice and head of finance administration, to which the Minister referred. In view of the strong feelings that have been expressed in Committee this afternoon, I wonder whether the Minister would consider taking back this order and relaying it once proper consideration has been given to the inclusion of the owners of ABS firms. I think that all noble Lords present would like to see one single set of regulations. That would make for much better government and much better governance, and I should be grateful for the Minister’s views.
If the noble Lord is not able to take back this order—and he may not be able to do so—I should be grateful for an assurance that he will come back in the very near future with another order that encompasses the ownership of ABS firms. I quote from his honourable friend Jonathan Djanogly, who, when speaking for the Conservative opposition in the House of Commons—I am afraid that I do not have the words of the noble Lord, Lord Hunt of Wirral, in front of me—said:
“The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements”.—[Official Report, Commons, Legal Services Bill Committee, 22/6/07; col. 300.]
I think that, unless we have an order before us in the very near future that encompasses ABS firms, we will indeed have that spectre before us.
Lord McNally
I knew I was right when I said that the enemies are behind me, but very constructive enemies they have been. One of the benefits of this procedure is that we can examine orders such as this in a non-partisan but expert way. As much as it is within my power to give the assurances that the noble Baroness, Lady Royall, has asked for, I give those assurances. The points that have been made by my noble friends during this debate should be treated with proper urgency. I am not in a position to withdraw the order, which covers matters that it is important to take forward. However, the noble Baroness is quite right: in opposition both Jonathan Djanogly in the other place and my noble friend Lord Hunt made it very clear that the effectiveness of fitness-to-own provisions was a crucial element of the consumer protection measures that needed to be in place for all ABSs. That position has not changed.
I can assure the Committee that the gist of this debate—or at least Hansard—will be made known to my colleagues in the Ministry of Justice, along with the strong message that a sense of urgency is needed in taking this matter forward. The argument that a compelling case and a clear understanding of the potential risks are needed to justify inclusion in exception orders is valid. Licensing authorities have a range of regulatory powers and will be required to put in place strict licensing rules to ensure that licensing bodies are properly regulated and consumers adequately protected.
Nevertheless, I accept the point made by my noble friend Lord Dholakia. I hope we can carry forward his initiative in producing a new Private Member’s Bill that updates the Act. If we are to get general public support for a rehabilitation of offenders Act, and carry public confidence in it, we must have exception orders to give the protections that the public require. Certainly, the case made today for owners being part of the Act is, to my mind as a lay man, almost unanswerable. I hear what has been said. It would seem only natural to a simple lay man that owners and managers of ABSs should be included in the order. I will take the very strong recommendations of this Committee back to colleagues. In the mean time, I ask the Committee to accept this order.
Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011
(13 years, 5 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the commercial order would implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007. The amendment order would add two categories of person to the list contained in Section 2(2) of the Act. These are persons owed a duty of care by virtue of either being held in the custody area of UK Border Agency customs facilities or being held in Ministry of Defence service custody premises.
The purpose of the commencement order is to implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007—which I shall refer to as the “custody provisions”. The amendment order will extend the provisions to facilities not already covered in the Act; namely, Ministry of Defence service custody premises and customs custody facilities which have now become the responsibility of the UK Border Agency.
Before going into the detail of the orders, I shall briefly remind Members of the Committee of the context surrounding the custody provisions. The Corporate Manslaughter and Corporate Homicide Act 2007 created an offence whereby an organisation could be found guilty of corporate manslaughter if the way in which its activities were managed or organised resulted in a death and amounted to a gross breach of a relevant duty of care to the deceased. The breach must be grossly negligent and a substantial part of it must have been in the way activities were managed by senior management.
The offence was created to deal with the problem of obtaining convictions of corporate bodies because of the operation of the identification principle, which required the prosecution to show that the offence was in essence committed by the “directing mind” of an organisation. This meant that, in some instances, because of the complexities of the decision-making process in big companies, it was not possible to identify a single individual—that is to say, the directing mind—with specific responsibility for the failing. The new offence allows an organisation’s liability to be assessed on a wider basis, providing a more effective means of accountability for very serious management failings across the organisation.
The majority of the Act came into force on 6 April 2008, with the exception of the custody provisions, whose implementation Parliament agreed would be delayed by three to five years. During the final stages of the Bill’s passage through Parliament, a lengthy discussion took place as to whether deaths in custody should be covered by the Act. After much debate, the then Government were finally persuaded to accept clauses that would extend the Act to the management of custody, but argued that custody providers would need time to prepare. A compromise agreement was reached to the effect that the custody provisions would be implemented between three and five years after the Act came into force. The Bill was passed on this basis. Custody providers have since indicated their readiness to implement the provisions in two reports to Parliament, published in 2008 and 2009.
The custody provisions do not create additional duties. All custody providers already owe duties of care to detainees. The commencement order makes these duties of care relevant for the purposes of the offence in the Act, which means that, once commenced, an organisation responsible for the management of custody, including a government department, could be convicted of corporate manslaughter if its management failings led to a death.
The commencement order simply illustrates the coalition Government’s long-standing commitment to commence a provision which we fought for during the passage of the Bill. We felt then, and still do now, that there is no good reason why a victim of a failing by a government department should not be afforded the same protection as the victim of a failing by a private corporation. We believe that the state has a particular responsibility to those for whom it has a duty of care, such as persons held in custody, and should lead by example. Having established that custody providers are ready to comply with the custody provisions in the Act, we are here today to debate commencement of the provisions at the earliest available opportunity.
We are here today also to debate an amendment order which brings military and customs facilities into the scope of the Act. This is an important amendment that ensures that the law will be applied consistently to all custody providers. The intention to extend the Act is nothing new; it was signalled in the annual progress report that I have already mentioned, and we have been assured by the relevant departments that the custody providers concerned are ready for implementation.
As with commencement, the question is not so much why extend but what possible reason can there be not to extend. I put it to the House that there is none. I believe that both orders constitute positive and necessary developments, and I trust that the members of this Committee will agree.
Lord Thomas of Gresford
My Lords, it is helpful to put this order into some context. The corporate manslaughter provisions were considered by the Independent Advisory Panel on Deaths in Custody. When one looks at the statistics on page 9 of the report, which was a joint Ministry of Justice and Home Office report, one sees that in 1999 there were 643 deaths in state custody. That number has reduced in the past two years to 483 and 366, but that is a lot of people who have died in custody. It is important that there should be corporate responsibility, not simply for claims of negligence but for criminal claims. We are very pleased that this order is now being introduced.
I have two questions for the Minister. One relates to service custody. Do I take it that the Ministry of Defence could be criminally liable for a death in service custody abroad? The other matter that concerns me is whether the private organisations that provide prison accommodation and in particular transport come within the provisions of the Act, so that any default on their part means that they will be subject to criminal liability as well as to liability in civil law.
Lord Goodhart
My Lords, I would like to step in briefly on this matter. The law dealing with the liability of corporations for offences, or matters for which the corporation has been responsible, has been inadequate in recent years. In particular, to make the corporation liable for homicide, as in this case, or for other purposes, it has been necessary for it to be shown that not only was the corporation itself negligent but that negligence could be attributed to a directive member of the corporation. Therefore, I very much welcome this particular piece of this particular order.
I should mention also that a recent and important change in this law came into effect a couple of days ago with the Bribery Act, which makes liability for bribery subject not to any particular identification of any particular individual who is responsible but simply to the incompetence of the corporation itself. Therefore, I very much welcome this particular amendment.
Baroness Royall of Blaisdon
My Lords, I, too, welcome the orders. As the Minister said, at the time of the passage of the Corporate Manslaughter and Corporate Homicide Act 2007 there was much discussion about this issue in both Houses. It was absolutely right that the Bill should encompass this particular aspect, because it is important that an organisation can be found guilty of manslaughter if the way in which its activities were managed or organised causes a death. That is absolutely right. It is particularly important for the victims’ families because they need the certainty that such deaths can be properly investigated and authorities brought to justice.
I have only a couple of questions. My first question relates to the custody suites in the UK Border Agency and the Ministry of Defence. Is it intended that there will be a review of those specific holding and detention areas? Like the noble Lord, Lord Thomas of Gresford, I would like an assurance that those in the private sector who are responsible for the custody and transporting of offenders can also be brought to justice.
In the other place, a member of the DUP asked whether or not there had been discussions with the Northern Ireland Assembly. It was not absolutely clear from the Minister’s response what discussions had taken place with the Assembly. I realise that they are a separate entity but it is important that discussions should take place between the Assembly and the Government and I would grateful for information from the Minister.
Lord McNally
I thank all noble Lords who have contributed to the debate and for the general welcome that has been given to the orders.
On the question asked by my noble friend Lord Thomas of Gresford, Section 28 provides that the Act extends only to England, Wales, Scotland and Northern Ireland; it will not apply to Ministry of Defence facilities abroad. If I am wrong about that I shall write to my noble friend. However, I believe that to be correct.
On the issue of private providers, which was referred to by both the noble Baroness, Lady Royall, and my noble friend Lord Thomas of Gresford, the Act applies to contracted services. Contracted service providers of custody will continue to be responsible for their actions in delivering safe custody. The Act does not place new duties on them. We will retain residual responsibilities in relation to the management and monitoring of the contractual arrangements, and they will be covered by the Act in this respect. They will have the same duties of care.
On the issue of inspection, in respect of the Border Agency customs facilities, a review relating to the care of an arrested teenager was initiated as a result of a death in custody in 2007 and is due to be finalised by the Chief Medical Officer. Once the recommendations have been finalised, the UKBA will be reviewing its processes and initiating an implementation programme.
In respect of the MoD, the Army has reviewed its need for service custody facilities and in September 2010 endorsed some recommendations, including an immediate reduction of authorised unit custodial facilities from 67 to 22.
The points made by the Committee have been extremely relevant, not least the rather chilling figures of the number of deaths in custody. Over recent years—this applies also to the record of the previous Administration—there has been a consistent attempt by government to address the problems. My noble friend Lord Thomas will agree that the bald figures cover a range of reasons for death in custody. Nevertheless, in recent years the police, prison authorities and all those who have a duty of care have made a real effort to address the reasons for deaths and to prevent them wherever possible. They have changed techniques for dealing with violent prisoners, changed the furniture in cells and limited opportunities for suicides. They have introduced a whole range of activities and initiatives to tackle the problem.
There is no doubt that the Government, as the state, freely accept in this order the responsibilities that they imposed on the private sector with the initial Act. I remember my noble friend Lord Goodhart and others pressing these matters when we were in opposition and I am pleased that we are able to bring these orders together.
Criminal justice is devolved in Northern Ireland and the local Minister and Assembly have the relevant commencement powers under the Corporate Manslaughter and Corporate Homicide Act, which we understand the Assembly is looking at. I am the Minister in the MoJ responsible for contact with the devolved Assemblies and Administrations and I shall make sure that our views on and experiences of this aspect are made available to our colleagues in Northern Ireland.
Lord Thomas of Gresford
In relation to private provision of prison and transport facilities, what is the relationship between those private facilities and the department? Could the department resist a charge under the Corporate Manslaughter and Corporate Homicide Act on the basis that the responsibility has been contracted out? My noble friend may not be able to answer straightaway, but I would be grateful if he could clarify that at some stage.
Lord McNally
I certainly cannot answer that directly; I will have to write. It is an interesting point. I shall not mention providers by name, but if a private prison or a private transporter of prisoners was guilty of corporate manslaughter, would the line of responsibility run back to the MoJ? I take it that that is the point. It is an interesting point. I suspect that, on the one hand, the suggestion would be that the responsibility for the corporate manslaughter would be that of the provider and that the provider would be charged; on the other hand, there is the argument that the MoJ should never have given the contract to such a body in the first place. This is what makes this job both interesting and frightening at times. I shall write to my noble friend to clarify.
Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011
(13 years, 5 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2011
(13 years, 5 months ago)
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Baroness Verma
That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Baroness Verma
My Lords, I shall take together this order and the Charities Act 2006 (Changes in Exempt Charities) Order 2011. The two instruments relate to the regulation as charities of three classes of state-funded educational charity: academies, sixth-form colleges, and foundation and voluntary schools.
The changes in the exempt charities order will reconfer exempt-charity status on sixth-form colleges and foundation and voluntary schools. Academies are charities and will become exempt charities from 1 August 2011 by virtue of the Academies Act 2010.
The principal regulator regulations will appoint principal regulators for all three groups of exempt charities, with the duty to promote their charity law compliance. Exempt charities have not been regulated in the same way as other charities. The general law of charity applies to exempt charities, but they are exempt from many provisions of the Charities Acts, cannot register with the Charity Commission and are exempt from its supervisory powers. The categories of exempt institutions, in so far as they are charities, are mostly set out in Schedule 2 to the Charities Act 1993.
Historically, exempt status was usually conferred by legislation on charities that were already regulated, so additional supervision by the Charity Commission was considered unnecessary. However, this was challenged in 2002 by the then Prime Minister’s Strategy Unit, which found that the position was anomalous, confusing for the public, and potentially risked the integrity of charitable status.
Most respondents to a public consultation in 2003 agreed that exempt charities benefiting from the advantages of charitable status should come under some form of regulatory oversight as charities, but concerns were expressed that duplication or new regulatory burdens should be avoided.
The Charities Act 2006 marked a new approach. Wherever possible, a body that already has oversight responsibility will become the main or “principal” regulator for an exempt charity or group of exempt charities. Principal regulators have a new duty to promote charity law compliance in the charities for which they are responsible. They have two key roles: first, providing tailored advice for their sector or signposting to relevant guidance to help trustees meet their legal obligations; and, secondly, stepping in where something goes wrong. In serious cases, it is likely that the Charity Commission will also need to be involved.
The aim of the principal regulator approach is for smarter regulation that maintains trust and confidence in charities but avoids regulatory duplication by using the regulator’s existing processes and procedures to promote charity law compliance. Where it is not possible to identify a principal regulator for a charity or group of charities, they will cease to be exempt and, if their income exceeds a £100,000 annual income threshold, will be required to register with the commission.
Although that is not the case for any of the charities we are considering today, since 2006 there has been phased implementation of this new approach. In some cases the 2006 Act itself removed exempt status from groups of charities, but it also provides the Minister for the Cabinet Office with a power in Section 11 to remove, or to confer, exempt charity status from a charity or class of charities. This power can be exercised only if the Minister is satisfied that the change is desirable in the interest of ensuring appropriate or effective charity regulation of the charities or charity concerned. In addition, the 2006 Act provides the Minister with the power in Section 13 to appoint a principal regulator for an exempt charity or class of exempt charities.
The 2006 Act increases the extent to which exempt charities are subject to the Charity Commission’s regulatory jurisdiction in Sections 12 and 14 and Schedule 5. But importantly, the Charity Commission cannot exercise its regulatory compliance powers in relation to an exempt charity without first consulting the exempt charity’s principal regulator—in Section 14 —and it cannot open a statutory inquiry into an exempt charity unless invited to do so by the principal regulator listed in Schedule 5.
I will now summarise the changes that these instruments will bring about, which were announced to Parliament in a Written Ministerial Statement on 30 March this year by the Minister for Civil Society, Nick Hurd MP, and the Under-Secretary of State for Education, the Minister responsible for schools, my noble friend Lord Hill.
Taking each of the three categories in turn, I will deal first with academies. Academies will, from 1 August this year, be exempt charities when Section 12(4) of the Academies Act 2010 is commenced. As of 1 July there were 801 academies in England. There are no academies in Wales.
During the debate on the Academies Act 2010 it was proposed that the Young People’s Learning Agency should be appointed as the principal regulator of academies. However, following the review of public bodies, the YPLA will, subject to parliamentary approval, be succeeded next year by the Education Funding Agency, an executive agency of the Department for Education. Therefore it is now considered more appropriate to appoint the Secretary of State for Education as principal regulator of academies, because he has existing funding and regulatory roles.
In practice, the YPLA and its proposed successor, the EFA, would carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State on his principal regulatory role. The principal regulator regulations therefore appoint the Secretary of State as principal regulator of academies.
The second category is what I have referred to as foundation and voluntary schools. In fact, it includes the following bodies: the governing bodies of foundation, voluntary and foundation special schools, foundation bodies established under Section 21 of the School Standards and Framework Act 1998, and connected institutions.
There are believed to be over 8,100 of these charities in England, and 175 in Wales. Historically they have been exempt charities, but in January 2009 they ceased to be exempt, although transitional provisions pending a final decision on their status have meant that they continue to be treated as if they are exempt. These transitional provisions are due to expire on 1 September, having already been extended twice.
In 2010 the Cabinet Office consulted on the proposal to reconfer exempt charity status on foundation and voluntary schools, and appoint an appropriate principal regulator. Responses strongly supported the proposal to reconfer exempt charity status, although views differed over which personal body should be appointed as principal regulator.
The Department for Education regulates these charities under education law, so is ideally placed to take on the role of principal regulator. This ensures compliance with charity law while avoiding regulatory duplication, in line with the Government’s commitment to reducing the burden of regulation on schools.
The changes in the exempt charities order reconfers exempt charity status on these foundation and voluntary school charities. The principal regulator regulations appoint the Secretary of State for Education as principal regulator of these charities in England and Welsh Ministers as principal regulator of these charities in Wales.
Following detailed analysis by the Cabinet Office, working with the Charity Commission, the Department for Education and Welsh Assembly Government, these arrangements are considered to provide the most appropriate regulatory oversight of foundation and voluntary schools as charities, while keeping the burden of regulation to a minimum.
The third and final category is sixth-form college corporations. There are currently 94 sixth-form college corporations in England and none in Wales. They were created following amendments made to the Further and Higher Education Act 1992 by the Apprenticeships, Skills, Children and Learning Act 2009. It was always intended that they would be exempt charities, as this was the status of the institutions that became sixth-form college corporations in April 2010. For this reason, the commission has not required sixth-form college corporations to register.
As with foundation and voluntary schools, the Department for Education has an existing regulatory oversight role under education law. It is ideally placed to take on the principal regulator role, promoting compliance with charity law through existing procedures without additional regulatory requirements. The Charities Act 2006 (Changes in Exempt Charities) Order confers exempt status, as was intended from the outset, and the principal regulators regulations appoint the Secretary of State for Education as their principal regulator.
I should add that we also propose to appoint the Secretary of State for Education as principal regulator of certain exempt charities connected to academies and sixth-form colleges. This will have to be done separately by a negative procedure statutory instrument, as regrettably these charities were overlooked when the instruments before us were laid.
The duty imposed by the Charities Act 2006 on principal regulators of exempt charities is forward looking. This means that they are required only to promote compliance by the charity trustees with charity law obligations arising on or after, or ongoing on, the commencement date. Principal regulators will not be required to take action relating to matters which occur before the commencement date and in connection with which no charity law obligation is continuing at that date.
The Office for Civil Society and the Charity Commission have worked closely with the Department for Education, the YPLA and the Welsh Assembly Government on these proposals, and key representative bodies of the schools and colleges have been kept informed of progress. No significant concerns have been raised about the forthcoming changes or the instruments that will give effect to them.
For exempt charities under the principal regulator regime, there will be little, if any, noticeable impact on a day-to-day basis. They will continue, as now, under their existing regulatory regime, albeit with their regulator also promoting charity law compliance.
For academies and sixth-form colleges, the YPLA will continue to have a role. The principal regulator regulations make provision for this by amending the Apprenticeships, Skills, Children and Learning Act 2009 to enable the YPLA to assist, advise or provide information to the Secretary of State for Education as principal regulator. An impact is likely to be felt only when something goes badly wrong and the regulators need to intervene.
The Charity Commission is currently developing memoranda of understanding to formalise the details of the relationship between the principal regulators and the commission. It is also setting up a committee of principal regulators which will meet annually to share best practice.
The impact of the changes made by these instruments will be reviewed within three years of commencement. Although a statutory review of the 2006 Act will begin later this year and will include an evaluation of the changes made by the Act to exempt charities, this will be too soon to properly consider the impact of the changes made by these instruments.
These instruments will ensure that academies, foundation and voluntary schools and sixth-form colleges are regulated appropriately and effectively as charities but through existing oversight mechanisms to ensure that regulation is proportionate. I therefore commend this order to the Committee.
Lord Phillips of Sudbury
My Lords, I am grateful to my noble friend the Minister for that introduction. I broadly welcome the regulations. I have one specific, rather gritty point to put to her. I have given notice of it to her officials, so I hope that it may be possible for an answer to be available today. I have one general point on which I would be very interested in her response and then another general point which needs to be made in the light of the regulations.
I shall deal with the gritty point as quickly as I can. It arises out of the statutory instrument dealing with principal regulators. Regulation 7 introduces a new section, Section 71A, into the Apprenticeships, Skills, Children and Learning Act 2009. New subsection (1) gives a discretion to the Young People’s Learning Agency to provide the principal regulator, the Secretary of State, with information that he or she may need in order more effectively to carry out his or her duty as regulator. We have already heard today that the YPLA is likely to be replaced in not too long a time by the education funding agency. I hope that that does not mean that we shall need further amending legislation to substitute EFA for YPLA. But why only a discretion? Surely the YPLA should be under an obligation to provide assistance, information or advice to the principal regulator, so long as it is a reasonable request. The Minister might like to comment on that.
My first general observation relates to the particular character of a government department as a principal regulator. There is growing anxiety within the charity sector about the preservation of what is an absolutely fundamental characteristic of any charity: its independence. It is often not understood among the wider public that one of the bedrock guarantors of the integrity of each and every charity—however small or large it is, whether it has trustees appointed by outsiders or not, and whether it is funded from a particular source or not—is that it has absolute independence and responsibility for its own affairs. Its trustees have one sole purpose in life, which is to forward its charitable purposes to the best of their ability for the benefit of the public.
Having the Secretary of State for Education as the principal regulator is sure to involve conflicts of interest all along the way. Whatever Government are in power, they will have their own agenda. The voluntary sector is a very important part of the provision of education generally. The measure seems to warrant a little more thought. I do not for a moment propose to question the Secretary of State for Education being principal regulator in these statutory instruments, but the concern is germane and relevant. Perhaps the Minister will take back to the Government the need for some informal, internal consideration of the independence factor, as I call it.
Lord Phillips of Sudbury
There was a cock-up in prior legislation that led to the need for the second of these statutory instruments to confirm that sixth-form college corporations should have exempt status re-conferred on them. There is no question or doubt that their exempt status was removed from them unintentionally. I commend whoever wrote the helpful Explanatory Memorandum on the delicate language employed therein. It explains:
“Sixth form colleges which are charities had their exempt status removed by the ASCL Act. It is unclear whether this was intentional”.
Wonderfully clear it was not. I make this point not to make fun of those who were party to the error. The parties most responsible for it were in this place, because it is we who churn out, day in and day out, tidal waves of primary and secondary legislation. It is we who fail to scrutinise adequately that tidal wave, and it is we, therefore, who did not see when the ASCL Bill was introduced that by an unintentional side wind these sixth-form college corporations were deprived of their valuable exempt status. It seems as though they have been in a sort of ghostly limbo until now, but at least we are putting them out of their misery.
I wanted to raise this issue because it is not often that such a blatant example of the weight of interlocking legislation is clearly shown to be false in its outcomes. I put it to the Committee that charity law has become barbaric. Happily, when I started practising law, nine times out of 10, such matters would never darken the doors of a lawyer’s office, but those days are long gone. We are, even in these instruments, creating another web in which to catch the unwary, forcing the prudential into seeking expensive advice and generally making the voluntary sector a victim of our excessive endeavours.
Lord Hodgson of Astley Abbotts
My Lords, my noble friend Lord Phillips, from his lengthy experience in the charity field, has carried most of the points with him. I shall attempt to sweep up behind a little, if I may, and raise a couple of issues. Before doing so, I need to declare interests as president of the National Council for Voluntary Organisations and as chairman of the Armed Forces Charities Advisory Company.
I wanted to speak on this issue because, first, the concept of exempt charities is complex and their structure and rationale is not immediately apparent. Secondly, these exempt charities are of course educational charities, and it is around education and health, but particularly education, that the whole issue of public benefit and charitable status revolves in the case of private schools. Therefore, it is important that we give these instruments a proper degree of scrutiny.
One danger and one problem or issue that arose during the passage of the Academies Act was whether we had undermined the issue of presumption, because the Act merely stated that these institutions would be charitable, full stop. Having spent a great deal of time earlier removing presumption and making sure that all charities had to justify their public benefit status, it seemed strange and possibly dangerous that we would suddenly say that a group of charities—in this case, schools—was exempt. Therefore, the question of how they are going to be regulated and the nature of the regulator is important.
As for when the regulator takes over from the Charity Commission, originally the 2006 draft Bill suggested that exempt charities could only disappear. Originally, the Bill as drafted allowed only for exempt charities to be removed; the original concept was that they would finally fade out. However, some of us, including my noble friend Lord Phillips and I, decided that it would be better to have a two-way valve, not a one-way valve. Indeed, it is the two-way valve that is being used to create a new category of exempt charities.
When we examined some of the exempt charity regulators, there were some surprises, which have a read-across to this debate. The regulator for universities is the Higher Education Funding Council for England. It has always been surprising that that is the regulator because it has no charitable knowledge at all; it is merely a funding body. I shall come back to that again in connection with the proposals for the regulator and the Secretary of State in the current regulation. We have had some grave disappointments. Given that we were trying to create a proportionate regime, it was a shame that the MoD was not prepared to take on some of the requirements of the exempt regulation for Armed Forces charities, because there are many hundreds of them and they require a particular light touch.
On the upside, you can have light-touch and proportionate regulation focused on a particular group of exempt charities, but there is a down side, which is regulatory arbitrage. You can find ways to fall between the cracks of the regulatory regime, which is something that we have to be very careful about. As I understand it, there will be two principal regulators. One of them is the Secretary of State for Education—that is very clear, although there are some down sides that my noble friend has just mentioned—but in the Welsh situation the regulator is a “responsible person”, which is defined in Regulation 6(2). It means a person who,
“is or was … a Welsh Minister”,
was,
“acting on behalf of the Welsh Ministers”,
or was,
“a member of a committee established by the Welsh Ministers”.
This is not an attack on the devolution process but it does mean that nobody is identified as the regulator for the Welsh educational institutions. I think that responsibility should lie with someone, or some defined body, and there is a danger here of having an amorphous and opaque nature of responsibility with regard to Welsh educational institutions.
On the question of memoranda of understanding, through which we can avoid regulatory arbitrage, I assume that there will be two—one with the English regulator, the Secretary of State, and one with the Welsh person. It will be interesting to know from my noble friend who that person will be in the light of the rather opaque drafting of the regulation. This will be the first time that we have had two regulators—one for England and one for Wales. As I look through the other exempt regulators, I see that DCMS regulates museums and galleries for both England and Wales. We are now dividing them for the first time and creating an interesting precedent.
I share the concerns that my noble friend Lord Phillips raised about role of the Secretary of State for Education in respect of England. This is a tiny part of his empire and can hardly have the attention that it might deserve. There is the issue of independence that my noble friend underlined, as well as the question of conflicts of interest that may arise in the future. I was quite attracted by the idea that the YPLA should be a regulator. If it is to be succeeded by the education funding agency, so be it. After all, if the Higher Education Funding Council is doing universities, why should the education funding agency not do this group of educational institutions? As the Explanatory Memorandum says:
“In practice, the YPLA (and its proposed successor the EFA) will carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State”?
Why not just have them carry out the role? It would be a good devolution of power. It would remove the role from the Secretary of State and avoid the conflicts of interest to which my noble friend referred.
In conclusion, I understand that these are technical questions. I am sorry that my technical e-mailing skills are not sufficient to have been able to get them to my noble friend in advance of this afternoon’s debate, but I think that they are important. In these stringent, difficult and suspicious times, we need to maintain the culture of the charity brand, especially in the field of education. Some precedents are being set here and we need to be careful that we are not doing something that we will later regret. I think that, in line with the Government’s overall policy, devolving power for regulation to the lowest possible level is appropriate, and therefore I do not quite see why the Secretary of State has to have a continuing role here. That seems to be centralising rather than devolving.
Baroness Royall of Blaisdon
My Lords, I, too, am grateful to the Minister for introducing these orders. Of course, it is right to ensure that there is proportionate but effective oversight of charities under charity law while keeping the regulatory burden to the minimum necessary, but that regulation must be effective and ensure proper compliance with charity law. Therefore, I share the concerns of noble Lords who have spoken about the potential conflict of interest and perhaps the impact on the independence of charities if the Secretary of State is to be the regulator for so many of these institutions. I, too, think that again this is a demonstration of centralisation rather than enabling organisations to flourish, and that dismays me. I should be grateful for the Minister’s views but I also hope that the Government will reflect on potential conflicts of interest in relation to the Secretary of State’s role as regulator and his role as Secretary of State for Education.
I find no reference to free schools in the documents before us and I do not understand their status. Are they charities or not? I do not know. All academies are included. However, I do not know what the status of free schools is and I should be grateful for some clarification. If they are charities, who is the principal regulator?
In the Academies Act 2010, as the Minister said, it was agreed that a principal regulator would be required for academies and, as noble Lords have said, it was proposed that this should be the YPLA. Then along came the Public Bodies Bill and the aim to abolish the YPLA. Of course, the Bill is still in Committee in the House of Commons.
I have a few questions. First, is it not precipitate to appoint the Secretary of State for Education as the regulator when the YPLA has not yet been abolished? Like the noble Lord, Lord Hodgson, I wonder why the Education Funding Agency should not be the regulator rather than the Secretary of State. Secondly, the memoranda of understanding are clearly extremely important and I wonder whether Parliament will be able to see them before they are concluded.
My last question is a small one. The section relating to monitoring and review is a little perplexing. A review is supposed to commence later this year. However, this will be pretty worthless in relation to the regulator because the review of the 2006 Act is expected to follow shortly after the change is made by these regulations. Essentially, I am asking: why have two reviews? Why not have one review in three years’ time? That would obviate a lot of work that will go into reviewing in the mean time.
Baroness Verma
I am grateful for the extremely knowledgeable contributions of noble Lords this afternoon. I start by thanking my noble friends Lord Phillips and Lord Hodgson, and the noble Baroness, Lady Royall, for their warm welcome to these regulations. Many questions have been thrown at me; I shall try to respond to them in the order in which they were asked. I thank my noble friend Lord Phillips for prior notification of his questions. I passed his notes to the civil servants. I hope that, through my response, he will be reassured that we have taken his concerns seriously. I am pleased that my noble friend Lord Hodgson’s train arrived on time so that he was able to tease out of me further details of an extremely complex area of law.
In response to my noble friend Lord Phillips, the YPLA is fully committed to supporting the Secretary of State in his or her role as the principal regulator. The consultation went across all the agencies, all of which agreed that the Secretary of State would be ideally positioned to be the regulator. The YPLA has worked closely with the EFA, the Department for Education, the Cabinet Office and the Charity Commission on the development of the Secretary of State’s role as the principal regulator. Much of what the YPLA will do will be to support the Secretary of State as part of the existing day-to-day functions of the regulator. In practice, I am not sure that we should see the YPLA refusing any reasonable request from the Secretary of State for advice and information. I hope my noble friend is reassured that the YPLA, when it is replaced by the EFA, will continue to fulfil its role of supporting the Secretary of State.
I come to independence, on which I think my noble friend is about to challenge me.
Lord Phillips of Sudbury
I am grateful for what the noble Baroness said but why can the regulations not just say that the YPLA “shall” provide reasonable assistance, information and advice. Why not “shall” instead of “may”?
Baroness Verma
Since this is a legal and technical matter, perhaps I could write to my noble friend. I know that such words can change the law very quickly, and I shall not be drawn into that trap by my noble friend today.
On the issue of independence, both the Charity Commission and the Cabinet Office are satisfied that the appointment of the Secretary of State for Education and the Welsh Minister as principal regulators will not give rise to an inherent conflict of interest. The commission and the principal regulator will work together to ensure that a charity’s independence is maintained. The functioning roles already have accountability. There is no conflict, since assurance is largely derived from the funding function and both roles require similar levels of assurance.
We all accept that the law on exempt charities is an incredibly complex area with a complex history. More than anybody else in this Committee, my noble friend is aware of the difficulties that this law raises. I accept that we would rather be in a better position, but we are where we are and it is difficult to unpick some of the complexities. As a result, we should go for a simpler legal regulatory framework for exempt charities. It has always been intended for exempt charities to be exempt. When the ASCL Bill was enacted, it was agreed that this would be done through exempt-charity SIs. That is what these instruments do.
My noble friend Lord Hodgson spoke on the MOUs. Principal regulators are not expected to be experts in charity law. It is not their job to be, nor is it their duty to promote charity law unless charity law compliance requires it. Expertise in charity law lies with the Charity Commission. That is why the commission has investigation and enforcement powers in relation to exempt charities.
My noble friend also asked why the Education Funding Agency is not the regulator. As I said to my noble friend Lord Phillips, the EFA will be an agency of the Secretary of State. It will not have a separate legal personality, so it cannot be appointed as the principal regulator.
Lord Hodgson of Astley Abbotts
Will the MOU be in place when the regulations come into force on 1 August?
Baroness Verma
I have been told by my experts behind me that it will be shortly afterwards.
The noble Baroness, Lady Royall, reminded us of the effectiveness of the regulators. The principal regulator approach will not mean less effective regulation. It will be entirely valid to use different models of regulation to fit the circumstances so that we end up with smarter regulation that maintains trust and confidence in charities. Using an existing regulator’s processes and procedures to oversee charity compliance avoids costly and wasteful duplication.
The noble Baroness asked also about free schools. Free schools are a type of academy. They are charities in the same way as other academies. She asked also about the MOUs between the Charity Commission and principal regulators. MOUs will be published on the Charity Commission website. We are happy to deposit copies in the House Library.
I suspect that I have not given satisfactory answers to my noble friends who are experts in this area. I hope that they can be assured that I will provide written responses to questions to which they feel they have not answers.
The regulations are about making the system leaner and smarter. I therefore commend them to the House.
Charities Act 2006 (Changes in Exempt Charities) Order 2011
(13 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Verma
That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Changes in Exempt Charities) Order 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Distribution of Dormant Account Money (Apportionment) Order 2011
(13 years, 5 months ago)
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Baroness Verma
That the Grand Committee do report to the House that it has considered the Distribution of Dormant Account Money (Apportionment) Order 2011
Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments
Baroness Verma
My Lords, this apportionment order marks the culmination of a long process to do something useful with dormant account money. The Dormant Bank and Building Society Accounts Act 2008 created the legislative framework required to use this money for the good of society while protecting the rights of account holders. In line with the original Act and in consultation with the Big Lottery Fund, which is the designated distributor of dormant accounts money, England, Scotland, Wales and Northern Ireland are all determining their own spending priorities for it. As the Prime Minister announced in July of last year, England’s portion will be used to set up a big society bank.
Current estimates suggest that there is about £400 million of eligible dormant accounts in the UK. Some of this will be kept back to meet claims from customers, as is right and proper. However, the Reclaim Fund estimates that between £60 million to and £100 million will be released for public spending over the course of the first year. Subsequent releases will be made according to the rate of reclaim.
This order sets out how the money available for public spending will be apportioned between England and the devolved Administrations. In accordance with communications at the time of the original Act in 2008, the order divides the money on a per capita basis; in other words, in line with the Barnett formula. Based on the latest population estimates by the Office for National Statistics, the percentages are as follows: England, 83.9 per cent; Scotland, 8.4 per cent; Wales, 4.9 per cent; and Northern Ireland 2.8 per cent. While the application of the Barnett formula to the apportionment of dormant account money is in line with previous expectations, the decision to use the formula was made only after a period of consultations with the devolved Administrations, as required by the Act.
Following the passage of the transfer of functions order on 31 January, the Minister for the Cabinet Office had responsibility for leading this process. Prior to the formal consultations, Cabinet Office officials informed officials in the devolved Administrations and territorial offices of the Government’s intention to use the Barnett formula, thereby preparing the way for the ministerial process.
The formal consultation process was conducted through an exchange of letters between the Minister for the Cabinet Office and his ministerial counterparts in the devolved Administrations during March and April. A number of concerns were raised about the use of the Barnett formula, principally revolving around the established criticisms that the formula is outdated and does not take into account the varying needs across the constituent countries of the UK. I can assure noble Lords that we have considered these concerns very carefully. However, based on advice from the Treasury and in line with normal devolved spending, we maintain that the formula remains the most transparent, robust and sustainable method of apportionment. This judgment was communicated to the devolved Administrations in letters from the Minister for the Cabinet Office on 6 April, thereby formally ending the consultation process.
While keeping within the constraints of the parliamentary timetable, we have been keen to ensure that the apportionment order is passed as soon as possible so that the dormant account money can be put to good use as soon as the first tranche becomes available later in the summer. While England’s portion will be used to establish a big society bank, which will help build a social investment market and broaden the finance options open to civil society organisations, with the passing of this order, Scotland, Wales and Northern Ireland will be able to use their portions to fund their own social and environmental programmes. I therefore commend the order to the Committee. I beg to move.
Lord Higgins
My Lords, I have a long-standing interest in the question of dormant bank accounts. Indeed, at one stage I was an arbitrator on the claims resolution tribunal for dormant accounts in Switzerland.
I have only one or two points to make on the order, the first of which concerns the question of distribution. As the Minister said, there were considerable discussions on this issue. She said that in the course of the discussions the devolved Administrations argued that the allocation of the money should be changed and that it should be distributed in relation to the various needs of the devolved areas, whereas the very good and helpful brief states that it does not take into account need. It is not the same thing. “Need” implies that certain groups of people have a need for money as against the overall allocation—which, presumably, will happen in the course of normal government decisions.
In all events, could the Minister say what evidence the devolved Administrations produced to argue that it ought to be done on the basis of need? Whatever one thinks about the Barnett formula—and many views have been expressed about it, not least by the noble Lord, Lord Barnett—I have come to the conclusion of the Treasury that this is probably right way of doing it.
The second point, which is interesting, is that this money is normally going to go, as I understand it, to the Big Lottery Fund. The money going to the devolved Administrations—I presume, the Minister will correct me if I am wrong—will be allocated by the fund. However there is also an intriguing passage in the Explanatory Memorandum, which states:
“With the Prime Minister’s announcement on 19 July 2010, England’s portion is committed to setting up a Big Society Bank, which will be a social investment wholesaler”.
I am not at all clear what a “social investment wholesaler” is—perhaps the Minister could clarify that. But in all events it looks as though England will have its chunk allocated to the big society bank, whereas the other devolved Administrations will not.
I understand and support the idea of a big society bank, and the idea of the big society, which the Prime Minister is understandably so enthusiastic about. But if that is so, why has an apparently arbitrary decision been taken, which I do not think is reflected at all in any of the legislation, that England’s portion shall go to the big society bank, rather than any of the other uses which the lottery fund might have used it for?
Although we have a Big Lottery Fund which is responsible for making this kind of decision, it is apparently to be overruled in this case by the Prime Minister’s statement. I am not the least bit clear what the financial and legislative basis is for his decision to overrule that, and why—instead of the normal process of going through the Big Lottery Fund—we suddenly find it is to be done by a big society bank. No doubt that has not been set up yet. I presume there will be some delay, whereas if it went straight to the Big Lottery Fund, the money would be allocated immediately, or at least much sooner than it would under the arrangements set out in the Explanatory Memorandum. I would be most grateful if the Minister could clarify those particular points.
Lord Maclennan of Rogart
My Lords, my noble friend Lord Higgins has raised a number of the points which I would otherwise have raised, but we wish to reinforce his inquiries. I note that the money is being handled in Scotland, Wales and Northern Ireland by the Big Lottery Fund. What prioritisation, if any, is being indicated by the Governments of the countries to which power has been devolved? What relationship is there between the views of the Governments in these countries and the Big Lottery Fund? Will it be open to them to seek to influence the judgment of what is apparently being described as money for the public sector? It is to my mind rather odd that no public consultations were deemed necessary to consider this matter, or other matters related to the distribution of the dormant account moneys, since the amount is not negligible. I would be very interested to know if—in the course of the discussions about how the money might be divided up—any representations were made by the devolved Governments about how the money ought to be spent. Were they content with the proposal that it should be left to the discretion of the Big Lottery Fund?
So far as the reliance upon the Barnett formula is concerned, there have been many occasions—some recently in our House—when the limitations of the formula have been considered. Perhaps this is not the occasion to reopen that question, but it is a little disappointing that we have received an indication that the Barnett formula is considered to be the best method of financing the Governments of the devolved countries, without any indication that any sort of inquiry has been made by the Government.
It appears that some interesting suggestions have been canvassed by experts in this area. I draw attention in particular to the views of Professor Iain McLean of Nuffield College, Oxford, on how other countries tackle this problem. He drew attention to the example of how the Australian provinces meet to decide these issues. The time has come at least to put in hand significant research, because there is a widespread perception that the Barnett formula’s outcomes are not just inequitable. However, it would be a mistake, on the back of this order, to carry that out as far as it has been carried out in other forums.
The question of the amounts of money available is of great interest, and I am happy to have heard from my noble friend that the sums anticipated for this year are in the order of between £60 million and £100 million. Have any assessments been made as to whether those sums will be a one-off, or whether they will continue and, if so, at what level? I realise that that is a difficult issue to hypothesise about, but if any work has been done, it would be interesting if it could be shared with the Committee. I am grateful to my noble friend for what she has said.
Baroness Royall of Blaisdon
My Lords, I, too, am grateful to the Minister for her introduction. I certainly support the order and I am glad that the money will be distributed. I recognise that now is not the time to discuss how the dormant accounts money is to be spent, nor is it the time to have a discussion about the big society bank. However, I have reservations about the big society bank because, while I believe that it will help some people and organisations, it is a very small answer to the problems that they will encounter as a result of cuts in local authority services.
The noble Lord, Lord Maclennan, asked whether the noble Baroness thought that the £60 million to £100 million that it is estimated will come from dormant bank accounts this year will be a one-off, or if such an amount of money can go into the big society bank every year. If it is a one-off, my concern about the viability of the big society bank is exacerbated because, if there is to be a bank that will really fulfil what is likely to be an important role in supporting charities and civil society, it has to be more sustainable than something that will get possibly £60 million next year—or possibly not. Who knows? That raises some concerns.
I hear what the noble Baroness says about the Barnett formula. Discussions have taken place on whether or not there are other options and, clearly, the decision has been taken and has come down in favour of the Barnett formula. It would be interesting to know what discussions have taken place, and with whom, in order to reach that decision. I am concerned about its specific impact on Wales because it is widely recognised that Wales tends to lose out as a consequence of the Barnett formula.
As I said, I am glad that the money is to be distributed and welcome the order. However, it raises profound concerns which must be addressed, if not today then in the future.
Baroness Verma
I thank my noble friends and the noble Baroness, Lady Royall, for their broad warm welcome for the order. I expected the order to raise questions, on some of which, I am afraid, I shall have to write to noble Lords.
My noble friends Lord Higgins and Lord Oakeshott raised concerns around the use of the Barnett formula and asked why not other formulas. It was found that the Barnett formula was the most robust way of allocating the money. The Big Lottery Fund’s way of distribution is not a government formula and therefore does not have a wider standing beyond the distribution of lottery funds. The Government recognise that concerns have been expressed about the system of devolved funding; however, their position remains that the priority is to reduce the budget deficit and that any decision to change the current system must await the stabilisation of public finances. However, we have to find an alternative and, until we do, noble Lords will have to accept that the Barnett formula has its strengths.
My noble friend Lord Higgins asked about the term “social investment wholesaler”. The big society bank will be a social investment wholesaler. It is a term used in dormant accounts legislation and is one of three areas where English dormant accounts can be spent. The other two are youth provision and financial inclusion and capability.
My noble friend Lord Clement-Jones asked about public consultation on the distribution of dormant accounts. The Government carried out a public consultation on how the English portion of the dormant accounts should be spent prior to the 2008 Act. As a result, the dormant accounts Act allows the English portion to be used for youth provision, financial inclusion and capability or a social investment wholesaler.
I was asked about the monies going into the big society bank and whether this would be a one-off. We have £60 million to £100 million that we are going to allocate. However, there is a reclaim fund and we need to see how much of that is drawn on. Of course, if money is then still left, it is only right and fair that it is put to positive and good use through the big society bank so that people and smaller organisations can draw on it. The decision will, of course, be made after the independent reclaim fund has looked at how the progress of reclaim has worked.
The questions that were asked today centred basically around confidence in ensuring that the monies reach the right people and that we are making the best use of the dormant accounts. I think there is agreement over the framework that we are using, which was passed in 2008. Since taking office, the Government have worked hard, taking the necessary steps to make sure that money from dormant accounts made available for public spending is put to good use as soon as possible. A reclaim fund has been established by Co-operative Financial Services and authorised by the FSA. As I have indicated from the outset, the estimated £60 million to £100 million from dormant accounts will be released by the fund over the first year. It is imperative that we are able to spend this money as soon as possible.
In taking the decision, the Government have considered thoroughly some of the concerns that noble Lords have raised today. I stress to the Committee that we understand that there are criticisms of the formula we are using. However, it has proved to be currently the most transparent and easily understood formula of all those that are around. I hope noble Lords will be satisfied. I know I have not been able to respond to all questions but I undertake to ensure that all noble Lords are written to. On that basis, I commend the order to the Committee.
Lord Higgins
My Lords, I should like to seek a little further clarification. I stress that I am, despite all its imperfections, in favour of the use of the Barnett formula for the allocation of funds between different parts of the United Kingdom. However, that does not solve the problem of which formula is being used to distribute the money, as against distributing it between the regions. I am anxious to save my noble friend unnecessary correspondence. Why, instead of the normal procedure being used—whereby the money for each of the regions goes into the Big Lottery Fund—is the money suddenly being siphoned off into the big society bank? Apparently this is not happening in the regions, although one would have thought that the big society was a UK-wide concept. Why do we suddenly find the allocation of resources—apparently contrary to the Act, although I might be wrong about that—being left to the big society bank, rather than to the existing arrangements set out in legislation? Alternatively, why is it not all going to the big society bank? How do the criteria for these two bodies differ?
Baroness Verma
My noble friend of course wants far more detailed clarification than I am about to give him. I undertake to ensure that such clarification is passed to all Members. However, the devolved Assemblies and authorities can make orders to restrict the kind of purposes and people to which money from dormant accounts may be distributed. That comes under Sections 19 to 21 of the Dormant Bank and Building Society Accounts Act 2008; some safeguards are already in place. However, I completely understand my noble friend’s concern. Therefore, to ensure further clarity, I would rather undertake to write and give a much fuller explanation that will, I hope, satisfy him.
Lord Higgins
My Lords, I am afraid that an exchange of correspondence does not clarify something in the same way as having it dealt with on the Floor of the House. Can I be clear? What is the financial basis of the Prime Minister’s statement, allocating this money to the other fund, rather than to the Big Lottery Fund?
Baroness Verma
As I said earlier to noble Lords, the Prime Minister has made it clear that for him the priority in England is to be able to set up the big society bank to ensure that dormant accounts are used for the needs of organisations in England. My noble friend is now querying the needs of the devolved Assemblies. However, I would give justice to my noble friend only if I could write to him and to other noble Lords because I would not want to have something misread or misheard in giving clarification. I may be able to do so now but, then again, I may not.
Under the Dormant Bank and Building Society Accounts Act 2008, following the transfer of functions order the Minister for the Cabinet Office must give directions to the Big Lottery Fund on how the English portion should be spent. I am not quite sure that that will satisfy my noble friend and therefore I continue to say that I shall write to noble Lords.
Lord Higgins
I am most grateful to my noble friend. I look forward to her letter to see whether the Minister can, in fact, make such an order.
Ministerial and other Salaries Act 1975 (Amendment) Order 2011
(13 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Verma
That the Grand Committee do report to the House that it has considered the Ministerial and other Salaries Act 1975 (Amendment) Order 2011
Relevant documents: 19th Report from the Joint Committee on Statutory Instruments
Baroness Verma
My Lords, this is an order that my right honourable friend the Prime Minister has specifically requested to formalise in legislation the coalition Government’s policy on ministerial salaries, as announced on 13 May last year. The order was laid before Parliament on 21 March and agreed to in the Delegated Legislation Committee in another place on 21 June.
The order, which is intended to remain in force for the lifetime of this Parliament, will ensure that ministerial and other officeholder salaries are reduced in legislation as they have been reduced in practice since the coalition Government took office. The salaries and offices affected are specified in the amendment order and these salaries cannot be at any other rate during this Parliament without further amendments to the legislation. Lords Ministers can be assured that their salaries will remain as listed in the order until the Dissolution of Parliament.
The Government’s policy is that Ministers’ total remuneration is 5 per cent less than that claimed by equivalent Ministers in the former Government. In the case of Lords Ministers, “total remuneration” in the context of the order simply refers to their ministerial salary. For Commons Ministers, it refers specifically to ministerial and MPs’ pay taken together, with the reduction then applied solely to the ministerial salary element. Since entering office, therefore, Ministers have waived their entitlement to receive a full ministerial salary and have been receiving a reduced salary ever since.
The order also ensures that ministerial and other officeholder pension contributions and future accruals are brought into line with the reduced ministerial salary levels. Currently, Ministers and other officeholders receive reduced salaries but, because of the rules governing ministerial pensions, their contributions have to remain based on their entitled level of salary as set by the Ministerial and other Salaries Act 1975 as it stands. This has meant that departments have had to make up the shortfall in pension contributions between the reduced and the entitled levels of salary for Ministers and officeholders. The amending order will eliminate the need for departments to do this and will save the Government approximately £100,000 per year.
As I mentioned, ministerial and other officeholders’ salaries are currently governed by the Ministerial and other Salaries Act 1975, as amended. The salaries of all Ministers, the Speaker in each House and the six paid opposition officeholders fall under the remit of this Act. These individuals have been informed of this order and the changes that it will make to the Act. Currently, increases to ministerial salaries are linked to the average increase in the mid-points of the senior Civil Service pay bands. This order will effectively nullify the link during this Parliament but it will apply again after the Dissolution of Parliament.
I should point out that over several years ministerial salaries have not, in practice, remained in line with the legislation. Since 2008, Ministers in the former Government had waived any entitlement to increases in their salary. This order will therefore bridge the gap that has grown between the legislation and what is happening on the ground. Given the Government’s policy on a Civil Service and wider public sector pay freeze, it is right that Ministers show leadership during this time of financial constraint. Since taking office, this Government have saved around £700,000 on Ministers’ pay. Over a full five years, this will represent a £4 million saving. I commend the order to the Committee.
Lord Maclennan of Rogart
My Lords, I welcome the opportunity that the laying of this order gives to enable some scrutiny of the policy lying behind it.
The practice of making alterations to the levels of ministerial salaries is not new, and particular aspects of this order are worthy of consideration. It is perhaps remarkable that since 1975 there have been 30 previous examples of alterations to ministerial salaries. My noble friend the Minister has made it clear that to some extent this is, on this occasion, gesture politics. It is about signalling to those in the public sector that Ministers are also bearing some of the brunt of the financial situation that the country is in. It has to be said, however, that the savings to which my noble friend has referred are rather minuscule. It might reasonably be inquired as to whether such savings might have been better made by reducing the total number of Ministers, which seems inexorably to have increased over the past 100 years—notwithstanding the devolution of power and the apparent commitment of the present Government to decentralise power further. There has been no shedding of Ministers to accommodate that philosophy.
I wonder whether the setting of an example by Ministers will be regarded by those in the public sector as amounting to anything more than a row of beans, in the light of the fact that large cuts in the public sector are being made among civil servants and public authorities around the country. If savings of public funding can be made at that level, some thought ought to have been given to saving at the top in Whitehall. The question arises of why the Government have taken an inflexible view to this order, which does not match or mirror what has happened in the past? Circumstances change, and it is to be hoped that they will change within the lifetime of this Parliament. To set these proposals in stone, as apparently the Prime Minister has decided to do, does not seem to be a pragmatic approach to ministerial pay.
From the point of view of clarification, I should be interested to know what the true position is concerning the changes in the pension arrangements. My understanding is that this is not intended to be retrospective in its effect and that the raising of the contributions will take effect only when the order comes into force. I should be most grateful for my noble friend’s comments on some of these points.
The Earl of Courtown
My Lords, I am most grateful to the Minister for telling the Committee that there has been a £700,000 saving in ministerial salaries. However, does that take into account those Ministers, Whips and Members of the Front Bench who do not receive a salary? I should be interested to know how many Members on the Front Bench in this House and the other place are not in receipt of a salary. If they are not, do they accrue any form of pension benefit? I think that the Ministers in this House do a grand job—the same as when the noble Baroness, Lady Royall, was in power—and they are not paid nearly enough. I look forward to hearing what my noble friend has to say.
Baroness Royall of Blaisdon
My Lords, I declare an interest as being in receipt of a ministerial or other salary. I have been for some time and I am very grateful to the Government.
I am also very grateful to the Minister for pointing out that the previous Government also had a policy of not increasing salaries. Of course, I am attracted—I would be, wouldn’t I?—by the idea from the noble Lord, Lord Maclennan, that, rather than reduce ministerial salaries, there should be a reduction in Ministers. I jest but I believe now, as I did when we were in government, that there are too many Ministers. I do not think that that should have an impact on salaries but I firmly believe that there are too many Ministers—in the other place, of course—although Ministers work phenomenally hard.
I am not sure what the noble Earl was getting at but I think that it is wrong in principle for there to be unpaid Ministers. A Minister is a Minister; they do a fantastic job and should be paid accordingly.
Of course, when everyone in the whole country is having to tighten their belts, it is right that those in receipt of ministerial salaries should do likewise. Resources are limited and we have to take our share of the pain. Although I would strenuously argue that the cuts to our public services in general are too deep and being made too fast, I do not think that that is the case in relation to ministerial salaries. The Prime Minister was correct when he acted as a sort of catalyst for this legislation.
Baroness Verma
Again, I start by thanking my noble friends and the noble Baroness for their broadly warm welcome for the order and for their questions about ministerial salaries. I should like to start by responding to the point made by my noble friend Lord Maclennan—whose name, I hope, I have got right this time—about it being gesture politics. The fact is that we need to show that we in government are prepared to take some of the bites that are going to affect every single citizen because of the financial difficulties that this country is in. I want to resist saying that it is gesture politics: we have a duty to show that we are willing to take some of the pain. It may not look as though it is a lot of the pain but those of us who work incredibly hard feel that it is only right that we all share in it, and the previous Government did the same.
I should also like to thank my noble friend for his kind words. Ministers in both this House and another place work very hard and often with gruelling hours on subjects that we have to get our minds around very quickly, as is the case today. This is not my normal remit—and I think that is true of the noble Baroness, too.
There are 13 unpaid Ministers in government, three in the Commons and 10 in the Lords. The former Administration had the same number of unpaid Ministers before leaving office, with nine from the Commons and four from the Lords. The Government believe that the number of Ministers should be dictated by need, and on this basis have carefully considered all the appointments that they have made. Because of the nature of the coalition Government and the challenge of delivering the programme for government, the Prime Minister did not think that it was possible to reduce significantly the number of Ministers at this time. However, the Government have reduced the number of Ministers who regularly attend meetings of the Cabinet. I hope that has answered my noble friend’s question.
The Earl of Courtown
Perhaps I did not explain well enough the point that I was really making. The Minister said that at the other end there are three Ministers not in receipt of a salary, and 10 noble friends at this end. At least down the other end they receive a parliamentary salary.
Baroness Verma
My Lords, I enter into territory that is way over my pay grade, and the safest option for me is now for me to retreat into a safer area. I shall respond to the question about pension contributions. It is correct that these measures are not retrospective; salaries in the amendment order come into effect when the order comes into force. On the question of unpaid Ministers who might be in receipt of pensions—no, it deals only with salaried Ministers. Unpaid Ministers are not entitled to a pension under the parliamentary pension scheme.
I am not getting much more inspiration from behind me on any further questions, so I undertake to write to noble Lords on any questions that have not been answered.
Communications Act 2003 (Maximum Penalty for Contravention of Information Requirements) Order 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Communications Act 2003 (Maximum Penalty for Contravention of Information Requirements) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Baroness Rawlings
My Lords, telecommunications are a vital part of the UK economy, worth over £35 billion in GDP alone. Perhaps more significantly, they help to underpin our online and internet economy—the largest per capita ICT market in the world and the driver of innovation and growth in the UK. It is absolutely critical that in this fast-moving and dynamic sector we have the necessary regulatory framework capable of keeping pace with market developments and technological change. This is why the Government have implemented the European framework on electronic communications. Those changes became law on 26 May this year. The changes to the framework are, first, good for business, which will benefit from the improved regulatory framework to encourage investment, and, secondly, they will provide greater competition and innovation among electronic communications providers. They will be beneficial, too, for consumers, who will gain from access to higher-quality and lower-cost communications services. Benefits for the former will include improved, reasonably priced choice of supplier and contract terms. For the latter, they will include strengthened rights on privacy and confidentiality, with faster switching processes and improved accessibility.
The UK approach to implementation has been light touch and has the support of business. It has been informed by a comprehensive and open dialogue with the people concerned, as well as a determination to avoid all over-regulation.
The framework contained a number of amendments granting new powers to Ofcom, the independent regulator. The powers will make certain that Ofcom has the appropriate tools to carry out its statutory functions effectively. These functions include the ability to make regulatory decisions on the markets. In order to make them effective, Ofcom needs access to information held by communications providers.
If the providers do not comply with information requests, it will hinder Ofcom in fulfilling its duty as the communications regulator. This could prevent Ofcom making informed decisions relating to remedy of the market and consumer protection. This could have detrimental impacts on both the communication markets and the consumer.
Amendments to Article 10(3) of the authorisation directive as well as to Article 21a of the revised framework directive require that Ofcom be able to levy dissuasive financial sanctions for most breaches of the regulatory obligations, including its information-gathering powers under Sections 135, 136 and 191 of the Communications Act 2003. Ofcom already has powers to impose financial penalties for breaches of these provisions, but the current limit for such penalties is only £50,000. Having reviewed the maximum level of the penalty, the Government no longer believe that this level of penalty is sufficiently dissuasive to prevent non-compliance with information-gathering requests.
The Government see the ability to levy an increased penalty for failure to comply with an information request as key to making certain that Ofcom has the necessary information available to make effective and correct regulatory decisions. Recent changes to the Ofcom enforcement regime in relation to silent calls raised the maximum level of penalty that Ofcom can levy for breaches from £50,000 to £2 million. This amendment to the Communications Act 2003 will mirror that increase in the maximum level of penalty in respect of non-compliance with requests from Ofcom for information. Other financial penalties in the Communications Act have been increased, too, to sums above the current penalty. For example, there will now be no financial advantage to companies refusing to answer an information request and taking a £50,000 penalty, as the maximum level of penalty will be £2 million. The use of this power by Ofcom must be appropriate and proportionate to the breach of the information-gathering powers under the relevant sections of the Act. The Government are clear that the UK has no discretion on the implementation of these provisions. We must therefore provide for dissuasive penalties, as they are the law and are required by the European directive.
The Government consulted on a change to the level of penalty as part of our wider consultation last year on the implementation of amendments to the European framework for electronic communications. Respondents from across both the telecommunications sector and the consumer rights groups were broadly supportive of this proposal. They recognised that it is of fundamental importance to the conduct of Ofcom’s regulatory functions under the framework that it is able to gather whatever information it needs.
Respondents also agreed that it is important that Ofcom is able to levy dissuasive penalties, particularly on those operating short-term scams where the potential gains can exceed the amount of the fine. The people concerned also struck a cautionary note, arguing that, given the high level of the potential fine, its levy should be proportionate to the type of breach of the information requests. I am pleased to say that this is recognised in our approach.
The Government are aware, however, that not all the people concerned agreed with the proposed increase in the level of sanction. Some suggested that the current level of penalty for failure to comply is already dissuasive and claimed that there is little evidence that companies are not complying with information requests.
The Government have looked long and hard at the level of the sanctions available to Ofcom under its information-gathering powers. We have worked closely with the regulator, Ofcom, to analyse and test its powers, including its current enforcement powers. We firmly believe that Ofcom’s enforcement powers in relation to the information-gathering requests made under Sections 135, 136 and 191 of the Communications Act 2003 are not equivalent to the other enforcement powers available to Ofcom and are not genuinely dissuasive. Therefore, we will increase the level of fine that Ofcom can levy for failure to comply with an information-gathering request up to a maximum of £2 million.
This will be done for the following reasons. First, the Government are aware that some communications providers have refused to comply with an information request or have provided inaccurate information on a number of occurrences during the years 2009 and 2010. Some respondents claimed that the current level of sanction available to Ofcom was already sufficiently dissuasive. The Government, however, have seen evidence that suggests that there is a lack of deterrent effect in the current regime. This means that businesses can, and do, take the risk of not providing accurate information as requested or providing any information. Potentially, therefore, they gain financial and other business advantages through the delay, and even the avoidance, of the full effect of Ofcom’s enforcement powers under the Act. This in turn can have significant detrimental impacts on both markets and consumer protections.
Secondly, non-compliance or delayed compliance with information requests under Sections 135, 136 and 191 of the Communications Act 2003 hinders Ofcom in fulfilling its duty as regulator. We see the ability to levy an increased level of penalty for failure to comply with an information request as key to making certain that Ofcom has the necessary information available to make effective and correct regulatory decisions.
Thirdly, increases in the level of sanction in other areas—for instance, silent calls—could provide communications providers with an incentive to refuse to respond to an information request and face a penalty of a maximum of £50,000 rather than answer the request, demonstrate a breach of other regulatory burdens and risk a far higher penalty.
Fourthly, the penalty will apply only to those who do not comply properly with Ofcom’s information requests. Two million pounds is the maximum level of fine that Ofcom will be able to levy, and the penalty imposed in any specific case must be, as I said, proportionate to the breach.
Her Majesty’s Government believe that this order is a necessary and important change to the powers of the regulator, Ofcom. This change will help to make certain that Ofcom is able to make fully informed decisions on the market it regulates; this can only be good for business and good for consumers. Therefore I commend this order to the Committee.
Lord Clement-Jones
My Lords, I understand the purpose of this order; the reasons for it were very cogently set out by my noble friend. European directives in the telecoms area have been extremely important in making sure that we have a level playing field in telecommunications across Europe. I doubt anybody would deny that the European framework is extremely important. However, this is only one part of the implementation of the changes to the European framework of directives. The question that occurs to me is: why are we not dealing with all the other aspects of the changes at the same time? One could then see the full context in which those changes are being made. I wonder whether I may have missed three statutory instruments this month, which is easily done, especially in this House. I may not have missed them—they may be coming down the track—but it would seem convenient for us to deal with them and this rather draconian order at the same time. The impact assessment that comes with the Explanatory Memorandum deals with the whole slew of other changes being made to the European framework and the other five directives that are part of it. Therefore, it would have been convenient to deal with them at the same time.
As the Minister says, the consultation broadly supported raising the level of the sanction to £2 million. However, “dissuasive” is, on the face of it, quite a subjective word. I wonder whether the Minister could define “dissuasive”—a word she used three or four times in the course of her excellent introduction. For instance, what is dissuasive about a penalty of £2 million as opposed to £1 million? I wonder whether this is less of a legal definition and more of a value judgment. I am perfectly okay with it being a value judgment, but we need to accept that it is and that it is a judgment made by the Government, who are not really objective in the circumstances.
I fully understand the nature of the changes being made to the authorisation directive in terms of specific sanction. However, I find parts of the impact assessment confusing. Looking at the impact assessment that deals with the authorisation directive, policy option 1 is:
“Implementation of the Authorisation Directive—articles for which there are no options in implementation”.
Then we move swiftly on to policy option 2, which is:
“Preferred implementation of the Authorisation Directive—articles for which there are options in implementation”.
Which option have we chosen? It is not clear to me from this impact assessment which option we have chosen. I assume that we have chosen policy option 2, but there was no explanation of that in the Minister’s introduction. It would be extremely valuable if she could explain which of the policy options has been adopted. Indeed, perhaps I was not even looking at the right impact assessment; that is always a possibility.
Lord Moynihan
My Lords, my intervention on this will be very brief. I echo my noble friend’s comments about the Minister’s excellent introduction. I should like the Minister to give us a little more clarity, if possible, on the consultation outcome. The rise from £50,000 to a maximum of £2 million, based on a value judgment, is large. Descending on the £2 million is the issue that I shall focus on. Could the Minister, in replying, let us know a little more about the level of response to the consultation exercise which was supportive of the figure of £2 million? The Explanatory Note includes a breakdown of small groups and groups that took different views, but I should be grateful if the Minister could tell us whether there was overwhelming or significant majority support for the proposal that she has brought to the Committee today.
Lord Stevenson of Balmacara
My Lords, I, too, welcome the Minister’s introduction, which was extremely fulsome and interesting. Like other noble Lords who have spoken, I understand and broadly welcome the objectives of the order. However, I, too, have a number of points that I want to draw out and the Minister to respond to when she is able to do so.
We understand that the need for the order is the EU directive and the requirement to implement the better regulation directive. The Minister said that she had no discretion on that, but there is quite a lot of discretion within the directive because it does not specify a figure of £2 million, as has already been mentioned by the noble Lord, Lord Clement-Jones. It is a ministerial decision that this is the way to be “appropriate”, “effective” and “dissuasive”—the terminology used. Is it appropriate? Will it be effective? Will the net effect be dissuasive? That point came through in earlier speeches and I shall be interested to hear the Minister’s response.
As far as we can tell, Ministers have judged that £50,000 in fines is not dissuasive. Whichever way we read the impact statement—it was rather a heavy read—the evidence may support that level of penalty as regards certain companies, and certainly for those where the returns are much greater than £50,000 for an alleged breach of not providing the information. However, is it really appropriate to increase fines by 40 per cent in order to remedy a lack of provision of information? It is not exactly on the same scale as the examples given by the Minister. The only real example that I could find was where companies were undertaking short-term scams, although it was not clear what those were—perhaps we could have a discussion about them in the response—or what sort of returns there were on them. If they were that profitable, I should like to know more about them.
To explain, we are not really against the order but there are some questions. Is £2 million the right figure? The argument that it is the same figure that they have used in other places is not sufficient. We need to know more about what the £2 million does in terms of dissuasion and whether it is indeed appropriate and effective. Has consideration been given to another penalty? We were given one option, which was discussed, but it would not be difficult to think of a more dissuasive penalty in a situation whereby, as a result of the lack of the provision of information, the company concerned gained significantly in its trading activities. It is quite hard to see what that would be, but let us assume that that is the case. If the company made a significant profit as a result, perhaps the appropriate and dissuasive penalty would be the removal of that gain.
The potential impact on a smaller company certainly came through in some of the responses but has not really been picked up on. Many companies in this field do not have profits greater than £50,000 per year. To be fined at the level of £2 million is an awesome thought.
We were told that there was a large consultation but I agree with noble Lords that the information about who was actually consulted is not available. We were told that the responses were broadly supportive but we were unable to identify—certainly by size or by range—what those companies were. On reading the impact statement, it seems that the evidence used was only the 11 cases that have been considered by Ofcom since 2005, of which three were multiple occurrences. So we are talking about only eight different cases, which seems to be quite a small sample on which to base such a draconian increase.
In making a judgment that this measure is appropriate and proportionate, the Government are acting as both judge and jury. I am not sure that that is the right way to approach this. I would have liked to have seen more quantitative evidence in the impact statement.
The comment made in some of the paperwork is that as a result of this change there may well be an increase in the number of appeals made against such fines. That will obviously cost and it may be that the overall effect is not significant. In her summation, the Minister said that this would be good for business and good for consumers. I am not sure. This is more likely to be another example of gold-plating what is required by the EU directive, which is aimed at providing only appropriate, effective and dissuasive powers. It is not a fixed amount. It is perhaps not so much gold-plating but platinum-plating. It is hardly a light touch; rather, it is a heavy plundering.
Baroness Rawlings
My Lords, this has been a constructive small debate, and I am very grateful to noble Lords who have contributed. The change that I have outlined today will raise the level of penalty that the independent regulator, Ofcom, is able to levy for a breach of its information-gathering requests from £50,000 to £2 million. It is a necessary and welcome part of the United Kingdom’s implementation of the European framework on electronic communications. As in any fast-moving and dynamic sector, it is vital that the regulator is able to make necessary and timely decisions in response to changes in the market. The increase in penalty will help to make certain that the regulator’s enforcement powers for such a breach are sufficiently dissuasive and that the United Kingdom is fully compliant with European law.
I turn to the questions from my noble friend Lord Clement-Jones. The other changes have been passed and were made law on 26 May. They were passed by negative resolution in a statutory instrument. The change has been decided with Ofcom, and £2 million will make certain the equivalence with other enforcement measures.
We have listened to many people concerned, who have said that the level of this penalty must be proportionate to the breach. My noble friend Lord Moynihan asked for more details of the consultation level. We conducted a full and proper consultation from autumn last year. The response from industry was clear; it is vital that Ofcom is able to make properly informed decisions about this fast-moving sector. This means gathering all the necessary information through the effective and proportionate use of its information-gathering powers. Although a small number of businesses raised limited concerns about the level of the penalty sanction, the majority of the people concerned supported the Government’s proposals. In fact, all respondents to the consultation recognised that it is important for Ofcom to be able to levy dissuasive penalties for the breach of such powers, particularly on those operating short-term scams, as I mentioned, when the potential gains to the operator can exceed the amount of fine.
Four hundred and twenty organisations were consulted, and from 70-plus came replies. There were also more than 80 separate meetings, events and round tables with the industry, the regulator and consumer groups.
The noble Lord, Lord Stevenson, asked whether the change was necessary and whether it was not gold-plated. Changes to Ofcom’s information-gathering powers are intended to enable Ofcom to fulfil its role as the regulator more effectively. This change should not place significant burdens on industry, and it will apply only to businesses in breach of the UK regulation.
The noble Lord, Lord Stevenson, asked as well about the choice, which was between keeping £50,000 as a maximum and finding a sum that was consistent. There were more than 70 responses to the consultation, and most responses on this change were in favour of the £2 million sum. Only some of the larger companies were against.
The short-term scams mostly concern premium rate numbers run for 30 days. Sums run into the hundreds of thousands. They have been a serious concern for the regulator and for the European Commission.
The noble Lord asked about the impact on smaller businesses. The penalty does not have to be £2 million; that is the maximum. As I said earlier, it needs to be appropriate and proportionate. It is for Ofcom to decide, subject to appeal to the Competition Appeal Tribunal.
Her Majesty’s Government believe that this is a necessary and important change to the powers of the regulator. As I said, it will benefit both businesses and consumers. I recommend the order.
Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Baroness Rawlings
My Lords, the legislation we are debating this evening concerns category B3 gaming machines. These are slot machines which currently allow a maximum stake of £1 and a maximum prize limit of £500. They are most commonly found in adult gaming centres – which are more frequently referred to as “AGCs” – and bingo premises. Under the provisions of the Gambling Act, a maximum of four of these machines can be offered by an AGC, while bingo premises may offer a maximum of eight.
The Categories of Gaming Machine (Amendment) Regulations 2011 will increase the stake limit for B3 machines—that is, the maximum amount that can be staked on a single game—from £1 to £2, while the Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011 will vary the maximum number of these machines that AGCs and bingo clubs can offer customers to 20 per cent of the total number of gaming machines available for use on an individual premises.
The changes have been requested by the amusement and bingo industries. The AGCs and bingo clubs have been struggling for some years with difficult trading conditions arising from the economic downturn. These difficult trading conditions are also affecting other related sectors, in particular British gaming machine manufacturers and suppliers. The British Amusement Catering Trade Association—which represents the majority of the AGCs and gaming machine manufacturers in Britain—estimates that revenues across the industry are now down some 36 per cent since 2007, with over 250 arcades and 1,300 jobs lost. BACTA also estimates that gaming machine manufacturing output has dropped by 40 per cent since 2006, with employment in the sector down by 33 per cent during 2009. Alongside this, figures produced by the Bingo Association show that 128 clubs have closed since 2006, with gross gaming sales having fallen by some £900 million since 2008-09 and employment down by nearly 30 per cent since 2006.
Category B3 gaming machines are an intrinsic part of the business model for AGCs and bingo clubs. They are very popular with adult players and generate significant levels of revenue for these businesses. These changes will allow them to adapt and develop their business model to meet the challenges of the current economic climate.
Amusement arcades and bingo halls are some of the oldest tourism and leisure businesses in Britain and occupy unique roles in the leisure industry. The AGCs in Britain employ nearly 20,000 people. They are often a vital part of many seaside towns, where they form an integral part of the local tourism offer and are significant employers not only in terms of individual premises but also in supporting businesses involved in manufacturing, supply and maintenance.
Bingo clubs also form a significant part of local economies in terms of employment. The industry employs some 17,000 people. But they also play a wider role. Some 3 million people in Britain play bingo, and bingo clubs very often provide a valuable social amenity. They fulfil an important social function in many communities, especially for older and retired people—older women in particular.
However, gambling is different to other industries. For the overwhelming majority of people in Britain, gambling is a pastime, and does not present any problems, but for a tiny minority of people it is a darker business. The 2010 gambling prevalence survey showed that problem gambling levels in Britain had increased from 0.6 per cent to 0.9 per cent of the adult population over the last three years. That is nearly half a million people. This risk is why gambling in Britain is carefully regulated. In the case of gaming machines, a robust regulatory framework is in place. There is a comprehensive licensing system for operators, manufacturers and suppliers; and stringent rules covering access, supervision, and the technical standards of the machines. Regulations also strictly control the amount that customers can stake and win, and the numbers and types of machines gambling premises businesses can offer.
This regulation works. Britain has very low rates of problem gambling compared to other jurisdictions. However, as a consequence operators face restrictions around the types of commercial decisions they have to take to maintain and grow their businesses. They are unable to adjust product pricing to absorb increasing costs, and as machine numbers are set centrally, they are limited in how they can respond to demand and tailor their offer to meet local circumstances. Amusement and bingo industries have therefore asked the Government to change the rules around category B gaming machines to allow the stakes permitted to be raised and the incidence of such machines increased.
Following a public consultation, the Government are persuaded that the situation facing AGCs and bingo clubs is sufficiently grave to justify a recalibration of the stake limits and entitlements for B3 machines. By bringing forward these measures the Government want to give greater flexibility to these businesses to make the necessary commercial decisions about the products they offer customers for B3 gaming machines in Britain—both through new machines and new game formats, thereby offering a boost to the manufacture and supply sectors.
The Government would like these businesses to thrive, but not at any cost. I referred earlier to the level of problem gambling in Britain and I want to make it clear that protection of the public—especially young and vulnerable people—will remain paramount. A public consultation on these measures closed in January, and a wide range of views for and against was expressed. The Government have taken notice of these views and are confident that these matters do not present a risk to problem gambling. They balance meeting the needs of business with protection of the public. The fact is that what research there is about the impact of gaming machines on problem gambling is inconclusive. There is no clear evidence—further research is continuing; but it will take time to bear fruit, and in the mean time businesses are suffering and jobs are being lost.
Let us bear it in mind that the 2010 prevalence survey showed that participation in slot machines has decreased since 2007 from 14 per cent to 13 per cent. Based on the available evidence, the Government do not see B3 gaming machines as a risk to the public. In fact, the current regulations have led to unintended consequences: such is the demand for B3 machines from customers in AGCs and bingo clubs that operators have often resorted to splitting their premises artificially in order to meet this demand. This is not conducive to effective regulation.
The measures we are debating this evening are not simply about allowing operators to install more machines and charge more for their use. They should stimulate demand for new B3 game formats and new machines across the amusement and bingo industries, thus offering a timely boost to manufacturers and suppliers as operators look to refresh their offer. Operators will be able to respond to customer demand without having to play fast and loose with the regulations by artificially splitting their premises.
The Government estimate these measures should see an injection of up to 3,000 new B3 machines into the market as operators take advantage of more flexible machine entitlements. This could see an increase in revenues of £8.5 million a year across these industries. This is a modest amount, but it will offer security for social and economic assets in local areas and protect jobs. It will make the difference in keeping smaller bingo clubs open and provide a potential lifeline to many small family-run arcades, particularly in seaside towns, which are struggling in the current economic climate.
Finally, the Government are committed to removing unnecessary red tape and barriers to create the conditions for growth in the leisure economies. Consequently, these measures are a minor adjustment to the regulatory framework put in place by the Gambling Act. They are not about promoting gambling; they are about providing long overdue help to many tourism and leisure businesses. We want amusement arcades and bingo clubs to remain competitive in these tough economic times. These are some of the oldest tourism and leisure businesses in Britain, employing between them some 37,000 people. They are important elements of many local economies, particularly in seaside towns, as I said. We want them to thrive. I commend the regulations and the order to the Committee.
Lord Clement-Jones
My Lords, I thank my noble friend the Minister for her introduction, which I believe makes a strong case for redressing the balance, as I see it, between licensed betting offices on the one hand, and arcades, AGCs and bingo clubs on the other. She mentioned figures, which are contained in the Explanatory Memorandum, about the closures of bingo clubs and AGCs over the last few years. There are some 400 closures—391, to be precise. That illustrates the problems that those establishments have faced over the past few years.
I pay tribute to BACTA and some of the other organisations for the persistence with which they have pursued this issue on B3 machines. We have to accept that the previous B3 regime encouraged premises to get round the limits by splitting their space up into separate areas, as the Minister mentioned. This announcement has been mooted for some time; indeed, when one looks back at debates on orders on C and D category machines under the previous Government, it was clear that there was a debate over whether the B3 changes could be made at that time. Certainly, favourable noises were made by Mr Sutcliffe and others, but nothing was ever really done about it. So I welcome very much that that is now happening.
There are some issues, however. What worries me is that these things are done so often in a piecemeal fashion. We had the C and D changes in 2009, and we are having these B3 changes now. It is extremely important that there is a regular review of these issues, and that the state of economics of bingo clubs and AGCs is regularly examined. They are an important part of the amusement economy—indeed, the seaside economy. I note that the Minister in the other place is a Member of Parliament who represents a seaside town. It is very important that there should be regular reviews. I believe that a regular stakes and prizes review used to take place. I do not know whether it is planned to reinstitute that on, say, a regular three-yearly basis. There seemed to be some hint in what Mr Penrose said in the other place that that might be the case. However, it is important, if possible, to make that commitment.
Review is also important to see the impact that these new machines will have, not only on the establishments but on the public’s gambling habits. It was notable from the debate in the other place that there are differences of view over the impact of this order on the sheer number of machines that might be introduced. There was clearly a wide discrepancy between the Government’s quite low figure of 3,000 extra machines and the figure cited by others, which was considerably higher.
There is also the question of which other establishments should be able to benefit from changes in machines. Not everybody goes to bingo halls or AGCs. Snooker halls have also come up in debate. I hope that the Minister and her colleagues in the DCMS will also consider that issue.
Finally, one thing puzzles me. I think that this is a sensible order and the right way to proceed. However, it appears that the Gambling Commission has a different view on how these additional B3 machines should be calculated. It would be helpful if the Minister could explain where the Government differ from the Gambling Commission, and why they have decided not to accept its advice in these circumstances.
Lord Moynihan
My Lords, I also support the government proposals before the Committee. I echo the comments of my noble friend about the effectiveness of BACTA, the trade body for the British amusement industry. It is good to see highly professional trade associations working with small, family-run businesses, many of which are based at the seaside and more than 500 of which are members. BACTA does excellent work and has done so for several years.
What struck me about the Minister’s speech was that she looked at the economic impact over the past five or six years; indeed, she went back as far as 2006 at one stage in her statistical analysis. Over the past five years, the reality is that the serious decline has happened in the past two years. In other words, the economic impact of this is getting more and more serious. We can see that from the background against which, over the past two years, there have been approximately 200 arcade closures, representing some 800 job losses. However, there are many more than those 800 when you consider the part-time nature of positions over the summer. In addition to the loss to local businesses, there is a direct knock-on effect on related enterprises such as souvenir, gift and high street food and beverage shops, many of which are based in seaside resorts. The life-blood of those seaside resorts is local businesses—those gift shops and high street shops. It is good to note that the work being done by so many of these small, family-run businesses at the seaside generates local activity and employment.
However, those businesses are under very serious economic constraints, because of which the Prime Minister made a pre-election pledge to throw a lifeline to the traditional British amusement industry by reversing changes made under the Gambling Act 2005 to the operation of amusement machines. These proposals give effect to that pledge and would see a return of a maximum stake for category B3 machines from £1 to £2, as the Minister said, and an increase in machine entitlement to 20 per cent of machines sited, or four machines, whichever is the greater. According to some of the estimates in the impact assessment, this small change that the Committee is considering would raise in the order of £8.3 million for the industry. I ask my noble friend: is that the correct figure? If so, the financial assistance will alleviate some of the pressures threatening the industry since the introduction of the Gambling Act 2005, and other economic pressures felt by the sector. I therefore support the measures.
Out of interest, I ask the Minister whether, given the proposed increase, the next generation of machines will have the capacity to take a £2 coin, or will we have to plug in two £1 coins? We have not touched on the related issue of whether the Government are considering increasing the prize limit from £500 for category B machines in the future and, if so, when.
I thank my noble friend for her comments—it was, again, another eloquent opening speech. I emphasise that given the speed of economic decline in this sector it would perhaps be of value to the Government in the future to revise the levels we are talking about today on a more frequent basis than they have done in the past.
Lord Stevenson of Balmacara
My Lords, I start with a complaint. In volunteering to undertake this slot—no pun intended—I felt peculiarly disadvantaged because I have never knowingly interacted with a gambling machine of any type. I may have led a very sheltered life but it has never come my way. There is plenty of space in here so we could have had a demonstration or a machine to play with while the Committee sat for hours on earlier orders. At least we would have better understood the mechanics, if not the economics, of the industry. I hope that when the Minister replies she will respond to that in an appropriate way.
There is no concern about the aim here, which is to allow the business more flexibility to respond to the economic climate. I recognise the unintended consequences of the current regime, where operators are manipulating the rules by artificially splitting premises. I wonder what an artificial split of premises is, but I think we get the picture.
The key is that in the Government’s judgment this will not undermine the central aim of the Gambling Act 2005, which is, of course, public protection and ensuring that gambling is crime free, fair, open and protects children and vulnerable adults. We have heard reassurances from the Minister and I do not think that these changes will undermine that.
The noble Lord, Lord Clement-Jones, referred to the Gambling Commission, which is the Government’s principal adviser in this area. It is interesting that its various comments, which are seeded throughout the impact statements and other documents that we have seen, suggest that gambling machines are becoming a little less popular—although the decline is relatively small—and that they do not seem to lead to problem gambling. In our regime, prizes are quite low by international comparison, and the combination of that and a robust licensing regime suggests that there is room to make the changes proposed.
On the other hand, the recommendation from the Gambling Commission is that we should not look at changes in areas such as B3 machines in isolation, a point picked up by other noble Lords; we need a wider prospectus when we are considering changes. That point did not come through well in the documents that I saw. This is a complicated situation, and not only within the venues and places we are talking about. Changes here will redouble pressures for changes elsewhere, as has been mentioned. In some senses— although one does not wish to restrict choice in these matters—if we are really concerned about the growth in gambling, any increase in availability is, in principle, a bad thing.
On the consultation, I read in the documents that there were 92 consultees—mainly from the industry, although there were some consumer groups—and that they were offered a wide range of options, ranging from do nothing to changes in relation to floor space. Like the noble Lord, Lord Clement-Jones, I was perplexed that the Government did not accept the advice from its principal adviser, the Gambling Commission, on this matter and went for option 5, the model wanted by the industry. The Gambling Commission wanted option 6, which required that the increased number of machines permitted should be related to floor space, which is the common sense and logical position. Anything else would be rather odd to calculate as you would have an assessment of the total number of machines and then a proportion of that subject to a floor limit. That does not seem a robust way of doing this. The size of the premises is important because it will reflect the number of people who can use it. That would be a better way but, nevertheless, it will be interesting to hear the Minister’s response on this.
There are three or four points on which the Minister might reflect before she responds. Clearly, the Government have to balance the growth in popularity of the B2 machines in betting offices and the impact of the proposal on other gambling centres, which might draw customers away, rather than try to maximise the spend from existing customers in existing premises. That would be a problem, and I am not sure whether the view is that that will be the case. I think that it is not the case, but we nevertheless need to keep an eye on this.
I agree with the noble Lord, Lord Clement-Jones, that there will be a need for a regular review of this whole area, not just because of the integrated way in which all the various venues and machines fit together, but because we do not know enough about the way that gambling trends are going—particularly problem gambling trends. If we are talking about 500,000 people, that is a sufficient number for us to want to keep an eye on the situation. We do not really know what will be the total number of machines, consequent on the changes, and it would be interesting to have regular feedback on that.
There is mention in the documentation of the impact of tax on the way that the industry will work, and there is the suggestion of a machine games duty. I am not sure whether the level for that has yet been set, or whether that proposal has been implemented. When the Minister responds, can she give us some information on that, because it will be an important aspect of this? It would also be useful to track more accurately the change in takings. The figures that the noble Lord, Lord Moynihan, mentioned were startlingly large. If the measures indeed generate more than £8.3 million in additional revenues in this area, we would like to know about that. It was also mentioned somewhere in the documentation that the Government are a bit doubtful about the BACTA figures on generating income. Again, it would be helpful if the Minister could respond on that.
Finally, there is mention of further research being carried out by the Responsible Gambling Strategy Board and the Responsible Gambling Fund that could feed into this regular review. The outcome of that will be awaited with interest.
Baroness Rawlings
My Lords, this has been a very helpful debate and I thank all noble Lords who have spoken. I thank my noble friend Lord Clement-Jones for his support, and I will try and answer his three questions. The first was regarding a regular review, which the noble Lord, Lord Stevenson, also wanted to know about. We would like a more systematic approach to be in place, and we are minded to return to a triennial review system, as the noble Lord, Lord Clement-Jones, mentioned. We hope to develop this area with the industry and the Gambling Commission, and to explore how it might work. There are no plans for the moment to make changes to stake and prize limits for B2 machines.
The noble Lord’s second question was regarding other establishments. The Government have made clear their commitment to the British amusement industry to deliver these measures. The Minister for Tourism is meeting Rileys Clubs Ltd tomorrow, Wednesday 6 July, to discuss this issue, and it would be wrong to pre-empt that meeting.
On the noble Lord’s third question, also mentioned by the noble Lord, Lord Stevenson, the Gambling Commission originally favoured an approach based upon floor space. The Government took these views into account but felt, on balance, that the 20 per cent formula would be better placed to meet the needs of both the AGCs and bingo clubs, plus, it would offer a real boost to the machine manufacturers.
My noble friend Lord Moynihan is very knowledgeable in this area, because I believe he took through the previous Bill. I totally agree with him regarding the seaside resorts and that the Prime Minister supported this at a very early stage. As to the estimate of the economic benefit set out in the impact assessment, the impact assessment was considered by the independent regulatory policy committee and was assessed as being a reasonable estimate of impact. We therefore believe that it is an accurate estimate.
The noble Lord asked whether the new generation of machines would take the £2 coin. Yes, they will.
I am sorry that the noble Lord, Lord Stevenson, has never tried slot machines, because they are rather fun for a flutter, but perhaps your Lordships' House is not quite the right place to have them.
Lord Stevenson of Balmacara
I mentioned it only because the age profile and ambience here seemed so appropriate.
Baroness Rawlings
Oh, well. Perhaps that is another place and another time.
The noble Lord asked a more serious question about tax, which of course is a matter for the Treasury. Decisions on the eventual rates and thresholds for a new duty will be made by the Chancellor in the 2012 Budget. The Treasury has launched a consultation on the design characteristics of the new duty. We would urge all interested parties to engage as fully as possible with the Treasury on this matter. I am aware of the industry’s concern about any additional tax burdens and have made my Treasury colleagues aware of the industry’s difficult economic situation and the need to minimise burdens on operators.
This has been a very constructive debate. I thank all noble Lords who have contributed. I commend the order to the Committee.
Categories of Gaming Machine (Amendment) Regulations 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Categories of Gaming Machine (Amendment) Regulations 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
House of Lords
Diplomatic Missions: Unpaid Congestion Charges and Parking Fines
(13 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Faulkner of Worcester
To ask Her Majesty’s Government what steps they are taking to recover unpaid congestion charges and parking fines incurred by diplomatic missions.
Earl Attlee
My Lords, two-thirds of all foreign missions pay the London congestion charge, but as diplomatic missions are immune from prosecution in UK courts, there is no legal course of action which Her Majesty’s Government or local authorities can take to enforce payment of the congestion charge or parking fines. The Foreign and Commonwealth Office, Transport for London and other local authorities continue to press non-paying diplomatic missions to pay the clearly outstanding congestion charges and parking fines.
Lord Faulkner of Worcester
I thank the Minister very much for that Answer—disappointing though it is, I am afraid. Does he agree that this is an absurd situation which cannot go on indefinitely? The total in unpaid congestion charge penalties rose from £36 million at the start of last year to £52 million by the end of April. Is not the answer perhaps for the Prime Minister or the Foreign Secretary to sit down quietly with the American ambassador—who owes £5 million of those fines to the people of London—and explain to him that this is not a tax: it is a legitimate charge for services rendered under Article 34 of the Vienna Convention on Diplomatic Relations? If the American ambassador were to do it, I am sure that the others would follow.
Earl Attlee
My Lords, the noble Lord suggests that this situation could go on indefinitely. My noble friend Lord King, who briefed me, told me that he had to deal with this issue during his time in office, so it is a long-running problem. On the noble Lord’s second question, I understand that the mayor has had a chat with the President of the United States, but he still did not get very far.
Lord Trefgarne
My Lords, will my noble friend forgive me if I rain on his parade? Is he aware that the collection of congestion charges by Transport for London is a pretty haphazard affair? Some of us have had the misfortune, and on at least two occasions, of an allegation that we had not paid when we had.
Earl Attlee
My Lords, I have had a brush with Transport for London over the congestion charge and, unfortunately, I found it to be deadly efficient.
Lord Berkeley
My Lords, can the noble Earl tell the House whether the President of the United States and his very long and low-slung car—which went aground in Dublin, we are told—and his retinue of 40 other cars paid the congestion charge when they came to London last month?
Earl Attlee
My Lords, I expect that they probably claimed diplomatic immunity.
Baroness Doocey
My Lords, I declare an interest as a Member of the London Assembly. Does the Minister agree that the abolition of the western extension zone gives the Government a new opportunity to renegotiate this long-running saga?
Earl Attlee
My Lords, the situation is simple: we believe that the Government of the United States should pay these congestion charges and parking fines as they occur. It does not really matter how far out the congestion charge zone goes, these fines and charges are due.
Lord Davies of Oldham
My Lords, the Minister is right: sagas last a long time, and so has this particular abuse—for it is an abuse of our hospitality when charges are not paid by foreign embassies. Why does the Minister not talk to his Foreign Office colleagues and suggest that Foreign Office staff from this country working overseas will not pay any charges until we reach the sum that is owed to us by those delegations that refuse to pay legitimate charges?
Earl Attlee
The noble Lord will recognise that diplomacy is a very delicate matter and that such a course of action would be extremely ill advised.
Lord Glentoran
Will the Minister say what success the previous Government had with this problem, which has been going on for many years?
Earl Attlee
My Lords, I would like to keep this non-partisan. All Governments put pressure on the Government of the United States and other countries. I am pleased to say that we have had some success with Kazakhstan, which has managed to regularise its overdue parking fines.
Lord Pearson of Rannoch
My Lords, have the Government made a study of how the United Kingdom pays similar fines in other jurisdictions? Do we obey their rules: is it only they who do not obey ours? How do we stand elsewhere?
Earl Attlee
My Lords, the noble Lord makes an extremely important point. Our diplomats are very careful to pay all outstanding charges when they are overseas. We discourage any parking offences and in the United States our diplomats pay toll charges, which are equivalent to our congestion charge.
Lord Strathclyde
My Lords, my sense is that the House would like to hear from my noble friend Lord Tebbit and then from my noble friend Lord Avebury.
Lord Tebbit
My Lords, could we not experiment with wheel clamping the CD-plated cars of particular embassies? That might have a good effect—and while we are about it, we could try wheel clamping one or two Lib Dem Members of this House.
Earl Attlee
My Lords, I am sure that my noble friend knows the details of the Vienna Convention on Diplomatic Relations, under which diplomatic cars are inviolable. Therefore, we cannot clamp them.
Lord Avebury
My Lords, perhaps I may make a helpful suggestion. The Government should seek statutory power to tow away any vehicle that has been the subject of several previous parking fines that remain unpaid.
Earl Attlee
My Lords, I repeat the point that I just made. Diplomatic cars are inviolable. The other problem is that we could get into a tit-for-tat situation with our diplomats overseas. I suggest that that would not be a sensible course of action. It would be much better to continue to apply the pressure that we do.
Lord Pearson of Rannoch
My Lords, how does the noble Lord equate his last answer with his answer to me in which he said that we obey the rules overseas? How could there be any tit for tat?
Manufacturing: Investment Growth Forecast
Lord Sheldon
To ask Her Majesty’s Government what is their forecast for the growth of manufacturing investment in the current year.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, the Government do not make forecasts of growth in manufacturing investment specifically. However, the Office for Budget Responsibility has forecast total annual business investment growth of 6.7 per cent in 2011. This forecast is underpinned by an extended period of low interest rates, reductions in the rate of corporation tax and strong growth in profitability. The findings of independent surveys by the CBI and the manufacturers’ organisation, the EEF, also suggest that manufacturing investment will increase in 2011.
Lord Sheldon
My Lords, I thank the noble Baroness for that reply. On 28 April the Prime Minister said that there had been an increase in manufacturing output and exports in the previous 12 months, but on 25 May the EEF, the manufacturers’ organisation, commented that although there was export growth, manufacturing investment was down. This was confirmed in June by the Project Management Institute. How does the noble Baroness consider these matters?
Baroness Wilcox
There is no doubt that we have gone through a soft period in the last three months. However, the latest surveys from the CBI and the EEF suggest that output will grow overall in the second quarter of 2011, with manufacturers expecting growth to continue well into the third quarter.
Lord Razzall
My Lords, in the light of her Answer and indeed the Question put by the noble Lord, Lord Sheldon, might this not be a moment for the Minister to endorse the Statement last week by her colleague the Business Secretary that Britain’s economy must undergo a cultural revolution to prevent manufacturing losing so many school leavers and high-flying graduates to the City? What steps are she and her department prepared to take to promote the See Inside Manufacturing programme, in which young people visit schools to encourage others to train as career engineers, thereby helping our exports and manufacturing?
Baroness Wilcox
The Government are well aware—certainly my boss, the Secretary of State, is well aware—that advanced manufacturing is what will take our country forward in the future. Investment in technology, investment in skills and investment in the very thing that my noble friend has just mentioned are what will take us forward.
Lord Peston
I do not know where the Minister gets her figures from, but the Office for National Statistics, in its latest published figures on business investment, tells us that business investment fell in the first quarter of this year; so I would like to know who she is quoting as superior to the Office for National Statistics. However, is not the main question about the level of manufacturing output? Is the Minister aware that virtually everybody who is looking at the forecasts, for both the British and the global economy, now expects us to start going through a period of a fall in the expansion of manufacturing output locally and globally? Is that not a matter that the Government ought to be taking rather seriously?
Baroness Wilcox
We are predicting growth—not very exciting, but we are. We must always remember that over the past 30 years manufacturing has declined as a share of the economy; as a sector it has grown and continues to grow.
The Lord Bishop of Derby
My Lords, I hope you will allow the Bishop of Derby to ask the Minister about Bombardier in the context of the very important commitment to manufacturing investment. Could the Minister indicate to us where the design and making of trains fit into a strategy within which we have to invest in manufacturing; and what investment in manufacturing in that strategy would have to say to a highly skilled workforce in a place like Derby that it is facing collapse through lack of investment and lack of opportunity?
Baroness Wilcox
There are a lot of questions from the right reverend Prelate. I will answer as many as I can, or as many as my Leader will allow me to. We all know about the announcement that Bombardier made this morning that 1,200 jobs would be lost at the plant in Derby. The company had already told us that this was going to happen regardless of whether it had won the Thameslink contract. As we know, this particular industry is very volatile. The company has had enormous contracts, it is coming to the end of them and it did predict that it would lose jobs. As a volatile industry, it has to hire and fire at will, but we hope that it is a temporary situation. We are doing everything that we can to try and help it grow. We are introducing 21 new enterprise zones across the local enterprise partnership areas, which will benefit from superfast broadband, lower taxes and lower levels of regulation and planning controls. At the end of the day, it is very important for us to support our industry wherever we can.
Lord Hughes of Woodside
My Lords, did the Minister not hear on the one o’clock news today the chairman of the Derby company, I believe, who gave no indication that it was going to have troubles anyway, and who claimed that the reason for Siemens getting the contract was that the Germans actually support Siemens through subsidies? If we have to have competition in the European Community, why can we not have it on a level playing field?
Baroness Wilcox
There is no doubt that it is always a shock when we do not get a contract like this. Today, the Transport Secretary and the Business Secretary have written to the Prime Minister underlining the need to examine the wider issue of whether the UK is making best use of the application of the EU procurement rules. I think this House will be very glad to hear that.
Lord Vinson
Does the Minister agree that for the first time for many years the pound is close to parity level, which helps make our industry, at last, much more competitive internationally? Would she like to suggest to the Treasury that, in future instead of having just an interest rate policy or an inflation policy, we should also have a rate of exchange policy that might help us to support our industry over many more decades in the future?
Baroness Wilcox
My noble friend makes a very important and interesting point, and I shall take it back.
Lord Young of Norwood Green
My Lords, it was more than a shock for Bombardier employees who have lost their jobs. Even more worrying, perhaps, is its ability to bid for future contracts, such as Crossrail. The point I want to emphasise is that British manufacturers are failing to capitalise fully on the weak value of the pound as factory growth lags behind continental nations led by Germany. The purchasing managers’ index of UK factory output fell to 51.3 per cent last month, just above the 50 per cent—
Lord Young of Norwood Green
I will be—that marks the divide between expansion and contraction. That is the lowest reading since September 2009. What steps are the Government going to take to ensure that British manufacturing is able to respond to an environment where the value of sterling should enable it to have a competitive advantage?
Baroness Wilcox
We are having a competitive advantage in countries such as China and India, where we are growing. That is very important to us. Competing with our European colleagues is one thing, but taking new business abroad from the BRICs is even more important to our country at this time.
Audiovisual Media Services Directive
Lord Clement-Jones
To ask Her Majesty’s Government whether they intend to review the operation of the Association for Television on Demand in the regulation of video on demand under the Audiovisual Media Services Directive.
Baroness Rawlings
The AVMS—audiovisual media services—directive has been implemented by way of co-regulation under which Ofcom has given the day-to-day responsibility to the Authority for Television on Demand, which to simplify I will refer to as ATVOD in future. It is for those two bodies to make certain that the system works. Ofcom plans to review this after March 2012. Ministers are aware of the range of concerns that have been discussed with Ofcom, ATVOD and the industry.
Lord Clement-Jones
My Lords, I thank my noble friend for that reply, which is reassuring because surely ATVOD is everything an industry-based co-regulatory scheme should not be: expensive, too wide in scope, far from light touch and, indeed, already giving rise to litigation. I am delighted to hear that the DCMS will be making sure that ATVOD is fit for purpose.
Baroness Rawlings
My noble friend Lord Clement-Jones makes a very good point. Our regulations specifically require that the fees be justifiable and proportionate in respect of each provider. We are aware that the regulations will inevitably have a cost, but we look to the regulators to make certain that that cost is minimised.
Baroness Gardner of Parkes
ATVOD is a very difficult name that we are all trying to come to terms with, but is it a fact that a number of companies have refused to pay the first full-year contribution?
Baroness Rawlings
My noble friend Lady Gardner is absolutely right. Some have not paid, but this is being looked at and is why Ofcom is going to be the backstop to follow these points through.
Baroness Jones of Whitchurch
Will the Minister explain exactly what backstop powers Ofcom has retained in order to intervene if it feels that ATVOD is not carrying out its functions properly? Does she agree with the original point made by the noble Lord, Lord Clement-Jones, that it has exceeded and expanded its role way beyond that which was designated in the original directive and that it needs to focus much more carefully just on raising standards in the video-on-demand industry?
Baroness Rawlings
My Lords, this has been gone through because of public consultation, and the actual responsibilities delegated to ATVOD include setting and collecting the fees from the VOD service providers to meet the estimated costs of carrying out ATVOD functions. ATVOD’s power to set and collect fees is subject to Ofcom’s prior written approval.
Baroness Benjamin
My Lords, in a recent survey, 20 per cent of eight year-olds said that they had seen nudity online. Is my noble friend the Minister aware that on the most popular websites, children are exposed to advertising of an adult nature and are invited to explore links to very explicit websites? If so, will the Government consider encouraging Ofcom to take further measures to protect children and young people from being targeted in this way by putting in place simple practical steps so that online media owners can take action to prevent clear-cut examples of inappropriate content appearing in places where children are likely to see them?
Baroness Rawlings
My noble friend Lady Benjamin makes a very valid point, and it is necessary for the Government to encourage simple steps to be taken. The Government believe that protecting children from harmful content in our media is of the greatest importance. That is why, following the implementation of the audiovisual media services directive, providers of certain video on-demand services will now be required to comply with minimum standards set under the directive. In 2010 these requirements were incorporated into UK law. They include the use of effective access controls.
Lord Inglewood
Does my noble friend agree that the whole system for the regulation of video on demand and other digital television-type and actual television services is hugely complicated? As the recent report of the Communications Committee pointed out and recommended, it would be to everyone’s advantage, not least of all the public’s, if it became a bit simpler.
Baroness Rawlings
I totally agree with my noble friend that it is hugely complicated, and it has taken me a great deal of time to get to grips with it, but we recognise that there may have been some initial problems with the regulation in the area, which is why we have looked to ATVOD and Ofcom to resolve these issues.
Sudan: Framework Agreement
(13 years, 5 months ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government, in advance of Southern Sudan’s independence on 9 July, what is their assessment of the likely impact of the Framework Agreement signed at Addis Ababa on 28 June on securing peace and security in the region.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, we fully support the ongoing discussions in Addis Ababa led by President Mbeki. We assess that for it to secure peace and security in the region, the framework agreement must be used by both sides as a basis for the immediate cessation of hostilities.
We continue to urge north and south to negotiate to resolve all outstanding comprehensive peace agreement issues.
Lord Alton of Liverpool
My Lords, I thank the Minister for his reply. Does he accept that for any of us who travelled in Southern Sudan during the war there, when some 2 million people died and 4 million others were displaced, any celebration of Southern Sudan’s landmark independence this coming weekend is tempered by these terrible atrocities which have been committed in recent days on the basis of ethnicity and political affiliation, and by the dire failure of the ceasefire to stop the violence or displacements?
As the comprehensive peace agreement expires this weekend, and given the United Kingdom’s role as guarantor and as one of the brokers of that agreement, will the Minister say whether we have raised, in the UN Security Council, the importance of sustaining, rather than withdrawing, a continuing UN peacekeeping presence in the area, and the importance of a robust Chapter 6 mandate? Will the Minister also comment on the bleak warning given by the most reverend Primate the Archbishop of Canterbury last weekend that he could see another Darfur beginning to unfold in southern Kordofan, Abyei, and the areas to which I have alluded?
Lord Howell of Guildford
Naturally, on the last point, we hope that this warning, which no doubt is justified by the long history of atrocities, is not fulfilled. As to the noble Lord’s question on the comprehensive peace agreement, in theory it ends on 9 July with the independence of Southern Sudan, but it has been recognised that key issues are yet to be resolved and must be talked about.
As for our role with the United Nations, the UN Security Council, as the noble Lord knows, has extended the remit of UNMIS until 9 July and has signalled that it wants the remit to continue beyond then despite the continued strong opposition of Khartoum, which says that UNMIS must remove itself. As well as that, United Nations Security Council Resolution 1990 empowers the Ethiopians to move into Abyei. They are on their way, although they have not yet arrived. Those are the activities of the United Nations and we continue to play a full and central part in them.
Lord Chidgey
Is my noble friend aware that the chair of the Sudan Disarmament Immobilisation and Reintegration Committee has estimated that with the current level of resources, when the conflict ends it will take at least six years to assimilate 150,000 surplus soldiers back into civilian life? What assistance do the Government plan to provide to speed up this DDR process and reduce the risk of what is a major security threat to the region?
Lord Howell of Guildford
Clearly, this is one more problem on top of the problems of refugees, resettlement, basic development and provision of infrastructure in the two countries; notably, in Southern Sudan, which is a very poor country, and in the north. I can give my noble friend only the general answer that my right honourable friend the DfID Secretary of State has indicated that our substantial and detailed programmes to meet these and future problems will continue and will be administered in a very detailed and hands-on way.
Baroness Kinnock of Holyhead
My Lords, the Minister will be well aware of the enormous needs of the new country soon to become a reality on Saturday. Those needs include health, education, infrastructure and huge gender disparities—92 per cent of women in Southern Sudan are illiterate. Will the Minister comment on the heavy criticism now regularly made of the slow disbursement of aid through the pooled donor fund which is being used? Will he further comment on the need for long-term, predictable funding, rather than the unpredictable, short-term financing that is currently happening?
Other post-conflict countries, such as Mozambique, Rwanda and Sierra Leone received long-term funding after the conflict ended, and Afghanistan still receives long-term predictable funding. Will the UK push for a five or 10-year commitment to funding for essential services, such as health and education, in the new Southern Sudan?
Lord Howell of Guildford
All that the noble Baroness says is correct. The model followed elsewhere is that which should be followed in the division of Sudan. It is very difficult. A lot of the activities are unco-ordinated and need better co-ordination. However, it is very hard to see beyond the present pattern of continuing an ugly conflict. As soon as we can see beyond it, these post-conflict arrangements should be put in place. For the moment, I can only say that these are the right ideas. We are moving towards them but there are some ugly, immediate problems that have got to be overcome in order for peace to break out and for these very poor countries to begin to move on the long-term pattern to development with suitably arranged financial funding behind them.
The Lord Bishop of Wakefield
My Lords, does the Minister agree that the efforts made by the former South African President, Thabo Mbeki, in brokering the framework agreement demonstrate the viability and stability of both states of the Sudan, will to a large extent remain dependent on the continued support and assistance of the international community in helping both sides to resolve the outstanding issues? In the light of the report of the European Union Committee of this House, what steps are Her Majesty’s Government taking with their European partners to hold the Khartoum Government to the agreement?
Lord Howell of Guildford
For a start, as the right reverent Prelate surely knows, we are backing and funding to a substantial degree the African Union implementation panel, over which President Mbeki presides and into which he is putting enormous efforts. That is our expression of support for the continuing work of the panel and of the products of the panel, including the framework agreement signed on 28 June, to which the noble Lord, Lord Alton, has already referred. We hope that will stay in place and will secure the beginnings of some order, particularly in South Kordofan where a whole confused range of Arab and non-Arab forces—some allegedly belonging to the south but in the north, and some in the north but belonging to the south—are fighting each other. We are backing the Mbeki implementation panel and, through that, many African Union people think that the best solutions will come.
There is an argument, which I only put before your Lordships, that while we must support the humanitarian efforts and do everything we can to support peace, the African Union itself is anxious that it and not outside powers should solve its problems.
Lord Luce
My Lords, since Southern Sudan is proceeding this week towards independence—in what we all agree is a very dangerous and very precarious situation which could lead to further disasters—may I reinforce the point made by my noble friend Lord Alton that, as a sponsor of the comprehensive peace agreement and with all our responsibilities over 60 years with the Sudan, we should pull out all the stops to persuade the international community, particularly the African community, to help hold the ring in that part of the world?
Lord Howell of Guildford
The noble Lord will recognise, I am sure, that we are doing so. Enormous efforts are being made on the diplomatic front, both in the UN and with the African Union and with all other parties involved. On top of that, the UK is one of the chief funders and backers of development—medium, short and long-term—in both Khartoum Sudan and Southern Sudan. We are not merely talking and making pleas for the ceasefire, of course we have to do that, but we are putting our money where our mouth is and making very substantial and solid commitments to a better future for these countries, which we hope will begin after 9 July.
Baroness Tonge
My Lords, the Minister will know that, sadly, oil reserves play a very great part in the troubles of Southern Sudan and indeed in the government of Sudan generally. The Chinese are very involved with oil extraction in Sudan. Will the Minister tell us whether our Government had any conversations about the Sudan with the Chinese when they visited?
Lord Howell of Guildford
I am very glad that my noble friend raised that issue. We tend to overlook the fact that the Chinese nowadays not only have a commercial involvement in many regions—particularly this region—but need to match their commercial involvement with some diplomatic responsibility. I am happy to say in the Sudan situation that is beginning to be evident. Our own envoy has had contact with the Chinese envoy and the Chinese have made some extremely helpful statements in support of calming the situation and overcoming the difficulties in the disputed areas of Abyei and South Kordofan. We are finding that Beijing’s old stance of not wanting anything to do with anybody else’s foreign policy is in this area beginning to give way to a more realistic and responsible attitude. That can only be helpful and we intend to work with it.
Phone Hacking
(13 years, 5 months ago)
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Lord Fowler
To ask Her Majesty’s Government, in view of the public concern over phone hacking following the latest reports, whether they will immediately undertake to set up an independent inquiry once criminal proceedings are complete.
Lord Fowler
My Lords, I beg leave to ask a Question of which I have given private notice.
The Minister of State, Home Office (Baroness Browning)
My Lords, once again our thoughts are with the Dowler family. As the Prime Minister said, these allegations are truly dreadful and the police should pursue their investigations wherever they lead them.
A police investigation into allegations of phone hacking is currently under way. It is important that the investigation is allowed to proceed and that the conclusions be made public. A number of parliamentary inquiries and other reviews are also under way, and a number of individual cases are currently before the courts. This represents a broad span of activity across several aspects of this issue and the Government believe it most appropriate to consider the outcome of the police investigations and these various inquiries before deciding whether any further steps are necessary.
Lord Fowler
My Lords, I thank my noble friend for the reply, but I urge her to go further. I declare an interest in that I was once a journalist, but my view of the press is that newspapers are there to expose injustice and abuse of power, not to illegally intrude into the private lives of the public.
Is my noble friend aware that since January of this year I have asked four Questions on the Floor of this House on phone hacking? Steadily, month by month, the revelations have become more and more serious, with today’s revelation about Milly Dowler almost beyond belief and certainly beyond contempt. Are we not now confronted with one of the biggest scandals affecting the press in living memory and with clear evidence that a deliberate conspiracy has taken place against the public? Will she therefore recognise that this is not a matter of party politics but of protecting the public, and that the only way that that can be done successfully is by an eventual independent inquiry looking at all the evidence? Why cannot the Government commit themselves to that today?
Baroness Browning
My Lords, I can understand my noble friend’s concern, and the concern of the House as a whole, at what is a truly shocking matter. This morning the Home Secretary, appearing before the Home Affairs Select Committee in another place, described what has happened, with the new information that has been received, as shocking and disgusting. She reiterated today that we must await the outcome of the police investigation, but she stated that, if these allegations are found to be true, there will need to be new avenues to explore.
Lord Rosser
My Lords, we support the call of the noble Lord, Lord Fowler, for an independent inquiry. The latest disturbing allegations about phone hacking will only have strengthened the feeling that parts of our national newspaper industry regard themselves as being above the law and having no need to fear any action from the Press Complaints Commission. The Minister’s reply to the noble Lord, Lord Fowler, will just not do. How many more potential phone- hacking scandals have to be unearthed, and how many more denials that they knew what was going on by editors and News International top executives do there have to be, before this Government recognise the failings of previous investigations—by the police, by News International and by the Press Complaints Commission—and act? Will the Government set up an independent inquiry into phone hacking and the culture and practices of at least part of the national newspaper industry that have allowed these things to happen?
Baroness Browning
My Lords, as noble Lords will know, this matter is subject now to a robust investigation by the Metropolitan Police. The MPS has provided a public update and made it clear that it can say no more at this stage. Surrey Police, which is responsible for the Milly Dowler investigation, is also making no comment. Accordingly, this remains an ongoing operational matter for the police on which Ministers can neither interfere nor comment in any substantive way. The proper course is for the investigation and the independent review of previous evidence to be allowed to proceed without interference.
Lord Prescott
My Lords, the hacking of Milly Dowler’s mobile is, so far, the latest and most obscene action of this company of the Murdoch press. Will the Minister confirm that it is still the Government’s view that these criminal acts are irrelevant to Murdoch’s purchase of BSkyB? Is the Minister also aware that the regulator Ofcom has a duty and a statutory responsibility to investigate matters of privacy? Have the Government asked Ofcom for its advice on that matter before they come to a decision on BSkyB?
Baroness Browning
My Lords, I have every sympathy for the noble Lord, Lord Prescott, who I believe is himself a victim of this phone-tapping scandal. Phone tapping or hacking is illegal and is not a matter that the Government regard lightly. It is an offence for a person intentionally to intercept without lawful authority any communication in the course of its transmission. That applies equally to the media. The noble Lord asked me about the decision that my right honourable friend the Secretary of State for Culture, Olympics, Media and Sport has to make about BSkyB. The House will be aware that the Secretary of State in that department has to follow guidelines as already set out in law. He will follow those guidelines in making his decision.
Baroness Williams of Crosby
My noble friend the Minister is obviously doing everything that she can to try and help the House, but might she consider the very serious situation in which there has been a considerable loss of trust both in police inquiries and in the work of the Press Complaints Commission? In that situation, would the Minister agree that we need a more fundamental look at the whole situation that now confronts us—one in which the media feel that, to some extent, they do not have to abide by the normal rules of civic behaviour in our society? Therefore, should we not very seriously consider the proposal of my noble friend Lord Fowler, given that such an independent complaints committee might recover trust from the public in making recommendations about what should be done?
Baroness Browning
I fully understand why my noble friend raises the issue of trust, because from the beginning these matters have been conducted in ways which have given the public great concern. If I may, let me quote to my noble friend the words of Sir Paul Stephenson, given that the Met is now conducting a very robust and vigorous investigation, whose conclusions, once made, will be ones on which I believe we can rely. Sir Paul Stephenson has said that questions should be asked once the criminal inquiry and any judicial process have been concluded. As I mentioned, the police investigation is ongoing and it is a matter for that inquiry and that investigation to conclude. At that point, Sir Paul Stephenson said, questions should be asked. I can assure the House that we will consider the outcome of police investigations as well as other inquiries that are under way. I am not saying to the House today that we will not have an inquiry, but while police investigations are under way I cannot be pressed on that.
Lord Fellowes
My Lords, does the Minister agree that, at the end of this episode, it would be a good thing for the Press Complaints Commission either to be given statutory powers or to be wound up?
Baroness Browning
My Lords, I am aware that the chairman of the Press Complaints Commission has expressed her grave concerns today that the News of the World lied in giving evidence. She was extremely angry that the Press Complaints Commission had been misled. That is a very serious matter, and I am sure that my right honourable friend the Secretary of State for Culture, Media and Sport will want to take account of her views on that matter and what has happened with the Press Complaints Commission.
The Lord Bishop of Manchester
My Lords, it seems to me that two issues are germane to this debate. One is the tragic matter of Milly Dowler and, clearly, the judicial inquiry has to be pursued in that direction and the police allowed to do what they are meant to do. The second issue seems to me to be a much deeper one and also a matter of some urgency for this House to address once the particular inquiries relating to Milly Dowler are over. The noble Baroness, Lady Williams, referred to what I believe are some serious underlying ethical issues about this whole matter that this House must address and as soon as possible. I hope that the Minister, while clearly having to make the point about the present inquiries, will give a more robust response to what has been said in all quarters of this House this afternoon about the need for the deeper issues to be addressed.
Baroness Browning
I thank the right reverend Prelate for the way he couched his question. He clearly understands from my replies that I cannot engage the House today in a full debate on this, because we are waiting for these investigations and legal outcomes to be made public, but I have no doubt that once they are in the public domain, we shall return to this subject with much vigour.
Baroness Anelay of St Johns
My Lords, I regret that we have reached the limit of 10 minutes on the Private Notice Question.
Arrangement of Business
Baroness Anelay of St Johns
My Lords, my right honourable friend the Leader of the House of Commons made a business Statement yesterday to set out how the other place would be invited to take the Police (Detention and Bail) Bill thorough its Commons stages on Thursday 7 July. The two-clause Bill was published in draft last night and will be introduced into the Commons later today.
The Explanatory Note sets out why the Government consider that the Bill merits expedited consideration by both Houses. In short, the Bill will restore the law on the calculation of time spent in police detention to what it was commonly understood to be prior to the High Court judgment of 17 June in the case of Hookway. That decision held that police detention runs uninterrupted for a maximum of 96 hours from the point at which detention is authorised, whether or not the person is on bail. The decision has significant operational implications for the ability of the police to investigate offences and protect the public. It is for those reasons that the Government propose to expedite the passage of the Bill rather than wait for the outcome of the appeal to the Supreme Court, the result of which is in any case uncertain.
It may be convenient for noble Lords to know that the usual channels have agreed to invite the House to take the Bill through all its Lords stages in the course of Tuesday 12 July, next week. We propose to start that day with the Second Reading of the Police (Detention and Bail) Bill. We will then pause, while continuing in that pause with the Committee stage of the Localism Bill. That will give Members of the House the opportunity to table amendments to the Police (Detention and Bail) Bill and the clerks the opportunity to prepare a Marshalled List. Later that day we will take the Committee stage in the usual way, after proceedings on the Localism Bill. If the Police (Detention and Bail) Bill is not amended in Committee, the Report stage and Third Reading will then be taken formally. We will finish the day, I hope, with the notification of Royal Assent. The next edition of the forthcoming business will set out this programme when it is published tomorrow morning.
A speakers list for the Second Reading is now open, and the clerks have agreed to accept amendments to the Bill immediately after its First Reading—that is, from the end of Thursday 7 July. This order of business is of course subject to the will of the House, and on Monday my noble friend the Leader will move the Motion proposing to take the stages in one day.
Marine Navigation Bill [HL]
Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) (Amendment) Order 2011
(13 years, 5 months ago)
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Lord Strathclyde
That the draft orders and regulations be referred to a Grand Committee.
Localism Bill
(13 years, 5 months ago)
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Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, I hope that I will be able to deal with these amendments quite shortly. Last Thursday my noble friend Lord Shipley made an admirable speech on the clause stand part debate before the amendments came up, and advanced all the arguments that I would have made in support of this group. The main difference between my noble friend and me was that he expounded his objectives—eloquently and adequately, I thought—and I have tabled the amendments that would give effect to them.
I do not intend to take the House through each of these several amendments. However, I can say that the amendments have four main purposes in relation to the possibility of a referendum on the council tax in an area where it is thought that the council tax increase has been—to use the word in the Bill—excessive. It should not be for the Government to lay down what is excessive. There has been a lot of talk about this being a new form of rate-capping. I know something about that, having dealt with that in an earlier part of my political life. This is intended to be a protection for council tax payers against an increase in council tax which goes beyond what they feel to be fair.
The first point that I would like to make is that it should be for local people to determine whether they find a suggested council tax increase excessive. Therefore, my amendments in a sense come under four groups. First, there are amendments which would delete the Secretary of State’s powers to determine what constitutes an excessive rate of council tax—this is likely to be very different in different circumstances in different areas around the country. Secondly, it should therefore also be for the local authority to decide when a referendum should be held. That should not be determined by central government. If localism means anything, this is exactly what it is supposed to mean. Thirdly, it should be the councils, rather than the Secretary of State, which should decide how the referendum is going to be conducted. Finally, there are amendments which would delete powers for the Secretary of State to make a whole raft of regulations, on, among other things, setting out the question to be asked in a referendum, the allowable publicity accompanying a referendum, and how votes ought to be counted.
I have dwelt on this issue before. The rhetoric of Ministers in this Government has been that this is a brand new start, a real decentralisation of power from Whitehall to town hall and county hall, and that it is going to be a rejuvenation of local authorities. Yet one only needs to look at the size of the Bill to realise that, while that may be the objective, it is certainly not being produced in this Bill. The Bill is full of detailed directions, and powers to make regulations to give further detailed directions, as to how local authorities are to use what is supposed to be their new freedom.
I am not going to say more than that, or go through all the details. I hope that Ministers—who are going to have an unusually long gap between this Committee stage and the Report stage, which will come after the Recess—will have a good, hard look at this Bill, to see whether some of this centralisation and central direction, and this business of telling local authorities how to have their freedom and how to behave themselves, can be removed from the Bill. I can assure my noble friends on the Front Bench that it will be extremely popular among the local authorities, which have had their hopes raised that they are at last going to have freedom from central direction, and then find that this Bill does nothing of the sort. I beg to move.
The Lord Speaker (Baroness Hayman)
I have to inform the Committee that if this amendment is agreed to I cannot call Amendments 129LZZA to 129LZZF by reason of pre-emption.
Lord Greaves
My Lords, I have added my name to amendments in this group and I agree with everything that the noble Lord, Lord Jenkin, has said.
I am sure that most Members of this Committee, never mind the whole House, will not spend a lot of time reading the details of Schedule 5 to the Bill and all the ways in which the Secretary of State will be able to lay down very detailed powers and instructions for local authorities on how to carry out council tax referendums. However, these measures are extraordinary, and typical of a huge amount in the Bill. If the Bill constitutes localism, it is extremely detailed top-down localism.
I have seven amendments in this group, six of which are effectively the same. They seek to remove the description of high council tax increases as “excessive”. The Bill says that if a council wants to impose a council tax increase which is higher than the Secretary of State thinks is appropriate, as agreed by the House of Commons, it will be described as excessive. This is bad legislation. The word is prejudicial rather than neutral and is almost a slogan. One of the things that the Secretary of State will be able to do is to determine the question in any referendum that takes place. I can imagine a question such as, “Do you agree with your council that they should impose an excessive rise in the council tax this year?”. That is the effect of “excessive”. Legislation should be neutral and should not use such words. My amendments seek to delete “excessive” and replace it with,
“higher than the level recommended by the Secretary of State under the provisions of this Chapter”.
That is what the legislation should say. It should be value neutral and simply set out what the position is. Of course, if the noble Lord’s amendments were all passed, mine would be pre-empted and would fall. I would be delighted if that were the case as I would rather not have these detailed prescriptions there in the first place. However, if we are going to have them, we should use proper language and not political slogans.
My Amendment 129LABA concerns the date of the referendum. It probes the Secretary of State’s ability to lay down detailed instructions on this and seeks to ascertain why councils cannot be left to deal with this themselves. However, this is in effect already covered by the rather more sweeping amendments of the noble Lord, Lord Jenkin, and therefore I do not need to speak to it further.
Lord McKenzie of Luton
My Lords, first, I wish to speak to the amendments spoken to by the noble Lord, Lord Greaves, with which we sympathise. It is not just a case of semantics and of substituting one form of words for another. For the reason that he has outlined, we agree with him that if “excessive” is used in the legislation it will inevitably end up in the question that is put to the voters in a referendum, as it would be the technical term. We are denying local authorities the right to campaign for the council tax increase that they want. If we want to approach this matter in a neutral way, the very least we can do is to remove prejudicial legislation, as the noble Lord termed it.
The Minister may well say that “excessive” is not a new term and that it is embodied in the current capping legislation. However, there is a difference between that position and what may happen in the future because the current arrangements for capping will not be put to a popular vote. Therefore, that term is effectively an internal term rather than one that would inevitably feature in the referendum question on some basis or other. For that reason, I believe that we need to recast the term that is in the legislation.
I agree with the noble Lord, Lord Jenkin. It is a central point of our concern with this legislation that it is stuffed with detailed powers and that the Secretary of State has to draw back from the nominal rights that it is seeking to give to local authorities. I doubt whether the gap between finishing Committee in July—if we do—and Report in September is long enough to unpick some of the stuff that has come from our discussions today, but at least there is perhaps a longer gap than usual. Our attitude to the amendments of the noble Lord, Lord Jenkin, depends on precisely where the Government are on this. When last Thursday we had our first canter around the issue of capping powers, it was said that all Governments of all persuasions had held to themselves a reserve power. If in fact it is the Government’s position that they are eschewing that power, we do not feel obligated to hold to the position that I think I outlined—that it is difficult for us to deny the current Government those powers if we took them in past years. If that is not one of the criteria of the Government, that point falls away. When he responds, perhaps the Minister can tell us whether the Government see the arrangements currently included in the Bill as capping powers, whether they believe that they should have the right to hold those powers, or whether they are, by one formulation or other, happy to let local electors decide on what the appropriate level of council tax should be. If his response is, “Well, we think there should be reserve capping powers and this is what the Bill is about”, that is one thing, but if the argument is that the Bill is about making sure that electors are the final arbiters in this, that helps us in our position on the matter.
I say to the noble Lord, Lord Jenkin, that there is a question about his formulation. Under the Government’s proposition, a level of council tax, if deemed excessive, requires the authority to produce a substitute calculation. As I understand it, a substitute calculation is one that is not excessive. I suppose that most authorities in this position would compute a substitute council tax that was just a smidgen short of what the excessive level would be. I am not quite sure, on the noble Lord’s formulation, what that substitute calculation would be and what would happen in circumstances where there was a referendum, 5 per cent of the electors called for it, and they did not support the level of council tax that was proposed. What are the consequences of that? If the noble Lord could help us with that point, it would be appreciated. It is clear under the Government’s propositions what the consequences would be, but I am not quite sure what the consequences would be under the noble Lord’s formulation.
I think that this has been a very helpful debate. It is incumbent on the Minister to say whether the Government see the powers as capping powers and believe that they need them, or whether that is not their position and this is basically about letting electors decide what the appropriate or inappropriate level of council tax would be.
Lord Tope
My Lords, I suppose I can rise to speak on behalf of the only party in this House that is unencumbered by a history of support for capping, but I will try to resist too much temptation there. My name is obviously with my noble friend Lord Greaves on his amendments. I think he is right and I hope that the Government will consider very carefully that fairly simple change to wording which, as others have said, is actually very important. If these provisions are to be in Bill—like my noble friend Lord Greaves, I would rather that they were not—it is important that we have a neutral wording and not a prejudicial wording, which “excessive” must be, especially if that wording is likely to be used either as part of a referendum question or at least in support of any such referendum.
My particular reason for wanting to say a few words now is to support the noble Lord, Lord Jenkin, both in his general and particular plea. The general plea relates to much less regulation and dictation from the Government, a message repeated throughout the Bill. It is salutary to remember that when Ministers first announced the Bill, it was greeted with a pretty widespread welcome right across local government. The aim and intention as enunciated by Ministers was, broadly speaking, welcomed. We knew that there would be some things in here that we would be less happy about, but we thought that most things we would be fairly happy about. Then we came to see the detail of the Bill and the extent to which, as others have said, if it is localism at all, it is localism top-down. It is also prescribed by ministerial regulation and it is potentially constrained by Secretary of State powers. I join the noble Lord, Lord Jenkin, in urging Ministers, during what will be a longer than usual gap between Committee and Report, to take courage and look seriously at whether we need to be so risk averse that we hedge everything with regulations, Secretary of State powers, and so on. I said at Second Reading that if we mean localism, we have to trust local government. Some may occasionally get it wrong, but is that a reason to legislate for the vast majority that are to be trusted and should be trusted?
I turn now to the particular of this, which is about council tax capping. I do not have to be quite as measured as the noble Lord, Lord McKenzie. I do not have to carry that history and I understand that. It is council tax capping, as others have said. In reality, it is probably the most effective capping that a Government have ever had, because I suspect that very few, if any, local authorities will take the risk of setting what is prescribed as an excessive tax. It will be a huge risk: not just the risk of whether they can or cannot win a referendum but the cost and administrative upheaval of having to rebill later.
That seems to me to fly in the face of a fairly basic principle of localism. I have always believed that it was a fundamental democratic principle that local councillors are elected—personally, I wish that they were elected under a fairer system, but, nevertheless, they are elected —to determine the needs of their local community and to balance those needs with the level of tax that has to be raised to meet them. That is a tricky balance. Then they are accountable for their decisions to the people who elect them, the local people. We come back to the fact that if there is to be a referendum on council tax levels, it should be the local people who determine the need for a referendum, not the Secretary of State. To me, that is what localism is about, and that is why I support both the general statements of the noble Lord, Lord Jenkin, and his particular in the amendment.
Earl Attlee
My Lords, this is a large group. I shall speak first to Amendments 129LZZZA, 129LZZG, 129LZZH, 129LZZJ, 129LZAA, 129LZAB, 129LZC, 129LZE, 129LZF, 129LABZA, 129LABZB and 129LBA.
These amendments from my noble friend Lord Jenkin would require a referendum to be held only in response to a local petition signed by local electors. I understand what my noble friend seeks to achieve. That may indeed be purer localism than the Government's approach, but there would be grave practical difficulties in going down that road. My noble friend seeks to allow the timing to be determined locally, but time will be very short for such a petition to be organised, as council tax must be set in early March. If democratic control is to be effective, and not just cause financial confusion, the electorate's endorsement or otherwise of the authority's decision should follow very soon after. Given the binding nature of the referendum, it would be necessary to establish that each signatory of the petition was a local government elector in the area. That would be a difficult, time-consuming, contentious and potentially expensive precursor to the main event, the referendum itself.
The amendments leave in place the notion of substitute calculations, but do not resolve with any certainty the basis on which those calculations should be made. In effect, the authority will be saying, “If you do not like this level of council tax, we will adopt that one”. Who is to say that the electorate will not feel the substitute to be excessive as well?
Baroness Farrington of Ribbleton
Will the Minister indicate a preparedness to discuss between Committee and Report the implications of the amendment moved by the noble Lord, Lord Jenkin of Roding? Having had discussions with the noble Lord when he was Secretary of State and I represented local authorities, I think the Government would find helpful such discussions on the practicalities of the issues, which appear to be the issues that the noble Earl, Lord Attlee, is relying on. The noble Lord, Lord Jenkin of Roding, is very knowledgeable about the history and the implications and he would be extremely helpful if the Government were minded to move to quell the fears of the noble Earl, Lord Attlee.
Earl Attlee
My Lords, I am extremely grateful to the noble Baroness because I passed by my handwritten notes and did not read them out. My noble friend Lord Jenkin set some homework for Ministers during the Recess. We will carefully consider the Committee’s deliberations, and we are grateful for all noble Lords’ counsel, even if we do not agree with all of it.
The amendments in the name of my noble friend Lord Greaves would change the wording of new Section 52ZB so that an authority is no longer required to determine whether it has set an “excessive” increase in council tax. Instead it is required to determine whether the increase is,
“higher than the level recommended by the Secretary of State”.
We consider that it would not be appropriate to change the wording of the new section in that way. The question of whether an authority’s relevant basic amount of council tax for a financial year is excessive will be decided in accordance with a set of principles determined by the Secretary of State and approved by the House of Commons. If an increase in council tax is then set locally that exceeds the level anticipated by those principles, it is perfectly reasonable to call it excessive. The increase might be justified, but the authority will have to persuade the electorate of that. It would be excessive because it exceeded the norm adopted by most authorities. The Government’s policy on this must be set against the background that average council tax increases have been high over the years, and in many years higher than inflation. This Government have taken steps of their own to help move away from this position, notably by funding a council tax freeze for this year. Ultimately, however, the best way to control excessive local expenditure is to make sure the local electorate can put a stop to it.
Lord Greaves
The Minister said that it will be up to the local authority to persuade the local electorate of the case that it is putting forward. Is it not the case that local authorities will not be allowed to spend money on campaigning in such referendums?
Earl Attlee
My Lords, I am not certain of the details, and I hope we will come to a suitable amendment to debate that.
Lord Jenkin of Roding
The noble Lord, Lord McKenzie, asked that specific question last Thursday, and my noble friend gave this very specific answer:
“The noble Lord, Lord McKenzie, asked whether authorities can campaign for the proposed increase in council tax. No, it is intended that they cannot. They must put the facts to the electorate and leave them to decide but individual councillors will be free to campaign”.—[Official Report, 30/06/11; col. 1971.]
Is he saying that that stands, or is that not right now?
Earl Attlee
I am extremely grateful to my noble friend for refreshing my memory. He is absolutely right; that is the current situation.
Lord McKenzie of Luton
The Minister seems disinclined to accept the amendment, which would remove the word “excessive” from the legislation. Will he give an undertaking that the word “excessive”, as applied to the proposed council tax of any local authority, will not have to feature in any referendum question?
Earl Attlee
My Lords, I hope to give the noble Lord some comfort on that. Within the context of that policy, the Government think they are right to refer excessive increases and to require that such increases be approved via a referendum. There is enough flexibility in these provisions to enable sensible principles to be defined. The Secretary of State has the power to set different principles for different categories of authority; and, in exceptional circumstances, if an authority is unable to discharge its functions in an effective manner or unable to meet its financial obligations, he can disapply the referendum provisions altogether.
Lord Beecham
What sort of categories might the Secretary of State have in mind? Is the noble Earl referring to types of authority, or are there some other criteria that the Secretary of State is likely to adopt?
Earl Attlee
My Lords, my understanding is that they are the different types of precepting authorities, but I will clarify that in writing to the noble Lord. No doubt there will be other matters that we will need to write on in due course.
Many noble Lords have asked me questions. The noble Lords, Lord Greaves, Lord Tope and Lord McKenzie, suggested that the word “excessive” in a referendum question might prejudice the result. Noble Lords made me think hard about this point but inspiration arrived. It might be possible to ensure that referendum questions do not prejudice the matter, and we will consider this point over the Summer Recess.
The noble Lord, Lord McKenzie, asked whether these measures are capping powers and whether the Government would be happy to see voters support a higher and excessive level. If voters make an informed decision to support higher council tax, the Government will be perfectly happy. That is the principle behind the legislation. In view of what I have said, I hope noble Lords will feel able to withdraw their amendments.
Baroness Scott of Needham Market
Before the noble Lord decides what to do with his amendment, will the Minister undertake during this gap to look at some dictionaries for definitions of “excessive”? I have taken advantage of the new rules of the House and googled the word. The definitions all say that it describes a quantity or amount exceeding that which is justifiable, tolerable or desirable—for example, excessive drinking. So will the noble Lord accept that “excessive” is a term that has connotations, whatever its original and absolute meaning might be? I agree with my noble friend Lord Greaves that it does not have a place in legislation.
Earl Attlee
My Lords, I cannot agree with my noble friend's point that it does not have a place in legislation, but I undertake to consider whether the word “excessive” is appropriate in the referendum question.
Lord Greaves
I am grateful for that; it is a step forward. If the Government are to do that over the Recess, will they consult the Electoral Commission about that matter, as it is a referendum question?
Earl Attlee
My Lords, I think it would be extremely unlikely that we did not take advice from the Electoral Commission.
Lord Jenkin of Roding
My Lords, we have spent more than half an hour on this amendment, following the speech of the noble Lord, Lord Shipley, on Thursday. I think the Government have got the message. I am extremely grateful to my noble friend Lord Attlee for undertaking to cogitate on these matters between now and Report. I understand some of the difficulties that his officials have put before him, but I was very encouraged to hear him say that he read from his own handwritten notes in response to the noble Baroness opposite when he said he would look at all these matters again. In the light of that assurance, I hope the noble Lord, Lord McKenzie, will forgive me if I do not go into detail about what the results of this might be. I do not regard these amendments as an infallible way of achieving the overall purpose of less top-down government control and more control by devolved local authorities. They are accountable to their electors and I suspect that my noble friend Lord Attlee really will look at this, as he said he would. I shall be happy to help him, and I shall perhaps bring along some of those who have been advising me on these matters. I beg leave to withdraw the amendment.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, this is a straightforward matter and I hope it will not detain us for long. In determining the principles by which a level of council tax is considered to be excessive—or whatever replacement word we may have—the Secretary of State can adopt different principles for different categories of authority, a point just raised by my noble friend, but such principles must apply to all authorities in the same category. There is nothing new in that and similar arrangements operate under existing capping rules. In determining categories of authority, the Secretary of State must take into account any information which he thinks is relevant. In the interests of transparency, this amendment simply requires those reasons to be set out in the report on the principles, which must be laid before the House of Commons.
This is especially important because, in government terms, these matters are to be determined by the public. I do not know whether the Minister can expand a little on what type of principles are likely to be identified in the circumstances which would help members of the public, if they were to vote, and how and what information would be conveyed to them.
Earl Attlee
My Lords, this amendment appears to assume that the Secretary of State will inevitably determine different categories of authority in a set of principles. That is not necessarily the case. The proposed new Section 52ZC allows the Secretary of State to determine different categories of authority, but he may also decide to apply the principles equally to all authorities. Without pre-judging the Secretary of State's decisions, he may, for example, determine as a category districts, councils, counties, metropolitan boroughs, police or fire authorities, which I think fully answers the question that arose in the previous group of amendments. That would be a matter for the Secretary of State to decide on a yearly basis. The Secretary of State is already required to set out his principles in a report to the other place. It is inevitable that the reasons for the principles will be debated there before the other place gives its final approval. Therefore, the proposed new clause is unnecessary and I urge the noble Lord to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for his reply. The amendment would have operated not only in circumstances where there was differentiation between different sorts of authorities but where there was no differentiation, because presumably, in making the judgment, the Secretary of State would have had to take into account a certain amount and range of information. I was simply seeking a situation where, when it came to the information to be taken into account in making the determination, either everyone will be in the same category or there will be different categories, but either way this should be transparent and included in the report that goes to the House of Commons. If the Minister says that that would inevitably be the case and it would be covered in the report, I am happy that that is on the record and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if my speech is not so brief. Amendments 129LZB and 129LAB seek an identical wording. The first relates to the substitute calculations of a billing authority, the second to substitute calculations of a precepting authority. Each calls for the inclusion in accruals of non-domestic rates in addition to the redistribution of non-domestic rates. This does no more than make provision for the localisation of the business rate in due course. In the absence of such an adjustment, by what mechanism will these calculations take account of localised business rates, should that be where we end up? Prior to this happening, perhaps the Minister will confirm the position of redistributive non-domestic rates. Will he confirm that currently, taking one year with another, amounts collected are fully redistributed? Will he also confirm that there are no plans or discussions concerning the possibility of charging amounts against the national pool before redistribution?
Amendment 129LAC concerns the recovery of the costs of a referendum. New Section 52ZN(7) allows a billing authority to recover from a precepting authority the cost of holding a referendum. However, new Section 52ZN(8) gives the Secretary of State powers to deny or modify the right of a billing authority to recover such costs. The impact assessment estimates that the cost of a referendum, depending on the size of the local authority and whether other elections are held at the same time, could be between £85,000 and £300,000. Therefore, not inconsiderable sums are at stake. In what circumstances is it envisaged that recovery of referendum expenses would be denied to a billing authority? Does the Minister consider that the term,
“incurred by the billing authority in connection with the referendum”,
will cover the costs of rebilling in the event of a referendum not supporting the level of council tax calculations—in other words, the costs associated not only with the referendum but with its consequences? If the term is not meant to cover that, how is this otherwise catered for?
Amendment 129LE deletes a range of regulation-making powers that the Secretary of State has in connection with a referendum. In this respect, it is more focused and less ambitious than that of the noble Lord, Lord Greaves. The powers extend to the question to be asked; publicity; the limits on expenditure; the conduct of the authority, its members and its officers; when, where and how voting is to take place; how the votes are to be counted; and the disregarding of alterations in a register of electors. Frankly, it is outrageous that these matters cannot be left to an individual local authority. Amendments 129LF and 129LG deal with another matter.
As the legislation currently stands, the Secretary of State has power to determine that the referendum provisions are not to apply, notwithstanding that a council’s tax calculations are, in his view, “excessive”. The Secretary of State can do this if he considers that, without that level of increase, the authority would be,
“unable to discharge its functions … or … to meet its financial obligations”.
Our amendment is an opportunity to probe the meaning of this, but also to argue for an opportunity for a local authority to request an independent assessment of whether the criteria are met. There was limited debate in Committee in the other place on this issue. The line that the Minister was taking was that this safeguard was really only about a crisis or a catastrophe; for example, the collapse of BCCI, where the Western Isles had invested heavily. Clearly there are extreme examples, but where principles are applied to a local authority as part of a category of authorities, they do not sufficiently take account of its specific circumstances.
The Minister discussed the application of this safeguard where it was an issue about the level of services and how they were provided. In the House of Commons Bill Committee of 8 February, col. 440, he argued that local authorities had to set a budget that was lawful and would enable them to fulfil their statutory functions. However, if such a lawful budget was deemed excessive, it would only stand if supported in a referendum; if not, it could logically be the position that the authority would therefore be unable to fulfil its functions. The fact that the Ministers may be satisfied in aggregate that local authorities have been provided with sufficient resources—and we might argue about that—does not mean that each and every one in the same category will be. It may be that a particular authority has encountered issues of provider failure, litigation and redundancy costs, possibly because it is in transition to a delivery model that the Secretary of State might find more acceptable. It may be that some of the issues, for example, relating to contract litigation, where it might be genuinely difficult to provide sufficient information for a realistic assessment in a referendum at a particular point in time, could be in point; indeed, it could be prejudicial to a local authority’s case for it to do so. Sometimes it would difficult to condense quite sophisticated legal issues into information that would accompany a referendum question. So we have two fundamental points that these particular amendments are seeking to probe.
What does the Minister see as the boundaries of the use of these provisions? Discussion at the other end suggested that they were only to be applied in extreme, catastrophic circumstances. We postulated other circumstances—but not routine—where a local authority should not be forced through a referendum with all the costs and uncertainties that this entails. Our amendment, as well as being a probe, also sets out an alternative route for a local authority to benefit from this provision, whatever its boundaries. There should surely be a right to some independent assessment of whether these provisions apply. I would not commit it to the precise mechanism that we have set down; I simply raise the issue of the principle. I beg to move.
Lord Greaves
My Lords, I have a later amendment, Amendment 129LEA, which is on its own. I would have included it in this group if I had quite understood what the latter part of the amendment tabled by the noble Lord, Lord McKenzie, was about. The new Section 52ZR, which the Bill would insert into the Local Government Finance Act 1992, provides for the Secretary of State to give a direction,
“that the referendum provisions do not apply”,
because,
“the authority will be unable to discharge its functions in an effective manner or … the authority will be unable to meet its financial obligations”.
When speaking in the stand part debate introduced by my noble friend Lord Shipley last week, the Minister referred to this briefly when he said that these provisions would be used only in very extreme circumstances, such as,
“where the High Court has exercised its powers to appoint a receiver where an authority has failed to service its debt”.—[Official Report, 30/6/11; col. 1971.]
I do not know how often that happens, but I do not think it has happened, certainly in England, in my lifetime. It seems very rare, so I tabled Amendment 129LEA for the purpose that the noble Lord, Lord McKenzie, tabled his amendment: to probe the Government on exactly what kind of circumstances this provision might be used in. In view of that, I will listen carefully to the answer in this grouping, and I will not move my amendment when we get to it.
Earl Attlee
My Lords, Amendments 129ZB and 129LAB would add the words “non-domestic rates” to new Section 52ZF(3)(a) and new Section 52ZJ(4)(a). There is no need to do this. The wording “redistributed non-domestic rates” covers the sums that would have to be taken into account in respect of non-domestic rates when an authority carried out its original council tax calculations.
The noble Lord, Lord McKenzie, asked whether amounts of non-domestic rates are fully redistributed. The answer is yes, by virtue of Schedule 8 to the Local Government Finance Act 1988. When making substitute calculations to determine an amount of council tax that is not excessive by reference to the principles under the new Sections 52ZF and 52ZJ, an authority must use the amount determined in its previous calculations for redistributed non-domestic rates. This is because an authority should not be able to change its estimate of the amount it will accrue in the year in respect of redistributed non-domestic rates to calculate an amount of council tax which complies with the excessiveness principles.
Lord McKenzie of Luton
Perhaps I can help the Minister. The purpose of these amendments is much more straightforward than that. It is simply to try to cater for the situation where we no longer have redistributed non-domestic rates but have directly billed non-domestic rates. That is the sole purpose.
Earl Attlee
My Lords, these are complex matters, and I am advised that I should read it all out.
Subsection (8) of new Section 52ZN provides the Secretary of State with the power to modify or disapply a billing authority’s entitlement to recover costs in connection with a council tax referendum from a precepting authority. Amendment 129LAC would remove this provision. This power is needed so that the Secretary of State may make different provision for the recovery of costs in a situation in which a number of billing authorities are required to hold a referendum on a major precepting authority’s increase in council tax but one billing authority fails to do so. In this situation, it would not be appropriate for those billing authorities to recover their costs from the major precepting authority. Provision may instead be made for the billing authorities to recover their costs from the defaulting billing authority. We are aware that the Delegated Powers and Regulatory Reform Committee’s report on this part of the Bill recommended that this power should be subject to the affirmative procedure. We will consider that recommendation carefully and will return to the matter in due course, if required.
Amendment 129LE seeks to limit the matters the Secretary of State may make provision for in regulations regarding the conduct of council tax referendums. The regulations would include setting out what is acceptable in terms of publicity, expenditure, the conduct of authorities, their members and officials, and the counting of votes, so these are significant issues. We consider that it is important that these matters be prescribed in regulations, as an authority will be bound by the result of the council tax referendum, in contrast to a local referendum. It is intended that the regulations made under these powers will be modelled on the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which make provision in relation to the conduct of referendums on local government executive arrangements. I can assure the noble Lord that the regulations will be subject to consultation with the Electoral Commission.
Lord Greaves
The Minister said that the billing authority—I am thinking in terms of a two-tier area with counties and districts—may be able to recover its costs. Should that not be automatic if the referendum is in relation to the level of council tax set by the county council, for example?
Earl Attlee
My Lords, I can assure my noble friend that my words are very carefully chosen.
Lord McKenzie of Luton
My Lords, I thank the Minister for his very full response to these amendments. We will need to read the record to see what we wish to take forward from this, but I just want to follow up the point about the reserve powers that the Secretary of State is to have.
I can see that such powers would be necessary in a range of circumstances—including in catastrophic circumstances, at one end of the spectrum—and we are not arguing that, at the other end of the spectrum, there should be an automatic right to go to an unelected body to try to get off the consequences of this legislation. However, there could well be circumstances in-between. It may be that the solution would be—and perhaps this is what the Minister was suggesting—that you would separately designate a particular authority as a special category, but in general these regulations will be applied to groups of authorities, if not all of them together. Although the Government may well take the view that in aggregate they have enough to fulfil their functions, there could be circumstances of individual authorities where that is simply not the case. To be able to convince an electorate in a referendum that that is the case may not always be easy. There could be circumstances around litigation or sensitive commercial discussions where simply to spell out the upside and downside of that information provided in a referendum could be detrimental and prejudicial to the local authority. Therefore, has there not got to be some other safety valve in those sorts of circumstances, which are not the authority defaulting on its debt but the authority potentially getting into quite severe difficulty because of the potential downside of a court case, for example? It would be left not able to raise the level of tax that it thought that it should be able to deal with.
That is the point we are probing, which we have coupled with a right for an independent assessment in those circumstances. I ask the Minister to consider that point seriously. Whatever the supposed evils of capping at the moment, one of the benefits was that at least it was looked at on an authority-by-authority basis. If you had an authority which was in a sense in a particular circumstance, that could be taken account of within the principles that had been set. That seems to be not available under this formulation, which is a real issue.
Earl Attlee
My Lords, while not agreeing to take the matter away, I will unpack the issue with my officials and, if necessary, write to the noble Lord.
Lord McKenzie of Luton
I am very grateful for that. I beg leave to withdraw the amendment.
Earl Attlee
Earl Attlee
My Lords, government Amendments 129LA and 129LB ensure that only residents and not business voters are entitled to vote in any council tax referendum in the City of London. This addresses an anomaly which has become apparent since the clauses were originally drafted. Without the amendment, business voters in the City would be able to vote in a council tax referendum even though they are not resident in the area. The amendments therefore provide that it is only the residents of the City of London who can vote, which will bring the City in line with the position in the rest of England regarding council tax referendums. I beg to move.
Lord McKenzie of Luton
“( ) On application by a relevant authority, the Secretary of State may direct that the substitute calculations referred to in subsection (5) may be increased by an amount determined by the Secretary of State.”
Lord McKenzie of Luton
My Lords, Amendment 129LAA seeks another safety valve for limited, possibly exceptional, circumstances. Where an authority’s council tax is deemed to be excessive, it will be required to hold a referendum. If the referendum does not approve the basic amount of council tax, the council tax is set by reference to a substitute calculation. A substitute calculation is an amount predetermined by the authority, which would not be excessive under the rules. One might suppose that in most cases the substitute calculation would be just below what the Secretary of State would deem to be excessive. Our amendment would offer a route to an authority to seek to have the substitute calculation increased by an amount to be determined by the Secretary of State. So we are not suggesting that this should be a reference to independent assessment.
We do not advance this proposition as a general route to overturn the results of the referendum—it would be necessary to develop specific criteria. However, there may be circumstances where a local authority should not be bound by the substitute calculation—for example, picking up a theme in relation to the previous amendment, events may arise between the commencement of a referendum and its conclusion which, if reflected in the information provided, might influence the result. It could be a contractual matter with adverse consequences; it could be announced closures of major commercial undertakings, particularly if they were localised NNDR, which could have a significant impact on the council’s revenue base.
What would happen if there was a genuine challenge to the result of a referendum? If this challenge were sustained, what is the position? Would the local authority have to apply the substitute calculation, notwithstanding that an adverse result in the referendum was found to be unsound? How would that all work?
Earl Attlee
My Lords, this amendment seeks to allow an authority another bite at the cherry if it loses a council tax referendum. It also is surprising to note, given the previous debate, that the amendment would give the Secretary of State a new power of direction. A council tax referendum will present a clear option to voters: to vote for either the authority’s preferred increase or for an increase that does not breach the excessiveness principles. This amendment would allow the authority to apply to the Secretary of State to set an excessive increase in council tax when the local electorate have voted against this, thus allowing him to override the referendum result.
The noble Lord suggested that an extraordinary situation could arise locally. However, the electorate would be aware of that when they chose whether to vote for an excessive increase or not. The principle of this provision is that the local electorate should take the decision and not the Secretary of State. The Secretary of State has a power to direct that the referendum provisions are not to apply. However, he may use this power only where the authority is unable to discharge its functions in an effective manner or is unable to meet its financial obligations. The expectation is that this power would only be used in exceptional circumstances, such as where the High Court has appointed a receiver where an authority has failed to service its debt. It would not be appropriate for the Secretary of State to be able to direct that an authority may set an excessive increase in council tax and take the power of veto away from local electors as a matter of routine. I therefore urge the noble Lord to withdraw his amendment.
Baroness Scott of Needham Market
Will the noble Lord consider a scenario in which a local authority is required to increase substantially its council tax because it has to pay one of the EU fines being introduced by the Government in an earlier part of the Bill?
Earl Attlee
My Lords, I hope that the need to pay an EU fine will be an exceedingly unlikely event.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lord for his response but I do not think he really dealt with the question about an EU fine. It is provided for in this Bill and if the provision is removed we would all be delighted. A fine could be visited on a local authority at the last minute potentially after it has set its budget and its referendum detail is public.
I want to return to what happens if there is a challenge to the referendum—the Bill allows for that—and that challenge is sustained. If a local authority is deemed to have an excessive council tax increase—we must stop using that term otherwise it is going to be inculcated in our own speech as well as the text of the Bill—it has to hold a referendum. If that referendum does not support the council tax increase but is subsequently determined to be flawed, what are the consequences? It seems to me there are no provisions for the Secretary of State or anyone else to bring redress to the local authority which has been on the receiving end of malpractice in respect of the referendum.
Earl Attlee
My Lords, I imagine that the local authority will have to adhere to its reduced budget but, if I have anything to add on that point, I will write to the noble Lord.
Earl Attlee
Earl Attlee
“(ba) the amount of any levies and special levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 or 75 of the 1988 Act, or(c) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of, or including, the whole of its area.”
Earl Attlee
My Lords, I shall speak also to government Amendments 129N to 129U. This group of amendments addresses two specific issues concerning the calculation of whether an authority’s council tax is excessive. First, the amendments ensure that a referendum on a council tax rise is not triggered solely because of planned expenditure which has already been explicitly supported in a local referendum. The amendments apply where a qualifying local referendum is held across the whole of the billing authority area, the county council or the GLA. In such circumstances, an authority may be able to disregard qualifying expenditure that it estimates it will incur in taking steps to give effect to the result of that referendum when calculating whether an increase in council tax is excessive. This means an authority will not have to take this expenditure into account when determining whether it must hold a council tax referendum.
The conditions for qualifying expenditure and qualifying local referendums will be prescribed by the Secretary of State in regulations. The regulations will include matters such as the information that must be available in advance of the local referendum, the time period within which the local referendum must have been held and restrictions on the expenditure that may be disregarded. For the avoidance of doubt, we are making changes only to the calculation which determines whether a council tax is excessive. We are not changing the calculation of council tax itself.
Secondly, the amendments ensure that increasing levies, which have to be treated as part of the billing authorities and certain major precepting authorities’ expenditure for council tax purposes but are outside their control, do not tip the balance in requiring an authority to hold a council tax referendum. These amounts will therefore also not be taken into account when an authority calculates whether its council tax is excessive. I beg to move.
Lord McKenzie of Luton
My Lords, I think that I am grateful to the noble Earl for his explanation but I would like to read the record. These seem not unreasonable amendments.
Earl Attlee
“(2A) In the case of a major precepting authority that is a county council, any reference in this Chapter to the authority’s relevant basic amount of council tax for a financial year is a reference to the amount that would be calculated by it in relation to the year under section 42B(1) above if section 42A above did not require or permit it to take into account—
(a) the amount of any levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 of the 1988 Act, or(b) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of its area.”
(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”
(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”
“(9) In this section—
“local referendum” has the meaning given by section 42(1) of the Localism Act 2011;
“qualifying expenditure” means expenditure in relation to which the prescribed conditions are met;
“qualifying local referendum” means a local referendum in relation to which the prescribed conditions are met.”
Lord Greaves
Lord Greaves
My Lords, we now move on to Chapter 3 of Part 4 of the Bill, excitingly titled “Community Right To Challenge”. I have seven more amendments in this group, along with my noble friend Lord Tope, and there are a couple from the Labour Party. These are the first of a series of amendments on this community right to challenge part of the Bill which I am moving on behalf of the Liberal Democrats on the basis of the criterion which the noble Baroness, Lady Andrews, put forward at Second Reading—workability. This is a completely new idea and a completely new set of provisions. It is extremely important that, when they leave this House, they leave in a workable condition. They may already be in a workable condition, or they may not. Our job is to make sure they are, whether or not they require changes.
The basic principle—in rather obscure language, I have to say—is that,
“a relevant authority must consider an expression of interest”
if submitted by a relevant body that is interested in,
“providing or assisting in providing a relevant service”.
I have to say that back in Colne this is not the language people use and, no doubt, when the community right to challenge gets down to the grass roots, people will have a plainer English explanation of what it is all about. The relevant authority is, as set out, a principal local authority in England, or a body set out in Clause 68(2)(d), which reads,
“such other person or body carrying on functions of a public nature as the Secretary of State may specify by regulations”.
Here we have more mysterious regulations specifying mysterious people. Before the Bill leaves this House we need to know who these people are, at the very least.
A “relevant body” is defined as,
“a voluntary or community body … a body of persons or a trust which is established for charitable purposes only … a parish council … two or more employees of that authority”—
in other words, two or more employees of the council whose services are being challenged—
“or … such other person or body as may be specified by the Secretary of State by regulations”.
It is not a surprise to find that there, since it is what we find everywhere in the Bill, but, again, we need to know what it means.
A “relevant service” which is being challenged on the relevant authority by the relevant body is,
“a service provided by or on behalf of that authority in the exercise of any of its functions, other than” …
and “other than” is, effectively, a service that the Secretary of State makes regulations saying shall not be subject to the challenge. Yet again, we have a power to the Secretary of State that we need to understand.
This, in many ways, is the nub of the problem. This is framework legislation, skeletal legislation, and there is a huge amount down to regulations. It might seem boring to keep saying this, but in every part of the Bill this seems to be the fundamental problem. What we have here is a new idea—what I would describe as a spiffing wheeze—that has been dreamt up by the Government. It has actually been dreamt up by the Conservative part of the Government and I do not complain about that; a coalition is a coalition of two parties and each party has a right to bring its own spiffing wheezes to the table. We have to find out how this is to be done as I do not think that we are being told that at the moment. I would like all these specific powers for the Secretary of State to be removed, or at least a lot of them.
Is there any hope that we are going to see draft copies of the regulations before the Bill leaves this House? We do not have them for Committee stage. Will we have them by Report? If we do not have them by then, I can see that there might be a certain amount of bother in the House.
That is all I that I really want to say about this. I have some more notes but they just repeat what I have said, so I will not say it again. The noble Baroness, Lady Farrington, is going to express shock and surprise that I have not said it three times.
Baroness Farrington of Ribbleton
Most certainly not. The noble Lord, Lord Greaves, ceased to surprise me about 20 years ago. My point is that it is very helpful for other parts of your Lordships’ House to know when we are dealing with a government view or whether it is a jolly wheeze thought up by one party—on this occasion, according to the noble Lord, by the Conservative Party. I hope that members of the Conservative Party in your Lordships’ House will tell us when a jolly wheeze has their support but not that of the Liberal Democrats. It is a new form of coalition Government, and I am enjoying it.
Lord Greaves
The noble Baroness is, unusually, wrong. It is not a new form of coalition Government; it is how most coalitions work. Different parties bring different proposals to the table, compromises and trade-offs are reached and, one hopes, the best ideas from each of the parties come through. All I am saying is that it is no secret that the community right to challenge, as it is now called, and indeed the community assets that we will move on to discuss after this, came from the Conservative Party. I am not criticising that party for that or saying that I do not support it.
When I opened my remarks I said clearly that what we have to do with a new, untried, untested idea is ensure that it is going to work. If it does not, one of two things will happen. A lot of difficulties will be caused on the ground because the idea has not been thought through properly or, alternatively, it will be realised that it has not been thought through properly before these myriad regulations are produced and it will never happen, the regulations will never happen and perhaps the chapter will never be commenced. What I and the Liberal Democrats are trying to do is to be satisfied that the proposals are workable before they leave us so that they are actually a great success when they go out there.
Lord Beecham
My Lords, the amendments in my name start with Amendment 130ZBA. In estate agents’ parlance, the key to property is always described as “location, location, location”. When it comes to this legislation and the work of the Civil Service in advising Ministers, the phrase seems to be “regulation, regulation, regulation”, and it is to that that this amendment is addressed. The purpose of Amendment 130ZBA is to require the Secretary of State, before making regulations prescribing which services may be tendered and which not after an expression of interest, to consult with the Local Government Association or any public bodies to which the relevant section would apply. That echoes pleas that fell on unsurprisingly deaf ears last night in this Chamber on the police reform Bill where similar requirements were sought that the Home Secretary would require that police commissioners consulted with local authorities in respect of various matters. That did not appeal to Ministers but I rather hope that on this occasion Ministers will acknowledge that it would be sensible and right for the Secretary of State, before making regulations around this issue and indeed others in the Bill, to consult with a representative body for local government.
The second amendment would simply take out Clause 68(9). It is similarly designed to reduce the regulatory function to which other noble Lords—the noble Lords, Lord Jenkin and Lord Greaves—have referred. I hope the Government will acknowledge that no harm will be done to them, and indeed the general tenor of the legislation will be improved, if they were to accept these amendments.
Baroness Hamwee
My Lords, I am sure that they use plain English in Colne. I imagine that it is very direct language, and I very much doubt that they use the term “spiffing wheeze” or “jolly wheeze”. My noble friend may have forgotten that the department has actually issued a plain English guide to the Bill.
Baroness Hamwee
But do they read the plain English guide to the Localism Bill? That says, on the community right to challenge, that many local authorities,
“recognise the potential of social enterprises”.
I hope that my noble friend Lord Shutt of Greetland, who I think will respond to the debate, will be able to say a word about whether in the Government’s mind social enterprises are something different from community groups. Many social enterprises are in fact businesses. That is not a criticism, but they are very different from community groups. The application of these provisions to social enterprises is interesting. The guide refers to them providing,
“high-quality services at good value”,
and delivering services “with”—that is, with local authorities—“and through them”. I was interested in the “with”, which, in the legislation, finds its manifestation in,
“assisting in providing a relevant service”.
I do not know whether my noble friend is able at this stage—we may need to wait for the regulations, which I, like the noble Lord, Lord Greaves, hope to see before too long—to explain what that assistance might look like.
Lord Shutt of Greetland
My Lords, I thank those who have contributed to this series of amendments. We have a fresh start here, in that the community right to challenge will hand the initiative to voluntary and community bodies with good ideas about how services can be run better, and more cost-effectively, ensuring these ideas get a fair hearing, and will give them the time to organise themselves to bid to run these services.
In making my preparations for the day, I spotted the word “regulation” more than once. I thought the best thing to do is to take this head on. Much of the detail of how the community right to challenge will work is to be included in regulations. In response to amendments from noble Lords which touch on this detail, I will often have to explain that we are currently carefully considering issues that have been raised in our recent consultation. It is important that we get the details right. I would like to reassure noble Lords that, on various issues on which we have consulted, we propose to set out the way forward prior to the Report stage of the Bill. I am not promising, but if we can, we will see if we can get some draft regulations. That may not be possible in all cases but we will endeavour to do so.
I understand what my noble friend Lord Greaves said. I had not thought of “jolly wheeze” as featuring in his vocabulary. However, community organisations are part of the Liberal Democrats’ vocabulary. Therefore, this measure may have been suggested by one part of the coalition but I readily embrace it as a means of giving communities an opportunity to come forward with better ways of delivering local services. However, we need to see what is in the regulations, on which consultation is still taking place.
Lord Beecham
Will the noble Lord confirm that the Government accept the recommendations of the Delegated Powers Committee regarding regulations under this part of the Bill being subject to the affirmative procedure?
Lord Shutt of Greetland
My Lords, the Government are considering those recommendations. I will not make any promises on that but I believe that they are very likely to take serious account of the committee’s views. It would be very unusual if they did not.
Amendment 129V would remove the Secretary of State’s powers to specify requirements for expressions of interest in regulations. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right but this power would prevent a recalcitrant authority requiring an unnecessarily burdensome amount of information that would stymie a relevant body wishing to use the right.
Amendment 130ZB would remove the Secretary of State’s power to exempt services from challenge. Taken with Amendment 133ZK, which would remove the power for the Secretary of State to specify the grounds for rejecting an expression of interest, which we will consider later, this amendment would give relevant authorities discretion to reject a challenge to any of their services. As I have already explained, we have taken these powers to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right, but this power would prevent a recalcitrant authority rejecting expressions of interest out of hand.
Amendments 130ZA, 131ZA, 131G, 131H, 131E, 131F and 131DA would remove the Secretary of State’s powers to make changes to the right in regulations. Amendments 130ZA and 131ZA would remove the power to add relevant authorities and bodies. Amendments 131E and 131F concern the power to amend the definition of a relevant body and voluntary and community bodies. Amendments 131G and 131H concern the power to make any amendments to this chapter of the Bill that are necessary as a consequence of adding relevant bodies and authorities, including making changes to regulation-making powers. Amendment 131DA would remove Clause 68(9), which contains many of these powers.
We have taken these powers to enable us to keep pace with change and appetite for extension of the right. For example, the powers to add, amend and repeal relevant bodies and amend the definitions of voluntary and community bodies enable us to ensure that these definitions continue to reflect the types of organisation representing communities.
Amendment 130ZBA would require the Secretary of State to consult representatives of relevant authorities and other public bodies affected by an extension of the right. We have recently concluded a consultation on our proposals to use the various powers with all those with an interest in the right and we will consider the need for consultation on future changes. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded from the challenge.
I should respond to the noble Baroness, Lady Hamwee, who mentioned one type of social enterprise. I have certainly seen in my life numerous names representing organisations that are not a sole trader or public limited company but which have some social, community, environmental or other involvement. It seems that it does not stop. I think that the important thing is that other forms of enterprise might appear but that we are yet to hear from. The way that the script is written covers anything that might happen in the future. In those circumstances, I trust that the amendments will not be pressed.
Baroness Hamwee
Before my noble friend responds, I wonder if I may just say a word about that last point on social enterprises. A community body is defined in Clause 68(8) as a body carrying on activities,
“primarily for the benefit of the community”.
No one would quarrel with that, but the distinction between a community and a voluntary body as defined, is a reference—or, in the case of a community body, lack of reference—to profit, to it not being carried on for profit, or to what happens to the profit. Reading the words,
“primarily for the benefit of the community”,
I wondered whether that was to be read as including how profit is dealt with, whether it is to be ploughed back for the benefit of the community. Perhaps this is another matter for regulations. However, the distinction might be relevant in giving us a flavour of how the Government expect this new arrangement to work. Maybe it is a question of letting 1,000 flowers bloom, and so on.
Lord Shutt of Greetland
Letting many flowers bloom is the position. Clause 68(5) refers to a “voluntary or community body”, and the noble Baroness has mentioned the differences there; to a body “established for charitable purposes”; to the parish council; and then to “two or more employees”, and “more” could be considerably more. How that “more” then establishes itself is another way forward. There are clearly two features here: the elements of “voluntary”, “community” or “charitable”; and the way in which employees choose to organise themselves. They are lumped together, but in many minds—in my mind at any rate—they are two distinct ways forward.
Lord Beecham
The noble Lord may recall that I have an amendment dealing with precisely that matter, which we will discuss later.
Lord Greaves
My noble friends Lady Hamwee and the Minister are straying on to matters covered by future amendments. I remind my noble friend that she might have suggested some of those amendments. As for the idea that this is all about letting 1,000 flowers bloom, I invite my noble friend the Minister to come on over the tops and have a look at Colne at the moment. It is in an absolutely beautiful condition thanks to Colne in Bloom. There is a massive display of flowers; far more than 1,000. On the other hand, letting 1,000 flowers bloom did not do much good for Mao Tse-Tung. It has different connotations.
The Minister referred to recent consultations. Can he give us an assurance that the Government will publish a pretty full account of the results of those consultations and the evidence that they got? Will it be possible to access them?
Lord Shutt of Greetland
I do not have it to hand, but I am pretty certain that they are to be published on 2 August. I think that that is the statutory date when the results of the consultation must be published so that people know what people have had to say, so that will be done.
Lord Shutt of Greetland
That formal consultation has now finished, but I am pretty certain that, bearing in mind that this is still going through your Lordships' House, other views will still be taken into account—but not in the formal consultation.
Lord Greaves
Will what is published be a pretty good summary of what people said in the consultation, as well as of the Government's views? I think that the Minister is saying yes to that. That is good news, as was the fact that the Minister said that the department will endeavour to prepare draft regulations. People may have to work hard over the summer; some of us will be watching from the south of France.
The Minister referred to unnecessary, burdensome information required by a recalcitrant authority. That is the same way of thinking: that councils cannot be trusted to do things right, that some of them will be recalcitrant and that therefore everybody, even the great majority who will do it right anyway, must be lumbered with the alternative unnecessary, burdensome information, which is all the rules and regulations which come from central government to councils.
We are aware that the Department for Communities and Local Government is losing a lot of its staff. Who and where are the staff who will be employed to produce all that vast range of new rules and regulations—which, in our view, are unnecessary? We are not saying under any circumstances that there is no need for regulations, Secretary of State orders or secondary legislation. We are saying that the scale and amount of it is out of hand and will be more so as a result of the Bill.
The Minister rightly said that we are in favour of pushing power down into communities, and that expressions of interest should not be rejected out of hand. We all agree with that, but many later amendments in this part are about safeguards to ensure that the process will not be dangerous or cause difficulties and problems. We will come to those.
The Minister said that councils need to keep up to date and, for example, reflect the types of organisation representative of their communities. I am sure that that can be done without taking all those extra powers. The problem is that if the power for regulations is there, regulations will be produced, in some cases at great length. Far from keeping councils in order, in many cases they will simply prevent councils doing things in the best way for their local circumstances.
My final point, to which, again, we will come, is that the Minister said that some powers are to make it possible for the Secretary of State to exclude additional services from the challenge. The problem is that we do not know which services will be included and which will not. Again, we will come to amendments that will probe that.
It has been a useful introduction. I say thank you to noble Lords who have taken part and to the Minister for his attempt to be helpful. I beg leave to withdraw the amendment.
Lord Patel of Bradford
“( ) the expression of interest includes evidence that a substantial number of the service users affected by the service support the expression of interest.”
Lord Patel of Bradford
My Lords, as has already been explained, Clause 68 concerns the duty placed on relevant authorities to consider an expression of interest. It is a very important clause, as it provides the foundation for the community right to challenge process. The duty sets out the definitions of relevant authorities and bodies, definitions that we have already discussed and that we shall debate further in two or three later amendments. It also sets out the terms by which an authority must consider an expression of interest. That is the part that the amendment would strengthen.
Think for a moment about the meaning of this chapter, and indeed the thrust of the Bill: it is about the central role and importance of local communities in determining the ways in which services are provided. When we talk about communities, whether we use the terms, “community organisation”, “body” or “group”, we must be very careful about what we mean. There is always a risk that we assume that a particular community group, voluntary body or even a local authority understands all the communities that use services or represents them. Clearly, we cannot have a situation in which any individual or group can challenge the provision of a particular service and have a right for their expression of interest to be considered. We must also guard against the interest being too narrow. When considering services it is only right that the views of those who use the services should also be considered in any challenge. It is, after all, the service users who will be most affected by changes made as a result of the challenge.
I have worked for many years with a great number of service users from the full range of health and social care environments, including those with mental health problems, alcohol and drug addictions, those involved in the criminal justice system, and with people of all ages, including the very young and older people. My experience consistently is that service users are not only very willing and keen but very capable of saying what they think about services and how they would like to see them improved. I would like to think that among the reasons a local authority would accept a community right to challenge and go through a procurement process for the service is because they want to see improvements. I cannot think of a better way of doing this than by ensuring that service users are involved in the process.
Of course, we have then to consider how many service users should be involved. What is the optimum number? What might the minimum number be? I have no easy answers, but I am sure that other noble Lords will want to express a view on this. It seems to me that the number should be substantial, given the profound impact that any change in provider could have on those using the service. This approach gives credence to service users as a body of people whose views must be considered. It also places a duty on those wishing to lay an expression of interest to make sure that they have adequately consulted the service users, or are at least in a position to do so. I would argue that there is also protection in taking that approach. By ensuring that the views of those most affected by any proposed change are taken into account, we can avoid the situation in which potential bodies seeking to challenge the current provision are not doing so solely in their own interests.
I hope that the Minister will be willing to consider this amendment and that he can give me some strong reassurance on what steps will be taken to ensure that the views of those using services are taken fully into account. I beg to move.
Lord True: My Lords, I have some sympathy, of course, for the direction that the noble Lord is coming from, but he himself touched on important questions of practicality. There are a lot of questions of practicality in these clauses. Many local authorities are in the process of seeking to set up charitable trusts, social enterprises, and other organisations such as those that were referred to in Clause 5. I am not quite sure how the views of the service users would be established by those wishing to make a challenge or put forward an expression of interest. If there were a small social enterprise to be formed from among a group of local authority workers out of their interest in sustaining high-quality services, it would be proposed that they have focus groups, referendums or other means to establish the reaction of service users. Although well intentioned, the amendment might actually put obstacles in the way of local authority workers establishing social enterprises or bodies.
I am a little nervous about the direction in which the amendment would take us. Clause 70 contains rules for local authorities and how they should consider expressions of interest; there are duties laid upon local authorities to take into account how any expression of interest would promote the well-being of people in the local authority area. So although I understand where the noble Lord is coming from, this may add an extra complication to an already complicated piece of legislation, and I could not support the amendment.
Lord Shutt of Greetland
My Lords, this is the other side of the coin in terms of whether one is being too prescriptive. This amendment would require a relevant body to demonstrate that a substantial number of service users support its proposal when submitting an expression of interest. This puts an unnecessary burden on relevant bodies, and the relevant authority if it must verify the information. Where more than one relevant body submits an expression of interest, service users could be approached several times, which may be frustrating and confusing. This will be magnified by the fact that local people will use many different services. We agree that expressions of interest should reflect the needs of service users. Relevant bodies will often have excellent insight into these needs. The Bill enables relevant authorities to specify periods for the submission of expressions of interest in particular services. They could, for example, set periods that would enable relevant bodies to take into account the results of any consultation with service users, undertaken as part of the commissioning cycle. We are considering how service-user needs might be reflected in the requirements for an expression of interest. I hope, under these circumstances, that the Minister will feel it appropriate not to press the amendment.
Lord Greaves
The Minister said that more than one relevant body might submit an expression of interest in a particular service at any given time. I am trying to think of an example. Two community groups might be interested in taking over a particular park. They might be at daggers drawn and they will not want to put in a joint bid. How does the authority decide between those two community groups? I am trying to avoid using words like “relevant bodies”. Anybody out there listening to this discussion will not have the slightest clue what we mean by “relevant authorities”, “relevant bodies” and “relevant services”. But if two community groups want to run the same park—for example, because it is on the border of two quite different areas—how does the council decide which one to deal with?
Lord Shutt of Greetland
My Lords, the council concerned will have its own procedures for dealing with these things, but the chances are that one submission will be better than the other. If they are bang on equal, it might come down to price, but councils have their own decision-making ways. If the submissions are almost identical, councils will just have to look at them with great care. But it would be strange if they were identical. One could look at what lies behind the application, the strength of the body, whether it looks sustainable and whether the committee of the organisation looks as if it is there for the long haul. I am quite certain that these are all things the authority will be looking at.
Lord Beecham
Can the Minister indicate that on this topic, at least, there will not be regulations from the Government?
Lord Shutt of Greetland
The noble Lord is asking, in effect, to put a regulation into the Bill. The government line is that we do not need it in the Bill and therefore this is regulation-free.
Lord Greaves
To go back to the question I asked, the answer my noble friend gave is probably OK if the two applications come in at the same time or within the same council cycle so that they can be discussed by whatever procedures a particular council has to deal with these matters. But does the Bill not say that once an application has been accepted and is being considered, no more applications for the same thing can be made and accepted? Therefore, if one came in today and the other came in a couple of months later, perhaps in response to the knowledge that the first one had gone in, it could not be accepted. How would that be dealt with?
Lord Shutt of Greetland
I shall have to come back to the noble Lord on that. There two ways in which these expressions can be made: one is that once we have an Act of Parliament, people can, as it were, just pitch; and the other is by authorities saying, “We are looking at various things and this is the starting date and this is the finishing date, when we look forward to people making expressions of interest”. If it were the latter, it would be quite clear when expressions of interest could be made. If people were just making a pitch, an authority might look at that and be surprised that something else turned up later.
Lord Patel of Bradford
The Minister said that the best that he could offer was to put this into regulations. That is obviously welcome. However, I am disappointed. The noble Lord clarified the problem of practicality for me. I have worked in health and social care for about 20 years and every service that is delivered will never say that it will never engage with service users. Everyone is very happy to say, “Yes, we will engage with service users”, but they do not do it, simply because they think that practically they cannot manage it, that they will not get any benefit from it, and that they will talk to too many service users and confuse them. Using the words of the noble Lord, Lord Greaves, this is utter nonsense.
You can engage with service users, and there was huge appetite for that. I can give noble Lords example after example of people with mental health problems having impacted on social policy and on the policy of the organisation and teaching professionals how they should inspect services. What matters is how we do that and the value that we give it. Perhaps I can give one example. Over the past 18 months, I have chaired a review group on the effectiveness of drug treatment in prison. We looked at the huge amount of money that we spend on drug treatment in prison, which is a very difficult environment. We brought together 20 experts: governors, a chief probation officer, experts in the drugs area and academics. Everyone came round the table to explore a strategy for commissioning and producing outcomes. We spent 18 months meeting, arguing and fighting.
One thing on which I insisted was talking to service users, offenders, people currently in prison, ex-offenders and their families. We were not given a budget for it because they said, “It is not practical. No offender or ex-drug user will engage with the process, but have a go”. On a shoestring budget and in the space of six weeks, we engaged user groups across the country and asked them to talk to offenders, users, carers and families. We anticipated that at most 50 people would respond, but in those six weeks 550 current and ex-offenders and drug users responded.
Ultimately, the views of those drug users affected the way in which the final report—the Patel report—was written. They underpinned everything that happened. This effected the best evidence base ever gathered on drug treatment in prisons. They mirrored what that evidence base said and highlighted what drug users want and how they want it. With their evidence and their views, we produced an outcomes model. That would not have happened unless we had engaged with the so-called most difficult, hard to reach groups. People have a huge appetite to be involved. It does not matter whether two or three groups want to consult with service users; they should, because while they are consulting them and asking them what they want, they might learn something about what they should be doing and how they should be delivering their service.
It is crucial that this provision—that you cannot deliver a service without engaging service users—is in the Bill. I am sure that in his heart of hearts the Minister believes that. It is an important thing to do. My anxiety about not putting that into the Bill is that services will not do it; it will be an excuse not to do it. You have to force them to do it because it delivers goods. I will go away and think about this, and I would appreciate it if the Minister thought more about it and talked to his officials to see whether there is any way in which we could strengthen the provisions of the Bill that push those heading the new services to talk to service users. It might not have to be a substantial number, or whatever the legal phrase is, but this should happen because it is fundamental to the issue of the community’s right to challenge. The Minister himself said that this was about handing power to the community. Service users are a key aspect of the community, so we have to push this.
Lord Shutt of Greetland
My Lords, I am holding the line with the Bill. Anyone who thinks about challenging must put together all sorts of things to prove the viability of their outfit and the people involved. If they have any wit, they will say that they believe that they can do it and will have done some work in order to prove that they are up to the job. If the noble Lord were a consultant to people wanting to put forward a proposal, that is the sort of thing that he would urge them and everyone else to do.
Lord Patel of Bradford
Absolutely—if I was a consultant, it would be done. Unfortunately, however, there are not many folk like me about. We can discuss rates later. I take on board what the Minister said. I will think about it further and I would appreciate it if the Minister, too, would think further about whether we can strengthen this. I am sure that the issue will come back when we consider further aspects of the Bill. In the mean time, I beg leave to withdraw the amendment.
Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, I shall speak also to Amendments 131 and 132. No doubt other noble Lords will speak to Amendment 130ZC. We have discussed the question of challenges to local authorities by local communities and other bodies that wish to run their services. I am looking for a more ambitious community right to challenge. I support what is in the Bill. It is a very useful expression of bringing forward one aspect of the big society so that local people can become involved not just in yapping at the heels of those who provide a service but in putting forward suggestions for how they could do it better. I like that—but why does it stop at local government services?
My right honourable friend Greg Clark, the Minister of State for Decentralisation and Planning Policy, recently gave a lecture on the subject to the Local Government Association. He was on the right lines when he stated that Ministers are considering inviting councils and their partners to bid to manage a range of public services using devolved budgets. This recognises that government services or services provided by non-departmental bodies at national level may be run better and with more sensitivity to local needs and circumstances if they are run at local level. They do not all have to be run nationally. That is the point of the amendment. I am trying to provide a way in which my right honourable friend’s aspirations could be put into practice across the public sector.
If we are going to get this whole process going—I admired the eloquence of the noble Lord, Lord Patel, when he spoke of what was necessary—we need to generate enthusiasm for, and understanding of, what is being offered. This should be across the board and not limited to local government services. Therefore, my amendment extends the right to challenge across all public services, not just those guided by local government. Local authorities should be able to express an interest in running devolved national public services on behalf of their communities, which should be able to offer to run the services. They may need help, which local authorities are best placed to deliver.
Looking at it again with rather greater reluctance, I have to say that the suggestion that local authorities should provide a list of the services that they might be interested in devolving smacks of bureaucracy and I am not particularly enthusiastic about it. I ought to withdraw the amendment; I speak to it with no enthusiasm at all and I am grateful to see that that view is shared.
I will concentrate on the other amendments in this group, which propose extending the measure to services provided nationally by central government and by non-departmental public bodies and so on, and giving local authorities the right to bid and the duty to help local communities to do this. If you take London as an example—I declare my interest as one of the joint presidents of London Councils—the figures show that in 2009-10 central government spent over £47 billion in London. Local authorities actually spent much less than that—about £29 billion—so only 40 per cent of the total is spent by local authorities. By extending this measure, you are opening up a substantially larger pool from which one could get services provided locally. Of course, not all services can be delivered locally but a great many are. I shall give some examples in a moment.
Extending the community right to challenge and to apply it to a wider public sector would effectively address a lot of the problems that are inevitably caused by national bureaucracy. That often stands in the way of operational efficiency and, in particular, local sensitivity. A council could say, “If we did it for you, we would have to do it for everybody”. How often has one heard that excuse? What we are looking for in this Bill is a greater opportunity for public services to be run locally, where they can be responsive to local needs and circumstances. I will give some examples in a moment.
One possibility is to have cross-departmental services that could be run effectively from a local level. Another is to empower local authorities to support local aspirations. Research commissioned by London Councils last year identified over 150 non-departmental public bodies that spend more than £100,000 a year that have an influence in London. If one takes account of even the Government’s recent efforts to try to reduce the number of these bodies, as in the Public Bodies Bill, London Councils estimates that at least 120 of these organisations remain active in the capital. Many of them are responsible for the delivery of public services for which local communities have no statutory ability to hold anyone to account. This is the target one is aiming at, the substantial number of bodies that deliver services locally but are not in any way locally accountable. Therefore local authorities should be able to help them.
The third point is that, if you are going to have a community right to challenge, for that to be a genuine one, it should be open to all regardless of the local community’s expertise or experience. It will need help and the local authorities are best able to give that. If you can achieve that, you will be achieving a degree of local accountability for the services that are there for local people. Not only communities but the local authorities themselves should have the ability to challenge national services on behalf of their communities and alongside other agencies, and to run services delivered by national public bodies within their area. This would ensure that communities have some local control and that there would be some local accountability.
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendment 130ZA because of pre-emption.
Lord Greaves
My Lords, I have Amendment 130ZC in this group, which I will speak to in a minute. Before I do, I want to say that I think we agree with a very great deal, if not everything, of what the noble Lord, Lord Jenkin, has just said. We certainly agree with the broad thrust of his amendments. It seems illogical that if there is to be a system in which local people can, in the terminology here, challenge the existing providers of a service and suggest that they might do it better, that should be only for services that are provided by local government, not by other public bodies, because when it comes down to it services provided by local government, as opposed to other public bodies, are fairly arbitrary. There are good reasons for a lot of them, but for some of them it is not very clear why local government does them and someone else does not. It is certainly not clear why someone else does a lot of things and local government does not in this country. The division is arbitrary and it seems to me that the relevant criteria should be whether it is a local service and then whether it is desirable that this should apply to it.
We agree very substantially with the noble Lord’s Amendment 130, and with his Amendment 131, which would allow a local authority on behalf of its community to take over in appropriate places. Of course, there is a great question mark over how funding is going to be arranged. You immediately get into all sorts of questions about whether there would be ring-fenced funding for a particular service or whether it would be rolled up in the general local government grant, the existing formula funding or whatever is going to replace it, and how that would be organised. Nevertheless, those are not insuperable problems. Initially, one assumes that there would be ring-fenced funding for particular services that were transferred, but the basic principle is something that we would certainly support.
The noble Lord is not enthusiastic about his Amendment 132 requiring local authorities to produce a list of challengeable services. He suggested that it is bureaucratic. However, there is certainly another side of that coin because the Government are going to lay down a list of services that are not challengeable and that are excluded. Indeed, they are going to give themselves power in regulations to change that list from time to time, as we have already discussed. If people know what they cannot challenge, presumably they can work out what they can challenge, so it is not really a problem and the noble Lord’s amendment is probably unnecessary, whether or not it elicits enthusiasm.
My Amendment 130ZC would allow a district council in a two-tier area to challenge the county council and to suggest in certain circumstances that it could take over county services. There is an ongoing argument in some areas between districts and counties about what counties do and what districts do. In my own county of Lancashire, there was a great deal of devolution from the county to the districts in 1974. It simply followed existing practice with the old municipal boroughs and even some of the larger urban districts in the county. In recent years, the county council has been pulling services back and taking them to the centre, even though it is a large, far-flung council. I do not know exactly how far it is from north to south, but it cannot be far off 80 or 100 miles, and it is 60 or 70 miles from east to west, so it is a huge county. It is also an area with strong districts, some of which used to be county boroughs and are still resentful of having been downgraded, and some of which have always been strong municipal boroughs and are now the basis of strong districts.
District councils across the country vary hugely. Some are, frankly, quite feeble and weak affairs, and others try to behave as if they were unitary authorities but do not quite get away with it. Nevertheless, there are a lot of services that it can be argued would be better run at a local level and which in many cases have been. An example is local highway functions that cover not the main roads but local streets. In Lancashire, they were run by most of the districts until three or four years ago when the county decided to take most highway powers back to itself. Demonstrably, the system has not improved since then. Some would say that it has not got worse, but others might disagree with that. It is an area that could be challenged.
The whole area of leisure and recreation has a very local base to it in many cases. One example is country parks. Having a network of country parks across a wide council might be the best way to do it, or country parks might best be run at a local level and involving local people.
Lord Moynihan
I am grateful to my noble friend for raising that. Very briefly, a classic example of this are the national sport centres, which initially were set up to focus on excellence in sport and did so for many decades but which increasingly have come to serve the local community through community use and Sport for All. These are surely very good examples of where you can be far more aligned to local authorities—if they are run by local authorities—working with local clubs and with local governing bodies while protecting high-performance sport.
Lord Greaves
I am grateful to my noble friend for that intervention. Libraries are an example of this. In some parts of the country they are very controversial at the moment because they are being closed down on quite a large scale, while in other places they are not. So long as the existing funding for a library may be transferred to districts, there is no reason at all why districts cannot take libraries over. Indeed, the municipal boroughs before 1974 were the library authorities, and many of the fairly new libraries that now exist were built by the boroughs and not by the county council. If the county council is seriously looking at reorganising its library service, one of the ways in which it could perhaps increase the efficiency of libraries and local involvement in them is by transferring at least some of them to the districts. I am not saying that that is an ideal solution everywhere, but it is something that ought to be challengeable. There are a number of things like that.
As for national services, the ward I represent on the council had a recent problem of raw sewage flowing down from an inefficient septic tank system on a caravan site on a hillside and causing real problems to residents in the lane below. Noble Lords can imagine what their back gardens were like—not very pleasant at all. The Environment Agency became involved in this. It came and went and came and went, and the district council, which has no direct responsibility for it, became involved, and in the end it was the district council that actually organised the system, spent the money and connected the caravan site to the main sewage system. It then recharged the people who lived on the site and the people who own it. It was the district council that actually sorted it out on the ground, even though, as far as I could work out, the statutory responsibility lay with the Environment Agency. That is a classic example of the kind of service that, if transferred at a local level to a competent local council, might well be run better.
As for the river system, the Environment Agency is responsible for main rivers, but certainly in our part of the world some of the things that are classified as main rivers are tiny little streams. There is no reason at all why they should not be the responsibility of the district council. The district council has no statutory responsibility for rivers and it is not funded by government for it, but some district councils employ drainage officers because they are the sensible people on the ground who sort out flooding and drainage problems when they occur. How much better if they were actually statutorily responsible for it? I therefore support the noble Lord’s amendment with some enthusiasm, and put mine forward with enthusiasm as well.
Lord True
My Lords, I put my name to the first of the two amendments tabled by the noble Lord, Lord Jenkin, and I endorse all that he said. I can imagine my noble friends the Ministers saying that it is not possible to graft this on to the Bill at this stage, but the principle is a very good one, as my noble friends Lord Greaves and Lord Moynihan have also said. If the Ministers cannot accede to these amendments now, I hope that they might be prepared between now and Report to talk to local authorities and local government associations about ways in which local authorities might be given opportunities to suggest ways of localising more services.
I must apologise—and this may be a relief to some—that I have to attend a full council meeting later this evening, and if I am not in my place at 7 pm, with the less-than-coalitionist ardour that there is on opposition benches in Richmond I might find that a division is called. I could not support my noble friend on the list of challengeable services because—and he has made this point—it would cause bureaucratic problems for local authorities. I did not put down amendments to Clause 74, which comes later, because it would have been discourteous, anticipating that I was not going to be here. However, I must say that the other form of list that your Lordships will discuss later this evening might, in my estimation, need at least two officers to compile these kinds of lists. Therefore, while encouraging my noble friends the Ministers to resist my noble friend’s amendment, I also hope—in anticipation, as it were—that they will think more carefully later about the other lists that are imposed on local authorities in this Bill.
Finally, I support the suggestion about counties and districts, and of course I also support the principle relating to the Greater London Authority and London boroughs. Self-evidently, there are many things—in an earlier debate I gave the example of running high streets —that London boroughs could do far more effectively than a regional authority. I hope again that my noble friends the Ministers will consider that too.
Baroness Thornton
My Lords, perhaps I may ask a question. I have a great deal of sympathy for the noble Lords’ amendments. I am not sure what my Front Bench is going to say, but this sounds like a very useful discussion to have about how to extend local rights. My question, because I am a champion of social enterprises and the voluntary sector, is whether they, too, will be able to challenge for those national services that might appropriately be delivered at a local level. That would seem appropriate.
Lord Jenkin of Roding
Immediately, exactly the same bodies and people, including local charities and voluntary bodies, should be able to challenge these national services, in the same way as the Bill provides for them to challenge local services.
Lord Patel of Bradford
My Lords, I shall be very brief. I have listened carefully to what the noble Lord, Lord Jenkin of Roding, said, and I have read his amendment carefully. The basic principle of the proposal is exciting and warrants further investigation and explanation, although I agree that a list would be completely bureaucratic. As for the idea that we could take this a step further, I am excited by the community right to challenge aspect but would want to be assured that the amendments would not in any way, shape or form dilute the local community right to challenge.
Lord Shutt of Greetland
My Lords, I thank the noble Lords who have introduced these amendments. I wonder if I may deal first, out of sequence, with Amendment 132. This amendment would require local authorities to publish and maintain charitable services provided by all relevant authorities in their area. The Government are already asking local authorities to publish important information about services, and the Bill already enables relevant authorities to specify periods during which expressions of interest can be submitted for particular services, and requires them to publish details of these. This amendment would put additional administrative requirements on local authorities and falls into the trap of over-engineering the right, something which the Local Government Association has warned against.
Amendment 130 would change the definition of a relevant authority to extend community right to challenge to any public body. Amendments 131 and 130ZC propose changes to the definition of “relevant body” that would enable local authorities to challenge other relevant authorities, specifically government departments, agencies and non-departmental public bodies, under Amendment 131, and county councils, where the relevant body is a district council in a two-tier area, under Amendment 130ZC. The Bill already enables the Secretary of State to extend the right to other public bodies in regulations—back to our friend. Our recent consultation sought views on which other public bodies the right should be extended to. Many respondents said they felt that it should be extended to all public bodies. It was also suggested that local authorities should be able to challenge other types of relevant authority. Given this appetite, the Government are keen to explore the idea of extending the right to other public bodies. However, many of those respondents also felt that we should not rush into extending the right before evaluating its impact in its current form. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded.
My noble friend Lord Jenkin usefully gave us various examples. I would just say that the examples are such that other Ministers and departments would have to get thoroughly involved and, by jingo, there would have to be some joined-up government in all this. I warm to the theme that it is exciting. I am just wondering whether it is too exciting for this Bill at the present time.
Lord Jenkin of Roding
My Lords, I have been hugely encouraged by the amount of support all around the House for the fact that we should pursue this more ambitious right to challenge. I am very grateful in particular to the noble Baroness, Lady Thornton, for what she said, and for the enthusiasm and excitement of the noble Lord, Lord Patel. Turning to my noble friend, I have already indicated that I am not interested in the lists, and perhaps I should have withdrawn that amendment. However, it was encouraging to hear him say that the Government are keen to explore and that he would have to involve Ministers in other departments. If the localism ambitions are to be achieved then every department will need to be involved in this, not just the DCLG.
From what my noble friend Lord Attlee said in relation, for instance, to the discussions we had earlier about EU fines, I am aware that he now has to discuss this with all the other departments concerned, which is a good thing. If our amendments achieve that and nothing else, that would be worth while. My noble friend Lord Shutt has offered grounds for hope. A few weeks ago, when I discussed this with the Secretary of State, his reply was fairly brief. He said, “Really, we have got to be able to walk before we can run”. My noble friend used the phrase “before evaluating”.
I should like to feel that this is part of the Government’s ambition, something which we can look forward to as an extension of the right to challenge, and something which can be seen to be very much part of the coalition’s policy. Recognising that it might be difficult to put this provision into the Bill at this stage—it was not considered, I think, in the other place—we have to recognise that there are problems. However, I hope that my noble friends on the Front Bench will start consulting now with the other departments that will be involved. With that, I beg leave to withdraw the amendment.
Baroness Thornton
I am standing up to give the noble Lord, Lord Greaves, time to move his amendment, which comes before mine in this group.
Lord Greaves
My Lords, if the House is willing to be tolerant, I will admit that I was asleep.
The Deputy Chairman of Committees
My Lords, I have called Amendment 130ZD and it was not moved. I now call Amendment 130A.
Amendment 130A
Baroness Thornton
Baroness Thornton
In that case, I will speak to my amendments and give the noble Lord, Lord Greaves, a chance to catch up on his amendments in this group. Before I do so, I declare an interest as an ambassador for Sporta, the trade group of social enterprises which deals with local sports and leisure services, and as the founding chair of the Social Enterprise Coalition. I shall speak to Amendments 130A and 131A, and comment on some other amendments in this group, although I may leave that until they have been spoken to. My noble friend Lord Patel is right to say that Clause 68 is important. I have always believed that socially owned businesses, founded and run in this case by local people, have an important and valuable role to play in the provision of public services.
Amendment 130A seeks to put beyond doubt the kind of enterprise which can challenge and be considered appropriate to contract for the services under consideration. I seek clarification from the Minister about this because, as it stands, it seems that the expression of interest could be used by local authority employees setting up a private company. I believe that that might be a loophole that would need to be closed. Amendment 130A states that,
“after ‘authority’ insert ‘who have formed an organisation for charitable purposes or a community interest company or industrial and provident society’”.
That covers basically all the organisations that are not private enterprises.
Amendment 131A again seeks to make completely clear an issue which is, in a way, about the size of the organisation. I believe that there should be a requirement that the expression of interest can be initiated by a local organisation or in collaboration with a local organisation. Many national charities already provide and contract for services at a local level—for example, Barnardo’s and Action for Children, which I know about through a long association with them. I believe that those national charities, along with any national social enterprise—indeed, there are those that are contracting which are building social businesses providing social care—would want to contract for those services at a local level. But they have to prove that they are working collaboratively with local agencies to provide locally integrated solutions.
This would still allow national organisations, which have great skills and experience in delivering these services, to bid but would ensure that the Bill meets its main objective of devolving power and giving a voice to local communities. The involvement of a national social enterprise or a national charity may be the difference between a local body being able to challenge and contract for local services and it not having the capacity to do so. It is important that large and small, and local and national, collaborative working is part of this Bill and is put beyond doubt. That is what these two amendments are about. I beg to move.
Lord Greaves
My Lords, I apologise for falling asleep; it is these Zs all over the place which are doing it. I am not speaking to Amendment 130ZD, which I missed. However, Amendment 133ZN has exactly the same meaning. I was going to apologise for putting down the same amendment twice in the group but it seems that that was providential. I certainly have a great deal of sympathy and support for what the noble Baroness, Lady Thornton, has just said.
We put down amendments to take out the reference to employees not because we do not think that in appropriate circumstances it is a good idea for employees to take over running the services for which they are employed, but because we are not at all convinced that this Bill is the best place to legislate for employee buy-outs, employee buy-ins, employee takeovers or whatever. They do not quite fit with the concept of the community—however the community or somebody in the community is defined—making a challenge and saying, “We can run this service. Can we have a go please?”. Employees are very different in that sense as they represent the producer side of the service rather than the consumer side and, clearly, if consumers or citizens or residents take over a service, they become producers as well. Equally, employees can make the same journey in the other direction.
Lord Newton of Braintree
My Lords, I want to build with a couple of questions on what my noble friend Lord Greaves and the noble Baroness have said. Definition seems to me to be quite an issue on my scanning of this clause. The question that has just been asked about what community you have to be in, so to speak, is at least worth asking and it will be interesting to see the answer.
The other question is that I understand that there are definitions of charitable bodies and of industrial and provident societies. Is there a definition of community bodies? Where does the type of body known as a social enterprise come in all this? If you ask the Library for information on social enterprises, as I did once a few months ago, you discover that there are about six different definitions from different quarters. Is social enterprise embraced in all this? Is it defined in all this? Is it intended to be dealt with in the wrap-up clause about the Secretary of State having the right to define other bodies? A lot of definition problems are raised but not answered by this clause.
Lord Beecham
My Lords, I want to assist, in a sense, the noble Lord, Lord Newton, by clarifying the description of one particular—
Lord Jenkin of Roding
I apologise to the noble Lord, Lord Beecham, but for those of us who rely on the loop, the microphone is rather important.
Lord Beecham
I shall be very brief. My Amendment 131AA looks at the definition that the noble Lord, Lord Greaves, referred to in Clause 68(7). It seeks to tighten the reference to the surplus by saying that the fact that a body’s activities generate a surplus does not prevent it from being a voluntary body for the purposes of the section. The original clause says:
“so long as that surplus is used for the purposes of those activities”.
With my amendment, it would say:
“so long as that surplus is required to be and is used”.
In other words, it is not a casual use; it is a prescribed use of the surplus in the way that you would find in a charitable organisation. I hope the amendment is not unhelpful and that it just emphasises the nature of the organisation and that the surplus is required to be used—as well as, in practice, that it may be used—for the purposes outlined. I hope the noble Lord will think about that and perhaps take the amendment back or accept that it strengthens the intention of the clause.
Lord Patel of Bradford
My Lords, I shall be brief. I am specifically speaking to support Amendments 130A and 131A, both of which are concerned with the nature and type of relevant bodies that may submit an expression of interest under the community right to challenge.
As we have heard from my noble friend Lady Thornton, the purpose of Amendment 130A is to bring greater clarity to the definition of a relevant body—something the noble Lord, Lord Newton, raised—particularly to make it plain that this is intended to include not only charitable organisations but community interest companies and industrial or provident societies.
As the Bill stands now, the question as to what constitutes a voluntary or community body is unclear, as the noble Lord, Lord Greaves, has said. A voluntary body is defined in the Bill by virtue of not being a public or local authority and,
“the activities of which are not carried on for profit”,
while a community body is simply one that carries out activities for the benefit of the community. There is potential confusion here. For example, does the Minister intend that a public or local authority is also a community body, and what of community interest companies which are allowed to make a surplus? Does this mean that they are not voluntary bodies for the purpose of this? The amendment that my noble friend Lord Beecham has suggested may be helpful in this case.
I am a firm believer in the potential for local community and voluntary groups to deliver services, provided they are given the right support. I am concerned that without the additional clarification provided by Amendment 130A some important groups, including industrial and provident societies—which, as we are all aware, have a proud and significant history of representing local people—will be excluded from the community right to challenge. I hope the Minister will support the intention of this amendment.
Amendment 131A is closely related to these issues and similar in intent to one tabled by the noble Lords, Lord Greaves and Lord Tope. This concerns the question of whether those relevant bodies that may wish to use the right to challenge to become themselves providers of services are in fact from or primarily working within the local area. My concern is that once a challenge is made under the community right to challenge, it might not be local community groups that enjoy the transfer of services but big business or non-local providers. Therefore, it seems essential that in determining who can make an expression of interest to run a service, priority should be given to those local community groups first.
If localism is to mean anything in practice, it should be local groups who benefit and, as people who live and work in the area, they should be the preferred option. I accept that there will be some cases where it is desirable for a regional or national provider—such as Barnardo’s or National Children’s Home, as my noble friend Lady Thornton said—to initiate the process. They will have a strong specialist offer to give but even in these cases there will be real benefits in encouraging local involvement and local partnership. The risk is that this becomes an open invitation for non-local bodies to seek entry into an area. Again, I hope the Minister will agree that this would be undesirable and look to support the amendment.
Lord Shutt of Greetland
My Lords, there is rather a lot here and I thank noble Lords who have taken part. Before I come to my notes, Clause 68(5) refers to voluntary and committee bodies and they can be defined. It might not be absolute but they can be defined in some way or another. When the subsection says,
“a body of persons or a trust which is established for charitable purposes”,
it does not say there about the community. That can be national. It then says, “a parish council”, which is clearly local, and,
“in relation to a relevant authority, two or more employees”,
which might just be a partnership if it is two. If it is more, it can be any form of enterprise that was thought of. I am aware of the theology that exists in the different forms of co-operatives and so forth. There can be all sorts and then there is the catch-all in our friend, “regulations”.
Let us see how we can cope with the notes that have been made on specific amendments. Amendment 131A and 131C would require the voluntary and committee bodies to have some local connection, whether operating primarily in or for the benefit of the community in the relevant authority area, or working with a body that does. We are keen to encourage local and national bodies to work together to submit expressions of interest and bid for any subsequent procurement exercises, but many national organisations do excellent work locally in their own right—particularly for communities of interest, which may not always be well supported by a local group. We would not, for example, want to prevent the Alzheimer’s Society expressing an interest in running a relevant authority service. It is difficult to argue that it would not represent the interests of vulnerable, elderly people in a local area. These amendments could also prevent voluntary and community bodies that are successfully implementing innovations in service delivery from replicating their approach elsewhere.
Amendments 131AA and 131B propose different requirements around a voluntary body’s surplus. Amendment 131B would require that surpluses should be used for the “benefit of”, as opposed to being for the “purposes of those activities”,
“or invested in the community”.
Amendment 131AA would require that any surplus was,
“required to be and used”,
as opposed to simply being “used”,
“for the purposes of those activities or invested in the community”.
Amendment 131ZB would enable the Secretary of State to add “category of bodies” as a relevant body rather than “person or body”. I am not clear what material difference these amendments may make.
Baroness Thornton
Perhaps I may help the Minister with this because the point about my noble friend’s Amendment 131AA is that where a voluntary body generates a surplus, it can be legitimately used for several purposes. It can be used to undertake further activities consistent with the social aims, as set out in its governing document, which could include but not be restricted to local community benefits. It could be used to invest in strengthening the organisation itself, so that it becomes more resilient and can expand its work, and it can be used to repay loans and other investment. It might, for example, include a payment of dividends to shareholders following a community share issue within the limits established by the incorporation of the community interest company or the IPS. Those are safeguards against excessive private gain. I do not think this is the right amendment but the point is that it seeks to clarify whether points two and three are permitted within the Bill. We might need to discuss this further.
Lord Shutt of Greetland
I am even more confused but I will endeavour to look at that in due course. As I was saying, the Bill already states that a voluntary body’s activities should not be carried on for profit. The purpose of a voluntary body’s activities should surely be to benefit the particular community it represents. As for what the noble Baroness has said, we are in Committee and we can clearly look at this again, but I saw this in simple terms. I cannot get it out of my head, quite frankly, that you may get a community association bidding which, in its building, has a kitchen where it will do its meals on wheels. It might make a bit of a profit from the meals on wheels service in that community. It seems to me that if it makes a small profit from that exercise, it can use that for the benefit of the rest of the association that it is carrying on in that building. That is as I see it in simple terms.
Amendment 130A would require employees of a relevant authority to set up a charity, community interest company or industrial and provident society in order to submit an expression of interest. Requiring employees to form a specified organisation in order to submit an expression of interest and get a fair hearing for their idea would create an unnecessary and bureaucratic burden. It risks putting employees off exercising the right altogether. The Government are committed to giving public sector workers the right to bid to take over services that they deliver, and the community right to challenge implements this commitment for relevant authority employees.
Baroness Thornton
I am sorry for interrupting the Minister again but this is a very important point. I can cite two examples. Sunderland Home Care was set up by home care workers as a co-operative and, quite rightly, the employees of that local authority in Sunderland provided much better terms and conditions to contract with Sunderland Council. Greenwich Leisure started the whole movement of leisure trusts because Greenwich Council was going to close down its swimming pools— this was 10 or 12 years ago—due to something called rate-capping, which some of your Lordships may remember, and it was the employees who initiated the move to contract with the local authority to take over all the leisure services.
Those examples both make a surplus—and quite right too—because that is how they reinvest back into their local communities, so that the charges in Greenwich for leisure services are now much lower proportionately than they were. They are also both able to support contracting in other areas, so that Sunderland Home Care now provides training for home care workers across the north-east. The point about this amendment is that by defining the legal form that community groups, or any group of employees, use to do the challenging, we actually safeguard the social purpose against private profit being made which then does not get put back into the community.
Lord Shutt of Greetland
My Lords, I understand what the noble Baroness is saying, but there is a concern about being overprescriptive. It is important that we do not do anything to put employees off. We can return to this; there is no reason why not; but we know what the intention is. It is to free up the opportunity for employees to take part in a right to challenge. I am far from certain that we should be prescribing that there are these various routes and it is outside the theology if they take the fifth route and not routes one to four. We need to be a bit careful about that.
Lord Greaves
If there are not to be clear structures which are recognised as appropriate, how do you prevent the situation in which two employees make a right to challenge when they have absolutely no support from the rest of the employees, but because they have made the right to challenge, the process has to take place?
Lord Beecham
Before the noble Lord replies, may I point out that I have an amendment dealing with precisely that matter as well?
Lord Shutt of Greetland
I am quite clear that, if there are two employees, we are back to the whole business about looking at who is backing this and whether the people who will ultimately benefit from this service think that it is a good idea. It is unlikely that the local authority would say, “Off you go; you look a great pair”. It is very doubtful that that would be the case. That is the route to putting a stop to that. It may well be that our friend, regulations, will come into this as to the power of stoppage that there would be in these circumstances.
Amendment 133ZN would prevent the Secretary of State providing advice and assistance in using the right to a body that is formed of, or includes, any employees or ex-employees. That would introduce a disparity. It would mean that advice and assistance could not be provided to a voluntary and community body formed of employees and ex-employees, but could be provided to other voluntary and community bodies that did not contain such individuals. No decisions have been made on the form of any advice and assistance in using the right, but we expect to focus on those that need it most. This is likely to mean smaller, newer voluntary bodies, but it is sensible that we have the powers to provide assistance to any relevant body that might need it. I understand that an impact assessment has been done on this and the suggestion is that, across the country, £20 million will be required. It is not yet in any budget, but that is the suggestion in the impact assessment.
Clause 73(4) ensures that this includes employees who have formed a body to take on the delivery of a service, including where they have left the employment of the authority. This supports the Government’s commitment to give public sector workers the right to bid to take over the running of the service that they deliver. I trust that these comments will mean that these amendments are not pressed at the present time.
Baroness Thornton
I rather expected that the noble Lord, Lord Greaves, would be doing the heavy lifting at this point in the debate. I thank the Minister. We need to have further discussions about this to make sure that we are safeguarding things. I say to the noble Lord, Lord Newton, that definitions are not a problem here, because we are seeking to create a variety of different ways for local organisations and groups to set up social businesses which will be able to contract for services. The way that they will define themselves is by choosing a legal framework which fulfils the purpose as outlined in the Bill. There are only a few things that they could choose: a company with charitable purposes; a community interest company or an IPS, a co-operative of a different sort. There is a limited number. They define themselves, in a way. It looks complex, because there are lots of different ways of doing this and, in fact, the Government’s role in providing information support at local level will be very important. With that, I beg leave to withdraw the amendment.
Lord Greaves
“( ) This section does not apply to any company or other body or person the activities of which are carried out for profit.”
Lord Greaves
My Lords, I was very carefully not saying “Not moved” to any of those previous amendments.
I rise to move Amendment 131D, which is grouped with Amendment 131ZP and with the question on whether Clause 73 should stand part, which is to be moved by the noble Lord, Lord Patel, which should lead to another interesting debate. Amendment 131D is a probing amendment to stimulate a discussion which follows on from the discussion we have just been having about the nature of the organisations which might end up running local services, whether they are very local services, such as looking after a pocket park, or much more substantial services, such as taking over refuse collection. In relation to “relevant bodies”—in other words, the bodies that are challenging to take over services—my amendment would add the words:
“This section does not apply to any company or person the activities of which are carried out for profit”.
It is clear that there is not an absolute distinction between profit-making and non-profit-making bodies. We have already discussed the way non-profit-making bodies might make a surplus, but for the purposes of discussion, that is fair enough. Amendment 133ZP is a belt-and-braces amendment, which would insert the same wording at the end of Clause 73.
The fear about the proposed community right to challenge—and there is a lot of fear about the proposal—is that it will lead to the fragmentation, privatisation and commercialisation of a lot of council services; that, in the name of the community making the challenge and as a result of local community organisations, parish councils and whatever putting in the first challenge, the big boys will then come galloping in. The noble Lord referred to the risk of non-local bodies moving into the area. Perhaps there is a risk of local commercial organisations of a slightly cowboy variety, or, more likely, large corporate companies, coming in and taking over, all in the name of the community.
Lord Patel of Bradford
My Lords, I shall speak to Clause 73 stand part. On the face of it, the heading of the clause, “Provision of advice and assistance”, appears to be very welcome. However, I am struggling with the direction of travel here. This is, after all, the Localism Bill whereby we are led to believe that the Secretary of State wishes to roll back the mighty arm of the state, yet here we find a clause that gives an astounding new array of powers for the Secretary of State to interfere, I suggest, in local decision-making.
I shall outline the extent of that interference. Clause 73 at least begins as it intends to go on. First, we are asked to endorse the following:
“The Secretary of State may do anything that the Secretary of State considers appropriate for the purpose of giving advice or assistance to a relevant body”.
Now, while I am certain that the Secretary of State has only the best intentions and that he means to provide helpful advice and assistance, I struggle to accept the idea that this may include anything that he considers appropriate. I am also somewhat concerned at the use of the word “assistance”. What do we make of this? Exactly what does the Secretary of State have in mind for such assistance? Clause 73 goes on to give us an idea, which I again find a little troubling. Assistance may come in the form of,
“the preparation of an expression of interest … participation in a procurement exercise”,
and, as if this were not enough assistance already, it may also involve,
“the provision of a relevant service”.
I am left to wonder what the point is of the previous clauses in the community right to challenge chapter, when the conclusion appears to be that the Secretary of State is going to do it all.
I am not a lawyer, so I will leave it to noble Lords who are to ponder the implications, but I am fairly certain that interference by the Secretary of State in local procurement exercises may well be against competition rules, not to mention the likely effect of this on local governance.
The Secretary of State has not yet finished—there is more in this clause. We go on to learn that the Secretary of State may also do anything that he considers appropriate in the operation of the whole community right to challenge chapter in respect of a body or person that is other than a previously defined relevant body. Once more I am forced to question why the previous sections of the chapter were written and why noble Lords have spent the last few hours discussing such things as what constitutes a relevant body. It seems clear to me that this clause intends the Secretary of State to have the powers to bring into the community right to challenge, at any time or place as he sees fit, any body that he wishes.
The clause goes yet further. The Secretary of State also intends to interfere with finances. If it is the intention of the Secretary of State to provide “financial assistance” to local groups seeking to take up the community right to challenge, why does he not make that assistance available to local authorities that have local knowledge so that they may decide on its use? That would be something practical, and something which I have previously said is lacking from the Bill. However, this does not seem to be his intention. The reason that I am suspicious is that the Secretary of State feels it necessary to include in the definition of bodies to which he can give financial assistance those that are not relevant bodies under the earlier clauses. Can the Minister explain who these bodies might be, and why the Secretary of State needs these new powers?
I say again that this is not localism. The aim of the community right to challenge is to enable local voluntary and community groups, social enterprises, parish councils and local authority employees delivering a service to challenge a local authority by making an expression of interest in running any service for which they are responsible. I do not recall this meaning that the Secretary of State shall attempt to supplant this very local process in any way he considers appropriate, including placing new bodies that are not defined under the Bill into the process. We have already debated the potential limitations and lack of clarity about the current definitions of a relevant body, and I am quite sure that it is the intention of this House that this should not include the private sector.
I would have thought that the Secretary of State might have learned something from the recent debate over the role of competition in the health service about the risk of inviting the private sector to take over large parts of public services. If not, I am sure that my noble friend Lady Thornton could give him a quick lesson in this area. I have a strong suspicion—maybe wrongly—that this clause may well be a backdoor attempt to bring in such privatisation. Indeed, I believe that this is the same point exercising the minds of the noble Lord, Lord Greaves, and the noble Baroness, Lady Hamwee, whose commendable amendment seeks to restrict these new powers of the Secretary of State so as explicitly to exclude the private sector. However, I do not feel that this clause is one that can be corrected by amendment. The entire clause raises so many questions, and appears to fly in the face of localism and the intentions of the Bill.
It is for this reason that I oppose the question that the clause stand part of the Bill. I hope the Minister will either reassure me tremendously, or support my argument.
Baroness Hamwee
My Lords, I wish to ask one question, which has occurred to me only while listening to the debate—otherwise, it would have been down as an amendment. Does clause 73 extend to the Secretary of State giving directions to a local authority to provide financial assistance in this connection? The Minister can take it as my view that it should not.
Lord Shutt of Greetland
My Lords, Amendment 131D seeks to confirm that bodies which carry out activities for profit cannot be relevant bodies. Amendment 133ZP would prevent bodies which are carrying out profit-making activities from receiving advice and assistance in using the right to challenge.
The definitions of voluntary and community body have been designed to enable a range of civil society organisations to use the right. This supports the Government’s commitment to enable these groups to have greater involvement in running public services. This includes social enterprises and co-operatives, where not all profits may be reinvested in their activities or the community provided that their activities are for the benefit of the community. This requirement will ensure that any profits are indirectly focused on their activities. It will also ensure that large, multinational companies and big conglomerates cannot use the right to challenge. I am aware that that is a concern.
No decision has been made yet on the form that any assistance will take, but one would expect it to focus on those who need it most. This is most likely to mean smaller, newer voluntary and community bodies; but it is sensible that we have the powers to provide assistance to any relevant body that might need it. In answer the noble Lord, Lord Greaves, when I referred to the “power of stoppage”, that was my own phrase. I think that we have to look at regulations because it is not clear to me yet exactly how a local authority will cope when it encounters the whole business of people taking advantage of the right to challenge—whether it can just say “buzz off”, or whether, in the regulations, it cannot say “buzz off” unreasonably. I believe that this is something that has to be worked through in regulations. He referred to the figure of £156,000; that is the threshold figure in terms of the Public Contracts Regulations 2006. However, as well as the £156,000 threshold figure, there is a list of services in Part B of Schedule 3 to those regulations which is quite lengthy, to which that figure is not relevant. This includes education, health and so forth. There are a large number of things which would fall outside that.
It is important to understand that there is nothing in the Localism Bill which addresses procurement. Procurement is up to local authorities. Local authorities have worked out how they do that.
Baroness Thornton
I do not understand, then, why Clause 73(1)(b) talks about,
“participation in a procurement exercise”.
Lord Shutt of Greetland
That would be the exercise that is carried out by the local authority. It does not say how the authority should procure, it simply acknowledges that there will be a procurement exercise. I understand that these are wide-ranging powers, and I understand the noble Lord expressing his view on that. I think, however, that there are two quick responses—and the noble Baroness, Lady Thornton, will no doubt warm to this theme. It could well be that if employees are expressing an interest, under these clauses, provision could be made—and that may indeed be via a local authority rather than the Secretary of State—to give them help and assistance in forming a community interest company. That sort of advice and assistance, and seed-corn money, might enable such groups of employees to enter into expressions of interest. If they did not have that, they would be unable to.
Baroness Thornton
The noble Lord invites me to comment on this. My comment is that it is not the Secretary of State’s job to provide this advice and assistance. It is the local authority’s job, or else that of some association which is under its control. It is the Government’s job to provide the resources for them to do it. This gives too much power to the Secretary of State.
Lord Shutt of Greetland
The noble Baroness takes words out of my mouth. I did indeed say that that is exactly what could happen. I hope that, in the circumstances, these amendments will not be pressed, and that the clause will be able to stay. As I indicated right at the start, regulations are with us, and we will all need to see that we are happy with them. The noble Lord, Lord Greaves, said that he wanted convincing before the Bill leaves this House. It will be a while yet before it leaves.
Lord Patel of Bradford
Can the Minister give the House an idea of when the draft regulations on this clause will be laid?
Lord Shutt of Greetland
All I can do is repeat what I said at the beginning. Before we return to this, we shall either have draft regulations, or we will have an indication of where we are going. I cannot do more than that. I suspect that there is some work to be done on this, although some work is being done as we are going on. We have only just got the response to the consultation. Every endeavour will be made, because obviously it will assist their Lordships if this information is available.
Lord Patel of Bradford
I think that the wording we are discussing is almost duplicated in Clause 88, which will be opposed by the noble Lords, Lord Greaves and Lord Tope, so it is worth taking a second look at the extent of these powers. I am not entirely convinced that we have cracked this nut as lots of issues have not been debated fully.
Lord Newton of Braintree
I hope that I may hop in before the noble Lord, Lord Greaves, sums up, because I have been left in a state of confusion—as, I suspect, has the opposition Front Bench. I understand the point that this provision is not intended to let in large, multinational companies. We probably would not want to do that and in any case it seems to me that the number of large, multinational companies that would want to bid for small, local contracts worth less than £150,000 would be rather small. However, I am not clear whether it is the intention to do what this amendment appears to do, which is to ban even a small profit-making organisation. If that is the case, I am not sure that it is justified. If we consider meals on wheels provision, small catering companies provide sandwiches for local businesses and possibly meals for local old people’s welfare clubs. I do not see why they should be barred simply because they are making a profit, if they can provide a better value service than the organisations we are talking about here. I should like to know what the answer is to that.
Lord Shutt of Greetland
The quick response is that the community has the right to challenge. It is in the Bill—although I cannot turn to the relevant clause quickly—and was certainly in the consultation document, that there may well be circumstances where the community goes into partnership. Going back to meals on wheels, you could have the local community centre going into partnership with the local baker. Those sorts of things could happen, but the community has the right to challenge, not local businesses or conglomerates.
Lord Newton of Braintree
Can I be absolutely clear about that? I am sorry; I am becoming as talkative as the noble Baroness. I do not apologise for that as I think she is doing rather well. If a profit-making company were involved with a community body, would that be all right, even though it was making a profit?
Lord Shutt of Greetland
My Lords, it is my understanding that the community body could have as a partner another body that happened to be a profit-making body.
Baroness Hamwee
My Lords, I am relieved to hear the Minister say that, as the noble Lord, Lord Newton, seemed to be referring to competitive tendering, which we have experienced in different forms over the years. I want to pick up on a point that my noble friend made earlier. This is an observation rather than a question. The Minister said that the assistance would be given to whichever organisations needed it. I hope that the regulations will be written with a view to benefiting the community rather than the provider of the service. Those two things may be the same in the long run, but the benefit to the community should be the lens, as it were, through which one looks at the arrangements.
Lord Shutt of Greetland
My Lords, I understand the point that the noble Baroness is making. I will bear it in mind and take it back to the department.
Lord Greaves
My Lords, I thought that this group might lead to an interesting discussion. We have had an interesting discussion, which I do not think can end today. I have the sense that of all the groups we have discussed so far, this is the one on which my noble friend the Minister has batted on something of a sticky wicket. However, like a good Yorkshireman, he has rightly batted with a straight bat. There have been a few Bradfordians in the Committee today. The noble Baroness, Lady Eaton, has just gone but there are still a few of us left. The Minister does not quite qualify as a Bradfordian by a couple of miles, but he is still using a straight bat.
There are two fundamental issues in this group. One was raised by the noble Lord, Lord Patel of Bradford. The question of how this money is going to be handed out, to whom and what criteria will apply is very important. As we are all Bradfordians, I shall talk about Leeds. If there is an agreement between Leeds council and a big community-based group which would like to take over a lot of community-based services, and that happens, it seems to me very appropriate for government money to be used to assist that process. The process will proceed on the basis of co-operation and people agreeing that a particular group requires help and assistance to build up its capacity. However, if the money is handed out to large national organisations, whether they be charities or other bodies, in order to make speculative challenges or to come in after the challenge phase as part of the procurement for large-scale services such as children’s services or adult care services in large authorities, that would seem to me a less desirable use of the money. If it is to be used in relatively small or medium-sized amounts to bolster local community-based groups, that seems to me a good use of government money. However, I have problems with this provision being part and parcel of large national organisations taking over local services. That is the kind of thing that we shall have to probe further.
However, the fundamental issue in my amendments has not been confronted. My noble friend the Minister stated clearly that large commercial organisations, multinationals or others, will not be able to take part in the community right to challenge and will not be able to make expressions of interest. We all understand that but the problem arises at a later stage if it is a challenge for a service that costs £1 million a year to run and therefore has to be put out to a tendering process. As far as I can see, that would be very like the competitive tendering processes which used to be compulsory, and which some councils still carry out in order to get the best value because that is the way they want to do it. If that is to happen on a compulsory basis as a result of what was initially a community right to challenge, a problem will arise. Procurement does not appear in the Bill. I have been looking at where it might appear. Clause 72 is headed “Supplementary”. Clause 72(1) states:
“The Secretary of State may by regulations make further provision about the consideration by a relevant authority of an expression of interest submitted by a relevant body”.
That seems to allow the Secretary of State to make any regulations he wants about the whole procurement process. Clause 72(2) states that a relevant authority must,
“have regard to guidance issued by the Secretary of State”,
which, as we know, comprises instructions and does not even come to this place for us to nod it through. There are real issues here about the procurement process. If it is to be not in the Bill but in the regulations, the procurement regulations—if there are to be any—have to be among the regulations that the Minister manages to dredge out of the department before we get to Report. On that basis, I beg leave to withdraw the amendment.
Lord Greaves
“regarding services provided on behalf of more than one authority jointly”
Lord Greaves
This amendment is the first in a group of four amendments. In moving it, I will also speak to the three others. It is a miscellaneous group of different things that I put together to avoid getting leant on by the Whips. I think I can deal with these fairly quickly.
Amendment 131J is about how to deal with services provided by more than one authority jointly. The two adjoining authorities might be a district and a county in a two-tier system. I have a number of examples of that; I do not think I need to read them all out, but they include leisure facilities. Amendment 131K is about how the Government are going to review what is going on. This is an all new, untried and untested system that, we assume, will be brought into operation across the whole country at the same time, and the amendment is about how the Government are going to have a continuous review of what is going on, and continuous consultation with local authorities on how it is happening.
Amendment 133ZK provides more regulations and restrictions. It is about the rejection of an expression of interest. It seems to me that there are two stages at which things can be rejected. One stage is where the expression of interest is made and the authority can simply say, “We are rejecting the expression of interest and are going no further”. At the moment, Clause 70(8) says:
“The relevant authority may reject the expression of interest only on one or more grounds specified by the Secretary of State by regulations.”
That is crucial. Again, it would help if we could know what those regulations are; they ought to be in the Bill. The second stage is procurement, which we have been talking about.
Amendment 133ZL is a provision by which the relevant authority, the council, can carry on as before with the exercise, even if the relevant body—the community body or the parish council—withdraws its expression of interest or refuses to agree to modify the expression of interest. It is an indication yet again that once the process has started, it will continue and be very difficult to stop. That is, I think, of concern to some of us. We can see a situation in which a community organisation as defined is persuaded to put in its expression of interest. It is not really interested at all, but it gets the process going and is in league with one of the big boys, a big commercial organisation, which, if the figure is over £156,000, will then come in and try to clean up. There are real concerns that there are loopholes here that need looking at before the system is unleashed. I beg to move.
Lord Shutt of Greetland
Amendment 133ZK would remove the Secretary of State’s power to specify in regulations the grounds for rejecting an expression of interest. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will of course act within the spirit of the right, but the power to specify the grounds on which an expression of interest could be rejected prevents a recalcitrant authority from rejecting it out of hand and defeating the purpose of the right. I accept that, as my noble friend indicates, we are back to regulations.
Amendment 131J would give a Secretary of State a power to make provision in relation to services that are provided jointly by authorities in regulations. We would expect relevant authorities to take a common-sense approach to services that are provided jointly, and to agree together a period during which expressions of interest could be submitted and arrangements made for considering them and for carrying out any subsequent procurement exercise. However, provision in relation to jointly provided services can already be made if necessary under the powers in Clause 72.
Amendment 131K would require the Secretary of State to consult representatives of relevant authorities when making regulations of guidance, and to have regard to their views. We have recently concluded a consultation, with all those with an interest in the right, on our proposals to use the various powers that we have taken. We will consider the need for consultation on future changes.
Amendment 133ZL would remove the authority under this chapter for a relevant authority to undertake a procurement exercise when an expression of interest has been withdrawn or a relevant body does not agree to modifications to it proposed by a relevant authority, meaning that it has to be rejected rather than accepted. An authority might wish to carry out a procurement exercise in these situations if, for example, it is attractive to the type of service delivery set out in the expression of interest and if the authority wants to initiate a procurement exercise anyway, or if services are currently contracted out and the company needs to undertake a procurement exercise in order to maintain service continuity. Clause 71(7) provides clarity in stating that a relevant authority may determine whether to carry out a procurement exercise where an expression of interest has been withdrawn. I hope that that will persuade my noble friend to withdraw his amendment.
Lord Greaves
My lords, I will withdraw it in a minute. However, I will, as always, read carefully what my noble friend has said and decide whether any of the amendments in the group need further pursuit.
The more I hear this debate, the more I am concerned about the word “challenge”. I think “challenge” is wrong because it is an adversarial word. If any of these arrangements are going to work, there will have to be a willingness on both sides—that is to say, on the part of councils and the organisations that are making a bid to run services—to make them work. There has to be co-operation. If that is not there, frankly the arrangements are not going to work very successfully. What is needed more than anything else in many places is a culture change, which can best be created by people exhorting, explaining, being enthusiastic and persuading, rather than having hundreds of thousands of words telling people in detail what to do. If people do not like what they are doing, they will do it grumpily, and it will not work very well.
The only question I will ask my noble friend the Minister concerns all this talk of recalcitrant authorities. What estimate have the Government made of the number of local authorities which they expect to be recalcitrant in relation to this particular part of the Bill?
Lord Shutt of Greetland
I have no idea whether there is any estimate. When starting afresh with a new proposal, one of the things I think to myself is, “Could local government have done this anyway? Could it have said, ‘It could be that all sorts of bodies could do things rather better than us. Can we find ways in which we can give these opportunities?’”. I am doubtful that I have heard the answer. Therefore, because this has never been done, there might be a perception that this is the sort of thing that local government would not get up to on its own. The authorities could be recalcitrant in those circumstances, but in general I do not know, and I suspect that the calculation is not there because I do not see how you could get that calculation. However, it is worth looking at what has happened to date.
Lord Greaves
The Minister is tempting me to go into a whole new area, which I will resist, except simply to say that there is a culture in local government nowadays that is very different from what it was 30 or 40 years ago; you do not do anything at all, on anything and in any way, unless you have permission from the Government or the regional office, which has now been abolished, or someone else up there, to do it. People are scared to death of doing things because they have lawyers who tell them that not only can they not find the power in the legislation; they cannot find the instruction in the legislation and all the stuff that tells them exactly how to do it. That is the problem in local government now; it is in detailed bureaucratic thrall to central government, and we are about to pass a Bill that increases that.
Having made that counterpoint to what my noble friend said—which might have some justification but is, I think, part and parcel of the fact that people in Whitehall do not believe that local government can ever be trusted to do anything useful or sensible unless they are told how to do it as if they were in kindergarten—I beg leave to withdraw the amendment.
Lord Lucas
“Duty to consider requests
(1) A relevant authority must consider a request in accordance with this Chapter if—
(a) it is submitted to an authority by a parish or town council, and(b) it is made in writing and complies with such other requirements for requests as the Secretary of State may specify by regulations.(2) In this Chapter “request” means a request to a relevant authority that it should provide a service or perform a function (being a service or function that it already provides or performs, or is entitled to provide or perform) in a specified manner.
(3) A relevant authority in receipt of such a request shall accede to it unless doing so would—
(a) result in net additional expenditure or net reduced revenue, or(b) adversely affect that authority’s wider interests or policies.(4) In reaching a conclusion under subsection (3)(a), the relevant authority shall take into account all consequent changes in expenditure or income, including any amounts that the parish council is prepared to pay the authority, except that it may not take into account any net reduction in revenue resulting from the enforcement of civil penalties.”
Lord Lucas
My Lords, the amendment gives a town or parish council the power to put in a request to its superior council, whether that is the district, county or city council, to say, “We wish you to provide your services in a particular way”, or, “We wish you to exercise your functions in a particular way”, and for it to be imperative on the superior council that it accede to the request unless doing so would cost it money or interfere with its wider interests.
There are three principal themes behind the amendment, all of which we will come to in my later amendments. First, there is much to be said for producing something between the current status and some of the cathartic remedies offered in the Bill—in this case, the community right to challenge. It is a serious prospect to ask a small Hampshire town to take on rubbish collection, parking control or any other services that are provided on a large scale by the local authority, and probably belong at that scale, but it is quite reasonable for it to say to the local authority, “When the dustmen come round and spill a bag, we would like them to pick it up rather than leaving the contents on the ground, as your current contractor does”, or, “Please can you desist from parking control on Wednesdays, when we like to allow everyone free rein to get into the shops in the town centre”. To my mind, such requests should be acceded to, but we will never do it through the community right to challenge.
I propose this as a more gradual way, an in-between solution. We are giving such power and influence to town and parish councils that they will over the next decade or so grow much stronger than they are at the moment. There are many other things in which people have an interest locally—not just planning but the whole way in which their local services are provided—and it seems unreasonable that the only way they should have to influence those things is in trying to put together a consortium to take over from the superior council the whole provision of those services. If they can find a solid way to influence the services, if they can make a definite promise to their electorate that they will go to the superior council to ask for that to be done and to have every indication that it will, that will contribute to building strength at the bottom end of the council structure. That will produce a much more robust council when it comes to taking all the decisions that will be asked of it under neighbourhood planning. In strengthening communities and the basis for neighbourhood planning, the amendment has a role.
The third role concerns cities. In neighbourhood planning, we are producing a structure that will work very well in the suburbs and the countryside, where there is a great deal of value to be extracted from the planning process and where communities have a close interest in the way that development takes place. That is the case not only in the inner cities but in places such as in Battersea in London, where I lodge. There is really no interest in controlling development because it is a matter of minutiae and individual planning decisions. The place is built up, except for Clapham Common, and no one can touch that. There are no big decisions to be taken in our neighbourhood; there is no incentive to get together as a community under the provisions of the Bill. However, if the neighbourhood was to be granted any sort of control over the enforcement of parking, 50 per cent of households would come out to vote tomorrow.
I want the capabilities of neighbourhoods under the Bill extended to include the sort of things that people will care about in cities. In places such as Battersea, that is parking, music in pubs and licensing, and other such local authority functions. In the more impoverished parts of the inner city, it is likely to be education and provision for youth. Those are the sort of things that a community will care enough about to want to influence and that will provide the motivation for the creation of the sort of active neighbourhoods that the Bill is intended to achieve.
Lord Newton of Braintree
Prompted again by what I have heard—I hope that this is not out of order, because it raises a point about the clause with which we have just finished—this is the first reference I have seen to town councils as distinct from parish councils. Town councils are not specified as relevant bodies in the previous clause; they are included in the new clause. What is the position of town councils under the Bill?
Lord Greaves
My Lords, legally, town councils are parish councils. I think that is the answer the Minister will give. It is true, anyway. The noble Earl, Lord Lytton, is poised to come in again. A town council is a parish council that has passed a resolution under about three lines of the Local Government Act 1972 to call itself a town council. It can have a town mayor if it wishes, but it does not have to. I think that is all there is to say about it, but the noble Earl might have other things to say.
I strongly support the amendment moved by the noble Lord, Lord Lucas. It is ridiculous if a parish council can put in a lot of time and effort to consider taking over local services, has to do it through the expression of interest procedure and can then be outbid by other people. There is no sense in that. The Minister might say that it is unnecessary because if the district, unitary, county or whatever council agrees to it, it can happen anyway. My experience is of a borough council that tries to offload things to the parishes such as public conveniences when the parishes do not want to take them on, but that is a different matter. Throughout local government, there is a culture of conservatism and fear of taking on and doing more things. Changing that culture is the most important thing that we have to do. The amendment would be a very useful addition to the Bill.
The Earl of Lytton
My Lords, there is nothing like the words “parish council” to get me out of my seat. Noble Lords will know of my interest in parish and town councils. To answer the first question, the noble Lord, Lord Greaves, is right: fundamentally, structurally, parish and town councils are effectively synonymous. The differences are in the way in which they operate, but structurally in their clerks, membership and rules of engagement with which they have to comply, you can more or less say that the term is synonymous one with the other, except that one happens to apply to a town. It is an area where we have great difficulty with what we might call the family of parish and town councils, because town councils such as Weston-super-Mare have huge budgets and are on a principal authority scale, whereas many tiny rural parishes, although they may have quality parish council status, are extremely small. That lack of consistency makes it very difficult to deal with parishes as a cohesive whole.
I say straight away that I have not conferred with the noble Lord, Lord Lucas. I am very pleased that he has moved this amendment. There are some extremely good examples of where principal authorities have felt that they had the confidence to pass on to a parish or town council a function that they knew could be dealt with readily, cost-effectively and which was well within the capacity of the town or parish council concerned. But I am bound to say that nationally, the track record of passing things down to the lower tier has been fairly poor, taking things as a whole. That is one of the issues that lies behind localism. We need to get that straight.
What the noble Lord, Lord Lucas, suggested was a sort of localism-light in the sense of trying to avoid a bureaucratic and procedurally-driven process. On the whole I would welcome that as well. At Second Reading, I said that these things have to be rendered down to a localism scale—a community scale, not based on the sort of procedures and checks and balances that perhaps apply to the much more senior aspects that must be rightly dealt with by principal authorities.
I give one example. In my own parish council in Shipley in West Sussex, which is one of the largest geographically but has one of the smallest populations in the whole of West Sussex, a parish councillor commented some time ago on the problem the parish council was having with verges. People were encroaching on road-side verges by extending their gardens, filling-in road-side ditches, and doing all sorts of things that might include impairing forward visibility along the road. They were planting things, and so on and so forth. The verges, in so far as they were part of the highway, would have been vested in the highway authority, which in that instance is the county council. We know that all county councils are subject to cost constraints, and certainly West Sussex where I live is no stranger to that and has introduced some commendable measures to try to square the circle, so to speak. But it cannot be in all places at all times and it cannot police those verges. Such things should be preserved in the generality of the public interest—they are assets of community value in many cases but they are often orphan pieces of land. They may historically have been part of an enclosure plan or something like that which attached them to a particular estate or riparian owner, but over time, and with the process of land registration, that link has been lost. The boundary may have been drawn to an ordnance survey boundary that was set back from the hard edge of the road, so you end up with orphan strips.
Parish and town councils in some instances—I am not saying in every instance as they may not have the facility to do it—would like to get hold of those to manage them properly and make sure, in particular, that they are not filched by neighbouring householders or have things dumped on them where nobody seems to be responsible. They may get driven over because it happens to be a convenient place to pull off for dog walking, as happens in my part of the parish. That is just one example of something that could be of benefit.
In general, I support the amendment but there is a caveat. The words,
“net additional expenditure or net reduced revenue”
is a proviso that the noble Lord wants to insert under subsection (3)(a). There is a problem with activities, services and things being passed to parish councils shorn of any resource to deal with it. That is the classic thing that we refer to in parish and town council circles as double taxation. The parish then has to raise by precept a means of funding that expenditure because the principal authority has said, “Yes, you can have this but there is no funding to go with it”. I therefore enter a caveat on that. On subsection (4), I would flag up that it might be extremely difficult to verify, knowing what little I know about local government finance, to deal with the matters that the noble Lord is trying to cover there. I well understand his reasons for putting them in, but I do not know how you would prove it. However, in general I support the direction of travel of the amendment.
Lord Newton of Braintree
My Lords, I knew it was a mistake to mix with these experts. I had better apologise for not understanding the point about parish and town councils and indeed for stirring up the noble Earl, Lord Lytton, with his well-informed speech.
I want to make two observations, one of which builds on that. Town councils, in terms of their size and perception of themselves, can be, as in his example of Weston-super-Mare, completely different animals from most of the parish councils that I know. My constituency contained two main towns—the towns have not changed but the constituencies have—one of which was the main town, Braintree, and the other was Witham, which was almost the same size, with 30,000 people in those days and possibly more now, which had a town council. If I had tried telling them that it was just a jumped-up parish council, I would have expected to lose the odd vote at the following election. The Government appear to be saying that all these bodies, which are not insignificant, are just jumped-up parish councils. I do not think that that is very sensible. Whatever parliamentary draftsmen may say, it might be sensible to incorporate town councils in the wording of the Bill. I leave that thought with my noble friends.
Beyond that, there was one other thing that I wanted to say. I agree with the noble Lord, Lord Greaves, that district and borough councils are not always great at wanting to devolve downwards. Presumably one of the objects here is that they might be encouraged to do that in appropriate circumstances. The only thing I ask, having endlessly declared that my wife is a district councillor, is that nobody tells her what I have said.
Lord McKenzie of Luton
I wonder whether the noble Lord can help me on a point which is prompted by this proposition. If you are switching expenditure from one authority to another and precepting increasing on the one hand and reducing on the other, how does that play as far as the calculations for council tax referenda are concerned?
Lord Shutt of Greetland
My Lords, I need real notice of that last point as it is a bit technical. I have not heard of parish council tax capping. I have never heard of it and have a feeling that it is not there. That is the simple response to that.
It may be that having a little amendment putting parish or town in the Bill could be helpful so that nobody is in any doubt that parish means parish and town. I understand and accept that. Of course, there is no symmetry in the sense of the sizes of parishes or towns. For example, I was in the former Elland urban district council area, which never got parish council status, yet Todmorden, which is a borough council, did. There is no symmetry, but nevertheless this House has a wealth of experience of people involved in parish and town councils, so it is not surprising that such an amendment creates interest.
Through the legislation as a whole, we are enhancing the role of parish councils. They will be able to exercise the general power of competence when they meet certain conditions. They will be able to nominate assets of community value and we propose that they can express their intention to bid for an asset, triggering the full moratorium or window of opportunity. They will be able to initiate the preparation of neighbourhood plans and we will also be carefully considering the arrangements for parish polls as part of our proposals for local referendums.
However, we believe that Amendment 133 is a step too far and, in addition, is unnecessary and risks cutting across the intentions of the community right to challenge. We already expect local authorities to engage with their communities on services, including with parish councils, as part of the commissioning and engagement process. Where there are representations, we would expect these to be considered and taken seriously. If representations are made and concern over service delivery remains, parish councils are already named as relevant bodies under the community right to challenge. They would be able to issue a challenge to deliver the service if they believed they could do so differently or better. Relevant authorities will have carefully to consider these challenges.
Lord Greaves
Will my noble friend confirm that it will still be possible for district councils or any principal council to come to an arrangement voluntarily with their parish councils to transfer service delivery to the parish council outside the provisions of the community right to challenge?
Lord Shutt of Greetland
My Lords, I believe that is the case. I do not see that that should be disturbed by anything that the Bill is doing. The noble Lord talked about it the other way round, saying that sometimes district councils try to offload and the parish says, “No, we would sooner you kept doing this”. I do not see that there is any reason why that cannot be done under present arrangements. The right to challenge is a different principle. There is a risk that this amendment could catch relevant authorities in an endless and burdensome cycle of considering requests and counter-requests from different parish councils in their area that have different ideas and preferences as to how services should be run.
Finally, the amendment would risk cutting across the community right to challenge as a whole. Requests from parish councils to provide services differently, which might include the service being provided by the parish council or by another organisation, would potentially override expressions of interest from other relevant bodies. I hope that in the circumstances the noble Lord will feel able to withdraw his amendment.
Lord Lucas
I thank my noble friend for that reply but not for the content of it. We will come to these matters again. I understand what he is saying, but I think that the Government are falling short of the ambitions that they should have in his saying that. We are taking a step towards making parish councils serious bodies for which serious people in the community stand and expect to do serious things. To put them in a position where the only thing that they can promise their electorate is to take a particular attitude on planning is seriously missing a trick. There are many other things that good people in a community should have an influence over. They should feel that they can go to their electorate and say, “I will do this for you”, and not just, “I will go cap in hand to the district council” but “I will make a request that the district council has to consider”, or some equivalent. We ought to be looking at ways of empowering parish councils and particularly town councils in relation to the districts and the counties that sit above them. I am sorry that the Government feel that they have gone far enough in this legislation. I hope that when we get experience of parish councils and town councils being what they can be under this legislation, we will take a step forward.
It is not so much the problems of the noble Earl, Lord Lytton, that I am thinking about. His sort of parish under this Bill will become rich in opportunities to raise funds as a result of development, which will enable it to do whatever it wants with its verges. It really will not be a problem for them, but the Bill is a serious problem for city parishes, first of all because there are no parishes. If you look at my bit of Battersea, there are no lines drawn other than the ward boundaries, and they change every time the Electoral Commission has hiccups. There is no community on the ground, and Battersea is a relatively homogenous corner of London.
There are bits of London where you have an enormous mix of different communities with strong ties within them and very few ties between them and to the locality. To build a community there which can take advantage of the facilities in this Bill to influence planning requires that the organisations we create can have influence beyond mere planning. Most of the lives of people in the community are dictated by the ways in which the local authority chooses to spend money on them, to police them and to require things of them. If they want to do something as simple as having a real influence over the provision made for their children, particularly in terms of early years, youth clubs, youth provision and help into work, all of which are substantial programmes going through Government and through local authorities, they have no right to do so. No one can promise that under this Bill the neighbourhood will have a real influence on those sorts of things. Unless we offer communities that ability, we will never create the communities to take advantage of this Bill. This will be a Bill that does not happen in the cities because no one ever gets going because no one can create the consensus because there are no powers on offer that are relevant to the local communities.
I think that is a serious problem with the Bill and one that I hope the Government will think about. I hope that the Opposition will think about it, too, because I associate the Opposition with having some interest in cities from time to time. I was particularly disappointed by the noble Lord’s lack of interest in this amendment. I hope I manage to interest him in some of my later ones. It seems sad to me that the Opposition are just interested in the rural vote and have no care left for cities. Perhaps that is being left to the Liberal Democrats, for whose support I am grateful. I beg leave to withdraw the amendment for now.
Corporate Governance and Accountability
Lord Harrison
To ask Her Majesty’s Government what steps they are taking to improve corporate governance and accountability with respect to social and environmental issues.
Lord Harrison
My Lords, the UK corporate governance framework is built on the principle that shareholders exercise oversight of company boards. The publication last year of the UK stewardship code marked a recognition that this ownership role needed to be taken more seriously by the institutional investment community. Indeed, I believe the code should include oversight of environmental, social and governance issues, not simply because it is the right thing to do or because these issues have a material impact on company returns, but also because it translates into a competitive advantage for business. Sadly, shareholder scrutiny does not always work, as in the case of the BP oil spill due to lax safety standards. Two months before that disaster, a shareholder resolution on tar sands—a similar method of oil extraction to deep-water drilling—which was put forward to increase disclosure of the risk involved, was rejected by 90 per cent of shareholders. As the noble Lord, Lord Freud, commented in a recent debate,
“some pressure on the BP board by its shareholders in relation to environmental issues, might have been especially valuable to the company”.—[Official Report, 15/3/11; col. GC 28.]
I later asked a question of the noble Lord, Lord Freud, along similar lines. He indicated that the Government had no ideas for new regulations in the current climate but they are open to creative ways of improving the quality of disclosure. So I ask the Minister: are the Government continuing to explore non-regulatory ways to encourage better reporting by pension funds, and what assessment, if any, have the Government made of the adequacy of the reporting at present? We need to improve matters.
The UK stewardship code encourages fund managers to disclose their voting records and the Government have confirmed that it is important that all institutional investors disclose their voting. Voting and engagement on social and environmental issues is an important part of an investor’s toolkit for managing risk that could affect savers and yet, after years of voluntary codes, only 64 per cent of fund managers and 21 per cent of pension schemes publicly disclose their voting standards. The Government have reserve powers to make voting disclosure mandatory. Are they thinking about it and under what circumstances might they contemplate it? Are they open to ideas of improving the quality of pension funds’ disclosures on the management of environmental and social risks? Perhaps the Minister could tell us.
Another, besetting problem is the short-term approach to these matters. As Paul Abberley, CEO of Aviva Investors, recently put it:
“If you are investing in a company with a long-term time horizon, it very much matters to know about sustainability issues, but if you are taking a time horizon of an average holding of six weeks, you might take the view that there may be a time bomb ticking but it is unlikely to go off in my holding period”.
I am very pleased that Vince Cable, the Secretary of State, has announced a review of economic short-termism and published a call for evidence on a long-term focus for corporate Britain. In addition, he has appointed Professor John Kay to oversee that with questions such as how best to ensure that the timescales over which companies and fund managers operate match the interests of clients and beneficiaries. Equally, how do you establish the most effective means of boosting transparency for clients, underlying beneficiaries and companies themselves?
Another worry is the misinterpretation of the fiduciary duty. The FairPensions report, Protecting Our Best Interests: Rediscovering Fiduciary Obligation—I am pleased to acknowledge the help from FairPensions for this debate—was published in March 2011 and received a good hearing from Ministers Ed Davey and Steve Webb. I wonder whether the Government will respond to this, to encompass and clarify. Howard Pearce of the Environment Agency pension fund argues that,
“all pension funds will need to adopt a climate change-proofed financial investment strategy in the future to enable them to fulfil their fiduciary duties”.
However, fiduciary duties should demand an enlightened approach to social and environmental issues, but we all know that too often they are invoked to justify the reverse. Pension fund members are told that their fund cannot be concerned with stopping climate change because it has a fiduciary duty to maximise returns. On closer analysis, that seems daft.
I am a great supporter of narrative reporting. I think it is an improvement on what we have had before in company reports. Nevertheless, we have problems relating to unreliable information. Many investors say that the lack of verification makes it difficult for them to rely on narrative reports, which can be misleading or present a rose-tinted view of the world. The OFR included an enhanced audit, requiring a higher standard of verification than is currently the regime. Sometimes it is up against incomplete information. Many companies focus on peripheral corporate citizenship activities undertaken during the year, such as volunteering—I am wholly in favour of volunteering—rather than on key social and environmental risks to their core business such as water, security and scarcity. No official guidance has been published on what constitutes an adequate report. Perhaps the Minister can comment on that.
A third problem is inadequate enforcement. The regulator has judged that two-thirds of annual reports fall short of legal requirements in relation to principal risk, yet in 2008-09 it did not take enforcement action against a single company. The regulator is not resourced to take active enforcement action and generally responds only to complaints from investors and NGOs. In the light of that, I ask the Minister whether the Government can confirm that they still intend to bring forward proposals specifically to drive up the quality of social and environmental reporting, as indicated in the coalition agreement. Do the Government accept that better reporting will achieve their objective only if investors have confidence in it? Do they therefore agree that any new reporting regime must contain improved mechanisms for guaranteeing the reliability of information, whether through enhanced audit or more robust enforcement? I declare an interest as the vice-chairman of the All-Party Group on Corporate Governance.
In conclusion, I ask the Minister whether she can put the matter in this frame. Sometimes we worry about the introduction of legislation but, to my mind, and in my assessment of it, we have to create a view that consideration for environmental and social and corporate governance is not a chore but a cheerleader for a better approach to what a company is doing. It can enhance its competitiveness within the market if it complies not only in a tick-box way, but with verve, inspiration and interest. I ask the Minister whether, when they think about it deeply, her Government are capable of leading the charge of encouraging companies to take this more positive attitude, which I think will carry with it the appropriate approach to something which is very important to investors, to shareholders and to pension fund holders for the future. I am very grateful to all those who are to contribute to this debate. I look forward to the Minister's reply.
Baroness Northover
I remind noble Lords that this is a time-limited debate. When the clock shows “3”, noble Lords will have had their time.
Baroness Bottomley of Nettlestone
My Lords, the House is grateful to the noble Lord for identifying a subject that is of such concern that we all wish that this had been an all-day debate rather than just an hour's debate. I share his view that, for all the stakeholders in the debate, the institutional community is not sufficiently well engaged currently and the stewardship code offers a serious opportunity.
The fact is that we in the UK should be proud that UK companies have been at the forefront of the process. A large majority of major UK firms publish high-quality social and environmental information on an annual basis. Many produce stand-alone reports dealing with financial and social performance. Frankly, many of them are too large, too lengthy, too detailed and sometimes irrelevant. Those of us who have been Ministers for a certain time know that the way to silence Ministers is to bombard them with paper, and a corporate report lasting 500 pages is a way of befuddling rather than informing.
Companies see the importance of good corporate ethics and strategy and of reporting properly and fully about the full nature of their activities. I agree with the noble Lord that volunteering is not the same as human rights, female empowerment and avoiding child labour. We already go further in non-financial disclosures than most other EU members. I am concerned about further stringent regulations that might impose a significant administrative burden on firms without a corresponding gain in transparency.
I declare an interest as I am on the UK advisory committee of the International Chamber of Commerce. We have drawn attention to the fact that allowing a certain degree of discretion in non-financial reporting enhances transparency by allowing companies to focus on issues of more relevance and materiality to their business operations. By contrast, the tick-box approach, which I think many of us would like to avoid, would produce a sea of data and information, at considerable cost to UK plcs, that would be impenetrable to all but the most persistent reader. I think the CBI has similar views.
It is understandable that there is a desire for greater clarity. Since the Companies Act 2006, on which I made my maiden speech in this House, we have seen great development. My honourable friend’s department, BIS, has consulted on narrative reporting. We are fortunate to have her as our Minister because she had a significant commercial business career and was also chair of the National Consumer Council, so she can balance all the interests involved. Perhaps she will let us know what the Government are doing to improve the quality of narrative reports to ensure improved disclosures on the environmental and social impact of corporate activities.
Above all, I want to emphasise that the ability of global business to be a force for good, for female empowerment, for sustainability and for anticorruption in many parts of the world, should not be underestimated. As we look for modifications, we should remember the opportunities that are there.
Lord Haskel
My Lords, my noble friend Lord Harrison outlined the benefits of good corporate governance and reporting. Do they increase profits, the rate of return or shareholder value? I do not think that anybody knows. Therefore, strong forces oppose these activities and see them as a waste of money that distracts management from dealing with competition. Because one cannot show them as assets on balance sheets, they have no effect on shareholder value. These issues change with fashion. They are unpredictable and have little impact on the short-term horizon of many managers.
A good metaphor for these conflicting views is the way in which we manage our forests. The Minister may find the subject of forests painful, but the metaphor is not mine: it came from Mark Goyder, the founder of Tomorrow’s Company. We can cut down trees and harvest wood for an immediate cash benefit; then we are left with barren land. Alternatively, we can nurture the forest, plant for the future, take out the dead wood and let new plants and wildlife thrive in the forest, and thereby open up new horizons. Many of us would like to know which companies are good at forestry so that we can deal with them, work in them or invest our savings or pension funds in them.
Many of us like to drink Fairtrade tea and coffee because we know that everybody in the value chain has had a square deal, or we may look for the Carbon Trust Standard mark that tells us that an organisation has tackled its emissions. Branding enables us to make this choice. Helpfully, as my noble friend reminded us, Tomorrow's Company has produced a stewardship code that incorporates many things that we are debating this evening. Will the Government support and facilitate a branding exercise to enable us to recognise the good companies that play such an important social and environmental role in our economy?
Lord Newby
I thank the noble Lord, Lord Harrison, for introducing the debate. I declare an interest as an adviser to companies on issues of corporate governance and responsibility. There is no doubt that the past decade has seen a sea change in attitudes to social and environmental accountancy, with both voluntary codes such as that of the Global Reporting Initiative, which has been widely taken up across the world, and statutory provisions such as the Companies Act 2006, which has already been referred to and which has required companies in the UK for the first time to report on their social and environmental impacts.
The previous Government planned to go slightly further and introduce a full operating and financial review, before Gordon Brown got cold feet at the last minute. The principal difference between an OFR and what we have under the Companies Act is the requirement for some sort of audit. While I agree with the noble Baroness, Lady Bottomley, about wanting to avoid a pure tick-box approach, at present the quality of reporting on social and environmental issues is extremely mixed. Only 9 per cent of companies that Deloitte surveyed reported on their carbon emissions in line with Defra guidelines. Reporting by companies of community investment is both extremely difficult and patchy. Requiring an audit would improve standards. Under the Climate Change Act, the Government have the potential to make carbon reporting by companies mandatory. Does the Minister think that the time has come for that provision to be brought into effect?
Of course, reporting by companies is only part of accountability. The other part, referred to by a number of noble Lords, is the accountability of those who invest in companies. For many years, investors have been remarkably uninterested in social and environmental performance. This is beginning to change because people can see, not least in relation to climate change, that how companies relate to the environment will have a material effect on their long-term sustainability, particularly in some of the extractive industries. It will also be logical for pension funds, because of the long-term implication of companies’ environmental and social impacts, to take account of those factors in their investment decisions. However, as we have already heard, there are serious concerns about whether they can do that legally, given their fiduciary duties. Do the Government believe that a review of that issue is now appropriate?
Baroness Young of Hornsey
My Lords, I, too, thank the noble Lord, Lord Harrison, for securing this debate. I will declare my interests. I work with various organisations concerned with ethical and sustainable fashion, including Made-By, the Centre for Sustainable Fashion and Cotton Made in Africa. I am also a patron of Anti-Slavery International.
Many of us balk at the idea of introducing more legislation and complex regulation, especially when some businesses are taking the initiative. For example, the Responsible Sourcing Network has created a pledge for US and European companies publicly to state their opposition to the use of forced child labour in the harvesting of Uzbeki cotton and to refuse to use it in their products. There must also be firm action from the EU, and from the Governments and importers in those countries that trade with Uzbekistan.
Self-regulation and voluntary measures on their own are not always enough to secure the necessary support for the people and environments that are most vulnerable to exploitation. Reacting to stakeholder demands for greater transparency and responsibility, Governments in Europe and the US are legislating on corporate governance and accountability. In 2008, Denmark adopted an amendment to the Danish Financial Statements Act requiring large businesses and listed and state-owned companies to account in their annual reports for their work on CSR. Spain has made a similar move with the Sustainable Economy Act, which came into force in March 2011.
Where do we need to be? We should aim high. Sir Geoffrey Chandler, founder of Amnesty International’s business group and a former director of Shell and of the National Economic Development Office, argued that all businesses should be required to ensure that their operations and supply chains comply with the Universal Declaration of Human Rights. An important step towards this aspiration would be to include a requirement in the combined code of corporate governance that businesses should report annually on the measures that they are putting in place to achieve this, to uphold the rule of law and to ensure environmental sustainability in their international operations.
Professor John Ruggie, UN special rapporteur on business and human rights, argued for measures to advance corporate legal responsibility through countries establishing extraterritorial jurisdiction over corporations for violations of international laws and conventions. What plans for action do the Government have to improve the quality of social and environmental reporting, and how might they move towards the high aspirations articulated by Sir Geoffrey Chandler and Professor Ruggie?
Lord Patten
My Lords, I want to make three points before the clock strikes three. First of all, I strongly believe in the corporate, social and environmental agenda. I equally strongly believe in the enterprise economy in this country. It is extremely important that our growth agenda succeeds at a time of fragile economic recovery. Therefore I believe it is extremely important that across the piece, in the areas of environmental responsibility and corporate social responsibility, there is no more unnecessary loading of unnecessary regulation on the shoulders of businesses, which are trying to create jobs and employment opportunity. It is extremely important to counterbalance the quite proper pleas for better reporting, greater clarity and all the rest that we have seen. Along with our growth agenda, we also have, as a coalition, a happiness agenda. I know that the Minister wants to make me happy, and I hope that she will indeed make this Back-Bench Peer happy in her wind-up speech by saying that we are not going to have any more unnecessary regulation in this area of corporate social responsibility and environmental social responsibility between now and 2015.
Secondly, there are of course some successful companies that have made very good money by selling themselves quite properly as ethical producers. Body Shop and Lush are examples from the cosmetics world, while Ben & Jerry’s and Innocent are producers in the worlds of ice creams, fruit drinks and vegetables. By comparison, most companies make cars, build buildings or supply services and try to be good corporate citizens, just as most individuals try to be good individual citizens. They are generally now, I think, very responsible in these areas. The noble Lord, Lord Harrison, who has a good track record for introducing interesting debates of this sort, said in his very interesting speech that he wanted more companies to take the view that this was an important issue. In my experience, in declaring my own financial and corporate interests, I think most companies do indeed take this very seriously and have already taken the view that this is something that they should do. In other words, it has entered into their corporate DNA. Just as belatedly, in the slipstream we are seeing the need to have more women and greater diversity on the boards of our companies getting into the DNA. It is lagging a bit and still has some way to go, but with the enactment of the Bribery Act last Friday, we are going to see ethical training and ethical codes also coming along and getting into the DNA of companies. That is a very considerable agenda indeed and I think that the direction of travel is right.
Lastly, investors and institutions have been criticised for perhaps not being active enough, particularly those that hold shares for a short period. I welcome very much the Government’s encouragement for greater employee share ownership. I think that is a very good thing, and as the Government and others try to explain why participating in a capitalist economy is a good thing, at the same time they should stress financial benefits and their promotion and the opportunities for people with shares newly given to take an active interest in the social and environmental agenda of the companies of which, after all, as employees, they are now part-owners.
Baroness Sherlock
My Lords, the Minister may struggle to make us all equally happy, but I hope to find some common ground at least. I add my voice to those who look at the reasons why environmental and social reporting should be something that we promote. For a start, it would help to increase public trust in business and in those who regulate it, which we could do with as much of as possible. Nevertheless, reporting requirements are mainly there to make sure that stakeholders can make informed judgments about companies. If we overly limit that to too narrow financial information, we fail to take seriously the indirect, unintended or non-financial costs—or indeed benefits—of corporate activity. The consequences are very serious. In economic terms, it fails to account for externalities and in practice can distort a market. In social terms, it fails to take account of the full range of stakeholders who have a legitimate interest in the company's activities because they—we—are affected by them.
Is the noble Lord, Lord Patten, right in saying that no more regulation is needed? I fear not. If we look at the environment, it seems very clear that voluntary reporting simply cannot deliver results on the scale and at the pace that is necessary to meet the reduction in emissions that British law already requires. In my view, carbon reporting should therefore be mandatory, at least for large companies. In terms of social accounting, we have heard ample evidence that current narrative reporting requirements are not being followed. A recent report from the Corporate Responsibility Coalition summarised the problems pretty well as follows:
“vague corporate obligations … insufficient auditor involvement and … weak enforcement”.
Apart from that, it is going swimmingly.
There is good practice out there. I discovered recently that the first plc in Britain to produce an audited social report was not a corporate giant but Traidcraft, a medium-sized company founded in Durham in 1979 to fight poverty through trade. I am sure that my noble friend Lord Haskel has enjoyed some of its chocolate bars and tea. In 1993, Traidcraft published an audited social report, and I hope that the Minister has had the opportunity to look at its social accounts. I found them fascinating. They told me more about the impact of that company not just on its customers, members and supporters but on its supply chain right the way through to its staff and the lives of the very farmers out in developing countries. That is a true social report. I encourage the Minister to comment on it and to share some of the methodology with larger companies. There is so much more that companies could do. If they will not, they must be required to, I regret. At the very least, we should see full monitoring and compliance with the current requirements. However, we also need some guidance on what should be reported on, and we need an audit standard and, crucially, a timetable for when disclosure of social data will be verified. If data cannot be verified, it simply undermines their legitimacy at all. We may, in fact, discourage people from doing this rather than encourage them.
Lord German
My Lords, I declare my interest as a trustee of a pension fund, and I want to speak exclusively about the investment in pension funds. It is there, of course, where people are investing their money day in, day out, month in, month out, preparing for the world in which they want to live when they retire. That is why social and environmental issues are going to be extremely important for them. However, the chain of command, as it were, between the investment itself—from the pension fund investors right through to the people who manage the money on their behalf—is very long indeed. It is very difficult to see transparency through that route. That is why I think it is important that these issues should be discussed and understood right throughout that long chain.
Since 2000, pension funds have had to state the extent to which they take into account social, environmental and ethical considerations. However, much of the reporting has been very much a tick box, where people would tick a small box or put in a straight statement, which would not give enough information to the person whose money was going into that investment fund. We believe that, from the disclosure of information, you get more empowerment and that the person who is putting their funding in is getting more empowerment for their money. We have had years of voluntary codes, yet only 64 per cent of fund managers and 21 per cent of pension schemes publicly disclose their voting records so that the investors in that company can see them. Obviously, investors have a right to know and understand, but disclosure is only the first step to empowerment in the part-ownership that they have in the company.
The Government have reserve powers, which they have taken, to make voting disclosure mandatory if voluntary disclosure does not generate sufficient improvement. Of course, the coalition agreement contains a commitment to,
“reinstate an Operating and Financial Review to ensure that directors' social and environmental duties have to be covered in company reporting and investigate further ways of improving corporate accountability and transparency”.
I know that the Government have consulted on this and are intending to launch a further consultation in July; but could the Minister tell us where the direction of travel is on this particular part of the coalition agreement and where it is likely to end up?
There are three key problems that I think we need to address in this whole area of pension funds. The first one is unreliable information; that is, the lack of verification, making it difficult for investors to rely on reports that look through rose-tinted spectacles. Secondly, there is the problem of incomplete information, with many companies focusing on corporate citizenship activities, such as volunteering, rather than on key social and environmental risks to their core business. Could the Minister tell us, in winding up, whether she intends to bring forward proposals specifically to drive up the quality of social and environmental reporting, as indicated in the coalition agreement?
Lord Moynihan
My Lords, I thank the noble Lord, Lord Harrison, for securing this debate. I declare an interest as a director of the US-based Rowan Group of companies and chair of its health, safety and environment committee.
I agree with my noble friend Lord Patten that the vast majority of companies see a clear alignment between social and environmental issues and their overall business strategy. However, some companies have a gap between their board’s aspirations with regard to social and environmental issues and the way they are enabled and enacted within their own organisations. I hope that tonight’s debate will enable government to work afresh with companies to close the gap between companies’ stated social and environmental policies and the actions and investments they make to pursue those objectives, particularly where the objectives may lack a clear financial return on investment or drive long-term rather than short-term benefits.
As my noble friend Lord Newby said, Deloitte, in its impressive analysis of sustainability and business today, concluded that while many companies promote the sustainability concept of the triple bottom line—pursuing performance in economic, social and environmental spheres—most companies primarily invest in environmental initiatives out of the three. I believe we live in a generation where there is an imperative for companies to consider broadening their efforts in the communities in which they operate as well as in the physical environment. In this context, I support the proposal for companies to drive for competitive advantage by helping them establish or maintain a voluntary social licence to operate in their target communities and markets; that is, to gain the support of the people who live and work in those communities and markets.
These objectives and principles can be embedded in the corporate governance criteria followed by all companies and, of course, in their reporting policies, not least where social and environmental issues are usually considered alongside safety within the remit of HSE committees. I agree with the noble Lord, Lord Harrison, that social, environmental and safety issues should all meet the legal and voluntary requirements to be fully and appropriately covered in annual reports and, I would add, in internal reporting to employees and, as the noble Lord, Lord German, has just said, to the investment community as well.
From my experience the energy sector, human safety and environmental protection, regulatory oversight of licensing, energy exploration and production require reforms and a new priority within corporate governance, even beyond those significant improvements already made by the sector and this Government. This is an area where co-operation and dialogue with government should be preferred to further primary legislation at this time.
Lord Whitty
My Lords, I congratulate the coalition on rectifying what I thought was part of a very bad mistake by the previous Government whereby, even though the noble Baroness’s department was all lined up to introduce operational and financial review provisions that would have required companies to report on social and environmental objectives, the carpet was pulled from under them by the Treasury, as the noble Lord, Lord Newby, said. I am glad that the intention is there; now let us see the reality.
I am going to dwell largely on carbon reporting, and I declare an interest as a member of the Environment Agency’s board. In that capacity, I chair the Environment Agency’s pension scheme, whose chief officer my noble friend Lord Harrison has already quoted, which attempts to ensure that our investments help to induce some more effective environmental and social reporting.
Clear environmental reporting, particularly on greenhouse gases, has a major effect not only on transparency but also on internal management behaviour and external investors’ priorities. Without clear, effective and audited reporting, we will not meet the changes that are required in company behaviour in order to meet the climate change objectives that were laid down with all-party support in the Climate Change Act.
The Climate Change Act provides enabling powers in this respect. It is also important to recognise that, as far as the institutions, particularly pension funds, are concerned, there is no conflict between a proper interpretation of fiduciary responsibility, an interest in climate-change proofing the activities, objectives and balance of activities of companies and investors of funds. Indeed, all such large bodies should include within their objectives a climate-change proofing strategy, but that is not the case.
As others have said, only just over half of large companies have any reporting of climate change objectives and, of those, only 22 per cent have any reporting that relates to the Defra guidelines. As the noble Lord, Lord Newby, said, only 9 per cent of larger companies fully comply, according to the Deloitte survey. That does not indicate—and I am afraid I have to differ with the noble Lord, Lord Patten—that there has been a change in the DNA of corporations, or at least in that of their auditors and accountants. As the noble Lord, Lord Moynihan, said, it may be that the good intentions of the board are not being reflected through the technical reporting responsibilities. However, without those indicators internally and externally, we cannot achieve the climate change objectives that we need, so they are a vital tool for those objectives.
I hope that the Minister will be able to say tonight that the wind is moving in the right direction on this and that we will see some action. I look forward to her response.
Lord Stoneham of Droxford
My Lords, I want to address two issues in the context of this debate. I believe that there is too much emphasis on short-termism in companies and there is often a danger of arrogance, particularly in dominant market positions.
Too many companies are pressed by the short-term-profit instincts of the stock market and investment banks and cannot think long term. I worked for a local newspaper company with strong family ownership traditions. It believed in investing long term for the next generation and for its local communities. We worried constantly about the dangers of overgearing in a very cyclical industry. It was taken over in 1999 by an executive team committed to a business model of borrowing, cutting costs and assuming that the boom would go on for ever. Ten years later, that company came to the brink of bankruptcy, and shareholder value today is 2.5 per cent of what it was in 2007. It simply never thought long term.
Successful companies can get introverted and arrogant. They can become oblivious to their communities and markets, particularly if they are too dominant in their markets. I believe the high-paying bankers got remote and out of touch with reality for those reasons. Even Tesco seriously contemplated unacceptable tax-avoidance schemes despite its prime dependence on British consumers, and News International, which I worked for at the time of the current phone-tapping scandal, but not as a journalist, perhaps will find that it became too arrogant with its success and out of touch in its pursuit of competitive advantage. Some of its executives lacked a hinterland that would have warned them against the consequences of their actions. It is frightening that a risk taken nine years earlier can finally catch up with that company.
We need counters to short-termism and arrogance. Principal shareholders are now largely pension funds, which should be primarily interested in the long term. Wider social responsibilities need instilling in directors to keep them in touch with their communities and markets. The key for the Government—and I am pleased that the coalition is reviewing this—is to clarify the requirements for company reporting, to improve identification of risks and to force directors to address their social and environmental concerns and risks. Greater concern for social and corporate responsibility should help counter company arrogance and complacency, and we should encourage the accountability of pension fund managers to their savers, so social and environmental risk is at the forefront of their responsibility as shareholders.
Lord Young of Norwood Green
My Lords, I also wish to congratulate the noble Lord, Lord Harrison, for introducing this debate on such an important issue.
I declare an interest as vice-chair of the Ethical Trading Initiative, which is a tripartite organisation whereby companies, trade unions and NGOs work together to improve the lives of workers throughout supply chains, which in today’s world are truly global. Companies that sign up to The ETI Base Code, which is based on the ILO conventions, agree that,
“Employment is freely chosen … There is no forced, bonded or involuntary … labour …. Freedom of association and the right to collective bargaining are respected … Working conditions are safe … Child labour shall not be used … Living wages are paid … Working hours are not excessive … No discrimination is practised … Regular employment is provided … No harsh or inhumane treatment is allowed”.
Needless to say, all these companies are on a journey, but there is a real pledge and commitment in their reporting to try to live up to these principles enshrined in the base code.
In this brief contribution I will touch only on the issues of transparency and accountability, which seem to me the key themes that have run through this debate. Let me quote from a speech that Ed Miliband made on responsibility. He said:
“On pay, companies should publish the ratio of the pay of its top earner compared to its average employee. If it can be justified by performance, they should have nothing to fear. We need shareholders to better exercise their responsibilities to scrutinise top pay. And we also need to recognise—as many great companies do—that firms are accountable to their workers as well as their shareholders. Some companies already understand that having an employee on the committee that decides top pay is the right thing to do. We should debate whether this requirement should be extended to all firms. And of course the same should be true in the public sector. So we need responsibility at the top of society, but we also need it at the bottom”.
On the need to avoid the short-termism that has been referred to during this debate, Ed Miliband said:
“It is worth recalling that JP Morgan founded his financial company on the idea that the ratio of pay between the highest and lowest paid employee should be no more than 20 to 1”.
Interestingly, the noble Lord, Lord Patten of Barnes—not to be confused with the noble Lord, Lord Patten, who spoke in this debate—recommended something similar in a contribution he made on Andrew Marr’s breakfast show. The new chair of the BBC Trust suggested that he was interested in the “very good ideas” contained in the Hutton report on public sector pay, which suggest not a ratio but certainly something like this 20 times approach. The Hutton report said that that pay multiples should be published and any increase in the figure should be explained publicly.
I want to end on this question of whether exhortation, as opposed to a bit more regulation, is the right way forward. We can see from this debate that there is still a long way to go on the quality of reporting from many companies. How important is this? We should focus our minds on the fact that, in October 2012, another 9 million people will start to be enrolled into pension schemes, in which their savings clearly will be at an investment risk because they will be members of defined contribution schemes. There is a real importance in ensuring that companies are not short term in their approach and that they genuinely recognise their environmental and social responsibilities.
I look forward to hearing the response of the noble Minister.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, I should like to thank the noble Lord, Lord Harrison, for raising this important and timely question on what steps the Government are taking to improve corporate governance and accountability on social and environmental issues, a subject that I have some knowledge of, because I wrote the first corporate and social responsibility document for Cadbury Schweppes, and, well you see where it got them. I am therefore going to try to answer as many questions as possible as I go through, because this really has been a most engaging debate. I am amazed that we have managed to get through so many speeches in such a short time with so many questions, and my noble friend is already telling me to get a move on, so I shall.
As my noble friend Lady Bottomley stressed, strong corporate governance must be at the heart of successful capital markets which work both for companies needing to raise capital and investors looking for solid and sustainable returns. It is essential for the long-term health of our British economy. It is equally clear that accountability and transparency are the bedrock of a vibrant corporate sector. They build trust and, as the noble Lord, Lord Harrison, said, underpin business decision-making and long-term performance. Britain has been a pioneer in developing high standards of corporate governance but we are far from complacent. A few weeks ago my right honourable friend the Secretary of State for Business announced that he had asked Professor John Kay to lead the review of the effect of British equity markets on the competitiveness of British business. This will address issues of vital importance to the long-term performance and governance of British quoted companies. I am delighted to note the support of the noble Lord, Lord Harrison, for the Secretary of State’s thinking on this.
My noble friend Lord Patten asked whether the Government will introduce further regulation. As we said in the call for evidence, on a long-term focus for corporate Britain the best solutions are those which are owned and driven by market participants and investors in companies. Therefore, we want to work with the companies and the City to develop business-led solutions.
My noble friend Lord Newby asked whether the Government should review fiduciary duties. The Kay review will consider whether government policies directly relevant to institutional shareholders and fund managers promote time horizons and effective collective engagement. If that is not clear, we will write. I am not sure whether I answered that correctly. We recognise the importance of social environmental issues to the long-term success of businesses. All directors have a general duty to have regard to the impact of the company’s operations on the community and the environment. That is reflected in the way in which they report to their shareholders, notably in the business review part of the company’s annual report.
The purpose of the business review is to help shareholders assess how the directors have complied with this duty. Quoted companies must provide information in the business review about environmental, social and community issues to the extent necessary for an understanding of the company’s business. Some companies already make high-quality disclosures but the standards are not applied consistently, as we have heard. Getting this right is crucial if we want to achieve balanced and sustainable economic growth. In the growth review, we gave a clear commitment to simplify the reporting framework. The work we have been doing on narrative reporting is important. Our aim is to give shareholders the information that they need to make well informed decisions without adding to the regulatory burden.
The noble Baroness, Lady Sherlock, spoke of introducing a higher audit requirement. In July, the Government will consult fully on these matters. They will of course need to avoid placing additional regulatory requirements on business unless there is clear evidence that they will help to improve the quality and relevance of the disclosures. We aspire to make reports less complex and cluttered. We will enable quoted companies to provide clear and relevant information to investors about strategy, performance and risk, using a more concise report with supporting information on the company’s website.
The noble Lord, Lord Harrison, asked what constitutes adequate reporting and assurance of the information contained therein. I thank the noble Lord for that question. An adequate report meets the needs of investors and, as such, investors should engage with companies to determine specific standards of assurance.
My noble friend Lord Patten asked whether the Government will introduce more regulation in narrative reporting. We want to ensure that we have the right framework, which would be a win for everyone. Boards should face less complexity and shareholders and other readers should be able to access information more easily. That means removing any duplicate requirements, improving guidance and making it easier for companies to adapt to national and international developments. Our consultation, which will run from July to October, will consult on proposals to address these aims and we look forward to receiving the views of many noble Lords who are here tonight.
The noble Lord, Lord Haskel, asked whether the Government will support a branding exercise. The Government support a range of industry-led awards in this area, which have proved to be very effective. They will continue to support these and I would encourage the noble Lord to help us in this.
The noble Baroness, Lady Young, asked whether the Government will bring forward proposals specifically to drive up the quality of social environmental reporting as indicated in the coalition agreement. The answer is yes. The Government’s consultation will address the issue of how social and environmental reporting can be better integrated into the narrative reporting framework to drive up the quality of the disclosures of this information.
In answer to the question asked by the noble Baroness, Lady Sherlock, no decision has been taken yet on whether to regulate. The consultation is aimed at understanding whether regulation is necessarily the best way to ensure consistency in reporting. My noble friend Lord Newby and the noble Lord, Lord Whitty, asked whether the time has come to review the reporting of environmental emissions. The Government have launched a consultation to consider options including a voluntary alternative to promote more widespread and consistent reporting of greenhouse gas emissions by companies in their annual reports. This was an open consultation with no preferred option. It closed today and it will report in the autumn.
We must keep an eye on the European and international agendas. Commissioner Barnier published his Green Paper on corporate governance in April and the Government will respond to it, ensuring that Britain continues to play a key role in shaping European thinking. My right honourable friend the Secretary of State for Business will be taking forward our thinking in the international arena this summer.
The noble Lord, Lord Harrison, asked whether proposals will be brought forward specifically to drive up the quality of social and environmental reporting as indicated in the coalition agreement. The answer is yes. The Government’s consultation will address how social and environmental reporting can be better integrated into the narrative reporting framework to drive up the quality of disclosures of this information.
Better governance is allied with stronger corporate responsibility, an issue we take very seriously. It is not just about businesses not doing harm; it is about them helping to build a better society. We are committed to helping businesses succeed so that they create the jobs, the wealth and the opportunity that our country needs. We want to encourage enterprise and make it easier for small firms to grow. Our commitment to business and the commitment we are asking for in return from all businesses, large and small, is set out in Every Business Commits. This responsibility deal between businesses and the Government asks them to show that they are serious about meeting their social responsibilities by, among other things, protecting the environment and supporting communities.
Finally, I should like to mention the recent review by the noble Lord, Lord Davies, Women on Boards, which highlighted the low numbers of women reaching senior positions in our companies. The report set out a body of evidence that showed that diverse boards are in a better position to make good decisions. A company and its shareholders profit from this. As a result of the report, things are already changing. The Financial Times reports that in the first two months of this year, 35 per cent of new FTSE 100 board appointments were women. If there is not enough change in the next few years then the Government will consider what further action they will take. However, the key recommendations of the noble Lord, Lord Davies, are for companies themselves. These are aimed at the larger companies, the FTSE 100 or 350. However, I would hope that all companies will think about the report and about how they can benefit from its findings.
The noble Lord, Lord Harrison, asked some detailed, important and pertinent questions about pensions as did the noble Lord, Lord German. My answer to them both is, as I have no doubt the noble Lord, Lord Harrison, knows, pensions are the responsibility of the Department for Work and Pensions and I will liaise with colleagues in DWP and write to both noble Lords to ensure I provide a coherent and joined-up answer.
As we work through these issues our conclusions will be informed by the principles underpinning our thinking on how to renew the corporate governance framework; a commitment to rebuilding trust; a determination to empower shareholders and a focus on protecting long-term values. We are not in the business of weighing companies and investors down with more regulation and higher costs but we are going to shine our spotlight on corporate governance to improve accountability and transparency and secure long-term, sustainable economic growth for United Kingdom companies. I wonder whether the noble Lord, Lord Harrison, would like to have a final thought. There is no reply but I am sure that if he wishes to—
Baroness Northover
I am more than happy to allow the noble Lord, Lord Harrison, to speak, given that we have a minute.
Lord Harrison
Perhaps before the Minister sits down, I could thank her for her thoughtful reply. I look forward to some of the developments from the Government. I would like to extend my thanks to all Members who have participated in what was a very interesting and fascinating debate. I hope that we can return to it as matters develop. Once again, I thank everyone.
Localism Bill
(13 years, 5 months ago)
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Lord Shipley
Lord Shipley
I shall also speak to Amendment 133ZB and I shall be very brief, because a number of the issues that I would have raised were raised earlier in amendments on this section. It is interesting that in this chapter, which has four pages, the Secretary of State is mentioned 19 times. It seems very odd that in a Bill about localism, the Secretary of State has to have 19 separate possible roles. My amendment is simply about how the timing and consideration of expressions of interest could be progressed. Put simply, relevant authorities would have to specify when these would be.
It seems to me that local government can be trusted to do more things for itself. Given that councils will have a power of general competence under this Bill, we might consider allowing them to prove that they are generally competent to do things for themselves and do not need the constant intervention of the Secretary of State in a whole range of ways which do not support the principle of localism. There is a key principle here: this is an example of where the powers of the Secretary of State could simply be written out of the Bill and local authorities could be given a responsibility for defining when expressions of interest could come in and when the authority would then consider them. As a consequence, the role of the Secretary of State and a considerable number of the 19 separate roles of the Secretary of State in this four-page chapter could be reduced.
Lord Greaves
My Lords, I have two amendments in this group, Amendments 133ZC and 133ZE. They are all about the maximum and minimum periods by which local authorities have to deal with expressions of interest and the rules and regulations that the Secretary of State will be able to make in relation to those. I can only underline what my noble friend Lord Shipley has just said.
Lord Beecham
My Lords, I also have an amendment in this group. First, I endorse what the noble Lords, Lord Shipley and Lord Greaves, have said in speaking to their amendments. My Amendment 133ZEA is effectively to replace the Secretary of State’s regulatory function—again we come across the Secretary of State’s regulations—with the relevant authority being allowed to determine and publicise the relevant periods between accepting an expression of interest and beginning the procurement exercise. That really ought to be a matter for local circumstances and local decision and not something prescribed nationally.
Lord Shutt of Greetland
My Lords, Amendment 133ZC would remove the Secretary of State’s power to specify minimum periods for the submission of expressions of interest. Amendment 133ZEA would require relevant authorities to set and publicise minimum and maximum periods between an expression of interest being accepted and a procurement exercise starting. Amendment 133ZE would remove the Secretary of State’s power to specify these periods, which would have a similar effect. We have taken these powers to ensure that power really is pushed down into the hands of communities.
The power to specify minimum periods for submission of expressions of interest will ensure that relevant bodies have sufficient time to prepare and submit them. The power to specify a minimum period between an expression of interest being accepted and a procurement exercise starting will, in particular, ensure that employees, where they are not the challengers, have sufficient time to decide whether they wish to organise themselves to bid, and do so effectively. This will support the Government’s commitment to give public sector workers the right to bid to take over running the services they deliver. It should also help smaller and newer voluntary and community bodies. The power to specify a maximum period will prevent a procurement exercise from being unnecessarily delayed.
The majority of relevant authorities will, of course, act within the spirit of the right, but these powers will prevent a recalcitrant authority from specifying periods that are so short that they stymie relevant bodies wishing to use the right. However, following our recent consultation, we are carefully considering whether some discretion could be given to relevant authorities on the timescales associated with the process to enable them to take account of local circumstances.
Clause 69(2) gives discretion to relevant authorities to specify periods during which expressions of interest could be submitted in particular services. Amendments 133ZA and 133ZB would instead require relevant authorities to specify periods during which expressions of interest in a particular service would be considered, changing the emphasis of this provision. Relevant bodies would then be able to submit expressions of interest at any time. However, this amendment could result in expressions of interest being submitted so far in advance that they would be out of date by the time the relevant authority considered them. The time within which a relevant authority must notify a relevant body of its decision on an expression of interest, provided for in Clause 71(4), is intended to provide time for consideration of expressions of interest. I trust that, in the circumstances, noble Lords will feel able to withdraw their amendments.
Lord Greaves
From my point of view, if this provides a bit more flexibility to deal with local holidays and things like that, it is welcome, but the whole thing is still complete nonsense. The idea that local authorities need to be told exactly what the minimum or maximum periods are, or need new rules to say, “This is exactly the flexibility you can have to increase it, or reduce it, or whatever”, is treating local authorities, as I said before, first of all like wholly owned subsidiaries of national government, and secondly like a kindergarten which needs to have its whole life organised for it by people from above. It is absolutely crazy and is typical of the entire ethos which lies behind the Bill. All the good stuff in the Bill is being ruined by this complete nonsense that local authorities have to be told what to do and how to do it in detail. I was thinking about this over dinner. I said before that it is to do with local authority cultures. Local authorities will never learn to be grown-up people who can make their own decisions and organise their own lives if this culture continues.
My honourable friend Andrew Stunell, one of the Ministers responsible for the Bill, complains almost every time I see him that he goes to local authorities and they keep asking him how they are going to deal with the new general power of competence. He says, “It is a new general power of competence and you yourselves will decide how you’re going to deal with it”. That is wonderful, but all through the Bill we have all these detailed regulations that go against that.
Local authorities nowadays will not do anything unless they have such regulations. So long as these regulations continue, local authorities will lack imagination and enterprise. They will be the opposite of what we want them to be. The civil servants and the Government have to let go. Until they do so, there is no hope.
Lord Shipley
My Lords, I agree with much of what my noble friend Lord Greaves has said. This is about the issue of competence. A power of general competence implies that people are able to do things because they are competent to do them, but for local authorities there is a separate meaning for “competence”, which is the ability to do it. Local authorities have the ability to do it; maybe some do not but many do. Those that do not will have to grow in the role to enable them to do so. However, a four-page chapter in which the words “Secretary of State” are mentioned 19 times should not be part and parcel of a Localism Bill. I hope that between now and Report that further thought will be given to this and that someone somewhere might attempt to remove some of these mentions of the Secretary of State so that the words appear only where they really need to. I beg leave to withdraw the amendment.
Lord Greaves
“(a) decide whether or not to carry out a procurement exercise relating to the provision on behalf of the authority of the relevant service to which the expression of interest relates, and(b) either—(i) carry out such an exercise, or(ii) negotiate with the relevant body on the terms on which the body may carry out the provision of the relevant service.”
Lord Greaves
I have this somewhere. Sorry, my Lords, I got a bit carried away with the previous amendment and stopped sorting my papers out. I shall speak also to my five other amendments in this group. There is also a Labour amendment in the group.
Amendment 133ZD follows a pattern of debate and amendments on this chapter in that it tries to give local authorities more freedom to make their own choices and attempts to minimise constraint by the Secretary of State. It would give local authorities the choice whether or not to respond to an expression of interest with a procurement exercise. We discussed this in some detail in our debates on amendments before the dinner hour, so I will not go into that in any more detail now. This is an area that I think we will want to come back to in later discussions.
The reason for Amendment 133ZF, which refers to Clause 70(6) and (7), is to try to find out what they mean. Subsection (6) reads:
“A relevant authority must, in carrying out the exercise referred to in subsection (2), consider how it might promote or improve the social, economic or environmental well-being of the authority’s area by means of that exercise”.
This is a welcome provision, because it suggests that, as part of dealing with the expression of interest that comes in, the social, economic and environmental well-being of the authority’s area has to be looked at. I assume that when it says “the authority’s area”, it also means the specific part of the authority’s area that the expression of interest refers to. It would be interesting to have a comment on that. Subsection (7) then says:
“Subsection (6) applies only so far as is consistent with the law applying to the awarding of contracts for the provision on behalf of the authority of the relevant service in question”.
This is simply an amendment to probe what that means in practice. I understand what it means on paper, but in reality what balance will be given when an authority is considering how to deal with a particular expression of interest, and particularly with the procurement exercise? If what really applies is the lawyers coming along and saying, “This is how this authority awards contracts, and this is how it has to be done”, the reference to social, economic and environmental well-being may not actually mean very much. Or does it mean that the authority’s rules on the awarding of contracts—its financial regulations and so on—can be changed in order to give more weight to the kind of things that we talked about earlier, such as community involvement and the enhancement of particular areas, even if that is not the cheapest way?
Amendment 133ZG would insert a new provision, which reads:
“Any contract or other agreement that the relevant authority enters into under the provisions of this section shall be time-limited”.
This might happen automatically, but it would be interesting to hear the Minister say what the Government’s view is. Does this hand over a local service for ever, or is it the normal sort of contract that a local authority would have with an outside contractor to provide a service, which would be time-limited to five or 10 years, or whatever it might be?
Amendment 133ZH would add four more provisions. The first is:
“Any contract or other agreement that the relevant authority enters into under the provisions of this section may be subject to such arrangements for supervision, monitoring and assessment as the relevant authority thinks are necessary”.
Is it a question of handing a service over to someone in the community, or an organisation comes in and takes advantage of the procurement exercise, who is then responsible for it lock, stock and barrel, or does the council still have a residual responsibility? Will it be treated like a normal council contract—for example, a contract for refuse collections and recycling—or is it something different? Will there be a lighter touch in supervision? Will there be any supervision whatever? If it is something that the council has a duty to do by law, and there is no supervision, how does that tie in with the council’s duty?
The second provision the amendment would add is that,
“Any contract or other agreement that the relevant authority enters into under the provisions of this section may be subject to stipulations about the minimum level of services that must be provided and standards relating to their provision”.
This is the same kind of argument. It is the kind of thing that would happen automatically with a normal council contract. Does it apply in this case? If it does not, what guarantees are there that a proper service will be provided in future?
The third proposed subsection states:
“Each such contract may contain provisions relating to the action that may be taken by the relevant authority if a stipulated level or standard of service is not provided”—
in other words, if people are not providing the service that they said they would provide when they made the expression of interest and when the procurement exercise took place. If they do not provide the service, what happens? Is the council responsible for stepping in and doing something about it, or does it just hold its hands in the air and say, “That’s tough, that’s the way it is”?
The amendment further states:
“Such provisions may include a procedure by which the relevant authority may take over the provision of the relevant service itself”.
In other words, if the provider is not performing adequately, can the council move in in default, as it can with a normal contract, and take over the service, or is it lost for ever once it is out in the community, even if it is no good?
Amendment 133ZJ would apply the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006, usually known as TUPE. Clearly, if it is a question of looking after a pocket park at the end of a street, that can simply be transferred to a community group such as the parish council. However, if these provisions were used to transfer a refuse collection service, TUPE provisions would normally apply. Do they apply in the case of transfers under this legislation?
The final amendment in the group, Amendment 133ZM, is headed “Application of duties”. It seeks to investigate whether the Equality Act 2010 will apply in respect of the provision of a relevant service under the Bill. Will it be deemed to apply to the relevant body when that body is providing the service? If all you are doing is looking after a pocket park at a very local level, common sense suggests that the Act will not apply, but if you are transferring a service that involves employing people and providing a significant service such as social services to people, does the equality legislation still apply to those services, some of which might well be duties on the local authority that are being carried out by someone else? I beg to move.
Lord Patel of Bradford
My Lords, the noble Lord, Lord Greaves, has raised important issues, and I look forward to the Minister’s response to them. I speak particularly to Amendment 133ZEC, which seeks to include a provision relating to expressions of interest. Clause 70(5) already calls on relevant authorities to consider the likely impact of any expression of interest on promoting or improving the,
“social, economic or environmental well-being of the authority’s area”.
I greatly welcome this and believe that it is an essential component of the consideration. However, I wish to strengthen it by including a consideration of equality. As noble Lords know, I have a long-standing interest in equality and feel passionately that this is a vital issue for all public services. I greatly welcomed the previous Government’s introduction of the Equality Act and have watched with some concern the current Government’s apparent retreat from many of the excellent provisions in that Act.
It seems appropriate that we should do all we can to ensure that equality is a prime consideration under the community empowerment chapters of the Localism Bill. The noble Lord, Lord Greaves, shares this concern. His Amendment 133ZM seeks to ensure that the provisions of the Equality Act 2010 that apply to relevant authorities will also apply to relevant bodies. I wish to go somewhat further than this as I believe we need to ensure that the existing equality requirements are strengthened. I wish to outline three reasons why this is important.
First, there is a risk that the community right to challenge could result in the exclusion of vital voluntary and community groups that currently empower people and ensure that local decision-making promotes equality. Groups working with specific communities, such as lesbian, gay, bi-sexual and transgender communities, black and minority ethnic communities, people with disabilities, and faith groups, should all be given robust support to take up the community challenge. Without specific protections to ensure this, such as a duty to consider equality, many of these groups would be passed over.
Lord Shutt of Greetland
My Lords, I thank the two noble Lords who have taken part in the debate. I have several notes here for responding to these things, and if I do not pick everything, I hope I can write to them afterwards.
We have to remember as a preliminary to all this that this is the Localism Bill and there are some new things here, but that that does not get rid of old things. Therefore, if something is in the law at the moment, no other apple carts are upset. That is the fact of the Bill. However, Amendments 133ZD, 133ZJ, 133ZM and 133ZEC address areas in which existing legislation will apply and where services are contracted out following a successful challenge under the right. Amendment 133ZD would require a relevant authority accepting an expression of interest to decide whether it was going to carry out a procurement exercise, and either carry out that exercise or negotiate with a relevant body on the terms on which it may deliver the service.
Clause 70(3) already requires the procurement exercise carried out by the relevant authority following a successful challenge to be appropriate and have regard to the value and nature of the contract that may be awarded as a result. Therefore, where the service is of a nature or value to which the Public Contract Regulations 2006 apply, the relevant authority will need to follow the procedures set out in those regulations for advertising, tendering and awarding contracts. However, where those regulations do not apply—for example, where the value of the service is below the threshold of £156,000 for local authorities or the services are otherwise exempt—authorities have the discretion to decide how to procure the service, just as they already do when contracting out services.
Amendment 133ZJ would require any contract that a relevant authority entered into following a successful challenge to be subject to the Transfer of Undertakings (Protection of Employment) Regulations 2006—TUPE. The TUPE regulations already specify the instances in which they will apply. We are not seeking to change those through the community right to challenge.
Amendment 133ZEC would require a relevant authority to consider whether acceptance of an expression of interest would promote or improve equality of service provision in its area. Amendment 133ZM would apply the duties with which a relevant authority must comply under the Equality Act 2010 when delivering a service to a relevant body delivering a service on its behalf.
Relevant authorities will need to comply with their duties under the Equality Act when delivering services directly, when considering expressions of interest, when contracting out following a successful challenge under the right, and when procuring services outside the right. As is currently the case, when contracting out services authorities will need to satisfy themselves that they have fulfilled their duties, for example by including appropriate requirements in contracts.
Amendment 133ZF would remove the requirement for a relevant authority's consideration of how it might promote or improve the social, environmental or economic well-being of its area through the procurement exercise, to be consistent with procurement law. The amendment would remove clarity where it is needed. A relevant authority considering how it might promote or improve the social, economic or environmental well-being of its area must do so in a way that complies with procurement law. Failure to do so provides a number of grounds for legal challenge.
Amendment 133ZH would enable a relevant authority to specify in relation to contracts entered into following a successful challenge: arrangements for supervision, monitoring and assessment; service levels and standards; and the action that may be taken by the authority where those are not met, including a procedure by which the authority may take the service back in-house. Relevant authorities can and do include requirements in contracts for performance and monitoring. The right does not restrict them from continuing to do so.
Amendment 133ZG would require contracts let following a successful challenge to be time-limited. Authorities enjoy the freedom to enter into contracts for whatever period is relevant to the needs of their service users and to the need to obtain value for money. The amendment would unnecessarily restrict that freedom. In other words, there is no prescription on that. That is not a regulation; it is not in the Bill.
In the circumstances, I hope that the amendment may be withdrawn.
Lord Greaves
My Lords, there have been a number of useful and welcome statements, which have helped us to understand how this might work. I will read them carefully, as usual. There are one or two other issues, such as the TUPE business, for which the Minister said that nothing has changed, but it might still be helpful to know how it might apply to different circumstances under the Bill. For the moment, I beg leave to withdraw the amendment. In general, they were very helpful responses, and I will read them carefully.
Lord Beecham
Lord Beecham
This amendment, and the other amendment in this small group, Amendment 133ZEB, relate to the situation where the challenge is made by two or more employees of the authority under the provisions of the Bill. The first amendment requires the consent of the majority of the workforce likely to be affected before the authority is obliged to accept the expression of interest. That seems a sensible precaution.
A previous amendment would have raised the number from two to five but, if I may say so, that is almost irrelevant. It would be wrong for a very small group of employees of an authority to have an expression of interest accepted without the support of people in the authority who might be affected by the decision to proceed with the challenge. I hope that the Minister would agree it would be essential in those circumstances for a majority of those who would be so affected to endorse the proposition, even if it were made by a relatively small number. It would not be a cumbersome or difficult exercise to test the opinion of the relevant workforce, and it would clearly be a sensible precaution.
The other amendment is based on concerns about the operation of EU competition and procurement law, particularly in the case of a service that had been carried out by the authority becoming outsourced. This is legal territory into which I venture with trepidation. It has never been my area of legal specialism; it is not an area in which perhaps many in my profession are all that confident. There seems to be a risk in these cases that when an undertaking has been carried out by a public body and outsourcing takes place with the relevant workforce, that may expose the procedure to the rigours of the competition and procurement laws that might then lead not to a community organisation taking over but a private enterprise, which is quite outside the intentions of the legislation.
The amendment would require the authority to take a view—and take advice, of course—about the potential problem. If it was not a problem, of course, the expression of interest could go ahead. If it were to be a problem the amendment would allow the authority to reject the expression of interest on the grounds of a serious risk of the intention of the expression of interest being frustrated by some entirely extraneous body being able to enter into the procurement procedure and win the contract. This is not intended to be a destructive proposal. On the contrary, it is intended to help the legislation fulfil its intentions, and I hope that the Government, if not tonight, will be prepared to look at these two amendments to see whether they can be adopted in the interests of their own position on the Bill. I beg to move.
Lord Shutt of Greetland
My Lords, Amendment 133ZDA would require that a majority of the workforce affected by an expression of interest submitted by employees of the relevant authority consented to a procurement exercise before it went ahead. We agree that employees affected by an expression of interest submitted by their colleagues should be engaged in the development of the proposal and we are looking at how this might be reflected in the requirements for an expression of interest. The face-to-face meetings, intranet updates and staff clinics undertaken when some 1,200 staff from the Hull Primary Care Trust transferred to a social enterprise under the NHS right to request scheme is a good example of how employees have been engaged in a proposal. However, when a local authority decides to undertake a procurement exercise for services outside the community right to challenge, there is no requirement to secure the consent of the majority of the workforce affected by it. This amendment may therefore act as a barrier to services being provided differently and better. Of course, the requirement for employers to inform and consult representatives and employees affected by a prospective transfer of employment will continue to apply.
Amendment 133ZEB would enable a relevant authority to reject expressions of interest when EU procurement or competition law is likely to apply. The Public Contracts Regulations 2006, which are part of our domestic law that implement EU procurement law, set out requirements in relation to procedures for advertising, tendering and awarding contracts when the value of the service is more than £156,000 for relevant authorities or the service is not otherwise exempt. Authorities will already need to comply with these requirements in deciding what kind of procurement exercise to carry out for a service, and will need to continue to do so following a successful challenge under the right. The amendment would enable relevant authorities to reject an expression of interest in all but the smallest services, dramatically reducing the scope of the right. I hope that the noble Lord will withdraw his amendment.
Lord Beecham
I will first deal with the rather strange analogy that the Minister has drawn between this situation where a small number of employees can precipitate a process and a situation where an authority decides to outsource. The noble Lord identified a case involving several hundred employees but it might well be even more than that. The trigger in that case is the authority; the trigger in the case in the Bill is potentially a handful of fellow employees making an approach under the provisions of the legislation, affecting substantially more. That seems to me to be quite a different situation. While one would hope that there would be a process of consultation along the lines that the Minister referred to in the case of Hull Primary Care Trust, there is nothing in the Bill that would require it. So I hope that the Minster will have another look at that.
In so far as the competition requirements are concerned, with respect, I think that the Minister is slightly missing the point that I am making, which is not about the general provision for procurement but about the particular circumstances that might apply to an undertaking of a public authority being outsourced by its workforce under the provisions of the Bill.
I understand that the Minister is not prepared to accept either amendment tonight, but I reiterate my request that these matters be looked at between now and Report. Otherwise, it may well be that we will have return to the issue at Report and potentially test the opinion of the House. However, at this stage I will withdraw the amendment.
Lord Greaves
Lord Greaves
My Lords, we now move on to Chapter 4 of Part 4 of the Bill, which relates to assets of community value and the compilation of lists of assets of community value by local authorities, the definition of community land, the procedures for including the land in the list, and so on. This is an important chapter. It is entirely new legislation, with new ideas and a new procedure. As with the right of community challenge, this House has, I believe, a duty to ensure that the legislation is workable.
I shall speak also to six other amendments in the group, which are in my name, and there are many other amendments in the names of other noble Lords. Amendment 133D, which leads the group, seeks to change the definition of what is to be in the list which the local authority maintains. Clause 74(1) states:
“A local authority must maintain a list of land in its area that is land of community value”.
We seek to change that to,
“a list of businesses in its area that are businesses of community value”.
This is a probing amendment to probe the meaning of “land”, “businesses” and “buildings”, which are all referred to in this part of the Bill. There is also something more fundamental behind it, which is the question of what, in a community, is of value to people. As far as this proposal is concerned, is it land, or is it what people do with the land; in other words, the businesses? There is a fundamental distinction and it is worth debating. There is also the matter of whether land, as such, should be maintained on the register or whether it should be dealt with in some other way. We will come to those amendments in due course.
Amendment 136ZAB—
Lord Beecham
Does the noble Lord have a view on the utility of Clause 74(2) which reads:
“The list maintained under subsection (1)”—
with which the noble Lord has just dealt—
“by a local authority is to be known as its list of assets of community value”.
Does he think that is useful or would he have in mind a further amendment about that?
Lord Greaves
I do not know. If the local authority is maintaining a list of land or businesses of community value, it will no doubt be known as the list of assets of community value. Whether the words are required in legislation is something I have long since stopped wondering about. I am sure that some of us could get round a table and reduce the size of this Bill considerably just by omitting stuff that appears to add nothing. I am not sure that that is our job. I would love to go through deleting stuff, but the Government would not accept it. When I do, they do not accept it. I have no real comment on that.
The Bill refers to a building or land specified in regulations, as a definition of the buildings and land which perhaps ought to be in the list of community assets. Again, it refers to a building or land, and appears to refer to a particular building or particular land, but it seems to me that it ought to refer to a class of building or land or a category of building or land.
Amendments 136ZB and 136ZC go together and are rather more specialist. Amendment 136ZB is quite long. It states:
“For the purposes of this section “land of community value” does not include … an allotment, common, open space, nature reserve or playing field in the ownership or management of a national or local authority or a charity whose purpose includes the management or conservation of that land for the public benefit … access land, or … land governed by an approved estate management scheme under section 19 of the Leasehold Reform Act 1967 or section 69 of the Leasehold Reform, Housing and Urban Development act 1993”.
Amendment 136ZC defines the terms. As defined in the amendment, access land is land defined as such under the Countryside and Rights of Way Act 2000. It covers very large areas. For example, the whole of the Lake District is access land, either because it is urban common or because it has been described as access land. Very large areas of the uplands of this country are access land, and many places have commons that are access land. Clearly this is land of community value, which is why it has been defined as access land on which people can engage in what I believe is termed “recreation on foot”. However, it would be ludicrous if all that land were to be included in this legislation. These amendments exclude it.
The list of allotments, commons, open spaces and so on removes from the Part 4 procedure land already reasonably protected by statute, and land where the present owners should not be encouraged to believe that they can offload it on other people or perhaps on public authorities. It is also desirable to simplify the creation of the lists. Many areas, large and small, are defined in this way and might be included. However, if they were it would be likely to lead to a large number of disputes that would be difficult to resolve.
The definitions of allotment, common and open space are similar to those in Clauses 163(3) and 183(10) in the London sections, which repeat definitions from previous legislation over the years. It should be noted that the definition of “allotment” does not include the normally understood meaning of allotment, which is either a statutory allotment under the Allotments Act 1922 or a council or other allotment probably let on an annual garden tenancy. These allotments are the specialist fuel and field garden allotments under an Inclosure Act, which some of us will remember discussing during the passage of previous legislation.
The amendments do not seek to prevent the transfer or leasing of any of these excluded classes of land to appropriate charitable organisations—by agreement and after full consultation with the public and those affected—but it should not be under the pressure of this procedure. These classes of land have protection that is long established and rather specialist, and it should remain.
Amendment 133E questions the five-year time limit for land and buildings that are included—
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, before we proceed any further, it might be helpful to Hansard and to the rest of the discussion if I give a short résumé of the purposes behind this part of the Bill. It has caused enormous consternation and we have had endless discussions—useful discussions. If the Committee will allow me, I will take five or 10 minutes to go into it.
The idea behind this chapter is very simple. We know already that many communities, both urban and rural, have lost the use of buildings or land that were important to them because they were sold privately or without an interested community group having time to raise the necessary funds. There are instances of an adult education centre in Calderdale, a Methodist church in Cornwall and any number of village shops and pubs, as well as other community assets, which noble Lords will be aware of in their villages and towns.
Local authorities can, of course, already choose to transfer assets to local community ownership or management. They can do so on favourable terms where it will promote local well-being under existing legislation. The Government have actively supported this and want it to continue. The assets of community value provisions that we are considering today are aimed at situations where the local authority does not choose to do so, and at assets owned by other public bodies and by charitable or private owners. We are giving communities the right to nominate assets of community value and local authorities a duty to list them if they satisfy certain criteria. Then, if—and only if—the owner of a listed asset decides to dispose of it, he or she will not be able to do so for a defined period. This will allow interested community groups the opportunity to prepare a business plan and raise the necessary funds to bid for the asset. The owner will not be restricted in marketing the property in preparation for its disposal during this period. The word “disposal” is used as opposed to “sale” because these provisions will apply both to freehold sales and to the granting and assignment of long leases. Those will be the definition of “disposal”. However, I can assure your Lordships that it is our clear intention that the provisions will not apply to transfers made by inheritance, gifts or transfers between family members and between partners in the same firm or trustees of a single trust; these will be able to proceed unimpeded.
We are continuing to explore other appropriate exemptions, and I would like to address these and other issues concerning the operation of the moratorium rules when we consider Clause 82, which may not be today. I also want to stress that these provisions do not restrict in any way the freedom of the owner of a listed asset to dispose of it to whomever they choose and at whatever price they choose. They only affect when they can do so. Furthermore, they do not confer a right of first refusal, unlike the Community Right to Buy scheme that operates in rural Scotland. Also, they do not directly place any restriction on what an owner can do with their property, once listed, while it remains in their ownership. This is because it is planning policy that determines the permitted use of a particular site. An owner can, of course, apply for planning permission for change of use; this will be dealt with by the local planning authority in the normal way. In that situation, the authority may consider the fact that an asset has been listed as a material consideration, or they may not.
We are acutely aware that we have to balance the community benefit that these provisions will bring with the rights of property owners. That is why we have built a range of safeguards into the process. Landowners will have a right to request that the local authority review a listing decision. We also intend to introduce a right of appeal against a review decision.
The Bill allows for the payment of compensation, and it is our firm intention to put in place a compensation scheme, administered by the local authority, which will consider claims for costs and loss incurred by non-public owners—that is, private owners—in complying with the requirements of the scheme.
The Bill provides for a number of more detailed aspects of the scheme to be set out in regulations. This will make it possible to review how those provisions are working after a year or two and to make adjustments if they appear necessary. It has also allowed us to consult widely on the details, and we have been carefully considering the 256 responses to the consultation, which ended on 3 May. They will inform our views about this as we go along.
There is another balance to strike. On the one hand, consistency across the country is desirable, giving certainty for interests represented nationally. This could be achieved by putting more detail in the Bill or in regulations. On the other hand, in encouraging localism, we want to allow local authorities to use their discretion and respond to local circumstances and views. There are amendments before us, which we will discuss in a minute, that support both these points of view, so following careful consideration of all the representations we have received we believe that certain things should be set nationally to ensure fairness, to safeguard people’s rights and to make it easier for citizens and communities to make use of these provisions alongside the others in the Bill. However, we also believe that there is considerable scope for local decision-making, and our intention is to use delegated powers frugally to ensure appropriate local flexibility.
We expect the debate to focus on four aspects of the provisions in particular. The amendments suggest that this is right. They are the definition of an asset of community value, who has the right to make a community nomination, the length of the moratorium periods and the types of disposals that will be exempt from the provisions. There are amendments about a few other matters. We have set out our current thinking on these and other areas of detail in the discussion paper deposited in the House Library last week, and I informed noble Lords that it was there. We will be happy to expand on our thinking on these areas when we debate the relevant clauses, and we can take into account what has been said.
I thought it might be helpful to put that in context and then, as we discuss the amendments, I will respond to them individually at the end of the debate.
Lord Cameron of Dillington
The Minister has set out in detail her view of Chapter 4. I have a completely opposing view of it. I have put my name to the stand part of every single clause to set out an opposing view at this early stage before we get into the detailed amendments. Is that in order, or does the Minister want to take some detailed amendments first?
Earl Attlee
My Lords, I suggest that we go into the detail of the amendments and then, if the noble Lord wishes, have a good stand part debate.
Lord Cameron of Dillington
On the whole of Chapter 4? At which stage? After the first amendment?
Lord Hodgson of Astley Abbotts
My Lords, I am extremely grateful to my noble friend for her explanation. She gave us quite a lot of information at a fairly rapid rate. I have been scribbling down some of the points that she made, and I found myself very sympathetic with her comments about the need for balance and the need to satisfy certain criteria. Then she turned to the question of consistency across the country and a national standard. That is where my Amendment 136 comes in. It inserts in Clause 74(5) the requirement that there should be a definition of an asset of community value. That establishes consistency across the country.
I have not participated in this Bill so far, so I should make it clear at the beginning that I support its thrust. I favour community empowerment. I think it is a good Conservative principle, and I am on the side of the little battalions. Indeed, having just chaired a task force on red tape and having seen hundreds of examples from across the country, one or two of which I may refer to later, I know how important and vibrant local community feeling is, so I very much support the localism idea. Perhaps I may take a minor swipe as I go past. It is rather extraordinary that we should, as a party or Government, appoint Sir Terry Leahy, the ex-chief executive of Tesco, as our adviser. Sir Terry Leahy has had a very distinguished career, building up Tesco nationally and internationally, but his entire career has been devoted to destroying localism. His plan, of course, is to have a Tesco store on every corner, and every butcher, baker and candlestick-maker should be wiped out. It is a slightly strange appointment, but there we are.
I agree with my noble friend that there is a balance to be struck between the community entitlement and the right to private property. This amendment, and indeed the later amendments which I shall be speaking to—probably at our next sitting of the Committee—seek to explore this balance and discover the Government’s thinking.
I first need to declare at least a couple of interests. The first is that I am the senior independent director of a listed company, which is one of Britain’s largest brewers and pub operators. We operate five breweries and over 2,000 pubs across the country, some of which are managed and some of which are tenanted; we are an integrated business, not a pubco. Some of what I say will therefore have a pub flavour about it, if I may use that phrase, but I think there is a good deal of read across to other assets which are of interest to the community and on which I am sure other noble Lords will wish to speak. The other interest that I ought to declare is that I am president of the National Council for Voluntary Organisations, and—before someone else points it out—the NCVO has briefed against my amendments, which just shows that that is what makes horse racing. There is clearly a balance to be struck.
My concerns and my reasons for speaking to this amendment are partly philosophical and partly practical. I will deal with the philosophical point first. As my noble friend has made clear, the right to enjoy one’s private property is an absolutely fundamental part of our society. The Englishman’s home is his castle: it provides stability for our society; it provides people with a stake in our society and in the order of that society. If I may exaggerate grossly to make a point, development experts will say that property rights are a key part of any country developing satisfactorily. If you do not know when your property may be removed from you, why bother to invest? Merely go and stick it in Switzerland and wait for the inevitable to happen. I am not in any way suggesting that there will be wholesale expropriation. I am, however, suggesting that there may be the law of unintended consequences. It may deter people from offering their assets for use by the community, for fear of precedent; and as noble Lords will have seen in the briefings we have had, woods, cricket pitches and use of buildings are all issues that have been raised by various interest groups talking about the background to this Bill. It would surely be a shame if we were to impede much worthwhile activity at a local level.
So much for the philosophy; what practically needs to be done? My amendment suggests that we should insert a definition on what constitutes an asset of community value on the face of the Bill. This will reduce the fear of the unknown factor. What factors and issues could be included there? I think there is an argument that it should only operate for local businesses. I understand that the wish is to have farm shops, village stores, restaurants and pubs, but national chains—even Sir Terry with his store—might not be as appropriate as an asset of community value. The question is also whether there is any alternative provision in the locality; if there are two restaurants or two pubs, for example, should one of them be able to be listed? As the noble Lord, Lord Greaves, said, there needs to be some distinguishing between the service that is being offered and the premises in which it is being offered. Many communities will like having a shop, a post office, or a shop and post office combined, but suppose it is bought up by the community and turned into an antique shop; that is rather a different issue.
Lord Cotter
My Lords, first, I thank the Minister for her comments. There is no question that I and many noble Lords engaged in the Bill, as well as those outside this Chamber, support the intention to support local communities by giving them a chance to have their say. This amendment has a particular point to make on behalf of businesses. It is designed to ensure that no private assets are put on the list. The fear is that, once a private asset is put on the list, it possibly will have an effect on the market value and thus make it more difficult to sell. That would be very discouraging and could tangibly affect not only the business people but the community as well, and have a negative impact on both the community and the owner of the business.
Local people might wish to list a very much appreciated local shop for fear that the owner might sell it on for use as flats or offices and deny the community a valuable asset. People could be overzealous perhaps in what goes on the list—I will be very interested to know what the Minister thinks of this—and will try to protect their much valued shop in this case. Of course, it can have a counterproductive effect on future businesses and they may feel that they could have, if you like, the rug taken from under them. I hope the Minister can understand what I am saying and can respond to this concern. The idea is to maintain the many things people would like to have in the community but at the same time to protect the property owner because the market value could be adversely affected.
Lord Gardiner of Kimble
My Lords, I want to speak to Amendment 136ZD in my name and that of my noble friend Lord Cathcart. My noble friend the Minister is aware that I raised reservations at Second Reading about this part of the Bill and the unintended consequences affecting private owners who allow their property to be used for community use. I thank my noble friend for her explanation earlier because it starts to clarify the intentions. However, the intention of this amendment is to provide greater clarity and also thereby allay justified concerns with a definition of an asset of community value and to provide clear guidance to local authorities, which is essential if we are to avoid confusion and unnecessary legal action which could be the case if we do not get this definition right.
I also think that we should strengthen the tests which have to be met in relation to nominations for the community asset register. We should firm up and define what is intended by community value. The primary requirement in all cases should be that assets of community value must promote social well-being through their past or current use. There should also be a secondary requirement, where local authorities consider it appropriate, of furthering the economic and environmental well-being of the community.
The amendment sets out the various factors that local authorities must take into account: current use; planning policies that affect the asset, which could include planning permissions already in place; what the nominator is proposing to use the asset for; evidence of wider support for the nominator’s proposals within the community; where there may be another site in the locality which could serve the same purpose. I think very much of the local library that might be closing but another publically owned property could be used for that purpose.
However, in accepting that exclusions from the listing will need to be in the regulations rather than in the Bill, the key one is that most residential premises must be excluded from listing. I say most because I can understand the asset where there is a pub where the living accommodation is secondary to the purpose. I am persuaded that village shops, post offices and pubs should be assets, which if communities wish to bid, they should be in a position to do so.
There are so many examples of private individuals enabling communities to use part of their residential premises and it is essential that the regulations make it absolutely clear that these premises are not included. I therefore hope that my noble friend the Minister will give this amendment due consideration and bring back on Report a comprehensive amendment on the definition of an asset of community value. As far as I am concerned the test will be that private owners will not in any way be advised that it would not be sensible for them to continue to allow their assets to be used by the community. If we do not get this right the net effect will be negative whereas what we are seeking to do is a positive thing for many communities.
Lord Moynihan
My Lords, I support Amendments 136, 136ZA and 136ZD, to which my noble friend has just spoken. In so doing I need to declare an interest as chairman of the British Olympic Association which has, among its principal objectives, the promotional of sport and recreation.
I seek guidance from my noble friend the Minister because I can see a great deal of good news for sport and recreation. Inasmuch as local authorities will have a duty to maintain a list of assets, the freedom to determine the form and content of the list, to set out specific requirements and to allow community nominations to be proposed, there is in many respects a presumption in favour of listing sport and recreation assets. I would have no problem whatever if this legislation applied exclusively to local authority or public sector facilities. Indeed, we had a lengthy debate this afternoon on Amendment 130, where my noble friend Lord Jenkin sought to insert,
“any public body, including, but not limited to, local authorities, government departments, government agencies and non-departmental public bodies”.
In that context, I see real benefit. As I say, I have no problem whatever with supporting it. On the contrary, it would enhance sport and recreation provision if the principles within this Bill, which I support, applied to those public sector facilities. Many playing fields owned by the Government and many local authority facilities would fall into that category.
However, as I read it and as I listened to the debate, Clause 74(1) and the amendments to which I speak apply to assets of community value wherever they are found, including on private property. Many noble Lords have understandable reservations regarding pubs and local shops, for example, but the situation regarding sport and recreation facilities is, I would argue, very different. Organised competitive sport in this country over the past 200 years has its roots in the relationship between landowners and sporting activity. Many cricket grounds, for example, are still located in the grounds of homes around the country. Many equestrian or sailing events and fishing activities are to be discovered on privately-owned land. The history of British sport rests on the amicable nexus between sport and recreation, on the one hand, and the good will of the private property owners—long may that remain the case—but as currently drafted the Bill risks halting that process.
The reason is this: that relationship is based on good will, on tradition, on the work of volunteers, the love of sport and recreation and, in many cases, clubs which have been formed, nurtured and flourished on the cornerstones of local communities to this day. As I understand it, the sole purpose in this context of the list would be to create transparency, providing a legislative process for local communities to bid for listed facilities. The bid, of course, could be rejected. Apart from that benefit of greater transparency, I seek guidance from the Minister because I do not see any further benefit. On the contrary, at the moment a mutually agreed sale can be agreed between the landowner and a community that uses those facilities. Simply put, the Bill provides for that transparency, then adds a whole series of measures which will negatively impact on the intention and good will of many landowners and homeowners to make their facilities available to the local community.
Let me cite an example. A private landowner who has a squash court attached to his property might want to provide a local village school with the opportunity regularly to use that court, but with this legislation the person concerned is unlikely to do so. He or she will certainly be very wary of so doing. When the property is up for sale, a search initiated by a future buyer may find that squash court is now listed under this legislation. A buyer making an offer may be time-constrained and thus walk from the sale or offer a reduced price. A buyer may well walk from a sale faced by a hostile local community, with the power of the press on their side given the publicised moratorium on the sale and the provisions in the Bill. I am sure that nobody in this House, on either side, can foresee this, but nevertheless there are risks that a future Government of a different political complexion might embed the full list in new right-to-buy legislation, damaging the value of the properties, or, looked at another way, putting a new tax on today’s market value of the properties. Put simply, many landowners will avoid these risks and shelve their plans to provide for sport and recreation today.
If my noble friend the Minister can allay these concerns I will rest persuaded, but on reading the Bill—I have not had the privilege that my noble friend Lord Hodgson has had of many letters or briefings on this subject; indeed, I have not had a single briefing—I am concerned that where there is good will among individual owners of properties, where, through their good will and intent, they build strong relations with their local communities, allow primary schools to access their land and use those facilities, the tennis court, swimming pool or squash court, the consequence of the Bill, which may be an unintended consequence, will be such that that individual immediately stops doing that any more for fear that listing will impact on the final value of the house. If there is a way to address that in the Bill and to recognise that nothing could be more damaging than multiplying that across the country with the negative impact that that would have on sport and recreation facilities and the negative impact that it would have on good will and local communities—which is what the Bill is all about in driving localism—I would be content to support the Bill, to move forward and to persuade my colleagues in the British Olympic Association that this is a subject that does not warrant the concern that it currently has.
Put simply, there are many landowners who I believe will avoid these risks, as I say, and shelve their plans to provide for sport and recreation. That would, frankly, be a disaster, particularly in the countryside, and I am sure that it is not the Government’s intention. As a result I ask my noble friend to address himself to my three amendments and to take this clause away in order to see how sport and recreation can be fully protected, particularly those facilities I have focused on this evening which are owned in the private sector by private landowners. I emphasise that I fully support the provisions of the Bill to free up many facilities that are owned in the public sector for community use—many playing fields we go past daily that are unused or underutilised—so that the local community can benefit from availing themselves of those facilities. If we can engage with that in the Bill and increase participation as a result, there will be real benefit, but if the unintended consequence is that we impact negatively on the good will in the private sector and among private landowners to make these facilities available, it would be a very sorry day for sport and recreation.
Lord Jenkin of Roding
I want to make one or two points. I have been hugely impressed by what my noble friends have been saying about this. I listened with care to what my noble friend on the Front Bench said about the objectives behind these provisions and I shall want to read that very carefully in order fully to understand. I am not sure, possibly as a result of my poor hearing, that I got it all, but I will read it.
My fear is due to the fact that the whole essence of localism is supposed to be building a partnership between local authorities and local communities. It depends for its development on the good will that will be generated by this process. I have put my name to a lot of amendments, including that to which the noble Lord, Lord Cotter, spoke earlier, because it seems to me that that is essential.
We are talking about public assets. I find it quite extraordinary that this is intended to apply to a wide range of privately owned assets. Businesses, yes—the noble Lord, Lord Greaves, made the point that, if there is a business such as a post office, a pub or something else that is going out of business, it is perfectly reasonable that a community might wish to say, “We can run this. We will take it over. We cannot open for the full time, but we will be open so many hours in the week” and be able to do that. That is a voluntary and community partnership.
What I find difficult is that this is all to be imposed by central government. There must be some way in which the statute could be drafted so as to build on the idea of community partnership with local authorities rather than giving everyone the sense that this is being imposed on them from the centre. One fact tells the story: there are 54 references to specific cases where the Secretary of State can issue regulations from the centre in this part of the Bill alone. The whole thing is being imposed from the centre.
I do not want to go on singing this song because I have sung it a good deal during the passage of the Bill, but the amount of detail that the Government are seeking to impose is absurd. Why do they have to decide and lay down what is of community value? Why can a local authority not establish criteria? Guidance could be given about the sort of principles, but does that need to be included in statute? Why does the Secretary of State have to decide who can make a nomination and who cannot? This gets the whole thing off on entirely the wrong footing, and it is the wrong sort of emotional approach to what one is trying to achieve—that is, localism, local responsibility and the ability of local authorities to respond to the desires of the local community. After all, the councillors are elected by people from the local community. That is the relationship that one should be building on. As a number of people, including my noble friends Lord Greaves and Lord Tope have said, this gives the impression that no one in Whitehall trusts local authorities unless they are being told what to do.
I am sorry, but I get quite hot under the collar about this because it rather upsets me. I have some sympathy with the noble Lord, Lord Cameron of Dillington, who put his name to the question on whether the clause stand part, to which I have also added my name. Having considered the details of the anxieties and objections of the local authority associations—I have them all here but I will not weary the House with them—I have come to the view that we cannot go ahead with this part in the way that it is currently conceived or drafted. The whole concept behind this seems to be drawn up on the wrong principles. I hate having to differ in such a rooted way from my noble friends on the Front Bench but one really has been driven to this. I have not had anything like the representations that my noble friends have had and have spoken about but, hearing them and realising what is behind this, I beg my noble friends to think again.
Baroness Thornton
My Lords, it is time that someone stood up and said how much they welcome what the Minister had to say and how much they agree, although it may not help her for me to say so from these Benches. On what the noble Lord, Lord Moynihan, said about Governments of a different complexion, I say to him that in my view my own Government were really rather timid on this matter.
Why does the community right to buy matter? There are thousands of community organisations in this country that need the right to buy. This is not about central government imposing something on the local community; it is about giving a right to buy. I shall take a moment to explain. Healthy, viable communities are in the interests of landowners and everyone else. The community right to buy in the Bill is a significant step towards realising the aspirations of localism, the big society, the good society and community regeneration—aspirations that to a high degree are shared across the political spectrum. It would be a bitter blow for hundreds of communities if these actually quite modest proposals were derailed in this House.
Earl Cathcart
My Lords, just for clarity, I point out that the noble Baroness referred to a “community right to buy”, whereas the Bill is actually about the right to bid. Did the noble Baroness mean “right to bid” rather than “right to buy”?
Baroness Thornton
Thank you for that clarification.
As the noble Baroness said, it is not about forcing a sale, or forcing landowners to sell to a particular bidder; it is about creating even more use of assets, some of which were previously liabilities. In the past, disused buildings, wasteland, schools, libraries, town halls and offices which were becoming redundant have all been used by local communities. The Bill promotes an extension of that activity. For example, in London the Westway Development Trust took over 40 acres of derelict land under the A40 to create a thriving community. In North Yorkshire local villagers bought a failing pub last year and have thus safeguarded a vital community resource. However, a major impediment to this has been the lack of a window of opportunity, to allow time for community groups to bid for key assets in their neighbourhoods before the assets are sold on the open market. Often key assets of huge community significance have slipped through their fingers as a result.
This is an important and practical step. The Government have sought to build safeguards into the Bill, to protect owners’ interests. It would be a great shame if we were to lose what would be a relatively modest step towards giving communities the right to make use of assets which they very much need.
Lord Flight
My Lords, as I understand it, what this is about, as the noble Baroness has just described, is the concept of a period of pause. It has not yet been specifically defined, but if the shop or the pub closes, the community might have a period of six months, during which to get the money together to buy it. During such a period the owner would be constrained from selling it.
In itself, that sounds not unreasonable. I am somewhat concerned at the length and complexity of legislation that that rather simple idea has given birth to. When I sit back and think about it, the issue of price is absolutely fundamental. As was just pointed out by the noble Earl, Lord Cathcart, this is a right to bid, not to buy. However, if the owner of the property does not wish to sell, or believes that he can sell at a much higher price, then clearly he is not going to sell, and so the right to bid is not going to do the community much good. Equally, if it turns into a right to buy, there is still the question: what is the price? Who is going to determine the price? Will there be some premium in the price? I am a little concerned that these very complex arrangements—the central objective might more easily be achieved simply by defining a time period in which community groups have grace to assemble the money—as they are presently structured may be self-defeating in a situation in which the owner is not willing to sell. To say that price should be left to market—well, what is market, when something has been listed? I am not sure that the provisions of the Bill can achieve their objectives without thinking about price.
The Earl of Lytton
My Lords, I need to declare my interest which I have not previously declared—there has been no need to do so until this part of the Bill—as a landowner and a practising chartered surveyor as well as my interest in local councils.
I need to bring a technical aspect to bear here. However, before I do so, I should like to comment on something said by the noble Baroness, Lady Hanham, in her introductory remarks. The provisions of the Bill go well beyond what might be described as the recovery of assets that were in, but have passed out of, community use. As regards some of the things about which the noble Lord, Lord Cameron of Dillington, is concerned, a much wider aspect seems to be appearing.
In my professional life I have prepared lots of lists of property assets. I worked for nearly seven years in the public sector and during that time dealt with a lot of things for local authorities, health trusts and government departments, so I know something about preparing lists. I suggest that the proposed list is very far from being a free bet. The process would involve drawing up, managing, publishing, and possibly providing free of charge, a list of indeterminate size and complexity. Why is that the case? It is because regulation cannot foretell what propositions will come forward as a result of the Bill’s provisions.
The obligation is subject to what the Secretary of State may decide following consultation. It is perhaps a pity that the Government have not yet published their response to the results of the consultation on their paper entitled, Proposals to Introduce a Community Right to Buy—Assets of Community Value. In due deference to the noble Baroness on the opposition Benches, the right to buy was not a term that she coined, it was in the consultation document, as I perceive it. I look forward to that response informing the Report stage of the Bill. I hope that I will receive a reassurance from the Minister that it will be forthcoming before that stage so that we all have time to consider it.
I go back to the list. There will be rules about content, additions, deletions and modifications. The list will have to delve into issues of ownership, some of them quite detailed and probably some that are commercially sensitive and may even be confidential. The list will have to be maintained alongside another “not in” list of failed nominations. All I would say at this juncture is that even on a conservative basis this will be a resource-hungry exercise for local authorities.
Lord Brooke of Sutton Mandeville
My Lords, like my noble friend Lord Hodgson, this is my maiden speech on the Bill. I intend it to be generic rather than go into detail and I hope, therefore, to be brief. I regret the hour at which we are holding this debate, although my noble friend the Minister showed admirable initiative in opening it with the statement that she did. It is a pity that the noble Lord, Lord Cameron of Dillington, did not have the opportunity to paint the larger landscape before we started getting into the detail.
I am speaking in particular to Amendment 136ZD, in the names of my noble friends Lord Gardiner of Kimble and Lord Cathcart, to which the former spoke a little while ago. I express my admiration for their exercise in clarification. The instincts that underlie generosity to one’s community are the big society writ early. I was a London inner-city Member of Parliament for nearly a quarter of a century, and London is nothing if it is not a collection of villages where the instincts of the big society apply. I have in a recent debate identified in my own constituency Pimlico and Soho as model inner-city communities, if in different modes. I have, however, had an address in Wiltshire for half my life and these characteristics of the big society or, as Burke might put it, the small platoon society, are perhaps evidenced even more vividly in the countryside because of the way everyone knows everyone else and where the roots of families are at least as deep as those of parallel families in the cities, if not more so.
I pay warm tribute to those who give of their substance in rural areas and demonstrate their recognition of local need and to the imaginativeness of their responses. My one plea to my noble friend the Minister is that that generosity of spirit should not be unduly curtailed by the letter of the law, which can turn the landscape into briars and brambles which deter rather than welcome sensible development. I, in turn, have welcomed the amendment as being an insurance policy to support one’s desire to be helpful to the community rather than to ring one’s assets around with defences against hazard.
I end with the amendment of my noble friend Lord Hodgson and support his Amendment 136, though by placing it in line 19 of page 61, it means it offers late rather than early assistance in illuminating the first four lines of that page. It is the opposite of the example once set by a Polish Bishop who was visiting a parish in his diocese, an episode that could be helpful to many a parliamentarian. When greeted by the curate, the Bishop said, “When I visit parishes in my diocese, I am accustomed to be greeted by the sound of bells, and that has not happened today”. The curate said, “My lord, there are three reasons. The first is there are no bells”. “Pray go no further,” said the Bishop. Although my noble friend Lord Hodgson has placed his amendment quite far down on page 61, I still think it is an extremely valuable contribution to the Bill.
Baroness Byford
My Lords, I have waited very patiently because my name is not added to any of those amendments, but I support the amendments tabled by my noble friends. I will pick up on what the Minister said to us earlier. In some ways it was a shame that my noble friend Lord Cameron was not allowed to express his broader concerns on the whole of this section. My noble friend quite rightly said that the Government have it in mind to introduce a right of appeal, so clearly they recognise that the Bill, as currently laid down, is far from satisfactory, and that we will get a compensation scheme later. My question to the Minister is: how soon will we have sight of what a compensation scheme might be, or when will we know what right of appeal will be formally moved hopefully between now and Report?
I have a farm in Suffolk that is listed in my interests here, but in this particular context I have no interests that are particularly relevant to this. However, I was formerly one of the patrons of ViRSA, which the noble Lady, Baroness Thornton will recognise. We dealt for many years with post offices being squeezed and unable to make a living in support of their long-term well-being—we are talking here of sub-postmasters and sub-postmistresses. In his amendment, the noble Lord, Lord Cotter, clarified quite well the difficulties that we face with this Bill. Are we talking about the loss of a facility that is established within one’s own community, or are we in fact looking at a facility, such as a post office, that is also someone’s dwelling place? Those are two very different issues, and my noble friend, when she comes to wind up, might perhaps enlarge upon that because it is crucial that we know exactly where we stand. For example, in some areas that I know, post offices that have been under threat have managed to relocate into shops, churches, or wherever. Provided that we keep them, it is very good that they have been enabled to remain and be a vibrant part of that particular community. To me, therefore, there is a great difference between a particular service that is offered and the buildings in which it is set. This has been touched on, but I would like the Minister to address that particularly.
My noble friends also expressed concern about land, and to a certain extent about personal privacy, and about investigations that could be made under the proposals in this section of the Bill that would also worry me. We know only too well of investigations of things that are held on computer disks and things that get moved around. Some of this might not be well held in the public domain, to be honest. This is the balance that we have to get right in the Bill. I support the Bill. As I said earlier on, I am a great believer in localism in its truest sense and from the lowest level. Noble Lords who have not heard me say before will hear me say now that, at the parish level, whether in cities or in country areas, localism is most important.
To pick up on a point made earlier, within local councils, authorities or parishes, there will be different interpretations of how they want to proceed. Again, I would be glad if the Minister could reflect on that in her response.
Lastly, I am concerned—not from my point of view, because we have no interest in it—that that could well have an effect on the land value or the land market of people's private, individual holdings. I hope that the Government will reflect on that.
As I said at the beginning, I am very grateful to my noble friend Lady Hanham for her statement on inheritance and gifts between families and trusts and considering the question of the holding for a limited time if those assets are bid for. I cannot see any reason why you would bid if you are not going to buy. There is no logic.
Baroness Byford
As my noble friend says, it would be the price, but one is not going to bid for something unless one has the ultimate purpose of wanting to buy.
I, too, am sorry that we are discussing this very important part of the Bill at this time of night, but we are. I am grateful to all noble Lords who have spoken and seek clarification from the Minister on many of the points made, which I fear will make us rather late finishing tonight. I thank my noble friends for proposing their amendments, which I support.
Lord Cameron of Dillington
My Lords, I have had a note from the government Front Bench saying, “Do say what you wanted to say”, but I believe that it is far too late at this time of night for me to say what I wanted to say. Like all good bedtime stories, as in The Arabian Nights, I will leave the next episode until we meet again.
Earl Cathcart
My Lords, obviously, I support Amendment 136ZD, ably proposed and argued for by my noble friend Lord Gardiner, to which I added my name. I shall not go over that ground again. I also welcome the opening remarks of the Minister. I did not catch all of it, and will read with interest in Hansard tomorrow exactly what she said. She may well have allayed some of the fears that we have heard about relating to this chapter.
Some months ago—it may have been many months ago—I recall the Prime Minister saying that he would bring forward measures for communities to save their village shop, pub and post office. That is an admirable idea, and here we have Chapter 4 before us, but now we have a huge expansion of the assets that communities can save to include all assets from which members of the community derive some benefit. That has put the cat among the pigeons for those landowners and others who allow their communities to enjoy the open spaces of their farms in one way or another. As other noble Lords have said, the unintended consequence of the way that the Bill is written is that landowners will withdraw permission for any activity on their land, a point powerfully put by my noble friend Lord Moynihan. That would be disastrous. If it were to happen, it would go against the grain of the big society, which is what the Bill is meant to be all about.
Amendment 133D goes some way to remedy that, as it focuses on business assets—that is, the village shop the pub and the post office—which, after all, was the original intention of the Prime Minister.
There is another amendment in the names of my noble friends Lord Jenkin and Lord Greaves, Amendment 136ZZB. That would leave out subsection (1) and insert that,
“the local authority will determine whether or not a building or other land is of community value”.
I am afraid that I do not share the view of my noble friend Lord Jenkin. I am slightly nervous of leaving it to a local authority to say what it thinks an asset of community value is. What if the local authority is signed up to the idea that all assets should be to the benefit of communities? That would be very dangerous for landlords and I do not think that I could support that.
In this area, I was having a similar thought about tabling an amendment that would try to take the matter back to business assets rather than all assets. My idea was to provide that “a building or other land may be of community value if it is used on a commercial basis by the local community”. That is very much in the same vein as the first amendment in the group—Amendment 133D—on business assets.
Lord Lucas
My Lords, this is going to make for a very interesting Division on Report. It will be fascinating to see who ends up in which Lobby.
I should declare an interest that I own an asset of community value—a woodland in Kent. I would be happy to go along with the Bill’s provisions but that is for me. It is my decision and my feeling about my relationship with the community. Any suggestion that assets of community value are restricted to assets that are already in community use when it comes to land is extremely dangerous. It produces exactly the side-effects that all my noble friends have been talking about of immediately causing assets to be withdrawn from community use.
There is no great function for this part of the Bill when it comes to rural communities anyway. Under the neighbourhood planning provisions rural communities with a lot of land and space to spare, and therefore an ability to develop, will be in a very strong position to do deals to support the businesses that they want to support and mould communities in their own ways. They are the great winners from neighbourhood planning. I suspect that suburban communities with decent amounts of space will do equally well. I am concerned about the example that was adduced about the problems that arise in cities where neighbourhood planning has very little to offer. Such communities by and large will not have the ability to tackle these things proactively, to accumulate wealth to be able to support or buy assets as and when they are wanted and to think ahead in the way in which it will happen in rural communities. I do not have an answer to the question posed by the noble Baroness, Lady Thornton, about what happens in cities, but for rural communities this part of the Bill is entirely unnecessary, as neighbourhood planning will do it all.
Lord Patel of Bradford
My Lords, I will be very brief as the noble Baroness, Lady Byford, covered many of the points succinctly. First, I thank the Minister for her intervention earlier. It was very helpful, but I think that we need to study the note in the Library. I have a feeling that this will be an iterative process. We would certainly welcome involvement in that and further meetings.
Notwithstanding the benefits that my noble friend Lady Thornton pointed out in respect of this clause to local communities and local areas, we recognise the good intentions and the thrust behind many of the amendments and the arguments that have been presented, together with carefully crafted amendments. We obviously need to look carefully at the practicalities of what this means. I can say certainly that the point made by the noble Lord, Lord Moynihan, struck a chord. It is clearly an issue that we need to take further and seek more clarification from the Government.
We agree with the comments made by the noble Lord, Lord Jenkin, in respect of the centralised delegated powers. We are completely on board with that. That issue has kept coming up throughout all the debates and needs to be looked at very carefully. As I say, I think this is going to be an iterative process. The amendments pose some very serious questions that we need to explore further, and I look forward to what the Minister has to say about that. We will certainly want to sit round the table with the Minister and others and look at this a bit more carefully.
Baroness Hanham
My Lords, this has been a longer debate than we would have hoped for at this time of night. I fully accept that this is not ideal but that is how the business has gone. We could not have stopped at 9.30 pm. I kept hoping that somebody would manage to keep the debate on the previous amendments going long enough for us to stop, but that has not been possible. We have had the opportunity now to discuss the amendments pretty widely and I will speak to them as well as I can in a minute or two.
I want to say from the outset that we are looking at this all the time. I hear what has been said and where I cannot answer questions put forward by noble Lords satisfactorily, we will clearly need to make sure that by the next stage we have had the sort of discussions the noble Lord, Lord Patel, is talking about. Indeed, we have already had considerable discussions on the points made. The fact that they have come up again probably means that we have not satisfied noble Lords and we will have to try and do that and look at making revisions to the Bill before the next stages.
In my opening remarks I tried to bring this back from being a very wide problem into being quite a simple, singular matter. The purpose behind these provisions is to try and ensure that, when a valuable asset in a local community comes up for sale, the local community has a window of opportunity to see if it can get the money together to buy it. I know this is happening all over the place. There are lots of examples already of people buying their local pubs or shops to keep them from going out of business.
There are also plenty of examples of people saying, “If only we had had a bit of time, we could perhaps have done something to preserve this and protect it for our local community”, and that is what we are offering here. It is not going to be a very long time; it is just going to be a short time for people to say, “That is a valuable asset. We have already said that we like it. If it comes up for sale, we want the opportunity to see whether we can, as a community, get the money together”. What the Bill does not do is say that they can buy that facility if they cannot afford it at the price that the seller is asking. During the time that the community is putting the money together, there is nothing to stop the person selling from going through all the negotiations and discussions that they want. At the end of the day, the seller may be perfectly happy to sell whatever it is to the community, and they can do that. There is nothing in the provisions that says that they cannot sell to the community at an early stage if they want to. All we say is that there is a window of opportunity for the community to find out whether they can do something.
Most noble Lords have not seen that as being unreasonable, but there is a certain feeling of pressure and compulsion about this which really is not there. The only compulsion, if I can put it that way, is the fact that the asset has to be notified in advance as being something in which the local community is interested. That is where a list comes in.
In a village, I do not know how many pubs people can claim to have an interest in. I am not sure how many assets there will be in a town centre in which people can have an interest, but probably not a lot. I do not think we are talking about a multitude of areas on which people will want to put their finger and say, “If you are going to sell it, this is an asset that we want”. Public assets can also be listed. If a local authority decides to sell a sports ground, for example, that is an area where this provision would intervene, so that it could have an opportunity to see whether it could buy it.
I shall read very carefully what has been said and I shall make sure that my colleagues do too. We have to be able to answer more clearly than I can tonight the concerns that are being raised. I cannot say that they are not justified because I cannot narrow it down sufficiently at this stage to say categorically that this will be the situation. As regards the fears expressed by noble Lords about land assets being devalued because part of the land will have been identified as an asset, a compensation scheme will come into effect. On the point about something on a list coming up in a land search, presumably someone will say it is there anyway, but I do not know whether that will devalue it. I do not see why it should just because someone is trying to get some money together. It might delay the sale, but there will be compensation if that happens.
The fact that my noble friend Lord Moynihan spoke about the loss of sports and recreation facilities if this goes ahead, and that other noble Lords commented on the fact that landowners will be advised not to let their land be used for any community facility, is something of which we need to take cognizance. If that is what is being said, and if that is a fear, that will stretch out further as we go through the Bill. We need to take note of that and I can assure noble Lords that we will discuss it and come back on that.
I will go through the amendments. Some people will be quite happy with what I am saying and others will not be. Going through the brief on the amendments will pick up some of the points that have been raised and may explain matters better than I can at this time of night.
We do not think that Amendment 136, tabled by my noble friend Lord Hodgson, is necessary. Clause 75(1) and (2) say that there will be an indication under regulations of what will be involved. We will try to see that there is reasonable coherence about that so that when we come to the next stage it is understood as well as it can be. It will involve buildings such as pubs and local community facilities. I am not sure how much wider it will go, but we will ensure that it is well understood. I recognise that there has been pressure from noble Lords for greater certainty, including over definitions. We are very grateful to noble Lords who have raised this matter. My noble friends Lord Gardiner and Lord Cathcart raised the issue in connection with Amendment 136ZD.
Amendment 136ZD also combines a primary requirement that assets of community value have been or are promoting social well-being with a number of factors that local authorities must take into account as secondary considerations in arriving at final decisions on listing. These include relevant planning policies, the use that the nominator is proposing for the asset, evidence of community support for the nomination and the availability of other assets locally that could serve the same purpose. As I said, we will give this careful consideration and consult more on it. In doing so, we will have in mind the recommendation of the Delegated Powers and Regulatory Reform Committee that any regulations under Clause 75 should be subject to the affirmative procedure.
There has been a lot of criticism about the number of regulations laid out in the Bill. One reason is that consultation processes have gone on and are going on, and some regulation will come about as a result of those consultations to make this part of the Bill work.
Amendment 136ZBA proposes an ingenious way of addressing concerns that have been expressed on behalf of landowners who make land or buildings available for community use. This point was made very clearly by my noble friends Lord Moynihan and Lord Gardiner. We have had a lot of discussion about this outside the House. I will take the example of a corner of an agricultural field used for the cricket club or disused clay pits to which people have access for walking. The suggestions in Amendment 136ZBA are interesting and we will give them further consideration.
We have some sympathy also with the intention behind Amendment 136ZAB, tabled by the noble Lords, Lord Greaves and Lord Tope. Since the provisions are breaking new ground, we will need to learn from experience how they work. However, we will need to give further consideration to those as well.
Amendment 136ZAC would limit the power to decide whether an asset meets the definition to a local authority and no other body. The present thinking is that it will be only the local authority, as defined in Clause 91, which can exercise that power as the democratic authority. My noble friend Lord Jenkin asked why this was being laid down from the centre and why local authorities could not make up their own minds about who will be able to nominate an asset, what the asset will be and whether it will go on the list. The centre is laying down only the ground rules for this. It would be impossible to leave it to local authorities to decide what an asset is without giving them guidance as to what an asset of community value might be, and whether there are limitations about which they need to know. Of course it will be up to local authorities to decide whether a community that is looking at something will be able to deliver or whether it is just putting forward a sighting shot. They will be in charge of making sure that the community is not simply using a delaying tactic but putting forward something that has a reasonable expectation of being successful.
I made it clear in my opening statement that it is our intention through regulations to exclude types of land such as residential premises from the listing—that point was made by my noble friend Lord Moynihan—unless, for example, they are integral to a pub or shop. If you have a pub with residential accommodation attached to it, you will not just be able to list the pub if it also has residential accommodation that is being used. We cannot support the remaining exclusions.
Amendment 133D fundamentally misconstrues the purpose of the provision by proposing to replace land and buildings with businesses. It is wider than that. It will not just be confined to businesses as such, but we need to talk about how much wider it is going to go. It would be entirely inconsistent with the rest of the chapter and would effectively exclude most public assets from these provisions, since they would not be considered to be businesses, although they are crucial to the aims of the policy.
On the other hand, Amendment 136ZA would limit land of community value to publicly owned land, or land that a private owner agreed is of community value. This would in effect limit it only to publicly owned land, since most private owners would probably not agree to make their land subject to the rules of the scheme. An owner can, after all, voluntarily choose to delay a sale to give a community group time to prepare a bid if they want to. They can also sell it to the community if they want to. By effectively excluding private assets from the provisions, this amendment would exclude some of the key assets that we want to help communities to save, such as the last village shop or pub.
Amendments 136ZB and 136ZC make a different point. They seem to propose excluding land for which public access is already guaranteed under statute, or which is very unlikely to be put on sale but which is self-evidently of community value. In both cases, while listing would be unlikely to lead to any further action, there is no reason, we believe, for not allowing such land to be listed to provide for the unlikely event that it does come up for disposal.
We have another series of amendments, all based on the same theme that local authorities should be allowed to operate the scheme as they wish within some very broad parameters set out in the Bill. It is a question of balance. As I have said, we will be considering that further.
I am conscious of the many questions raised by noble Lords, not all of which I have answered either in my opening remarks, in my response to the amendments or by what I have said. However, I hope that I have covered enough of them to make noble Lords realise that my ears are wide open to this. We appreciate that this is a controversial area of the Bill, but we have been having discussions and will continue to do so to see that we end up not with unintended consequences in this Bill but with what we believe would be a valuable asset, which is to be able to ensure that local communities have an opportunity, if it arose, to take over buildings of community value if they can afford to do so.
Lord Greaves
My Lords, I have lots of things to say about everything in this group, but I am not going to because I might get lynched if I tried. It is a while since anybody was lynched in this building and I do not want to be the next.
First of all, I thank the Minster for the very detailed care with which she has taken the debate on these amendments, even at this time of night. It has been extremely helpful. A lot of useful stuff will be recorded in Hansard, and I think it will help us very much in what is clearly going to be quite a lot of further debate on the rest of the groupings on this part of the Bill.
I just want to comment on Amendment 136ZBA. I did not comment on it when I originally opened the group because I discovered that I had a slightly out-of-date list of groupings and it was not on it, which caused me confusion. The Minister referred to this amendment and said the Government were looking at it sympathetically. The proposed amendment would exclude land and buildings that have an ancillary use of community value but where it is not the main use. This is a fairly well known concept in planning. I am not sure that it is exactly transferable but, where there is a sporting use or another public use that is ancillary, minor or part-time, it clearly has to be excluded. I believe that that would go a long way to solve the problems that were eloquently explained by the noble Lord, Lord Moynihan. I was very pleased indeed that the Minister said that the Government were looking at the concept raised in my Amendment 136ZBA.
Having said that, I now look forward to further debate on these matters on Thursday. I beg leave to withdraw the amendment.